Flamel's Fourth Quarter Results

Flamel reported net income of $1.9 million ($.09 per share) for the fourth quarter of 2003, versus a loss of $0.3 million ($.02 per share) in the fourth quarter a year ago.
Total revenues for the fourth quarter 2003 were $11.4 million, versus $5.0 in the year ago period. License and research revenue totaled $10.6 million during the quarter, compared to $3.8 million in 2002. License and research revenue recognized during the quarter included revenues from Bristol-Myers Squibb and GlaxoSmithKline. Product sales and services during the fourth quarter were $0.6 million, compared with nearly $0.9 million during the year-ago period.
Expenses during the quarter grew to approximately $9.8 million from almost $6.0 million in the fourth quarter of 2002. Expenses increased as a result of formulation and development activities performed seeking to apply Flamel's technology platforms, particularly Medusa®, to additional drugs. Reported expenses also increased due to the increase in value of the Euro versus the US dollar in the twelve-month period

Flamel's 2003 Annual Results

For the calendar year 2003, Flamel reported that its operating revenue grew to $25.3 million, compared to $18.4 million in 2002. License and research revenue grew by 45%, increasing to over $21.1 million in 2003, from approximately $14.6 million in 2002. License and research revenue in 2003 included revenues from Bristol-Myers Squibb, Biovail, GlaxoSmithKline, Merck, and Servier, as well as from other undisclosed partners. Product sales and services for the year 2003 increased to $3.4 million, versus approximately $2.9 million in the year 2002, reflecting increased supply of clinical batches to our partners.
Expenses in 2003 increased to $ 29.9 million, up from over $18.6 million in 2002. The increase was largely the result of additional investments by Flamel to formulate additional drugs using our technologies prior to licensing, particularly interferon alpha and interleukin-2, as well as human growth hormone and EPO.
The company reported a net loss for the year 2003 of approximately $3.3 million, or $(0.19) per share, as compared with a profit of approximately $3.0 million, or $0.18 per diluted share for the year 2002.
Flamel's cash on hand at year-end 2003 was $109 million, compared to $14.5 million at the end of 2002 and the company was cash-flow positive on an operating basis, before taking into account the increases in cash position due to financing activities.

Stephen Willard, chief financial officer of Flamel Technologies, noted: "Flamel has had a strong financial year in 2003, with an increase in license and research revenues of more than 45%, targeted investment in a number of potential new products for licensing, particularly with our Medusa® technology, and a strengthened balance sheet. In 2003, research revenues grew markedly from the partnerships announced during the year, particularly with Bristol-Myers Squibb and GlaxoSmithKline, but also from new feasibility study agreements with undisclosed partners. Expenses rose as we began to use our revenues to commence formulation work on the next generation of potential licensed products, including the proteins interferon alpha, interleukin-2, human growth hormone and EPO. Despite this investment in future potential products, Flamel was cash-flow positive on an operating basis, while adding more than $70 million to the balance sheet through the sale of 2 million shares in a public offering of stock and the exercise of previously-issued warrants."

Dr. Gerard Soula, founder, president and CEO of Flamel, said: "The year 2003 was a year of great accomplishment for Flamel and its team. We proved in clinical trials the value of Medusa® with Basulin® for the treatment of diabetic patients, and Micropump® with Coreg® for cardiovascular disease treatment. These results permitted Flamel to sign major partnerships with leading pharmaceutical companies Bristol-Myers Squibb and GlaxoSmithKline, among others. Flamel also received increased recognition of its technologies from a number of major pharmaceutical companies, such that interest in licensing our technologies for additional products has never been greater. We strengthened the balance sheet of our company with milestones and an equity offering, resulting in more than $100 million of cash at the end of the calendar year. With these efforts and successes, Flamel has made significant strides to create shareholder value, with the support of our employees."

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^® technology is designed to deliver controlled-release formulations of therapeutic proteins.Micropump^® is a controlled release and taste-masking technology for the oral administration of small molecule drugs.