Meningitis drug nets SkyePharma £16m deal

The mid-cap drug company SkyePharma is to be paid up to £16m in a deal that will see its meningitis treatment, DepoCyte, marketed in Europe.

SkyePharma said yesterday it has licensed the drug to Elan, one of Ireland's leading pharmaceuticals groups, for an upfront payment of $10m (£7m).

It will receive a further milestone payment within weeks on clearance of the drug by European authorities.

DepoCyte, which is already on sale in the United States, is used to treat the meningitis that can arise as a complication of cancer. Analysts believe it could achieve European sales of £400m a year.

SkyePharma is expected to receive royalties of almost 20 per cent and additional milestone payments based on sales targets.

The details of the deal were not disclosed.

Michael Ashton, the chief executive, said the size of the milestone payments, up to $23m (£16m), validated SkyePharma's strategy of waiting for as long as possible before bringing in partners for its drugs. He said: "We have been growing over the last few years and have the cash and infrastructure for late stage development.

"We have the clinical people, the manufacturing people, and the regulatory people so we can take a product all the way through."

SkyePharma was the best performing FTSE 250 stock yesterday, up 3.75p to 86.5p a share.