Preliminary Results for the year ended 31 December 2016
Futura Medical plc (AIM: FUM), the innovative healthcare company focused on advanced transdermal technology, is pleased to announce its preliminary results for the year ended 31 December 2016.
- Chairman's and Chief Executive's Review
- Group Statement of Comprehensive Income
- Group Statement of Changes in Equity
- Group Statement of Financial Position
- Group Statement of Cash Flows
MED2002: Eroxon® - Treatment for erectile dysfunction (“ED”)
- Breakthrough results in clinical study showing efficacy, safety and speed of onset, with the potential to be the world’s fastest-acting treatment for ED
- Advisors appointed to assist in securing out-licensing partners
CSD500: Erectogenic condom
- Achieved extended shelf life via modified manufacturing process
- Second manufacturer approved by regulator
- Two new licensing agreements signed for CSD500 with a further agreement announced in March 2017, bringing network of international partners to a total of eight
- First licensee launch and first non-EU regulatory approval granted
Pain relief products TPR100 (diclofenac) and TIB200 (ibuprofen)
- First out-licensing agreement signed in January 2017 for TPR100 in the UK
- US Food and Drug Administration regulatory feedback received for TPR100 which confirmed the Company’s regulatory strategy for the US
- Ongoing out-licensing discussions with prospective partners for TIB200 and TPR100 (outside of the UK)
- Strengthened operations with appointment of Ken James to Executive Director and Head of R&D
- Net loss of £3.70 million (2015: net loss of £5.08 million), reflecting lower R&D spend on clinical trials during the year
- Fundraising in November 2016 via placing of shares raised £12.00 million (before expenses), with proceeds being applied to clinical development work and to working capital
- Cash resources of £12.35 million at 31 December 2016 (31 December 2015: £4.19 million)
James Barder, Futura's Chief Executive, commented: "Futura continues to make good progress, both commercially and clinically, across its portfolio of product opportunities and we look forward to the year ahead with confidence. 2017 has started well with the launch in the Middle East of CSD500, our novel erectogenic condom, and the signing of a licensing deal for TPR100, our diclofenac pain relief gel. We have the balance sheet strength to drive forward our exciting clinical plans for MED2002, our breakthrough erectile dysfunction gel, with potential for significant prescription sales, once approved, and the prospect of an over-the-counter switch in the future to enable additional sales.”
Analyst meeting and webcast
A meeting for analysts will be held at 10.00am this morning, 23 March 2017, at the offices of Buchanan, 107 Cheapside, London EC2V 6DN. There will be a live webcast of the analyst presentation. If you would like to listen to the webcast, please log on to the following web address approximately 5 minutes before 10.00am:
A recording of the webcast will also be made available at www.futuramedical.com and www.buchanan.uk.com following the results meeting.
2016 was a year of great progress for Futura with the major highlight being the announcement on 7 September of breakthrough results for our product MED2002 in a clinical study. MED2002 is our topical gel for erectile dysfunction (“ED”). We are well advanced in our plans for the further development of the product and we have been very encouraged by the high level of commercial interest from potential licensing partners. MED2002 has the potential to be a highly disruptive product with significant prescription sales, a possible patent life extension to 2038 and the prospect of an over-the-counter (“OTC”) switch in the future.
During the year we signed a further two distribution agreements for CSD500, our novel erectogenic condom product. These agreements were with Milsing, for seven countries in Southeast Europe, and with TTK Protective Devices Limited (“TTK”), the Indian company with whom we also signed a manufacturing agreement in June 2016. In addition earlier this week, we signed a further distribution agreement for CSD500 with F Lima SA for Portugal. With these new distribution agreements in place we have succeeded in out-licensing CSD500 to distribution partners in the majority of key countries worldwide as part of our strategy for delivering global sales.
We made substantial progress during 2016 with CSD500 particularly in modifying the manufacturing process to extend the product’s shelf life to meet the requirements of our licensing partners. TTK has received regulatory approval from the relevant EU Notified Body to manufacture the extended shelf life product.
The first international licensee launch has already taken place, as announced in early January 2017, in Saudi Arabia by Kabey Pharmaceuticals (“Kabey”), our distribution partner for key countries in the Middle East and North Africa (“MENA”). Church & Dwight, our CSD500 distribution partner for North America and key countries in Europe, is currently working to enable launch in selected markets.
