BioWorld International Correspondent
LONDON - SkyePharma plc sold its San Diego-based injectable drugs business for £10.2 million ($20 million) up front, and a further £31.7 million (US$61.4 million) in development milestones on the lead product, to Blue Acquisition Corp, a private equity group.
At the same time the London-based company said it was raising a further £14.8 million in a placing with its largest shareholders, to add to the £35 million (US$67.8 million) loan it took out last month.
"This represents the best bid, given the amount that is needed to be put into the business," CEO Frank Condella said in a teleconference. "The sale gives us cash in the short term, and more importantly relieves us from cash burn."
For the six months to June 2006 the injectables unit had an operating loss of $22.6 million and revenues of $5.7 million. The revenue comes from two products, DepoCyt for lymphomatous meningitis, and DepoDur, a long-lasting formulation of morphine for postsurgical pain.
SkyePharma had high hopes for DepoDur, but since it received FDA approval in May 2004, sales have been disappointing. In the six months to June 2006, revenues on the product were only $1.6 million, and Monday, SkyePharma's U.S. development and marketing partner, Endo Pharmaceuticals Inc., of Chadds Ford, Penn., said it had given notice it was terminating the contract.
The most valuable asset of the injectables business is seen as DepoBupivacaine, a controlled-release formulation of the local anaesthetic bupivacaine, which is ready for Phase III. In addition, there are a number of controlled-release biologics in development and two drug delivery platforms, DepoFoam and Biosphere. The business employs 100 staff and has FDA- and EMEA-approved manufacturing facilities.
Blue Acquisition is a Delaware-based syndicate led by Sanderling Ventures. Condella said that soon after the business was put up for sale, it became clear the likely buyer would be a private equity company. "The cash requirements meant it really was for private investors that don't need to worry about shareholders."
The sale will require SkyePharma to restructure its two loans with Paul Capital Royalty Acquisition Fund LLP. They will be fixed at $92.5 million, to be paid to an agreed schedule. Part of the liability will remain with the Injectables unit, which will continue to pay Paul Capital royalties on certain products.
The sales and placing are subject to shareholder approval, which is expected to happen in early February. On completion, SkyePharma will have £53 million cash. "This gives us a sound financial foundation," said Condella.