SkyePharma jumps as lung drug deal nears

Britain's SkyePharma is close to a deal on one of its lung drugs that could be worth US$160 million, the drug delivery firm has claimed, boosting its shares as it posted a narrower loss for 2004.

SkyePharma, which develops its own medicines as well as helping drugmakers fight copycat competition by improving their existing products, said it had agreed the main terms of a deal with a unnamed major pharmaceutical company to help develop and market its respiratory medicine Flutiform.

SkyePharma will get a double-digit percentage royalty on future sales if the deal is finalised as well as an estimated $160 million in up-front and milestone payments.

Investors have been waiting since 2003 for a deal on SkyePharma's suite of lung drugs, and the delay has been a key reason that the firm slid into losses in 2003 and 2004.

SkyePharma shares climbed 7.5 per cent on the news. The shares had underperformed the UK drugs sector by about 28 per cent since the start of the year, despite speculation of a possible takeover bid for the company. CEO Michael Ashton said Flutiform had the potential to make over $1 billion a year in sales. The medicine was likely to be launched by 2009, he said. He also said SkyePharma had not received a takeover approach and was not soliciting one.

The firm also said it had agreed a compensation deal with GlaxoSmithKline over antidepressant pill Paxil CR after US regulators blocked sales of the medicine earlier this year because of problems at GSK's manufacturing plant in Puerto Rico.

SkyePharma, whose technology was used to develop Paxil CR, said it would get a one-off payment of $10 million. It will also get an undisclosed level of royalty income on GSK's budgeted sales of Paxil CR even while the drug is off the market.