Our key focus during 2016 with our two pain relief products was on the out-licensing of the products, which both showed statistically significant pain relief in an earlier clinical study. Our out-licensing negotiations resulted in the announcement in January 2017 of our first commercialisation agreement for our pain relief portfolio. This agreement is with Thornton & Ross, a UK subsidiary of STADA Arzneimittel AG (“STADA”), for the UK commercialisation of TPR100, our diclofenac gel for topical pain relief. Futura continues in discussions in connection with the licensing of TPR100 in other countries and also with the licensing of TIB200, our ibuprofen gel.
The fundraising in November 2016 raised £12.0 million (before expenses), strengthening the Company’s balance sheet and providing the financial capability to drive forward Futura’s clinical and commercial development activities. These activities include a placebo-controlled Phase III clinical study of MED2002, to commence later this year, in 700 or more patients.
We were delighted that Ken James, the former head of consumer healthcare R&D at GlaxoSmithKline, agreed to become Head of R&D in November 2016 to lead our development programmes. Ken joined Futura in April 2016, initially as a Non-Executive Director.
Our balance sheet is strong, with cash resources of £12.4 million as at 31 December 2016 (31 December 2015: £4.2 million). We will continue to use these cash resources prudently.
Portfolio updates - Sexual healthcare
MED2002: Eroxon® Treatment for erectile dysfunction
MED2002, which uses our DermaSys® drug delivery system, is the development name for our topical gel for the treatment of men with ED. We hold worldwide patents to the product in a market worth US$4.8 billion1 for currently available treatments and have registered the brand name Eroxon®.
Major clinical progress was made with MED2002 during 2016, led by the breakthrough clinical results announced in September 2016. The clinical study, which began in June 2015, met its primary endpoint and showed efficacy, safety and speed of onset. MED2002’s rapid onset of action means that it has the potential to be the world’s fastest-acting treatment for ED.
The clinical study comprised a total of 232 randomised males and measured, as its primary endpoint, improvement in the erectile function (“EF”) domain score of the International Index of Erectile Function (“IIEF”), the scoring system used for the approval of PDE5 inhibitors, the class of products including Viagra® and Cialis®. The placebo-controlled study used one dosage, 0.2% w/w glyceryl trinitrate (“GTN”) gel, and included mild, moderate and severe ED patients.
The study achieved its primary endpoint in demonstrating a statistically significant improvement in erectile function in the EF domain score, averaged across the entire patient set, when using MED2002 compared with placebo.
The speed of onset of action of MED2002 was rapid, partly reflecting the method of application with the gel being applied directly to the penis, with an average speed of onset of action of fewer than 5 minutes in the responder group.
No major safety concerns were identified. No serious adverse events or serious adverse reactions were recorded and there were no drop-outs from the study owing to side-effect issues. Patients reported fewer than 2% mild side-effects of a headache, in over 1,000 intercourse attempts, which is considered a very low percentage in pharmaceutical terms.
We have been refining our strategy for the further development of the product following these breakthrough trial results. It is our intention to begin a Phase III placebo-controlled parallel group multi-centre clinical study of 700 or more patients in Q4 2017 using two dosage forms, the 0.2% w/w GTN gel used in the earlier study and a higher strength dose form of 0.4% w/w GTN gel. We will also conduct a separate 30 patient pharmacokinetic safety study to compare GTN blood plasma levels of MED2002 with existing cardiovascular GTN drugs. Both studies are expected to complete in Q4 2018 with regulatory submissions expected in Q2 2019. We are currently consulting with the UK and US regulatory authorities to enable us to finalise the design and timing of these studies.
We have had substantial interest in MED2002 from potential licensing partners following the breakthrough results of the clinical study and we intend to commence the Phase III clinical trial whilst licensing negotiations are ongoing.
As part of earlier market research into the potential of MED2002 as a prescription product Decision Resources Group (“DRG”) conducted a survey in the US involving 200 physicians and 400 ED patients. The survey found that the top three characteristics that patients and physicians desired in a new ED treatment were: fast onset, safety, and the ability to be used by all ED patients. As a topical treatment MED2002 has been developed to meet these requirements by offering a safe and effective treatment with a rapid speed of onset and no contraindications for ED sufferers.
