BioWorld International Correspondent

LONDON - SkyePharma plc filed for FDA approval of DepoMorphine, its sustained-release formulation of morphine, triggering an unspecified milestone from its North American marketing partner, Endo Pharmaceuticals Inc.

At the same time, the London-based drug delivery company announced the signing of a \15 million (US$24 million) European licensing deal with Mundipharma International Holdings Ltd., of Cambridge, UK, for DepoCyte, a treatment for lymphomatous meningitis.

But despite the deal, CEO Michael Ashton said the company would report a net loss for the first half of 2003 that would be substantially greater than was forecast in April, and greater than the comparable period last year, after failing to complete licensing deals. In particular, there is as yet no European partner for DepoMorphine.

"The majority of our revenues will still arise from milestone payments, the timing and magnitude of which are naturally difficult to forecast," Ashton said.

The profit warning overshadowed the two deals, and the shares fell by 4.25 pence to 65 pence when the news was released Monday.

SkyePharma has gone solo on the development of DepoMorphine, currently the most important product in the pipeline, and as a result will get a greater proportion of revenues than from earlier products. The product, which uses the company's DepoFoam technology, is given as a single epidural injection and provides pain relief for 48 hours.

The Phase IIb and Phase III program involved four pain models and included nearly 1,000 patients. SkyePharma will file for European approval later this year.

Under the terms of the deal for DepoCyte, Mundipharma will pay an initial \4.25 million, plus further milestones of up to \10.75 million. SkyePharma will manufacture the drug, and receive royalties on sales. The product, which is marketed in North America by Enzon Pharmaceuticals, is a controlled-release formulation of cytarabine that releases the drug over a two-week period. European rights were previously licensed to Elan Pharmaceuticals, of Dublin, Ireland, but SkyePharma subsequently re-acquired the rights for an undisclosed sum.