Interim results

Interim Results for the six months ended 30 June 2017

Futura Medical plc (AIM: FUM), the innovative healthcare company focused on advanced transdermal technology, is pleased to announce its interim results for the six months ended 30 June 2017.


Highlights

MED2002: Eroxon® - Treatment for erectile dysfunction ("ED")

  • Key meetings with US and UK regulators in H1 2017 on the further clinical development of MED2002 following breakthrough clinical results in H2 2016
  • Pharmacokinetic study to begin in Q4 2017 with the results informing a large-scale Phase III study to begin in H1 2018
  • Out-licensing discussions are ongoing

CSD500: Erectogenic condom

  • Successful product launch in the Middle East
  • Regulatory approval of additional brand names and packaging, enabling launch in several EU countries
  • Strategic consideration currently being given to commercialisation options for the countries covered by the Church & Dwight agreement, notice of termination of which was received in August 2017

Pain relief products TPR100 (diclofenac) and TIB200 (ibuprofen)

  • First out-licensing agreement signed in January 2017 for TPR100 in the UK
  • UK regulatory submission for TPR100 targeted for Q1 2018
  • Ongoing out-licensing discussions for TIB200 and TPR100 outside of the UK

Financial

  • Net loss of £1.60 million in the period (H1 2016: net loss £1.89 million), reflecting planned reduction in R&D expenditure in preparation for MED clinical programme commencing in H2 2017
  • Cash resources of £10.12 million at 30 June 2017 (30 June 2016: £2.90 million)

James Barder, Futura's Chief Executive, commented: "Futura made excellent progress in the first half of 2017 with MED2002, our breakthrough erectile dysfunction gel, which is moving close to its Phase III programme. This exciting programme brings the potential for significant prescription sales and the prospect of an OTC switch in the future. We are currently in commercial discussions with potential licensing partners for MED2002 and we look forward to announcing a licensing agreement in due course. Our novel erectogenic condom, CSD500, has now been launched by our first distributor and we anticipate further launches in the months ahead."

A meeting for analysts will be held at 11.00am this morning, 12 September 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 11.00am:

http://vm.buchanan.uk.com/2017/futuramedical120917/registration.htm

A recording of the webcast will be made available at www.futuramedical.com following the results meeting.

 

Chairman's and Chief Executive's Review

During the year to date we have continued to advance our pipeline of product opportunities and have made particular progress with MED2002, our topical gel for erectile dysfunction ("ED"), which is progressing to the start of the Phase III clinical programme required ahead of regulatory submission.

CSD500, our novel erectogenic condom, has been launched in the Middle East, with over 500,000 condoms sold to date, and we are working with our partners on launches in other countries. However it was very disappointing that last month Church & Dwight, which had licensing rights to CSD500 in North America and certain European countries, decided to terminate its licensing agreement. We understand from Church & Dwight that this was due to a strategic change by them. Church & Dwight also confirmed that their testing of the product re-confirmed the safety and clinical results that we have previously obtained. The CSD500 product is now "market ready" for distribution we have received verbal confirmation of the approval of additional brand names and pack design with relevant certification expected by the end of September. This will enable launches by our distributors to proceed in a number of other European countries, not covered by the Church & Dwight agreement. We are therefore planning to expand the number of countries where the product is launched within the European Union ("EU"). At the same time we are actively considering commercial options for countries previously licensed to Church & Dwight, including digital marketing of CSD500 within the EU countries.

The commercialisation of our pain relief portfolio continues on track, with the UK regulatory submission for TPR100, our diclofenac gel for topical pain relief, targeted to take place in Q1 2018 by Thornton & Ross, a UK subsidiary of STADA Arzneimittel AG ("STADA").

Regulatory work has been a prominent feature in the year to date reflecting strategies to commercialise our portfolio across the greatest geographical reach. Across Europe, there has been a consolidation of the "Notified Bodies" able to issue regulatory approvals for medical devices, such as CSD500, with the result that it is taking additional time to gain the required approvals. We have therefore worked collaboratively with BSI, the UK based Notified Body, to prioritise our submissions to minimise the impact of delays. During the half year, we recruited a full time regulatory affairs director from the pharmaceutical industry to strengthen our in-house capability and optimise the use of our network of external consultants.

Our balance sheet includes cash resources of £10.12 million as at 30 June 2017 (30 June 2016: £2.90 million). We will continue to use these cash resources prudently through careful consideration of the design and ongoing scrutiny of our clinical trial programmes.

 

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 patents to the product in a market worth US$5.6 billion1 for currently available treatments and have registered the brand name Eroxon®, though potential distributors may choose to use other brand names. MED2002's rapid onset of action means that it has the potential to become the world's fastest-acting treatment for ED.

We announced breakthrough clinical results in September 2016 for MED2002 and these results were shared in face-to-face meetings with the UK and US regulatory authorities in March and April 2017. Both meetings were highly constructive regarding the finalisation of data requirements to achieve approval in the UK, Europe and the US. Both authorities suggested we include a range of doses of MED2002, including the original dose, in the upcoming Phase III studies to achieve the broadest possible indications to cover mild, moderate and severe ED.

