UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K
___________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 8, 2016
___________________
FLAMEL TECHNOLOGIES S.A.
(Exact name of registrant as specified in its charter)
___________________
| Republic of France (State or Other Jurisdiction of Incorporation) |
000-28508 (Commission File Number) |
98-0639540 (I.R.S. Employer |
|
Parc Club du Moulin à
Vent (Address of Principal Executive Offices) |
Not Applicable (Zip Code) |
Registrant’s telephone number, including area code: 011 +33 472 78 34 34
___________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
£ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On August 8, 2016, Flamel Technologies S.A. (the “Company”) issued a press release announcing its earnings for the quarter ended June 30, 2016. That press release is attached as Exhibit 99.1 and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On August 8, 2016, the Company posted to its website a set of presentation materials that it will use during its earnings call and webcast to assist participants with understanding the Company’s financial results for the quarter ended June 30, 2016. A copy of this presentation is attached hereto as Exhibit 99.2.
______________________
Limitation of Incorporation by Reference
The information in this current report on Form 8-K (including Exhibit 99.1 and Exhibit 99.2) is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section, nor shall such information be incorporated by reference into any registration statement or other filing pursuant to the Securities Act of 1933, except as may be expressly set forth by specific reference in such filing.
______________________
Item 9.01 Financial Statements and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Exhibits
The following exhibits relating to Item 2.02 and Item 7.01 shall be deemed to be furnished, and not filed:
| 99.1 | Press release dated August 8, 2016, issued by Flamel Technologies S.A. | |
| 99.2 | Presentation materials |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FLAMEL TECHNOLOGIES S.A. | ||
| By: | /s/ Phillandas T. Thompson | |
| Phillandas T. Thompson | ||
| Senior Vice President, General Counsel and Corporate Secretary | ||
Date: August 8, 2016
3
Exhibit Index
| 99.1 | Press release dated August 8, 2016, issued by Flamel Technologies S.A. | |
| 99.2 | Presentation materials |
4
Exhibit 99.1
Flamel Technologies Reports Second Quarter 2016 Results
Total Revenues of $38.9 Million
2016 Revenue Guidance Increased to $125 to $140 Million
Akovaz™ to Launch in August 2016
Lyon, France – August 8, 2016 - Flamel Technologies (NASDAQ: FLML) today announced its financial results for the second quarter 2016.
Second Quarter Highlights Include:
| · | Total revenue for second quarter 2016 was $38.9 million, compared to $48.6 million during the same period last year. |
| · | GAAP net loss for the second quarter was ($20.0) million, or ($0.48) per diluted share, compared to GAAP net loss of ($16.9) million, or ($0.42) per diluted share, during the same period last year. |
| · | Adjusted EBITDA was $10.1 million, compared to $23.8 million in the prior year.* |
| · | Adjusted net loss for the second quarter was ($985,000), or ($0.02) per diluted share, compared to an adjusted net income of $11.5 million, or $0.29 per diluted share, during the same period last year. * |
| · | Cash and marketable securities at June 30, 2016 were $154.9 million, compared to $160.0 million at March 31, 2016 and $144.8 million at December 31, 2015. |
| · | Akovaz received FDA approval on April 29, 2016 and is scheduled to launch in August 2016. |
| * | Non-GAAP financial measure. Descriptions of Flamel’s non-GAAP financial measures are included under the caption “Non-GAAP Disclosures and Adjustments” included within this document and reconciliations of such non-GAAP financial measures to their most closely applicable GAAP financial measures are found in the “Supplemental Information” section within this document. |
Michael Anderson, Flamel’s Chief Executive Officer, commented, “We are particularly pleased with our second quarter results. Bloxiverz® averaged over 40% share of the neostigmine market during the quarter, and Vazculep® continued to build share to 32% of the 1mL market volume, while holding all of the 5mL and 10mL markets. We generated revenue of $38.9 million for the quarter and we look forward to launching our third sterile injectable product, Akovaz™, this month. We believe the market potential for Akovaz is the largest yet from our portfolio of previously unapproved marketed drugs, or UMDs.”
Mr. Anderson continued, “In addition to our strong UMD business, we continue to advance our pipeline of proprietary products forward. We received positive data from our Phase 1b trial with Medusa™ exenatide and, following guidance from FDA, we will be conducting an alcohol interaction study in the second half of 2016 with our Trigger Lock™ hydromorphone product to further test its abuse-deterrent capabilities.”
“In regards to our most important project, Micropump® sodium oxybate, we have been in dialogue with FDA and look forward to finalizing the Special Protocol Assessment for our Phase III trial in the very near term. We continue to make all the necessary preparations associated with running the trial, including registering clinical sites and preparing clinical supplies, in order to hit the ground running once we begin patient enrollment. Our once nightly version of sodium oxybate is a very exciting opportunity for us, and we are on track to complete our study in approximately one year, with the goal of filing a New Drug Application by the end of 2017 or early 2018,” concluded Mr. Anderson.
Second Quarter 2016 Results
The Company achieved revenues during the second quarter 2016 of $38.9 million, compared to $48.6 million during the same period last year. In the second quarter 2016, the Company determined that it is now able to estimate the ultimate net selling price of its products at the time of shipment from its warehouse. Previously, the Company was unable to completely estimate certain gross to net deductions that occur throughout the selling channel due to a lack of historical data. . This sales through accounting method resulted in an approximate one month lag between the time product was shipped from the Company’s warehouse until it reached the final customer. As a result of this change, the Company recorded approximately $5.9 million of additional revenue in the second quarter 2016.
