Stephen Willard – Director Mike Anderson – CEO Siân Crouzet – Principal Financial Officer

Matt Kaplan – Ladenburg Thalman Fred Milligan – Sanders Morris Harris Peter Butler – Glen Hill Investments Roger Bensen – Number One Corporation Tom Weissenborn – Credit Suisse

Good morning, ladies and gentlemen, and welcome to Flamel Technologies 2011 quarter four and annual results conference call. After prepared remarks, we will be opening the conference to a question-and-answer period. As a reminder, today’s call is being recorded. At this time it is my pleasure to turn the conference over to Mr. Stephen Willard. Please go ahead Mr. Willard.

Thank you very much. Good morning, ladies and gentlemen. We open as always with the forward-looking statement language which is set out at the conclusion of yesterday’s press releases. All statements made on this call about future events, results, performance, actual results may differ materially from these statements due to risks and uncertainties over of which we have no control. We encourage our shareholders to review the risks and other disclosures set forth in our SEC filings which are all publicly available. Yesterday, we announced that we have entered into a definitive agreement to acquire Eclat Pharmaceuticals, a specialty pharmaceutical company that is focused on the development, approval, and commercialization of niche brands and generic products. Eclat has one approved product on the market Hycet, which is a hydrocodone acetaminophen oral solution, as well as a fleet of products that are in various stages of R&D completion. Under the terms of the acquisition, a newly formed U.S. subsidiary of Flamel has issued a $12 million senior note to Eclat Holdings LLC, the former owner of Eclat that is guaranteed by Flamel and its subsidiaries and secured by equity interest and assets of Eclat. The note is payable over six years only if certain contingencies tied to the approval and net sales of certain Eclat products are satisfied. The note accrues interest at an annual rate of 7.5% payable in kind until satisfaction of certain of the foregoing contingencies. Flamel will also pay Eclat Holdings and earn out payment of 20% of the gross profit generated by the Eclat product launches. In addition to the note, Flamel has issued two warrants that are subject to shareholder approval. One warrant is exercisable for up to 2.2 million American depositary share ADS, each representing one ordinary share of Flamel at an exercise price of $7.44 per share. And the second warrant is exercisable for up to 1.1 million ADS at an exercise price of $11 per share. The warrants are exercisable for a six-year term and Flamel has committed to register the ADSs underlying the warrants with the SEC if shareholder approval is obtained. If shareholder approval is not obtained, the warrants will be cash settled and the term will be extended to seven years. The warrants also contain a limitation generally preventing them from being exercised during any time that would result in the holder beneficially owning greater than 19.98% of our ordinary shares. In addition to the products, Eclat comes with a strong management team of pharmaceutical veterans. The board has elected Mike Anderson, Eclat CEO to head the combined company as we advance on our strategy to create a more vertically integrated pharmaceutical company with greater upside potential and control of our pipeline and news flow. We believe that the combination of Mike’s experience and our drug development expertise will create dramatic opportunities for the growth of Flamel Technologies. I would like to note that the acquisition brings $2 million in incremental cash resources to the company. I am very pleased to be able to introduce to all of my fellow shareholders, to Mike Anderson, Flamel’s new CEO. Mike is here in France and I would ask him, please, to discuss the company that he founded and his plan for Flamel. Siân Crouzet will then discuss our financial results for 2011 and the fourth quarter. And then with Mike’s permission, I will review our 2011 highlights and operating results.

Thank you, Steve. We’re very pleased for our new association with Flamel Technologies, which as you know is the leader in drug delivery technology. A combination of Flamel and Eclat will provide shareholders with significantly more flexibility than in the past by combining the cutting-edge technology of Flamel with the commercial capabilities of Eclat, which as you may know is a St. Louis-based specialty pharma company. Since the acquisition was built around a contingent payment structure tied to FDA approval and net sales of Eclat launch products, the deal was backend-loaded and limits downside to Flamel shareholders. At the same time, I believe that the Eclat product portfolio provides our company with multiple high value opportunities for near-term cash flows that carry a balance risk profile. The strategy we have pursued at Eclat is straightforward. We focus on niche opportunities where we can bring new products to market at relatively low cost. We plan to employ in the near-term cash flows that we anticipate generating, the funding of development of products using Flamel’s Best in Class drug delivery platforms as we believe that the opportunities for the combined company are numerous and significant. Eclat has been in existence since November of 2010 and it was created to pursue the development, approval, and marketing of NDAs primarily 505(b)(2)s. The company is focused on niche products and on products that can be commercialized without a large marketing infrastructure. In a market increasingly being impacted by the use of generics and by the influence of third part payers, Eclat focuses on products that can satisfy these changes in the U.S. pharmaceutical market. Since Eclat works primarily with improving existing molecules, the competitive nature of the business doesn’t allow us to identify the specific products on which we are working. As Steve said earlier, Eclat has one small approved product, Hycet, the combination of hydrocodone and acetaminophen in an oral solution, which is a product that we in-licensed. We have a number of products under development and expect to file at least one NDA this year and could expect to see an approval as early as next year. Putting these two companies together allows Flamel to independently pursue partnering opportunities just as it always has in the past. But now, we also have the ability to more proactively look for opportunities that allow us to create our own products as well. Our expectation would be to augment our current R&D activities with additional products in well-defined niche areas that could subsequently be marketed. In the coming weeks, we will be working hard to streamline our activities in this direction. We believe that the Medusa Micropump Trigger Lock of LiquiTime platforms all offer unique advantages over other technologies and we have already a number of ideas for new products that could help drive, increase shareholder value for a long time to come. I want to thank Steve and the board for this exciting opportunity to work with such a talented group of employees. I look forward to sharing more with investors on upcoming conference calls and presentations.

