Flamel Technologies Announces Fourth Quarter and Full Year 2012 Results

Flamel Technologies Announces Fourth Quarter and Full Year 2012 Results 
Conference Call With Management to Take Place at 8:30 AM EST on
February 28, 2013 
LYON, FRANCE -- (Marketwire) -- 02/28/13 --  Flamel Technologies
(NASDAQ: FLML) today announced its financial results for the fourth
quarter of 2012 and full year 2012. The year 2012 marks the
transition of Flamel from a stand-alone drug delivery company to a
specialty pharmaceutical company with outstanding drug delivery
capabilities. Highlights from the quarter and subsequent period
include: 


 
--  Management continues to advance internal pipeline and pursue external
    business development opportunities,
--  Flamel had $9.2 million of cash and marketable securities as of
    December 31, 2012, prior to the debt financing, and
--  Receipt of $14.5 million of net proceeds on February 4, 2013 from the
    previously announced $15 million debt financing with two funds managed
    by Deerfield Management, the Company's largest shareholder.

  
In March 2012 Flamel acquired Eclat Pharmaceuticals, LLC (Eclat), which
provided both marketing capabilities and a mature pipeline of short
term product opportunities. The company has continued the development
of those products and expects to launch the first of them
 in the
summer of 2013, providing there are no unanticipated regulatory or
other delays. 
"Our progress in developing products at Eclat and additional
technology-driven products from Flamel's proprietary platform of
technologies has continued at a rapid pace and we are excited about
the expected approval and launch of our first product, as well as the
expected filing of additional marketing applications in 2013," said
Mike Anderson, Chief Executive Officer of Flamel. "In addition, the
recent financing will serve two important purposes. First, it allows
us to continue investing aggressively in our R&D pipeline; second, it
also provides the means to market effectively our first product,
after its expected approval this year."  
Mr. Anderson continued, "We believe we have evolved the company into
an organization that now has three distinctive ways to create
revenue: commercializing the Eclat projects in the shorter term,
pursuing our self-funded internal projects in the mid-term, and
continuing to seek meaningful partnerships with other companies to
supplement the other initiatives." 
"From an operating standpoint, management continues to exercise cost
discipline," he added, as fourth quarter 2012 operating expenses,
excluding non-cash elements, declined by $0.3 million compared to the
fourth quarter of 2011, despite absorbing additional operating
expenses from Eclat since March 2012.  
Flamel's Fourth Quarter Results 
Flamel reported total revenues during the fourth quarter of 2012 of
$7.3 million versus $8.6 million in the fourth quarter of 2011. The
decrease was primarily driven by lower product sales and services of
$2.2 million in the fourth quarter of 2012 compared to $4.2 million
in the prior year quarter, as the fourth quarter of 2011 included the
non-recurring revenues from the signing of a new supply contract with
Glaxo SmithKline ("GSK") for purchases of Coreg CR(R)'s
microparticles. License and research revenues grew to $3.5 million
during the fourth quarter of 2012 compared to $2.2 million in the
prior year quarter, reflecting the recognition of the remaining
up-front monies received from Merck Serono, subsequent to termination
of the license agreement in October 2012. Other revenues, consisting
primarily of royalty income from GSK on the sales of Coreg CR,
declined to $1.7 million in the fourth quarter of 2012 versus $2.2
million in the prior year quarter.  
Total costs and expenses during the fourth quarter of 2012 decreased
to $1.2 million versus $10.9 million in the prior year period.  
The total costs and expenses for the fourth quarter of 2012 included
two major non-cash line items. The terms of acquisition of Eclat
Pharmaceuticals in March 2012 included the issuance of a $12 million
note, whose repayment is tied to the approval and net sales of
certain Eclat products, 3.3 million warrants and earn-out payments
based on the gross profit achieved on the Eclat products. These
commitments are revalued and reassessed at each balance sheet date
based on information and data available at that time, including
financial projections related to the potential of the Eclat products,
as well as the share price and interest rate in so far as they
influence the value of the warrants. A favorable $16.5 million
adjustment was realized in the fourth quarter 2012 from the updated
fair-value measurement of these liabilities. In addition, Flamel took
a $7.2 million charge to reflect the impairment of R&D assets, mainly
reflecting changes in market opportunities for one of the acquired
pipeline products. Excluding these adjustments, operating expenses in
the fourth quarter of 2012 decreased to $10.6 million compared to
$10.9 million in the prior year period.  
Costs of goods and services sold for the fourth quarter of 2012 were
$1.5 million compared to $1.9 million in the fourth quarter
 of 2011.
Research and development costs in the fourth quarter of 2012 totaled
$6.1 million versus $5.9 million in the prior year period. This
modest increase in R&D expense was primarily due to $0.7 million in
Eclat-related expenses not present during the prior year period.
