UPDATE 1-Bentley Pharma to spin off drug delivery business

(Recasts, adds details, CEO comment)

Oct 23 (Reuters) - Bentley Pharmaceuticals Inc BNT.N said it plans to spin off its drug delivery business into a separate company and explore strategic options for its generics business.

"The separation will enable the two businesses to compete more effectively in their respective markets," Chief Executive Officer James Murphy said in a statement.

The drug delivery business, which had revenue of $8.4 million in 2006, will be spun off into a publicly traded company called CPEX Pharmaceuticals Inc that will seek a listing on the Nasdaq under the ticker symbol "CPEX."

CPEX will focus on developing drug delivery technologies based on the company's CPE-215 technology, which enhances delivery of drugs through the skin, Bentley said.

Following the spin-off, CPEX will employ about 20 people, while Bentley will have about 425 employees.

Bentley said its current manufacturing, sales and marketing, and research and development centers in Europe will be unaffected by the spin-off.

Bentley's generics business had revenue of $101.1 million in 2006.

The company said its board hired Deutsche Bank as financial adviser, and Skadden, Arps, Slate, Meagher & Flom LLP as legal adviser for the spin-off and strategic review. (Reporting by Dilipp S. Nag in Bangalore)