NASDAQ:SKYE LSE:SKP

1
2003 Full Year Results 29 April 2004
NASDAQSKYE LSESKP www.skyepharma.com UK
tel [phone] US tel [phone]

2
Legal statement
This presentation does not constitute or form
part of any offer for sale or subscription or
solicitation of any offer to buy or subscribe for
any securities in SkyePharma PLC nor shall it or
any part of it form the basis of or be relied on
in connection with any contract or commitment
whatsoever. This presentation is only being
distributed to persons who fall within Article 8
of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) (No 2) Order 1997 or
Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order
1996, as amended.   This presentation includes
certain forward-looking statements with respect
to certain development projects, potential
collaborative partnerships, results of operations
and certain plans and objectives of SkyePharma
including, in particular, the statements
regarding potential sales revenues from Paxil CR,
targeted sales revenues from other products both
currently marketed and under development,
possible launch dates for new products, and our
revenue and profit guidance for the 2004
financial year. By their very nature
forward-looking statements involve risk and
uncertainty that could cause actual results and
developments to differ materially from those
expressed or implied. The significant risks
related to SkyePharmas business which could
cause our actual results and developments to
differ materially from those forward-looking
statements are discussed in SkyePharmas SEC
filings under the caption Risk
Factors. SkyePharma reports under UK GAAP.
Where US dollar equivalents have been provided
for convenience in this presentation, a fixed
exchange rate of 1.79 1 has been used
throughout. These dollar equivalent numbers do
not imply restatement from UK GAAP to US
GAAP. This presentation was updated on 28th
April 2004
3
Michael Ashton
Chief Executive Officer
4
2003 summary

• 2003 loss primarily due to delays in completing
  3 key new agreements
• milestone payments 24m vs 48m in 2002
• royalty income nearly tripled
• since year-end, one key deal signed on excellent
  terms
• DepoMorphine? / Medeus
• dermatology package outlicensed
• commercial terms agreed for pulmonary package -
  with partner of choice
• subject to due diligence
• 20m convertible bond issue completed

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A transforming business
Nine approved products FDA approvals validate
three of our five delivery technologies Foradil?
Certihaler? approvable letter (Oct 03)
validates fourth (pulmonary)
Strong clinical pipeline 2 Filed, 4 x Phase III,
3 x Phase II
Changing quality of earnings
Strategic emphasis on royalty income over upfront
milestone payments Royalty income to replace
milestones as main revenue source, driven by
Now Paxil CR?, Xatral OD/Uroxatral, Solaraze,
DepoCyt
Future Foradil Certihaler , DepoMorphine?,
HFA-formoterol, Propofol IDD-D?
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Major Products Update
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Paxil CR? defending the Paxil franchise
Paxil CR? has captured 8 of the US SSRI
antidepressant prescription market

• first US generic competition for Paxil started
  8 September 03
• a prescription for Paxil CR? cannot be
  substituted with generic paroxetine
• but some indirect price pressure
• GSK still actively promoting Paxil CR?
• GSK aggressively defending last patent for
  Paxil (expires end-2006)
• Paxil CR? US sales
• 2002 300 mn
• 2003 650 mn
• 2004 800 mn (est likely peak)
• SkyePharma royalty rate low single digits

It is very important to keep the sales effort
behind Paxil CR? John Coombe (GSKs CFO) Feb
2004
expect increase from start of US generic
competition
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Xatral OD/Uroxatral Sanofi-Synthélabo

• Once-daily Geomatrix? formulation of alfusozin
• uroselective alpha-blocker
• indication urinary symptoms of BPH
• On market in Europe ROW since 2000
• replacing multidose versions

• USA Uroxatral?
• new product on US market
• launched to urologists Nov 03
• launched to primary care Mar 04
• two USPs
• uroselection (no postural hypotension)
• no ejaculatory side-effects

• AUR indication approved Europe Ph III US
• 2003 world sales 222 mn (25 CER)
• Q104 world sales 72 mn (50 CER)
• 2006 forecast 500 mn (Sanofi-Synthélabo)
• SkyePharma royalty rate mid-single digits

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DepoMorphine? Endo, Medeus
US filed with FDA Jul 03 (PDUFA date 18 May
04) Europe filed Nov 03 (UK, then mutual
recognition procedure)

• Clinical trials (1000 patients) highly
  statistically significant
• hip/knee surgery, lower abdominal surgery,
  caesarean section
• Sustained-release morphine for relief of pain
  after surgery
• given as a single epidural injection
  before/during operation
• morphine released evenly over 48 hours (period
  of peak post-op. pain)
• minimizes breakthrough pain
• with conventional PCA, patient must react to
  pain
• no need for catheters and infusion pumps (
  savings for hospital)

