A Brighter Outlook at SkyePharma

For a little-known British maker of drug-delivery systems, SkyePharma (SKYE ) has attracted several giant drugmakers as partners to develop easy-to-use, controlled-release formulations of various drugs. GlaxoSmithKline, Novartis, and Roche Holding are among those that have licensed SkyePharma's chief delivery technology, called Geomatrix. It allows controlled release of drugs taken orally. In April, GlaxoSmithKline launched Paxil CR in the U.S., a Geomatrix formulation of its antidepressant Paxil. The Food & Drug Administration has approved Paxil CR for major depression, anxiety disorder, and panic disorder. Ian Anderson of S.G. Cowen gives the stock, now at 7 a share, an "outperform" rating. He says Paxil CR alone could contribute 15% to 17% of SkyePharma sales by 2006. He sees SkyePharma breaking even in 2002--and earning 20 cents a share in 2003 and 40 cents in 2004. CEO Michael Ashton, on the other hand, says SkyePharma may post a profit in 2002 and calls Anderson's forecasts for the next two years "reasonable." By 2005, 50% to 55% of revenues, he says, will come from royalties from partners of SkyePharma.

By Gene G. Marcial

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