Thank you very much, Mike. I would now like to ask Siân Crouzet, please, to provide an overview of our recently announced financial results. After that I will go into more details on some of our most recent business highlights. Siân? Siân Crouzet: Thank you and good morning. The financial results for the fourth quarter of 2011 reflect our continued commitment to control our cost and the incremental benefit of the new supply agreements signed with GSK on September 30th, 2011, which served to partially offset the challenging environments in which we are working with respect to our license and research revenue streams. Total revenues during the fourth quarter were $8.6 million compared to $13.5 in the year-ago quarter. The fourth quarter of 2010 included two milestones from Merck Serono totaling €4 million, which did not have a corresponding amount in 2011. With that said, product sales have increased by $2 million year-on-year for the quarter as a result of the new supply agreement signed with GSK and the increase in demand for Coreg CR. Costs and expenses for the fourth quarter of 2011 declined by 4.2% to $10.9 million. This decline was driven by a reduction in R&D expenses resulting from a decline in headcount since late in 2010 in addition to control of discretionary spend. Cost incurred on a pre-clinical and clinical programs have decreased year-on-year as a result of progress of certain programs. Specifically, the ongoing interferon alpha phase II clinical trial sponsored by ANRS, which required less funding in 2011 compared with 2010 and a reduction of pre-clinical cost as a result of the filing of our (inaudible) in February 2011 for which were the study also financed in previous years. Our SG&A cost for the fourth quarter increased for the first time in 2011 compared with prior year. This is as a result of the legal fees incurred from the lawsuit filed against Lupin Pharmaceuticals in relation to Coreg CR. For the full year 2011 our net loss is $8.8 million as oppose to $9 million in 2010. We were successful in aligning our cost and expenses, which declined by $4.7 million to the reductions in revenues year-on-year of $4.5 million. Our quarterly and annual results demonstrate our capacity to adopt our cost to the ongoing revenue stream. With respect to our cash and market (inaudible) security, we finished the year with $24.5 million of funds. None of which will be used to fund the acquisition of Eclat Pharmaceuticals. We continue to pursue opportunity to license our technology and convert feasibility agreements into license agreements. But recognize that the environment in which we are working in to achieve this is increasingly challenging. I will now turn the call back over to Steve. Stephen Willard Thank you Siân. 2011 was a rewarding year for Flamel Technologies. In particular, our two proprietary delivery platforms, Medusa and Micropump took great strides forward. With respect to our Medusa Hydrogel Depot, the phase one results are currently being analyzed and discussed with our partner Merck Serono. We are also approaching completion of the phase 2a study on our proprietary long-acting interferon alpha-2b for hepatitis C. We were pleased that the data from an intermediate analysis of the study demonstrated an improved safety profile versus standard PegIntron plus Ribavirin and to present this data at the AASLD meeting last November. At the meeting, we share that when given in combination with Ribavirin interferon alpha-XL, reported at least 30% fewer side effects versus PegIntron plus Ribavirin. A copy of the poster can also be found on our website. We anticipate presenting further data including efficacy data at a major scientific congress this spring. We are focused on the worldwide market opportunity for interferon alpha-XL. HCV is a growing problem, especially in emerging markets. Interferon alpha-XL is on track to hit that sweet spot of providing all the compliance and convenience advantages of the standard pegylated interferon therapies, but with the more favorable safety, and perhaps even efficacy profile, and at lower cost. We are currently in discussion with three parties on alpha interferon. For the Medusa platform itself, we were pleased to see our intellectual property portfolio broadened in 2011 with the addition of a granted patent in Japan. Japan remains one of the largest pharmaceutical markets in the world. And we are encouraged by the foundation that will allow us to go there. In the US, we submitted a type four drug master file on Medusa Hydrogel to the FDA early last year, thanks in large part to the comprehensive pharmacology