NASDAQ:SKYE LSE:SKP

1
Interim Results 2004 Michael Ashton Chief
Executive Donald Nicholson Finance Director 15
September 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 1.80 1 has been used
throughout. These dollar equivalent numbers do
not imply restatement from UK GAAP to US
GAAP. This presentation was updated on 14
September 2004
3
H104 summary

• DepoDur? - approved by FDA 18 May
• Foradil? Certihaler? - first approvals in Europe
• revenues 28.5m (H103 22.6m) up by 26
• royalty income 10.3m up by 29 - now over
  one-third of total revenues
• net loss cut by 45 to 10.2m (H103 18.7m)
• pulmonary package negotiations proceeding
• 70 mn raised / refinanced through convertible
  issues

4
H104 - new corporate developments

• Medeus Pharma - DepoDur? Europe
• 100 mn of milestones and 35-50 share of sales
• First Horizon oral cardiovascular product
• response to approvable letter filed with FDA -
  approval expected in Q4
• up to 50 mn in milestones 25 net royalty
• Critical Therapeutics zileuton
• oral leukotriene antagonist
• now in Ph III for asthma expect to file in
  2005
• Trigenesis dermatology portfolio
• 20 mn in milestones and 10 royalty (35 of
  sub-licence income)
• Trigenesis now acquired by Dr Reddys
• Vectura pulmonary alliance
• technology sharing Vectura device more suited
  to delivery of macromolecules
• King terminated Altace agreement after
  announcement of acquisition by Mylan
• still at pre-feasibility stage of development

5
Pulmonary package

• formoterol MDI
• long-acting beta-agonist bronchodilator (LABA)
• Phase II completed
• target filing Q3 06
• formoterol/fluticasone MDI
• flutiform
• fixed-dose combination inhaled steroid / LABA
• competitive with GlaxoSmithKlines Advair
  (salmeterol/fluticasone)
• clinical scale-up completed
• Ph I completed
• target filing date Q4 06
• budesonide MDI (US rights)
• inhaled steroid
• European Ph III completed
• substantial market opportunity for combination
  asthma product
• 2003 global sales Advair (GlaxoSmithKline) 3.6
  bn Symbicort (AstraZeneca) 0.5 bn

6
Global asthma market 2003-2010
Source ING Asthma COPD July 2004
7
Pulmonary package - status

• due diligence ongoing with several potential
  partners, including preferred partner
• manufacturing, clinical and regulatory
  development ongoing
• due diligence covers the following (not in order
  of importance)
• Active ingredient chemistry/pharmacology Analytic
  al issues
• Raw material sources Subcontractor evaluation
• Confirmation of development status Future trial
  protocols
• Project development cost estimates
  Intellectual property issues
• Regulatory issues Competitive analysis
• Manufacturing issues Cost of Goods evaluation
• Market analysis Commercial evaluation

8
A transforming business
Nine Ten approved products FDA approvals validate
three of our five delivery technologies Foradil?
Certihaler? approvable letter (Oct 03)
validates fourth (pulmonary)
Strong clinical pipeline 2 Approved (awaiting
launch), 1 Filed, 4 x Phase III, 5 x Phase II
Strategic emphasis on royalty income over upfront
milestone payments Royalty income replacing
milestones as main revenue source, driven by
Now Paxil CR?, Xatral OD/Uroxatral, Solaraze,
DepoCyt
Future Foradil Certihaler, DepoDur?,
HFA-formoterol, Propofol IDD-D?
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• Marketed Products
• Update

10
Paxil CR? defending the Paxil franchise
Paxil CR? holds 7.5 of the US SSRI
antidepressant new prescription market

• generic competition for Paxil from 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?
• despite May 04 Appeals Court decision, GSK
  still aggressively defending last patent for
  Paxil (expires end-2006) should limit number
  of generic versions
• Paxil CR? US sales
• 2003 635m
• 2004 750m (est likely peak)
• H104 193 mn (351m) 26 CER
• 3 mn (5 mn) of non-US sales
• royalty rate dispute with GSK still proceeding

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Xatral OD/Uroxatral Sanofi-Aventis

