SkyePharma PLC announced that in June 2003 it licensed exclusive marketing and distribution rights for DepoCyte, a treatment for lymphomatous meningitis, to Mundipharma International Holdings Limited for most European and Eastern European countries.

Under the terms of the agreement, Mundipharma will pay SkyePharma euro 4.25 million (US $4.9 million) on signature plus additional milestone payments that may amount in total to euro 10.75 million (US $12.3 million). SkyePharma will manufacture the drug at its San Diego facility and supply to Mundipharma associates at an agreed transfer price. Mundipharma will also pay SkyePharma an additional royalty on sales.

SkyePharma's chief executive officer, Michael Ashton, said "We are delighted to have found in Mundipharma a partner which can bring the focused marketing and sales support needed for a specialist product like DepoCyte. Mundipharma shares our view that lymphomatous meningitis is both under-diagnosed and under-treated and that DepoCyte offers great potential to bring relief of suffering from this devastating complication of cancer. We look forward to working together."

DepoCyte is a sustained release injectable formulation of cytarabine and is approved in both the USA and Europe for the treatment of lymphomatous meningitis, a serious late-stage complication of lymphoma, a form of cancer affecting the lymphatic system. Lymphomatous meningitis is a subset of neoplastic meningitis. Cytarabine is known to be an effective treatment for neoplastic meningitis but is rapidly metabolised and so patients require spinal (intrathecal) injections every two days. SkyePharma's proprietary DepoFoam delivery technology encapsulates cytarabine in water solution within minute particles of lipid. After injection, these particles gradually degrade, prolonging the release of the drug and extending the period between injections to two weeks. This brings quality of life benefits to the patient and also savings in hospital costs. Furthermore, maintenance of sustained higher levels of cytarabine in the cerebrospinal fluid may also prolong the time to neurological progression.

Lymphomatous meningitis is a comparatively uncommon condition with approximately 10,000 cases reported worldwide each year. Consequently DepoCyt has been granted "Orphan Drug" status in the USA. SkyePharma is currently conducting a Phase IV study, the data from which will be submitted in applications to the FDA and EMEA to expand the treatment indication for DepoCyt/DepoCyte to neoplastic meningitis associated with solid tumours. This is a more common condition and would increase the number of patients eligible for treatment with DepoCyt/DepoCyte approximately threefold.

DepoCyt was approved by the US Food & Drug Administration in April 1999 and is marketed in North America by Enzon Pharmaceuticals. Rights in Japan were licensed to Nippon-Shinyaku in 2001 although the product is not yet on the market. DepoCyte was approved by the European Medicines Evaluation Authority in August 2001. European marketing and distribution rights for DepoCyte were licensed to Elan Pharmaceuticals in June 2001 but following Elan's decision not to proceed with the planned establishment of an oncology sales force, SkyePharma has reacquired these European rights for an unspecified amount. This amount will be written off in full in SkyePharma's accounts for the six months to June 30th, 2003.