NASDAQ:SKYE LSE:SKP

1
Corporate Presentation Michael Ashton Chief
Executive
NASDAQSKYE LSESKP www.skyepharma.com UK
tel [phone] US tel [phone]

29 September 2005
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 2005
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 1.74 1 has been used
throughout. These dollar equivalent numbers do
not imply restatement from UK GAAP to US
GAAP. This presentation was updated on 26
September 2005
3
SkyePharma in brief

• UK-domiciled speciality pharmaceutical company
• drug delivery industry leader
• originally founded 1983, IPO 1996
• listed London (SKP), New York (ADR, SKYE)
• market capitalisation 250/445 mn
• 29 Sep 40p/share, 7.25/ADR, 628 mn shares in
  issue
• largest investors Fidelity (13), Insight (10)

4
SkyePharma business outline
5
What is drug delivery?
Not truck delivery!
6
Drug delivery making good drugs better

• Key advantages of drug delivery
• greater efficacy (less fluctuation in blood
  levels targeted delivery)
• more convenient ( ? better compliance)
• reduced side-effects

7
Drug delivery making good drugs better

• SkyePharma normally works on drugs already
  proven safe and effective
• low risk of clinical failure
• short development times
• low development costs
• contrast with biotech!
• SkyePharma relies on partners for sales and
  marketing

8
SkyePharma delivery technologies

• Oral
• most widely-used drug delivery route (50 of
  all drugs taken orally)
• Geomatrix? multi-layer tablet technology with
  barrier layers around active drug matrix
• flexible release profile no vehicle residue
  ease of manufacture on conventional tablet
  presses
• Sustained-release injectable
• DepoFoam? active dissolved in water within
  multivesicular liposome particles
• Biosphere? active dispersed in dry starch core
  within PLG shell
• Pulmonary
• HFA-MDI metered-dose aerosol inhaler powered by
  non-CFC propellant (HFA)
• SkyeHaler? multi-dose dry-powder inhaler
• associated formulation technologies to ensure
  dose-to-dose consistency
• Solubilization
• insolubility growing problem in drugs industry
• reducing particle size raises solubility - but
  reagglomeration must be prevented
• multiple technologies to improve bioavailability
• Triglide? is first approved product based on
  IDD? technology
• Topical
• multiple transdermal technologies - now licensed
  to Trigenesis (Dr Reddys)

9
Two business models
Contract drug delivery project Example Paxil CR? Self-funded project Example DepoDur?
Risk Low Medium NB much lower than for a NCE
Return Low High
Out-licence stage Start of project Late-stage clinical trials
RD costs Partner (reimburses SkyePharma) 5-10 mn SkyePharma 25-50 mn
Milestone payments Modest lt10 mn High 100 mn
Royalty rate Low 3-7 High 20-50
10
Global infrastructure
London (HQ)
Basel
Osaka
San Diego
Global business development coverage
2 FDA/EMA approved manufacturing sites
gt400 staff worldwide of which 50 scientists /
clinical staff
11
A transforming business
Drug delivery service provider
Developing own products for out-licence
Integrated pharmaceutical developer
12
Flutiform? - out-licence negotiations history

• discussions with potential marketing partners
  have been on the basis of development funding by
  the partner
• Dec 03 - offer involving milestone payments of
  90 mn - rejected as inadequate
• Apr 05 non-binding Heads of Terms negotiated
  with major global pharma company for US rights to
  Flutiform?
• up to 160 mn in milestone payments and
  development cost reimbursement
• double digit royalties with escalating rate on
  sales thresholds
• Sep 05 contract negotiations terminated
• April announcement attracted substantial
  additional interest, leading to advanced
  discussions with another major global pharma
  company for worldwide rights (and with other
  companies for other territories)

