BioWorld International Correspondent

LONDON - The battle for SkyePharma plc moved into war when founder Ian Gowrie-Smith resigned to forestall an attempt by activist shareholders to oust him.

Gowrie-Smith's resignation as nonexecutive chairman Jan. 23 followed a statement by North Atlantic Value (NAV) LLP, Morley Fund Management and Insight Investment, which jointly hold about 13 percent of London-based SkyePharma, calling for an extraordinary general meeting to propose his removal.

Gowrie-Smith had announced previously that he planned to leave the company, and the hunt for his successor is under way. But he showed resentment at the manner of his leaving, saying, "This expedites a process that was already ongoing and hopefully will bring to an end the recent acrimonious period and spare shareholders and the company the expense and distraction of an [extraordinary general meeting]."

The NAV-led investors blame Gowrie-Smith for "overpromising on performance, but underdelivering" - a reference to the company's failure to find a partner to pay for the Phase III trials and commercialization of flutiform, a combined asthma treatment.

In December 2003, SkyePharma dropped a proposed $90 million deal for the product, but announced in April it had a bead on a $160 million deal. But that was not finalized, and in September, SkyePharma launched a heavily discounted $60 million rights issue to give it enough cash to start Phase III trials itself. That unpopular move prompted a 20 percent fall in the value of the company.

SkyePharma in November announced it was appointing Lehman Brothers to conduct a strategic review after receiving a bid for the company. That offer, from Innovata plc, did not lead anywhere, and earlier this month, SkyePharma said the review was ongoing.

The NAV-led investors want to appoint Bob Thian - who has worked previously with GlaxoSmithKline plc, Abbott Laboratories, and Novo Nordisk AS, and was nonexecutive director of Celltech plc for seven years - as a replacement for Gowrie-Smith. At the same time as announcing the rights issue, CEO Michael Ashton announced his resignation. NAV said a new CEO should not be appointed until after its proposed general meeting.

Gowrie-Smith said that building a company like SkyePharma was a long-term business and that it's "not surprising or unreasonable for investor patience to be tested from time to time."

"It is unfortunate that the short-term interests of a small group of shareholders can cause such disruption to the development of a company where real achievements are often measured in decades," he said.

SkyePharma's share price rose 1 pence to 45 pence when Gowrie-Smith's departure was announced, valuing the company at around £340 million (US$606.9 million).

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