Currently approximately 7.5% of ED sufferers are unable to be prescribed PDE5 inhibitors due to contraindications with nitrate medicines taken by them for cardiovascular conditions. These patients also represent an additional potential market for MED2002 as its active ingredient, GTN, is unlikely to be contraindicated.
Market research conducted by DRG into the potential of MED2002, following approval as a prescription medicine, forecast peak annual sales of up to US$560 million in key countries worldwide with no price premium, at DRG’s forecast price of $5. Both the DRG research work and the recently announced Ipsos research indicated that consumers may be willing to pay a price premium for MED2002, compared with the existing available products, potentially enhancing the prescription market value of the product.
MED2002 has substantial potential, as the fastest-acting compound with a favourable safety profile, in the prescription market where it will be marketed first. These characteristics also give MED2002 the potential to become one of the largest OTC products in the global OTC market place later in its product life cycle. As announced on 6 March 2017, the market research firm Ipsos used its validated healthcare forecasting model to forecast peak OTC annual sales for MED2002 in key countries worldwide of more than US$650 million. Importantly, Ipsos forecasts that 73% of these potential OTC sales would be incremental to the prescription category.
The Ipsos valuation was based on the outcomes from primary market research carried out amongst 400 men, with ED or suspected ED, in the USA. The respondents were shown a concept about MED2002 as part of the market research but they did not use the product as it is currently in clinical development. The key findings of the market research showed that the respondents believed that the product, once approved, would be highly differentiated from existing products and that its claims would meet their needs. MED2002's rapid onset of action was the key feature that attracted respondents to the product.
MED2002’s patent protection runs until August 2028 in the USA and August 2025 in Europe. An additional patent filing announced earlier this month could extend patent protection through to 2038.
MED2002, as a topically applied gel with a very rapid speed of onset, has the potential to be a significant product with combined peak sales of more than US$1 billion in a market currently dominated by Viagra® and Cialis®, which are taken orally and do not take effect for at least 30 minutes, and typically one hour or more2.
Note 1 Top 10 markets, IMS Health Data (2015) Manufacturers’ Selling Prices
Note 2 US patient information for Viagra® and Cialis®
CSD500: Condom containing the erectogenic Zanifil® gel
CSD500 benefits from three clinically proven claims: the maintenance of a firmer erection, maximised penile size and a longer lasting sexual experience for women. CSD500, which is CE Marked, represents real innovation in an industry where there has been limited new product development. Futura’s unique intellectual property for CSD500 has been protected throughout the world through the filing and granting of a range of patents.
To date CSD500 has been out-licensed to a total of 41 countries including major commercial markets in North America and Europe. During 2016, we signed a licensing agreement with Milsing for the marketing and distribution of CSD500 in seven countries in Southeast Europe and we also signed a licensing agreement with TTK for marketing and distribution within India. TTK owns the fastest growing condom brand in India, SKORE®, and it is intended that CSD500 will be part of the SKORE® brand. In March 2017 we signed a licensing agreement with F Lima SA for the marketing and distribution of CSD500 in Portugal. We continue in discussions with potential licensing partners for countries where we have not yet licensed the product and are pleased to report that we have succeeded in out-licensing CSD500 to distribution partners in the majority of key countries worldwide as part of our strategy for delivering global sales.
During 2016 we made major progress in preparing for the international roll-out of the product by our distribution partners. We successfully modified the manufacturing process to achieve an extended shelf life to meet the requirements of our distribution partners. Both of our manufacturing partners - TTK in India and our European manufacturer - have the required approvals to ship CSD500 to any country in which the product is approved, for example in all 28 EU countries. TTK has received regulatory approval from the relevant EU Notified Body to manufacture the extended shelf life product. We are currently awaiting approval from the same EU Notified Body of the extended shelf life product for our European based manufacturer.
In January 2017, CSD500 was launched in Saudi Arabia by our distributor Kabey and further launches in MENA are expected during the course of 2017. Kabey is using the brand name Futura Max Manex Super and its promotion is based on direct retail marketing rather than an online campaign, which reflects local marketing practices. We have been advised by Kabey that the launch in Saudi Arabia has received positive feedback and in March 2017 Kabey placed a further order for the Saudi Arabia market.
