Flamel Technologies Announces Licensing Agreement with Merck & Co., Inc.

Lyon, France, October 10, 2001 - Flamel Technologies (NASDAQ:FLML) announced today that it has signed a licensing agreement with Merck & Co., Inc. (NYSE: MRK) for the application of its Micropump ^® technology to an undisclosed class of pharmaceutical compounds. Financial terms of the agreement were not disclosed.

Micropump^® is an innovative patented technology developed by Flamel using microparticles which permits the delivery of small molecule drugs over an extended period in the small intestine, including drugs with a narrow window of absorption. 

Dr. Gerard Soula, president and chief executive officer of Flamel, said: "We are delighted that Merck, a premier pharmaceutical research organization, renowned for innovations in drug development, has licensed our technology. This agreement further demonstrates Flamel's ability to develop innovative pharmaceutical delivery systems for a worldwide market."

Dr. Soula continued: "In particular, we are pleased to announce the name of a second major partner, Merck, to join our flagship collaboration with Novo Nordisk on long-acting insulin, using our Medusa^® technology. We hope to be able to announce the names of additional major partners with whom we work as we go forward and strive to maximize value for our shareholders."

About Flamel Technologies:

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. 

About Merck & Co., Inc.:

Merck & Co., Inc. is a leading, research-driven pharmaceutical products and services company.  Merck discovers, develops, manufactures and markets a broad range of innovative products to improve human and animal health, directly and through its joint ventures.  Merck –Medco manages pharmacy benefits for employees, insurers and other plan sponsors, encouraging the appropriate use of medicines and providing disease management programs.  Through these complementary capabilities, Merck works to improve the quality of life and contain overall health care costs.

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.