Press Releases

Flamel Technologies Announces Third Quarter Results, Earnings of $0.13 Per Share and Revenues of $13.3 Million

Lyon, France, October 28, 2004 Flamel Technologies (NASDAQ:FLML) today announced its financial results for the third quarter of 2004.

For the third quarter, Flamel reported total revenues of $13.3 million compared to $5.4 million for the third quarter of 2003. Expenses increased to $11.2 million, from $7.3 million in the third quarter of 2003, largely as a result of increased research and development and clinical studies and continued strength in the value of the Euro against the U.S. dollar. Net profit in the third quarter of 2004 was $2.8 million, compared to a net loss of $(1.9) million in the third quarter of last year. Net income per share for the third quarter of 2004 was $0.13, compared to a net loss per share in the third quarter of 2003 of $(0.11). Fully diluted earnings per share for the quarter were $0.12. Cash on hand at the end of the third quarter was $95.7 million versus $22.1 million at the end of the third quarter a year ago.

Flamel's third quarter revenues included license and research revenues of $12.3 million versus $4.2 million during the third quarter of 2003. The $12.3 million recognized in the third quarter of 2004 came largely from research contracts and included a milestone payment from Glaxo SmithKline relating to a Micropump^® enabled formulation of one of their existing drugs that entered Phase III trials during the quarter. The amount also included a milestone payment from TAP Pharmaceuticals in connection with the lansoprazole project. Third quarter license and research revenues also included increased amortization of $2.1 million relating to the $20 million upfront payment received from Bristol-Myers in November, 2003 for Basulin®. The remaining $12.3 million (assumes constant dollar/euro exchange rate) will be recognized during the fourth quarter, when the contract expires. Revenues from product sales and services were approximately flat year over year at $0.9 million. Other revenues remained stable at $0.2 million. Costs and expenses of Flamel's research and development increased to $8.6 million, from $5.0 million in the third quarter of 2003, largely as a result of increasing clinical and preclinical study work, primarily related to projects developed internally. Costs of goods and services sold in the quarter were stable at $0.9 million. SG&A decreased slightly from $1.5 million to $1.4 million.

Dr. Gerard Soula, president, chief executive officer and founder of Flamel Technologies said: "We are very pleased that GSK has moved into Phase III with one of their major existing products using a formulation utilizing our Micropump^® technology. It is a strong recognition by a major pharmaceutical company of the value of our technology, as well as our capability to manage the full development of a pharmaceutical compound.

During the quarter, we have also announced that we have entered into a new agreement with TAP Pharmaceuticals for the development and commercialization of a long-acting lansoprazole (Prevacid^®) based on our Micropump^® technology. Prevacid^® is currently the seventh largest selling drug in the world. On the Medusa^® side, we have announced the anticipated termination of our license agreement with Bristol-Myers Squibb, which we deeply regret. Flamel is still highly committed, however, to continue the Basulin^® project and we are looking for a new partner."

Stephen Willard, chief financial officer and general counsel of Flamel, said: "This quarter reflects strong research and revenue income on a number of partnerships with third parties, as well as a milestone from GSK. Expenses were up as a result of preparations for initial clinical trials on Interleukin-2 and Interferon alpha. Flamel's cash position reflects significant investments realized in the new facility in Pessac, as well as investments made for new equipment and leased space to support the development of our partnered and internal projects."

Flamel Technologies, S.A. is a biopharmaceutical company principally engaged in the development of two unique polymer-based delivery technologies for medical applications. Micropump^® is a controlled release and taste-masking technology for the oral administration of small molecule drugs. Flamel's Medusa^® technology is designed to deliver controlled-release formulations of therapeutic proteins.

A conference call to discuss earnings is scheduled for 8:30 AM ET October 29, 2004. The dial-in number is 800-374-1498 (Conference ID 1804409). International callers are invited to dial-in (1) 706-634-7261.

This document contains a number of matters, particularly as related to the status of various research projects and technology platforms, that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The presentation reflects the current view of management with respect to future events and is subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. These risks include risks that products in the development stage may not achieve scientific objectives or milestones or meet stringent regulatory requirements, uncertainties regarding market acceptance of products in development, the impact of competitive products and pricing, and the risks associated with Flamel's reliance on outside parties and key strategic alliances. These and other risks are described more fully in Flamel's Annual Report on the Securities and Exchange Commission Form 20-F for the year ended December 31, 2003.

 

FLAMEL TECHNOLOGIES S.A.
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