A New Upside Call

Add FLML Calls Now

By Bryan Bottarelli
Monday, October 23, 2006 10:49 AM EST
Mon, 23 Oct 2006 15:49:00 GMT

Dear Bottarelli Research Member,

Somehow the Dow has once again turned an opening-session loss into a mid-morning gain. This unrelenting upside strength means that it’s time we balance out our current ledger by adding an upside call position to the mix — and today’s candidate comes in the form of Flamel Technologies (FLML – NASDAQ).

Flamel Technologies is a biopharmaceutical company engaged in the development of polymer-based delivery technologies for medical applications. In other words, it’s one of the next-generation nanotech companies you heard about two years ago that has since been forgotten by Wall Street.

FLML

But today, FLML has jumped back into the limelight thanks to the U.S. FDA granting approval of their new drug application called COREG CR (carvedilol phosphate extended release capsules). Co-developed with GlaxoSmithKline’s (GSK – NYSE), COREG CR is used for treating three key conditions:

1.) High blood pressure (also known as hypertension)

2.) A heart attack that reduced how well the heart pumps (known medically as post-myocardial infarction left ventricular dysfunction)

3.) Mild to severe heart failure

COREG CR microparticles are produced by Flamel Technologies at its production facility in Pessac, France using the company’s Micropump® technology platform.

Stephen H. Willard, Flamel’s chief executive officer, stated, “I believe that the approval decision from the FDA marks the beginning of a new phase of growth for Flamel."

I tend to agree. Today’s FDA approval means that FLML, once thought of as only a futuristic nanotech, has proven that they’re for real. This could spark investors re-rating FLML in the coming weeks, especially since FLML is set to release Q3 earnings on Wednesday, November 1st. We could see a run-up in anticipation of this release, which is why I’d like to establish an upside position in FLML now. Here’s the play:

PLAY: Buy the FLML December 20 Calls (FLU LD) at or under $4.60, good for the day. Current bid/ask spread is $4.20 to $4.50. Place a protective stop loss at $2.80.

Lock and load!

Sincerely,

Bryan Bottarelli

Bryan Bottarelli
Editor, Bottarelli Research

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