and toxicology package, we completed earlier. Other Medusa updates in 2011 include the smaller molecule tigecycline partnership we signed with Eagle Pharmaceutical. Our co-development agreement with Theralpha on their ASIC3 inhibitor for inflammatory pain and our June TGF beta-1 inhibitor partnership with Digna Biotech. Our Medusa-based hydrogel depot formulation of tigecycline is expected to enter into pre-clinical pharmacokinetic and pharmacodynamics study in the second quarter of this year. Tigecycline is currently dosed twice-a-day by flow of intravenous infusion to patients that are typically hospitalized. The most Medusa platform potentially enables switching the root of administration from intravenous or IV to subcutaneous injection, to the creation of a once-a-day sustained release injectable tigecycline which we believe will create a substantial competitive advantage. We hope to offer reduced cost to hospitals and improve convenience for patients requiring antibiotic treatment. Indeed, we anticipate this formulation may allow some patients to leave the hospital earlier and be treated at home. The sales of antibacterial drugs that could benefit from such IV to subcute switch were $1 billion in 2011. Market potential is greater than $4 billion if we target anti-cancer treatments. As a compliment to its core business activities with leading pharmaceutical and biotechnology companies, Flamel entered in to two co-development agreements in 2011, with smaller biotechnology companies with exceptional potential in early stage molecule, Theralpha and Digna Biotech. Pre-clinical work is beginning on the formulation being developed with both companies. Moreover, Flamel has several undisclosed partnership with leading pharmaceutical and biotechnology companies. Many of them have now reached in vivo confirmatory pharmacokinetic studies in animal models for Medusa-based formulations of proteins and peptide drugs. Entering 2012, we believe that the promise of the Medusa platform remain strong. Versatile and flexible yet highly effective in preventing issues of insolubility, aggregation and immunogenicity, all without altering the core drug compound. We believe that Medusa would make a strong component for numerous drug development approaches including biologics. Our Micropump platform strengthened its footing as well. Most notably with the issuance of the US number 209 patent this past January. The 209 patent basically covers the delivery of micro-particles with varying control release profiles, a technology utilized in Coreg CR. This additional patent should only strengthen our position in defending Coreg CR. This patent is now registered by GSK in the orange [ph] book. Last October, we announced a multi-year agreement with GSK for the production of Coreg CR micro-particle. Guaranteed minimum payments totaling €2.6 million have been received during Q3 and Q4 of the past year. The agreement also improves the economics for Flamel with regard to any product manufactured by us as of January 1, 2011. Our manufacturing margins will continue to be far higher than they were previously under the supply agreement that ended December 31, 2010. Our newest delivery platform Trigger Lock and LiquiTime also saw progress in 2011. For example, in April, we entered into license agreement with two leading specialty pharmaceutical companies for development and commercialization of three already marketed drugs, two of which, will utilized Trigger Lock. During the past quarter, we also signed two new feasibility study agreements with undisclosed major pharmaceutical companies, one based on our Trigger Lock technology and the other based on LiquiTime. This is a breakthrough for these platforms which we only recently launched and we remain optimistic about the opportunities they each present. As a reminder Trigger Lock is our tamper-resistant controlled release formulation that is designed to mitigate or prevent the abuse of applicable narcotic drugs. LiquiTime is our technology that allows the creation of controlled release or stable liquid oral formulation of drug for patients who have difficulty swallowing pills, such as children and the elderly. We have already seen proof of concept for LiquiTime, and believed that it has the potential across a wide spectrum of applications including both the over-the-counter and prescription drug arenas. I believe that all of these technology platforms will serve as a strong foundation for the development of new programs and initiatives by the company under Mike’s strong leadership. We would now be pleased to take your questions. Question-And-Answer:

