Total costs and expenses during the fourth quarter of 2012 decreased to $1.2 million versus $10.9 million in the prior year period.
The total costs and expenses for the fourth quarter of 2012 included two major non-cash line items. The terms of acquisition of Éclat Pharmaceuticals in March 2012 included the issuance of a $12 million note, whose repayment is tied to the approval and net sales of certain Éclat products, 3.3 million warrants and earn-out payments based on the gross profit achieved on the Éclat products. These commitments are revalued and reassessed at each balance sheet date based on information and data available at that time, including financial projections related to the potential of the Éclat products, as well as the share price and interest rate in so far as they influence the value of the warrants. A favorable $16.5 million adjustment was realized in the fourth quarter 2012 from the updated fair-value measurement of these liabilities. In addition, Flamel took a $7.2 million charge to reflect the impairment of R&D assets, mainly reflecting changes in market opportunities for one of the acquired pipeline products. Excluding these adjustments, operating expenses in the fourth quarter of 2012 decreased to $10.6 million compared to $10.9 million in the prior year period.
Costs of goods and services sold for the fourth quarter of 2012 were $1.5 million compared to $1.9 million in the fourth quarter of 2011. Research and development costs in the fourth quarter of 2012 totaled $6.1 million versus $5.9 million in the prior year period. This modest increase in R&D expense was primarily due to $0.7 million in Éclat-related expenses not present during the prior year period. Selling, general and administrative costs were $3.0 million in the fourth quarter of 2012 versus $3.2 million in the fourth quarter of 2011, primarily resulting from cost-saving measures, despite Éclat-related expenses of $0.6 million incurred in the fourth quarter of 2012 not present during the prior year period.
Total interest expense of $1.6 million for the fourth quarter of 2012 includes $1.7 million of non-cash expense related to debt used to fund the Éclat acquisition, partially offset by interest earned on our cash balance. In the fourth quarter of 2011, the Company had interest income of $0.1 million.
Net income for the fourth quarter of 2012 was $9.1 million versus a net loss of $2.1 million in the year-ago period. Earnings per share (both basic and diluted) was $0.36 in the fourth quarter of 2012 versus loss per share (basic and diluted) of $0.08 in the fourth quarter of 2011. Net loss and loss per share (basic and diluted) for the fourth quarter of 2012, excluding the impact of the re-measurement of the fair value of acquisition liabilities, the impairment of R&D assets and the impact of deferred taxes, was $3.6 million and $0.14, respectively.
A conference call to discuss these results and other updates is scheduled for 8:30 AM Eastern Standard Time on Thursday, February 28, 2013. A question and answer period will follow management's prepared remarks. To participate in the conference call, investors are invited to dial 888-417-8533 (U.S.) or 719-325-2361 (international). The conference ID number is 6788004. The conference call webcast may be accessed at www.flamel.com. A replay of the call will be available for 14 days, within a few hours after the call ends. Investors may listen to the replay of the call by dialing 888-203-1112 (U.S.) or 719-457-0820 (international), with the passcode 6788004. A replay of the webcast will also be archived on Flamel's website for 90 days following the call.
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