On Wednesday Motley Fool Hidden Gems pick Flamel Technologies (NASDAQ:FLML) publicly disclosed that it has signed a partnership deal to develop an improved formulation of an unnamed Wyeth (NYSE:WYE) drug.

As usual, Flamel was tight-lipped on everything regarding the deal except for the name of its partner and which technology will be used to enhance the drug. Hawk-eyed Foolish analyst Rich Duprey theorized that the Wyeth drug most likely part of this deal is its hemophilia treatment BeneFIX, although Wyeth hemophilia drug ReFacto is equally as likely.

BeneFIX and ReFacto both fit the criteria for compounds that could benefit from Flamel's Medusa platform. They are proteins for which a new long-lasting formulation would definitely increase patient convenience and compliance, especially since they are administered intravenously or via an injection. Equally as important is that the drugs lose patent protection in 2011 and 2010, respectively.

With ReFacto going generic sooner, I bet it's the source of the deal. BeneFIX is a part of another upcoming deal, although it's unclear whether this deal is one of the four deals that Flamel claims to have been in discussion on recently.

While it's nice to see Flamel sign another deal, investors shouldn't get overly excited about the terms of this one. Flamel didn't disclose the size of Wyeth's upfront payments or any other payment terms. This likely means that they weren't significant, as public companies generally have to report material changes to their business.

Royalty rates for such reformulations are usually in the mid-single-digit percentages. If the drug is BeneFIX or ReFacto, and Flamel can usher a new formulation to the market, peak royalty revenue to Flamel could be in the $10 million to $30 million range, considering BeneFIX's and ReFacto's 2006 sales of $358 million and $306 million, respectively.

Flamel's only revenue-producing compound on the market now is its controlled-release Coreg CR heart failure compound marketed by GlaxoSmithKline (NYSE:GSK). Prescription and revenue growth from this drug has been modest to date and is likely to get worse in the near term now that generic versions of immediate-release Coreg are on the market. In the near and intermediate terms, Flamel's fortunes are largely tied to the success or failure of Coreg CR.

At least the new Wyeth deal shows that Flamel hasn't been completely blowing smoke about being in the process of signing new partnership deals.

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Fool contributor Brian Lawler does not own shares in any company mentioned in this article. GlaxoSmithKline is an active Income Investor pick. The Fool's disclosure policy needs no partnership deals.