SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a - 16 OR 15d - 16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2006
SkyePharma PLC
SkyePharma PLC, 105 Piccadilly, London W1J 7NJ England
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F.
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- _______
For Immediate Release 16 February 2006
SkyePharma issues EGM notice and recommends shareholders to vote against proposals
LONDON, UK, 16 February 2006 - SkyePharma PLC (LSE: SKP; Nasdaq: SKYE)
announces that it has today posted to shareholders the notice of the Extraordinary General Meeting ("EGM") to be held at The Sheraton
Park Lane Hotel, Piccadilly, London, W1J 7BX at 11.00 am on 9 March 2006.
The Board of SkyePharma strongly urges shareholders to vote AGAINST resolution 1 because it seeks to appoint Mr Robert Thian as a
director as part of an apparent strategy by a minority group of new shareholders to take control of the Company by making Mr Thian a
director and then attempting to force him upon the Board as an Executive Chairman.
It is the Board's role to appoint the Chairman, having followed the appropriate corporate governance procedures as part of its
selection process. Accordingly, it has appointed Dr Argeris ("Jerry") Karabelas whose distinguished career in the pharmaceutical
industry speaks for itself and who the Board is confident will act in the interests of all the Company's shareholders. Given that Mr
Thian has rejected the possibility of any kind of non-executive role, the Board does not believe that the proposed election of Mr
Thian on the basis suggested by the minority group would be appropriate for the following reasons:
1. the Company's Chairman should be independent and act in the interests of all shareholders and not for a minority group trying to
dictate the strategy and management of the Company.
2. it is for the Board, following the recommendations of the Nominations Committee, to determine who is best placed to act as
Chairman and not a group of minority shareholders in pursuit of its own agenda.
3. the Chairman's role in a development stage company such as SkyePharma demands recent relevant pharmaceutical industry experience
which Dr Karabelas clearly has and Mr Thian does not.
4. Dr Karabelas is leading an excellent new management team, with outstanding pharmaceutical experience and track records, in a new
strategy to achieve sustainable profitability within the shortest reasonable time and deliver maximum shareholder value.
5. an Executive Chairmanship runs counter to best corporate governance practice.
Resolution 2 will be redundant as it seeks to unseat Directors appointed since 27 January 2006 and the date of the meeting: there
have been and will be no such appointments. This resolution will therefore not be put to the meeting.
The Board therefore strongly recommends that shareholders vote AGAINST the first resolution.
New senior management appointments
On 2 February 2006, SkyePharma announced that following a review by its Nominations Committee of internal and external candidates, it
had appointed Dr Karabelas as Non-Executive Chairman. Dr Karabelas, aged 53, has had a distinguished career at senior levels in the
global pharmaceuticals industry: he was Chief Executive of Novartis Pharma and prior to that President of the North American
operations of SmithKline Beecham. He is currently an Executive Director of Care Capital, a specialist US healthcare investment fund,
and is Non-Executive Chairman of a number of pharmaceutical and healthcare companies, of which the largest is Human Genome Sciences,
Inc. Dr Karabelas has been a Non-Executive Director of SkyePharma since 2000 and his familiarity with the Company's business enables
him to make an immediate and positive contribution as Chairman.
On 6 February 2006 SkyePharma announced that it had appointed a new senior management team comprising Frank Condella as Chief
Executive and Dr Ken Cunningham in the newly created post of Chief Operating Officer. This new role will focus on ensuring the
effective development of SkyePharma's key products such as Flutiform™.
Frank C. Condella Jr. was President of the European operations of IVAX prior to its acquisition by Teva for more than $7 billion in
January 2006. He was closely involved with IVAX's respiratory franchise, one of its three core therapeutic areas, including managing
the acquisition and integration of 3M's branded respiratory business in Europe. Prior to joining IVAX in 2002, he occupied senior
roles at Faulding Pharmaceuticals, Roche, and the Lederle unit of American Home Products. Mr Condella is 51 and has a BS Pharm degree
and an MBA from Northeastern University in Boston.
