NASDAQ:SKYE LSE:SKP

1
2004 Full Year Results 28 April 2005
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 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 1.90 1 has been used
throughout. These dollar equivalent numbers do
not imply restatement from UK GAAP to US
GAAP. This presentation was updated on 27 April
2005
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• Michael Ashton
• Chief Executive Officer

4
Headline news

• new agreement with GlaxoSmithKline on Paxil CR?
• partner for pulmonary package
• subject to contract
• UK marketing authorisation for DepoDur?
• subject to conditions
• DepoBupivacaine? licensed to Mundipharma
• all territories outside North America and Japan

5
Paxil CR? new GSK agreement

• GSK has now agreed to increase the royalty rate
  on Paxil CR? from 3 to 4
• 10 mn cash payment upfront
• 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

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Global asthma market 2003-2010e
Source ING Asthma COPD July 2004
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Pulmonary package

• Heads of Terms with major global pharma company
  for Flutiform? HFA-MDI
• up to 160 mn in milestone payments and
  development cost reimbursement from 2005
• double digit royalties escalating rate on
  sales thresholds
• SkyePharma to execute clinical development
• at this stage still non-binding and subject to
  contract finalization

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2004 results summary

• revenues 62m (2003 53m) up by 17
• milestone income affected by timing of key deals
  product approvals
• royalty income 26m up by 39 - now over 40 of
  total revenues
• net loss 24m (2003 43m) down by 44
• net loss per share 4.9 p (2003 7.1 p)
• end-2004 cash 15.3m (end-2003 22.0 m)
• 70m raised / refinanced through convertible
  issues

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A transforming business
10 approved products
2 launches anticipated 2005
4 products to be filed 2005
5 products now in Phase III - 5 products in
Phase II
Royalty income replacing milestone payments as
main revenue source, driven by royalties from
Now Paxil CR?, Xatral OD/Uroxatral,
Solaraze, DepoCyt, DepoDur?
Future Foradil Certihaler, fenofibrate,
HFA-formoterol, zileuton CR, Requip 24hr,
Propofol IDD-D?, Flutiform? .
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• Major marketed products
• Paxil CR? (GlaxoSmithKline)
• Xatral? OD / Uroxatral? (Sanofi-Aventis)
• DepoDur? (Endo Zeneus)
• Solaraze? (Bradley Shire)
• DepoCyt? (Enzon Mundipharma)

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Paxil CR?
Up to 4 March 2005, Paxil CR? held 7 of the US
SSRI antidepressant new prescription market

• generic competition for Paxil began Sep 03
• a prescription for Paxil CR? cannot be
  substituted with generic paroxetine
• but generics exert indirect price pressure
• Paxil CR? sales
• 2003 635 mn (all in USA)
• 2004 725 mn
• USA 388 mn (710 mn) 13 CER
• 8 mn (15 mn) of non-US sales

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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 10 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
• SkyePharma return on sales
• mid-single digits

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DepoDur? Endo / Zeneus

• sustainedrelease injectable formulation of
  morphine for relief of post-operative pain
• USA (Endo Pharmaceuticals)
• approved by FDA May 04
• launched Dec 04 hospital sales force 70
• priced at premium to conventional analgesia
• Q1 05 sales 1.9 mn
• Europe (Zeneus Pharma)
• filed Nov 03
• EU mutual recognition procedure (UK as reference
  country)
• UK marketing authorisation Apr 05 subject to
  conditions
• approvals in other EU countries to follow over
  next 6-12 months
• Zeneus has pan-European hospital sales force of
  150

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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

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Solaraze? Bradley / Shire

• topical gel treatment for actinic keratosis
• active ingredient diclofenac in proprietary HA
  gel formulation
• alternative therapies for AK painful and/or
  disfiguring
• now marketed by Bradley in North America, Shire
  in Europe / Australasia
• 2004 global in-market sales 18 mn
• US 12 mn Europe 6 mn
• positive longer-term results from Ph III
  Australian study
• filed in Australia Dec 04
• data will support marketing elsewhere
• SkyePharma return on sales mid-teens

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DepoCyt? Enzon / Mundipharma