On a GAAP basis, the Company recorded a net loss of ($20.0) million during the second quarter 2016, or ($0.48) per diluted share, compared to a net loss of ($16.9) million, or ($0.42) per diluted share, for the same period last year. Included in the net loss for the second quarter 2016 was $23.9 million of charges related to the change in the fair value of related party contingent consideration. Adjusted net loss for the second quarter was ($985,000), or ($0.02) per diluted share, compared to an adjusted net income of $11.5 million, or $0.29 per diluted share, during the same period last year. The decline in adjusted net income and adjusted diluted EPS from the previous year was due to lower product sales resulting from increased competition and higher SG&A from investments in infrastructure, people, and expenses related to the Company’s planned cross-border merger to Ireland from France. The Company recognized a foreign currency exchange gain of $1.7 million in the second quarter 2016, compared to a foreign currency exchange loss of ($3.6) million in the prior year quarter. Please see the Supplemental Information section within this document for a reconciliation of adjusted EBITDA, adjusted net income and adjusted diluted EPS to the respective GAAP amounts.
Sales for the FSC product line were below the Company’s expectations for the second quarter 2016 as the Company continues to work on improving product distribution, increasing third party payer access, and refining territories to maximize representative effectiveness. The Company expects to continue making progress throughout the remainder of the year in this business segment. It recently closed the Charlotte office facility and has strengthened the sales management team.
For the six months ended June 30, 2016 cash flow from operations was $15.9 million, compared to $40.3 million in the same period last year. Cash and marketable securities at June 30, 2016 were $154.9 million, compared to $160.0 million at March 31, 2016.
2016 Revenue and R&D Spending Guidance
As a result of the stronger than expected market share for Bloxiverz, slightly better expected market conditions for Akovaz and the change in the Company’s ability to better estimate net selling price upon shipment of product from its warehouse, the Company is increasing its full year 2016 revenue guidance to the range of $125 to $140 million from its previous guidance range of $110 to $130 million. The Company expects to allocate a substantial amount of its R&D expenses on its sodium oxybate trial; however, timing of the spend will be slightly shifted to 2017 and, as a result, has lowered its 2016 R&D spending guidance to the range or $30 to $40 million from the range of $35 to $50 million.
Clinical Pipeline Updates
Flamel received positive results from a Phase 1b clinical trial of FT228, a once-weekly subcutaneous injection formulation of exenatide using its proprietary Medusa™ technology. The study achieved all pharmacokinetic (PK) and pharmacodynamic (PD) objectives throughout four weekly administrations of Medusa™ exenatide (FT228), and assessed the safety, steady-state PK profile and the product’s potential effect on biomarkers and surrogate endpoints upon repeated administrations. Exenatide is a GLP1 analog used to treat patients suffering from Type 2 Diabetes Mellitus. Medusa™ is a hydrogel depot technology that enables the modified/controlled delivery of drugs, and is ideally suited to the development of subcutaneously administered formulations.
One dose per week of FT228 at 140mcg was administered to twelve Type 2 Diabetes Mellitus patients over a four week period. Following each administration, a continuous release of exenatide was observed over a period of up to 14 days and a relative bioavailability exceeding 94% was demonstrated. The PD performance of FT228 was comparable to current marketed products, Victoza® (liraglutide IR) and Bydureon® (exenatide SR).
In addition, Flamel received feedback from the U.S. Food and Drug Administration (FDA) regarding the clinical development pathway for FT227, an abuse-deterrent, extended-release, oral hydromorphone product using the Company’s proprietary Trigger Lock™ drug delivery platform.
To date, the Company has completed two pharmacokinetic (PK) studies of FT227 in 30 healthy volunteers, in addition to an independent in vitro study confirming FT227’s superior resistance to extraction/recovery in various media under several different conditions compared to both Exalgo® and Oxycontin®. Following guidance from the FDA, Flamel will be conducting during the third quarter of 2016 an in vivo alcohol interaction study, which the Company believes will provide further confirmation of the robust abuse-deterrent capabilities of Trigger Lock.
Conference Call
A conference call to discuss these results and other updates is scheduled for 10:00 a.m. ET on Monday, August 8, 2016. A question and answer period will follow management’s prepared remarks. To participate in the conference call, investors are invited to dial 800-930-7616 (U.S. and Canada) or 913-312-1375 (international). The conference ID number is 9799429. Interested parties may access a live audio webcast and accompanying slides via the events and presentations section of the Company’s investor website, www.flamel.com/investors. The archived webcast of the conference call will be available for 90 days on Flamel’s website.
About Flamel Technologies
Flamel Technologies SA (NASDAQ: FLML) is a specialty pharmaceutical company utilizing its core competencies in formulation development and drug delivery to develop safer and more efficacious pharmaceutical products, addressing unmet medical needs and/or reducing overall healthcare costs. Flamel currently markets two previously Unapproved Marketed Drugs (“UMDs”) in the United States, Bloxiverz® (neostigmine methylsulfate injection) and Vazculep® (phenylephrine hydrochloride injection), and received approval for its third, Akovaz™ (ephedrine sulfate) on April 29, 2016. The Company also develops products utilizing its proprietary drug delivery platforms, Micropump® (oral sustained release microparticles platform), along with its tangent technologies, LiquiTime® (a Micropump-derivative platform for liquid oral products) and Trigger Lock™ (a Micropump-derivative platform for abuse-resistant opioids). Additionally, the Company has developed a long acting injectable platform, Medusa™, a hydrogel depot technology, particularly suited to the development of subcutaneously administered formulations. Current applications of Flamel’s drug delivery products include sodium oxybate (Micropump®), extended-release of liquid medicines such as ibuprofen and guaifenesin (LiquiTime®, through a license arrangement with Elan Pharma International Limited for the U.S. Over-the-Counter market) and a current study of the delivery of exenatide utilizing the Medusa™ technology. In February 2016, Flamel acquired FSC Pediatrics, a company that markets three pediatric pharmaceutical products - Cefaclor for oral suspension, indicated for infection, Karbinal™ ER, indicated for allergic rhinitis and AcipHex® Sprinkle™ (rabeprazole sodium) indicated for the treatment of gastroesophageal disease (GERD). FSC also received 510(k) clearance from the FDA in October 2014 for Flexichamber™, a collapsible holding chamber for used in the administration of aerosolized medication using pressurized Metered Dose Inhalers (pMDIs) for the treatment of asthma. The Company is headquartered in Lyon, France and has operations in Dublin, Ireland and in St. Louis, Missouri. Additional information may be found at www.flamel.com.