Dr Ken Cunningham was Chief Executive of the privately owned UK biotechnology company Arakis, recently acquired by the Japanese
company Sosei for $200 million. Dr Cunningham has extensive experience in the development of respiratory products and the Arakis lead
product, a treatment for chronic obstructive pulmonary disease (COPD), was licensed to Novartis in 2005 in a deal worth up to $375
million. Prior to his appointment to the Arakis role in 2002, he was Vice President, European Affairs for Alza and before that was
Vice President for Clinical Development for Sequus Pharmaceuticals. Prior to that he held a variety of clinical development and
commercial strategy positions in Glaxo Wellcome and Warner-Lambert. Dr Cunningham, who is 53, qualified from St Mary's Medical
School, London University.
Both Mr Condella and Dr Cunningham have considerable drug delivery experience, which the Board believes is an essential attribute in
making an immediate and positive contribution at SkyePharma and working effectively for the Company's future. The Board does not
believe that it is appropriate to subject its new executives to a vote prior to their joining the Company and being able to begin to
make a contribution to the execution of the new strategy outlined below. However, it is envisaged that they will both join the Board
before the next Annual General Meeting ("AGM") in June 2006 when shareholders will have ample opportunity to assess their skills.
Board structure
Michael Ashton, Chief Executive of SkyePharma, announced in September last year that it was his intention to retire in 2006 on
reaching the age of 60. Michael Ashton will continue to act as SkyePharma's Chief Executive until 1 March, when Frank Condella can
take up his appointment, and in order to facilitate the handover process will remain on the Board as a Non-Executive Director until
the next AGM in June 2006.
During 2005 Ian Gowrie-Smith, the Company's then Non-Executive Chairman, indicated to the Board his intention to stand down when a
suitable replacement could be identified. Mr Gowrie-Smith subsequently announced his resignation as Non-Executive Chairman on 23
January 2006 and his intention not to stand for re-election as a Non-Executive Director at the June 2006 AGM. With the EGM pending,
Mr Gowrie-Smith decided in the interests of all shareholders to bring forward his resignation and resigned as a Director on 13
February. The appointment of Dr Jerry Karabelas as Non-Executive Chairman was announced on 2 February. Dr Karabelas has been a
Non-Executive Director of SkyePharma since 2000.
In addition to Michael Ashton, two other Non-Executive Directors, Sir Michael Beavis and Dr Keith Mansford, will be retiring this
year and therefore will not be standing for re-election at the Annual General Meeting in June. The Nominations Committee of the Board
has therefore initiated the process of finding candidates for these posts. As part of this process, the Nominations Committee has
already met with Mr Thian and raised with him the possibility of his appointment as a Non-Executive Director, but he rejected that
option making it clear that his desire and that of his backers was solely to take on the role of Executive Chairman. Based on the
recommendations of the Nominations Committee and after full consultation with shareholders in accordance with best practice
procedures it is the intention of the Board to appoint two or more new Non-Executive Directors as soon as practicable.
New strategy
On 2 February the Company announced the outcome of its Strategic Review. The Board concluded that in the interests of returning the
Company to sustainable profitability in the shortest possible time, SkyePharma should concentrate on oral and pulmonary products and
divest its injectable business interests, for which a number of potential purchasers were identified during the Strategic Review. The
proposed divestment (which the Board expects to be subject to approval by shareholders) would not only release cash but also relieve
the Company of a significant cash burn and future capital expenditure. The Board believes that the residual business would be able to
achieve sustainable profitability within a reasonable timeframe. Furthermore, with greater resources the Company would be in a better
position to further develop its pipeline of proprietary products, obtain more favourable financial terms from licensing partners (for
example by retaining co-promotion rights) and ultimately aim to add a niche sales and marketing capability that would not only
improve the profitability of its current and pipeline products but also give it greater control over their revenues.