(Operator Instructions) And we’ll take our first question form Matt Kaplan with Ladenburg Thalman. Matt Kaplan – Ladenburg Thalman: :

Hi, Matt, I thought you changed your last name. Matt Kaplan – Ladenburg Thalman: Yes, she said Kapell [ph], exactly.

Hello, Matt Kaplan. Matt Kaplan – Ladenburg Thalman: So, a few questions that maybe you can help us with the structure of the acquisition. First, can you tell the continuities with respect to the $12 million note that’s payable over six years and how that works?

Sure. The note is payable only if there is success with Eclat products and that success is defined as at least two products being FDA approved or at least one product being FDA approved. And $40 million of net sales from that product. If the Eclat products are not successful, we owe nothing on the notes. If the products are successful under what I just defined, then there would be payments of one-third in each of the years 2015, 2016, 2017 and 2018. Yes. I think this is a very good situation for us because it allows us to bring in new products, products that as Mike said, might have the possibility of a launch next year and yet we have de-risked the transactions because if they are not successful, we will not owe the money of the note, which is roughly the money that Deerfield had put in to create Eclat. Matt Kaplan – Ladenburg Thalman: Yes. Okay. And with respect to the warrants, how do they work in terms of the two classes of warrants, the 2.2 million and the 1.1 million? Are there any contingencies associated with their issuance?

Yes. They’re subject to shareholder approval with regard to the underlying shares. The reason they’re split into two is that one group was at a 5% premium to the price that we closed out on Monday and the second obviously at $11 a share is attractive only to Deerfield if Flamel has the success that they – and I think it’s fair to say, we hope for. Matt Kaplan – Ladenburg Thalman: Okay. Fair enough. And I guess going onto Eclat’s portfolio, what attracted you to their portfolio of products? And I guess maybe a question for you and then maybe Mike can go into it, but I guess Hycet with FDA’s position on combination into the medicine product doesn’t – obviously doesn’t look that interesting. But maybe it does, maybe I’m wrong. But talk about what else they’ve got in the near term and what attracted you about it?

Okay, Matt. Good morning. This is Mike Anderson. Maybe I can address those for you if possible. First of all, as it relates to Hycet, as you are obviously work Hycet is a very small product. Hycet was acquired back early or sometime early last summer. The product is very small and was never designed to build a company around but rather to begin our relationships with the customer base et cetera. Hycet... Matt Kaplan – Ladenburg Thalman: Sorry to interrupt you? What do you think Hycet – what is its potential?

Well, I’m hesitant to speculate but let me address another issue that you raised and that may put it into a slightly different light. As you know, effective January 14, the FDA has said that it will no longer allow products containing acetaminophen and other narcotic analgesics. They will not allow any prescription product containing over 325 milligrams of acetaminophen, given the level toxicity potential of high doses of the acetaminophen combined with people who self-medicate. So, this product, Hycet is one of the two or three products today that already meet the new FDA guidelines. So, in January of 2014, at the latest or potentially before that about 97% of the acetaminophen hydrocodone marketplace is going to have to revert to 325 milligrams or less. We’re already having the 7.5 hydrocodone, which is by far the most popular dose of the opioid. We believe we’re in a position to be able to take advantage of that with currently today. So Hycet, as the brand, of course. And then we also have an authorized generic under italic label. So long story short, even though it’s very, very modest today and the likelihood of their being significant growth with Hycet today is minimal. There certainly is upside based on the FDA’s mandates in 2014. As it relates to the existing product portfolio or development projects, if you will, at this point in time, given the notion that there are existing molecules. And what we’ve done is try to add to those. We prefer not to get specific and, in fact, want about the identity of those products or the précised timing of either their submission or approvals, which obviously, of course, we don’t totally control. But it’s basic to say that we’ve been in business since late 2010. And in that time period as a virtual company, we’ve worked with outside developers and contract manufactures to begin creating that portfolio. So as you might imagine, some pieces there are fairly well down the track. As we alluded in the comments, we could. And we do expect to file our first NDA this year. So I know you’d like to have specific parameters to measure the dollar volume, et cetera. But unfortunately at this time, we’re not able to bribe that for you. As soon as possible though, obviously, we will. Matt Kaplan – Ladenburg Thalman: Fair enough. Can you give us a sense in terms of if they’re going to build a commercial organization? Is there going to be a focus on a certain area of therapy, a certain indication so you can have a certain niche? As you said niche opportunity so you can get that leveraged at that cell space or that commercial effort?

Right. Great question. And the answer is that we are therapeutically agnostic. And what allows us to be that is because we have selectively identified products that could take place over a number of therapeutic categories. Our model was specifically designed to try to take advantage on a commercial basis now of the changes in the market place. The idea of adding large sales forces and requiring expensive infrastructure whether you hire it yourself or whether you go out and contract it through a CSO. For most products today, in our view, is beginning to be yesterday’s model. What we’re attempting to do is to pursue the development of projects where we think we have the ability to move market share through non-personal selling kids of techniques. Which if you look at what physicians tell the market place today or really what they would prefer. Clearly, if you’re doing unique chemical entities or specified proteins or peptides, that may not always be possible. But it’s not our plan to go build an expensive commercial infrastructure. The real asset here is Flamel’s technology to the degree that’s going forward. We can take that technology and combine it with efficacious well-characterized and highly effective molecules and create real patient advantages. That’s kind of what the business is all about going forward. Matt Kaplan – Ladenburg Thalman: Is the goal, if I understand, to a place or therapeutically – so you can be exchanged at the pharmacy level such that a doc would write a script and then you could be substituted at the pharmacy level on some of this so that you don’t have to detail?

