Investors 'unhappy' over drug firm's performance

Major investors in British drug delivery firm SkyePharma were today said to be considering a campaign to force its chairman to stand down.

Shareholders such as Fidelity and Insight Investment Management were reported to be unhappy about the performance of £362m-valued SkyePharma, which has received an approach about a merger from a company a third of its size.

Their discontent is focused on chairman Ian Gowrie-Smith and his handling of a strategic review following the approach by Innovata, the Sunday Telegraph said.

Investors are understood to be sceptical that a buyer will be found by Lehman Brothers, which has been asked by SkyePharma to advise on its future.

Shares in SkyePharma fell 15% on Friday after it was confirmed that Innovata - formed by the merger of ML Laboratories and Quadrant earlier this year – was behind the bid approach.

Innovata, which specialises in making inhalation drugs, has made little secret of its ambitions to grow through acquisition and is thought to have approached SkyePharma last month.

SkyePharma has its own pipeline of pharmaceutical products that includes Flutiform and Formoterol for treating asthma, while also marketing medicines of other drugmakers.

According to today’s report, investors fear potential bidders will be scared off by “poison pills” that could boost the costs and risks of a takeover.

These include the change-of-control clauses in SkyePharma’s licensing agreements with partners such as GlaxoSmithKline, with whom it markets anti-depressant Paxil CR.

But it is thought that this could be overcome if a new board is installed to acquire Innovata, which would avoid triggering the change-of-control clauses.

Innovata is believed to have approached the company’s management after SkyePharma launched an unpopular and heavily discounted rights issue in October.

The rights issue was sought by SkyePharma when discussions over a partnership deal for Flutiform foundered and the company opted to press ahead alone with final trials of the drug.

In September, SkyePharma said operating losses had narrowed to £300,000 at the interim stage from £1.6m a year earlier after expenditure on research and development fell by a quarter. A third of its revenues of £36m came from royalty payments.

A spokesman for SkyePharma declined to comment on the report today.