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Flamel Technologies Announces First Quarter 2013 Results

Flamel Technologies Announces First Quarter 2013 Results 
Conference Call With Management to Take Place at 8:30 AM ET on May 7,
2013 
LYON, FRANCE -- (Marketwired) -- 05/07/13 --  Flamel Technologies
(NASDAQ: FLML) today announced its financial results for the first
quarter of 2013. Highlights from the quarter and subsequent period
include: 


 
--  Management continues to focus on development and advancement of
    internal near term projects as well as mid-term pipeline opportunities
    that employ Flamel's proprietary drug delivery technologies.
--  Flamel has filed a second NDA with the US Food and Drug Administration
    (FDA) in the first quarter.
--  Management continues to pursue selective external business development
    opportunities.
--  Flamel had $15.4 million of cash and marketable securities as of March
    31, 2013, subsequent to the debt financing.

  
"We continue to be pleased with our progress in developing products
from the acquired Eclat portfolio and are excited about the expected
approval and launch of our first product in the summer of 2013," said
Mike Anderson, Chief Executive Officer of Flamel. "We are still
working to submit additional new drug applications as soon as
possible and filed a second NDA in the quarter. For this second NDA,
we have received a 'refusal to file' letter from the FDA, citing our
need to reformat parts of certain datasets in the application. The
letter does not comment on the approvability of our product and we
will continue to work closely with the agency to provide the
information requested for resubmission of this application as quickly
as possible. While this is disappointing, given the limited nature of
the deficiency, we have confidence in being able to resubmit our
filing shortly in accordance with FDA requirements. Moreover, we
continue to push forward developing additional, innovative drugs that
employ Flamel's proprietary platform of technologies."  
Greater research and development spending on these efforts is
designed to build Flamel's near-term and mid-term pipeline and
revenues and to build the company's shareholder value. The company
expects to perform clinical trials on two internal pipeline products
in the second half of 2013. Additionally, Flamel announced the
dismissal of a 2007 class action law suit during the first quarter,
resulting in the reimbursement of the $0.5 million deductible.  
"We continue to execute on our strategy to strike a balance between
our own pipeline products, where we control decisions on development,
regulatory submission and marketing, while continuing our commitment
to enter into significant partnerships that employ Flamel's
proprietary drug delivery platforms," said Mr. Anderson. "In the near
term, our new strategy of funding and developing our own products
could lower partner-derived revenue, but will provide a much larger
revenue base in the mid and long terms. 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." 
Flamel's First Quarter Results 
Flamel reported total revenues during the first quarter of 2013 of
$5.1 million versus $7.4 million in the first quarter of 2012. For
the first quarter of 2013, a decrease of $1.3 million in product
sales and services was the primary driver of lower revenues versus
the prior year period. License and research revenues were $1.3
million during the first quarter of 2013 compared to $2.1 million in
the prior year quarter, reflecting the absence of new contracts.
Product sales were $2.1 million in the first quarter of 2013 compared
to $3.4 million in the prior year period. The decline is primarily
due to the timing of demand from GlaxoSmithKline ("GSK") and
recognition in the first quarter of 2012 of the remaining $0.9
million of indemnity payments due to the Company following the
signature of a new supply agreement in 2011. Other revenues,
consisting primarily of royalty income from GSK on the sales of Coreg
CR, were $1.8 million in the first quarter of 2013 versus $1.9
million in the prior year quarter.  
Total costs and expenses during the first quarter of 2013 increased
to $15.0 million versus $7.4 million in the prior year period. The
total costs and expenses for the first quarter of 2013 increased due
to several items. First, the Company incurred Eclat expenses for the
full first quarter of 2013 compared to March 13- 31, 2012 in the
prior year period, resulting in an increase of $1.4 million in
expenses (excluding the filing fee mentioned below) included in both
R&D and SG&A expenses. Second, Flamel incurred a $2 million filing
fee for its second new drug application NDA filed with the FDA,
offset by reduced SG&A costs. Third, the value of the warrants issued
for the acquisition of Eclat has increased over the quarter as a
result of our share price, resulting in an accounting non-cash
expense of $3.0 million in the first quarter of 2013 compared with a
favorable adjustment of $5.1 million in the first quarter of 2012. 
Costs of goods and services sold for the first quarter of 2013 were
$1.0 million compared to $1.3 million in the first quarter of 2012
due to lower product sales. Research and development costs in the
first quarter of 2013 totaled $8.5 million versus $6.0 million in the
prior year period primarily due to the Company's expanding portfolio
of new internal pipeline products in development, including the $2
million filing fee. Selling, general and administrative expenses for