13
Flutiform? - keeping development on track

• proceed with Ph III development at our own
  expense
• allows us to keep development under our control
• reduces risk of delays to market entry,
  jeopardising sales potential
• still our intention to appoint licensee(s) but
  now during/after Ph III
• removal of partner funding obligation,
  elimination of majority of development risk and
  proximity to launch should result in much more
  favourable economics
• will seek to retain co-promotion rights in line
  with medium-term strategy of vertical integration

14
Global asthma market 2003-2010e
Source ING Asthma COPD July 2004
15
Flutiform opportunity

• formoterol / fluticasone combination in HFA-MDI
  for asthma and COPD
• optimal combination of steroid LABA
• expected to enter US market 2009
• competition GSKs Advair (2004 world sales 4.6
  bn) and Symbicort (2004 world sales 800 mn not
  on US market)
• US regulatory entry barriers very steep
• even though Symbicort filed 23 Sep 05, market
  entry thought unlikely before 2008 at earliest
• no other combination competitors expected before
  2012 at earliest
• our estimate is 1.5 bn peak sales potential in
  the hands of an appropriate partner

16
Flutiform the risks of delay

• in negotiations potential licensees have not
  disagreed on the likely value of Flutiform
• but time to market is critical
• we expect Flutiform to be the 2 or 3 steroid /
  LABA combination to reach the US market (in 2009)
• other competitors (proprietary or generic) will
  follow eventually but not before 2012 at the
  earliest
• partner control of Flutiform development could
  result in delays
• some partners have wanted results from certain
  studies before proceeding with others
• risk of big pharma bureaucracy
• SkyePharma is confident in its ability to meet
  timelines
• long experience with development of pulmonary
  products, including formoterol and budesonide
• very encouraging Phase II data for Flutiform
• manufacture successfully scaled up
• MDI poses less regulatory issues than a DPI
• DepoDur track record filed on target in Jul
  03, first cycle FDA approval May 04
• conclusion fund and control development
  ourselves

17
Flutiform Phase III trials

• start date Q1 06
• filing mid 07
• expected FDA approval H109
• assumes 18 month review instead of statutory 10
  months
• development cost from now to filing 54 mn

18
Headline news H1 05

• US approval for Triglide (fenofibrate)
• launched 15 July
• new agreement with GlaxoSmithKline on Paxil CR?
• Paxil CR? returned to US market 27 June
• DepoDur? approved in UK (conditional)
• DepoBupivacaine? licenses
• Apr 05 Mundipharma for all territories outside
  North America and Japan
• Foradil? Certihaler? approved in Germany
• launched Sep 05
• Pulmicort? HFA-MDI filed in first European market

19

• Major marketed products
• Paxil CR? (GlaxoSmithKline)
• Xatral? OD / Uroxatral? (Sanofi-Aventis)
• DepoDur? (Endo Zeneus)
• Triglide? (First Horizon)
• Solaraze? (Bradley Shire)
• DepoCyt? (Enzon Mundipharma)

20
Paxil CR? new GSK agreement Apr 05

• 4 Mar 05 - FDA halts US distribution of Paxil
  CR?
• cites manufacturing problems at GSKs plant in
  Puerto Rico
• 28 Apr 05 - amended agreement with GSK
• GSK to increase the royalty rate on Paxil CR?
  from 3 to 4
• 10 mn cash payment upfront
• in lieu of higher royalty rate on sales of Paxil
  CR? 8 Sep 03 4 Mar 05
• GSK to pay SkyePharma 4 of budgeted US sales of
  Paxil CR? from 4 March 05 until Paxil CR?
  returns to the market
• GSK to pay SkyePharma 4 of actual sales
  thereafter
• subject to other conditions of the agreement
• SkyePharma to drop all legal / arbitration
  action
• 27 Jun 05 - Paxil CR? returns to US market

