nasdaq:skye lse:skp uk tel: +44 (0)207 491 1777 us tel: +1 (212) 753 5780 business review day 2006...

NASDAQ:SKYE LSE:SKP www.skyepharma.comUK tel: +44 (0)207 491 1777US tel: +1 (212) 753 5780

Business Review Day 2006

Introduction and Injectables DivestmentFrank CondellaChief Executive

21 June 2006

21 Jun 06 2

Legal statementThis presentation does not constitute or form part of any offer for sale or subscription or solicitation of any offer to buy or subscribe for any

securities in SkyePharma PLC nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment

whatsoever. This presentation is being made only to and is directed at (a) persons who have professional experience in matters relating to

investments who fall within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (b) high

net worth entities and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order (all such persons

together being referred to as “relevant persons”). Any person who is not a relevant person should not rely on this presentation or any of its

contents.

This presentation includes certain forward-looking statements with respect to certain development projects, potential collaborative partnerships,

results of operations and certain plans and objectives of SkyePharma including, in particular, the statements regarding potential sales revenues

from Paxil CR, targeted sales revenues from other products both currently marketed and under development, possible launch dates for new

products, and any revenue and profit guidance. By their very nature forward-looking statements involve risk and uncertainty that could cause actual

results and developments to differ materially from those expressed or implied. The significant risks related to SkyePharma’s business which could

cause our actual results and developments to differ materially from those forward-looking statements are discussed in SkyePharma’s SEC filings

under the caption “Risk Factors”.

SkyePharma reports under IFRS. Where US dollar equivalents of SkyePharma’s reported figures have been provided for convenience in this

presentation, a fixed exchange rate of $1.88 = £1 has been used throughout. These dollar equivalent numbers do not imply restatement from IFRS

to US GAAP.

This presentation was updated on 20 June 2006

21 Jun 06 3

Strategy evolution

Develop drugs under contract

Develop drugs toPh II/III and partner

Develop drugs and market

3 – 5%royalty

10 – 15%royalty

25 – 30%product operating

margin

~2000 ~2008

21 Jun 06 4

Strategic plan 2006

• new leadership

• divest injectables unit

• continue Phase III for Flutiform™ and outlicense this year

• focus on core oral/inhalation unit and expand pipeline

• improve operational efficiency

• longer term aim to market own products in selected therapeutic area

21 Jun 06 5

London (HQ)

Basel

Lyon

San Diego

Two main business units

INJECTABLE

ORAL & INHALATION

21 Jun 06 6

Divest injectables unit• two complementary injectable delivery technologies

• DepoFoam™

• Biospheres™

• two approved products• DepoCyt (cancer)

• DepoDur (post-operative pain)

• strong pipeline• DepoBupivacaine™ (post-operative pain; Ph II completed)

• Biologics (SR injectable formulations of therapeutic proteins; pre-clinical)

• stand-alone operation with R&D and manufacture in San Diego

• unit requires significant investment in R&D and capex

21 Jun 06 7

DepoBupivacaine™

DepoBupivacaine™ has

blockbuster potential

21 Jun 06 8

DepoBupivacaine™ - issues with bupivacaine

• bupivacaine is the “gold standard” local anaesthetic - but has the drawback of a short duration of action

• all patients require post-operative analgesia after surgery

• local anaesthetics are used for:• pre-operative anaesthesia

• post-operative analgesia

• bupivacaine most commonly used local anaesthetic for significant surgical procedures - considered the “gold standard”

• longest-lasting bupivacaine duration of effect currently 6-10 hours

*Source: 2004 Verispan Data

21 Jun 06 9

DepoBupivacaine™ - extended pain relief

• DepoBupivacaine™ offers prolonged pain relief through a variety of routes of administration

• innovation in local/regional analgesia provides sustained duration of analgesia (target: >48 hours)

• sustained-release bupivacaine via a single-dose administration

• favored analgesic matched with sustained-release DepoFoam™ delivery technology

• previously approved in both US and EU (DepoDur and DepoCyt)

• 3 potential routes of administration• wound infiltration - soft tissue incisional procedures (eg hernia repair, hysterectomies,

etc)

• nerve blocks - thoracic, upper and lower limb surgeries

• epidural - significant orthopedic procedures (eg hip and knee replacement, etc)

21 Jun 06 10

DepoBupivacaine™ - major product benefits• simplified post-operative pain management after various surgical

procedures• helps address patient pain for 2-4 days after surgery

• significant reduction in need for supplemental opioid pain medications

• fewer narcotic side effects

• ease of use• no need for catheters, pumps, or devices

• potential pharmacoeconomic benefits• easier patient management

• earlier discharge

• faster rehabilitation

21 Jun 06 16

DepoBupivacaine™ - $1 bn market potential

• potential $1 billion opportunity exists for DepoBupivacaine™

• >40 mn annual US in- & out-patient surgical procedures (hospitals and out-patient surgical centers) - all patients require post-operative analgesia

• significant established market, expressed clinical and commercial needs

• safety and potential duration of action out to 96 hours currently established by PK levels

• safety comparable to bupivacaine solution has been shown at 2-6x free bupivacaine dose

• production scale-up approach already cleared by regulatory agencies

• one possible competitor• Durect – now in Ph II

• Ph III trials due to start 2H ‘06

21 Jun 06 17

Biologics

Substantial potential for Biologics

21 Jun 06 18

Biologics - >$100 bn market opportunity

0

100

200

300

400

500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Glo

bal

sal

es (

$ b

illio

n)

Biologics sales

All other ethical pharma sales

*DataMonitor 56 top pharma and biotech companies

Biologics to make up 23% of the $455 billion global pharma market by 2010

21 Jun 06 19

Biologics - most patents will expire by 2013

Biologic product Brand name CompanyLaunch

year

2004 sales ($mm)

EU patent expiry

US patent expiry

Epoetin alfa Epogen / Procrit / Eprex

Amgen / J&J 1988 6,735 Expired Aug 2013 Sep 2016

Insulin Novolin, Humulin, Insuman

Novo Nordisk, Lilly, Sanofi-Aventis

1982 3,774 Expired Expired

Interferon beta 1a Avonex, Rebif Biogen Idec, Serono 1996 2,554 Jul 2012 May 2008 May 2013

Human growth hormone

Genotropin, Humatrope etc.

