Skyepharma's investment future hinges on Flutiform, say Edison analysts

The Skyepharma investment case hinges on Flutiform, a fixed-dose combination (FDC) of formoterol, a long-acting bronchodilator and fluticasone, an inhaled corticosteroid, comment analysts at Edison Investment Research. The drug is filed in the European Union, but is stalled in the USA, where additional study requirements - and the willingness of partner Abbott Laboratories to fund them - remain unknown. Earlier this year, Skyepharma took back the US New Drug Application for the drug from Abbott (The Pharma Letter February 8).

The shares trade at a significant discount to fair value, even without assuming any US Flutiform revenue. However, there are concerns at SkyePharma's ability to repay, if necessary, convertible bonds which can be put in 2013-14, although we believe the company should be able to refinance them if Flutiform is approved in the EU. Any event that clarifies Flutiform's US regulatory path and/or secures the long-term financial position should offer significant upside, the analysts say.

Uncertainties: FDA requirements, partner commitment; Dulera regulatory outcome