Safe Harbor: This release may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements herein that are not clearly historical in nature are forward-looking, and the words "anticipate," "assume," "believe," "expect," "estimate," "plan," "will," "may," and the negative of these and similar expressions generally identify forward-looking statements. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond Flamel's control and could cause actual results to differ materially from the results contemplated in such forward-looking statements. These risks, uncertainties and contingencies include the risks relating to: our dependence on a small number of products and customers for the majority of our revenues; the possibility that our Bloxiverz®,Vazculep® and Akovaz™ products, which are not patent protected, could face substantial competition resulting in a loss of market share or forcing us to reduce the prices we charge for those products; the possibility that we could fail to successfully complete the research and development for the pipeline product we are evaluating for potential application to the FDA pursuant to our "unapproved-to-approved" strategy, or that competitors could complete the development of such product and apply for FDA approval of such product before us; our dependence on the performance of third parties in partnerships or strategic alliances for the commercialization of some of our products; the possibility that our products may not reach the commercial market or gain market acceptance; our need to invest substantial sums in research and development in order to remain competitive; our dependence on certain single providers for development of several of our drug delivery platforms and products; our dependence on a limited number of suppliers to manufacture our products and to deliver certain raw materials used in our products; the possibility that our competitors may develop and market technologies or products that are more effective or safer than ours, or obtain regulatory approval and market such technologies or products before we do; the challenges in protecting the intellectual property underlying our drug delivery platforms and other products; our dependence on key personnel to execute our business plan; the amount of additional costs we will incur to comply with U.S. securities laws as a result of our ceasing to qualify as a foreign private issuer; and the other risks, uncertainties and contingencies described in the Company's filings with the U.S. Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2015, all of which filings are also available on the Company's website. Flamel undertakes no obligation to update its forward-looking statements as a result of new information, future events or otherwise, except as required by law.
Non GAAP Disclosures and Adjustments
Flamel discloses certain non-GAAP financial measures, including adjusted net income and loss and adjusted net income and loss per diluted share and earnings before interest, taxes, depreciation and amortization (EBITDA) as management believes that a comparison of its current and historical results would be difficult if the disclosures were limited to financial measures prepared only in accordance with generally accepted accounting principles (GAAP) in the U.S. In addition to reporting its financial results in accordance with GAAP, Flamel reports certain non-GAAP results that exclude, if any, fair value remeasurements of its contingent consideration, impairment of intangible assets, amortization of intangible assets, effects of accelerated reimbursement of certain debt instruments, foreign exchange gains and losses on assets and liabilities denominated in foreign currency, the net income (loss) from discontinued operations and related tax effects, but includes the operating cash flows plus any unpaid accrued amounts associated with the contingent consideration, in order to supplement investors' and other readers' understanding and assessment of the Company's financial performance. The Company's management uses these non-GAAP measures internally for forecasting, budgeting and measuring its operating performance. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most closely applicable GAAP measure set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. The table provided within the following “Supplemental Information” section reconciles GAAP net income and loss and diluted earnings or loss per share to the corresponding adjusted amounts.
*******
| Contacts: | Michael F. Kanan |
Chief Financial Officer
Phone: (636) 449-1844
Email : kanan@flamel.com
Lauren Stival
Sr. Director, Investor Relations & Corporate Communications
Phone: (636) 449-5866
Email: stival@flamel.com
Flamel Technologies S.A.
Consolidated Statements of Loss - (Unaudited)
(In Thousands, Except Per Share Data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenues: | ||||||||||||||||
| Product sales and services | $ | 38,165 | $ | 48,602 | $ | 73,518 | $ | 81,128 | ||||||||
| License and research revenue | 693 | - | 1,556 | - | ||||||||||||
| Total | 38,858 | 48,602 | 75,074 | 81,128 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of products and services sold | 3,907 | 2,756 | 7,813 | 6,386 | ||||||||||||
| Research and development expenses | 7,604 | 7,204 | 12,992 | 13,226 | ||||||||||||
| Selling, general and administrative expenses | 11,290 | 5,873 | 20,751 | 10,336 | ||||||||||||
| Intangible asset amortization | 3,702 | 3,139 | 7,216 | 6,282 | ||||||||||||
| Changes in fair value of related party contingent consideration | 23,898 | 32,000 | 32,141 | 37,254 | ||||||||||||
| Total | 50,401 | 50,972 | 80,913 | 73,484 | ||||||||||||
| Operating income (loss) | (11,543 | ) | (2,370 | ) | (5,839 | ) | 7,644 | |||||||||
| Investment Income | 390 | 310 | 590 | 974 | ||||||||||||
| Interest Expense | (263 | ) | - | (438 | ) | - | ||||||||||
| Other Expense - changes in fair value of related party payable | (2,773 | ) | (2,726 | ) | (4,307 | ) | (2,985 | ) | ||||||||
| Foreign exchange gain (loss) | 1,680 | (3,565 | ) | (1,261 | ) | 7,936 | ||||||||||
| Income (loss) before income taxes | (12,509 | ) | (8,351 | ) | (11,255 | ) | 13,569 | |||||||||
| Income tax provision | 7,449 | 8,507 | 14,761 | 17,214 | ||||||||||||
| Net loss | $ | (19,958 | ) | $ | (16,858 | ) | $ | (26,016 | ) | $ | (3,645 | ) | ||||
| Net loss per share - Basic | $ | (0.48 | ) | $ | (0.42 | ) | $ | (0.63 | ) | $ | (0.09 | ) | ||||
| Net loss per share - Diluted | $ | (0.48 | ) | $ | (0.42 | ) | $ | (0.63 | ) | $ | (0.09 | ) | ||||
| Weighted average number of shares outstanding - Basic | 41,241 | 40,353 | 41,241 | 40,281 | ||||||||||||
| Weighted average number of shares outstanding - Diluted | 41,241 | 40,353 | 41,241 | 40,281 | ||||||||||||
Flamel Technologies S.A.