Since our last update on MED2002, in July 2017, we have decided to amend the sequencing of this Phase III programme. It is now planned to commence the 40 subject pharmacokinetic ("PK") study, as soon as possible during Q4 2017 with completion in Q1 2018, this will enable us to check the tolerance to higher doses and define the exact doses to be used in the Phase III trials in 2018. This will avoid the inclusion of unacceptably high doses in the Phase III studies. Meanwhile, planning for the two Phase III studies has continued and detailed protocols have been defined. Final regulatory endorsement shall be sought from European regulatory authorities in October and from the US FDA under the mechanism of a formal IND submission to be made in September. Running the PK and Phase III studies in sequence allows us more time to consult with regulatory authorities and we anticipate that this will mean that the number of active doses can be reduced from four to three in the Phase III study, thereby reducing cost and the time required to complete patient recruitment, with an expected 10% overall reduction in the number of patients required.

The filing will be made in the USA using the 505(2)(b) route in which safety data from another product can be used provided that similarity is demonstrated. In Europe the intent is to follow the decentralised procedure under Article 8(3), subject to regulatory confirmation, which will enable us to reference the long history of safe use of the active ingredient for other indications. This regulatory route will also give us 10 years of data exclusivity, from the date of approval, thereby further strengthening our intellectual property position.

We have had substantial interest in MED2002 from potential licensing partners, seeking both global and regional deals. We continue to work towards our objective of being able to announce a licensing deal by the end of the year, based on existing negotiations.

MED2002, as a topically applied gel with a very rapid speed of onset, has the potential to be a significant product with combined forecast 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.

MED2002 has substantial potential in the treatment of ED, 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 over-the-counter ("OTC") products in the global OTC marketplace as it has strong potential to be switched from prescription to OTC status, after a period of marketing on prescription, to extend the commercial potential. As announced earlier this year, 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 some 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 year could extend patent protection through to 2038.

 

Note1 IMS Health - MSP 2016 (15 key countries)
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.

Consent to use additional brand names and pack design for additional EU countries, with an already CE Mark approved product, continues to take considerable time owing to the changing structure of the EU regulatory bodies, and we have therefore prioritised our submissions in order of commercial relevance as far as possible. We have received verbal confirmation of approval of additional brand names and pack design with relevant certification expected by the end of September. This will enable launches by our distributors to proceed in a number of EU countries.

CSD500 was launched in Saudi Arabia in the first half by our distributor Kabey and further launches in the MENA region are planned as soon as the necessary regulatory approvals on a country by country basis are granted. Kabey is using the brand name Futura Max Manex Super and its promotion is based on direct retail marketing rather than an online campaign. Kabey will shortly receive its third shipment of stock, to date 540,000 condoms have been sold with initial feedback from users of the product being positive.

CSD500 is proceeding to launch in other countries, subject to relevant regulatory approvals, though we were disappointed that Church & Dwight, which had licensing rights to CSD500 in North America and certain European countries, decided to terminate its licensing agreement and return the associated marketing rights, as announced last month. We are actively considering commercial options, including digital marketing of CSD500 within the EU, and will inform shareholders once a decision is reached on how we plan to commercialise CSD500 in those countries previously licensed to Church & Dwight.

Last year we successfully modified the manufacturing process to achieve an extended shelf life for CSD500 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. During the first half of this year TTK received regulatory approval from the relevant EU Notified Body to manufacture the extended shelf life product. We continue to await approval from the same EU Notified Body of the extended shelf life product for our European based manufacturer, which is now our top priority with that Notified Body.

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 daily 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.

Thornton & Ross, part of STADA, holds the UK rights to TPR100, our novel diclofenac gel for pain relief. We expect the regulatory filing for marketing authorisation to be made by Thornton & Ross early next year. Under the terms of its licensing agreement, Thornton & Ross holds rights to manufacture, market and distribute TPR100 in the UK for the lifetime of the product's patents, which run to 2028 in the UK.

We continue in licensing discussions in respect of the commercialisation of TPR100 outside of the UK and are also in discussions in connection with our ibuprofen based product TIB200. As previously stated, we do not intend to conduct any further clinical work without a clear indication of interest and commitment from potential commercial partners.

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.

Outlook

Futura made excellent progress in the first half of 2017 with MED2002, our breakthrough erectile dysfunction gel, which is moving close to its Phase III programme. This exciting programme brings the potential for significant prescription sales and the prospect of an OTC switch in the future. We are currently in commercial discussions with potential licensing partners for MED2002 and we look forward to announcing a licensing agreement in due course. Our novel erectogenic condom, CSD500, has now been launched by our first distributor and we anticipate further launches in the months ahead.