21
Paxil CR? GlaxoSmithKline

• Geomatrix? version of GSKs SSRI Paxil
  (paroxetine) for depression
• targets release to lower intestine, reducing
  nausea and improving compliance
• up to 4 March 2005, Paxil CR? held 7 of the US
  SSRI antidepressant new prescription market
• launched in USA Apr 02
• generic competition for Paxil began Sep 03
• Rx for Paxil CR? cannot be substituted - but
  generics exert indirect price pressure
• Paxil CR? sales
• 2003 635 mn (all in USA)
• 2004 725 mn (USA 710 mn 13 CER 15 mn of
  non-US sales)
• H1 05 126 mn (-65 CER)
• Paxil CR? off US market 4 Mar 27 Jun05
• SkyePharma royalty 4 (3 until Apr 05)

22
Xatral OD/Uroxatral Sanofi-Aventis

• once-daily Geomatrix? formulation of alfusozin
  for BPH, with two USPs
• highly uroselective (avoids postural hypotension)
• no ejaculatory side-effects (cf. Flomax)
• marketed in Europe ROW since 2000
• USA Uroxatral? launched Nov 03
• primary care launch Mar 04
• main competitor Flomax (tamsulosin)
• Uroxatral? now holds gt11 of combined
• TRx for Flomax and Uroxatral?
• AUR indication approved Europe Ph III US
• adjuvant (after surgery) and prophylaxis
• 2004 world sales (all versions) 281 mn 28
  CER
• H105 157 mn 16 CER
• SkyePharma return on sales mid-single digits

23
DepoDur? Endo / Zeneus

• sustainedrelease injectable morphine for relief
  of post-operative pain
• provides effective relief of pain for 48 hours
  after surgery (period of peak post-operative
  pain)
• avoids catheter-related problems with
  conventional short-acting morphine
• potential to replace conventional infusion pumps
  (major source of equipment failure)
• USA (Endo Pharmaceuticals)
• approved by FDA May 04 (NB first-cycle
  approval)
• launched by Endo Dec 04 hospital sales force
  70 targetting 1000 key hospitals
• priced at premium to conventional analgesia
• expected to be on 50 of hospital formularies
  by end-05
• H1 05 sales 2.3 mn
• Europe (Zeneus Pharma)
• filed Nov 03 (EU mutual recognition procedure
  with UK as reference country)
• UK marketing authorisation Apr 05 subject to
  conditions
• once conditions met, approvals in other EU
  countries to follow over next 6-12 months
• Zeneus has pan-European hospital sales force of
  150

24
DepoDur? - licence terms endorse potential

• Licence terms for DepoDur?
• SkyePharma bears development and manufacture
  costs
• partner bears sales and marketing costs
• Skyepharma receives increasing share of sales as
  partners revenues increase
• most of milestone payments also related to
  revenue targets

Territory Partner Products Milestones (maximum if all targets met) SkyePharmas share of sales Min Max
North America Endo Pharmaceuticals Dec 02 DepoDur? Propofol IDD-D? right of first negotiation for DepoBupivacaine? 120 mn 20 60 of combined sales of DepoDur? and Propofol IDD-D?
Europe Zeneus Pharma Mar 04 DepoDur? 100 mn 35 50

• rights for other territories not yet assigned

25
Triglide First Horizon

• Triglide? (fenofibrate) launched 15 July 05
• approved by FDA May 05
• SkyePharmas IDD-P solubilization technology
  allows Triglide? to be taken with or without food
• fenofibrate a key treatment for lipid disorders
• beneficial dual lipid-modulating effects TG
  LDL-C ? but HDL-C ?
• fenofibrate best in class fibrate (NCEP
  guidelines 2005)
• 1 bn US market for fenofibrate (growth in
  2004 38)
• highly unsatisfied market most patients with
  elevated lipids either untreated or undertreated
• potential synergy between fenofibrate and
  statins presents major opportunity
• First Horizon successful US specialty pharma
  company
• 400 sales force dedicated to US cardiovascular
  market
• good track record of capturing market share from
  heavy-hitting competitors
• SkyePharma receives up to 50 mn in milestones
  and 25 share of sales

