Full Press Release Details
Flamel Technologies Announces Third Quarter
Lyon, France - October 31, 2013
- Flamel Technologies (NASDAQ: FLML) today announced its financial results for the third quarter of 2013. Highlights from the quarter
"We are pleased that the FDA has
accepted for review our second NDA from the clat product portfolio and we look forward to the April 28, 2014 PDUFA date,"
said Mike Anderson, Chief Executive Officer of Flamel. "For competitive reasons we are not identifying the product at this
time, but this adds to Flamel's pipeline of new products that we believe will become increasingly more visible to our investors
"For Bloxiverz, the marketing organization
is working to place product into the marketplace and informing clinical staff, hospital risk managers and Group Purchasing Organizations
(GPOs) to make them aware of availability of the first FDA-approved version of neostigmine sulfate", added Mr. Anderson.
"Since our approval, we have signed contracts with nearly all of the major GPOs in the US and sold product to the major drug
wholesalers, which distributes the product to the hospital community. Additionally, we have provided information to the FDA on
our Bloxiverz production levels and the inventory in the wholesale channel in order to demonstrate that Flamel can satisfy the
entire U.S. demand for neostigmine sulfate."
"We will continue to push forward
on additional NDA filings out of the clat portfolio and on development of additional, innovative drugs that employ Flamel's
proprietary platform of technologies. Greater research and development spending on these new product efforts is designed to build
Flamel's near-term and mid-term pipeline and potential revenues. The Company expects to report clinical data on several products
from its internal pipeline in the first half of 2014."
Medusa hGH XL Update
As a part of its R&D program, Flamel
has completed preclinical studies with its proprietary extended release Medusa hGH XL product which utilizes Flamel's Medusa
technology applied to recombinant human growth hormone (rhGH). The Medusa technology is an innovative and safe depot formulation
for the delivery of a broad range of injectable biological and chemical drugs. The study was conducted on hypophysectomized ("hypoX")
rats, e.g. animals that have had their pituitary glands removed. This animal model is relevant for assessing efficacy evaluation
in the condition of growth hormone deficiency. Flamel's study data provided significant evidence to move this proprietary
drug forward into a human clinical trial in 2014 with once weekly dosing. The table below summarizes the key data:
| AT DAY 14 | Placebo | Low dose IR* | High dose IR* | Medusa hGH XL | ||||||||||||
| Number of animals | 10 | 10 | 10 | 10 | ||||||||||||
| Body Weight Gain (g) | -2 4 | 16 4 | 36 8 | 22 7 | ||||||||||||
| Tibia Length (mm) | 27.0 0.7 | 27.7 0.5 | 28.7 1.1 | 28.4 0.6 |
The data demonstrates that hypoX rats treated
with Medusa hGH XL showed a comparable increase in body weight gain as compared to the immediate release drug. The dose of Medusa
over 14 days in the study did not exceed the high dose of the immediate release rhGH over 14 days. There were no adverse events
in any arms of the study attributed to rhGH or Medusa polymer.
Flamel's Third Quarter Results
Flamel reported total revenues during the
third quarter of 2013 of $5.6 million, compared with $5.4 million in the third quarter of 2012, primarily due to an increase in
product sales and services offset partially by a decrease in license and research revenue.
Costs of goods and services sold for the third quarter of 2013
were $1.7 million compared to $1.5 million in the third quarter of 2012. Research and development costs in the third quarter of
2013 totaled $6.7 million versus $6.2 million in the prior year period primarily due to the timing of our development and regulatory
activities on our internal pipeline products. Selling, general and administrative expenses for the third quarter of 2013 decreased
to $2.9 million compared to $3.1 million in the prior year period.
Total costs and expenses in the third quarter of 2013 were $12.4
million compared with $11.9 million in the prior year period. Excluding approximately $1 million related to the remeasurement of
acquisition liabilities in both periods, as discussed below, total costs and expenses increased by 4.5% to $11.3 million in the
third quarter of 2013 compared to $10.9 million in the third quarter of 2012.
In the acquisition of clat, Flamel acquired several
pipeline products that management believed could be commercially attractive. As part of the acquisition, Flamel has incurred obligations
owed to the former clat shareholders that are contingent on the approval and market potential for those products. These
commitments are revalued and reassessed at each balance sheet date based on information and data available at that time resulting
in a non-cash expense of $1.0 million in operating expenses in the third quarter of 2013 consistent with the non-cash expense of
$1.1 million in the third quarter of 2012.
Total interest expense was $0.7 million
for the third quarter of 2013, which includes interest on the additional debt financing completed during the first quarter of 2013,
compared to $0.1 million in interest income in the prior year period.