Pfizer, Lilly etc. 1988 2,324 Expired Expired / Invalidated

Epoetin beta NeoRecormon Roche 1990 1,678 Expired (2013)

Filgrastim (G-CSF) Neupogen Amgen 1991 1,428 Aug 2006 Dec 2013

Interferon beta 1b Betaseron Schering AG 1993 973 Expired Sep 2007

Imiglucerase Cerezyme Genzyme 1991 839 Jan 2012 Aug 2013

Interferon alfa 2b Intron A Schering-Plough 1987 318 Expired Nov 2019*

Sources: Datamonitor; company-reported information; DOLPHIN patent database, Thomson Scientific, September 2005; Biogen Idec annual reports; etc

* Bacterially produced

21 Jun 06 20

Biologics - limited ways to exploit patent expiry

• biogeneric / biosimilar• mimic originator product

• adulterate or enhance protein• modify protein to increase circulation half-life (eg PEGylation)

• enhance delivery of protein• maintain originator product but extend duration of action via

sustained-release delivery system (eg DepoFoam™ or Biosphere™)

21 Jun 06 21

Biologics – not like small molecule generics

High up-front investment

Biotechnology expertise

Legal / patent expertise

Pharmacovigilance studies

Specialist marketing

Regulatory experience

Controlling manufacturing cost

Clinical trial requirements New challenges representing

increasing barriers to biogeneric entry

Skills required in a traditional

generic business model

• the biosimilars market presents higher barriers to entry than for small molecule generics - including cost, risk and time needed for clinical development

21 Jun 06 22

Biologics - portfolio of enhanced biosimilars

• Phase I• hGH-Biosphere

• feasibility studies complete:• Depo-IFN-α

• Depo-EPO

• feasibility studies in progress:• Depo-G-CSF

• Depo-hGH

• Depo-IFN-β

• a number of proprietary proteins and peptides for third parties

21 Jun 06 23

Benefits of divesting injectable unit

• improve SkyePharma P&L

• reduce cash requirements of ongoing business

• strengthen balance sheet• permits SkyePharma to explore strategic options

• focus management on oral/inhalation unit

21 Jun 06 24

SkyePharma segment P&L split

• in 2005 Injectable unit represented 17% of 2005 SkyePharma revenue

• Oral & Inhalation unit was profitable

• split included allocation of corporate costs to each segment

• excludes exceptionals

£m 2004 2005

Revenue

Injectable 25.6 10.5

Oral & Inhalation 49.6 50.8

Total 75.2 61.3

Operating profit/loss (excluding exceptional items)

Injectable (1.4) (18.6)

Oral & Inhalation 1.0 2.5

Total (0.4) (16.1)

21 Jun 06 25

Sale of injectables unit - status

• due diligence materials prepared

• UBS selected as investment bank

• several expressions of interest already received

• management presentations and due diligence ongoing

21 Jun 06 2621 Jun 06 26

10 approved products

TOPICAL

Foradil CertihalerPulmicort HFAFlutiformformoterol HFAQAB 149

NovartisAstraZenecaKosSkyePharma Novartis

Paxil CRXatral OD/Uroxatral Madopar DR CorunoCordicant-UnodiclofenacTriglideRequip Once-a-dayzileuton CRLodotranisoldipine CR

GlaxoSmithKlineSanofi-Aventis RocheTherabelMundipharmaRatiopharmScieleGlaxoSmithKlineCritical TherapeuticsNitecSciele

ORALlaunchedapprovedfiledPh.IIIPh.IIPh.IfeasibilityproductLicensee / partner

SkyePharma-funded Client-funded

INHALATION

SolarazeMultiple

Bradley/ShireDr Reddy’s Status is most advanced project

Product to be presented today

21 Jun 06 27



Marketed products

Dr Werner EnzVP Commercial

Patrick FourteauCEO, Sciele

21 June 2006

21 Jun 06 2821 Jun 06 28

Key marketed products

Paxil CR® (GlaxoSmithKline)

Xatral® OD / Uroxatral® (Sanofi-Aventis)

Solaraze® (Bradley; Shire)

Triglide™ & nisoldipine CRwill be covered by

Patrick Fourteau, CEO

21 Jun 06 2921 Jun 06 29

Paxil CR™ GlaxoSmithKline

• Geomatrix™ version of GSK’s SSRI Paxil® (paroxetine)

• FDA approved for the treatment of depression, social anxiety disorder, premenstrual dysphoric disorder, and panic disorder

• all SSRI antidepressants take about a month to take effect – but side-effects (notably nausea) start immediately

• nausea major reason for therapy switching and non-compliance

• Paxil CR™ designed to reduce nausea

• active passes through stomach unchanged and is released in lower intestine

• clinically proven benefits of Paxil CR™ over Paxil® IR:

• reduced nausea

• improved compliance

• improved efficacy

21 Jun 06 3121 Jun 06 31


• FDA approval Feb ‘99 - but GSK did not launch until Apr ’02

• first generic competition for Paxil® (old IR version) Sep ’03

• Paxil CR™ clinically differentiated and not substitutable, so generic paroxetine had minimal impact on Paxil CR™ Rx share

21 Jun 06 3221 Jun 06 32


• manufacture problems at GSK’s Cidra plant led to product being taken off US market Mar ‘05

• FDA Consent Decree allowed re-introduction end Jun ‘05 - but ongoing supply restrictions from new documentary controls

• 2005 Paxil CR™ sales $231m

• US $209m + RoW $22m

• Q1 ‘06: $89 mn (+15% CER)

• US $82 mn + RoW $7 mn

• SkyePharma royalty: 4%

• was 3% until April ’05

Paxil CR - share of all SSRI Trxfrom return to market Jun 2005

0%

1%

2%

3%

4%

3-Jun-05 3-Aug-05 3-Oct-05 3-Dec-05 3-Feb-06 3-Apr-06

TRx s

hare

21 Jun 06 3321 Jun 06 33


• Mylan filed Para IV certification for “paroxetine hydrochloride controlled release” in late 2005

• Mylan is not challenging GSK’s paroxetine hydrochloride hemihydrate crystalline form patent (expires Jun ’07)

• GSK has decided not to invoke 30 month stay of approval

• earliest possible generic entry: July ’07

• no certainty that Mylan will be able to match PK profile of Paxil CR™

• SkyePharma not aware of any other generic versions pending

• SkyePharma has other patents on technologies used in Paxil CR™

21 Jun 06 3521 Jun 06 35


Conclusions

• sales >$700 mn before withdrawal

• sales slowly recuperating - but unlikely to reach previous level

• sales still growing Q over Q

• generic paroxetine has had minimal impact

• earliest generic CR entry could be Q3 ‘07

21 Jun 06 3621 Jun 06 36

Xatral® OD/Uroxatral® Sanofi-Aventis

• once-daily Geomatrix™ formulation of alfuzosin

• alpha-blocker for treating the urinary symptoms of benign prostatic hypertrophy (BPH)