26
Solaraze? Bradley / Shire

• topical gel formulation of diclofenac for
  actinic keratosis
• AK is early form of squamous cell carcinoma
• alternative treatments for AK are painful and
  disfiguring
• SkyePharma formulation holds active in upper
  layers of skin
• marketed by Bradley in North America, Shire in
  Europe / Australasia
• SkyePharma received payment of 5 mn for
  transfer from Quintiles to Bradley in 2004
• 2004 global in-market sales 18 mn
• US 12 mn (2004 sales pattern disrupted by
  change of licensee)
• Europe 6 mn
• H105 sales 10 mn
• filed in Australia by Shire Dec 04
• SkyePharma royalty mid-teens

27
DepoCyt? Enzon / Mundipharma

• intrathecal injectable cytarabine for
  lymphomatous meningitis
• severe complication of lymphoma
• Depofoam? formulation extends period between
  injections from 1-2 days to 2 weeks
• treatment can be on out-patient basis
• marketed by Enzon in US, Mundipharma in Europe
  (as DepoCyte?)
• 2004 global in-market sales doubled to 8 mn
• US sales 6.5 mn (60)
• Europe sales 1.5 mn (first year)
• H1 05 sales 5.6 mn (105)
• US 3.5 mn (40) Europe 2.1 mn (vs 0.2 mn)
• Ph IV trial in solid tumour patients now
  completed
• most common type of neoplastic meningitis
• expect to file data with FDA mid-05
• SkyePharma share of sales 35

28

• Key near-term
• pipeline products
• Foradil? Certihaler?
• DepoBupivacaine
• Propofol IDD-D

29
Foradil? Certihaler? Novartis / Schering-Plough

• formoterol (fast-onset, long-acting
  bronchodilator) for asthma / COPD
• uses SkyePharmas multi-dose dry-powder inhaler
  (DPI)
• SkyePharma developed both device and formulation
  
• formulation keeps powder dry, ensures accurate
  consistent dose
• now also being used in second collaboration with
  Novartis - QAB149 (indacaterol)
• Schering-Plough to market in key US market,
  Novartis elsewhere
• H1 05 sales of Foradil? in inconvenient
  single-dose DPI 174 mn
• FDA approvable letters issued Oct 03, Dec 04
• Novartis has filed additional data requested
  FDA decision due early 06
• approvals began H1 04 (now 6 in Europe, 6 in
  Latin America, South Africa)
• launched in Germany Sep 05 other European
  launches to follow
• SkyePharma return on sales 10
• made up of royalty manufacturing return

30
DepoBupivacaine? Mundipharma

• long-acting injectable formulation of
  widely-used local anaesthetic
• designed to provide 48-72 hours of local pain
  relief
• especially suitable for control of
  post-operative pain after out-patient surgery
• gt65 of all surgical procedures in US now done
  on out-patient basis
• current local anaesthetics short-acting home
  recovery precludes use of most narcotic
  analgesics
• DepoBupivacaine? complements DepoDur? (for pain
  relief after in-patient surgery)
• Ph II trial started late 04 results Q4 05
• Ph III to start H1 06 target filing end-07

Territory Partner Upfront payment Development Funding Milestones (maximum if all targets met) SkyePharmas share of sales
North America Endo Pharmaceuticals Right of first negotiation on completion of Phase II Right of first negotiation on completion of Phase II Right of first negotiation on completion of Phase II Right of first negotiation on completion of Phase II
Europe RoW Mundipharma Apr 05 10 mn SkyePharma 80 mn 35 (30 outside Europe)

• licenses for other territories still under
  negotiation

31
Propofol IDD-D? SkyePharma / Endo

• proprietary improved version of propofol
  (AstraZenecas Diprivan)
• widely-used injectable anaesthetic and sedative
• potential for microbial contamination requires
  aseptic technique and limits use to 6 hours
  despite presence of preservative
• SkyePharma IDD-D? technology stabilises emulsion
• formulation unique
• inherently antimicrobial
• no need for a preservative
• 2 emulsion ( lower injection volume, reduced
  lipid load)
• not a generic
• designed for continuous uninterrupted 24-hour
  sedation
• licensed to Endo for US market
• in discussion with FDA on design of Ph III trials