• intrathecal injectable treatment for
  lymphomatous meningitis
• marketed by Enzon in US, Mundipharma in Europe
• 2004 global in-market sales doubled to 8 mn
• US sales 6.5 mn (60)
• Europe sales 1.5 mn (first year)
• Ph IV trial in solid tumour patients now
  completed
• expect to file data with FDA Q205
• SkyePharma return on sales 35

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

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Foradil? Certihaler? Novartis / Schering-Plough

• formoterol (fast-onset, long-acting
  bronchodilator)
• uses SkyePharmas multi-dose dry-powder inhaler
• SkyePharma developed both 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
• global sales of Foradil? in inconvenient
  single-dose DPI 360 mn
• filed US Europe Dec 02
• FDA approvable letters issued Oct 03, Dec 04
• approvals began H1 04 (now 5 in Europe, 5 in
  Latin America)
• SkyePharma return on sales 10 (royalty
  manufacturing return)

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Propofol IDD-D?

• proprietary improved version of propofol
• 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
• in discussion with FDA on design of Ph III trial

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Near-term pipeline status

• Requip 24hr (GlaxoSmithKline)
• once-daily oral formulation of ropinirole
  (dopamine agonist for Parkinsons disease)
• therapeutic benefits improved compliance
• SkyePharma has managed clinical studies for GSK
• Ph III trial complete - filing mid 05
• Pulmicort HFA-MDI (AstraZeneca for Europe)
• Pulmicort (budesonide) inhaled steroid for
  asthma in CFC-free MDI
• Ph III trial complete - filing mid 05
• DepoBupivacaine? (SkyePharma)
• long-acting injectable formulation of local
  anaesthetic
• designed to provide 48-72 hours of local pain
  relief after out-patient surgery
• complementary with DepoDur?
• Ph II trial started late 04
• licensed to Mundipharma outside North
  America/Japan Apr 05
• 80 mn in milestones 35 share of sales (30
  outside Europe)
• Endo has right of first negotiation for North
  America

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2004 - new corporate developments

• Zeneus Pharma - DepoDur? for Europe
• First Horizon fenofibrate
• improved formulation of important
  cholesterol-lowering therapy (marketed by Abbott
  as Tricor)
• second approvable letter issued Dec04
• approval condition in agreement with First
  Horizon extended to 30 Jun 05
• up to 50 mn in milestones 25 royalty
• Critical Therapeutics zileuton
• potent oral leukotriene synthesis inhibitor
  (previously marketed by Abbott as Zyflo)
• CR formulation (originally developed for Abbott)
  now in Ph III for asthma Critical expects to
  file late 05
• other indications in development (COPD, nasal
  polyps, acne, atherosclerosis)

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2004 - new corporate developments 2

• Trigenesis dermatology portfolio
• 20 mn in milestones and 10 royalty (35 of
  sub-licence income)
• Trigenesis now part of Dr Reddys reinforces
  marketing ability
• Vectura pulmonary alliance
• technology sharing Vecturas DPI device more
  suited to delivery of macromolecules
• equity stake
• King Altace project cancelled
• Astralis Psoraxine?
• US Ph II trial started Apr 04 - preliminary
  results very disappointing
• unclear why outcome so different to results of
  previous large-scale studies in Venezuela
• protein inactivation? adjuvant? dose? strain?
• SkyePharma and Astralis exploring reasons
• SkyePharma acquired shares from 2 former
  directors Dec04
• raised stake to just under 50
• total equity investment to date 25 mn

23
Well-stocked 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-U
no DiclofenacRequip 24hrzileuton UndisclosedUnd
isclosed
GlaxoSmithKline Sanofi-Aventis Roche TherabelMun
dipharmaRatiopharm GlaxoSmithKlineCritical
Therapeutics NitecUndisclosed
Foradil CertihalerPulmicort HFA formoterol
HFAQAB 149 Flutiform
NovartisAstraZeneca SkyePharma
Novartis SkyePharma
Enzon/MundiPharma/Nippon SyakuEndo /
ZeneusAstralis SkyePharma SkyePharmaGeneMedix
DepoCytDepoDurPsoraxine DepoBupivacaineHGHIn
terferon alpha-2b
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
fenofibrate Propofol IDD-D Multiple
First Horizon Endo / SkyePharma Baxter
24