• Disadvantages of conventional morphine
• effective analgesic but short-acting
• repeat doses need a catheter and an infusion
  pump
• catheter problems main barrier to wider use of
  epidural analgesia
• epidural route desirable (delivers direct to
  brain, needs less morphine than IV)

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DepoMorphine? - potential endorsed by licence
deals

• USA/Canada
• 120m deal with Endo Pharmaceuticals (Dec 02)
• rights for DepoMorphine? and Propofol IDD-D?
• option on related pipeline products including
  DepoBupivacaine
• SkyePharma bears development, manufacture costs
• Endo bears marketing costs
• SkyePharmas share of sales 20-60
• based on combined sales of DepoMorphine? and
  Propofol IDD-D?
• gt50 share if combined sales gt250 mn

• Europe
• 100m deal with Medeus Pharma (Mar 04)
• rights for DepoMorphine? only throughout Europe
• SkyePharma bears development, manufacture costs
• Medeus bears marketing costs
• SkyePharma share of sales 35-50
• 50 share reached at sales well below 100 mn
• Rights for rest of world still available for
  licence

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Foradil? Novartis / Schering-Plough

• Active ingredient formoterol
• fast-onset, long-acting bronchodilator for
  asthma
• recent major study on maintenance use of
  formoterol raises value
• SkyePharma developed both Certihaler? device
  and formulation
• formulation keeps powder dry, ensures accurate
  consistent dose

• now also being used in second collaboration with
  Novartis (QAB149)

Schering-Plough to market in key US market,
Novartis elsewhere Filed US Europe Dec 02
(launches expected in H2 04)

• FDA approvable letter issued Oct 03
• European approvals 2004 (Switzerland, Austria,
  Finland.)

SkyePharma return on sales 10 (royalty
manufacturing return)
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Propofol IDD-D? Endo, SkyePharma

• improved version of AstraZenecas injectable
  anaesthetic Diprivan
• SkyePharmas formulation unique - cannot support
  microbial growth
• no need for a preservative
• 2 emulsion ( lower injection volume and less
  lipid)
• not a generic
• designed for continuous uninterrupted 24-hour
  sedation
• ICU sedation is fastest-growing segment of
  Diprivan market

• Ph II completed (5 mn milestone payment from
  Endo)
• Ph III to start Q204 target filing 2005
  target launch 2006

• North America Endo (same terms as
  DepoMorphine?)
• Europe/Japan licensees to be appointed
• est. sales potential for Propofol IDD-D? 200 mn

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Solaraze? Quintiles/Shire

• topical gel for actinic keratosis
• early form of squamous cell carcinoma
• proprietary HA formulation of diclofenac
• licensed to Quintiles (North America)
• licensed to Shire (Europe ANZ / SA / Pac Rim)

• 2003 sales 18 mn (USA 12 mn Europe 6 mn)
• vs 8 mn in 2002
• Australian efficacy trial complete data being
  analysed
• proof of eradication could expand market
  potential

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DepoCyt? Enzon/Mundipharma

• treatment for lymphomatous meningitis
• cytarabine in DepoFoam? sustained-release
  injectable formulation
• licensed to Enzon for North America

• European rights reacquired from Elan and
  licensed to Mundipharma
• part of Purdue/Mundipharma/Napp group
• pan-European launch (as DepoCyte?) March 04
• 2003 sales 5 mn (all in USA)
• Phase IV trial patient enrolment complete
• aim to expand indication to neoplastic
  meningitis associated with solid tumours

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Other major pipeline products

• HFA-formoterol (SkyePharma)
• Fast onset, long-acting bronchodilator in HFA
  metered-dose inhaler (HFA-MDI)
• Value enhanced by recent major study on
  maintenance use of formoterol

Ph II trial complete Ph III to commence
2004 Filing end 2005 launch 2006/7

• Pulmicort HFA-MDI (AstraZeneca for Europe)
• Pulmicort (budesonide) inhaled steroid (for
  asthma)
• Ph II study complete - bioequivalent to CFC MDI

Ph III trial ongoing Filing early 2005
DepoBupivacaine (SkyePharma) Long-acting
injectable formulation of local
anaesthetic Designed to provide 48-72 hours of
local pain relief after out-patient
surgery Target indications knee arthroscopy
laparoscopic surgery plastic surgery
Ph I trial started in Europe Sep 03 Ph II to
start mid-2004

• Requip (GlaxoSmithKline)
• Once-daily oral formulation of ropinirole (for
  Parkinsons disease)
• Therapeutic benefits improved compliance
• SkyePharma managing clinical studies for GSK

Ph III started Jun 03 Filing 2005
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2003 - new corporate developments

• licensing agreement signed with King for Altace
  (ramipril)
• US branded ACE inhibitor market leader, with 527
  mn sales in 2003