Well, that’s not the basic strategy. But our basic strategy in the marketplace now, we’re now third payers who are ever more controlling. The outcomes of products that are approved is to look for molecules so we can significantly impact the cost over the long hole. Back ten years ago, it was quite common place if somebody have a molecule that was about to lose patent expiry. Three years in front that they create their own Excel form and they would go about switching people so that by the time the molecule expired there was very little business for generics and it would go pretty much to the Excel form. It’s still a reasonable strategy, but third party payers today don’t embrace that like they used to. They’re becoming much more selective. So the onus is on us to create products that really have a significant role where you can, in a meaningful way, impact the cost of getting a patient be made better through pharmaceuticals. Matt Kaplan – Ladenburg Thalman: But is it fair to say, Michael, that this is accretive to the existing Flamel business and the existing Flamel business will continue under your management separate from the discussion you just had about the cost?

Yes, absolutely. There is nothing about this change and this acquisition that will significantly change Flamel’s approach as it has been. And that it is to take this technology. And we look for the right avenues with which to partner with them. The real difference is that now in addition to having that capability, we have the ability to also have a commercial possibility of our own. And that’s important. It helps us to control our own destiny, if you will. Matt Kaplan – Ladenburg Thalman: Great. Just one more question. I’ll jump back with you. What do you think would be the cost to brand your kind of average product to market? And what’s your experience, I guess, with your first product that you’re on the verge of following NDA with? What’s the average cost?

Yes. Matt, it’s a great question. And typically, 505(b)(2) is predicated upon what your experience with the FDA is or what the results of your discussions with FDAR. Generally, a less expensive avenue than obviously doing a chemical entity or brand new molecules because in most cases, you’re working pretty much to create bio equivalency kinds of profiles So as a general rule of thumb, and they vary. Not every product is not the same, and most of these products is something under too. And, of course, a lot of the development activity for some of our more mature opportunity is already been financed.

So, again, just to understand that, some of the existing products have already been financed and your estimate subject to all the cruezet was less than $2 million each?

Yes, correct. Matt Kaplan – Ladenburg Thalman: Right, right. And then, sorry, just one more question I guess for Steve. You mentioned in your opening remarks the Medusa program that you’ve completed the phase I. Where are you in your discussions with Medusa right now?

Sure. One of the many reasons that I found the acquisition of a clot compelling was because since I took over this company I’ve worked with my colleagues to rebuild the technology, rebuild our relationships with Big Pharma. As everyone who pays attention to Flamel knows the price we pay for partnering with health industry and developing their trust is to have a very limited ability to discuss what we’re doing. As a result, I created initiatives like Interferon and Digna to get more that we would be able talk to our partners about. We’ve brought in the Eclat products which Mike will be able to more about. But our deal with [Mike Toronto] is one of the conventional ones where we are limited by what we are permitted to say by our partner. And the sentence they have permitted us to say is the phase I results are currently being analyzed and discussed with our partners. I’m hopeful that with Mike’s leadership, we will be able to increase our information flow as we add to the existing model of Flamel to serve the major pharmaceutical companies of the world. Matt Kaplan – Ladenburg Thalman: Any sense of timing in terms of when do you be able to share more?

That would have to be negotiated with [Mark Toronto]. Matt Kaplan – Ladenburg Thalman: Okay. Thank you.

Thank you.

We’ll take our next question from Fred Milligan with Sanders Morris Harris. Fred Milligan – Sanders Morris Harris: Good morning and good afternoon.

Good afternoon to you. Fred Milligan – Sanders Morris Harris: Acquisitions, is that being re-circuit or you making acquisitions?

Well, I think at this point, there’s nothing certainly that will restrict us. But I think after the acquisition of Eclat, we have some assimilation to do here. And I think our number one focus will clearly be to make sure that our existing pipeline of opportunities is prioritized correctly and that we’re able to inject appropriate opportunities that could be brought to us by Eclat. But certainly nothing down the road that would preclude us from looking at that sort of activity.