Consolidated Balance Sheets - (Unaudited)
(In Thousands, Except Per Share Data)
| June 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 23,899 | $ | 65,064 | ||||
| Marketable securities | 130,964 | 79,738 | ||||||
| Accounts receivable (net of allowance of $35 at both June 30, 2016 and December 31, 2015) | 9,488 | 7,487 | ||||||
| Inventories | 3,640 | 3,666 | ||||||
| Research and development tax credit receivable - current portion | - | 2,382 | ||||||
| Prepaid expenses and other current assets | 9,657 | 8,064 | ||||||
| Total current assets | 177,648 | 166,401 | ||||||
| Property and equipment, net | 3,104 | 2,616 | ||||||
| Goodwill | 18,669 | 18,491 | ||||||
| Intangible assets, net | 29,209 | 15,825 | ||||||
| Research and Development tax credit receivable less current portion | 4,034 | - | ||||||
| Income tax deferred charge | 11,381 | 11,581 | ||||||
| Other | 4,968 | 158 | ||||||
| Total assets | $ | 249,013 | $ | 215,072 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 283 | $ | 434 | ||||
| Current portion of long-term related party payable | 29,500 | 25,204 | ||||||
| Accounts payable | 7,043 | 5,048 | ||||||
| Deferred revenue | 3,820 | 5,121 | ||||||
| Accrued expenses | 10,592 | 9,308 | ||||||
| Income taxes | 6,286 | - | ||||||
| Other | 664 | 133 | ||||||
| Total current liabilities | 58,188 | 45,248 | ||||||
| Long-term debt, less current portion | 788 | 684 | ||||||
| Long-term related party payable, less current portion | 136,021 | 97,489 | ||||||
| Deferred taxes | - | 684 | ||||||
| Other | 2,871 | 2,526 | ||||||
| Total liabilities | 197,868 | 146,631 | ||||||
| Shareholders' equity: | ||||||||
| Ordinary shares, nominal value of 0.122 euro per share; 53,178 shares authorized; 41,241 issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 6,331 | 6,331 | ||||||
| Additional paid-in capital | 368,897 | 363,984 | ||||||
| Accumulated deficit | (305,233 | ) | (279,217 | ) | ||||
| Accumulated other comprehensive loss | (18,850 | ) | (22,657 | ) | ||||
| Total shareholders' equity | 51,145 | 68,441 | ||||||
| Total liabilities and shareholders' equity | $ | 249,013 | $ | 215,072 | ||||
Flamel Technologies S.A.
Consolidated Statements of Cash Flows - (Unaudited)
(In Thousands)
Six Months Ended | ||||||||
June 30, | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (26,016 | ) | $ | (3,645 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 7,681 | 6,531 | ||||||
| Loss on disposal of property and equipment | 110 | - | ||||||
| Loss on sale of marketable securities | 455 | 225 | ||||||
| Unrealized exchange loss (gain) | 1,261 | (7,315 | ) | |||||
| Grants recognized in research and development expenses | (70 | ) | (1,086 | ) | ||||
| Remeasurement of related party acquisition-related contingent consideration | 32,141 | 37,254 | ||||||
| Remeasurement of related party financing-related contingent consideration | 4,307 | 2,985 | ||||||
| Change in deferred tax and income tax deferred charge | (5,028 | ) | 3,442 | |||||
| Stock-based compensation expense | 4,914 | 4,152 | ||||||
| Increase (decrease) in cash from: | ||||||||
| Accounts receivable | (1,689 | ) | 467 | |||||
| Inventories | 2,345 | 1,175 | ||||||
| Prepaid expenses and other current assets | 546 | (1,876 | ) | |||||
| Research and development tax credit receivable | (1,630 | ) | 3,807 | |||||
| Accounts payable & other current liabilities | (348 | ) | 2,194 | |||||
| Deferred revenue | (1,461 | ) | (1,314 | ) | ||||
| Accrued expenses | 777 | (614 | ) | |||||
| Accrued income taxes | 6,285 | (7,636 | ) | |||||
| Earn-out payments for related party contingent consideration in excess of acquisiton-date fair value | (7,769 | ) | - | |||||
| Royalty payments for related party payable in excess of original fair value | (1,159 | ) | - | |||||
| Other long-term assets and liabilities | 269 | 555 | ||||||
| Net cash provided by operating activities | 15,921 | 39,301 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (760 | ) | (659 | ) | ||||
| Acquisitions of businesses | 161 | - | ||||||
| Proceeds from sales of marketable securities | 26,013 | 21,196 | ||||||
| Purchase of marketable securities | (75,528 | ) | (31,093 | ) | ||||
| Net cash used in investing activities | (50,114 | ) | (10,556 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Earn-out payments for related party contingent consideration | (6,572 | ) | (6,118 | ) | ||||
| Royalty payments for related party payable | (816 | ) | (888 | ) | ||||
| Repayment of long-term debt | - | (4,903 | ) | |||||
| Reimbursement of conditional R&D grants | - | (615 | ) | |||||
| Cash proceeds from issuance of ordinary shares and warrants | - | 1,652 | ||||||
| Net cash used in financing activities | (7,388 | ) | (10,872 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | 416 | (2,397 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | (41,165 | ) | 15,476 | |||||
| Cash and cash equivalents at January 1 | 65,064 | 39,760 | ||||||
| Cash and cash equivalents at June 30 | $ | 23,899 | $ | 55,236 | ||||
Flamel Technologies S.A.
