Shares in SkyePharma climbed as much as 5% in early trading on the London Stock Exchange this morning, as investors breathed a huge sigh of relief on news that group’s search for a suitable US partner for its flagship asthma drug Flutiform has ended.

The company has signed a joint development pact for Flutiform (formoterol plus fluticasone) with Kos Pharmaceuticals that could bring in up to $165 million in milestones and royalties, including the $25-million seal on the deal it has already slipped into its coffers.

Flutiform is a novel combination therapy comprised of the long-acting bronchodilator formoterol and the inhaled steroid fluticasone in a proprietary metered-dose aerosol inhaler. The product is currently in Phase III development for asthma and could be submitted for US approval in the latter half of 2007, with a potential market launch in 2009.

According to SkyePhama, by the time the drug hits shelves the US market for asthma and chronic obstructive pulmonary disorder combination treatments is expected to exceed $5 billion. And, although a company spokesperson was not available for comment this morning, the firm has previously forecast that Flutiform could rake in peak sales of over $1 billion worldwide.

Flutiform will compete in the US marketplace with GlaxoSmithKline's Symbicort (salmeterol and fluticasone), which shrugged off a black box safety warning to post an 11% sales increase to reach $806 million in the first quarter of this year, with worldide sales of $1.4 billion.

The only other combination asthma product on the market, AstraZeneca's Symbicort (formoterol and budesonide), is not yet available in the USA but was submitted for approval there last September.

The deal with Kos has certainly been a long-time coming. SkyePharma has been after a partner for Flutiform since 2003, and earlier failures to find a partner to help share the late-stage development of its lead drug was one of the key complaints that drove a shareholder rebellion earlier this year, which ultimately led to the early resignation of founder Ian Gowrie-Smith.

The company is also looking to share its drug in other parts of the world, and said it is still negotiating with potential partners for Europe and other markets.