Flamel Technologies SA ( FLML)

Q2 2011 Earnings Call

July 26, 2011 8:30 am ET


Stephen H. Willard – Chief Executive Officer, Chief Financial Officer and General Counsel

Siân Crouzet – Principal Financial Officer


David Moskowitz – Madison William

Matthew Kaplan – Ladenberg Thalm

Peter Lux – Private Investor

Peter Butler – Glen Hill Investment



Good morning, ladies and gentlemen, and welcome to Flamel Technologies’ Second Quarter 2011 Results Conference Call. After prepared remarks, we will be opening the call to a Q&A period. (Operator Instructions) As a reminder, this call is being recorded.

The following presentation regarding Flamel Technologies SA includes 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 views of Flamel's 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 product in the development stage may not achieve scientific objectives or milestones meet strategic regulatory requirement, 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 public filings, except as required by law, Flamel does not intend any disclaims any duty or obligation to update or revise any forward-looking statements contained in this presentation to reflect new information, future events or otherwise.

It is now my pleasure to turn the call over to Mr. Stephen Willard, CEO. Please go ahead Mr. Willard.

Stephen H. Willard

Thank you very much. Good morning, ladies and gentlemen. It’s great that my lawyers got to the conference call operator for which I am very grateful.

First, I would like to summarize some important events that Flamel made during the second quarter. We completed new licensing agreements with two specialty pharma companies for the creation of three new controlled release formulations, which leverage new advances in our Micropump and Trigger Lock platforms.

We’ve also entered into joint development agreements with two companies for work involving controlled release formulations of four new molecules. These joint development agreements are part of a new initiative that we are undertaking to identify promising first-in-class early stage therapeutic candidates being created at developing corporations and which benefit from our drug delivery expertise.

Engaging in these joint development agreements complements our existing strategies of working with large pharmaceutical partners.

In these projects, we contribute our formulation expertise while our partner performs the clinical trials and licenses the formulations to large pharma. Such licenses are expected to occur significant lead before ultimate pivotal trials, but Flamel will receive greater economic returns substantially sooner than with our conventional business.

The financial percentages due to Flamel are also significantly higher than with our conventional agreements. We do however share the risk of early stage developments which is not the case when we worked with many currently approved molecules.

We believe that these programs offer us higher risk, higher reward, opportunities that address attractive market opportunities with significant unmet medical needs, but at low cost to ourselves as the work we are performing involves applications of our existing platforms and low external costs. I would discuss these agreements and the strategic initiative later.

We are continuing our discussions with GSK and seek a mutually beneficial agreement that ensures unfettered patient access to the life saving drug Coreg CR. As the discussions are well advanced and ongoing, I will be limiting my comments on the status through these negotiations. While we negotiated new supplier agreements, we’ve continued to provide GSK with interim supply of Coreg CR micro particles. We continue to believe that the eventual resolution of our negotiations with GSK would be a positive catalyst for our company.

As a result of the second quarter advances as well as funds we have received related to our R&D tax credits, our cash increased during the quarter to $33 million. This compares to $31.3 million at the end of last year and this is also virtually the same as with $33.7 million of cash, which we had 12 months ago at the end of the second quarter 2010.

At this point, I would like to ask Siân Crouzet, our Principal Financial Officer to please review the second, and the results of the second quarter. Siân?

Siân Crouzet

Thank you, Steve. Good morning. During the second quarter, as Steve mentioned, our cash balance increased to $33 million, up from $26 million at the end of the first quarter. This increase was driven by the signature with new licensing agreement and the factoring of research and development tax credit from 2010.

Revenues during the quarter declined to $6.8 million from $7.5 million in the prior year. License and research revenues were $2.5 million versus $3.3 million in the year ago quarter.

This reduction is driven partly by the fact the programs that we were developing last year have either entered preclinical or clinical testing conducted by our partners, and partly by the fact, that having accomplished a considerable number of programs as in the last couple years we are now waiting for our partners to indicate how they wish to proceed.

Product sales and services during the quarter were $3.3 million compared to $1.9 million in 2010. A new supply agreement is under negotiation with GSK, and in the interim we have continued to supply products inline to demand requirement from GSK.

Read the rest of this transcript for free on seekingalpha.com

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