Supplemental Information - (Unaudited)
(In Thousands, Except Per Share Data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue by product: | ||||||||||||||||
| Bloxiverz | $ | 25,620 | $ | 44,283 | $ | 50,367 | $ | 72,726 | ||||||||
| Vazculep | 10,421 | 3,627 | 19,827 | 7,151 | ||||||||||||
| Other | 2,124 | 692 | 3,324 | 1,251 | ||||||||||||
| Total product sales and services | 38,165 | 48,602 | 73,518 | 81,128 | ||||||||||||
| License and research revenue | 693 | - | 1,556 | - | ||||||||||||
| Total revenues | $ | 38,858 | $ | 48,602 | $ | 75,074 | $ | 81,128 | ||||||||
| Reconciliation of Reported to Adjusted Financial Statement Line Items: | ||||||||||||||||
| Operating income and EBITDA: | ||||||||||||||||
| Reported Operating income (loss) | $ | (11,543 | ) | $ | (2,370 | ) | $ | (5,839 | ) | $ | 7,644 | |||||
| Exclude: Contingent related party payable fair value remeasurements - Acquisition-related - Inc./(Dec.) | 23,898 | 32,000 | 32,141 | 37,254 | ||||||||||||
| Intangible asset amortization | 3,702 | 3,139 | 7,216 | 6,282 | ||||||||||||
| Purchase accounting adjustments - FSC | 762 | - | 1,525 | - | ||||||||||||
| Include: Contingent related party payable paid/accrued - Acquisition-related | (6,992 | ) | (9,140 | ) | (13,437 | ) | (14,896 | ) | ||||||||
| Total adjustments | 21,370 | 25,999 | 27,445 | 28,640 | ||||||||||||
| Adjusted Operating income | $ | 9,827 | $ | 23,629 | $ | 21,606 | $ | 36,284 | ||||||||
| Exclude: Depreciation Expense | 225 | 132 | 465 | 249 | ||||||||||||
| Adjusted EBITDA | $ | 10,052 | $ | 23,761 | $ | 22,071 | $ | 36,533 | ||||||||
| Net income (loss) | ||||||||||||||||
| Reported | $ | (19,958 | ) | (16,858 | ) | $ | (26,016 | ) | $ | (3,645 | ) | |||||
| Exclude: Contingent related party payable fair value remeasurements - Acquisition-related - Inc./(Dec.) | 23,898 | 32,000 | 32,141 | 37,254 | ||||||||||||
| Contingent related party payable fair value remeasurements - Financing-related - Inc./(Dec.) | 2,773 | 2,726 | 4,307 | 2,985 | ||||||||||||
| Intangible asset amortization | 3,702 | 3,139 | 7,216 | 6,282 | ||||||||||||
| Purchase accounting adjustments - FSC | 762 | - | 1,525 | - | ||||||||||||
| Foreign exchange (gain)/loss | (1,680 | ) | 3,565 | 1,261 | (7,936 | ) | ||||||||||
| Include: Contingent related party payable paid/accrued - Acquisition-related | (6,992 | ) | (9,140 | ) | (13,437 | ) | (14,896 | ) | ||||||||
| Contingent related party payable paid/accrued - Financing-related | (941 | ) | (1,240 | ) | (1,833 | ) | (2,080 | ) | ||||||||
| Income tax expense (benefit) related to all above adjustments | (2,549 | ) | (2,688 | ) | (4,308 | ) | (135 | ) | ||||||||
| Total adjustments | 18,973 | 28,362 | 26,872 | 21,474 | ||||||||||||
| Adjusted | $ | (985 | ) | 11,504 | $ | 856 | $ | 17,829 | ||||||||
| Net income (loss) per share - Diluted | ||||||||||||||||
| Reported | $ | (0.48 | ) | $ | (0.42 | ) | $ | (0.63 | ) | $ | (0.09 | ) | ||||
| Exclude: Contingent related party payable fair value remeasurements - Acquisition-related - Inc./(Dec.) | 0.57 | 0.80 | 0.76 | 0.92 | ||||||||||||
| Contingent related party payable fair value remeasurements - Financing-related - Inc./(Dec.) | 0.07 | 0.07 | 0.11 | 0.07 | ||||||||||||
| Intangible asset amortization | 0.09 | 0.08 | 0.18 | 0.16 | ||||||||||||
| Purchase accounting adjustments - FSC | 0.02 | - | 0.04 | - | ||||||||||||
| Foreign exchange (gain)/loss | (0.04 | ) | 0.09 | 0.03 | (0.20 | ) | ||||||||||
| Include: Contingent related party payable paid/accrued - Acquisition-related | (0.17 | ) | (0.23 | ) | (0.33 | ) | (0.37 | ) | ||||||||
| Contingent related party payable paid/accrued - Financing-related | (0.02 | ) | (0.03 | ) | (0.04 | ) | (0.05 | ) | ||||||||
| Income tax expense (benefit) related to all above adjustments | (0.06 | ) | (0.07 | ) | (0.10 | ) | - | |||||||||
| Total adjustments | 0.46 | 0.71 | 0.65 | 0.53 | ||||||||||||
| Adjusted | $ | (0.02 | ) | $ | 0.29 | $ | 0.02 | $ | 0.44 | |||||||
Exhibit 99.2
August 8, 2016 Second Quarter 2016 Earnings Conference Call 1 Second Quarter 2016 Earnings Conference Call August 8, 2016
August 8, 2016 Second Quarter 2016 Earnings Conference Call 2 Forward Looking Statements This presentation may include "forward - looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements herein that are not clearly historical in nature are forward - looking, and the words "anticipate," "assume," "believe," "expect," "estimate," "plan," "will," "may," and the negative of these and similar expressions generally identify for ward - looking statements. All forward - looking statements involve risks, uncertainties and contingencies, many of which are beyond Flamel's control and could cause actual results to differ materially from the results contemplated in such forward - looking statements. These risks, uncertainties and contingencies include the risks relating to: our dependence on a small number of products and customers for the majority