In addition to the Kabey launch in Saudi Arabia, CSD500 continues to be test marketed in the Netherlands and Belgium by Bizzy Diamond BV under Futura’s brand, Blue Diamond®. The sales achieved in the Netherlands continue to provide useful consumer feedback for our post-market clinical follow-up (“PMCF”) study required for CE Marking and the PMCF study will also assist with other regulatory approvals.
As highlighted above, Church & Dwight, our CSD500 distribution partner for North America and key countries in Europe, is currently working to enable launch in selected markets.
Portfolio updates - Topical pain relief
The rapid skin permeation rates offered by Futura’s transdermal delivery system, DermaSys®, have created a major opportunity in topical pain relief. Rapid skin permeation offers potential benefits in pain management including: improved onset of action, duration and degree of pain relief. DermaSys® also allows the potential to have a twice a day dosing regimen which provides a compelling commercial proposition for ibuprofen which is currently dosed three to four times per day. Futura has previously demonstrated statistically significant results from its two non-steroidal anti-inflammatory drug (“NSAID”) programmes, TPR100 (2% diclofenac gel) and TIB200 (10% ibuprofen gel), in a clinical study.
During 2016 the Company was focused on the out-licensing of the pain relief portfolio and, on 10 January 2017, announced a licensing agreement with Thornton & Ross Ltd, the UK subsidiary of international healthcare company STADA Arzneimittel AG, for the commercialisation in the UK of TPR100, the Company's novel diclofenac gel for pain relief.
Under the terms of the agreement, Thornton & Ross Ltd will conduct the manufacturing scale-up of TPR100 and hold rights to manufacture, market and distribute the product in the UK for the lifetime of the product's patents, which run to at least 2028 in the UK. Futura received an upfront payment and will receive a further milestone payment upon the product receiving UK regulatory marketing authorisation along with royalties on product sales.
It is not expected that any further clinical work will be required ahead of a regulatory submission for UK marketing authorisation to be made by Thornton & Ross Ltd, which we anticipate in the second half of 2017.
We received a written response from the US Food and Drug Administration (“FDA”) in December 2016 which confirms our US regulatory strategy for TPR100. The main requirement being to conduct a 700 patient placebo-controlled efficacy study of TPR100 in treating osteoarthritis of the knee, with an open label extension of 100 patients for six months and 50 of those patients for a year, to demonstrate patient tolerability and safety. We will not, however, progress this study without a clear indication of interest from a potential commercial partner for the US market. Futura continues in commercial discussions in connection with the licensing of TPR100 outside of the UK.
Our ibuprofen based product TIB200 has attracted significant interest, especially if we are able to deliver a twice-a-day dosing regimen (morning and evening). This product requires further clinical work which, again, we will not progress without a clear indication of interest from a potential commercial partner. We continue in commercial discussions in connection with the licensing of TIB200.
Our objective is for our pain relief products to be best-in-class. The rationale for this is that the National Institute for Health and Care Excellence (NICE) gives clear guidance to physicians to prescribe topical NSAIDs in the first instance for joint pain associated with osteoarthritis, in preference to oral NSAIDs, owing to concerns over the long term use of oral NSAIDs. This means that the best-in-class topical treatment should be the first choice for doctors in the initial treatment of pain and therefore represents a substantial opportunity in a market with global sales estimated at US$2.9 billion3.
Note 3 2015 IMS Health estimate
At the year end, Futura had 12 employees, (excluding Non-Executive Directors), (2015: 12) however two additional staff have been recruited in the current year to support the regulatory function as we move forward from a UK-centric to a more internationally focused regulatory environment.
Board changes comprised the appointment of Ken James as a Non-Executive Director in April 2016 at which time Lisa Arnold, who had served as a Non-Executive Director since 2008, stepped down. We are immensely grateful to Lisa for her contribution to the Company during her tenure. In November 2016, we were pleased to appoint Ken James to an executive Board role, as Head of R&D, and it is our intention to appoint a further Non-Executive Director in due course to maintain the depth, balance and independence of the Board.
We are highly appreciative of our staff and of our external consultants and partners who continue to support our virtual business model.
