Press Releases
Flamel Technologies Reports Improved Operating Revenues and Net Income, Reducing Loss Per Share to $(0.04) for the Third Quarter
Lyon, France, October 25, 2000 – Flamel Technologies S.A. today announced its financial results for its third quarter ended September 30, 2000, the sixth consecutive quarter of improved revenues and net income for the company on a pro forma basis. On a per share basis, the Company’s loss per share for the third quarter was $(0.04) and the absolute amount of the third quarter loss was $659,000.
Total revenue for the quarter was $3.2 million, compared to $1.7 million reported for the third quarter of 1999. The increase in total revenues in the third quarter of 2000 was primarily the result of revenues from Novo Nordisk related to the development of LABI, a long-acting insulin product, and of the revenues of sales and royalty income from Corning Inc. related to their photochromic lens product.
Total costs and expenses declined to $4.0 million, from $4.5 million reported in the third quarter of 1999. The Company’s net loss from operations in the third quarter of 2000 was $659,000, compared to $3.0 million reported in the third quarter of 1999. On a per share basis, the quarter’s loss is equivalent to $(0.04) per share.
Total revenue for the first nine months of 2000 more than doubled to $8.4 million from $4.0 million in the same period last year. This increase is due to the combination of higher license and research revenues due to research revenues from Novo Nordisk and to revenues from sales to, and royalty income from, Corning. Revenues also included a one-time payment from Searle to Flamel in respect of the termination of the License Agreement for Asacard previously granted by Flamel to Searle. As a result of this agreement with Searle, Flamel has obtained all right, title and interest in Asacard from Searle and will explore its options for sale of the product through a new partner.
Total costs and expenses for the nine-month period declined to $12 million, as compared to $13 million incurred in the comparable period last year. The Company’s net loss from operations in the first nine months of 2000 was $3.3 million, compared to $8.9 million reported in the comparable period of 1999. On a per share basis, before giving effect to the charge resulting from a change in accounting treatment described below, this nine-months period loss would have been $0.22 per share.
Effective January 1, 2000, the Company changed its method of recognizing revenue on the up-front payments it receives when signing new collaborative agreements. The Company will now spread such revenue across of the term related agreement, rather than recognizing all of the revenue in the period it was received. Flamel believes this change is consistent with the Securities and Exchange Staff Accounting Bulletin (SAB) No. 101. As a result of this change in accounting treatment, the Company has recognized a charge of $4.6 million ($0.30 per share) specifically related to the $5.0 million received in December 1999 on signing a collaborative agreement with Novo Nordisk. This change resulted in a net loss for the nine-month period ended September 30, 2000 of $7.9 million ($0.52 per share), compared to a net loss of $8.9 million ($0.69 per share) for the comparable period of 1999. At September 30, 2000, the Company has $10.5 million in cash and short-term investments.
"These results demonstrate the continued success of Flamel’s efforts to increase revenues while controlling costs," said Stephen H. Willard, C.F.O. of Flamel Technologies. "We are applying a disciplined approach to actively searching out new revenues sources and partnerships while maintaining our dedication to existing partners and projects, as well as our internal research and development programs".
"This is a very exciting time for Flamel," said C.E.O. Gérard Soula. " I am particularly pleased that we obtained in this quarter, as previously announced, positive clinical data on Metformin XL, which is consistent with the successful application of our Micropump® oral drug delivery platform to a number of other compounds previously announced or under development. These results confirm the potential of Micropump®, Flamel’s oral delivery drug platform", Dr. Soula continued.
Flamel Technologies S.A. is a biopharmaceutical company principally engaged in the development of two unique polymer-based delivery technologies for medical applications. Flamel’s Medusa® nano-encapsulation technology is designed to deliver therapeutic proteins. Micropump® is a controlled release technology for the oral administration of small molecule drugs. Flamel’s expertise in polymer science has also been instrumental in the development of a photochromic eyeglass lens product now marketed by Corning Inc. Additionally, Flamel has developed new herbicide delivery systems now being tested by Monsanto and has patented a biomaterial, ColCys™.
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, 1999.
FLAMEL TECHNOLOGIES S.A.
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in thousands, except per share
data)
|
|
Three months ended |
Nine months ended |
| September 30 2000 US $ |
September 30 1999 US $ |
September 30 2000 US $ |
September 30 1999 US $ | |
| Revenues | ||||
|
Licence and research revenue |
2,085 |
482 |
5,274 |
1,719 |
|
Product sales and services |
848 |
1,124 |
2,175 |
2,182 |
|
Royalties and other income |
267 |
82 |
978 |
131 |
| Total revenues | 3,200 | 1,688 | 8,427 | 4,032 |
| Costs and expenses | ||||
|
Cost of goods and services |
(749) |
(997) |
(2,151) |
(2,356) |
|
Research and development |
(2,308) |
(2,707) |
(7,414) |
(8,259) |
|
Selling, general and administrative |
(963) |
(822) |
(2,455) |
(2,395) |
|
Stock compensation expense |
(1) |
(6) |
(12) |
(38) |
|
Total costs and
expenses |
(4,021) |
(4,532) |
(12,032) |
(13,048) |
|
Loss from operations |
(821) |
(2,844) |
(3,605) |
(9,016) |
|
Interest income (expense), net |
149 |
(95) |
292 |
119 |
|
Foreign exchange gain(loss) |
13 |
(27) |
23 |
17 |
|
Loss from operations before income taxes and the cumulative effect of a change in accounting principle |
(659) |
(2,966) |
(3,290) |
(8,880) |
| Income tax benefit | - | - | - | - |
|
Net loss from operations before cumulative effect of a change in
accounting principle |
(659) | (2,966) | (3,290) | (8,880) |
| Cumulative effect on prior years (to December 31, 1999) of changing method of revenue recognition, net of tax | - | - | (4,577) | - |
| Net loss | (659) | (2,966) | (7,867) |
(8,880) |
| Loss per share before cumulative effect of a change in accounting principle | - | - | $(0.22) | $(0.69) |
| Cumulative effect per share on prior years of changing method of revenue recognition | - | - | $(0.30) | - |
| Net loss per ordinary share | $(0.04) | $(0.23) | $(0.52) | $(0.69) |
| Weighted average number of ordinary shares outstanding |
16,198 |
12,939 |
15,042 | 12,939 |
