Flamel Tries to Get It in Gear

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Is the company making progress or spinning its wheels? It's often hard to tell in the slow-moving world of pharmaceuticals. Flamel Technologies (Nasdaq: FLML  ) announced its second-quarter earnings Wednesday with a little bit from both sides of the coin.

First, let's discuss the progress. Flamel derives the majority of its revenue from manufacturing and royalties on GlaxoSmithKline's (NYSE: GSK  ) heart-failure compound, Coreg CR. Sales of Coreg CR from Glaxo were up 10% from the previous quarter, to $77 million.

Glaxo is also moving ahead with its attempts to improve the label for Coreg CR. It filed a marketing application in the U.S. to expand Coreg CR's use further into hypertension, in combination with an ACE inhibitor. According to Glaxo, that indication currently provides most of Coreg CR's sales growth. So if the FDA reacts positively to Glaxo's request in the first or second quarter next year, it could bring a meaningful boost to Coreg CR sales and Flamel's royalties from the drug.

Flamel's second quarter was marked by large reductions in expenditures. As Flamel's CEO pointed out on the conference call, no company can continually cost-cut its way to prosperity, but Flamel has done a good job of reducing its cash burn. Since the start of 2008, its cash levels have declined by only $6 million, to $35 million in cash and short-term investments. This reduced cash burn buys Flamel some time to work on the compounds in its pipeline.

This is where the spinning wheels come into play. Flamel announced this quarter that it had inked deals to develop two new compounds with existing partners. This brings to 12 its number of new, mostly preclinical-stage reformulation compounds.

The problem here is that aside from announcing that it is working with German-Swiss drugmaker Merck Serono and Wyeth (NYSE: WYE  ) on separate projects, Flamel has provided next to no information on these very early-stage drug reformulation projects. In other words, who knows how committed Flamel's partners are? Contrast this to other discovery-stage workhorses like Exelixis (Nasdaq: EXEL  ) and Array BioPharma (Nasdaq: ARRY  ) , which have revealed a lot about their partnership agreements with big pharmaceutical firms.

Flamel is also working on inking deals to outlicense its two in-house drug compounds, if it can find a partner willing to help support their development. No progress was announced this quarter; in the conference call, management said that it won't resume working on these compounds until a deal is made.

Absent good Coreg CR news (which is outside Flamel's control), and until Flamel can explicitly show meaningful progress with its drug pipeline, the company will likely keep spinning its wheels for at least another year.

Exelixis and Array are picks in our Motley Fool Rule Breakers newsletter. GlaxoSmithKline is an Income Investor pick. The Fool owns shares of Exelixis. Try any of our Foolish newsletters today free for 30 days

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has an A+ disclosure policy.

Read/Post Comments (0) | Recommend This Article (4)

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: 703895, ~/Articles/ArticleHandler.aspx, 10/27/2016 3:25:32 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 6 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

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

10/26/2016 4:00 PM
FLML $11.11 Down -0.47 -4.06%
Flamel Technologie… CAPS Rating: ***
ARRY $6.11 Up +0.04 +0.58%
Array BioPharma CAPS Rating: **
EXEL $11.18 Down -0.12 -1.06%
Exelixis CAPS Rating: ****
GSK $40.34 Up +0.02 +0.05%
GlaxoSmithKline CAPS Rating: ***
WYE.DL $0.00 Down +0.00 +0.00%
Wyeth CAPS Rating: ***