Net loss for the third quarter of 2013
was $6.4 million versus a net loss of $6.4 million in the prior year period. Loss per share (both basic and diluted) was $0.25
in the third quarter of 2013 versus $0.26 in the third quarter of 2012. Adjusted net loss for the third quarter of 2013 was $5.6
million versus an adjusted net loss of $5.5 million in the third quarter of 2012. Adjusted loss per share (both basic and diluted)
was $0.22 in the third quarter of 2013 compared to an adjusted loss per share of $0.22 in the prior year period. A reconciliation
of adjusted net loss is included below.
The Company ended the third quarter with cash and marketable
securities of $9.3 million compared to $9.7 million at June 30, 2013, reflecting a decrease of $0.4 million. However, on July 3,
2013, the Company received payment of $6.7 million from the French Government in recognition of the research and development conducted
by Flamel in France, effectively a R&D tax credit. Had the R&D credit been received in June, then the company would have
ended the second quarter with a cash balance of $16.4 million and the decrease in cash during the third quarter would have been
$7.1 million. The reduction in cash during the third quarter principally reflects continued investment in the Company's product
pipeline, payment of expenses related to the launch of Bloxiverz, including the working capital investment required to build an
inventory position, and the slow uptake of Bloxiverz in the quarter due to the FDA not having removed unapproved neostigmine products
from the market as of this point. Flamel is working actively to expedite this process.
After the close of the third quarter, Flamel entered into a
term sheet for a $15 million secured line of credit. Flamel believes it is prudent to put the line of credit into place now
as we continue to anticipate that Bloxiverz sales will begin to ramp, primarily tied to the FDA's rulings and other proactive
steps taken by the Company. The final documentation for the line of credit should be completed in November 2013, although there
are be no assurances that documentation will be completed and the line of credit will be available to the Company.
Flamel is disclosing non-GAAP financial measures when providing
financial results, including adjusted net income. Flamel believes that an evaluation of its ongoing operations (and comparison
of current operations with historical and future operations) would be difficult if the disclosure of its financial results were
limited to financial measures prepared only in accordance with generally accepted accounting principles (GAAP) in the U.S. In addition
to disclosing its financial results determined in accordance with GAAP, Flamel is disclosing certain non-GAAP results that exclude
items such as fair value remeasurements and amortization expense directly associated with the acquisition and include items such
as operating cash flows associated with the acquisition liabilities and Royalty Agreement, in order to supplement investors' and
other readers' understanding and assessment of the Company's financial performance. The Company's management uses these non-GAAP
measures internally for forecasting, budgeting and measuring its operating performance. Investors and other readers are encouraged
to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most closely applicable GAAP
measure set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior
measure to, measures of financial performance prepared in accordance with GAAP.
Below is a reconciliation of GAAP net losses attributable to
Flamel and diluted GAAP losses per share to adjusted net losses attributable to Flamel and adjusted diluted losses per share for
the three and nine months ended September 30, 2013 and 2012 (in thousands except per share amounts).
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||||||||||||||||
| 2012 | 2013 | 2012 | 2013 | |||||||||||||||||||||||||||||
| GAAP Net income (loss) and diluted earnings (loss) per share | $ | (6,425 | ) | $ | (0.26 | ) | $ | (6,369 | ) | $ | (0.25 | ) | $ | (12,330 | ) | $ | (0.49 | ) | $ | (48,052 | ) | $ | (1.89 | ) | ||||||||
| Fair value remeasurement of acquisition liabilities | 1,060 | 1,043 | (3,963 | ) | 32,642 | |||||||||||||||||||||||||||
| Fair value remeasurement of Royalty Agreement | - | 13 | - | 2,028 | ||||||||||||||||||||||||||||
| Tax effects of the above items | (111 | ) | (89 | ) | (236 | ) | (2,342 | ) | ||||||||||||||||||||||||
| Earn-out acquisition payment payable | (73 | ) | (167 | ) | (75 | ) | (275 | ) | ||||||||||||||||||||||||
| Adjusted Net Income (Loss) and adjusted diluted earnings (loss) per share | $ | (5,549 | ) | $ | (0.22 | ) | $ | (5,569 | ) | $ | (0.22 | ) | $ | (16,604 | ) | $ | (0.66 | ) | $ | (15,999 | ) | $ | (0.63 | ) |
A conference call to discuss these results
and other updates is scheduled for 10:00AM Eastern Time on Thursday, October 31, 2013. A question and answer period will
follow management's prepared remarks. To participate in the conference call, investors are invited to dial 888-471-3843
(U.S. and Canada) or 719-325-2494 (international).
The conference ID number is 9636511. The conference call webcast may be accessed at www.flamel.com.
A replay of the call will be available for 14 days, within a few hours after the call ends. Investors may listen to the replay
of the call by dialing 888-203-1112 (U.S. and Canada) or 719-457-0820
(international), with the passcode 9636511. A replay of the webcast will also be archived on Flamel's website for 90 days following
About Flamel Technologies. Flamel Technologies SA's
(NASDAQ: FLML) business model is to blend high-value internally developed products with its leading drug delivery capabilities.