LONG-TERM DEBT (Tables)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

Long-term debt comprises:

(In thousands of U.S. dollars)	December 31, 2014		June 30, 2015
Government loans for R&D projects (a)	$	3,717	$	1,702
Acquisition liability contingent consideration (b)		70,112		89,077
Acquisition liability warrant consideration (b)		34,542		46,713
Deerfield Royalty agreement (c)		6,837		8,256
Broadfin Royalty agreement (d)		3,259		3,936
Total		118,467		149,684
Current portion		42,332		37,803
Long-term portion	$	76,135	$	111,882

(a) French government agencies provide financing to French companies for research and development. At December 31, 2014 and June 30, 2015, the Company had outstanding loans of $3.7 million and $1.7 million, respectively for various programs. These loans do not bear interest and are repayable only in the event the research project is technically or commercially successful. Potential repayment is scheduled to occur from 2015 through 2019. In June 2015, the Company reimbursed $0.5 million in relation to a loan associated with a specific research project conducted from 2003 to 2005. In addition, the Company recognized a waiver for repayment of the remaining $1.1 million on the basis of limited commercial and technical success. The waiver is accounted for as a reduction to R&D expenses.

(b) The Acquisition liability relates to the acquisition by the Company on March 13, 2012, through its wholly owned subsidiary Flamel US Holdings, Inc., or Flamel US, of all of the membership interests of Éclat Pharmaceuticals, LLC. In exchange for all of the issued and outstanding membership interests of Éclat Pharmaceuticals, Flamel US provided consideration consisting of:

⋅      a $12 million senior, secured six-year note guaranteed by the Company and its subsidiaries and secured by the equity interests and assets of Éclat. The note was repaid in full on March 24, 2014 generating a loss of $3 million and accounted for in interest expense;

⋅   two warrants to purchase a total of 3,300,000 American Depositary Shares, each representing one ordinary share of Flamel (“ADSs”); and

⋅       a commitment to make earnout payments of 20% of any gross profit generated by certain Éclat Pharmaceuticals products. The Purchase Agreement also contains certain representations and warranties, covenants, indemnification and other customary provisions.

(c) On February 4, 2013 the Company concluded a $15 million debt financing transaction (Facility Agreement) with Deerfield Management a current shareholder. The consideration received was as follows:

⋅     $12.4 million for a facility agreement of a nominal value of $15 million, including a premium on reimbursement of $2.6 million. The indebtedness was repaid on March 24, 2014 in its entirety, the accelerated reimbursement of this note resulted in interest expenses of $2.5 million;

⋅      $2.6 million for a Royalty Agreement whereby, the Company’s wholly owned subsidiary Éclat subject to required regulatory approvals and launch of product, is to pay a 1.75% Royalty of the net sales of certain products sold by Éclat and any of its affiliates until December 31, 2024.

The fair value of the Royalty was estimated using a probability-weighted discounted cash flow model based on probability adjusted projected annual net sales of each of the products which may be approved and sold by Éclat Pharmaceuticals. This fair value measurement is based on significant inputs not observable in the market and thus represents a level 3 measurement as defined in ASC 820. The discount rate used is 20%.

(d) On December 3, 2013 the Company concluded with Broadfin Healthcare Master Fund, a current shareholder, a $15 million debt financing transaction (Facility Agreement) divided in 3 tranches of $5 million each, Under the terms of the Facility, upon closing Broadfin made an initial loan of $5.0 million. Consideration received was as follows:

⋅       $2.8 million for a Facility agreement of a nominal value of $5.0 million. Loans under the Facility were scheduled to mature upon the earlier to occur of (i) January 31, 2017 and (ii) the repayment in full of all outstanding amounts under the Deerfield Facility, but in no event prior to November 15, 2015. The indebtedness was repaid on March 24, 2014 in its entirety, the accelerated reimbursement of this note resulted in interest expenses of $ 2.2 million;

⋅      $2.2 million for a Royalty agreement whereby, the Company’s wholly owned subsidiary Éclat subject to required regulatory approvals and launch of product, is to pay a 0.834% Royalty of the net sales of certain products sold by Éclat and any of its affiliates until December 31, 2024.

The fair value of the Royalty was estimated using a probability-weighted discounted cash flow model based on probability adjusted projected annual net sales of each of the products which may be approved and sold by Éclat Pharmaceuticals. This fair value measurement is based on significant inputs not observable in the market and thus represents a level 3 measurement as defined in ASC 820. The discount rate used is 20%.

Schedule Of Fair Value Assumptions Of Warrant [Table Text Block]

The fair value of the warrants was determined by using a Black-Scholes option pricing model with the following assumptions:

	December 31, 2014			June 30, 2015
Share price	$	17.13		$	21.19
Risk-free interest rate		1.17	%		0.92	%
Dividend yield		-			-
Expected volatility		56.5	%		62.90	%
Expected term		3.3 years			2.8 years

Schedule of Maturities of Long-term Debt [Table Text Block]

Total contingent and future payments on long-term debt for the next five years ending June 30 (assuming the various assumptions of the probability adjusted annual gross profit and revenues of each of the Éclat Pharmaceuticals products and, as it relates to government research loans, the underlying projects are commercially or technically successful for governmental research loans) are as follows:

(In thousands of U.S. dollars)	June  30, 2015
2015		19,846
2016		19,513
2017		21,814
2018		21,893
2019		16,691
2020		12,352
		112,109