BioWorld International Correspondent

LONDON - SkyePharma plc rebuffed activist shareholders at an extraordinary general meeting (EGM) last week, with 53 percent of shareholders voting against rebel demands to appoint their man, Bob Thian, as chairman.

After the meeting, Jerry Karabelas, chairman, said, "We can now get on with running the business for the benefit of all shareholders."

Cementing the peace, the company subsequently reached agreement with two of the major institutional investors over the selection process for two new nonexecutive directors who would be acceptable to both sides.

Anita Skipper, head of corporate governance for one of the investors, Morley Fund Management, said SkyePharma had taken the initiative in trying to work constructively with shareholders following the EGM. "We welcome the steps the company has taken and look forward to continuing the dialogue," she said in a SkyePharma press release.

"We will be fully supportive," said William Claxton-Smith, of Insight Investment Management. "We are happy that our initial aim of strengthening the board of SkyePharma will be achieved."

The London-based company emerges from the four-month battle minus CEO Michael Ashton and founder and chairman Ian Gowrie-Smith, and with an undertaking to sell its U.S. injectables business and ditch the lease on a New York penthouse.

The EGM followed hand-to-hand combat over business strategy and corporate governance issues between the activist shareholders led by North Atlantic Value and SkyePharma’s management. In the course of the dispute, there has been a complete change of personnel at the top of the company, with Karabelas moving up from nonexecutive director to chairman, and Frank Condella appointed as CEO, along with new chief operating officer Ken Cunningham.

At the EGM, Karabelas defused the situation by telling shareholders there are 10 expressions of interest for the injectables business, based in San Diego, and that negotiations to license flutiform, a combination asthma treatment, have been reinvigorated.

The injectables business is built around two sustained-release technologies: DepoFoam, a microsphere technology, and Biosphere, a microcapsule technology. There are two marketed products: DepoCyt, a cancer treatment, and Depodur, a controlled-release formulation of morphine for postoperative pain. However, the division represents a significant cost overhead as it has a pipeline of drugs in clinical development, including controlled-release versions of unnamed biopharmaceuticals and DepoBupivacaine, a long-acting version of the local anesthetic bupivacaine, which is ready for Phase III trials.

Karabelas said interest in the business has come from both trade buyers and private equity firms.

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