6-K 1 w86404e6vk.htm FORM 6-K e6vk
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

______________________

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of April 2003

Flamel Technologies
(Translation of registrant’s name into English)

Parc Club du Moulin à Vent
33 avenue du Dr. Georges Levy
69693 Vénissieux cedex France
(Address of principal executive offices)

     Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

     
Form 20-F x   Form 40-F o

     Indicate by check mark whether registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

     
Yes o   No x

     If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-     

 

 

INDEX

                     
                Page
               
Item. 1  
Financial Statements (Unaudited)
        
         
Condensed Consolidated Statements of Operations
     3  
           
Three months ended March 31, 2003 and 2002
        
         
Condensed Consolidated Balance Sheets
     4  
           
March 31, 2003 and December 31, 2002
        
         
Condensed Consolidated Statements of Cash Flows
     5  
           
Three months ended March 31, 2003 and 2002
        
         
Consolidated Statement of Shareholders’ Equity
     6  
         
Notes to Condensed Consolidated Financial Statements
     7  
Item. 2  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
     9  

2

 

FLAMEL TECHNOLOGIES S.A.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in thousands of dollars except share data)

STATEMENTS OF OPERATIONS

                     
        Three months ended
        March 31,
       
        2002   2003
       
 
Revenue :
                
 
License and research revenue
   $ 2,366     $ 1,962  
 
Product sales and services
     220       1,037  
 
Other revenue
     267       534  
 
 
    
     
 
   
Total revenue
     2,853       3,533  
 
 
    
     
 
Costs and expenses :
                
 
Cost of goods and services sold
     (300 )     (1,094 )
 
Research and development
     (2,954 )     (3,843 )
 
Selling, general and administrative
     (931 )     (1,009 )
 
Stock compensation expense
     (5 )     (4 )
 
 
    
     
 
   
Total costs and expenses
     (4,190 )     (5,950 )
 
 
    
     
 
Loss from operations
     (1,337 )     (2,417 )
Other income
     2,342       747  
Interest income, net
     17       80  
Foreign exchange gain (loss)
     5       (83 )
 
 
    
     
 
Profit, (loss) before income taxes
     1,027       (1,673 )
Income tax benefit
     —       —  
 
 
    
     
 
Net profit, (loss)
   $ 1,027     $ (1,673 )
 
 
    
     
 
Basic profit, (loss) per ordinary share
   $ 0.07     $ (0.10 )
 
 
    
     
 
Diluted profit, (loss) per ordinary share
   $ 0.07     $ (0.10 )
 
 
    
     
 
Weighted average number of ordinary shares outstanding
     16,198       16,198  
 
 
    
     
 

See notes to unaudited condensed consolidated financial statements

3

 

FLAMEL TECHNOLOGIES S.A.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in thousands of dollars except share data)

BALANCE SHEETS

ASSETS

                         
            December 31,   March 31,
            2002   2003
            (Note)   (Unaudited)
           
 
Current assets :
                
   
Cash and cash equivalents
   $ 14,527     $ 14,319  
   
Accounts receivable
     3,462       3,503  
   
Inventory
     375       531  
   
Prepaid expenses and other current assets
     347       865  
 
    
     
 
     
Total current assets
     18,711       19,218  
 
    
     
 
Property and equipment, net
     3,405       3,342  
Other assets :
                
   
Research and development tax credit receivable
     890       945  
   
Other long-term assets
     70       75  
 
    
     
 
     
Total other assets
     960       1,020  
 
    
     
 
       
Total assets
   $ 23,076     $ 23,580  
 
    
     
 
       
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities :
                
   
Current portion of long-term debt
   $ 693     $ 95  
   
Current portion of capital lease obligations
     229       195  
   
Accounts payable
     1,322       2,184  
   
Current portion of deferred revenue
     1,805       2,532  
   
Accrued expenses
     2,028       1,644  
   
Advances from customers
     361       271  
   
Other current liabilities
     71       240  
 
    
     
 
     
Total current liabilities
     6,509       7,161  
 
    
     
 
Long-term debt, less current portion
     1,391       1,445  
Other long-term liabilities
     789       884  
Deferred revenue, less current portion
     1,952       2,905  
Capîtal lease obligation, less current portion
     149       116  
 
    
     
 
     
Total long-term liabilities
     4,281       5,350  
 
    
     
 
Shareholders’ equity :
                
   
Ordinary shares
     2,366       2,366  
   
Additional paid-in capital
     71,178       71,178  
   
Accumulated deficit
     (56,381 )     (58,054 )
   
Deferred compensation
     (14 )     (10 )
   
Cumulative other comprehensive income
     (4,863 )     (4,411 )
 
    
     
 
     
Total shareholders’ equity
     12,286       11,069  
 
    
     
 
       
Total liabilities and shareholders’ equity
   $ 23,076     $ 23,580  
 
    
     
 

Note : The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date.

