Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Future Looking Up for Flamel

What a difference three months make. Last quarter, investors were disappointed with biotechnology and nanotechnology company -- and Motley Fool Hidden Gems recommendation -- Flamel Technologies (Nasdaq: FLML  ) for missing analyst earning estimates. The stock fell 6%.

Investors really turned a cold shoulder and sent the stock down 25% (ouch) when Bristol-Myers Squibb (NYSE: BMY  ) announced it was pulling out of a partnership to develop Basulin, one of Flamel's lead products -- and one that Novo Nordisk A/S (NYSE: NVO  ) had waived.

The stock has fallen 45% over the last 52 weeks. That's about as unloved as you can get for a company that is cash-rich, has an interesting product pipeline, and has partners such as Merck (NYSE: MRK  ) .

Then there is yesterday's news that the company earned $2.8 million in the third quarter. Investors liked that and sent the stock up 8%.

These profits would be great news if they were from product sales (although cash from any source is welcome). Instead, a milestone payment for the start of phase 3 trials for a reformulation of a major existing product from partner GlaxoSmithKline (NYSE: GSK  ) is behind the profit.

With generic-drug company Biovail's (NYSE: BVF  ) long-acting Genvir micropump formulation for genital herpes also in phase 3 testing, Flamel, a partner, does have prospects for product sales. Still, the five analysts who cover the company (up from three a quarter ago) are split on whether the company can be profitable in 2005. Their mean estimate is for a $0.01-per-share profit.

Flamel, part of the Merrill Lynch (NYSE: MER  ) Nanotech Index, offers exposure to the drug world of the future without taking on many of the drug development risks. The company's premier micropump technology is aimed at long-acting versions of existing drugs. One success in the two phase 3 trials should usher in many other candidates.

The company's Medusa nanoparticle technology, which still needs a partner, improves the delivery of native protein drugs through a more evenly controlled release of the drug. With its potential to avoid side effects, there are plenty of prescription takers who hope the technology is a success.

Many Motley Fool Hidden Gems recommendations face a bumpy road. They are small and have little analyst coverage. Flamel's stock has certainly taken its share of bumps, but with two drugs in phase 3 trials, the company is worth watching.

For related Fool analysis, see:

Try afree trialto the Hidden Gems newsletter. So far, Tom Gardner's recommendations have gained an average of 31% in 17 months, versus a comparable Standard & Poor's 500 gain of 5%. Why not bring this market-beating performance into your investment hunt?

The Motley Fool is investors talking to investors. Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 503020, ~/Articles/ArticleHandler.aspx, 10/28/2016 4:41:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 7 hours ago Sponsored by:
DOW 18,169.68 -29.65 -0.16%
S&P 500 2,133.04 -6.39 -0.30%
NASD 5,215.97 -34.29 -0.65%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/27/2016 4:00 PM
BMY $51.96 Up +2.67 +5.42%
Bristol-Myers Squi… CAPS Rating: ****
BVF.DL $0.00 Down +0.00 +0.00%
Biovail Corp (USA) CAPS Rating: ***
FLML $10.91 Down -0.20 -1.80%
Flamel Technologie… CAPS Rating: ***
GSK $40.42 Up +0.08 +0.20%
GlaxoSmithKline CAPS Rating: ***
MER.DL2 $11.64 Down +0.00 +0.00%
Merrill Lynch & Co… CAPS Rating: *
MRK $61.29 Up +0.42 +0.69%
Merck and Co. CAPS Rating: ****
NVO $40.94 Up +0.70 +1.74%
Novo Nordisk CAPS Rating: *****