of our revenues; the possibility that our Bloxiverz ® and Vazculep ® products, which are not patent protected, could face substantial competition resulting in a loss of market share or forcing us to reduce the prices w e c harge for those products; the possibility that we could fail to successfully complete the research and development for the two pipe lin e products we are evaluating for potential application to the FDA pursuant to our "unapproved - to - approved" strategy, or that competitors could complete the development of such products and apply for FDA approval of such products before us; our dependence on the performance of third parties in partnerships or strategic alliances for the commercialization of some of ou r products; the possibility that our products may not reach the commercial market or gain market acceptance; our need to invest substantial sums in research and development in order to remain competitive; our dependence on certain single providers for development of several of our drug delivery platforms and products; our dependence on a limited number of suppliers to manufacture our products and to deliver certain raw materials used in our products; the possibility that our competitors may develop and market technologies or products that are more effective or safer than ours, or obtain regulatory approval and mar ket such technologies or products before we do; the challenges in protecting the intellectual property underlying our drug delive ry platforms and other products; our dependence on key personnel to execute our business plan; the amount of additional costs we will incur to comply with U.S. securities laws as a result of our ceasing to qualify as a foreign private issuer; and the oth er risks, uncertainties and contingencies described in the Company's filings with the U.S. Securities and Exchange Commission, includin g o ur annual report on Form 10 - K for the year ended December 31, 2015, all of which filings are also available on the Company's website. Flamel undertakes no obligation to update its forward - looking statements as a result of new information, future events or otherwise, except as required by law.
August 8, 2016 Second Quarter 2016 Earnings Conference Call 3 FT228 - Medusa™ Exenatide Phase 1b PD Performance comparable to current marketed products Bydureon ® & Victoza ® Biomarkers / Surrogate Endpoints: • Glycated Hemoglobin (HbA1c) • Fasted Plasma Glucose (FPG) • Weight Loss Favorable Safety Profile: • Low incidence prolonged gastrointestinal side effects • Low incidence mild injection site reactions FT228: Once - weekly subcutaneous injection formulation of exenatide using its proprietary Medusa™ technology for treatment of type 2 diabetes Purpose: Assess safety & steady - state pharmacokinetic (PK) & pharmacodynamic (PD) profile of 1 dose FT228 (140mcg) per week for 4 weeks in 12 type 2 diabetes mellitus patients PK data showed continuous release of exenatide over period of up to 14 days & RBA > 94%
August 8, 2016 Second Quarter 2016 Earnings Conference Call 4 FT227 – Trigger Lock™ Hydromorphone ▪ Completed two pharmacokinetic (PK) studies in 30 healthy volunteers ▪ Independent in vitro study confirming superior resistance to extraction/recovery in various media under several different conditions compared to Exalgo ® and Oxycontin ® FT227: Abuse - deterrent, extended - release, oral hydromorphone using Trigger Lock™ technology for treatment of pain ▪ Feedback from FDA regarding clinical development pathway: In vivo alcohol interaction study to be conducted during 3Q 2016 ▪ Goal: Provide further confirmation of abuse - deterrent capabilities FDA Guidance Progress To Date
August 8, 2016 Second Quarter 2016 Earnings Conference Call 5 LiquiTime ® Perrigo Partnership (OTC) ▪ Ibuprofen likely to be lengthy and expensive approval process – evaluating potential replacement product ▪ Guaifenesin slated to begin pivotal trial in 1H 2017 Prescription Products ▪ Feasibility studies underway ▪ Product selection late 2016 / early 2017
August 8, 2016 Second Quarter 2016 Earnings Conference Call 6 FT218 – Micropump ® Sodium Oxybate Special Protocol Assessment (SPA) Filed with FDA end of Q1 2016 Dialogue with FDA ▪ No substantive issues ▪ Expect finalization near - term ▪ Overall trial tiamline intact – NDA filing end 2017 / early 2018 Ongoing Activities ▪ Registration of clinical sites Competitive Landscape ▪ 6 of 7 Risk Evaluation & Mitigation (REMS) patents held by JAZZ invalidated on July 26, 2016 ▪ Flamel continues to develop its own REMS strategy FT218: Once nightly version oral formulation of sodium oxybate utilizing Micropump ® technology for the treatment of narcolepsy
August 8, 2016 Second Quarter 2016 Earnings Conference Call 7 Bloxiverz ®, Vazculep ® & Akovaz ™ Bloxiverz held between 40% - 45% of neostigmine market during 2Q 2016 Vazculep increased market share in 2Q 2016 • 32% 1mL market volume • 100% 5mL market volume • 100% 10mL market volume Akovaz to launch in August 2016 • Market value ~ 200 million Combined Sales of Bloxiverz & Vazculep totaled $36 Million in 2Q 2016
