SkyePharma PLC announces that it has entered into a strategic marketing agreement with Medeus Pharma for the marketing and distribution of DepoMorphine in Europe.

DepoMorphine is SkyePharma's novel sustained-release injectable formulation of morphine for relief of moderate-to-severe post-operative pain. DepoMorphine was filed in the US and Europe last year and approvals are anticipated to commence in the second half of 2004.

SkyePharma chief executive Michael Ashton said, 'The structure of this agreement represents a strategic shift away from upfront milestone payments towards deriving a greater share of future revenues for our products, and demonstrates our commitment to improve the quality of our earnings by reducing our dependence on irregular milestone payments. The premium share of sales we will receive for DepoMorphine reflects the substantial advantages that we believe our product can deliver for patients, physicians, anaesthetists and hospitals. Our clinical trials have shown that DepoMorphine has the potential to significantly improve the treatment of pain after surgery, a well-recognized area of unmet medical need. We believe Medeus Pharma has the right therapeutic focus and targeted sales effort to maximise the potential of DepoMorphine in Europe and we look forward to working with them.'

Bryan Morton, chief executive of Medeus Pharma, said, 'Adding this terrific product to our portfolio of critical care and oncology products reflects the
interest in our 'Window on Europe' business model. We look forward to a strong collaboration with SkyePharma to bring DepoMorphine to the market in Europe.'

SkyePharma will receive a share of sales of DepoMorphine that will increase from an initial 35 per cent to a maximum of 50 per cent of net sales as certain sales thresholds are reached. SkyePharma will also receive an upfront payment and will receive further future milestone payments on attainment of marketing approvals, commercial launches and sales targets; if all targets are met these payments will amount to over €100 million. SkyePharma will be responsible for the cost of manufacturing the product and clinical development required to gain and maintain approvals throughout the expanded European Union.

Medeus Pharma will be responsible for the cost of all sales and marketing of the product, including pre-launch development and any further clinical studies (other than Phase IV studies for market development, for which the parties will collaborate).