As I mentioned in a previous article about Flamel Technologies (Nasdaq: FLML ) , the company's share price in the near term is going to be determined by how sales of Coreg CR by marketing partner GlaxoSmithKline (NYSE: GSK ) are fairing.
With shares of Flamel falling more than 5% yesterday, investors can guess how sales for Coreg CR were in its second quarter on the market. Rather than tracking higher versus its first partial quarter on the market, sales of the drug actually fell from $27 million in the first quarter to $20 million in the second quarter.
In its conference call yesterday, GSK said that the reason for the shortfall was that the same sales force that details Coreg CR also markets diabetes treatment Avandia to physicians. With all the media hysteria over Avandia the past couple of months following worries about its safety, GSK has had its U.S. sales reps focusing on doing damage control for Avandia rather actively marketing Coreg CR.
Coreg CR becoming a short-term afterthought for Glaxo spells trouble for Flamel in the short term. Luckily for Flamel shareholders, GSK said that it will renew its efforts in selling Coreg CR now that it has "made adjustments in (its sales) force coverage, and (has) about 2,000 reps" marketing CR as their primary drug.
Coreg CR's immediate-release counterpart posted 20% year-over-year sales growth in the second quarter to $380 million. Investors who believe that CR has the same sales potential and that GSK will now focus on achieving that potential, have just been handed a discount on Flamel shares that's hard to resist.