SkyePharma slips back into red

Related tags Inhaler Royalties Glaxosmithkline Skyepharma

UK drug delivery company SkyePharma expects to make a loss in 2003,
a disappointing result given that it chalked up its first
profitable year just a year earlier, and will cut 10 per cent of
its workforce as a result.

Shares in the company slid 7.5 per cent on the news, despite a new agreement with GlaxoSmithKline for an inhaler device, to close at 70 pence.

The company's chief executive, Michael Ashton, blamed the loss on delays in signing a number of new licensing deals for its drug delivery technologies. He is now expecting revenues to be 'significantly below' the £85-£100 million (€122-€143m) forecast in its interim results statement, and also the £70 million achieved in 2002.

"The company now expects to report a loss for the second half of 2003, albeit less than the [£17m] loss we reported in the first half,"​ it said in a statement. In April, SkyePharma had vowed that its loss-making days were over, but its full-year 2003 loss is now expected to be in the £30 million range.

SkyePharma's shares had hit a low of 60 pence during the day, but a recovery occurred after investors' jitters were assuaged by Ashton's assertion in a conference call that three deals worth $200 million in potential licensing revenues are in the latter stages of negotiation. He also promised that the group would return to profit in 2004.

The company also noted that it will have to take a £3.5 million charge this year to fund the job losses in its 450-strong workforce.

Meanwhile, in the new agreement with GSK, the UK-based drug major has licensed rights to one of SkyePharma's inhalers for use in the delivery of an unnamed respiratory drug. The deal concerns either a breath-actuated dry-powder inhaler or a metered-dose aerosol inhaler, according to SkyePharma.

The drug delivery firm has received an upfront licensing payment under the terms of the agreement. However, there was worse news for SkyePharma when it revealed that it was in dispute with GSK over the level of royalties it receives on Paxil XR (paroxetine), a slow-release version of the latter's blockbuster antidepressant.

SkyePharma believes it is due a hike in the royalty rate it receives on the new formulation now that the original version is facing generic competition in the important US market, but GSK disagrees.

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