32
SkyePharmas pipeline
SkyePharma
Client products
marketed
approved
filed
Ph.III
Ph.II
Ph.I
feasibility
product
licensee or partner

• Paxil CRXatral OD Madopar DR Coruno
• Cordicant-Uno
• DiclofenacRequip 24hrzileuton CR
• UndisclosedUndisclosed

• GlaxoSmithKline
• Sanofi-Aventis Roche
• TherabelMundipharmaRatiopharm
• GlaxoSmithKlineCritical Therapeutics
• NitecUndisclosed

Foradil CertihalerPulmicort HFA formoterol
HFAQAB 149 Flutiform
NovartisAstraZeneca SkyePharma
Novartis SkyePharma
Enzon/MundiPharma/Nippon SyakuEndo /
ZeneusAstralis SkyePharma/Mundipharma SkyePharm
aSkyePharma SkyePharma
DepoCytDepoDurPsoraxine DepoBupivacaineHGHIn
terferon alpha-2b GCSF
SkyePharma has a right of first negotiation to
acquire world rights for PsoraxineTM
TOPICAL
SolarazeMultiple
Bradley/ShireDr Reddys (Trigenesis)
Status is most advanced project
SOLUBILISATION
Triglide Propofol IDD-D Multiple
First Horizon Endo / SkyePharma Baxter
33
2005 filings

• Requip 24hr - GlaxoSmithKline
• once-daily oral formulation of GSKs Requip
  (ropinirole)
• dopamine agonist for Parkinsons disease
• therapeutic benefits (shorter titration
  schedule)
• improved compliance
• SkyePharma managed clinical studies for GSK
• SkyePharma royalty mid-single digits
• Pulmicort HFA-MDI - AstraZeneca (for Europe)
• Pulmicort (budesonide) in HFA-powered aerosol
  inhaler
• widely-used inhaled steroid for asthma
• will allow AZN to withdraw Pulmicort CFC-MDI
• filed in first European market 28 Jun 05
• SkyePharma royalty mid-teens

34
Results for six months ending30 June
2005presented in sterling and IFRS
35
Turnover
6 months

• Turnover up 3
• Contract development down 7
• Royalties up 17
• Manuf. distribution up 19
• Deferred contract development
• income 13.2m
• To reverse in H2 2005 8.5m

m
36.0
35.1
25.3
36
Turnover (2004 and prior years restated to IFRS
for comparative purposes)

• CAGR H196 H105 37

m
75.2
Collaboration equity H1 H2
66.5
44.2
42.6
36.0
24.1
22.4
16.7
13.8
9.0
37
RD sustained investment
6 months
m

• H1 05 RD down by 3.5m (-24)
• 3.1m on Flutiform
• 3.4m on DepoBupivacaine
• 1.5m on Other Injectable
• 0.4m on Budesonide HFA
• 1.3m on Other Inhalation
• RD target FY05 27m
• Flutiform 11m
• DepoBupivacaine 8m
• not now to be reimbursed

16.4
14.4
10.9
Enhanced Solubilisation
DepoDur
Oral
Propofol
Topical
38
Operating result
H104 H105
turnover 35.1 36.0 3
gross profit 23.5 21.4 -9
RD 14.4 10.9 -24
operating profit/(loss) 0.3 (0.3) -
net loss (8.7) (9.3) 7
EPS (pence) (1.4)p (1.5)p 7

EBITDA 4.2 3.3 -22

• Key variables
• Royalties 33 of Turnover up 17
• Gross profit down 9
• RD down 24
• Operating loss before exceptionals down 77
• Operating loss after
  exceptionals 0.3m (H1 2004
  0.3m profit)
• EBITDA 3.3m down 22

