SkyePharma rights issue weighs on share price
to carry out trials of its combination drug for asthma and chronic
obstructive pulmonary disease (COPD) after failing to find a
partner for the project.
Flutiform (fluticasone and formoterol) is a fixed dose combination of a corticosteroid and beta agonist that will compete with blockbuster products such as GlaxSmithKline's Advair/Seretide (salmeterol and fluticasone) and AstraZeneca's Symbicort (formoterol and budesonide).
The product has completed Phase II trials, and SkyePharma had been in negotiations with a commercial partner to take it forward into pivotal testing. However, these negotiations came to an end earlier this month and SkyePharma has resorted to a £35 million fundraising round to pay for Phase III trials.
Analysts said the news was disappointing, as a deal would have resulted in a licensing fee and milestone payments that would have played a part in SkyePharma's efforts to reach profitability. News of the rights issue came on the same day as SkyePharma reported interim results, which showed losses widening to £9.1 million from £8.6 million in the first half of 2004, in line with expectations.
The company's share price fell 17 per cent in morning trading on the London stock Exchange, down 9 pence to 43.75p.
Michael Ashton, SkyePharma's chief executive who announced plans to retire before the next annual general meeting, said funding Phase III trials would allow SkyePharma to negotiate a more lucrative deal down the line and should ensure there are no delays in bringing it to market.
He reiterated his position that Flutiform could be a major new product for asthma and COPD. The market for combination asthma drugs is currently represented by the GSK and AstraZeneca products, is worth around $5 billion at present and is growing fast, forecast to exceed $6 billion in 2006.
Flutiform consists of an environmentally friendly chlorofluorocarbon (CFC)-free metered-dose aerosol inhaler containing a fixed-dose combination of the two active drugs.
Advair/Seretide had 2004 global sales of $4.5 billion, while Symbicort racked up sales of just under $800 million over the same period, although it has only just been filed in the important US market. SkyePharma believes it could be third or even second to market in the US with Flutiform, and this should drive the sales potential of the drug to more than $1 billion a year.
The UK form maintains that its choice of active drugs represents the best combination, with formoterol offering a faster onset of action than salmeterol and fluticasone more effective in suppressing inflammation than budesonide, while the choice of inhaler will also be a positive factor.
"The HFA-MDI delivery device in Flutiform addresses the clear preference of many asthma patients in the US for an aerosol inhaler over a dry-powder inhaler," it said.
