Skyepharma exercises option under agreement
with micap - 17th August 2004

Micap plc (lse: mic), the technology licensing company specialising in the microencapsulation of active ingredients in yeast cells, today announces that skyepharma plc (lse: skp, nasdaq: skye) has decided to exercise its option to select for further development a number of pharmaceutical products that incorporate micap’s yeast-based delivery system.

In march 2004, skyepharma exercised an option to acquire an exclusive licence to use micap’s patented microencapsulation technology. This allows skyepharma to use micap’s technology for the delivery of hydrophobic drugs in up to ten nominated pharmaceutical products (“option products”) to be selected by skyepharma.

Skyepharma has subsequently been evaluating a number of potential option products and is now in a position to nominate the first option product. The identity of this product has not been disclosed for reasons of commercial confidentiality. Skyepharma will continue to review additional product opportunities, and expects to make further nominations prior to the expiry of the option period.

Under the terms of the march agreement, ongoing royalties will be payable by skyepharma to micap on sales made, or licences of, any option product. Skyepharma will also make milestone payments on the first successful completion of phase ii and phase iii clinical trials and also on the first commercial launch of an option product.

Michael brennand, chief executive of micap, said: “the commitment shown by skyepharma is a major validation of the potential applications of our microencapsulation technology in the pharmaceutical area. We look forward to progressing the relationship through clinical trials and product launches.”

Michael ashton, chief executive of skyepharma, said: “we continue to be pleased with our relationship with micap. In january 2003, we agreed to evaluate the application of the micap microencapsulation technology to the delivery of hydrophobic drugs. Following pre-clinical evaluation of the micap technology in both oral and topical drug delivery applications, we decided to exercise our option in march this year. We are now able to report that we have selected the first option product for further development. We will continue to evaluate other candidate option products, which we must nominate by the end of march 2005. The micap technology further expands our growing range of drug delivery options.”

NOTES FOR EDITORS:

About Micap

Micap is a UK technology licensing company specialising in the microencapsulation of active ingredients within yeast cells

About SkyePharma

SkyePharma develops pharmaceutical products benefiting from world-leading drug delivery technologies that provide easier-to-use and more effective drug formulations. There are now ten 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.

About microencapsulation

Microencapsulation is a process whereby tiny droplets of liquid or particles of solid material are coated with a continuous film of polymeric material. Microcapsules have several benefits, including conversion of liquids to solids; separating reactive compounds; protecting substances against environmental factors; and improving the material handling properties. Micap’s unique proprietary technology involves using killed yeast cells as natural capsules to protect the active ingredient. Yeast encapsulation can protect active ingredients against high temperatures, the effects of the sun, pressure and degradation through exposure to the air. The natural affinity of yeast cells for mucous membranes can also be exploited for targeted drug delivery.

About hydrophobic drugs

Certain pharmaceuticals dissolve readily in oils or organic solvents but are wholly or partially insoluble in water. These hydrophobic drugs pose particular delivery problems since, in order to be properly absorbed by the body, nearly all drugs need to dissolve in water.