Selling, general and administrative costs were $3.0 million in the
fourth quarter of 2012 versus $3.2 million in the fourth quarter of
2011, primarily resulting from cost-saving measures, despite
Eclat-related expenses of $0.6 million incurred in the fourth quarter
of 2012 not present during the prior year period.  
Total interest expense of $1.6 million for the fourth quarter of 2012
includes $1.7 million of non-cash expense related to debt used to
fund the Eclat acquisition, partially offset by interest earned on
our cash balance. In the fourth quarter of 2011, the Company had
interest income of $0.1 million.  
Net income for the fourth quarter of 2012 was $9.1 million versus a
net loss of $2.1 million in the year-ago period. Earnings per share
(both basic and diluted) was $0.36 in the fourth quarter of 2012
versus loss per share (basic and diluted) of $0.08 in the fourth
quarter of 2011. Net loss and loss per share (basic and diluted) for
the fourth quarter of 2012, excluding the impact of the
re-measurement of the fair value of acquisition liabilities, the
impairment of R&D assets and the impact of deferred taxes, was $3.6
million and $0.14, respectively. 
A conference call to discuss these results and other updates is
scheduled for 8:30 AM Eastern Standard Time on Thursday, February 28,
2013. A question and answer period will follow management's prepared
remarks. To participate in the conference call, investors are invited
to dial 888-417-8533 (U.S.) or 719-325-2361 (international). The
conference ID number is 6788004. The conference call webcast may be
accessed at www.flamel.com. A replay of the call will be available
for 14 days, within a few hours after the call ends. Investors may
listen to the replay of the call by dialing 888-203-1112 (U.S.) or
719-457-0820 (international), with the passcode 6788004. A replay of
the webcast will also be archived on Flamel's website for 90 days
following the call.  
About Flamel Technologies. Flamel Technologies SA's (NASDAQ: FLML)
business model is to blend high-value internally developed products
with its leading drug delivery capabilities. The Company has a
proprietary pipeline of niche specialty pharmaceutical products,
while its drug delivery platforms are focused on the goal of
developing safer, more efficacious formulations of drugs to address
unmet medical needs. Its partnered pipeline includes biological and
chemical drugs formulated with its Medusa(R) and Micropump(R) (and
its applications to the development of liquid formulations, i.e.
LiquiTime(TM) and of abuse-deterrent formulations Trigger Lock(TM))
proprietary drug delivery platforms. Several Medusa-based products
have been successfully tested in clinical trials. The Company has
developed products and manufactures Micropump-based microparticles
under FDA-audited GMP guidelines. Flamel Technologies has
collaborations with a number of leading pharmaceutical and
biotechnology companies, including GlaxoSmithKline (Coreg CR(R),
carvedilol phosphate). The Company is headquartered in Lyon, France
and has operations in St. Louis, Missouri, USA, and manufacturing
facilities in Pessac, France. Additional information may be found at
www.flamel.com. 
This release contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, including
certain plans, expectations, goals and projections regarding
financial results, product developments and technology platforms. All
statements that are not clearly historical in nature are
forward-looking, and the words "anticipate," "assume," "believe,"
"expect," "estimate," "plan," "will," "may," and similar expressions
are generally intended to identify forward-looking statements. All
forward-looking statements involve risks, uncertainties and
contingencies, many of which are beyond our control that could cause
actual results to differ materially from those contemplated in such
forward-looking statements. These risks include risks that the
acquisition of Eclat Pharmaceuticals may not be successfully
integrated or that certain payment acceleration events may be
triggered; the new hospital-based product under FDA review may not be
approved or such approval may be delayed; the reacquisition of the
exclusive rights to develop and commercialize IFN-β XL worldwide
and identification of an alternative strategic partner for the
program may not be successful; the identified opportunities will not
result in shorter-term, high value results; clinical trial res
ults
may not be positive or our partners may decide not to move forward;
management transition may be disruptive or not succeed as planned;
products in the development stage may not achieve scientific
objectives or milestones or meet stringent regulatory requirements;
products in development may not achieve market acceptance;
competitive products and pricing may hinder our commercial
opportunities; we may not be successful in identifying and pursuing
opportunities to develop our own product portfolio using Flamel's
technology; and the risks associated with our reliance on outside
parties and key strategic alliances. These and other risks are
described more fully in Flamel's Annual Report on Form 20-F for the
year ended December 31, 2011 that has been filed with the Securities
and Exchange Commission (SEC). All forward-looking statements
included in this release are based on information available at the
time of the release. We undertake no obligation to update or alter
our forward-looking statements as a result of new information, future
events or otherwise. 