See notes to unaudited condensed consolidated financial statements

4

 

FLAMEL TECHNOLOGIES S.A.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in thousands of dollars except share data)

CASH FLOWS

                       
          Three months ended
          March 31,
         
          2002   2003
         
 
Cash flows from operating activities :
                
Net profit, (loss)
   $ 1,027     $ (1,673 )
Adjustments to reconcile net loss to net cash provided by operating activities :
                
 
Depreciation and amortization
     310       459  
 
Stock compensation expense
     5       4  
 
(Gain) loss on disposal of property and equipment
     —       (362 )
 
(Gain) loss on recognition of grants
     —       (747 )
 
Increase (decrease) in cash from :
                
   
Accounts receivable
     3,533       92  
   
Inventory
     (114 )     (138 )
   
Prepaid expenses and other current assets
     (61 )     (497 )
   
Deferred revenue
     (1,083 )     1,510  
   
Accounts payable
     14       798  
   
Accrued expenses
     (1,375 )     (465 )
   
Research and development tax credit receivable
     1,383       (20 )
   
Other
     480       134  
 
    
     
 
     
Net cash from, (used by) operating activities
     4,119       (905 )
 
    
     
 
Cash flows from investing activities :
                
 
Purchases of property and equipment
     (89 )     (319 )
 
Disposal of property and equipment
     —       362  
 
    
     
 
     
Net cash from (used for) investing activities
     (89 )     43  
 
    
     
 
Cash flows from financing activities :
                
 
Proceeds of loans
     —       131  
 
Principal payments on capital lease obligations
     (104 )     (56 )
 
    
     
 
     
Net cash provided, (used by) financing activities
     (104 )     75  
 
    
     
 
Effect of exchange rate changes on cash and cash equivalents
     (539 )     579  
Net increase (decrease) in cash and cash equivalents
     3,387       (208 )
Cash and cash equivalents, beginning of period
     5,309       14,527  
 
    
     
 
Cash and cash equivalents, end of period
   $ 8,696     $ 14,319  
 
    
     
 

See notes to unaudited condensed consolidated financial statements

5

 

FLAMEL TECHNOLOGIES S.A.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Amounts in thousands of dollars except share data)

SHAREHOLDERS’ EQUITY

                                                         
    Ordinary Shares   Additional                   Cumulative        
   
  Paid-in   Accumulated   Deferred   Translation   Shareholders’
    Shares   Amount   Capital   Deficit   Compensation   Adjustment   Equity
   
 
 
 
 
 
 
Balance January 1, 2003
     16,197,590     $ 2,366     $ 71,178     $ (56,381 )   $ (14 )   $ (4,863 )   $ 12,286  
Amortization of deferred compensation
     —       —       —       —       4       —       5  
Net loss
     —       —       —       (1,673 )     —       —       (1,673 )
Other comprehensive income
                                                       
Translation adjustment
     —       —       —       —       —       452       452  
Comprehensive income
                                                     (1,221 )
 
    
     
     
     
     
     
     
 
Balance March 31, 2003
     16,197,590     $ 2,366     $ 71,178     $ (58,054 )   $ (10 )   $ (4,411 )   $ 11,069  
 
    
     
     
     
     
     
     
 

See notes to unaudited condensed consolidated financial statements

6

 

FLAMEL TECHNOLOGIES S.A.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

     1.     ACCOUNTING POLICIES

     The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles for interim financial statements generally accepted in the United States. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Flamel Technologies S.A. (the “Company”), all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included.

     The reporting currency of the Company is the U.S. dollar. The financial statements of the Company, whose functional currency is the Euro, have been translated into U.S. dollar equivalents using the period-end rate for asset and liability accounts, the weighted average rate for income and expense accounts, and historical rates for shareholders’ equity accounts. Corresponding translation gains or losses are recorded in shareholders’equity.

     Operating results for the three months ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. These condensed consolidated financial statements should be read in conjunction with the Company’s audited annual financial statements.

