For the second quarter, Flamel reported total revenues of $4.7 million, compared to $6.1 million in the second quarter of 2005. Expenses, which include option-related expense of $2.0 million in accordance with the implementation of FAS 123-R as of January 1, 2006, declined to $14.3 million in the second quarter of 2006, from $16.1 million in the second quarter of 2005.

Net loss in the second quarter of 2006 was $(9.5) million, compared to a net loss of $(9.2) million in the second quarter of last year. Net loss per share (basic) for the second quarter of 2006 was ($0.40), compared to a net loss per share (basic) in the year-ago period of ($0.41).

Cash and marketable securities at the end of the second quarter totaled $69.1 million, versus $75.3 million at the end of the first quarter.

Flamel's 2006 second quarter revenues included license and research revenues of $4.6 million. License and research revenues in the second quarter of 2005 totaled $5.4 million. Other revenues were $0.2 million during the second quarter of 2006 versus $0.2 million in the year-ago period.

Flamel's research and development expenses decreased to $9.0 million, from $12.6 million in the year-ago quarter. Cost of goods and services sold were $1.2 million versus $0.9 million in Q2 2005. SG&A increased to $2.8 million, before the addition of $1.3 million attributable to options-related expense in the category, from $2.6 million in the second quarter of 2005.

For the first half of 2006, Flamel reported total revenues of $9.8 million, compared to $14.2 million in the first half of 2005. Expenses declined to $29.6 million from $31.7 million in the first half of 2005.

Net loss in the first half of 2006 was $(19.1) million, compared to net loss of $(9.0) million in the first half of last year. Net loss per share (basic) for the first half of 2006 was ($0.80), compared to net loss per share (basic) in the year-ago period of $(0.40).

Flamel's license and research revenues during the first six months of 2006 were $9.4 million, versus $12.8 million in the year-ago period. Other revenues were $0.4 million during the period, as compared to $0.5 million in 2005. Flamel's research and development expenses decreased to $18.5 million, from $26.0 million in the first half of 2005. This decline was largely due to the Company's focus on maintaining a disciplined cost structure while continuing to invest in its core technology platforms. Cost of goods and services sold increased to $3.1 million, compared to $1.2 million a year ago. SG&A increased to $8.0 million, including $2.6 million in options-related expense, from $4.5 million in the year-ago period.

"As we approach the PDUFA date for Coreg CR," stated Stephen H. Willard, Flamel's Chief Executive Officer, "we have obtained new financial investment from GlaxoSmithKline. This has enabled us to purchase an additional production machine, which will be dedicated to further expanding our ability to produce Coreg CR Micropump® particles in response to growing projected levels of demand. We expect that the new machine will be on-line late next year. We continue to expand our relationships with additional pharmaceutical companies through development and feasibility agreements, while we work to obtain licensing agreements for our developed products."

A conference call to discuss earnings is scheduled for 8:30 AM EDT August 1, 2006. The dial-in number (for investors in the U.S. and Canada) is 1-800-374-1498; the conference ID number is 3668963. International investors are invited to dial 1-706-634-7261.

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. 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 and peptides.

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 document 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.