The injectables business, primarily located in San Diego, consists of two marketed products, DepoCyt® for a complication of
cancer and Depodur® for the treatment of post-surgical pain, and a pipeline of projects in various stages of development. These
include controlled-release injectable formulations of a number of biological products and DepoBupivacaine™, a long-acting
injectable formulation of the local anaesthetic bupivacaine for the control of post-operative pain. DepoBupivacaine™ has
completed Phase II development and will commence Phase III trials shortly. It has been licensed to Mundipharma for all
territories outside North America and Japan and to Maruho for Japan. In addition, the Company has successfully formulated seven
different proteins including major commercial products such as G-CSF, EPO, IFN-a and IFN-ß. It is anticipated that several of
these products will enter Phase I trials in 2007. The Board remains convinced that DepoBupivacaine™ addresses an important area
of unmet medical need and has major commercial potential. However the Board is conscious of the fact that a substantial
investment in clinical development would be required to maximise the potential of DepoBupivacaine™ and of the protein pipeline.
This development investment, together with the associated investment in manufacturing capacity, would not only place a
significant burden on the Company's current resources but also impact the Company's profitability for several years.
The Board believes that the injectables business is a valuable asset and the funds raised by its divestment will be available to
enhance the core oral and pulmonary business, including accelerating the development of certain pipeline products whose development
has had to be delayed in recent years. Several of these products, albeit at an early stage of development, address important
therapeutic areas such as gastrointestinal, diabetes and hypertension. The residual core business will consist of the oral and
pulmonary products business, with development based in Muttenz, Switzerland and manufacture in Muttenz and in Lyon, France. There are
seven marketed oral and pulmonary products, including Paxil CR™, Xatral™ OD and Triglide™, and a number of late-stage products that
are close to the market. The pipeline includes SkyePharma's most important project Flutiform™, a combination asthma product. The
Board is convinced that Flutiform™ has substantial value as it is poised to enter a large and rapidly growing market with currently
limited competition. The global market for combination therapies for asthma was worth over $5 billion in 2005 and is expected to
exceed $10 billion by 2010. Combination therapies are currently the fastest growing component of the asthma market and by 2010 are
projected to account for over half of the total market. There is an additional substantial market for these combination products in
the treatment of COPD. Despite the eventual likelihood of additional entrants, both proprietary and generic, the Board believes that
these competing products are unlikely to enter the United States market before 2012 at the earliest, and therefore there is an
opportunity to establish Flutiform™ as "best in class" combination therapy on the United States market. The Company is just about to
initiate Phase III trials for Flutiform™, on track for its target of filing with the FDA in 2007 and United States market entry in
2009. In addition, subject to the financial terms offered for the injectable business, the Company may seek to retain certain rights
in respect of DepoBupivacaine™.
Background to the EGM
In September 2005 the Company conducted a Rights Issue to raise the funds needed to take it's lead pipeline product, Flutiform™,
through Phase III development itself rather than rely on funding by a partner. Michael Ashton, the Company's Chief Executive, also
announced his intention to retire in 2006 on reaching the age of 60. The news that the Company had not yet secured a marketing
partner for Flutiform™ coupled with the terms of the Rights Issue, which was on a deeply discounted basis, led to a sharp drop in the
Company's share price. Although the share price subsequently recovered, in November 2005 a group of the Company's more recent
shareholders, led by North Atlantic Value LLP ("the NAV group"), registered their criticism of the Company and their intention to
seek to dismiss the Company's then Chairman, Ian Gowrie-Smith, and replace him, in an Executive capacity, with Robert Thian,
currently Chairman of Whatman plc, Southern Water Services Ltd and Southern Water Capital Ltd.
On 14 November 2005 the Company announced that it had received an unsolicited approach from a third party. The Board therefore
decided to review all of its strategic options, including inter alia offers for the Company as a whole. The Board appointed Lehman
Brothers as sole financial adviser to undertake this review.
On 23 January 2006 Ian Gowrie-Smith announced his resignation as Non-Executive Chairman of the Company and that it was his intention
not to stand for re-election as a Director of the Company at SkyePharma's 2006 Annual General Meeting.