     1.     REVENUES

     1.1 LICENSE RESEARCH AND CONSULTING AGREEMENTS

     In accordance with the long-term research and product development agreement signed with Corning in December 1998, the Company received research and development payment of $93,000 for the first three months of 2003.

     In accordance with the license agreement signed with Servier in December 2001, the Company recognized research and development revenues of $441,000 and licensing fees of $303,000 for the first three months of 2003. In accordance with the license agreement signed with Beecham Pharmaceuticals (Pte) Limited in June 2002, the Company recognized licensing fees of $136,000 for the first three months of 2003.

     In accordance with the license agreement signed with SB Pharma Purto Rico Inc. in March 2003, the Company recognized research and development revenues of $731,000 and licensing fees of $8,000 for the first three months of 2003.

     The Company received research and development payments on three feasibility studies with undisclosed partners for an amount of $275,000 for the first three months of 2003.

7

 

FLAMEL TECHNOLOGIES S.A.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

     1.2 OTHER REVENUES

     In accordance with the long-term research and product development agreement signed with Corning in December 1998, the Company recognized revenue of $137,000 corresponding to the royalties for the three months period ended March 31, 2003.

     The Company recognized in February 2003 a revenue of $362,000 from the sale of the equipments of its pilot plant of Vénissieux.

     2.     OTHER INCOME

     The Company recognized in March 2003 a revenue of $747,000 from grants of French public agencies linked to investments in the development of the Pessac facility, following to the achievement of the conditions of those grants.

8

 

Item. 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Revenues for the quarter ended March 31, 2003 increased to $3.5 million, compared to $2.9 million for the first quarter of 2002.

License and research revenue for the quarter ended March 31, 2003 of $2.0 million included $0.9 million revenue from GlaxoSmithKline, $0.7 million from Servier, $0.3 million from feasibility studies with other partners and $0.1 million from the on going research collaboration with Corning. License and research revenue for the first quarter of 2002 largely consisted of revenues from Novo-Nordisk, Corning, and various undisclosed partners.

Other revenues for the quarter ended March 31, 2002 consisted of royalties from Corning and the sale of equipment from the Company’s pilot plant in Venissieux. Other income included $0.7 million in French government grants. Other revenue in the first quarter of 2002 included $2.3 million received in settlement of litigation with the Welcome Foundation regarding Flamel’s long acting acyclovir product Genvir. Revenues from product sales and services were $1.0 million in the quarter ended March 31, 2003, compared to $0.2 million in the first quarter of 2002, largely as a result of increased toll manufacturing.

Total operating costs for the quarter ended March 31, 2003 amounted to $6.0 million, up from $4.2 million in the comparable quarter in 2002, largely as a result of the increased value of the Euro to the dollar. Research and Development costs for the first quarter of 2003 increased to $3.8 million from $3.0 million in the first quarter 2002, largely as a result of the exchange rate. Sales, General and Administrative costs increased slightly to $1.0 million from $0.0 million in the first quarter of 2002.

Overall, the Company had a loss of $1.7 million for the quarter, compared to a gain of $1.0 million in the comparable quarter in 2002.

As a result of fluctuations in the amount of quarterly revenues, which may arise from the signing of research collaborations, license agreements or other extraordinary transactions, interim results are not necessarily indicative of the operating results for the full year.

9

 

Liquidity and Capital Resources

On March 31, 2003, the Company had $14.3 million in cash, compared to $8.7 million in cash at the end of the first quarter 2002.

Net cash from operating activities amounted to a decline of $0.2 million for the first three months of 2003 which is due primarily to the loss for the period, offset by increases in deferred revenue from the recent licensing agreement with GlaxoSmithKline.

Cash used for capital investments was $0.3 million for the first three months of 2003, an increase from $0.1 million for the comparable period in 2002.

10

 

INFORMATION FILED WITH THIS REPORT

Document Index

     
99.1   Press release dated April 9, 2003 (“Biovail Acquires Rights to Controlled Release Acyclovir (Genvir) from Flamel Technologies”).
99.2   Press release dated April 30, 2003 (“Flamel Technologies Announces First Quarter Results, Showing Maintained Level of Cash and loss per share of ($0.10)”).

11

 

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, thereunto duly authorized.

         
    Flamel Technologies
          
Dated: May 9, 2003   By:   /s/ Stephen H. Willard
       
        Name: Stephen H. Willard
        Title: Executive Vice President,
        Chief Financial Officer and General
        Counsel

12