SkyePharma reveals pounds 16.4m operating loss

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DRUG DELIVERY group SkyePharma reported a pounds 16.4m loss for the year ending 31 December, but attention focused on the company's product delivery rather than its 37.8 per cent increase in operating loss.

Anxiety over the launch of the anti-depressant Paxil CR, which SkyePharma reformulated for SmithKline Beecham, pushed shares down to close at 66.5p.

Genghis Lloyd Harris, a biotech analyst at Credit Suisse First Boston, said: "With every day that goes past it's looking less likely that SmithKline Beecham is going to launch Paxil CR; it looks like a small product or a non product."

Ian Gowrie-Smith, the SkyePharma chairman, said the drug would "not be as big as highest expectations" but that it should still be successful. He added that speculation about the future of Paxil CR had been going on for some time and was built into the share price. The group had achieved many of its aims for 1998, in particular the acquisition of US injectible company, DepoTech.

But analysts agreed that the jury is out on SkyePharma. Erling Refsum, a biotech analyst at Nomura, said: "Their cash is fine - they've got pounds 26m. It's not their forecasts we're worried about. It's the fact that they're in the transitional period from acquisitions to sales delivery. They're good at acquisition but haven't quite delivered sales growth."

Mr Lloyd Harris said: "We're maintaining hold. They have to demonstrate they can deliver on a large and successful product for us to become more enthusiastic. Our hope was for Paxil CR but we don't think it's panning out."