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

2004 Full Year Results

28 April 2005

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 only being distributed to persons who fall within Article

8 of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) (No 2) Order 1997 or Article 11(3) of the

Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996, as amended.

 

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 our revenue and profit guidance

for the 2005 financial year. 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 UK GAAP. Where US dollar equivalents have been provided for convenience in this

presentation, a fixed exchange rate of $1.90 = £1 has been used throughout. These dollar equivalent numbers do not

imply restatement from UK GAAP to US GAAP.

This presentation was updated on 27 April 2005

3

Michael Ashton

Chief Executive Officer

4

Headline news

new agreement with GlaxoSmithKline on Paxil CR

partner for pulmonary package subject to contract

UK marketing authorisation for DepoDur

subject to conditions

DepoBupivacaine licensed to Mundipharma all territories outside North America and Japan

5

Paxil CR – new GSK agreement

GSK has now agreed to increase the royalty rate on Paxil CR from 3% to 4%

$10 mn cash payment upfront

GSK to pay SkyePharma 4% of budgeted US sales of Paxil CR from 4 March ‘05 until Paxil CR returns to the market

GSK to pay SkyePharma 4% of actual sales thereafter subject to other conditions of the agreement

SkyePharma to drop all legal/arbitration action

6

Global asthma market 2003-2010e

Source: ING “Asthma & COPD” July 2004

0

5

10

15

20

25

2003 2010e

$ b

n

Others

Leukotriene antagonists

Long-acting beta-agonists

Short-acting beta-agonists

Inhaled steroids

LABA/steroid combinations

$11.5 bn

$20.9 bn

7

Pulmonary package Heads of Terms with major global pharma company for Flutiform HFA-MDI

up to $160 mn in milestone payments and development cost reimbursement from 2005

double digit royalties – escalating rate on sales thresholds

SkyePharma to execute clinical development

at this stage still non-binding and subject to contract finalization

8

2004 results summary

revenues £62m (2003: £53m) up by 17% milestone income affected by timing of key deals & product approvals

royalty income £26m up by 39% - now over 40% of total revenues

net loss £24m (2003: £43m) down by 44%

net loss per share 4.9 p (2003: 7.1 p)

end-2004 cash £15.3m (end-2003 £22.0 m)

£70m raised / refinanced through convertible issues

9

A transforming businessIntegrated pharmaceutical developer

Drug delivery service provider

Developing own products for out-licence

10 approved products

Now: Paxil CR, Xatral® OD/Uroxatral®, Solaraze®, DepoCyt®, DepoDur

Future: Foradil® Certihaler®, fenofibrate, HFA-formoterol, zileuton CR, Requip 24hr, Propofol IDD-D, Flutiform ….…

Royalty income replacing milestone payments as main revenue source, driven by royalties from:

2 launches anticipated 2005

4 products to be filed 2005 5 products now in Phase III - 5 products in Phase II

10

Major marketed products

Paxil CR (GlaxoSmithKline)

Xatral OD / Uroxatral (Sanofi-Aventis)

DepoDur (Endo; Zeneus)

Solaraze (Bradley; Shire)

DepoCyt (Enzon; Mundipharma)

11

Paxil CR

generic competition for Paxil® began Sep ‘03

a prescription for Paxil CR cannot be substituted with generic paroxetine…

…but generics exert indirect price pressure

Paxil CR sales:

2003: $635 mn (all in USA)

2004: $725 mn

USA £388 mn ($710 mn) +13% CER

+ £8 mn ($15 mn) of non-US sales

Up to 4 March 2005, Paxil CR held ~7% of the US SSRI antidepressant new prescription market

Paxil and Paxil CR - share of US SSRI prescription market(NB generic paroxetine from 8 Sep 2003 )

Paxil CR supplies disrupted by FDA seizure 4 Mar 2005

0%1%2%3%4%5%6%7%8%9%

10%11%12%13%14%

Week ending

NRx

shar

e

Paxil CR Paxil

12

Xatral® OD/Uroxatral® Sanofi-AventisOnce-daily Geomatrix formulation of alfusozin for BPH, with two USPs:

•highly uroselective (avoids postural hypotension)

•no ejaculatory side-effects (cf. Flomax)

marketed in Europe & ROW since 2000

USA: Uroxatral launched Nov ’03

primary care launch Mar ’04

main competitor Flomax (tamsulosin)