• in BPH slow growth in size of prostate gradually constricts the urethra

• patient unable to empty bladder despite frequent urination

• urination problems normal reason for patient to consult doctor BPH diagnosis

• BPH is a very common condition in males from middle age onwards

• 20% of males aged 50-60, >40% of males aged >70

• pharmaceutical treatments for BPH:

• 5-alpha reductase inhibitors

• slowly shrink prostate

• little or no short-term benefit on urination

• alpha-blockers for symptomatic relief

• relax smooth muscle, open urethra and allow the bladder to empty

21 Jun 06 3721 Jun 06 37


• alfuzosin has two USPs:

• highly uroselective

• avoids postural hypotension seen with older alpha-blockers

• low cardiovascular risk

• can be used safely by patients taking PDE5 inhibitors

• minimal impact on sexual function

• contrast with tamsulosin (retrograde ejaculation affects ~20% of patients)

• late-stage BPH results in total blockage of urethra - Acute Urinary Retention (AUR)

• severe complication requiring immediate surgery for insertion of catheter

• Xatral® OD now approved in Europe and over 40 other markets for AUR

• adjuvant (after surgery) and prophylaxis

• indication no longer being pursued in USA

21 Jun 06 4221 Jun 06 42


• marketed in Europe & RoW since 2000

• replaced older versions taken twice or three times a day

• launched in US 2003

• main competitor tamsulosin (Flomax®)

• Boehringer-Ingelheim / Astellas

• in Europe, roughly equal market shares

• in US, Uroxatral® now holds >11% of combined NRx for Flomax and Uroxatral®

Uroxatral vs Flomax - all prescriptions

0%

2%

4%

6%

8%

10%

12%

14%

Oct-03 Jan-04 Mar-04 Jun-04 Sep-04 Dec-04 Feb-05 May-05 Aug-05 Nov-05 Jan-06 Apr-06

Uroxtr

al %

of co

mbine

d TRx

Uroxatral TRx share

21 Jun 06 4321 Jun 06 43


• 2005 sales of Xatral® €328m +18% CER

• US sales €53m ($66m) +121% CER

• Xatral® OD/Uroxatral® now >90% of Xatral® sales reported by Sanofi-Aventis

• Q1 ’06 sales €94 mn +15% CER

• US sales €19 mn ($23 mn) +19% CER

• Sanofi-Aventis Q1 ’06 report:

• UroXatral® share among US urologists reached all-time high of 20.7% in March

• fastest-growing agent for the treatment of BPH among urologists

• Ph III for OD version in Japan to start in 2006

• Uroxatral® has long patent life in US

• Flomax loses patent protection in Oct ‘09

• SkyePharma return on sales: mid-single digits

Xatral/Uroxatral sales trend 1996-2005

0

100

200

300

400

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Sal

es € m

n

Non-US US

Xatral OD

launch

21 Jun 06 45


Conclusions

• ongoing successful sales effort through Sanofi-Aventis

• excellent sales development - particularly in the USA through covering urologists and high potential GPs

• continued growth in Europe

21 Jun 06 4621 Jun 06 46

Solaraze® Bradley / Shire

• topical gel formulation of diclofenac for actinic keratosis (AK)

• AK is early form of squamous cell carcinoma• caused by over-exposure to sunlight

• especially common in fair-skinned individuals

• typically presents in middle age

• increasingly common

• AK lesions usually found in clusters on scalp, forehead or backs of hands

• lesions gradually progress to metastatic stage so need to be treated

• alternative treatments for AK are effective… • cryosurgery (liquid nitrogen)

• topical 5-FU

• photodynamic therapy

• …but painful and disfiguring• scarring and reddening very visible and cosmetically unacceptable

21 Jun 06 4721 Jun 06 47

The presentation of AK

A few superficial “thin” AKs

Many small but visible AKs, which may be palpated

Multiple “thicker” AKs, many of which are quite hyperkeratotic

Topical treatment

Surgical treatment

Images not to scale

21 Jun 06 4821 Jun 06 48


• Solaraze® is a topical formulation of 3% diclofenac in a proprietary hyaluronic acid (HA) gel formulation

• mode of action unclear but HA formulation retains high concentration of diclofenac in upper skin layers

• other gel formulations of diclofenac ineffective in AK

• applied topically twice a day for 60-90 days

• particularly suitable for treating clusters of lesions

• generally well-tolerated and invisible

21 Jun 06 5121 Jun 06 51


• 2005 global in-market sales $27.5 mn (+78%)

• Bradley (North America)• Doak Dermatologics unit has ~135 reps

• 2005 sales $10m in 9M ‘05 (latest data reported by Bradley)

• FY ‘05 est $15m

• vs $6m in 2004 (for 4 months)

• Bradley estimate Solaraze has 15% of the US market for topical AK treatments

• Shire (Europe / Australasia)• 2005 sales $12.5m (+32%)

• Q1 ’06 $3.3 mn (+38%)

• Australian regulatory review ongoing

• SkyePharma royalty: double digit

21 Jun 06 52

Solaraze® - raising awarenessJoint Doak / Skin Cancer Foundation campaign (Mar-Sep ’06):

“We’re Going On The Road”

To raise US public awareness about skin cancer and the importance of early detection and treatment

The Goal: Encourage people to see their local dermatologists for testing and treatment

Campaign expected to contact 20 mn people in 2006

Guidelines for the Management of

ACTINIC KERATOSES

Developed by the Guideline Subcommittee

May 2006

http://www.skincancerscreeningtour.com/

• Diclofenac in hyaluronic acid gel… Adverse effects were skin related and mild to moderate in severity

http://www.skincancerscreeningtour.com/

21 Jun 06 5321 Jun 06 53


Conclusions

• good sales growth in a market driven by epidemiology, awareness and prevention

• both partners actively promote product and invest in campaigns to raise profile of disease and treatment options

• activities ongoing to expand territories

21 Jun 06 5454

Triglide™ Sciele (formerly First Horizon)

• SkyePharma oral formulation of fenofibrate

• fenofibrate used to treat lipid disorders

• lowers LDL and TG but raises HDL

• potential synergy with statins

• uses Insoluble Drug Delivery – Microparticle (IDD-P™) technology

• can be taken with or without food

• launched in US July ’05 by Sciele (formerly First Horizon)

• SkyePharma receives up to $50m in milestones and 25% share of sales

• SkyePharma manufactures in Lyon (and bears COGS)

21 Jun 06 56

nisoldipine CR®

• Geomatrix™ technology applied to nisoldipine (Sular®)

• calcium channel blocker for treating hypertension

• 3 goals: • improve bioavailability

• reduce therapeutic dose

• optimize side-effect profile

• target filing: mid-07

• target US launch: 2008

• partnered with Sciele Pharma (formerly First Horizon)