 

John Clarke
Chairman
James Barder
Chief Executive

 

Note 3 IMS Health Estimate, MSP, 2015

 

Group Statement of Comprehensive Income

    Unaudited
6 months
ended

30 June
2017
Unaudited
6 months
ended
30 June
2016
Audited
year
ended
31 December
2016
  Notes £ £ £
Revenue 1.5 362,557 66,900 170,362
Research and development costs   (1,764,100) (1,785,356) (3,509,680)
Administrative costs   (605,742) (548,803) (1,214,755)
Operating loss   (2,007,285) (2,267,259) (4,554,073)
Finance income   9,419 7,037 14,714
Loss before tax   (1,997,866) (2,260,222) (4,539,359)
Taxation   401,422 369,058 842,246
Total comprehensive loss for the period attributable to owners of the parent company   (1,596,444) (1,891,164) (3,697,113)
         
Loss per share (pence) 3 (1.32p) (1.91p) (3.65p)

All amounts relate to continuing activities.

 

Group Statement of Changes in Equity

    Share
Capital
Share
Premium
Merger
Reserve
Retained
Losses
Total
Equity
    £ £ £ £ £
At 1 January 2016 - audited   198,185 33,053,345 1,152,165 (29,617,464) 4,786,231
Total comprehensive loss for the period   - - - (1,891,164) (1,891,164)
Share-based payment   - - - 60,200 60,200
At 30 June 2016 - unaudited   198,185 33,053,345 1,152,165 (31,448,428) 2,955,267
Total comprehensive loss for the period   - - - (1,805,949) (1,805,949)
Share-based payment   - - - (5,795) (5,795)
Shares issued during the period     42,105 11,957,895 - - 12,000,000
Cost of share issue     - (559,495) - - (559,495)
At 31 December 2016 - audited   240,290 44,451,745 1,152,165 (33,260,172) 12,584,028
Total comprehensive loss for the period   - - - (1,596,444) (1,596,444)
Share-based payment   - - - 90,469 90,469
Shares issued during the period     1,027 198,267 - - 199,294
At 30 June 2017 - unaudited   241,317 44,650,012 1,152,165 (34,766,147) 11,277,347

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.

 

Group Statement of Financial Position

    Unaudited
30 June
2017
Unaudited
30 June
2016
Audited
31 December
2016
  Notes £ £ £
Assets        
Non-current assets        
Plant and equipment   48,118 17,283 21,351
Total non-current assets   48,118 17,283 21,351
         
Current assets        
Inventories   83,632 197,733 83,641
Trade and other receivables 4 151,909 179,114 138,989
Current tax asset   1,243,668 369,058 842,246
Cash and cash equivalents 5 10,122,625 2,900,248 12,352,978
Total current assets   11,601,834 3,646,153 13,417,854
         
Liabilities        
Current liabilities        
Trade and other payables   (372,605) (708,169) (855,177)
Total liabilities   (372,605) (708,169) (855,177)
Total net assets   11,277,347 2,955,267 12,584,028
         
Capital and reserves attributable to
owners of the parent company
       
Share capital   241,317 198,185 240,290
Share premium   44,650,012 33,053,345 44,451,745
Merger reserve   1,152,165 1,152,165 1,152,165
Retained losses   (34,766,147) (31,448,428) (33,260,172)
Total equity   11,277,347 2,955,267 12,584,028

 

Group Statement of Cash Flows

  Unaudited
6 months
ended
30 June
2017
Unaudited
6 months
ended
30 June
2016
Audited
year
ended
31 December
2016
  £ £ £
Cash flows from operating activities      
Loss before tax (1,997,866) (2,260,222) (4,539,359)
Adjustments for:      
Depreciation (6,005) 3,332 6,247
Finance income (9,419) (7,037) (14,714)
Share-based payment charge 90,469 60,200 54,405
Cash flows from operating activities before changes
in working capital
(1,922,821) (2,203,727) (4,493,421)
       
Decrease / (increase) in inventories 9 (33,966) 80,126
(Increase) / decrease in trade and other receivables (12,920) (21,815) 16,981
(Decrease) / increase in trade and other payables (482,572) (45,724) 101,284
Cash used in operations (2,418,304) (2,305,232) (4,295,030)
       
Income tax received - 997,036 997,036
Net cash used in operating activities (2,418,304) (1,308,196) (3,297,994)
       
Cash flows from investing activities      
Purchase of plant and equipment (20,762) (500) (7,483)
Interest received 9,419 20,650 29,656
Cash (absorbed ) / generated by investing activities (11,343) 20,150 22,173
       
Cash flows from financing activities      
Issue of ordinary shares 199,294 - 12,000,000
Expenses paid in connection with share issues - - (559,495)
Cash generated by financing activities 199,294 - 11,440,505
       
(Decrease) / increase in cash and cash equivalents (2,230,353) (1,288,046) 8,164,684
Cash and cash equivalents at beginning of period 12,352,978 4,188,294 4,188,294
Cash and cash equivalents at end of period 10,122,625 2,900,248 12,352,978

 

Notes to the Group Financial Statements

The Notes to the Financial Statements are contained in the full results which is available to
download in PDF format

 

Page last updated: 12 September 2017