Skyepharma shares plunge into freefall

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Ian Gowrie-Smith, the founder of Skyepharma, blamed a crash in the biotechnology company's share price yesterday on the fallout from Biocompatibles' failure to agree a critical deal this week.

Shares in Skyepharma, which makes generic drugs, plunged almost 30 per cent to 49p after the company announced a placing and warned that revenues from a key project would be delayed for a year. Yesterday's fall takes the group's share price perilously close to the placing price of 45p a share, risking the possibility that the pounds 7.4m fund-raising may prove unattractive to investors. Skyepharma's announcement follows a spate of disappointments in the industry this year.

Speaking as the group announced a more than doubling of interim losses to June, Mr Gowrie-Smith said that that while the placing funds would meet the group's cash needs for the next 10 months, it would require another round of fund-raising before becoming cash flow positive. The group was also looking to strike more collaborative deals to "conserve cash".

Mr Gowrie-Smith said that the share price fall was exacerbated by market conditions after shares in Biocompatibles, the medical coatings group crashed 40 per cent in a day: "I've never run into such confusion among fund managers. They have lost confidence in their judgement of this sector. The one thing they have been riding high on, that looked a dead cert in their portfolio was Biocompatibles. We couldn't have given our shares to some of them. This is a black day and unfortunate timing for us."

News that a rival generic manufacturer has brought a low-dose version of a key heart drug to market before Skyepharma also disappointed. But Mr Gowrie-Smith said he was confident in the group's future.

He said he had bought 100,000 shares yesterday morning and that 10 of the 13 board members had taken up pounds 2.75m shares in the placing. "Today has been a black day, but tomorrow will be sunshine.''