Flamel Technologies SA Q2 2010 Earnings Call Transcript

Flamel Technologies SA, (FLML)

2Q 2010 Earnings Call

July 29, 2010 08:30 am ET

Executives

Stephen Willard

Sian Crouzet

Analyst

Matt Kaplan – Ladenburg

Peter Butler – Glen Hill Investments

Edward Nash – Roth Capital Partners

David Moskowitz – Madison Williams

Presentation

Operator

Please stand by, good morning ladies and gentlemen and welcome to the Flamel Technologies Second Quarter Earnings Conference Call. Please note that this call is being recorded.

Flamel Technologies requests that all investors review the forward looking statement language which is set out at the conclusion of yesterday’s press release.

All statements made on this call are subject to a variety of future events and risk factors including those set forth in Flamel’s filings with the SEC particularly on form 20-F, which are all publically available. Please review them as they are directly ethical to every element of this call.

I’d now like to turn the call over to Mr. Stephen Willard, please go ahead sir.

Stephen Willard

Thank you very much Rochelle and good morning ladies and gentlemen. Since our last quarterly call in May we have made important progress as highlighted in the press release detailing our second quarter results we are pleased with the progress that we have made recently particularly in the work we are undertaking with Merck Serono and Pfizer as well as a number of our other partners.

Excluding currency impacts we increased cash reserves during the second quarter. We maintain our cash reserves in Euros so as to match our expenditures.

Operationally we are pleased to announce the addition of three new programs as detailed in yesterday’s press release. Two of these programs are with a single partner for the development of controlled release formulations for cardiovascular drugs using our Micropump platforms.

The third program is for a Medusa enabled control release combination formulation of two molecules, one peptide and one protein. This program is being conducted with a new partner which is a top 20 pharmaceutical company.

I would now like to as Sian Crouzet to discuss our second quarter financial results and then I will expound on these remarks followed by the usual question and answer period, Sian.

Sian Crouzet

Thank you, Steve and good morning. As successful from yesterday’s press release our cash and marketable securities grew in the second quarter were around $1.6 million excluding currency translation effects.

This was as a result of the R&D tax credit that we received from the French Government during the quarter. This credit is effectively earned at the rate of 30% on the volume of research and development expenditure conducted by the company.

Total revenue during the second quarter was $7.5 million compared with $9.6 million in the year ago period.

License and research revenues were $3.3 million compared to $4.3 million in the second quarter of 2009.

As many of you know our development program often involves periods where work is less intensive than at other times. Such as win products and sick clinic. Currently we have 5 projects in clinic. That said our focus for the rest of the year is to increase revenues to a more normalized level.

Product [indiscernible] [0:03:38] relating to the production of COREG CR micro particles were $1.9 million compared with $2.5 million in 2009.

Other revenues which are primarily royalties on the sales of COREG CR were $2.4 million compared with $2.7 million in the year ago period.

Costs and expense declined year on year by $1 million. This decline was across all three categories as we maintain our commitment to strict cost control.

Production costs in line with ongoing demand from $1.9 million in the second quarter of 2009 to $1.6 million in the present period.

R&D declined to a lesser extent. As we continue our investments in this critical activities to support our project [indiscernible] [0:04:35]. And SGNA declined from $3.3 million to $2.8 million.

Our net loss for the quarter was $4.3 million compared with $3.6 million in the same period as last year. And our net loss per share was $0.18 compared to $0.16 in the second quarter 2009.

And with that I’ll now turn the call back over to Steve.

Stephen Willard

Thank you very much Sian, the continued progress that we have made this year on a variety of programs has created an unprecedented set of opportunities for Flamel.

We currently are engaged in discussions with a number of our pharmaceutical partners further expanding our relationships and we hope to sign license agreements of extend development work based on the positive results in formulation, pre clinical work and clinical work as seen to date.

We continue to enjoy a very strong relationship with Merck Serono and are confident in the progress that we have made in this collaboration. Our expectation remains that we will have an update for investors on that program this summer. We believe that this program has the potential to validate many of the advantages of the Medusa platform particularly with respect to Medusa’s ability to enable the controlled release of a fully bioactive molecule.

Our work with Merck Serono is highly promising we believe and may serve as an important proof of concept for the ability of our platform to deliver important, competitive advantages for existing and null molecules with relatively little development risk.

Another program that I will highlight is the one we originally began with Wyatt which is survived with the merger with Pfizer. Shortly after the merger was complete Pfizer exercised the option to license the Medusa platform for the creation of a controlled released intravenous formulation of a drug that had been previously been part of the Wyatt portfolio of marketed molecules. This work is very exciting and we are pleased to be moving into the next stage of development for the program.

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