Flamel Technologies' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Flamel Technologies SA (FLML)

Q1 2012 Earnings Call

May 7, 2012 8:30 am ET

Executives

Michael Anderson – Chief Executive Officer

Sian Crouzet – Principal Financial Officer

Analysts

Matt Kaplan – Ladenburg Thalmann

Peter Butler – Glen Hill Investments

Russell Cleveland – RENN Capital

Roger Bensen – Number One Corp

Presentation

Operator

Good morning ladies and gentlemen and welcome to the Flamel Technologies First Quarter 2012 Results conference call. Today’s call is being recorded. At this time, I would like to turn the call over to Michael Anderson, Chief Executive Officer of Flamel Technologies. Please go ahead, sir.

Michael Anderson

Thank you and good morning ladies and gentlemen. We want to open as always with the forward-looking statement language that’s set out at the conclusion of this morning’s press release. All statements made on this call about future events, results, performance, products under development, plans or objectives are forward-looking. Actual results may differ materially from these statements due to risks and uncertainties over which we have no control. We encourage our shareholders to review the risk and other disclosures set forth in our SEC filings, which are all of course publicly available.

This is my first call as the CEO of Flamel, and despite the very short of period of time since I’ve been on board, I’ve already been impressed with both our best-in-class drug delivery technology and the high quality of our Company’s employees. Rest assured that as the CEO, my constant focus will be to build long-term value for shareholders.

I also share the desire of all of our shareholders, that being to improve Flamel’s share price so that it better reflects the true value of the Company. As a result of our historical model, primarily collaborating with other pharma companies on their proprietary molecules, we’ve been unable in the past to disclose a number of these collaborations. While this will remain the case for the foreseeable future, it continues to make it challenging for investors to fully appreciate Flamel and to count on a steady stream of catalysts to drive the share price appreciation. The ultimate solution to this problem in my view is to perform by enjoying greater commercial freedom and therefore financial success. One of the best ways to do this is to add a number of internally controlled high value products to our pipeline.

I would like to make it very clear that I’m not talking about becoming a high burn, high risk biotech company; rather, we’re looking for targeted niche opportunities where we can develop products and market them in a highly efficient manner and at low cost. In the end, I hope to integrate a vibrant specialty business on top of Flamel’s high value collaboration portfolio. Our ability to commercialize these opportunities ourselves is what the acquisition of Eclat Pharmaceuticals is all about.

As we discussed the acquisition in detail on our last call, I’m not going to go into a lot of detail on the transaction itself, but I do want to highlight some of the key benefits. The acquisition brought Flamel one approved product already on the market, Hycet, as well as a portfolio of products that are in various stages of R&D completion. This pipeline of products, when combined with Flamel’s best-in-class drug delivery platforms has created a more vertically integrated pharmaceutical company with greater upside potential, greater control of our pipeline, and dramatic new opportunities for growth.

Our product portfolio now includes multiple high value opportunities for near-term cash flows that carry a more balanced risk profile. We plan to employ the near-term cash flows to fund the development of the products using our drug delivery platforms as we believe the opportunities are numerous and significant.

As I said during our last call, the competitive nature of our business does not allow us to identify the specific products with which we are working at the present time. In addition to Hycet or hydrocodone acetaminophen oral solution, we have a number of products under development. We remain on track to file at least one NDA this year, meaning an approval could come as early as next year. We’re hopeful of being able to discuss individual NDAs as they are filed. Most important, however, is that we do not compromise our competitive position by sharing too much too soon. We’ll also continue to pursue partnering opportunities as we have in the past.

Since the completion of the acquisition, we have been working hard on integration, including a company-wide portfolio review and management transition. We have now completed the review of our entire project portfolio and have identified a number of additional shorter term high value opportunities, but we’re not going to be able to comment a great deal on those today. Part of that pipeline review has allowed us to identify a number of areas where we can better utilize our resources to create shorter development cycles and therefore less risk. We do expect to provide investors with additional visibility in upcoming conference calls and presentations.

I would now like to ask Sian Crouzet to please provide an overview of our recently announced financial results.

Sian Crouzet

Thank you, Mike, and good morning. The financial results for the first quarter of 2012 continued to reflect the incremental benefit of the new supply agreement signed with GSK on September 30, 2011, partially offsetting the continuing challenging environment in which we are working with respect to our license and research revenue streams. Total revenues during the fourth quarter were $7.3 million compared to 6.8 million in the year-ago quarter, an increase of 8.4%. Product sales increased by 1.7 million year-over-year while license and research revenue decreased by 1.1 million over the same period.

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