Following a strategic review at the beginning of 2006, the company came to the conclusion that "in the interests of achieving sustainable profitability in the shortest reasonable time" it would be best to divest its injectable business and focus on its oral and inhalation product lines.
The announcement of the sale came yesterday, with an initial price tag of $20m along with contingency milestone and sales-related payments. The potential buyer is Blue Acquisition Corp, a corporation controlled and funded by a group of financial investors.
"The proposed disposal will relieve the company of a significant cash burn due to operating losses and the potential costs of future development and capital expenditure of the injectable business," SkyePharma CEO Frank Condella said in a statement regarding the move.
"The Disposal [and additional refinancing agreements] will put SkyePharma in a good position to build future value by further developing our strategic oral and inhalation products."
For the six months ending June 2006, the company's injectables division generated revenues of £3.9m (€5.8m) with an operating loss of £11.7m (€17.4m). The heavy loss making was put down to inefficient infrastructure and low sales volume.
The injectables business is based in San Diego in the US and its products include DepoCyt (cytarabine)for lymphomatous meningitis and DepoDur (morphine sulfate extended-release liposome injection) for post-operative pain. In the first half of 2006 sales of DepoDur reached only $1.6m prompting a rethink of marketing strategy.
The division also has a pipeline of products in various stages of development. The one on which the company is banking is DepoBupivacaine (bupivacaine), a long-acting injectable formulation of local anaesthetic bupivacaine for the treatment of post-surgical pain.
Terms of the sale to Blue Acquisition are dependent upon DepoBupivacaine completing Phase III trials and achieving certain launch and sales targets, and the deal is expected to be completed by early February.
Following the disposal of the injectable business, SkyePharma is now free to concentrate on other projects, such as their key combination asthma product, Flutiform (fluticasone and formoterol).
The sale of the division combined with additional financing secured continuing Phase III trials of the product, most of which are due to be completed during the first half of 2007. The treatment is still on track and the company hopes to gain approval during the first half of 2009.
Despite estimated development costs approaching $60m, the company have high hope for the product as it is poised to enter a large market with relatively limited competition. The only two approved combination drugs are GlaxSmithKline's Advair/Seretide (salmeterol and fluticasone) and AstraZeneca's Symbicort (budesonide and formoterol), both of which are blockbusters.
Phase III trials of Flutiform started in February 2006 and are anticipated to complete in mid-2007 and filed with the US Food and Drug Administration (FDA) in late 2007.