LONDON, UK, 8 July, 2008 – SkyePharma PLC (LSE: SKP) today provides an update on progress with the convertible bonds and current trading.
Progress with convertible bond refinancing/renegotiation
In its Q1 Interim Management Statement of 19 May 2008, the Company announced that detailed work was being carried out with a view to making a proposal to key bondholders and announcing definitive plans for refinancing or renegotiating the convertible bonds shortly after the announcement of the results of the further two pivotal Phase III efficacy trials (SKY2028-3-004 and SKY2028-3-001) of Flutiform™. As announced on 17 June and 3 July 2008 the positive top line results of both of these trials have now been reported.
In anticipation of these positive results, meetings were held with a number of existing and potential investors and with certain key bondholders regarding a specific proposal to refinance the convertible bonds. Although there was significant support, in the light of current capital market conditions the discussions on the specific proposal are not being pursued at the present time. Discussions are now taking place with a small number of stakeholders to consider an alternative plan. A further update will be given with the half-year results announcement, which is scheduled for 28 August 2008.
Progress with Flutiform™
Excellent progress has been made with the development for the United States of Flutiform™, the Company’s lead product for the treatment of asthma. As previously announced the primary end points have been met in all of the studies in the core clinical programme, comprising a long-term safety study and three efficacy studies, covering over 1,850 patients. The additional clinical efficacy study required for the New Drug Application (“NDA”) will be fully recruited this month and is on track for the last patient last visit during October. Work on the Chemistry, Manufacturing and Control package is well advanced. In the light of this significant progress and the nature of the outstanding steps to be completed, the Directors have increasing confidence in the likelihood of the NDA being filed in the United States in Q1 2009.
In Europe, good progress also continues to be made with the development of Flutiform™, with positive results reported from a paediatric trial. Mundipharma, which is responsible for the clinical trial programme for regulatory approval in Europe, has been reviewing its plans for filing and marketing the product in light of discussions with regulatory authorities and advisers. Existing plans are to file for approval of the lower and middle strengths in adults around the end of 2008 and to follow on with a later filing for the higher strength once additional clinical trials had been concluded. Mundipharma has informed the Company that it is considering whether to file for all three strengths in one application, and launch them together, rather than having a phased approach. This would have the effect of bringing forward the likely launch timing for the higher dose strength by six to nine months whilst holding back the launch of the low and middle strengths by a similar amount of time. In addition to commercial considerations, the Marketing Authorisation Application (“MAA”) would also be supplemented by including the additional data from the high dose study. If Mundipharma decides on this alternative approach, the expected date for filing of the MAA for European approval for all three strengths will be in the third quarter of 2009. The Directors believe that the medium term financial effect of an earlier launch of the higher dose, which is forecast to represent a substantial part of sales, is likely to largely compensate for the effect of holding back the launch of the lower strengths.
The target remains for Flutiform™ to be launched in the United States and Europe in 2010.
Current trading and prospects
Revenues in the first half of 2008 have shown an encouraging start to the year and will be significantly higher than in the first half of 2007. The first half results will include most of the costs of completing the core Phase III clinical programme on Flutiform™ and these will be included in research and development expenses in the profit and loss account. The underlying level of administrative expenses of the business in local currencies has remained broadly constant.
In the first half of 2008, net finance costs have benefited from unrealised gains in translating certain foreign currency denominated finance liabilities into the functional currency of a Swiss subsidiary. Such gains would largely reverse in the full year results if the exchange rates were to revert to 31 December 2007 levels by 31 December 2008.
The Directors remain optimistic about prospects for growth of the business once the bond refinancing has been resolved. Over the next eighteen months, notwithstanding the effect of generic competition on the sales of Paxil CR™, the Directors expect to see further growth in revenues from sales of recently approved products, such as Requip® Once-a-day and Pulmicort® HFA-MDI in Europe and ZYFLO CR™, the new formulation of Sular®, and Requip® XL™ in the United States, and, once approved, from Lodotra™ in Europe. The ongoing rate of expenditure on research and development is expected to reduce significantly now that the core clinical programme for the NDA for regulatory filing of Flutiform™ in the United States has been largely completed and the Board expects costs to be further offset, in the medium term, through contributions from partners on collaborative development projects.
Once Flutiform™ is approved and launched in the United States and Europe, the Board believes that there will be exciting prospects for growth in both revenues and cashflow.
Frank Condella, CEO, said: “We are pleased with the progress being made with the approved products and the development of Flutiform™, which continues to meet all its development milestones, and believe that this provides a good platform for refinancing or renegotiating the convertible bonds.”
For further information please contact:
+44 20 7491 1777
During office hours
Financial Dynamics (UK Enquiries)
+44 20 7831 3113
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Trout Group (US Enquiries)
+1 617 583 1308
About SkyePharma PLC
Using its proprietary drug delivery technologies, SkyePharma develops new formulations of existing products to provide a clinical advantage and life-cycle extension. The Company has twelve approved products in the areas of oral, inhalation and topical delivery. The Group’s products are marketed throughout the world by leading pharmaceutical companies. For more information, visit www.skyepharma.com.
Flutiform™ HFA-MDI is a fixed-dose combination of formoterol and fluticasone in a metered dose inhaler (“MDI”). The product incorporates a fast onset long-acting beta-agonist (formoterol fumarate) with the most commonly prescribed inhaled anti-inflammatory corticosteroid (fluticasone propionate) in combination with an environmentally-friendly aerosol propellant hydrofluoroalkane (“HFA”) and is being developed for asthma. Flutiform™ is aimed at the market for combination steroid and long-acting beta-agonist inhalers which is forecast to be approximately US$10 billion worldwide by 2010. Flutiform™ is licensed in the U.S. to Kos Life Sciences, a wholly owned subsidiary of Abbott.