Research services boost Skyepharma

Release Date: 2009-03-27

Currency movements also lift revenues at the biotechnology company as the launch of its asthma drug moves closer

Increased demand for contract research services and favourable currency movements have boosted revenues at Skyepharma, the British biotechnology group, as it looks forward to the launch of its asthma drug next year.

Last week, the company submitted its Flutiform asthma inhaler for marketing approval in the the US. The drug combines two key ingredients already used in Symbicort and Advair, the two leading asthma drugs sold by Astrazeneca and Glaxosmithkline, respectively.

Skye specialises in drug delivery systems such as inhalers, and makes roughly one third of its revenues from royalty payments on products it has licensed to other drugmakers.

In September, the company succeeded in refinancing its £90m in convertible bonds, which would have been due in May of this year.

“In the end the story is quite simple,” said Peter Grant, chief financial officer of Skyepharma.

“We changed the conversion price and we pushed back the earliest date at which the bonds could be called for repayment to November 2013 and December 2014. Assuming Flutiform comes to the market in the timescale talked about [i.e in 2010] that should generate enough revenue to meet those put dates.”

For the year ending in December, pre-tax losses widened by 19 per cent to £28.1m, on revenues that rose 50 per cent to £62.2m. The loss per share from continuing operations fell by 11 per cent to 274.4p.

However, much of the gain in revenues was caused by currency effects as sterling weakened against the dollar. In constant currency terms, revenues rose 23 per cent.

The widening of pre-tax losses was caused by a £19.5m non-cash impairment caused by reduced sales expectations of Triglide, a soluble cholesterol drug, which is now facing generic competition.

Shares in Skyepharma gained 9.1 per cent, or 14¼p, to 170p in afternoon trading on Thursday.

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