Skyepharma - Charts & News

UPDATE 3-SkyePharma asthma drug costs over-run, gets loan
Wed Dec 27, 2006 11:53 AM GMT
(Adds analyst comment)

By Mark Potter

LONDON, Dec 27 (Reuters) - Britain's SkyePharma Plc (SKP.L: Quote, Profile , Research) said on Wednesday that developing its biggest drug hope, Flutiform for asthma, was costing more than it expected and that it had arranged a new 35 million pound ($69 million) loan.

The drug delivery firm also said it was in exclusive talks with a potential buyer of its loss-making injectable drugs business and that it expected to reach a deal shortly.

SkyePharma has been hit by a string of delays in finding partners for its drugs and earlier this year a shareholder rebellion drove out founder and chairman Ian Gowrie-Smith.

The firm said in February it planned to sell its cash-hungry injectables unit to focus on its oral and inhalation businesses and speed up a move into sustainable profitability.

SkyePharma said on Wednesday that Flutiform was still on target for regulatory approval in the first half of 2009.

But the costs of clinical trials and manufacturing the drug were higher than expected.

It said it had agreed a new 10-year loan facility of about 35 million pounds with a specialist lending entity domiciled in Ireland and advised by Christofferson, Robb & Company.

The facility includes initial commitments of $35 million and 26.5 million euros, with interest generally charged on a quarterly basis at the respective U.S. and euro three month LIBOR rates plus a 5.85 percent margin, it said.

"The financing suggests that SkyePharma is not confident its balance sheet is sufficient to cover costs of Flutiform development (or development of other products) -- things are not quite as strong as we'd perhaps like them," Jefferies analysts wrote in a research note.

SkyePharma shares, which have halved in value this year, fell as much as 6.5 percent in early trade, but by 1140 GMT had recovered to stand down 2.8 percent at 26 pence, valuing the business at about 196 million pounds.

SkyePharma believes Flutiform, which is in final Phase III clinical trials, has the potential to be a $1-billion-a-year seller. It is partnered with Abbott Laboratories (ABT.N: Quote, Profile , Research) in the United States and privately owned Mundipharma in Europe.

Flutiform is likely to be the third medicine of its type to be launched in the United States, behind GlaxoSmithKline Plc's (GSK.L: Quote, Profile , Research) Advair and AstraZeneca Plc's (AZN.L: Quote, Profile , Research) Symbicort. (additional reporting by Dan Lalor)