Innovata has backed out of discussions for the possible "all-share" takeover of beleaguered drug development company SkyePharma, citing its inability to be competitive with cash-based offers from other companies.
Following the news, >SkyePharma has announced that it will continue to pursue discussions with other parties regarding potential cash offers for the business as a whole, but had not yet received an offer it felt could be recommended to shareholders.
The UK company also said that a number of parties remain interested in potentially acquiring individual assets. Such companies are believed to include Novartis, Pfizer, Schering Plough, Merck and Sanofi Aventis.
The cash-strapped firm is thought to be holding out for an offer that will improve its cash position. However, a failure to find a buyer by next week could lead to the ousting of the company's founder and chairman, Ian Gowrie-Smith.
SkyePharma ran into trouble in September when it was forced to raise £35 million (€ 52 million) to carry out Phase III trials of its flagship drug for asthma and chronic obstructive pulmonary disease (COPD), Flutiform, after failing to find a partner for the project.
The move was hugely unpopular with senior management and investors 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.
Since then disquiet has been growing over Gowrie-Smith, as the company has continued to struggle to find cash to fund its continued operations.
In November SkyePharma put itself up for sale after receiving an unsolicited bid from smaller rival Innovata to buy the company.
News of the takeover bid attracted further bidders to express interest in the company and in light of this the board opened its books in December to a number of interested parties to allow them to commence due diligence on the company.
However, >Innovata has now pulled out of negotiations and the expressions of interest from other parties have yet come into fruition and Gowrie-Smith now appears to be living on borrowed time.