SkyePharma PLC has entered into an amendment agreement with
GlaxoSmithKline in respect of Paxil CR, under which GSK will make a one-time payment of approximately $10 million. In addition, SkyePharma will also be entitled to an increase in the royalty rate from 3 to 4 per cent on actual net sales of Paxil CR, with effect from March 4, 2005. As GSK has been unable to supply Paxil CR in the US since March 4, 2005, GSK has also agreed to pay SkyePharma the same level of royalty on GSK's budgeted sales of Paxil CR from March 4, 2005 while the product remains off the market, subject to other terms of the agreement, a company release stated here.

Michael Ashton, SkyePharma's Chief Executive, said, "The royalties from Paxil CR are currently the single most important income flow for SkyePharma. We are therefore delighted that GSK has agreed to continue the royalty payment as if supply was maintained. We look forward to continuing our work together with GSK on this and other product collaborations."

On March 4, 2005, the US Food & Drug Administration halted distribution of supplies of Paxil CR and another unrelated product at GSK's manufacturing plant at Cidra in Puerto Rico and distribution depots, thereby halting US distribution of Paxil CR. Both GSK and the FDA agreed at the time that manufacturing issues cited by the Agency posed no significant safety issue for patients. GSK is working with the FDA to resolve these manufacturing issues as quickly as possible, the release added.