• mid-single digit royalty + option to manufacture for Sciele

21 Jun 06 57

Introducing

Patrick Fourteau

CEO

Sciele Pharma(the new name for First Horizon Pharmaceuticals)

Alpharetta, GA, USA

21 Jun 06 58

21 Jun 06 59

SCIELE PHARMA – WHO WE ARE

• Revenue of $216 million for full-year 2005

• Specialty pharmaceuticals with 70% of sales derived from cardiovascular/ metabolic

• Sales force of 525 representatives

• Unique business model – pay for performance

Importance

• Fast growing market

• Large market – over $1 billion

• One dominant player

• Synergy within our cardiovascular/ metabolic portfolio

21 Jun 06 61

PRODUCT PORTFOLIO SYNERGY

• Hypertension

• Hypercholesterolemia

• High triglycerides

• Type 2 Diabetes

Products address multiple risk factors in cardiovascular and metabolic diseases

Strategy

• Managed care – cost savings

• 450 sales representatives/11 calls per day

• Calling on primary care physicians

• Savings card

Sales PerformanceJune 2005 –March 2006Sales PerformanceJune 2005 –March 2006

Monthly Triglide TRx June 2005 – Mar 2006

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Jun-05 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06

Source: IMS Americas NPA

Formulation development project

• Sular is Sciele's flagship product

• New CR formulation is a priority for the company

• Sular has achieved excellent growth• New Rx’s increased 32% in 1Q 06 versus 1Q 05• Total Rx’s increased 17% in 1Q 06 versus 1Q 05

Development timeline

• Initiate pivotal clinical trial in second half 2006

• FDA filing in first half of 2007

• FDA approval expected in 2008

TRx by quarter

Source: IMS Americas NPA

Sular TRx by Quarter

200,000

225,000

250,000

275,000

300,000

325,000

350,000

Qtr 22004

Qtr 32004

Qtr 42004

Qtr 12005

Qtr 22005

Qtr 32005

Qtr 42005

Qtr 12006

21 Jun 06 67

NASDAQ Symbol: SCRX



Near-term pipeline and pre-approval products

Dr Francesco PatalanoManaging Director Europe

Dr Geraldine VenthoyeHead of Inhalation Business Unit

21 June 2006

21 Jun 06 69

Oral / inhalation:

Pulmicort® HFA

Requip Once-a-day

zileuton CR

Lodotra™

Foradil® Certihaler™

+

nisoldipine CR – already presented

Flutiform™ – to be presented by Ken Cunningham

Key near-term pipeline products

21 Jun 06 70

Pulmicort® HFA-MDI AstraZeneca (for Europe)

• Pulmicort® (budesonide) in CFC-free MDI• inhaled steroid for asthma

• will allow AZN to withdraw CFC-MDI version (Montreal protocol requirement)

• SkyePharma developed formulation and conducted clinical development for AZN

• development started Jan ′02

• filed on country-by-country basis in Europe mid ′05

• first European approval (Finland) Feb ′06

• development experience underwrites Flutiform™ development

• double digit royalty

21 Jun 06 71

Requip Once-a-day GlaxoSmithKline

• once-daily oral dosage formulation of Requip® (ropinirole)• dopamine agonist for Parkinson’s disease

• dopamine agonists are used as as first-line therapy for Parkinson’s disease

• Requip® is dosed three times a day

• once-daily version provides patient convenience in dosage titration

• filed by GSK Dec ′05• filed in Europe and New Zealand

• US filing to be resubmitted Q4 ′06

• GSK’s 2005 sales of Requip® $284m (+34%)• approx two-thirds of sales currently for RLS indication

21 Jun 06 72

zileuton CR Critical Therapeutics

• highly potent oral anti-inflammatory• 5-lipoxygenase inhibitor

• blocks both branches of inflammatory cascade

• primary indication: severe asthma• reduce or eliminate need for oral steroids

• current version (Zyflo) has to be taken four times a day

• zileuton CR is twice daily

• Ph III trial of zileuton CR completed - filing expected Q3’06

• high single digit royalty rate + option to manufacture

• peak sales estimates in region of $150 mn

21 Jun 06 74

zileuton - unique mechanism of action

EOSINOPHILS

5-LOArachidonic acid

LTC4

LTB4LTA4

5-HPETE5-HETE

FLAP

zileuton

5-oxo-ETE

ProstaglandinsThromboxanes

cysLT2RLTD4

cysLT1R

NEUTROPHILS

EOSINOPHILS

EOSINOPHILS

Singulair/LTRAs

zileuton

21 Jun 06 75

zileuton – greatest benefit in most severe asthma

All patients Severe disease(FEV1 <50%)

Placebo Zyflo Placebo Zyflo

N=257 N=257 N=56 N=52

Improvement in morning trough FEV1

+5.8% +15.1%** +11.9% +36.5%**

Decrease in ß-agonist use

-7.5% -26.3%** +3.4% -19.7%*

% requiring steroid rescue

17.1% 6.6%** 38.0% 6.0%**

Source: Critical Therapeutics pivotal trials for Zyflo (zileuton 600 mg)

* p < 0.05 ** p < 0.001

21 Jun 06 77

Lodotra™ Nitec

• controlled release formulation of oral anti-inflammatory• active not yet disclosed

• indication: rheumatoid arthritis

• Ph III recently completed• data not yet available

• Nitec has licensed rights for Germany and Austria to Merck KGaA

• negotiations for other territories ongoing

• mid-single digit royalty and manufacture for Nitec

21 Jun 06 78

Lodotra™ - limitations of current RA treatments• despite several innovative developments and use of combination therapies, RA

patients still experience considerable morning stiffness and pain

Sources: 1Townsend HG et al., Clinical Experimental Rheumatology, 2004; Buttgereit F et al, Arthritis and Rheumatism, 2004; NDC prescription data; WHO, CDC ² Decision Resources

>80%

11Oral Oral corticosteroidscorticosteroidsBiologics

NSAIDs (analgesics,

COX2)

DMARDs

(methotrexate,

others)

10-30% 70-100% 40-60%

Limitations: stomach ulcers cardiovascular

risk

side effects at higher doses

current formulations suboptimal

non-responders toxicity slow onset of

action

serious side effects

inconvenient (IV) expensive

Treated RA patientsTreated RA patients²²

> 4.5 mn (US/EU)> 4.5 mn (US/EU)

RA prevalence ~1% 80 % diagnosed/ treated

Rupert

text added cf draft 7

21 Jun 06 79

Circadian rhythms in rheumatoid arthritis• elevated night time pro-inflammatory cytokines result in more

severe early morning symptoms

• “… the timing of low-dose glucocorticoid administration should be adapted to the biological rhythms of the inflammatory process in RA.” – Cutulo et al. 2003

Source: Cutulo M et al,. Annals of Rheumatic Diseases, 2003.