 
                                                                            
              Condensed Consolidated Statements of Operations               
               (Amounts in thousands, except per share data)                
                                                                            
                                  Three months ended    Twelve months ended 
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2011       2012       2011       2012   
                                 ---------  ---------  ---------  --------- 
Revenue:                                                                    
  License and research revenue   $   2,170  $   3,450  $  10,566  $   9,324 
  Product sales and services         4,242      2,163     13,395      9,657 
  Other revenues                     2,237      1,697      8,639      7,120 
                                 ---------  ---------  ---------  --------- 
    Total revenue                    8,649      7,310     32,600     26,101 
                                 ---------  ---------  ---------  --------- 
Costs and expenses:                                                         
  Cost of goods and services                                                
   sold                             (1,850)    (1,495)    (6,284)    (5,860)
  Research and development          (5,910)    (6,162)   (25,089)   (26,115)
  Selling, general and                                                      
   administrative                   (3,166)    (2,950)   (10,810)   (14,153)
  Remeasurement of acquisition                                              
   liabilities                           -     16,538          -     23,710 
  Impairment of assets                   -     (7,170)         -     (7,170)
                                 ---------  ---------  ---------  --------- 
    Total                          (10,926)    (1,239)   (42,183)   (29,588)
                                 ---------  ---------  ---------  --------- 
                                                                            
Profit (loss) from operations       (2,277)     6,071     (9,583)    (3,487)
                                                                            
Interest income (loss) net (1)         122     (1,569)       594     (4,365)
Foreign exchange gain (loss)           118       (108)       273       (180)
Other income (loss)                      5         11        134        102 
                                                                            
                                 ---------  ---------  ---------  --------- 
Income (loss) before income                                                 
 taxes                              (2,032)     4,405     (8,582)    (7,930)
Income tax benefit (expense)           (59)     4,696       (192)     4,702 
                                 ---------  ---------  ---------  --------- 
  Net Income (loss)              $  (2,091) $   9,101  $  (8,774) $  (3,228)
                                 =========  =========  =========  ========= 
                                                                            
Earnings (loss) per share                                                   
                                                                            
  Basic earnings (loss) per                                                 
   ordinary share                $   (0.08) $    0.36  $   (0.36) $   (0.13)
  Diluted earnings (loss) per                                               
   share                         $   (0.08) $    0.36  $   (0.36) $   (0.13)
                                                                            
Weighted average number of shares                                           
 outstanding (in thousands) :                                               
                                                                            
    Basic                           24,737     25,213     24,669     25,086 
    Diluted                         24,737     25,314     24,669     25,086 
                                                                            
(1) In 2012, includes impact of passage of time on valuation of acquisition 
 liabilities.                                                               

  
Contact:
Michael S. Anderson
Phone: 33 (0) 4 72 78 34 34
Fax: 33 (0) 4 72 78 34 35
E-mail: anderson@flamel.com  
Investor Relations
Bob Yedid 
ICR Inc. 
Phone: 646-277-1250
Email: bob.yedid@icrinc.com 
 
 
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