SkyePharma In Cash Crisis As Losses Double

UK-based biotechnology company SkyePharma has been forced into a placingof 17.3 million shares to raise L7.4 million ($11.9 million) due to delays in meeting drug filing targets and the acquisition of a manufacturing facility at Lyon, France, which have left the group suffering significant cash-flow problems. The new shares are priced at 45p, a 40% discount on last year's rights issue price of 75p, which will enlarge the group's capital by 5%.

Development delays have occured most notably at SkyePharma's US unit, Brightstone, where products including the diabetes generics glipizide and glyburide have yet to be filed. The company says it is confident that technical difficulties can be overcome and cites the filing in July last year with the US Food and Drug Administration of its treatment for angina pectoris isosorbide-5-mononitrate.

Despite the placing, SkyePharma points out that this option only meets the group's short-term funding requirements, and that it will need further funding before it achieves significant cash-flow. The company raised less than it hoped due to the fact that the placing was priced on the day that shares in biotechnology firm Biocompatibles crashed 40% (Marketletter September 15).