• option agreement with unnamed partner in
  pulmonary area
• agreement with Critical Therapeutics to develop
  zileuton for asthma/COPD
• once-daily version previously developed for
  Abbott
• completed Phase III for asthma but never filed
• agreement with Novartis to co-develop QAB149
• ultra-long acting bronchodilator for asthma/COPD
• agreement with GlaxoSmithKline to use pulmonary
  formulation technology

• Astralis commenced US Phase I clinical trial for
  Psoraxine? for psoriasis
• Ph II trial started Mar 04
• strategic stake in Micap plc UK yeast
  technology specialist
• successfully completed IPO on AIM Aug 03
• SkyePharma exercised option over pharma
  applications Feb 04
• strategic stake in Vital Living Inc.
• development of pharmaceutical-grade
  nutriceuticals

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Well-stocked pipeline
SkyePharma
Client products
marketed
approved
filed
Ph.III
Ph.II
Ph.I
feasibility
product
licence or partner
Paxil CRXatral OD Madopar DR Coruno Nifedipine
DiclofenacRequipzileuton UndisclosedStatin
NK-104 Undisclosed Altace
GlaxoSmithKline Sanofi-Synthelabo
Roche TherabelMundipharmaRatiopharm GlaxoSmithK
lineCritical Therapeutics Merck
KGaAKowa Undisclosed King
PULMONARY
Foradil CertihalerPulmicort HFA Formoterol
HFAQAB 149 Formoterol Combi
NovartisAstraZeneca SkyePharma
Novartis SkyePharma
Enzon/MundiPharma/Nippon SyakuEndo /
MedeusAstralis SkyePharma SkyePharmaGeneMedix
Chugai
DepoCytDepoMorphinePsoraxine DepoBupivacaineH
GHInterferon alpha-2b Undisclosed
SkyePharma has an option on world rights for
PsoraxineTM, exercisable at the end of Phase II
TOPICAL
SolarazeHyclindaAcyclovir
Quintiles/ShireSkyePharmaSakai
SOLUBILISATION
Fenofibrate Propofol IDD-D BusulfanMultiple
SkyePharma Endo / SkyePharma SuperGen Baxter
18
Donald Nicholson
Finance Director
19
Turnover

• Turnover down 24
• Contract development down 47
• Royalties up 177
• Manuf. distribution down 35
• Deferred income
• - contract development 7.1m
• - other operating income 8.8m
• 15.9m
• - to reverse in 2004 12.9m
• Recognised through statement of
• total recognised gains and losses 2.0m

m
69.6
53.2
46.1
20
Turnover
Cumulative annual growth of 29
m
69.6
Collaboration equity H1 H2
53.2
46.1
24.3
22.6
17.0
13.8
9.0
21
RD
m
RD increased by 4 7.0m on DepoMorphine 8.6m
on Injectable 6.7m on Inhalation 5.9m in Canada
and Sweden RD target 2004 32m
Inhalation 14m Propofol 3m
DepoMorphine 3m NB subject to partner
reimbursement
30.5
29.3
17.9
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Operating result
m 2002 2003
turnover 69.6 53.2 -24
gross profit 44.7 23.4 -47
RD 29.3 30.5 4
operating profit/(loss) 4.7 (39.5) -44.2m
net profit/(loss) 1.1 (43.2) -44.3m
EPS (pence) 0.2p (7.1p) -7.3p

EBITDA 17.3 (26.6) -43.9m

• Key variables
• Gross profit down 47
• Timing and recognition
• of deals and milestones
• RD up 4
• One-off charges (including
• acquisition of DepoCyt? rights from
• Elan) 2.8m
• Exceptionals of 9.5m
• - cash 2.7m
• - non cash 6.8m
• Amortisation of intangibles
• of 6.7m
• EBITDA (26.6)m

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Operating result H1/H2
m H103 H203
turnover 22.6 30.6 35
gross profit 9.9 13.5 36
operating loss before exceptionals (15.6) (14.4) -7
net loss before exceptionals (17.3) (16.4) -5
net loss after exceptionals (18.7) (24.5) 31
Turnover up 35 Gross profit up 36 Operating
loss before exceptionals down 7 Net loss before
exceptionals down 5
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Net Cash
m
Debt 68.2m of long-term debt 60m convertible
debt Conversion June 05 Conversion price
83p 20m new convertible debt announced today

December 2002
June 2003
December 2003
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New convertible issue

• Provides additional cash cushion against timing
  of deals and for strategic initiatives
• 20m raised
• conversion price 65 premium to todays share
  price
• 6.0 coupon
• redeemable after 7 years
• provides additional flexibility re existing
  convertible