Circadian Rhythms in Rheumatoid Arthritis

0

50

100

150

200

300

5 pm 9 pm 1 am 5 am 9 am 1 pm 5 pm

IFN

IL6

IL10

sTNFR75

TNF

Ser

um

le

vels

(p

g/m

l)

Clinical symptoms

21 Jun 06 80

6 p.m. 10 p.m. 2 a.m. 6 a.m. 10 a.m.

LODOTRA™ - design rationale• morning administration is too late to

mediate the nocturnal cytokine peak

Stiffness andpain

High

Inflammatory cytokine

levels

Pain and stiffness scores

Cytokinerelease

Current therapy dose time

SkyeUser

Is the animation on this sequence correct??PL - looks OK to me

21 Jun 06 81

Release

6 p.m. 10 p.m. 2 a.m. 6 a.m. 10 a.m.

LODOTRA™ - how Geoclock™ delivers

• convenient bedtime dosing with maximally effective nocturnal drug release

Stiffness andpain

High

Inflammatory cytokine

levels

Pain and stiffness scores

Cytokinerelease

Dosing

21 Jun 06 82

Foradil Certihaler Novartis / Schering-Plough

• formoterol (fast-onset, long-acting bronchodilator) for asthma / COPD

• uses SkyePharma’s SkyeHaler™ multi-dose dry-powder inhaler (DPI)

• SkyePharma developed both device and formulation

• formulation keeps powder dry, ensures accurate consistent dose

• Schering-Plough to market in US market, Novartis elsewhere

• 2005 sales of Foradil in single-dose DPI: $332 mn• includes Novartis sales to Schering-Plough but no US end-user sales

• mid-single digit royalty + manufacturing return

21 Jun 06 83

Foradil Certihaler™ Novartis / Schering-Plough

• Foradil Certihaler™ now approved in 24 markets (Europe, Mid-East, S America…)

• launched in Germany Sep ′05 and Switzerland Oct ′05 but batches withdrawn by Novartis from both markets Jan ′06• a few patients mishandled the device and received an incorrect dose

• SkyePharma working with Novartis to investigate cause and correct

• FDA “approvable” letter Apr ′06 – device modifications will be required for final approval

21 Jun 06 84

Dose Counter: indicator& mechanism

Valve

Powder reservoir

Dosing bar & shelter

Mouthpiece

Protective cap (closed)

Aerosolisation chamber

SkyeHaler™: key components

21 Jun 06 85

Horizontal start position

SkyeHaler™: operation

SkyeUser

Check animation timings

21 Jun 06 86

Opening of protective cap


21 Jun 06 87

Powder dispensed into dosing chamber


21 Jun 06 88

Powder dose slides towards mouthpiece


21 Jun 06 89

Powder dose slides towards mouthpiece


21 Jun 06 90

Protective capopened to 90o

position


21 Jun 06 91

Powder in dispense position


21 Jun 06 92

Device readyfor inhalation


21 Jun 06 93

Inhalation: powder dispersed through

mouthpiece


21 Jun 06 94

Inhalation: valve moves forward


21 Jun 06 95

Closing of protective cap


21 Jun 06 96



21 Jun 06 97



21 Jun 06 98

Counter advances


21 Jun 06 99

Valve moves back


21 Jun 06 100

Device ready for next actuation


21 Jun 06 101

Skyehaler™ – current status

• in collaboration with Novartis, the Skyehaler™ has now been successfully modified

• the adapted device provides equivalent performance to the previous device version

• testing of the adapted device is complete

• DMF (Drug Master File) updated by the device manufacturer Riwisa and data submitted to the FDA



Flutiform™

Dr Ken CunninghamChief Operating Officer

Adrian AdamsCEO, Kos Pharmaceuticals

21 June 2006

21 Jun 06 103

Flutiform™ – product features

21 Jun 06 104

Asthma therapy 1.01 • asthma is an inflammatory condition - the airways become hyper-reactive to

external stimuli• in an asthma attack, the airways narrow (“bronchoconstriction”), causing breathing difficulties

Two complementary types of treatment are needed for asthma:

• controller • an anti-inflammatory to control the underlying cause of asthma

• most commonly an inhaled corticosteroid (“ICS”)

• reliever• a beta-agonist bronchodilator to open the airways and make breathing easier

• a short-acting beta-agonist is useful for acute relief from an asthma attack

• a long-acting beta-agonist (“LABA”) provides 12 hours of relief

• very important in avoiding night-time asthma attacks

• “combination” treatments have an ICS and a LABA in the same container• convenient for patient better compliance

• synergistic – the two agents work better together than on their own

• delivery: metered-dose aerosol inhaler (“MDI”) or dry-powder inhaler (“DPI”)• each type has merits and drawbacks – no dominant advantage for either type

21 Jun 06 105

Flutiform™ product details• formoterol (LABA) and fluticasone (ICS) in a fixed-dose

combination• formoterol 5 μg with fluticasone 50 μg or 125 μg per actuation (“puff”)

• two actuations per dose

• dosed twice a day (morning and night)

• proprietary HFA-powered MDI with dose counter

• covered by SkyeDry™ patent (2019 expiration)• unique proprietary formulation technology

• uses DSCG (cromolyn sodium, Intal) at sub-therapeutic dose as excipient to stabilize formoterol

• maintains dose-to-dose consistency

• target indication: asthma in adults and adolescents ≥ 12• COPD and paediatric asthma to follow

21 Jun 06 106

SkyePharma’s proprietary MDI• active dispersion of drug to the airways

• dose is independent of patient’s inspiration flow-rate

• largely avoids common DPI problem of deposition of steroid in the throat and consequent hoarseness

• “steroid-induced laryngeal candidiasis”

• requires patient to have a drink of water after each DPI dose

• HFA propellant (non-CFC)

• dose counter indicates number of doses remaining

• new FDA requirement for MDIs

• perceived faster onset of effect with an MDI than with a DPI

• SkyePharma’s MDI is small, portable, discrete and easy to use

• no need to train patients in a new device

21 Jun 06 107

Flutiform - product profile• formoterol LABA (long-acting beta-2 agonist)

• 12 hours bronchodilation = twice-daily dosing

• faster onset of action (1-3 mins) than salmeterol (30-45 mins)

• gives rapid relief from common symptom of wheeziness on waking

• patient confidence that medication is working

• enhances compliance

• less risk of over-dosage

• fluticasone ICS (inhaled corticosteroid)

• low level of systemic uptake

• physician-preferred ICS in the US

• US physicians in particular are concerned by the risk of systemic uptake of inhaled steroids Source: TVG market research 2004 (commissioned by SkyePharma)

