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SkyePharma: hope worth sharing? Shares in SkyePharma have plunged since the company announced a deeply-discounted $62 million rights issue in September to fund development of its lead asthma drug Flutiform. Although self-funding the drug clearly has its risks and concerns over possible marketing partners remain, given the product's sales potential, investors may have acted in haste by selling off their shares so soon. SkyePharma is developing Flutiform, a fixed-dose combination (FDC) of formoterol, a long-acting bronchodilator and fluticasone, an inhaled corticosteroid, for the US asthma market. In September, the UK-based biotech firm said it expected peak sales of Flutiform to reach in excess of $1 billion, based on the company finding a suitable marketing partner. Skyepharma originally intended to secure funding by licensing Flutiform, but considered initial offers inadequate and felt that further negotiations would delay the product's entry to market. The company terminated a heads of terms agreement with a major global pharma firm for US rights to Flutiform in April due to concerns over delays. SkyePharma's decision to self-fund the drug's development have resulted in critics declaring the company's strategy to be too uncertain. Nevertheless, SkyePharma plans to press ahead with phase III trials in early 2006 with planned development cost to filing of $54 million. Flutiform is expected to be launched in the US in January 2009, based on SkyePharma submitting regulatory filings in July 2007. Market opportunity remains The value of the respiratory FDC drug market is forecast to reach $5 billion by 2009, according to Datamonitor research, driven by sales of GlaxoSmithKline's (GSK) Advair/Seretide (fluticasone/salmeterol) and AstraZeneca's second-to-market product, Symbicort (budesonide/formoterol), which is expected to be launched in the US in 2007. The initial indication for Flutiform will be asthma, with a chronic obstructive pulmonary disease (COPD) indication to follow. Asthma represents the largest segment of the respiratory market and, according to IMS data, will account for 60% of US FDC respiratory drug sales in 2009, with the remaining 40% attributed to use in COPD. Flutiform has one vital attribute: it will be the first product to combine the efficacy and safety profile of fluticasone, which is the anti-inflammatory component of GSK's best-selling, Advair, with the fast-acting onset of action of formoterol, which provides the reliever component of AstraZeneca's Symbicort. AstraZeneca is using this unique attribute of formotorol to introduce Symbicort maintenance and reliever therapy (SMART), which is expected to be available in Europe from 2006. The SMART approach allows patients to adjust their Symbicort dose during a worsening of symptoms, which will offer a real advance in treatment by ensuring patients are guided to increase their preventative treatment earlier, thus reducing the severity of exacerbations. If the Symbicort SMART submission is successful, it is possible that US physicians may view Flutiform more favorably than as just another 'me too' product. SkyePharma strategy However, both Altana/Sanofi-Aventis and Novartis/Schering-Plough are forecast to launch novel FDC products based around formoterol in the same timeframe as Flutiform. Overall, as the third FDC to reach market, Datamonitor forecasts that Flutiform will capture around a 5% first year market share, rising to 10% after three years, equivalent to peak sales of $600 million. While well below SkyePharma's management guidance peak sales of over $1 billion, these sales forecasts still represent a substantial opportunity for SkyePharma. In the US, asthma is largely treated by primary care physicians and the marketing of Flutiform will require a large sales force and direct-to-consumer advertising campaign. Only a large pharmaceutical company, such as Sanofi-Aventis, Merck & Co, GSK, Pfizer or Novartis could fulfill these requirements. The problem for SkyePharma is that, having already walked away from one deal, it leaves the question of which company is left to co-market the drug given that most of the majors already have their own products or have already struck licensing deals with other companies. The ideal partner would be Pfizer, due to its strong presence in COPD, which would be complemented by an FDC product for asthma, although its focus may lie in non-steroidal approaches. However, SkyePharma may be able to strike more favorable terms with companies lacking any current respiratory presence, but which have an eye on the asthma market with pipeline products, such as Wyeth. Related research:
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