On 13 February 2006 Mr Gowrie-Smith announced that he would bring this forward and resign as a Director with immediate effect. Mr
Gowrie-Smith, who founded SkyePharma in 1996, stepped down from the role of Executive Chairman to a Non-Executive Chairmanship in
2004. It had been Mr Gowrie-Smith's intention since early 2005 to continue this process by resigning at an appropriate time, both as
Chairman and as a Director.
On 27 January 2006 the NAV group filed formal notice requisitioning an EGM seeking to dismiss Ian Gowrie-Smith and to appoint Mr
Thian as a Director. The stated intention of the NAV group in seeking Mr Thian's election as Director is to bring pressure on the
Board to appoint him as Executive Chairman. Under UK company law an EGM must be held if requisitioned by members holding at least 10%
of the issued share capital. The NAV group comprises Morley Fund Management and Insight Investment Management as well as North
Atlantic Value LLP (part of the J O Hambro Capital Management Group) and represented 14.2% of SkyePharma's issued share capital at
the time of the requisition. The vast majority of the shareholdings held by the NAV group have been acquired in the last nine months.
Corporate governance
The letter from the NAV group makes reference to "significant long term corporate governance issues which have not been and are not
being addressed by the current Board" but significantly, in the view of the Board, makes no attempt to identify what exactly these
issues may be.
SkyePharma maintains the highest standards of Corporate Governance and rejects any suggestion to the contrary.
The resolutions proposed by the NAV group:
You will find below a list of the resolutions proposed by the NAV group and an explanation of why the Board of SkyePharma unanimously
believes that shareholders should vote AGAINST Resolution 1.
The NAV group initially proposed to remove Ian Gowrie-Smith from the Board. Mr Gowrie-Smith, the Company's founder, stepped down as
Executive Chairman to become Non-Executive Chairman in 2004. Continuing this process, he resigned as Non-Executive Chairman in
January 2006 and has now also resigned as a Non-Executive Director. Dr Jerry Karabelas was appointed as Non-Executive Chairman in
February 2006.
As a resolution to remove Mr Gowrie-Smith as a Director of SkyePharma is entirely redundant the meeting will not need to consider any
such proposal.
Resolution 1. To appoint Robert Thian, who has confirmed his willingness to act, as a Director of the Company with immediate effect
in the place of Ian Gowrie-Smith to hold office only during such time as Ian Gowrie-Smith would have held office if he had not retired
Dr Karabelas, Mr Condella and Dr Cunningham are poised to implement the new strategy outlined on page 5 above. This strategy has been
set by the Board and the Board believes will accelerate the Company's return to profitability while continuing to maximise the value
to shareholders of its pipeline. Dr Karabelas' familiarity with SkyePharma as Non-Executive Director since 2000 and his knowledge of
the pharmaceutical industry are also expected to facilitate rapid execution of this plan.
The Board is firmly of the opinion that to be of maximum benefit to the Company, the Chairman should have recent relevant experience
of the therapeutic areas in which SkyePharma operates. This is particularly relevant when the Company is proposing to divest a
significant asset, its injectables business, and is adopting a new strategy to drive for sustainable profitability in the shortest
reasonable time. Dr Karabelas, who has had senior roles at two major pharmaceutical companies as Chief Executive of Novartis Pharma
and President of North American operations for Smith Kline Beecham, satisfies this requirement.
The minority NAV group shareholders are proposing that Mr Thian should be elected as a Director. The Board has been informed by this
minority group, representing only a little over 14% of the issued share capital, that this would be as a prerequisite to his
subsequent appointment as Executive Chairman of the Company. If the resolution to elect Mr Thian as a Director is passed, this would
not confer on him any executive responsibility, but would serve to increase the pressure on the Board to accede to the demands of a
self-serving minority group of shareholders who would be intent on disrupting the implementation of the new strategy of the Board
outlined on page 5 to satisfy their own agenda.