21 Jun 06 108

21 Jun 06 109

Flutiform™ – clinical trials

21 Jun 06 110

FlutiForm™ - Phase II trial design

• double-blind randomised 6-way crossover study • FlutiForm™ HFA pMDI 100/10g

• FlutiForm™ HFA pMDI 250/10g

• fluticasone (Flixotide) HFA pMDI 250g + formoterol (Foradil) DPI 12g

• fluticasone (Flixotide) HFA pMDI 250g

• formoterol (Foradil) DPI 12g

• placebo

• each patient received four of six treatments

• N=64 (7 treatment centres in UK)

21 Jun 06 111

FlutiForm™ - Phase II efficacy results

• at both doses, Flutiform™ behaves exactly the same as the two component actives given separately

• rapid onset (<5 min) of bronchodilation with both doses of FlutiForm™

• 100/10g and 250/10g

• bronchodilator effect maintained for ~12 hours • supports proposed twice-daily dosing

• no interference or other drug/drug interactions

• no safety concerns

21 Jun 06 112

Flutiform™ - positive Ph II results

21 Jun 06 113

FlutiForm™ - Phase III trials• design approved by FDA

• 3 double-blind pivotal trials

• primary end-point : FEV1

• patient population: mild-moderate / moderate-severe asthmatics age >12

• duration: 12 weeks

• one open-label 12-month safety study • conducted in parallel with pivotal trials

• total number of patients N = 1700• ~300 treatment centres in Europe and North America

• started as planned in Feb ’06

• target filing H2 ‘07

SkyeUser

chech bullet

21 Jun 06 114

Flutiform™ – commercial potential

21 Jun 06 115

Flutiform - market opportunity

GLOBAL ASTHMA/COPD MARKET

0

5

10

15

20

25

2004 2009E

$ b

n

Others

Leukotriene antagonists

Long-acting beta-agonists

Short-acting beta-agonists

Inhaled steroids

LABA/ICS combinations

$15.4 bn

$22.6 bn

Source: Lehman Brothers Sep '05

21 Jun 06 116

Flutiform™ - competitive landscapeCompany Product Current

phase Estimated

FDA approval date

Likelihood of

FDA approval

GlaxoSmithKline Advair

fluticasone + salmeterol

Marketed as DPI in US and EU

MDI recently approved in

USA

n/a n/a

AstraZeneca Symbicort

budesonide + formoterol

Marketed EU as DPI

MDI filed with FDA Sep 05

2008

High

“likely to require at least two review cycles”

AstraZeneca Jun 06

SkyePharma Flutiform

fluticasone + formoterol MDI

Ph III

Feb 06

2009 High

Altana with

Sanofi-Aventis

ciclesonide + formoterol DPI

Ph II 2012 Moderate

ciclesonide once-daily formoterol twice-daily

Novartis (with/without Schering-Plough?)

once-daily ICS + QAB149 DPI

mometasone + formoterol DPI

Preclinical

“Ph III to start in ‘06”

2012

?

Moderate

NCE development

Unknown

mometasone once-daily formoterol twice-daily

GlaxoSmithKline once-daily ICS + once-daily LABA DPI

both are NCEs

Early Ph II 2011/12 Moderate

NCE development

Source: SkyePharma

21 Jun 06 118

Flutiform™ - commercial potential

US Top 5 EU

Projected total ICS/LABA market 2011/12

$6.7 bn €2.3 bn

Flutiform™ peak share estimate

15%

assumes Symbicort is launched before Flutiform™

15%

Flutiform™ peak sales potential

up to $1 bn up to €350 mn top 5 EU

(€400-500 mn all Europe)

Source: SkyePharma

SkyeUser

new figures, 1 less row

21 Jun 06 119

Flutiform™ – US marketing partner

21 Jun 06 120

Flutiform™ US licence – Kos (May 2006)• Kos has exclusive marketing rights for Flutiform™ in US

• right of first negotiation for Canada

• SkyePharma receives up to $165 mn in milestone payments on regulatory & sales targets

• includes $25 mn upfront

• SkyePharma royalty rate starts in mid-teens • rate escalates on sales targets

• SkyePharma and Kos share development of Flutiform™ for asthma and COPD

• SkyePharma funds trials needed for approval in adult asthma

• Kos funds trials for all other indications and marketing/post-approval studies

• SkyePharma supplies product to Kos

21 Jun 06 121

US partner for Flutiform™ – why Kos?• successful, fully integrated US Specialty Pharmaceutical company

• strong financial position, no debt, excellent long-term outlook

• strong commercial capabilities, proven track record • 750 person sales force (>1000 by Flutiform™ launch), broad managed care, medical affairs and

customer services functions

• established presence in cardiovascular & asthma areas

• track record of respiratory market performance with Azmacort

• proven success in creating and building markets supported by quality medical and patient education

• excellent, therapeutically aligned R&D capabilities • clinical, regulatory, safety and surveillance strengths in CV, metabolic and respiratory disease

areas

• both partners see high potential in the product• superior product concept

• differentiated from competing combinations

• clear window of opportunity

21 Jun 06 122

Adrian AdamsPresident and Chief Executive Officer

Kos Pharmaceuticals

Cranbury, NJ, USA

Introducing

SkyeUser

Make sure all intro slides match

21 Jun 06 123

Overview of Kos Pharmaceuticals• founded in 1988, IPO in 1997 (Nasdaq: KOSP)

• named after Greek island of Kos – birthplace of Hippocrates

• fully integrated Specialty Pharmaceutical company

• core therapeutic areas: cardiovascular, respiratory, diabetes

• key marketed brands:

• 1400 associates (sales: 750, R&D: 225) – sales force increased to 900 by end ‘06

• headquarters in Cranbury, New Jersey – additional locations in NJ (Edison), FL (Weston and Hollywood) and NC (Raleigh)

21 Jun 06 124

Kos revenue growth record

*Includes international sales royalty (licensing revenue)

$497

$752

$294

$173

$84$55

70%

69%

51%

53%

106%

3%

9%

14%

15%

59%

® ®

®

®

®

®

$146$227

$321

$441$67

$108

$116

$103

$22

$27

$68

$70

$0

$75

$150

$225

$300

$375

$450

$525

$600

$675

$750

2000 2001 2002 2003 2004 2005

(in m

illio

ns)

Teveten /Teveten HCTCardizem LA

AzmacortAdvicor

Niaspan *

Rupert

tweaked slide

21 Jun 06 125

Kos - successful amongst “Big Pharma”

• HDL market creation and development• launched Niaspan into LDL-dominated market - HDL awareness very low

