BioWorld International Correspondent

LONDON - Shares in SkyePharma plc rose by 21.5 percent in the first week of 2003, following the announcement of two significant U.S. development and marketing partnerships.

The first, with Enzon Pharmaceuticals Inc., of Bridgewater, N.J., involves a broad technology access agreement under which the companies will use their combined drug delivery technologies to develop up to three products. At the same time, SkyePharma granted Enzon North American rights to DepoCyt, the only approved chemotherapy for lymphomatous meningitis.

In the second deal, announced a day later, on Friday, SkyePharma made a broad alliance with Endo Pharmaceuticals Inc., of Chadds Ford, Pa., a specialist in pain management, for two pain products in clinical development, plus options on future products.

The two deals pushed up the share price of London-based SkyePharma from 40.75 pence to 49.5 pence last week.

Under the agreement with Enzon, SkyePharma will pay a $3.5 million fee for access to Enzon's PEG technology for extending the half-life of drugs in the body, while Enzon will pay SkyePharma a $12 million licensing fee for rights to DepoCyt. The two did not give any details of the products they intend to develop together, but they will be based on SkyePharma's technology for oral, injectable and topical drug delivery, and Enzon's PEG technology, plus technology to enhance drug solubility, to which SkyePharma has rights.

While Enzon receives an up-front technology access fee, SkyePharma will receive milestone payments for each product based on its technology that enters Phase II. The partners will share R&D costs, and any future revenues, equally.

SkyePharma hopes that handing DepoCyt rights to Enzon will expand the market for the product, which was previously licensed to Chiron Corp., of Emeryville, Calif. The UK company made an undisclosed cash payment to Chiron to get back U.S. rights, and what it described as a "nominal sum" to reacquire the Canadian rights from Paladin Labs Inc., of Montreal.

Michael Ashton, CEO of SkyePharma, said, "Enzon shares our view that the market for DepoCyt, the only FDA-approved chemotherapeutic agent for the treatment of lymphomatous meningitis, is largely underdeveloped. We believe Enzon's focused oncology marketing effort is well placed to promote [it]."

SkyePharma will manufacture DepoCyt, which Enzon will purchase, initially at 35 percent of net sales. The UK company will receive milestones based on reaching certain sales levels, and for getting approval to expand the label to include neoplastic meningitis.

In the deal with Endo, SkyePharma will receive $25 million up front, and up to $95 million in further milestones. That includes milestones of $10 million for the lead pain product in the collaboration, DepoMorphine, a sustained-release version of morphine, currently in Phase III, and of $50 million for Propofol IDD-D, a formulation of the anesthetic propofol using SkyePharma's insoluble drug delivery technology to improve solubility, which is in Phase II. When the two products are on the market, SkyePharma will get 20 percent royalties initially, rising to 60 percent as certain sales levels are reached.

Ashton said that deal would bring would bring substantial value to SkyePharma. "We wanted a strategic partner with a focused specialty sales force, who would be able to maximize the sales potential for these exciting, value-added products."

SkyePharma will be responsible for completing clinical development and for the manufacture of the two products, while Endo will be responsible for marketing and conducting any post-marketing studies.

Under the agreement, Endo also obtained an option to DepoBupivacaine, a long-acting, sustained-release formulation of the local anesthetic bupivacaine.