The Nominations Committee of the Board has already met with Mr Thian and the possibility of his joining the Board solely as a
Non-Executive Director was raised but Mr Thian informed the Nominations Committee that he had no interest in Non-Executive posts. The
Board therefore assumes that Mr Thian's stated willingness to act as a director extends only to taking on an executive role. The
Board has no intention of being railroaded into making any such appointment, which it would see as inimical to the implementation of
its new strategy and contrary to the principles of sound corporate governance and management. It also has strong reservations as to
whether Mr Thian would be independent as suggested by the NAV group as it appears to the Board that Mr Thian would represent the
interests of that minority group and act to satisfy their own objectives rather than for the best interests of shareholders as a
whole. Accordingly, to implement its new strategy and for the reasons stated in this document the Board confirms that, in the event
that he is elected as a director pursuant to this resolution, Mr Thian will not be given any executive position on the Board.
The appointment of Dr Jerry Karabelas as Non-Executive Chairman of SkyePharma was announced on 2 February 2006 and the Board has
every confidence in him fulfilling this role for the benefit of all shareholders.
The Board sees no rationale for this resolution and strongly urges shareholders to vote AGAINST it.
Resolution 2. To remove any other person other than Robert Thian appointed as a Director of the Company between the date of the
requisition of the Meeting (27 January 2006) and the date of the meeting (9 March 2006) in accordance with Section 303 of the
Companies Act 1985.
This second resolution will be redundant as no Director will be appointed to the Board in this period.
The Company has recently appointed a new Chief Executive, Frank Condella Jr., and a new Chief Operating Officer, Dr Ken Cunningham.
The Board does not believe that it would be appropriate to subject its new executives to a vote as Directors prior to their joining
the Company and being able to begin to make a contribution to the execution of the strategy. However, it is the Board's intention to
appoint its two new senior executives to the Board shortly after the EGM and ask shareholders to confirm such appointments at the
next AGM in 2006 when shareholders will have had an opportunity to assess their skills.
As no Director has been or will be appointed to the Board in this period this resolution is redundant and will not be put to the
meeting.
For further information please contact:
SkyePharma PLC
Michael Ashton, Chief Executive +44 207 491 1777
Peter Laing, Director of Corporate Communications +44 207 491 5124
Sandra Haughton, US Investor Relations +1 212 753 5780
Buchanan Communications +44 207 466 5000
Tim Anderson / Mark Court
Notes for editors
About SkyePharma
SkyePharma PLC develops pharmaceutical products benefiting from world-leading drug delivery technologies that provide easier-to-use
and more effective drug formulations. There are now eleven approved products incorporating SkyePharma's technologies in the areas of
oral, injectable, inhaled and topical delivery, supported by advanced solubilisation capabilities. For more information, visit
www.skyepharma.com.
Certain statements in this news release are forward-looking statements and are made in reliance on the safe harbour provisions of the
U.S. Private Securities Litigation Act of 1995. Although SkyePharma believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that these expectations will materialize. Because the expectations are subject to
risks and uncertainties, actual results may vary significantly from those expressed or implied by the forward-looking statements
based upon a number of factors, which are described in SkyePharma's 20-F and other documents on file with the SEC. Factors that could
cause differences between actual results and those implied by the forward-looking statements contained in this news release include,
without limitation, risks related to the development of new products, risks related to obtaining and maintaining regulatory approval
for existing, new or expanded indications of existing and new products, risks related to SkyePharma's ability to manufacture products
on a large scale or at all, risks related to SkyePharma's and its marketing partners' ability to market products on a large scale to
maintain or expand market share in the face of changes in customer requirements, competition and technological change, risks related
to regulatory compliance, the risk of product liability claims, risks related to the ownership and use of intellectual property, and
risks related to SkyePharma's ability to manage growth. SkyePharma undertakes no obligation to revise or update any such
forward-looking statement to reflect events or circumstances after the date of this release.
END
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SkyePharma PLC
By: /s/ Douglas Parkhill
Name: Douglas Parkhill
Title:
Company Secretary
Date: February 16, 2006