• 90 territory managers vs LDL “thousands”

• Kos commercial philosophy• SMART sales and marketing with quality medical education

• recruit experience and success, pay in top quartile

• invest into success

• successful and highly differentiated position• cholesterol franchise grown to around $600 mn – on way to billion dollars

• dominant managed care position – over 95% lives covered

• HDL drug of choice among cardiologists and primary care physicians

• most big pharma companies now attempting access into “Kos market”

21 Jun 06 126

Kos - inhalation history • 1993 Kos acquires Aeropharm Technology inhalation platform

• 1997 Kos becomes a full member of IPACT-1, granting the Company necessary data for environmentally safe HFA-134a

• 1999 Kos acquires IEP Group, Inc., a design and engineering company focused on proprietary inhalation devices

• 2003 Kos secures key HFA patent - involves innovative use of water as a stabilizing excipient

•scientific infrastructure and broad formulation and delivery device IP portfolio

•basis of inhaled insulin development – phase III ready in 2007

• 2004 Kos conducts strategic acquisition of global Azmacort franchise - represents first commercial entry into the respiratory market

• 2006 Kos and Skyepharma announce exclusive licence agreement for Flutiform in the USA

21 Jun 06 127

Kos - Azmacort returned to growth

98.0

91.5

98.8

91.2 91.7

86.8

79.7 80.9 81.183.6 83.6

89.1

84.9

78.7

87.2

13.112.8

14.2

13.113.6

13.112.5 12.6

13.9 14.2

16.4

13.7

12.8

14.4

11.850

60

70

80

90

100

110

120

TR

x (

in t

ho

us

an

ds

)

11

12

13

14

15

16

17

18

19

20

21

22

Ta

rge

t P

hy

sic

ian

TR

x (

in t

ho

us

an

ds

)TRx Target Physician Rx

Data Source: IMS

21 Jun 06 128

Kos - rationale for Flutiform™ licence• strong strategic rationale

• broadens Kos’ established presence in asthma/respiratory market

• good fit with Azmacort, coverage of mono and combo market

• growth opportunity beginning 2008/9

• 2 projected new products to launch a year during 2007-2009

• strong financial returns

• win-win financial terms

• potential blockbuster with $500 MM plus anticipated peak year sales

• synergistic partnership

21 Jun 06 129

Kos – delivering value on many levels• focussed and successful specialty pharmaceuticals business model

• SMART targeted sales and marketing approach – enhanced productivity, eliminates “waste”

• Focus in R&D - measured investments in “R” of R&D

• highly differentiated and sustainable cholesterol franchise• increasing awareness of benefits of HDL, move towards combination therapy

• Niaspan & Advicor - most effective HDL therapies available - Simcor™ opportunity

• financial strength & expanding commercial brands• strong cash position, no debt, strong earnings outlook in 2007 and beyond

• resources to fully exploit product franchises in CV, Metabolic and Respiratory Diseases

• robust Research & Development pipeline• one to two new products per year 2007 to 2009 – major potential with Simcor™ and Flutiform™

• Kos’ inhaled insulin opportunity in high potential market

• progress in “measured” HDL and atherosclerosis NCE development



SkyePharma oral and inhalation delivery technologies

Dr Guy VergnaultHead of Oral Business Unit

Dr Geraldine VenthoyeHead of Inhalation Business Unit

21 June 2006

21 Jun 06 131

SkyePharma delivery technologies• Oral

• most widely-used drug delivery route (~50% of all drugs taken orally)

• Inhalation• cost-effective metered-dose liquid aerosol and dry-powder inhalers

• enabling formulation technologies to ensure dose-to-dose consistency and extended shelf-life at room temperature

• Solubilization• multiple technologies to improve bioavailability

• Sustained-release injectable (unit to be divested)• DepoFoam : active dissolved in water within multivesicular liposome particles

• Biosphere : active dispersed in dry starch core within PLG shell

• Topical• multiple transdermal technologies - now licensed to Trigenesis (Dr Reddy’s)

21 Jun 06 132

Geomatrix™ - a family of oral DDS, not a single DDS

• why do we have more than one DDS ?

• physicochemical characteristics of the API

• pharmacological characteristics of the API

• answer to specific therapeutic needs

• zero order release cannot satisfy all needs for extended drug delivery

• recent developments in oral portfolio

• Geoclock™ press coated tablets

• chronotherapy

• colonic delivery

• pulse delivery

21 Jun 06 133

Chronotherapy Geoclock™

THE BODY CLOCKDisorders displaying circadian rhythm

modified Smolensky & Labrecque by Veski

Ischemic heart diseases

21 Jun 06 134

View of Geoclock after core disintegration

Shell opening

Empty cavity left by drug loaded core

Geoclock™ concept

21 Jun 06 135

Reference IR

Geoclock in vivo testing

-10

010

20

30

4050

60

7080

90

0 5 10 15 20 25 30 35 40

Time(h)

Plas

ma

conc

entr

atio

n (n

g/m

l) Geoclock(n=10)

Geoclock™ conceptPrednisone

Time (h)

0 4 8 12 16 20 24 28

Pla

sm

a c

on

ce

ntr

atio

n (

ng

/mL

)

0

5

10

15

20

25

DecortinTest FastedTest Fed

Reference IRGeoclock

doseIR dose

21 Jun 06 136

0

5

10

15

20

0 5 10 15 20

Time (h)

Pla

sma

Co

nce

ntr

atio

n (

ng

/mL

)

Fasted

Fed

GEOCLOCK™ for colonic drug delivery

Geoclock™ concept

21 Jun 06 137

In vivo profile methylphenidate HCl (2x10 mg vs Ritalin 20 mg)

GEOCLOCK™ for multiple pulse drug delivery

Geoclock™ concept

21 Jun 06 138

• proof of Concept in vivo trials have shown reliable performance of the Geoclock™ DDS

• industrial scale expertise

• many opportunities for specific timed or targetted drug delivery

• one product in late-stage clinical development

• Nitec product

• supportive patent applications should provide protection beyond 2023

Geoclock™ concept

21 Jun 06 139

Solubilization technologies for oral route

• increasing number of APIs have poor solubility

• formulation issues

• bioavailability issues

• food effect

• can result in under- or over-dosing

• poor dose proportionality

• SkyePharma technology solutions• Dissocubes®

• SLN® (Solid Lipid Nanoparticles)

• IDD® (Insoluble Drug Delivery)

21 Jun 06 140


• right combination of particle size and stabilization system

• challenge of solid dosage form formulation

• conflicting targets

• requires specific “savoir faire”

• Triglide™ - first approved product based on IDD-P• commercial scale – 500 litre suspension