Futura continues to make good progress, both commercially and clinically, across its portfolio of product opportunities and we look forward to the year ahead with confidence. 2017 has started well with the launch in the Middle East of CSD500, our novel erectogenic condom, and the signing of a licensing deal for TPR100, our diclofenac pain relief gel. We have the balance sheet strength to drive forward our exciting clinical plans for MED2002, our breakthrough erectile dysfunction gel, with potential for significant prescription sales, once approved, and the prospect of an over-the-counter switch in the future to enable additional sales.
|John Clarke||James Barder|
The financial information set out below does not constitute the Company’s full statutory accounts for the year ended 31 December 2016 (or year ended 31 December 2015) but it is derived from those accounts that have been audited. Statutory accounts for 2015 have been delivered to the Registrar of Companies and those for 2016 will be delivered after the forthcoming Annual General Meeting. The independent auditors have reported on those accounts; their report was unqualified, did not include an emphasis of matter statement and did not contain any statements under section 498 of the Companies Act 2006.
|Research and development costs||(3,509,680)||(4,778,039)|
|Loss before tax||(4,539,359)||(6,078,478)|
|Loss for the year being total comprehensive loss attributable to owners of the parent company||(3,697,113)||(5,081,442)|
|Basic and diluted loss per share (pence)||9||(3.65 pence)||(5.13 pence)|
|At 1 January 2015||198,045||33,028,735||1,152,165||(24,657,134)||9,721,811|
|Total comprehensive loss for the year||-||-||-||(5,081,442)||<(5,081,442)|
|Shares issued during the year||16||140||24,610||-||-||24,750|
|At 31 December 2015||198,185||33,053,345||1,152,165||(29,617,464)||4,786,231|
|Total comprehensive loss for the year||-||-||-||(3,697,113)||(3,697,113)|
|Shares issued during the year||16||42,105||11,957,895||-||-||12,000,000|
|Cost of share issue||-||(559,495)||-||-||(559,495)|
|At 31 December 2016||240,290||44,451,745||1,152,165||(33,260,172)||12,584,028|
Share premium represents amounts subscribed for share capital in excess of nominal value, less the related costs of share issues.
Merger reserve represents the reserve arising on the acquisition of Futura Medical Developments Limited in 2001 via a share for share exchange accounted for as a group reconstruction using merger accounting under UK GAAP.
Retained losses represent cumulative net losses recognised in the Group Statement of Comprehensive Income. The total comprehensive loss for the year represents the total recognised income and expense for the year.
|Plant and equipment||10||21,351||20,115|
|Total non-current assets||21,351||20,115|
|Trade and other receivables||13||138,989||146,137|
|Cash and cash equivalents||14||12,352,978||4,188,294|
|Total current assets||13,417,854||5,495,234|
|Trade and other payables||15||(855,177)||(729,118)|
|Total net assets||12,584,028||4,786,231|
|Capital and reserves attributable to
owners of the parent company
|Cash flows from operating activities|
|Loss before tax||(4,539,359)||(6,078,478)|
|Share-based payment charge||17||54,405||121,112|
|Cash flows from operating activities before changes in working capital||(4,493,421)||(5,988,733)|
|Decrease / (increase) in inventories||11||80,126||(22,250)|
|Decrease in trade and other receivables||16,981||45,212|
|Increase in trade and other payables||15||101,284||121,232|
|Cash used in operations||(4,295,030)||(5,844,539)|
|Income tax received||997,036||480,689|
|Net cash used in operating activities||(3,297,994)||(5,363,850)|
|Cash flows from investing activities|
|Purchase of plant and equipment||10||(7,483)||(15,958)|
|Cash generated by investing activities||22,173||35,618|
|Cash flows from financing activities|
|Issue of ordinary shares||16||12,000,000||24,750|
|Expenses paid in connection with share issue||(559,495)||-|
|Cash generated by financing activities||11,440,505||24,750|
|Increase / (decrease) in cash and cash equivalents||8,164,684||(5,303,482)|
|Cash and cash equivalents at beginning of year||4,188,294||9,491,776|
|Cash and cash equivalents at end of year||14||12,352,978||4,188,294|
The Notes to the Group Financial Information are contained in the full results which is available to download in PDF format
Page last updated: 23 March 2017