Well, speaking to my past comments, if I may, I have frequently said with regards on conference call that I believe us to have an incredibly powerful set of technologies to be a strong company and not need to make any acquisitions. The reason that I was willing to support this is because I view it as an extraordinary opportunity to pick up some short-term products that have, in my opinion, great potential with a very limited downside risk where we pay only if they’re successful. And so, while I was not seeking acquisitions, this seems to be so good for our shareholders. And I believe it to be accretive to our shareholders that I went ahead and supported the acquisition of the class. But I don’t think this decision was in consistent with my prior statements that we were not comfortable with what we had. And so, I wasn’t looking to acquire that. Fred Milligan – Sanders Morris Harris: The agreement or the contingency with Eclat, does that only last three years? After that Eclat is just a part of Flamel without any contingency?

Eclat is part of Flamel without any contingency. It’s just a question of whether we have to pay for it. So we now own 100% of Eclat and it doesn’t go back. Fred Milligan – Sanders Morris Harris: I understand that, but you have an agreement here for them being paid over three or four years in regard to the amount of revenues they bring in. Does that end after that three or four-year period?

Oh, I see. The 20% of payout continued after the six-year period of the notes. And there are payments on the notes until the third year. Fred Milligan – Sanders Morris Harris: Okay. But the 20% payout will be continuing?

That continues in year seven and/or as long as those five products are on the market. Fred Milligan – Sanders Morris Harris: Five products?

Yes, those are what we’ve identified for launch products. You can either focus on the fact that we are paying 20% of the money these products bring in or you can focus on the fact that adding some item we are getting 80% of the money that these products bring in. Fred Milligan – Sanders Morris Harris: I know you’re not been talking about particular products, but if you’re talking about paying off on five products, what are those products?

Well, at this point in time we’re not really in a position to be able to describe what the products are. It’s a very competitive business. And so far as these are not new molecules, per se, we feel like it’s in the best interest of the shareholder to play. That is close to the best as we can, at least for the immediate time. As time goes on and as we get closer and these products gets closer to either approval, or what have you, a likelihood is that we’ll be more able to identify them for you. Fred Milligan – Sanders Morris Harris: Okay. But are they all in some stage of development?

Yes, sir. Fred Milligan – Sanders Morris Harris: Okay. All right. And you wouldn’t want to elaborate on what stage they might be in?

No, sir. We’d rather not. Fred Milligan – Sanders Morris Harris: Okay. What I’m concerned is the fact that you work with outside drug companies now, will that impede by trying to develop drugs on your own and maybe pursue the competition?

I will answer that and then turn it over to Mike, the CEO. I mean I’ve been with Flamel for coming up on 12 years. I handled the relationship with big pharma. I have a very strong personal belief that the kinds of things that Eclat are doing will not in any way have a negative impact on big pharma's willingness to deal with us. In fact, the commercial expertise that Mike Anderson brings to this company will strengthen us with big pharma on the core part of our business, which is drug delivery with big pharma. Fred Milligan – Sanders Morris Harris: Okay.

Just to add to that, I'm not familiar with 1ks or a big pharma company who desired to license, or what have you, one of your technologies would opt not to do so because you had a marketing effort of your own no matter how big or small it might be. I don’t perceive that, frankly, as problem. Fred Milligan – Sanders Morris Harris: Okay. All right, that’s all I have right now. Thank you very much and good luck.

Thank you. Thank you.

We’ll take our next question from Peter Butler with Glen Hill Investments. Peter Butler – Glen Hill Investments: Hi. Good morning.

Good morning.

Good morning, Peter. Peter Butler – Glen Hill Investments: Hi. I have a laundry list of possible questions and a limited time. So this is not necessarily in order. But theoretically and practically, with your alpha interferon, if this successfully passes phase two and given the sales potential of this product, isn’t there a rule of thumb that could put a value on this if you were to sell it? In other words, what is a product worth in the market place that has passed phase two and has a sales potential of, what, a billion dollars roughly? Stephen Willard Yeah. The best answer to what is that worth is what the market will bear. And I mean that quite seriously. We are in various stages of conversation or negotiation with three parties regarding alpha interferon in various territories and I think there is great excitement about the product we’ve developed. I mentioned earlier that we expect to put out some preliminary efficacy data shortly. There’s a lot of interest in this product. And you’re right, it’s a huge product and if we have a demonstrably safer and at least as efficacious or, perhaps, even more efficacious product, then I think we’ve got a winner. But it’s hard to put a number on that. Peter Butler – Glen Hill Investments: Well, related to this, bringing the cash register, I think you have tax laws carry forward at yearend. It’s got to be maybe $160 million. How could that be applied to an earnings stream coming from either Flamel or to Eclat over the next year or two? When do you start ringing the cash register and how do you use the tax law carry forward?

