SKP.L Regulatory News (SKP)

9 Jan 2007 07:01

Skyepharma PLC09 January 2007 FOR IMMEDIATE RELEASE 9 JANUARY 2007 London, England, 9 January, 2007 - SkyePharma PLC (LSE: SKP; NASDAQ: SKYE) todayannounces the following: • The proposed sale of its Injectable Business* to Blue Acquisition Corp ("Purchaser") for a total consideration which could exceed US$82 million, much of which depends on the completion of the development and substantial future sales of DepoBupivacaine(TM). The consideration includes an initial payment of US$20 million (£10.2 million) (less costs, US$2 million (£1.0 million) paid into escrow, a working capital adjustment and certain liabilities), up to US$62 million (£31.7 million) of contingent milestone payments, plus a percentage of sales of certain future products for a defined period of time. In addition, the Injectable Business is retaining responsibility for certain royalty-related payments which, when made, will reduce the Continuing Group's debt to Paul Capital. • Placing of ordinary shares, subject to disapplication of pre-emption rights, to certain institutional shareholders, raising £14.8 million (net of expenses) (the "Placing"). • Both the Disposal and Placing are subject to shareholder approvals which are inter-conditional. An EGM to approve the Disposal and Placing will be held around the beginning of February 2007. • The proposed restructuring of the existing secured financing facility with Paul Capital to a fixed amortisable note ("Note") of US$92.5 million (£47.3 million) with up to an additional US$12.5 million (£6.4 million) payable if worldwide sales of DepoDur(TM) (a product of the Injectable Business) reach certain thresholds. The amounts payable by the Continuing Group under the Note will be reduced to the extent of payments made to Paul Capital by the Injectable Business after the Disposal. The total net present value of the maximum Note (without allowing for the benefit of any future royalty-related payments by the Injectable Business) is approximately £33 million. The value of the Paul Capital obligations in the Group's balance sheet as at 30 June 2006 was £42.0 million. • Taking account of the new committed financing of approximately £35 million announced on 27 December 2006 the total additional funds available to the Group in the short term would amount to approximately £53 million (net of costs). • The Disposal will eliminate the significant cash costs of operating and developing the Injectable Business. The Directors believe that, once these transactions are concluded, the Continuing Group will have a sound financial foundation on which to build its future and continue to execute its strategy of focussing on growing its pipeline of oral and inhalation products. A circular to shareholders setting out the reasons for and background to theDisposal and the Placing will be sent to shareholders shortly. Further details of this announcement are set out below. *For the six months ended 30 June 2006, the Injectable Division, which comprisesthe Injectable Business together with an allocation of corporate and other Groupcosts, assets and liabilities, generated revenues of £3.9 million and anoperating loss of £11.7 million. Its products include DepoCyt(R), a treatmentfor a lymphomatous meningitis, and DepoDur(TM) for post operative pain. The ordinary shares in the Placing have not been and will not be registeredunder the US Securities Act of 1933 and may not be offered or sold in the UnitedStates absent registration or an applicable exemption from registrationrequirements. Frank Condella, SkyePharma's Chief Executive, said: "At the beginning of 2006, we set out several objectives including: thelicensing of Flutiform(TM), our key inhalation product, and the disposal of ourInjectable Business. "In May and September we outlicensed Flutiform(TM) in the US and Europe,respectively. Today we are announcing the planned sale of the InjectableBusiness for an initial consideration of US$20 million together with contingencymilestone and sales-related payments which could be substantial ifDepoBupivacaine(TM) fulfils its potential under the new ownership. "The proposed Disposal will relieve the Company of a significant cash burn dueto operating losses and the potential costs of future development and capitalexpenditure of the Injectable Business. "The Disposal, Placing and Paul Capital Refinancing, along with the £35 millionCRC Financing announced on 27 December 2006, will put SkyePharma in a goodposition to build future value by further developing our strategic oral andinhalation products." Certain statements in this news release are forward-looking statements and aremade in reliance on the safe harbour provisions of the US Private SecuritiesLitigation Act of 1995. Although SkyePharma believes that the expectationsreflected in these forward-looking statements are reasonable, it can give noassurance that these expectations will materialize. Because the expectations aresubject to risks and uncertainties, actual results may vary significantly fromthose expressed or implied by the forward-looking statements based upon a numberof factors, which are described in SkyePharma's 20-F and other documents on filewith the US Securities and Exchange Commission. Factors that could causedifferences between actual results and those implied by the forward-lookingstatements contained in this news release include, without limitation, risksrelated to the development of new products, risks related to obtaining andmaintaining regulatory approval for existing, new or expanded indications ofexisting and new products, risks related to SkyePharma's ability to manufactureproducts on a large scale or at all, risks related to SkyePharma's and itsmarketing partners' ability to market products on a large scale to maintain orexpand market share in the face of changes in customer requirements, competitionand technological change, risks related to regulatory compliance, the risk ofproduct liability claims, risks related to the ownership and use of intellectualproperty, and risks related to SkyePharma's ability to manage growth. SkyePharmaundertakes no obligation to revise or update any such forward-looking statementto reflect events or circumstances after the date of this release. The information contained herein does not constitute an offer to sell or thesolicitation of an offer to buy nor shall there be any sale of the securitiesreferred to herein in any jurisdiction in which such offer, solicitation or salewould be unlawful prior to registration, exemption from registration orqualification under the securities laws of any jurisdiction. These materials are not an offer for sale of securities in the United States.Securities may not be sold in the United States absent registration or anexemption from registration under the US Securities Act of 1933. The Companydoes not intend to register any portion of such offering in the United States orto conduct a public offering of the ordinary shares in the United States. For further information please contact: SkyePharma PLC +44 207 491 1777Frank Condella, Chief Executive Officer until noon GMT: +44 207 466 5000 thereafter: +44 207 491 1777Ken Cunningham, Chief Operating OfficerPeter Grant, Finance Director until noon GMT: +44 207 466 5000 thereafter: +44 207 491 1777 Buchanan Communications (UK) +44 207 466 5000Tim Anderson / Mark Court / Rebecca Skye Dietrich Trout Group (US)Seth Lewis +(1) 617-583-1308 Notes for editors About SkyePharma SkyePharma PLC develops pharmaceutical products benefiting from world-leadingdrug delivery technologies that provide easier-to-use and more effective drugformulations. There are now eleven approved products incorporating SkyePharma'stechnologies in the areas of oral, injectable, inhaled and topical delivery,supported by advanced solubilisation capabilities. For more information, visitwww.skyepharma.com. About Blue Acquistion Corp. Blue Acquisition Corp., a Delaware USA, corporation is controlled and funded bya group of financial investors including MPM Capital, OrbiMed and SanderlingVentures, which led the transaction. This information is provided by RNS The company news service from the London Stock Exchange