39
Net Cash
m
Debt 11.3m of debt (excl. convertible)
- 6.8m Swiss mortgage 89.6m convertible
debt 69.6m conversion May 2024
Conversion price 1.00
20.0m conversion June 2025 Conversion
price 81p
-1.2
-1.2
December 2003
June 2005
December 2004
Net Cash
Overdraft
Cash
40
Cash flow H105

• m

Operational cash inflow
Issue of convertible bond
Repayment of convertible bond
Debt repaid
CAPEX
Interest
Other

• Total 3.7m

41
Newsflow targets 2005
Pipeline progress Pulmicort HFA-MDI File EU
?Jun 05 Requip 24hr File US/EU DepoCyt
(2nd indication) File EU ? DepoCyt (2nd
indication) File US zileuton CR (asthma) File
US now H106 formoterol HFA-MDI Ph III
start under strategic review
zileuton CR (COPD) Ph III start Flutiform
HFA-MDI Ph III start now Q106 QAB 149
Ph III start now H106
DepoBupivacaine Ph II end Partners
responsibility

• Product approvals/launches
• DepoDur? UK/EU ?Apr 05 (with conditions)
• Foradil? Certihaler? US FDA
  approvable Dec 04
• Foradil? Certihaler? EU ? launched in Germany
• Triglide? (First Horizon) ?US launch Jul 05
• Licence agreements
• Propofol IDD-D? (Europe)
• DepoBupivacaine? (Europe) ?Mundipharma Apr 05
• DepoBupivacaine? (Japan)
• DepoBupivacaine? (US)
• Endo has right of first negotiation at end Ph II
  

42
Investment highlights

• strategic focus on royalties rather than upfront
  payments
• royalties now over one-third of revenues
• changing quality of earnings, driven by rising
  royalties from

Paxil CR?, Xatral OD/Uroxatral, Solaraze,
DepoCyt, DepoDur?, Triglide?
with Foradil? Certihaler?, HFA-formoterol,
zileuton CR, Requip 24hr, Propofol IDD-D?,
Flutiform? , DepoBupivacaine? ..close behind

• strong pipeline
• 11 FDA approvals validate our drug delivery
  technologies
• DepoDur? first-cycle FDA approval demonstrates
  successful development capability
• 2 launches in 2005 (Triglide and Foradil
  Certihaler)
• 4 products to be filed 2005
• 5 products now in Phase III - 5 products in
  Phase II
• no need to scale cost-base significantly for
  higher revenues

43
AppendixFlutiform clinical trials
44
FlutiForm Ph I and Ph II completed
45
FlutiForm Phase II trial design

• double-blind randomised 6-way crossover study
• FlutiForm HFA pMDI 100/10?g
• FlutiForm HFA pMDI 250/10?g
• fluticasone (Flixotide) HFA pMDI 250?g
  formoterol (Foradil) DPI 12?g
• fluticasone (Flixotide) HFA pMDI 250?g
• formoterol (Foradil) DPI 12?g
• placebo
• each patient received four of six treatments
• N64 (7 treatment centres in UK)

46
Ph II result change from baseline in actual FEV1
(ITT Population)
47
FlutiForm Phase II - efficacy results

• comparable efficacy of FlutiForm 100/10?g and
  FlutiForm 250/10?g compared with concurrent use
  of the individual components and with formoterol
  (Foradil) alone
• superior efficacy of FlutiForm 100/10?g and
  FlutiForm 250/10?g when compared with placebo
• no drug-drug interaction or apparent changes in
  the efficacy profile of the components in the
  FlutiForm formulation
• rapid onset (lt5 min) of bronchodilation with
  FlutiForm 100/10?g and FlutiForm 250/10?g
• bronchodilator effect well maintained for 12
  hours, supporting proposed twice-daily dosing

48
FlutiForm further clinical development plan
49
Flutiform - Ph III trial costs ( mn)
50
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