• manufactured in SkyePharma’s Lyon plant

21 Jun 06 141


21 Jun 06 142

Inhalation technologies - devices• SkyeHaler™ – “next generation” multi-dose breath-

actuated dry powder inhaler

• accurate, robust and simple to use

• medium-resistance device suitable for all types of patient

• available at commercial scale manufacture volumes

• HFA powered metered-dose aerosol inhaler

• developed to meet stringent new regulatory guidelines

• proprietary design incorporating dose counter

• supplied for Ph III clinical programs from the commercial scale manufacture site

21 Jun 06 143

Inhalation technologies - formulation

• SkyeProtect™ and SkyeDry™

• “intrinsically” protect a powder or liquid suspension from the detrimental effects of moisture ingress and thereby stabilise labile compounds in the formulation

• ensure accurate, consistent and reproducible dosing

• SkyeStabe™

• protects aerosol valve gaskets from abrasion

• improves inhaler functionality throughout can life and shelf life

• better suspension homogeneity provides superior dose uniformity

• SkyeFine™

• maximises the fine particle fraction (and therefore the dose delivered to the deep lung) in the dose emitted by a metered-dose aerosol inhaler

The use of a range of novel excipients to optimise dose-to-dose repeatability - a major hurdle for regulatory approval of inhalation products



Early-stage pipeline


21 June 2006

21 Jun 06 145

Early-stage pipeline

• SKP-1032 : opioid-NSAID combo BID

• SKP-1041 : non bzd hypnotic TRT

• SKP-6005 : PPARα /PPARγ combo OD

• SKP-6006 : ARB CR OD

• only SKP-1032 and SKP-1041 will be presented today

21 Jun 06 146

Opioid – NSAID combo

Short-term treatment of

moderate-to-severe acute pain

SKP-1032

21 Jun 06 147

• combines an anti-inflammatory dose of an NSAID with the potency of an opioid analgesic

• useful for orthopaedic surgeries, sprains, fractures

• only combination of an opioid with this NSAID

• selected NSAID is preferred by physicians

• selected NSAID perceived as more effective than ibuprofen

• greater potentiation of opioid effect with the selected NSAID compared with ibuprofen

• 12-hour pain relief with rapid onset

• avoids peaks and troughs and breakthrough pain

• SkyePharma product will be Schedule III

SKP-1032 – clinical advantages

21 Jun 06 148

SKP-1032 - opioid PK profile

0 4 8 12 16 20 24 28 32 36 40 44 48

Time (hours)

Pla

sma

con

cen

trat

ion

s (n

g/m

L)

MR1 MR2 MR3

Mean plasma concentration for opioid prototype formulations in fasted conditions (n=16)

21 Jun 06 149

SKP-1032 - market opportunity

• high volume market (167 mn TRx MAT 04/06)

• good pricing for branded products

• opiate combinations will remain the mainstay of treatment for moderate-to severe pain - little innovation in R&D

• unique positioning in pain associated with inflammation

• target launch: 2010

IMS Oral Narcotic Combinations TRx - US

0

20

40

60

80

100

120

140

160

180

MAT APR 01 MAT APR 02 MAT APR 03 MAT APR 04 MAT APR 05 MAT APR 06

TRx m

n

Non-benzodiazepine hypnotic

Sleep maintenance

GeoClock™ tablets ensure optimum release profile

SKP-1041

21 Jun 06 151

SKP-1041 - product concept

0.00 2.00 4.00 6.00 8.00 10.00 12.00

Pla

sm

a level

HYP1 IR HYP2 CR SKP 1041

• SKP 1041 corresponds to expected in vivo profile

• in vitro data supports target profile

21 Jun 06 152

SKP-1041 – unique clinical advantage

• non-benzodiazepine hypnotic

• first hypnotic product specifically designed for patients who have difficulty with sleep maintenance

• lowest effective hypnotic dose

• no drug on board when not needed = “natural” sleep onset

• very short half-life, resulting in fast clear-headed awakening

SkyeUser

Is it SKP or SKY?

21 Jun 06 153

SKP-1041 – insomnia patient segmentation

40% 36%

25% 24%

0%5%

10%15%20%25%30%35%40%

Woke up feelingunrefreshed

Awake a lot duringthe night

Difficulty fallingasleep

Woke up too early &could not get back

to sleep

2002 Sleep in America Poll

• delayed sleep onset affects only a minority of insomniacs

• maintaining continuity of sleep is a greater need

Based on interviews with 1,011 US adults

21 Jun 06 154

SKP-1041 - market opportunity• US insomnia market $2.4 bn in 2005

(+29%)

• projected to reach $4.5 bn in 2010 (14% CAGR)

• SKP-1041 specifically designed to target sleep maintenance

• significantly differentiated from existing and late stage pipeline compounds

• good pricing expected based on pricing for Lunesta and Ambien SR

• protected concept (patent application filed)

• target launch: 2011

US INSOMNIA MARKET ($ bn)

0

1

2

3

4

5

2004 2005 2006 2007 2008 2009 2010

Sales

$ bn

Source: Cowen & Co April 2006

21 Jun 06 155

Fast track from technologies to marketed products

The 505 (b) 2 approval process

21 Jun 06 156

The 505(b)(2) approval process• Hatch-Waxman amendment to the Federal Food, Drug & Cosmetics Act to

allow an NDA based in part on data NOT generated by the applicant• scientific literature and/or

• data used to support the filing of a product previously approved by the FDA

• examples:• a new dosage form or formulation of an approved product

• a new indication of an approved product

• a new route of administration of an approved product

• substitution of an active in an approved combination product

• a pro-drug of an approved product

• 505(b)(2) applicants must certify non-infringement of patents

• 505(b)(2) approval earns 3 years of market exclusivity • 5 years for an NCE

• does not affect protection arising from specific IP



Summary


21 June 2006

21 Jun 06 158

Major objectives 2006

• divest injectable unit

• outlicense Flutiform™

• negotiations for non-US territories ongoing

• complete modifications to Certihaler™

• expand oral / inhalation pipeline

• work with licensing partners to drive revenues of marketed products

21 Jun 06 159

The new SkyePharma

• new leadership

• drive for sustainable profitability• accelerated by sale of injectables unit

• core business is oral and inhalation

• potential blockbuster in Flutiform™

• strong cashflow from existing royalties

21 Jun 06 160

Q&A

This presentation is being webcast

Please give your name and affiliation when asking questions

NASDAQ:SKYE LSE:SKP

www.skyepharma.com

London

Peter Laing, Director of Corporate Communications

44-(0)207-491-1777 [email protected]

New York

Sandra Haughton, US Investor Relations Manager

1-212-753-5780 [email protected]

…and please visit our website

Investor relations contacts



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21 June 2006

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