Last week drug developer Flamel Technologies (NASDAQ:FLML) announced its first-quarter financial results and updated investors on the progress of its newly marketed Coreg CR compound.

Partner GlaxoSmithKline (NYSE:GSK) launched this new version of heart treatment drug Coreg in late March. With the barely more than a week of Coreg CR sales by GSK on the books, Flamel only brought in $5 million in manufacturing revenue from the compound, not nearly enough to compensate for the $19 million in operating expenses for the quarter.

When Flamel releases its second- and third-quarter financial results later in the year, we'll have a much better idea of how the Coreg CR launch is ramping up, since it will take GSK several weeks to see how the compound's sales are shaping up relative to the immediate release version of the drug. There is a lot of variability in sales estimates for Coreg CR, with analysts predicting anywhere from a 10% to 60% conversion rate from the $1.5 billion-a-year immediate release version to the controlled release version of Coreg.

While not directly comparable, other compounds like Sanofi-Aventis' (NYSE:SNY) Ambien franchise have seen the CR version of its drug capture 30% of the Ambien market share after a year and a half on the market in conjunction with the regular version of the drug. GSK's improved extended release version of its Wellbutrin antidepressant compound went on to capture more than 85% of the Wellbutrin franchise sales after less than two years on the market, but that includes generic competition on earlier versions of the drug. Therefore it's difficult to predict how much of the total Coreg market share the CR version will capture and what sort of revenue the drug could bring in for Flamel.

It's also next to impossible to value shares of Flamel based on anything but its reported pipeline and marketed products, even though Flamel's management talks about its undisclosed partnership projects all the time. With shares of Flamel valued at a $700 million market capitalization and its reported drug pipeline consisting of several compounds like its insulin and hepatitis drug candidates, Flamel is dependent on Coreg CR royalties ramping up significantly over the coming year to justify this sort of valuation.

Flamel is a Motley Fool Hidden Gems recommendation. A free trial will let you find out why.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. GlaxoSmithKline is an Income Investor selection. The Fool has a disclosure policy.