August 8, 2016 Second Quarter 2016 Earnings Conference Call 8 FSC Pediatric Products • Sales below expectations, but up ~ $1 million Q/Q • Growth across all products • Flexichamber launched planned for early Q4 • Continue to optimize sales territories, product distribution & 3 rd party payer access • Charlotte office closed end of July 2016
August 8, 2016 Second Quarter 2016 Earnings Conference Call 9 GAAP Financial Results Difference - Inc./(Dec.) (in 000s) Q2 2016 Q1 2016 Q2 2015 Q2 2016 vs. Q1 2016 Q2 2016 vs. Q2 2015 Revenue $ 38,858 $ 36,216 $ 48,602 $ 2,642 $ (9,744) Cost of products and services sold 3,907 3,906 2,756 1 1,151 Research and development expenses 7,604 5,388 7,204 2,216 400 Selling, general and admin expenses 11,290 9,461 5,873 1,829 5,417 Intangible asset amortization 3,702 3,514 3,139 188 563 Fair value adjustments of contingent consideration 23,898 8,243 32,000 15,655 (8,102) Operating Expenses 50,401 30,512 50,972 19,889 (571) Operating income (loss) (11,543) 5,704 (2,370) (17,247) (9,173) Interest & Other Expense (net) (966) (4,450) (5,981) 3,484 5,015 Income (loss) before income taxes (12,509) 1,254 (8,351) (13,763) (4,158) Income tax provision 7,449 7,312 8,507 137 (1,058) Net loss $ (19,958) $ (6,058) $ (16,858) $ (13,900) $ (3,100) Diluted loss per share $ (0.48) $ (0.15) $ (0.42) $ (0.34) $ (0.07) Included in Q2 2016 is $5,900 of Additional Revenue Due to the Change in Revenue Model
August 8, 2016 Second Quarter 2016 Earnings Conference Call 10 Non - GAAP Financial Results Difference - Inc./(Dec.) (in 000s) Q2 2016 Q1 2016 Q2 2015 Q2 2016 vs. Q1 2016 Q2 2016 vs. Q2 2015 Revenue $ 38,858 $ 36,216 $ 48,602 $ 2,642 $ (9,744) Cost of products and services sold 3,145 3,143 2,756 2 389 Research and development expenses 7,604 5,388 7,204 2,216 400 Selling, general and admin expenses 11,290 9,461 5,873 1,829 5,417 Intangible asset amortization - - - - - Fair value adjustments of contingent consideration 6,992 6,445 9,140 547 (2,148) Operating Expenses 29,031 24,437 24,973 4,594 4,058 Operating income (loss) 9,827 11,779 23,629 (1,952) (13,802) Interest & Other Expense (net) (814) (867) (930) 53 116 Income (loss) before income taxes 9,013 10,912 22,699 (1,899) (13,686) Income tax provision 9,998 9,071 11,195 927 (1,197) Net loss $ (985) $ 1,841 $ 11,504 $ (2,826) $ (12,489) Diluted loss per share $ (0.02) $ 0.04 $ 0.29 $ (0.07) $ (0.31) Increase in SG&A Primarily Driven from Investments in Infrastructure, People and One - Time Cross Border Merger Expenses *Reconciliations from GAAP to Non - GAAP can be found in the appendix
August 8, 2016 Second Quarter 2016 Earnings Conference Call 11 Product Sales Difference - Inc./(Dec.) (in 000s) Q2 2016 Q1 2016 Q2 2015 Q2 2016 vs. Q1 2016 Q2 2016 vs. Q2 2015 Bloxiverz $ 25,620 $ 24,747 $ 44,283 $ 873 $ (18,663) Vazculep 10,421 9,406 3,627 1,015 6,794 Other 2,124 1,200 692 924 1,432 Total product sales and services $ 38,165 $ 35,353 $ 48,602 $ 2,812 $ (10,437) License and research revenue $ 693 $ 863 $ - $ (170) $ 693 Total revenues $ 38,858 $ 36,216 $ 48,602 $ 2,642 $ (9,744) Bloxiverz Market Share Averaged Just North of 40% in the Second Quarter Total Product Sales Declined Year - over - Year Due to Increased Competition for Bloxiverz
August 8, 2016 Second Quarter 2016 Earnings Conference Call 12 Cash Flow Summary Six Months Ended June 30, 2016 2015 TOTAL Cash and Marketable Securities Beginning Balance $ 144,802 $ 92,834 Operating Cash Flows (excluding tax and earnout /royalty payments) 36,816 60,176 Tax Payments (13,100) (20,875) Earnout /Royalty Payments (16,316) (7,006) Repayment of Debt - (5,518) Capital Spending (760) (659) Other 1,736 1,565 FX 1,685 (4,397) Change in Total 10,061 23,286 Ending Balance $ 154,863 $ 116,120 (in 000s) Balance Sheet Remains Strong with No Bank Debt and $154.9 Million in Cash and Marketable Securities
August 8, 2016 Second Quarter 2016 Earnings Conference Call 13 Full - Year 2016 Guidance UPDATED PREVIOUS Revenue $125M - $140M $110M - $130M Research & Development Expenses $30M - $40M $35M - $50M
August 8, 2016 Second Quarter 2016 Earnings Conference Call 14 Question & Answer
August 8, 2016 Second Quarter 2016 Earnings Conference Call 15 Appendix