• Once-daily Geomatrix? formulation of alfusozin
  for BPH
• two USPs
• highly uroselective (avoids postural hypotension)
• no ejaculatory side-effects (cf. Flomax)
• marketed in Europe ROW since 2000
• USA Uroxatral? launched Nov 2003
• primary care launch Mar 04
• main competitor Flomax (tamsulosin)
• Uroxatral? now holds 10 of combined
• NRx for Flomax and Uroxatral?
• AUR indication approved Europe Ph III US
• H104 world sales (all versions) 138 mn 35
  CER
• 2006 forecast 500m (Sanofi-Aventis)
• SkyePharma return on sales
• mid-single digits

12
Solaraze? Bradley/Shire

• now marketed by Bradley in North America
• Quintiles Bioglan unit sold to Bradley Aug 04
• Bradley successful US specialty pharma company
• focus on dermatology, gastroenterology,
  respiratory and internal medicine
• expands US detail force for Solaraze from 60 to
  160
• SkyePharma received 5m for consent to transfer
  of marketing rights
• H104 global in-market sales 12.5m
• US 8.7m (some wholesaler inventory build)
  Europe 3.8 m
• positive longer-term results from phase 3
  Australian study
• data will be used for Australian filing
• will support marketing elsewhere

13
DepoCyt? Enzon / Mundipharma

• European launch by Mundipharma
• part of Purdue/Mundipharma/Napp group
• European launch (as DepoCyte?) March 04
• H1 04 global in-market sales 2.7m
• clinical trial of solid tumour patients now
  fully enrolled
• expect to file data with FDA Q105
• aim to expand indication to neoplastic
  meningitis associated with solid tumours
• approval would roughly triple the number of
  eligible patients
• substantial milestones due on approval

14

• Pipeline Products
• Update

15
DepoDur? Endo, Medeus

• USA
• approved by FDA 18 May 04 (first cycle review)
• unrestricted label for relief of post-operative
  pain
• no unexpected safety warnings required
• launch by Endo expected before year-end
• SkyePharma has now shipped launch material to
  Endo
• satisfies conditions for 5m milestone payment
• pricing not yet announced
• Europe
• filed Nov 03 - EU mutual recognition procedure
  with UK as reference country
• on normal timelines, UK approval expected by
  year-end
• appointed Medeus Pharma as European licensee
• pan-European hospital sales force of 150
• Sustained-release morphine for relief of pain
  after surgery
• given as a single epidural injection
  before/during operation
• morphine released over 48 hours (period of peak
  post-op. pain)
• minimizes breakthrough pain
• with conventional PCA, patient must react to pain

16
DepoDur? - potential market

• knee replacements revisions
• hip replacements revisions
• major abdominal surgery
• caesarean sections
• thoracic
• vascular

• 10-12 million key target surgeries a year in USA
  and Europe
• surgeries associated with an ageing population
  are growing at 6-7 per annum
• market research indicates potential for
• USA EUROPE
• Procedure share 16-50 20-50
• Price per procedure 125-175 60-120
• estd sales potential 300 - 400m

17
Foradil? Certihaler? Novartis/Schering-Plough

• formoterol (fast-onset, long-acting
  bronchodilator) in Certihaler? dry-powder inhaler
• 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
• global sales of Foradil in single-dose DPI
  device 300 mn (2003)
• filed US Europe Dec 02
• FDA approvable letter issued Oct 03
• Novartis has filed additional data requested
• European approvals began H1 04 (Switzerland,
  Austria, Finland, Netherlands.)
• SkyePharma return on sales 10 (royalty
  manufacturing return)

18
Pipeline progress

• Propofol IDD-D (SkyePharma/Endo)
• improved version of AstraZenecas Diprivan
  injectable anaesthetic/sedative
• novel formulation prevents bacterial
  contamination
• Ph II trial completed in discussions with FDA
  re Ph III trial design
• 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 (enrolment completed
  Q104)
• filing 2005
• Pulmicort HFA-MDI (AstraZeneca for Europe)
• Pulmicort (budesonide) inhaled steroid (for
  asthma)
• Ph III trial complete
• 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
• Ph I trial started in Europe Sep 03 Ph II to
  start late 04

