Please ensure Javascript is enabled for purposes of website accessibility

Why Flamel Technologics S.A. Tumbled 15% Today

By Todd Campbell – Jan 8, 2016 at 5:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A new competitor is expected to cause sales in Flamel's top-selling drug to drop significantly this year.

Source: Flamel Technologies S.A.

What: After providing updated financial guidance that disappointed investors, shares in Flamel Technologies S.A. (FLML) slumped by 14.9% today.

So what: Volume in the small-cap drugmaker quadrupled as investors reacted to the company's prediction that revenue this year will total between $100 million and $120 million.

That projection falls well short of the $189 million annualized sales run-rate for the company exiting Q3 and the company's current full-year 2015 guidance for sales of $170 million to $185 million.

The revenue drop is being blamed on expected market-share losses for Bloxiverz, Flamel Technologies' top-selling medication. In December, the FDA approved another generic version of neostigmine, the active ingredient in Bloxiverz, which brings the number of neostigmine formulations on the market from two to three.

Now what: Flamel Technologies holds onto 55% to 60% of the neostigmine market, and Bloxiverz accounted for 87% of its Q3 sales, but following the approval of this new competitor, Flamel expects that its market share will slip to 30%-40% and that pricing pressure will reduce the net price of Bloxiverz by 20%-30%.

Obviously, that's not the direction investors (or management) want to see in terms of sales and profit, but without a needle-moving approval on tap in 2016, Flamel Technologies is forced to focus investors' attention further out.

To that end, the company highlighted a slate of promising therapies in development in its press release, the most advanced of which is Micropump sodium oxybate, a formulation of Jazz Pharmaceuticals' (JAZZ 2.19%) $950 million per-year Xyrem.

A trial evaluating Micropump sodium oxybate is expected to run into mid-2017, and if it's successful, then Flamel Technologies thinks its once-nightly dosing will allow it to steal away considerable market share from Xyrem, which is dosed twice-nightly.

Clearly, Micropump sodium oxybate's success could erase a lot of the pain expected in 2016 from the loss of sales from Bloxiverz, but there's no guarantee that the Micropump sodium oxybate trial will succeed, and because of that, I'll stay on the sidelines with this company -- at least until later this year. 

 

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Jazz Pharmaceuticals plc Stock Quote
Jazz Pharmaceuticals plc
JAZZ
$138.41 (2.19%) $2.96
Avadel Pharmaceuticals plc Stock Quote
Avadel Pharmaceuticals plc
FLML

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
331%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.