It was anything but business as usual at SkyePharma plc Thursday.

The London-based company reported plans to divest non-core dermatology assets, issued new convertible bonds and released its year-end financial statement.

SkyePharma licensed its dermatology assets to Trigenesis Therapeutics Inc. The assets include residual rights (in territories in which they already have not been licensed) to three marketed products, rights to six early stage product candidates and rights to six dermatological delivery technologies. While the companies did not disclose full details on the products, SkyePharma CEO Michael Ashton said one of the marketed products is Solaraze, which is used for a precancerous skin condition called actinic keratosis. It is sold in North America and Europe by two existing SkyePharma marketing partners, but Trigenesis gained rights to the drug elsewhere.

"There's an acne product, I can tell you, and other products we were developing for other skin conditions," he told BioWorld Today. "But they want to keep it as much under wraps as they can until they develop them further."

In exchange, SkyePharma could receive total payments exceeding $20 million, should all six products reach the market in the U.S. and Europe. SkyePharma is due an up-front payment and could receive milestone payments related to the completion of Phase III trials and drug approval. Should any of the six products receive marketing authorization, SkyePharma would receive a 10 percent royalty on sales by Trigenesis, and 35 percent of any sublicense income.

"This is a great opportunity for Trigenesis," Ashton said. "It was a number of assets all focused on the dermatological area that we had acquired, organically built and developed, and products we developed within those, but it's not core to us."

Trigenesis, a start-up in Pennsylvania, is obligated to develop the pipeline products and to exploit the delivery technologies, and also will assume certain of SkyePharma's existing obligations to third parties involved in development.

SkyePharma retains all rights relative to existing license agreements for its dermatology assets, and also the right, in certain circumstances, to use the delivery technologies for development of a number of new chemical entities.

The drug delivery company's technologies include oral, injectable and inhalable delivery systems. Among its oral products are Paxil-CR (from GlaxoSmithKline plc) and Xatral OD (from Synofi-Synthelabo SA). Sustained-release injectable products include Depocyt for lymphomataus meningitis and Depomorphine for pain. An inhaled product not yet fully approved, Foradil for asthma, will be marketed by Schering-Plough Corp. in the U.S. and Novartis AG in Europe, where it is authorized in three countries.

Separately, SkyePharma completed a private placement of new convertible bonds, raising £20 million (US$35.5 million). SkyePharma closed the year ended Dec. 31 with £23.2 million in cash and short-term deposits.

The bonds, which have a coupon of 6 percent and a first put after five years with a final maturity of 2024, will have a conversion-price premium of 65 percent of the volume-weighted average share price of SkyePharma on Thursday. The company's stock (NASDAQ:SKYE) dropped 32 cents Thursday to close at $11.08.

The transaction was conducted by Credit Suisse First Boston, SkyePharma's sole broker and financial adviser. Its existing convertible bonds, due in June 2005, are not affected by the latest deal.

"We're evolving from simply being a service component, in which someone supplies you a product, you do work on it, they pay for it, you give it back, and they market it," Ashton said. "We're in the process of identifying products or areas where there are unmet or unserved medical needs, and that's the evolution of where we're going."

He said funds raised from the bond sale would provide added financial flexibility, as the company continues negotiating with potential partners for two programs, allowing SkyePharma to avoid jumping at up-front offers and, instead, to hold out for better back-end components in a deal, such as higher royalties. One such product is for asthma, created by the combination of a steroid and beta agonist, which Ashton believes could generate $1 billion in sales.

He noted that the company's full-year net loss resulted from ongoing partnership negotiations that have yet to culminate in up-front payments that would have been booked in 2003. As a result, its full-year revenue fell by 24 percent to £53.2 million, compared to 2002.

The company recorded a £43.2 million net loss after exceptionals, swinging away from a £1.1 million profit in 2002. Its loss per share was 7.1 pence, compared to earnings per share of 0.2 pence in 2002.

"At the moment, we still rely on doing deals and getting those significant up-front payments," Ashton said. "They just take a long time to do when you're asking someone to not just commit $5 million or $10 million up front, but give a full commitment to funding clinical work and supporting the marketing effort. It's a big commitment that could run into millions of dollars, so it takes a lot of negotiation. In fact, when I finish this call, I'll be back on the phone with someone with whom we're talking at the moment."