Uroxatral now holds ~10% of combined

TRx for Flomax and Uroxatral

AUR indication: approved Europe; Ph III US

adjuvant (after surgery) and prophylaxis 2004 world sales (all versions) €281 mn +28% CER

SkyePharma return on sales:

mid-single digits

Xatral/UroXatral sales trend 1996-2004

0

50

100

150

200

250

300

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Sa

les

€ m

n

H1 RoW FY RoWH1 US FY US

EU launch Apr '00

US launch Nov '03

Uroxatral vs Flomax - TRx

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Wee

kly

pres

crip

tions

0%

2%

4%

6%

8%

10%

12%

Uro

xatr

al %

of c

ombi

ned

TRx

Flomax TRx Uroxatral TRx Uroxatral TRx share

13

DepoDur Endo / Zeneus

sustained–release injectable formulation of morphine for relief of post-operative pain

USA (Endo Pharmaceuticals)

approved by FDA May ’04

launched Dec ‘04 – hospital sales force 70

priced at premium to conventional analgesia

Q1 ’05 sales $1.9 mn

Europe (Zeneus Pharma)

filed Nov ’03

EU mutual recognition procedure (UK as reference country)

UK marketing authorisation Apr ’05 – subject to conditions

approvals in other EU countries to follow over next 6-12 months

Zeneus has pan-European hospital sales force of 150

14

DepoDur - licence terms endorse potentialLicence terms for DepoDur

SkyePharma bears development and manufacture costs partner bears sales and marketing costs Skyepharma receives increasing share of sales as partner’s revenues increase most of milestone payments also related to revenue targets

Territory Partner ProductsMilestones

(maximum if all targets met)

SkyePharma’s share of sales

Min Max

North America

Endo Pharmaceuticals

Dec ’02

DepoDur

Propofol IDD-D

+ right of first negotiation for

DepoBupivacaine

$120 mn

20% 60%

of combined sales of

DepoDur and Propofol IDD-D

EuropeZeneus Pharma

Mar ’04DepoDur €100 mn 35% 50%

rights for other territories not yet assigned

15

Solaraze Bradley / Shire topical gel treatment for actinic keratosis

active ingredient diclofenac in proprietary HA gel formulation

alternative therapies for AK painful and/or disfiguring

now marketed by Bradley in North America, Shire in Europe / Australasia

2004 global in-market sales $18 mn US $12 mn; Europe $6 mn

positive longer-term results from Ph III Australian study filed in Australia Dec ‘04

data will support marketing elsewhere

SkyePharma return on sales: mid-teens

16

DepoCyt Enzon / Mundipharma

intrathecal injectable treatment for lymphomatous meningitis

marketed by Enzon in US, Mundipharma in Europe

2004 global in-market sales doubled to $8 mn US sales $6.5 mn (+60%) Europe sales $1.5 mn (first year)

Ph IV trial in solid tumour patients now completed expect to file data with FDA Q2’05

SkyePharma return on sales: 35%

17

Key near-term

pipeline productsForadil Certihaler

Propofol IDD-D

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Foradil Certihaler Novartis / Schering-Plough

formoterol (fast-onset, long-acting bronchodilator)

uses SkyePharma’s multi-dose dry-powder inhaler

SkyePharma developed both device and formulation

formulation keeps powder dry, ensures accurate consistent dose

now also being used in second collaboration with Novartis (QAB149)

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

global sales of Foradil in inconvenient single-dose DPI: ~$360 mn

filed US & Europe Dec ‘02

FDA “approvable” letters issued Oct ’03, Dec ’04

approvals began H1 ’04 (now 5 in Europe, 5 in Latin America…)

SkyePharma return on sales: ~10% (royalty + manufacturing return)

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Propofol IDD-D

proprietary improved version of propofol

SkyePharma IDD-D technology stabilises emulsion

formulation unique

inherently antimicrobial

no need for a preservative

2% emulsion (= lower injection volume, reduced lipid load)

not a generic

designed for continuous uninterrupted 24-hour sedation

in discussion with FDA on design of Ph III trial

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Near-term pipeline status Requip® 24hr (GlaxoSmithKline)

once-daily oral formulation of ropinirole (dopamine agonist for Parkinson’s disease) therapeutic benefits + improved compliance SkyePharma has managed clinical studies for GSK Ph III trial complete - filing mid ‘05