• Donald Nicholson
• Finance Director

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Turnover

• Turnover up 17
• - excluding Endo/First Horizon 5.5m
• Contract development down 11
• Royalties up 39
• Manuf. distribution up 106
• Deferred income
• - contract development 7.4m
• - other operating income 7.1m
• 14.5m

m
69.6
62.2
53.2
26
Turnover
Compound annual growth rate 1996-2004 27
m
69.6
Collaboration equity H1 H2
62.2
53.2
46.1
24.3
22.6
17.0
13.8
9.0
27
RD
m
RD decreased by 8 3.3m on DepoDur 6.5m on
Other Injectable 3.4m on Budesonide HFA 5.3m on
Pulmonary Package 3.8m on Enhanced
Solubilisation 2.8m on DepoBupivacaine RD
target 2005 30m Injectable 12m
Inhalation 14m NB subject
to partner reimbursement
30.5
29.3
28.0
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Operating result
m 2003 2004
turnover 53.2 62.2 17
gross profit 23.4 31.0 33
RD (30.5) (28.0) -8
operating loss (39.5) (20.7) -48
net loss (43.2) (24.3) -44
EPS (pence) (7.1p) (3.9p) -45

EBITDA (26.6) (6.4) -76

• Key variables
• Gross profit up 33
• RD down 8
• Selling and Marketing down 60
• Other Admin costs down 32
• Operating loss before exceptionals
• down 59
• Operating loss after exceptionals
• down 48
• Amortisation of intangibles of 6.3m
• EBITDA 76 improvement

29
Net Cash
m

• Debt
• 11.0m of debt (excl. convertible)
• - 7.4m Swiss mortgage
• 80m convertible debt
• 10m Conversion June 2005
• Conversion price 83p
• 70m Conversion May 2024
• Conversion price 1.00

December 2003
June 2004
December 2004
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Cash flow
m
Cash outflow
Issue of conv bond (net of expenses)
Investment disposals (Transition)
CAPEX
Investment purchases
Interest
Debt repaid
Other
Total - 6.7m
31
IFRS guidance

• guidance on IFRS transition (with 2004
  restatement) to be announced during H1 05
• IFRS transition base date 1 Jan 04
• key differences from UK GAAP
• revenue recognition - similar to US GAAP
• Paul Capital funding - treated as debt -
  similar to US GAAP
• employee options - fair value charged to PL
  similar to US GAAP
• goodwill amortization - will cease from 1 Jan
  04
• convertible bonds - separate equity and debt
  components,
• resulting in higher interest charge

32
Financial summary 2004

• Turnover up 17
• Royalties up 39
• Gross profit up 33
• Exceptionals and amortisation of 9.3m
• RD down 8
• Operating loss down 48
• EBITDA loss down 76

33

• Michael Ashton
• Chief Executive Officer

34
Newsflow targets 2005

• Product approvals/launches
• DepoDur? UK/EU ? (with conditions)
• Foradil? Certihaler? US FDA
  approvable Dec 04
• Foradil? Certihaler? Europe approved in 5
  EU markets
• fenofibrate (First Horizon) FDA
  approvable Dec 04
• Licence agreements
• Pulmonary product package ? (subject to
  contract)
• Propofol IDD-D? (Europe)
• DepoBupivacaine? (Europe) ?

Pipeline progress Pulmicort HFA-MDI File
EU Requip CR File EU/US DepoCyt (expanded
indication) File EU/US zileuton CR (asthma) File
US formoterol HFA-MDI Ph III start zileuton CR
(COPD) Ph III start Flutiform HFA-MDI Ph III
start QAB 149 Ph III start Psoraxine?
(Astralis) Ph II end DepoBupivacaine Ph II
end
35
Investment highlights

• Strategic focus on royalties rather than upfront
  payments

10 FDA-approved products validate drug delivery
technologies - DepoDur? first-cycle FDA approval
demonstrates successful development capability
2 launches anticipated 2005
4 products to be filed 2005
5 products now in Phase III - 5 products in Phase
II
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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