SkyePharma hopes to increase royalties by assuming more risks

By Jennifer Lanning Drey

Eugene, Ore., June 21 - SkyePharma plc plans to increase its future royalty rates by assuming more risks and taking new products further into their development cycles, said Frank Condella, chief executive officer of SkyePharma, on Wednesday during a company business review.

The company also has a long-term goal of marketing some of its own products in the future, he said.

"Any successful drug delivery company eventually develops into a company that markets some of its own products," said Condella.

In addition, SkyePharma would like to start manufacturing more of the products it develops for its partners, Condella added.

"There's an additional margin that can be made by manufacturing the products we develop for our partners," Condella said.

SkyePharma also said Wednesday that its goal is to have divested its injectable business by the end of the year.

The company announced in February that it would try to divest the injectable business and has been marketing the business since then.

"There is a competitive process ongoing which we think will support a good transaction in the end," Condella said.

SkyePharma believes divesting the injectable business will allow it to reach profitability faster. The company also believes the injectable business would be better off in the hands of a larger strategic buyer or a private company, Condella said.

"The main reason that we're divesting this unit is not that it doesn't have value. It will be a profitable and cash flow positive business, but further into the future, and quite honestly, too far for us as SkyePharma to provide the support that business needs over the next three to four years," Condella said.

"We think we can get to profitability sooner by just focusing on the oral and inhalation unit," Condella said.

SkyePharma's inhalation unit includes Flutiform, an asthma treatment that uses the company's proprietary technology and is approaching commercialization.

Flutiform is in phase 3 development for the indication of asthma in adults and adolescents and is expected to be submitted for approval by the Food and Drug Administration in the second half of 2007, reaching the market in 2009.

SkyePharma entered into an agreement in May with Kos Pharmaceuticals to jointly develop Flutiform.

SkyePharma technology with Lodotra

SkyePharma announced Wednesday that Nitec's Lodotra, a product for rheumatoid arthritis, will use SkyePharma's GeoClock technology to deliver the active ingredient at the most appropriate time of the day.

Nitec will out license the product, which will provide middle single digit royalties, plus manufacturing revenues. It will be produced in SkyePharma's Lyon, France, facility.

Resolving SkyeHaler issues

SkyePharma said that it believes it has resolved issues that caused patients in Germany and Switzerland to mishandle SkyePharma's SkyeHaler technology, which is being used in conjunction with Novartis' bronchodilator Foradil. The product was recalled in those countries in January.

The company has changed the technology and submitted new data to the FDA demonstrating that the error can no longer happen, according to Dr. Geraldine Venthoye, head of SkyePharma's inhalation business unit.

"We believe this modification has been successful," said Venthoye.

In the United States, the FDA issued an approvable letter for the technology in April, but is requiring device medication as a prerequisite for approval.

Early stage pipeline

SkyePharma announced Wednesday that its early stage pipeline includes SKLP-132, a fixed-dose combination of an opioid analgesic and a non-steroidal anti-inflammatory for moderate to severe pain.

In addition, the company is developing SKP-1041, a non-benzodiazepine hypnotic in a novel delivery formulation for the maintenance of sleep.

The company said both products will address substantial market opportunities.

London-based SkyePharma develops pharmaceutical products benefiting from delivery technologies that provide easier-to-use and more effective drug formulations.

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