Flamel Technologies Announces Second Quarter 2013 Results

Flamel Technologies Announces Second Quarter 2013 Results 
Bloxiverz(R) Product Launch Underway 
Second NDA From Eclat Portfolio Resubmitted to FDA 
LYON, FRANCE -- (Marketwired) -- 07/29/13 --  Flamel Technologies
(NASDAQ: FLML) today announced its financial results for the second
quarter of 2013. Highlights from the quarter and subsequent period
include: 


 
--  Flamel received an approval for Bloxiverz(R), the first
    FDA-approved version of neostigmine sulfate, a drug used to reverse
    neuromuscular blocking drugs in surgical procedures. This is Flamel's
    first NDA approval
--  Product launch for Bloxiverz(R) has commenced
--  Flamel re-submitted its second NDA with the US Food and Drug
    Administration (FDA) near the end of the second quarter
--  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

  
"We are excited to receive NDA approval for Bloxiverz(R) from the FDA
on the specified PDUFA action date. We think that speaks to the
quality of our team's regulatory skills, and we are applying those
skills to our other pipeline products," said Mike Anderson, Chief
Executive Officer of Flamel. "Moreover, the marketing organization is
intently focused on the product launch for Bloxiverz(R) and working
with clinical staff, hospital risk managers and GPOs to make them
aware of availability of an FDA-approved version of neostigmine
sulfate for the first time. We are currently taking orders and
putting product into the wholesaler channel, which provides
distribution services to the hospital community."  
"Our team continues to be pleased with our progress in developing
products from the acquired Eclat portfolio," added Mr. Anderson. "We
resubmitted our second new drug application in the second quarter and
look forward to the FDA notification if that NDA will be accepted for
filing, which will give us a specific PDUFA action date. We will
continue to push forward on additional NDA filings out of the Eclat
portfolio and on developing additional, innovative drugs that employ
Flamel's proprietary platform of technologies."  
Greater research and development spending on these new product
efforts is designed to build Flamel's near-term and mid-term pipeline
and potential revenues. The Company expects to perform clinical
trials on several products from its internal pipeline in the second
half of 2013.  
Flamel's Second Quarter Results
 Flamel reported total revenues
during the second quarter of 2013 of $5.5 million, which were 8%
lower than revenues of $6.0 million in the second quarter of 2012,
primarily due to a decrease in license and research revenue.  
Costs of goods and services sold for the second quarter of 2013 were
$1.3 million compared to $1.5 million in the second quarter of 2012
primarily due to reduced production costs. Research and development
costs in the second quarter of 2013 totaled $7.3 million versus $7.7
million in the prior year period primarily due to the timing of our
pre-clinical and clinical studies. Selling, general and
administrative expenses for the second quarter of 2013 decreased to
$2.7 million compared to $2.9 million in the prior year period
primarily due to reduced non-cash stock compensation expenses.  
Total costs and expenses in the second quarter of 2013, excluding the
remeasurement of acquisition liabilities, decreased by 7.3% to $11.3
million compared to $12.2 million in the second quarter of 2012.  
In the acquisition of Eclat, Flamel acquired several pipeline
products that management believed could be commercially attractive.
As part of the acquisition, Flamel has incurred obligations owed to
the former Eclat shareholders that are contingent on the approval and
market potential for those products. Because the outlook for the
potential value of the Eclat pipeline products owned by Flamel has
improved, including the FDA approval of Bloxiverz(R), Flamel expects
to owe more to the former Eclat shareholders than was estimated
previously.  
The specific terms of the 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 equal to 20% of the gross profit
earned on certain Eclat products that are FDA-approved and launched.
In addition, the Company's February 2013 financing of $15 million
included a royalty of 1.75% of net sales of certain Eclat products
that may be approved and launched. These commitments are revalued and
reassessed at each balance sheet date based on information and data
available at that time resulting in a non-cash expense of $28.6
million in operating expenses and $2.0 million in financing expenses
in the second quarter of 2013 compared to a modest non-cash expense
of $0.2 million in the second quarter of 2012. This quarterly
re-measurement increased the Company's total costs and expenses by
$28.4 million over the prior year period. This change in the
remeasurement of acquisition liabilities was the largest source of
change in the Company's total costs and expenses, on a GAAP basis,
which were $39.9 million for the second quarter of 2013 compared to
$12.3 million in the prior year period.  
Total interest expense of $0.6 million for the second quarter of 2013
includes interest on the additional debt financing completed during
the first quarter of 2013. In the second quarter of 2012, the Company
had interest income of $0.3 million. Other income of $0.5 million in
the second quarter of 2013 reflects the reimbursement of the
deductible from a 2007 class action against the Company that was
dismissed.  
Net loss and loss per share (basic and diluted) for the second
quarter of 2013, excluding the impact of the remeasurement of the
fair value of acquisition liabilities and royalty, were $2.2 million
and $0.09, respectively, compared with $5.7 million and $0.23,
respectively, in the prior year period. On a GAAP basis, net loss for
the second quarter of 2013 was $32.9 million versus a net loss of
$5.9 million in the prior year period. Loss per share (both basic and
diluted) was $1.29 in the second quarter of 2013 versus $0.24 in the
second quarter of 2012.  
The Company ended the second quarter with cash and marketable
securities of $9.7 million compared to $15.4 million at March 31,
2013, reflecting a decrease of $5.6 million. During the second
quarter of each year, Flamel typically receives an annual payment
from the French Government in recognition of the research and
development conducted by Flamel in France, effectively a research and
development tax credit. This year the research and development credit
of $6.7 million was delayed to July 3, 2013. Had the payment been
received in June, Flamel would have ended the second quarter with a
cash balance of $16.4 million.  
A conference call to discuss these results and other updates is
scheduled for 8:30 AM Eastern Time on Monday, July 29, 2013. A
question and answer period will follow management's prepared remarks.
To participate in the conference call, investors are invited to dial
888-401-4669 (U.S. and Canada) or 719-457-2648 (international). The
conference ID number is 3698213. 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 719-457-0820 (international), with the passcode 3698213. 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(R) 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
http://www.flamel.com. 
This release contains "forward-looking statements", 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
integration of Eclat Pharmaceuticals may not be successful or that
certain payment acceleration events related to the acquisition 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, 2012 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 disclaim any obligation to update or alter
our forward-looking statements as a result of new information, future
events or otherwise, except as required by law. 