August 8, 2016 Second Quarter 2016 Earnings Conference Call 16 GAAP to Non - GAAP Reconciliations Three Months Ended June 30, 2016: Adjustments (in thousands - USD$) Exclude Include GAAP Intangible asset amortization Foreign exchange (gain)/loss Purchase accounting adjustments - FSC Contingent related party payable fair value remeasurements Contingent related party payable paid/accrued Income tax expense (benefit) related to adjustments Total Adjustments NON - GAAP Product sales and services $ 38,165 $ - $ - $ - $ - $ - $ - $ - $ 38,165 License and research revenue 693 - - - - - - - 693 Total revenue 38,858 - - - - - - - 38,858 Cost of products and services sold 3,907 - - (762) - - - (762) 3,145 Research and development expenses 7,604 - - - - - - - 7,604 Selling, general and administrative expenses 11,290 - - - - - - - 11,290 Intangible asset amortization 3,702 (3,702) - - - - - (3,702) - Changes in fair value of related party contingent consideration 23,898 - - - (23,898) 6,992 - (16,906) 6,992 Total operating expenses 50,401 (3,702) - (762) (23,898) 6,992 - (21,370) 29,031 Operating income (loss) (11,543) 3,702 - 762 23,898 (6,992) - 21,370 9,827 Investment Income 390 - - - - - - - 390 Interest Expense (263) - - - - - - - (263) Other Expense - changes in fair value of related party payable (2,773) - - - 2,773 (941) - 1,832 (941) Foreign exchange gain (loss) 1,680 - (1,680) - - - - (1,680) - Income (loss) before income taxes (12,509) 3,702 (1,680) 762 26,671 (7,933) - 21,522 9,013 Income tax provision 7,449 - - - - - 2,549 2,549 9,998 Income Tax Rate (60%) - - - - - - 12% 111% Net Loss $ (19,958) $ 3,702 $ (1,680) $ 762 $ 26,671 $ (7,933) $ (2,549) $ 18,973 $ (985) Net loss per share - Diluted $ (0.48) $ 0.09 $ (0.04) $ 0.02 $ 0.64 $ (0.19) $ (0.06) $ 0.46 $ (0.02) Weighted average number of shares outstanding - Diluted 41,241 41,241 41,241 41,241 41,241 41,241 41,241 41,241 41,241
August 8, 2016 Second Quarter 2016 Earnings Conference Call 17 GAAP to Non - GAAP Reconciliations Three Months Ended March 31, 2016: Adjustments (in thousands - USD$) Exclude Include GAAP Intangible asset amortization Foreign exchange (gain)/loss Purchase accounting adjustments - FSC Contingent related party payable fair value remeasurements Contingent related party payable paid/accrued Income tax expense (benefit) related to adjustments Total Adjustments NON - GAAP Product sales and services $ 35,353 $ - $ - $ - $ - $ - $ - $ - $ 35,353 License and research revenue 863 - - - - - - - 863 Total revenue 36,216 - - - - - - - 36,216 Cost of products and services sold 3,906 - - (763) - - - (763) 3,143 Research and development expenses 5,388 - - - - - - - 5,388 Selling, general and administrative expenses 9,461 - - - - - - - 9,461 Intangible asset amortization 3,514 (3,514) - - - - - (3,514) - Changes in fair value of related party contingent consideration 8,243 - - - (8,243) 6,445 - (1,798) 6,445 Total operating expenses 30,512 (3,514) - (763) (8,243) 6,445 - (6,075) 24,437 Operating income 5,704 3,514 - 763 8,243 (6,445) - 6,075 11,779 Investment Income 200 - - - - - - - 200 Interest Expense (175) - - - - - - - (175) Other Expense - changes in fair value of related party payable (1,534) - - - 1,534 (892) - 642 (892) Foreign exchange gain (loss) (2,941) - 2,941 - - - - 2,941 - Income before income taxes 1,254 3,514 2,941 763 9,777 (7,337) - 9,658 10,912 Income tax provision 7,312 - - - - - 1,759 1,759 9,071 Income Tax Rate 583% - - - - - - 18% 83% $ (6,058) $ 3,514 $ 2,941 $ 763 $ 9,777 $ (7,337) $ (1,759) $ 7,899 $ 1,841 Net loss per share - Diluted $ (0.15) $ 0.09 $ 0.07 $ 0.02 $ 0.23 $ (0.18) $ (0.04) $ 0.19 $ 0.04 Weighted average number of shares outstanding - Diluted 41,241 41,241 41,241 41,241 41,241 41,241 41,241 41,241 41,241
August 8, 2016 Second Quarter 2016 Earnings Conference Call 18 GAAP to Non - GAAP Reconciliations Three Months Ended June 30, 2015: Adjustments (in thousands - USD$) Exclude Include Income tax expense (benefit) related to adjustments GAAP Intangible asset amortization Foreign exchange (gain)/loss Contingent related party payable fair value remeasurements Contingent related party payable paid/accrued Total Adjustments NON - GAAP Product sales and services $ 48,602 $ - $ - $ - $ - $ - $ - $ 48,602 License and research revenue - - - - - - - - Total revenue 48,602 - - - - - - 48,602 Cost of products and services sold 2,756 - - - - - - 2,756 Research and development expenses 7,204 - - - - - - 7,204 Selling, general and administrative expenses 5,873 - - - - - - 5,873 Intangible asset amortization 3,139 (3,139) - - - - (3,139) - Changes in fair value of related party contingent consideration 32,000 - - (32,000) 9,140 - (22,860) 9,140 Total operating expenses 50,972 (3,139) - (32,000) 9,140 - (25,999) 24,973 Operating income (loss) (2,370) 3,139 - 32,000 (9,140) - 25,999 23,629 Investment Income 310 - - - - - - 310 Interest Expense - - - - - - - - Other Expense - changes in fair value of related party payable (2,726) - - 2,726 (1,240) - 1,486 (1,240) Foreign exchange gain (loss) (3,565) - 3,565 - - - 3,565 - Income (loss) before income taxes (8,351) 3,139 3,565 34,726 (10,380) - 31,050 22,699 Income tax provision 8,507 - - - - 2,688 2,688 11,195 Income Tax Rate (102%) - - - - - 9% 49% Net Income (Loss) $ (16,858) $ 3,139 $ 3,565 $ 34,726 $ (10,380) $ (2,688) $ 28,362 $ 11,504 Net loss per share - Diluted $ (0.42) $ 0.08 $ 0.09 $ 0.87 $ (0.26) $ (0.07) $ 0.71 $ 0.29 Weighted average number of shares outstanding - Diluted 40,353 40,353 40,353 40,353 40,353 40,353 40,353 40,353