Pulmicort® HFA-MDI (AstraZeneca for Europe) Pulmicort® (budesonide) inhaled steroid for asthma in CFC-free MDI Ph III trial complete - filing mid ‘05

DepoBupivacaine (SkyePharma) long-acting injectable formulation of local anaesthetic designed to provide 48-72 hours of local pain relief after out-patient surgery complementary with DepoDur

Ph II trial started late ’04 licensed to Mundipharma outside North America/Japan Apr ’05

$80 mn in milestones + 35% share of sales (30% outside Europe) Endo has right of first negotiation for North America

21

2004 - new corporate developments

Zeneus Pharma - DepoDur for Europe

First Horizon – fenofibrate improved formulation of important cholesterol-lowering therapy (marketed by Abbott as Tricor)

second “approvable” letter issued Dec’04

approval condition in agreement with First Horizon extended to 30 Jun ‘05

up to $50 mn in milestones + 25% royalty

Critical Therapeutics – zileuton potent oral leukotriene synthesis inhibitor (previously marketed by Abbott as Zyflo)

CR formulation (originally developed for Abbott) now in Ph III for asthma – Critical expects to file late ‘05

other indications in development (COPD, nasal polyps, acne, atherosclerosis)

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2004 - new corporate developments 2 Trigenesis – dermatology portfolio

$20+ mn in milestones and 10% royalty (35% of sub-licence income)

Trigenesis now part of Dr Reddy’s – reinforces marketing ability

Vectura – pulmonary alliance technology sharing – Vectura’s DPI device more suited to delivery of macromolecules

equity stake

King – Altace project cancelled

Astralis – Psoraxine

US Ph II trial started Apr ’04 - preliminary results very disappointing

unclear why outcome so different to results of previous large-scale studies in Venezuela protein inactivation? adjuvant? dose? strain?

SkyePharma and Astralis exploring reasons

SkyePharma acquired shares from 2 former directors Dec’04 raised stake to just under 50%

total equity investment to date $25 mn

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Well-stocked pipeline

fenofibratePropofol IDD-DMultiple

First HorizonEndo / SkyePharmaBaxter

SOLUBILISATION

SolarazeMultiple

Bradley/ShireDr Reddy’s (Trigenesis)

TOPICAL

DepoCytDepoDurPsoraxine *DepoBupivacaineHGHInterferon alpha-2b

Enzon/MundiPharma/Nippon S’yaku

Endo / ZeneusAstralis *SkyePharmaSkyePharmaGeneMedix

INJECTABLE

Foradil CertihalerPulmicort HFAformoterol HFAQAB 149Flutiform

NovartisAstraZenecaSkyePharma NovartisSkyePharma

Paxil CRXatral OD Madopar DR CorunoCordicant-UnoDiclofenacRequip 24hrzileutonUndisclosedUndisclosed

GlaxoSmithKlineSanofi-Aventis RocheTherabelMundipharmaRatiopharmGlaxoSmithKlineCritical TherapeuticsNitecUndisclosed

ORALmarketedapprovedfiledPh.IIIPh.IIPh.Ifeasibilityproductlicensee or partner

SkyePharma Client products

* SkyePharma has a right of first negotiation to acquire world rights for Psoraxine TM

PULMONARY

Status is most advanced project

24

Donald Nicholson

Finance Director

25

TurnoverTurnoverup 17%

- excluding Endo/First Horizon £5.5m

Contract developmentdown 11%

Royaltiesup 39%

Manuf. & distributionup 106%

Deferred income:

- contract development£7.4m

- other operating income£7.1m

£14.5m

7.4 4.89.9

6.818.7

26.0

55.429.7

26.3

0

10

20

30

40

50

60

70

2002 2003 2004

£m69.6

53.2

62.2

26

TurnoverCompound annual growth rate 1996-2004: 27%

2.16.5 5.0

8.4 10.514.8

27.722.6

28.5

6.9

7.35.9

9.3

13.8

31.3

41.9

30.6

33.7

6.1

4.9

0

10

20

30

40

50

60

70

1996 1997 1998 1999 2000 2001 2002 2003 2004

Collaboration equity

H1

H2

£m

9.0

13.817.0

22.624.3

46.1

69.6

53.2

62.2

27

R&D

2.54.7 2.9

0.91.1 2.81.9

3.5 3.83.8

3.97.7

6.5

7.0 3.3

2.8

2.85.3

3.4

7.5

9.7

0

10

20

30

40

2002 2003 2004

£mR&D decreased by 8%

£3.3m on DepoDur

£6.5m on Other Injectable

£3.4m on Budesonide HFA

£5.3m on Pulmonary Package

£3.8m on Enhanced Solubilisation

£2.8m on DepoBupivacaine

R&D target 2005: £30m

Injectable £12m

Inhalation £14m*

* NB subject to partner reimbursement

Other

29.330.5

28.0

28

Operating result Gross profit up 33% R&D down 8% Selling and Marketing down 60% Other Admin costs down 32% Operating loss before exceptionals down 59% Operating loss after exceptionals down 48% Amortisation of intangibles of £6.3m

EBITDA: 76% improvement

£m 2003 2004

turnover 53.2 62.2 +17%

gross profit 23.4 31.0 +33%

R&D (30.5) (28.0) -8%

operating loss (39.5) (20.7) -48%

net loss (43.2) (24.3) -44%

EPS (pence) (7.1p) (3.9p) -45%

EBITDA (26.6) (6.4) -76%

29

Net Cash

23.2

29.9

15.3

-1.2 -0.9

22.0

29.0

15.3

-5

0

5

10

15

20

25

30

35

Cash Overdraft Net Cash

£m

£11.0m of debt (excl. convertible)- £7.4m Swiss mortgage

£80m convertible debt £10m Conversion June 2005 Conversion price 83p

£70m Conversion May 2024 Conversion price £1.00

December 2003 June 2004 December 2004

30

Cash flow

-1.7

-5.1

-2.2

-5.7

2.7

16.6

-10.7

-0.6

Total: - £6.7m

£m

Cash outflow

CAPEX

Investment purchases

Other

Interest

Issue of conv bond (net of expenses)

Investment disposals (Transition)

Debt repaid

31

IFRS guidance

guidance on IFRS transition (with 2004 restatement) to be announced during H1 ’05

IFRS transition base date 1 Jan ’04

key differences from UK GAAP: revenue recognition - similar to US GAAP

Paul Capital funding - treated as debt - similar to US GAAP

employee options - fair value charged to P&L – similar to US GAAP

goodwill amortization - will cease from 1 Jan ‘04

convertible bonds - separate equity and debt components,

resulting in higher interest charge

32

Financial summary 2004Turnover up 17%

Royalties up 39%

Gross profit up 33%

Exceptionals and amortisation of £9.3m

R&D down 8%

Operating loss down 48%

EBITDA loss down 76%

33

Michael Ashton

Chief Executive Officer

34

Newsflow targets 2005Product approvals/launches:

DepoDur UK/EU (with conditions)

Foradil Certihaler US FDA “approvable” Dec ’04

Foradil Certihaler Europe approved in 5 EU markets

fenofibrate (First Horizon) FDA “approvable” Dec ’04

Licence agreements:

Pulmonary product package (subject to contract)

Propofol IDD-D (Europe)

DepoBupivacaine (Europe)

Pipeline progress:

Pulmicort HFA-MDI File EU

Requip CR File EU/US

DepoCyt (expanded indication) File EU/US

zileuton CR (asthma) File US

formoterol HFA-MDI Ph III start

zileuton CR (COPD) Ph III start

Flutiform HFA-MDI Ph III start

QAB 149 Ph III start

Psoraxine (Astralis) Ph II end

DepoBupivacaine Ph II end

35

Investment highlightsStrategic focus on royalties rather than upfront payments

Changing quality of earnings driven by rising royalties fromPaxil CR, Xatral® OD/Uroxatral®, Solaraze, DepoCyt® , DepoDur

10 FDA-approved products validate drug delivery technologies- DepoDur first-cycle FDA approval demonstrates successful development capability

Foradil® Certihaler®, fenofibrate, HFA-formoterol, zileuton CR, Requip 24hr, Propofol IDD-D, Flutiform.….. close behind

2 launches anticipated 2005

4 products to be filed 2005

5 products now in Phase III - 5 products in Phase II

NASDAQ:SKYE LSE:SKP

www.skyepharma.com

Investor relations contacts:

London

Peter Laing, Director of Corporate Communications

44-(0)207-491-1777 plaing@skyepharma.co.uk

New York

Sandra Haughton, US Investor Relations Manager

1-212-753-5780 shaughton@skyepharma.com

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