 
                                                                            
              Condensed Consolidated Statements of Operations               
               (Amounts in thousands, except per share data)                
                                                                            
                                  Three months ended     Six months ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
                                    2012       2013       2012       2013   
                                 ---------  ---------  ---------  --------- 
Revenue:                                                                    
  License and research revenue   $   2,054  $   1,650  $   4,164  $   2,923 
  Product sales and services         2,053      2,195      5,431      4,302 
  Other revenues                     1,926      1,696      3,798      3,456 
                                 ---------  ---------  ---------  --------- 
    Total revenue                    6,033      5,541     13,393     10,681 
                                 ---------  ---------  ---------  --------- 
Costs and expenses:                                                         
  Cost of goods and services                                                
   sold                             (1,547)    (1,283)    (2,865)    (2,278)
  Research and development          (7,722)    (7,304)   (13,707)   (15,833)
  Selling, general and                                                      
   administrative                   (2,913)    (2,706)    (8,096)    (5,197)
  Fair Value remeasurement of                                               
   acquisition liabilities            (182)   (28,623)     4,898    (31,599)
                                                                            
                                 ---------  ---------  ---------  --------- 
    Total                          (12,364)   (39,916)   (19,770)   (54,907)
                                 ---------  ---------  ---------  --------- 
                                                                            
Profit (loss) from operations       (6,331)   (34,375)    (6,377)   (44,226)
                                                                            
Interest income net                    250       (640)       416     (1,069)
Fair Value remeasurement of                                                 
 royalty agreement                       -     (2,015)         -     (2,015)
Foreign exchange gain (loss)           156        (33)        23         (9)
Other income (loss)                      9        501         76        466 
                                                                            
                                 ---------  ---------  ---------  --------- 
Income (loss) before income                                                 
 taxes                              (5,916)   (36,562)    (5,862)   (46,853)
Income tax benefit (expense)            (1)     3,708        (43)     5,170 
                                 ---------  ---------  ---------  --------- 
  Net income (loss)              $  (5,917) $ (32,854) $  (5,905) $ (41,683)
                                 =========  =========  =========  ========= 
                                                                            
Earnings (loss) per share                                                   
                                                                            
  Basic earnings (loss) per                                                 
   ordinary share                $   (0.24) $   (1.29) $   (0.24) $   (1.64)
  Diluted earnings (loss) per                                               
   share                         $   (0.24) $   (1.29) $   (0.24) $   (1.64)
                                                                            
Weighted average number of                                                  
 shares outstanding (in                                                     
 thousands) :                                                               
                                                                            
  Basic                             25,157     25,421     25,085     25,418 
  Diluted                           25,157     25,421     25,085     25,418 

  
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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