The stock of biopharmaceutical and Merrill Lynch (NYSE:MER) Nanotech Index (AMEX:NNZ) member Flamel Technologies (NASDAQ:FLML) has declined more than 50% since hitting a $43.60 all-time high in September. The stock, down 11% today on no discernible news, is not matching the 20% increase, since May, of its index peers.

Although the recent stock flameout might be an indication of trouble, a closer look reveals a lot to like.

The company has two product lines. Medusa uses nanoparticle technology to improve drug delivery of native protein drugs. Medusa avoids side effects through a more evenly controlled release of the drug. It can also maintain the duration of delivery for, in some cases, up to a month. The lead product, a long-acting (24-hour) human insulin being developed for Bristol-Myers Squibb (NYSE:BMY), is in phase 2 trials.

The Micropump is Flamel's microparticle delivery platform for small-molecule drugs. Offering controlled release, it also provides extended delivery times. The lead product, acyclovir, for the treatment of acute genital herpes, is being developed for generic-drug company Biovail (NYSE:BVF) and has shown positive phase 3 results. Other partners include GlaxoSmithKline (NYSE:GSK) -- also in phase 3 testing -- and Merck (NYSE:MRK).

Flamel is cash-rich thanks to a secondary offering last October (when the stock was more than 50% higher). The two analysts following the company expect it to be profitable this year; one sees earnings of $1.36 a share next year!

This young French company, involved in high-technology drug delivery, has a strong patent position. There is too much uncertainty to expect the high 2005 earnings forecast to be met, but, if it is, the current stock price is a bargain. Today's price flameout provides a buying opportunity for a company with promising products, lots of cash, and the ability to make money.

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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.