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Flamel Technologies (Nasdaq:FLML) today announced its financial
results for the second quarter of 2008 as well as the signing of two
further Medusa contracts with two current partners. Flamel currently
is working on Medusa projects with four of the top-ten and six of the
top-twenty pharmaceutical companies in the world.

Flamel reported total revenues of $9.2 million, compared to $7.4
million in the second quarter of 2007. Product sales and services
totaled $3.2 million during the quarter versus $4.8 million in the
second quarter, 2007. License and research revenues were $3.2 million
versus $1.8 million in the year-ago period. Other revenues, including
royalties on the sale of Coreg CR(TM) were $2.8 million versus $0.8
million in the year-ago period.

Costs and expenses during the second quarter were $(14.9) million
versus $(21.5) million in the year-ago period. Costs of goods and
services sold in connection with the manufacture of Coreg CR
microparticles totaled $(2.2) million versus $(3.7) million in the
second quarter of 2007. Research and development expenses were $(9.0)
million versus $(13.2) million in the second quarter of 2007. SG&A
declined to $(3.7) million from $(4.6) million in the year-ago period.

Net loss in the second quarter of 2008 was $(3.4) million,
compared to a net loss of $(13.6) million in the second quarter of
last year. Net loss per share (basic) for the second quarter of 2008
was ($0.14), compared to a net loss per share (basic) in the year-ago
period of ($0.57).

Cash and marketable securities at the end of the second quarter
totaled $34.5 million versus $47.0 million at the end of the second
quarter, 2007.

For the first half of 2008, Flamel reported total revenues of
$20.0 million versus $17.1 million in the first half of 2007. License
and research revenues during the period were $6.7 million versus $4.9
million in the year-ago period. Product sales and services during the
first six months of 2008 were $7.9 million versus $10.2 million in the
first half of 2007. Other revenues during the first six months of 2008
were $5.4 million versus $1.9 million in the year-ago period.

During the first six months of 2008, total costs and expenses
declined $10 million versus the year-ago period, from $(40.6) million
to $(30.6) million. Costs of goods and services sold relating to the
manufacture of Coreg CR microparticles totaled $(4.7) million versus
$(8.2) million in the year-ago period. Research and development
expenses during the first half of 2008 were $(18.2) million versus
$(23.8) million during the year-ago period. SG&A for the first six
months of 2008 amounted to $(7.8) million versus $(8.7) million in the
year-ago period.

Net loss in the first half of 2008 was $(7.1) million, compared to
a net loss of $(22.7) million in the first half of last year. Net loss
per share (basic) for the first half of 2008 was $(0.29), compared to
net loss per share (basic) in the year-ago period of $(0.95).

“As our results show, we are rapidly diversifying our
relationships with the largest pharmaceutical companies and
maintaining our research and development, while significantly reducing
our expenses. We can do this as our partners assume much of the
clinical and preclinical work which we had funded previously,” said
Stephen Willard, Flamel’s Chief Executive Officer. “We are also very
pleased to be signing additional projects with large pharmaceutical
companies with whom we already have initial projects. These new
contracts with current partners confirm their view of our technology
and show recognition of our ability to solve a variety of challenges.
We are working actively to further diversify the partners and projects
on which we are working and expect success in that regard in the
coming months.”

A conference call to discuss earnings is scheduled for 8:30 AM EDT
August 7, 2008. The dial-in number (for investors in the U.S. and
Canada) is 1-800-374-1498; the conference ID number is 57373983.
International investors are invited to dial 1-706-634-7261.

Flamel Technologies, S.A. is a biopharmaceutical company
principally engaged in the development of two unique polymer-based
delivery technologies for medical applications. Micropump(R) is a
controlled release and taste-masking technology for the oral
administration of small molecule drugs. Flamel’s Medusa(R) technology
is designed to deliver controlled-release formulations of therapeutic
proteins and peptides.

This document contains a number of matters, particularly as
related to the status of various research projects and technology
platforms, that constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.

The presentation reflects the current view of management with
respect to future events and is subject to risks and uncertainties
that could cause actual results to differ materially from those
contemplated in such forward-looking statements.

These risks include risks that products in the development stage
may not achieve scientific objectives or milestones or meet stringent
regulatory requirements, uncertainties regarding market acceptance of
products in development, the impact of competitive products and
pricing, and the risks associated with Flamel’s reliance on outside
parties and key strategic alliances.

These and other risks are described more fully in Flamel’s Annual
Report on the Securities and Exchange Commission Form 20-F for the
year ended December 31, 2007.

Schedule attached

Financial Statements (Unaudited)

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(Amounts in thousands of dollars except share data)

Three months ended Six months ended
June 30, June 30,
——————– ——————–
2007 2008 2007 2008
———- ——— ———- ———
Revenue:
License and research
revenue $ 1,794 $ 3,157 $ 4,918 $ 6,701
Product sales and services 4,818 3,173 10,218 7,895
Other revenues 837 2,823 1,938 5,422
———- ——— ———- ———
Total revenue 7,449 9,153 17,074 20,018
———- ——— ———- ———
Costs and expenses:
Cost of goods and services
sold (3,699) (2,241) (8,179) (4,650)
Research and development (13,204) (8,960) (23,758) (18,237)
Selling, general and
administrative (4,553) (3,686) (8,663) (7,760)
———- ——— ———- ———
Total (21,456) (14,887) (40,600) (30,647)
———- ——— ———- ———

Profit (loss) from
operations (14,007) (5,734) (23,526) (10,629)

Interest income net 437 369 894 750
Foreign exchange gain (loss) (64) (31) (82) (144)
Other income (loss) 33 70 38 101

———- ——— ———- ———
Income (loss) before income
taxes (13,601) (5,326) (22,676) (9,922)
Income tax benefit (expense) (32) 1,968 (18) 2,868
———- ——— ———- ———
Net income (loss) ($13,633) ($3,358) ($22,694) ($7,054)
========== ========= ========== =========

Earnings (loss) per share

———- ——— ———- ———
Basic earnings (loss) per
ordinary share ($0.57) ($0.14) ($0.95) ($0.29)
Diluted earnings (loss)
per share ($0.57) ($0.14) ($0.95) ($0.29)
========== ========= ========== =========

Weighted average number of
shares outstanding (in
thousands):

Basic 24,005 24,061 24,005 24,061
Diluted 24,005 24,061 24,005 24,061
*T