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Cash flow
m
Cash generation
Financing
CAPEX
Investments
Interest
Taxation
Total - 6.1m
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Financial summary 2003

• Turnover down 24
• Timing and recognition of deals and milestones
  2 signed since year-end
• Royalties almost tripled
• Exceptionals of 9.5m
• RD up 4
• Cash Neutral
• New convertible

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2004

• performance will depend on timing and structure
  of deals
• deliberate strategic shift away from upfront
  payments to longer-term milestone payments and
  higher share of profits
• short-term impact on revenues and cashflow
• expect further substantial increase in royalty
  income
• 2004-05 diminishing dependence on milestones
• further guidance to be issued once deals
  completed

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Michael Ashton
Chief Executive Officer
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Newsflow 2003 most targets met

• Filings
• DepoMorphine? US ?
• DepoMorphine? Europe ?
• Paxil? CR Social Anxiety FDA approval 17 Oct
• Paxil? CR PMDD intermittent ?
• (Paxil? CR PMDD continuous FDA approval 2 Sep)
• Corporate commercial agreements
• European licensing of DepoMorphine
• European licensing of Propofol IDD-D
• European licensing of DepoCyte? ?
• Licensing of Pulmonary products
• Licensing of Dermatology products
• Licensing deal with King Altace? ?
• Micap floated on AIM ?

• Product approvals/launches
• Uroxatral? US ?
• DepoCyte? Europe
• Foradil? Certihaler? US approvable 22 Oct
• Clinical trial progression
• Requip? Ph III start ?
• Propofol IDD-D? Ph II end ?
• Propofol IDD-D? Ph III start
• Pulmicort? HFA-MDI Ph III start ?
• Psoraxine (Astralis) Ph I start ?
• Clinical data publications
• DepoMorphine? Ph III
• Foradil? DPI Ph III
• Uroxatral? Ph III

31
Key deals outstanding

• European rights for DepoMorphine? ?
• licensed to Medeus Pharma March 04
• 100 mn of milestones and 35-50 share of sales
• deal terms illustrate strategic drive away from
  upfronts to higher share of profits
• dermatology product package ?
• licensed to Trigenesis Apr 04
• pulmonary package
• formoterol MDI, formoterol/fluticasone MDI,
  budesonide MDI (US rights)
• significant external and internal developments
  in November
• substantial offer rejected late 03
• commercial terms agreed with partner of choice
  April 04 (subject to due diligence)
• undisclosed pipeline product
• near-term market opportunity

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20 mn dermatology licence deal

• 2003 strategic decision dermatology assets
  non-core
• 500 mn sales potential but low priority for
  SkyePharma
• Trigenesis granted exclusive licence for
• residual unassigned rights for Solaraze? and two
  other marketed products
• six pipeline products
• six topical delivery technologies
• Trigenesis is a US dermatology company
• CEO and founder former senior executive in
  GSK/SB
• upfront payment other milestones total 20
  mn
• 10 royalty ( 35 share of sub-licence income)
• SkyePharmas existing licences unaffected

33
Newsflow 2004 further progress

• Filings
• Requip? OD Europe (US 2005)
• Licence agreements
• DepoMorphine? (Europe) ?
• Pulmonary product package
• Unnamed pipeline product
• Dermatology assets ?
• Propofol IDD-D? (Europe)
• DepoBupivacaine? (Europe)
• Clinical data publications (by partners)
• DepoMorphine? Ph III
• American Pain Society, Vancouver 6-9 May
• Foradil? Certihaler? Ph III
• Uroxatral? Ph III

• Product approvals/launches
• Paxil? CR PMDD intermittent US ?
• DepoMorphine? US PDUFA date 18 May
• Launch of DepoCyte? Europe ?
• Foradil? Certihaler? US approvable Oct 03
• Foradil? Certihaler? Europe ?
• Clinical trial progression
• Propofol IDD-D? Ph III start
• Formoterol HFA-MDI Ph III start
• Formoterolfluticasone HFA-MDI Ph II/III start
• Zileuton (Critical Therapeutics) Ph III start
  (COPD)
• Psoraxine? (Astralis) Ph II start ?
• DepoBupivacaine? Ph II start

34
Investment highlights

• Strategic focus on royalties rather than upfront
  payments

Nine FDA-approved products validate drug delivery
technologies
Strong near-term clinical pipeline 2 Filed, 4 x
Phase III, 3 x Phase II
Two major product launches expected in H2 04
35
Investor relations contacts London Peter Laing,
Director of Corporate Communications 44-(0)207-491
-1777 plaing_at_skyepharma.co.uk New York Sandra
Haughton, US Investor Relations
Manager 1-212-753-5780 shaughton_at_skyepharma.com
and please visit our website
NASDAQSKYE LSESKP www.skyepharma.com