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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 Cordicant-U
no DiclofenacRequipzileuton UndisclosedStatin
NK-104 Undisclosed
GlaxoSmithKline Sanofi-Aventis Roche TherabelMun
dipharmaRatiopharm GlaxoSmithKlineCritical
Therapeutics Merck KGaAKowa Undisclosed
PULMONARY
Foradil CertihalerPulmicort HFA Formoterol
HFAQAB 149 Formoterol Combi
NovartisAstraZeneca SkyePharma
Novartis SkyePharma
Enzon/MundiPharma/Nippon SyakuEndo /
MedeusAstralis SkyePharma SkyePharmaGeneMedix
DepoCytDepoDurPsoraxine DepoBupivacaineHGHIn
terferon alpha-2b
SkyePharma has an option on world rights for
PsoraxineTM, exercisable at the end of Phase II
TOPICAL
SolarazeMultipleStatus is most advanced project
Bradley/ShireDr Reddys (Trigenesis)
SOLUBILISATION
Fenofibrate Propofol IDD-D Multiple
SkyePharma Endo / SkyePharma Baxter
20
Donald Nicholson Finance Director
21
Turnover

• Turnover up 26
• - excl. Endo/First Horizon 5.5m
• Contract development up 26
• Royalties up 28
• Manuf. distribution up 22
• Deferred income
• - contract development 9.4m
• - other operating income 7.5m
• 16.9m
• - to reverse in H2 2004 12.9m

6 months
m
28.5
27.7
22.6
22
Turnover
Cumulative annual growth rate H196 H104 38
m
69.6
Collaboration equity H1 H2
53.2
46.1
28.5
24.3
22.6
17.0
13.8
9.0
23
RD sustained investment
6 months
m

• H1 04 RD down by 2.1m (-13)
• 3.1m on DepoDur
• 3.1m on Other Injectable
• 2.4m on Budesonide HFA
• 1.4m on Pulmonary Package
• 1.3m on Enhanced Solubilisation
• 1.1m on DepoBupivacaine
• RD target FY04 32m
• Injectable 14m
• Inhalation 11m
• Enhanced Solubilisation 6m
• subject to partner reimbursement

16.4
14.4
12.1
Other inhalation
Topical
Oral
Propofol
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Operating result

• Key variables
• Gross profit up 52
• RD down 13
• Operating loss before exceptionals down 52
• Operating loss after exceptionals down 44
• Amortisation of intangibles 3.1m
• EBITDA (1.6)m 85

25
Net Cash
m
Debt 11.3m of long-term debt (excl. conv)
- 7.2m Swiss mortgage 78.2m convertible
debt 20m new (18.9m net) convertible debt
announced 29 April 49m additional offered July
in exchange for 2005 convertible leaves lt10m
of 2005 convertible outstanding new conversion
at 1.00 first conversion 2009
December 2002
June 2004
December 2003
Net Cash
Overdraft
Cash
26
New convertible issues (Apr/Jul 04)

• 20m raised 29 Apr further 49m raised 1 Jul
• conversion price 1.00
• gt50 premium to then-current share price
• 6.0 coupon
• same as for 2005 convertible
• first redemption 5 years (May 09)
• SkyePharma can force conversion if share price
  gt130p for 20 consecutive trading days between
  May 09 and May 11
• 49m of 05 convertible exchanged 1-for-1 and
  retired
• 10 mn of 05 issue left to be redeemed or
  converted in June 2005

• Net effect defers conversion until 2009 at same
  coupon and reduces potential dilution by raising
  conversion price

27
Cash flow H104
m
Cash outflow
Issue of convertible bond
Investments (Transition disposal)
CAPEX
Interest
Debt repaid
Total 7.0m
28
2004 full year

• 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 negative impact on revenues and
  cashflow
• expect further substantial increase in royalty
  income
• 2004-05 diminishing dependence on milestones
• 2004 profitability dependant on structure and
  timing of pulmonary deal and FDA approval of
  cardiovascular product

29
Financial summary

• Turnover up by 26
• Royalties up by 28
• Gross profit up by 52
• Operating loss before exceptionals down by 52
• EBITDA loss (1.6m) reduced by 85
• Enhanced financial flexibility

30
Newsflow 2004 further progress

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

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

31
Investment highlights

• Strategic focus on royalties rather than upfront
  payments

Ten FDA-approved products validate drug delivery
technologies - DepoDur? approval demonstrates
successful development capability
Strong near-term clinical pipeline 2 Approved
(awaiting launch),1 Filed, 4 x Phase III, 3 x
Phase II
Two major product launches expected by end-year
32
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