the first quarter of 2013 decreased to $2.5 million compared to $5.2
million in the year-prior period due to severance costs incurred in
the first quarter of 2012 upon the departure of the Company's
previous Chief Executive Officer and legal costs associated with the
acquisition of Eclat.  
The terms of acquisition of Eclat 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, the share price and interest rates in so far as they
influence the value of the warrants. An unfavorable $3.0 million
adjustment was realized in the first quarter of 2013 from the updated
fair-value measurement of these liabilities, compared to a favorable
adjustment of $5.1 million in the prior year period. Excluding these
adjustments, operating expenses in the first quarter of 2013
decreased to $12.0 million compared to $12.5 million in the first
quarter of 2012.  
Total interest expense of $0.4 million for the first quarter of 2013
includes interest on the debt financing completed during the quarter.
In the first quarter of 2012, the Company had interest income of $0.2
million.  
Net loss for the first quarter of 2013 was $8.8 million versus net
income of $12,000 in the year-ago period. Earnings per share (both
basic and diluted) was $(0.35) in the first quarter of 2013 versus
$0.00 in the first quarter of 2012. Net loss and loss per share
(basic and diluted) for the first quarter of 2013, excluding the
impact of the re-measurement of the fair value of acquisition
liabilities, was $5.9 million and $0.23, respectively compared with
$5.1 million and $0.20 respectively in the prior year period. 
A conference call to discuss these results and other updates is
scheduled for 8:30 AM Eastern Time on Tuesday, May 7, 2013. A
question and answer period will follow management's prepared remarks.
To participate in the conference call, investors are invited to dial
888-428-9473 (U.S. and Canada) or +1-719-325-2315 (international).
The conference ID number is 8200950. 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. and
Canada) or +1-719-457-0820 (international), with the passcode
8200950. 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 results
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 March 31, 
                                               ---------------------------- 
                                                    2012           2013     
                                               -------------  ------------- 
Revenue:                                                                    
  License and research revenue                 $       2,110  $       1,273 
  Product sales and services                           3,378          2,107 
  Other revenues                                       1,872          1,760 
                                               -------------  ------------- 
    Total revenue                                      7,360          5,140 
                                               -------------  ------------- 
Costs and expenses:                                                         
  Cost of goods and services sold                     (1,318)          (995)
  Research and development                            (5,985)        (8,529)
  Selling, general and administrative                 (5,183)        (2,491)
  Remeasurement of acquisition liabilities             5,080         (2,976)
                                               -------------  ------------- 
    Total                                             (7,406)       (14,991)
                                               -------------  ------------- 
                                                                            
Profit (loss) from operations                            (46)        (9,851)
                                                                            
Interest income (loss) net                               166           (429)
Foreign exchange gain (loss)                            (133)            24 
Other income (loss)                                       67            (35)
                                                                            
                                               -------------  ------------- 
Income (loss) before income taxes                         54        (10,291)
Income tax benefit (expense)                             (42)         1,462 
                                               -------------  ------------- 
  Net Income (loss)                            $          12  $      (8,829)
                                               =============  ============= 
                                                                            
Earnings (loss) per share                                                   
                                         
                                   
  Basic earnings (loss) per ordinary share     $        0.00  $       (0.35)
  Diluted earnings (loss) per share            $        0.00  $       (0.35)
                                                                            
Weighted average number of shares outstanding                               
 (in thousands) :                                                           
                                                                            
  Basic                                               25,012         25,415 
  Diluted                                             25,012         25,415 

  
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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