LONDON - SkyePharma plc added to its drug delivery expertise through the acquisition of Nanotech, the drug delivery arm of Berlin-based oncology company Medac GmbH, for US$2.5 million up front and 3.3 million ordinary SkyePharma shares.

The agreement provides for further payments of up to $5 million by the second half of 2001 and future royalties, depending on performance.

Michael Aston, CEO of London-based SkyePharma, told BioWorld International the technology would give the company the ability to produce drug particles down to 100 nanometers. "This is not smaller than is possible by other approaches, but the process is low energy, which will make it cheap in manufacturing terms."

As part of the acquisition SkyePharma will take over two development contracts currently in place, and push through the agreement of contracts under discussion. Ashton said the process of acquiring the company had put a halt to contract negotiations but he was confident they could now be completed.

The technology also will be important for existing SkyePharma projects, he said. "Nanoparticle technology is an important enabling tool which we expect will enhance all of our existing oral, injectable and inhalation delivery platforms."

Three different technologies have been acquired: NanoSuspensions, a dispersion of a pure drug without any matrix in fluids; Solid Lipid Nanoparticles, solid solutions of drugs in a lipid matrix; and Solid Polymer Nanoparticles, solid solutions of drugs in a solid polymer matrix.

The solid polymer technology will be applied to DepoFoam, the company's injectable sustained-release technology. SkyePharma acquired this technology when it took over DepoTech Corp., of San Diego, in March.

Ashton said although nanoparticle technology could be used to improve bioavailability of some existing drugs, SkyePharma intended to concentrate on applying it to compounds that had been abandoned because they were insoluble or had such irregular absorption characteristics they were hard to formulate. The technology also will be used for delivery of protein and peptide drugs.

"This is a very significant acquisition for us," Ashton said. "We have paid less than others have paid for similar technology, and the process is already scaled up to manufacturing."

Nanotech was set up by Medac in collaboration with the Free University of Berlin. The company has no employees, but one of the scientists involved will act as consultant to transfer the technology to SkyePharma.

Separately, SkyePharma released results for the six months ended 30 June, showing turnover up 70 percent to #8.4 million (US$13.5 million) from #5 million in the same period of 1998. Losses fell by 52 percent to #6.2 million from #10.4 million, and there was cash of #21.2 million. During the six months Chiron Corp., of Emeryville, Calif., launched SkyePharma's DepoCyt for the treatment of lymphomatous meningitis. The two companies have a 50-50 profit-sharing agreement.