While we have been working on this acquisition, we have also been going full tilt on a wide range of business development negotiations which we’ve discussed on past calls. Any one of which is successful, we’ll ring the cash register. We’ve now added the possibility of success with the Eclat product and while we have to confirm with our accountants, I’ve seen no reason that any of those profits or payments would not be protected with our net operating losses. Peter Butler – Glen Hill Investments: And could you, Siân, what’s the tax law carry forward accumulatively? Stephen Willard Siân, I don’t think, has that immediately at hand. My recollection was it was $160 million or something like that. But I ask you not to rely on that. Look at our publicly available information. And we do disclose that on a regular basis. Also, we are preparing our 2011 20-F. And that will include all of the financial disclosure that is required by law and additional information that we feel will be helpful. Siân, did you have anything to go after that? She just doesn’t have that number in front of us, so we can’t give it to you with certainty. Peter Butler – Glen Hill Investments: I’m interested in what happens next year. The success of a company depends on three resources – technology, money and people. And looking at this deal, it looks like maybe in fact that adds a little bit to the earnings, but I’m – in addition to Mike, who else is coming on board? Are we bolstering the people element here? And what are we adding in the technology?

Well, let me start with that and then hand it over to Mike. I think we are achieving all three things that you just talked about. Well, first of all, actually, with regard to technology, I think we have the finest drug delivery technologies of any company. I think our scientists have done a wonderful job. The technologies have received appreciation and are being worked with by many of the biggest pharmaceutical companies in the world. So I did not view this as a technology acquisition. I do view it as a financially beneficial acquisition. There’s actually $2 million in Eclat that will become Flamel’s. We have the possibility of product approvals, which could be very significant for us. Michael talked about those in coming conference calls. But the potential, in my view, is really a very nice potential, a very strong potential, and yet we are covered on the downside in that unless there’s that success, we don’t start paying out. And then the third you talked about was people. And I have gotten to know Mike Anderson and the kind of person he is and the way he works. He’s gotten to know the team here at Flamel. He is a 40-year veteran of the industry, who knows much more than I ever will about particularly the commercial elements of the drug delivery – the pharmaceutical industry having again spent 40 years. And so I personally am excited. I am not leaving Flamel. I will continue to work for Flamel. I will continue to be a director for Flamel. But I think bringing in Mike Anderson is going to pay big dividends for our shareholders. Mike?

Yeah. Well, thank you, Steve. That’s a tall order to have to fill. But the second part of your question is we have a – it’s a small virtual company. We have a handful of people no more than that. We anticipate adding no additional headcount as a result of this. We have expertise currently and project management/regulatory/manufacturing. We have expertise in the commercial end, both from a business development, marketing perspective and, significantly, from a trade perspective. So we at this point in time are pretty well-suited to be able to take advantage of this based upon our expectation of executing the plan.

We’ll take our next question from Roger Bensen with Number One Corporation. Roger Bensen – Number One Corporation: Hi, Steve.

Hi, Roger. How are you? Roger Bensen – Number One Corporation: I’ve known you for a long time and you’ve always said that you always work hard and you’ve always said, gee, you want to make a tremendous amount of money on the Flamel stock and that you’ve been doing separations from your family periodically and so on. And how does this work with your change in position now that you think you’re going to make more money on your stock than you previously had thought?

Well, I think you and I have known each other a long time and I don’t think money has ever been my primary driving force, but it is important to each of us as shareholders of Flamel. I really believe that the combination of the commercial expertise, Mike Anderson, the products that are pretty close to moving forward from Eclat are going to be a real possibility of a significant financial boost. And I think that applying Mike’s commercial skills to our negotiations and his understanding of the industry to our core business is going to really help create a lot more financial value for me as a significant shareholder in Flamel and for each of the shareholders that we represent. I am as I said going to continue as an employee of Flamel. I will continue on the board of directors. And I believe that I will be able to serve Flamel and Mike very effectively under his lead. Roger Bensen – Number One Corporation: Does your option position change any with the change in duties?

No. My situation remains the same with regard to – I continue to have my options and that sort of thing. Roger Bensen – Number One Corporation: Okay. My last question. Back a few months ago when you announced the Tigecycline success with Eagle, it appeared that there were many other products that other companies were interested in using the Medusa technology with the small molecule drugs that we’re going to convert subcu. What’s the status of those negotiations?

Sure. We have offer outstanding for additional groups of products on IV to subcu. We received this week an offer for a good chunk of our LiquiTime. Our business is continued to go forward as we’ve entered these discussions and work things out with Mike. I’m not going to speak for Mike. Mike is going to take his time and review what we have at the moment. He’s going to add his judgments and have the final say and we will report and he will report his successes as they come. Did you want to add anything to that, Mike?

