Flamel Technologies has announced the termination of the license agreement dated August 26, 2003 between the Flamel and Bristol-Myers Squibb Company for Flamel's formulation of long-acting human insulin.

BMS informed Flamel in a letter that it has decided not to progress with Flamel to develop long-acting insulin. BMS said in the letter that it had made this decision for commercial and other reasons, including reallocation of resources behind other pipeline projects, a release from Flamel said.

Gerard Soula, founder, president and chief executive officer of Flamel Technologies, said: "We are disappointed by the decision of BMS to terminate this partnership, but we respect their commercial decision. We will look actively for a new partner for this highly promising product."

Pursuant to the License Agreement, the termination will take effect in December 2004. Various payments will be made by BMS to Flamel pursuant to the License Agreement. As a result of the termination, Flamel will recognize the balance of the initial upfront payment from BMS (approximately 13 million Euros) as income from this payment in the remaining two quarters of 2004.

Meantime, GlaxoSmithKline has initiated phase III clinical trials of its currently marketed, drug utilizing Flamel's Micropump formulation.
Pursuant to the license, Flamel will receive a milestone of $2 million, which will be recognized in the third quarter of 2004.

Flamel's Micropump technology was licensed to GSK for this drug in March 2003.