No. I think the company has done quite well. I think anytime you bring in people with different experience sets, all you do is you increase the capabilities of the company. And, ultimately, what this all allows us to do to make a long story short is to have more flexibility and a better opportunity to rely on our own abilities rather than just those on our partners exclusively. And so, we’re excited. We’ll look at the projects. We’ll look at what we can add. We’ll streamline all this, make it more efficient where that’s possible to do, and we’ll move forward. Roger Bensen – Number One Corporation: Thank you.

Thank you, Roger. Operator And our last question today will come from Tom Weissenborn with Credit Suisse. Tom Weissenborn – Credit Suisse: Good morning, Steve, and welcome, Mike.

Thank you.

Good morning, Tom. Tom Weissenborn – Credit Suisse: Just a couple of questions. First, with regard to the warrants, and I believe those are being issued to Eclat holdings?

Yes. Tom Weissenborn – Credit Suisse: And isn’t there a contingency in there that they can’t be exercised if the beneficial holder owns greater than 19.985% of the company?

Yes. That was something, if I may, that I negotiated very hard for. Eclat Holdings is an affiliate of one of our existing shareholders. And it is important to me that this transaction be done with a company that will be part of Flamel, but that anything I did in this transaction would not facilitate anyone having undue – no, I would take that word back. Having benefited by substantially higher interest than they might already have. And so, I believe that 20% blocker was an important thing for Flamel. And it was graciously accepted by our counterparties in terms of maintaining the opportunity for Mike to take this company forward as Flamel. Tom Weissenborn – Credit Suisse: And they already own approximately 18% of the company. Correct, Steve?

That is correct. Tom Weissenborn – Credit Suisse: The other question I had was concerning the cash. I know you mentioned you had approximately $24 million at the end of the year. And I’m assuming an additional $2 million in contribution from Eclat on this merger?

Yeah, there will be things coming in. That $2 million will come in in this quarter. Also, I think, there was another $2 million of cash was due from GSK in the fourth quarter that didn’t come in. So there’ll be more cash moving in from a variety of things this quarter. Tom Weissenborn – Credit Suisse: And maybe this question for Mike. Can you give us any idea through possible cost savings and the advancement of many of your new products and initiatives what kind of burn rate we might expect on that cash during this fiscal year?

For the entirety or just for – are you talking about just for the former Eclat business? Tom Weissenborn – Credit Suisse: Or both through the combined entity.

I’m not sure I’m capable, frankly, of answering your question for the combined entity. Obviously, Eclat cash burn, which it did have, was very modest, because it’s so small and all. You really have this R&D expense. But I hope you’ll understand. I’m not sure I’m prepared to give you an accurate answer to that today. Tom Weissenborn – Credit Suisse: Can you give it just for Eclat?

Well, obviously, we’ll have a lot of changes in combining those. But the cash that comes in with the Eclat acquisition, the $2 million, is sufficient to last for, virtually, all the year. Tom Weissenborn – Credit Suisse: Thank you.

At this time, I’d like to turn the conference back over to our presenters.

Thank you very much. I’ll lead off and then turn it over to Mike. I think Peter Butler made a really good comment, which is the key to the success of a company is, technology, money, and people. I have always believed and continue to believe, and I think that Mike fully believes, that we have extraordinary technology that is of great interest to the pharmaceutical industry and gives us the capability to move in a variety of different directions. With regard to money, I think we are strong financially. We have continued to move aggressively on the business development front, and we hope to have successes there. We believe that the acquisition of Eclat gives us a very limited risk basis the opportunity for substantial potential revenues in the relatively short to medium-term. And with regard to people, I think Mike Anderson, who will be moving here and his wife, and he will reside here in Lyon, is going to give great leadership to the French team, give us great commercial expertise, give us an understanding of commercial areas for which we have not. And I think that’s going to be tremendously beneficial to Flamel as we go forward. Mike?

Yeah. Just to summarize it quickly. I’m very appreciative of this opportunity. I think we have a significant opportunity in front us and I think by combining these two attributes, we have the ability to create something very special in a market place that is undergoing a lot of change right now. And I think what we do at Flamel and at Eclat will put itself right in the forefront of those changes as a very contemporary approach in the specialty pharma/drug delivery area. So I’m grateful for the opportunity. We appreciate your time today and we look forward as we move down the road to additional conference calls and venues by which we can effectively have our story.

Thank you all very much for your interest in Flamel Technologies. It has been much appreciated this call and we look forward to future calls. Thank you once again for your interest in Flamel.

And that does conclude today’s conference again. Thank you for your participation today.