For the six months ended 30 June 2011
Futura Medical plc (AIM: FUM), the pharmaceutical group that develops innovative products for consumer healthcare, is pleased to announce interim results for the six months ended 30 June 2011.
Highlights
Chairman's and Chief Executive's Joint Review
Group Statement of Comprehensive Income
Group Statement of Changes in Equity
Group Statement of Financial Position
Group Statement of Cash Flows
Notes
Highlights
- Significant progress across the Company and in particular with two products, CSD500 and PET500
- PET500 - Worldwide rights licensed to Ansell Limited in February 2011 with launch expected 2012
- Placing in March 2011 raised £3.20 million (£3.07 million net of expenses), strengthening Futura's balance sheet
- Net loss of £0.62 million (H1 2010: Net loss of £0.44 million)
- Cash resources of £3.40 million at 30 June 2011 (30 June 2010: £1.32 million)
Post Balance Sheet Events
- CSD500 - CE mark awarded in August 2011 clearing regulatory pathway for launch as a Durex® branded condom
James Barder, Futura's Chief Executive, said: "The current year has started extremely well. We have signed a commercial deal with Ansell for PET500 and we were delighted to receive notification of the CE mark award to Reckitt Benckiser for CSD500 in early August. We are looking forward to the launch of the first of these products in early 2012."
Chairman's and Chief Executive's Joint Review
The first six months of this financial year were a period of significant progress at Futura, culminating in the award of the CE mark for CSD500 a few weeks after the period end.
The award of the CE mark to Reckitt Benckiser is expected to be transformational for Futura which now has two products on track that have the potential to produce recurring royalty income. These two products, our novel condom CSD500 and our sexual control enhancer PET500, are both licensed to major global companies and we believe that both have significant sales potential worldwide. Futura is, therefore, on the threshold of becoming a company in receipt of recurring royalties, heralding the exciting next phase in the Company's development.
The first half of the 2011 financial year saw significant progress in the commercialisation of Futura's existing portfolio. In early February, we were delighted to announce an exclusive worldwide agreement with Ansell Limited, one of the world's major sexual health companies, for PET500, Futura's innovative product for enhanced sexual control. Under the terms of the agreement, Futura will receive a significant royalty rate on sales of PET500, which is expected to launch early in 2012. In June we were able to announce that the regulatory authority had recommended the CSD500 dossier for review by its Review Panel. The formal award of the CE mark followed in August which enables CSD500 to be marketed in 29 European territories and a number of other non-European territories that recognise the CE mark process. This is therefore an exciting time for Futura. We are moving closer to the launch of CSD500, which is licensed to Reckitt Benckiser, and PET500, licensed to Ansell Limited. The branding of these two products, and the details of their launch, is subject to commercial confidentiality. It is therefore unlikely that Futura will be able to provide shareholders with detailed information in the period up to the launch of these two products.
In addition to supporting our commercial partners in the period up to the launches of CSD500 and PET500 we will accelerate the progression and broadening of our development pipeline. Our product pipeline remains centred on our two areas of expertise, sexual health and pain relief. However, where we identify a compelling commercial application for our DermaSys® technology outside of these two areas we will give it serious consideration.
At Futura we have a rigorous approach to vetting new products and we should stress that our interest is only in evidence-based products where robust clinical data can be generated. Our initial evaluation includes four key criteria: performance, aesthetics, stability and defensible intellectual property. Unless a new opportunity gives a clear indication of meeting these criteria then the product will not be moved forward to the next stage of development.
Portfolio updates - Sexual healthcare
CSD500: Condom safety device
During the first half, we were focused on working with Reckitt Benckiser to address some minor points raised by the regulatory authority in connection with the CSD500 regulatory dossier. These points were satisfactorily resolved and in June we were able to announce that the regulatory authority had recommended the dossier for review by its Review Panel. The formal award of the CE mark to Reckitt Benckiser followed in August and will enable CSD500 to be marketed in 29 European territories and a number of other non-European territories that recognise the CE mark process.
CSD500's unique intellectual property position has been protected throughout the world including the principal consumer markets within Europe, the USA and Canada through patents now granted or proceeding to grant in 36 countries with one application still pending.
CSD500 benefits from three marketing claims which have been approved by the regulatory authorities: the maintenance of a firmer erection, increased penile size and a longer lasting sexual experience for women. These claims were demonstrated in a statistically significant user study involving 108 couples.
Reckitt Benckiser, which views CSD500 as a global opportunity, is currently working on the detailed positioning of these claims ahead of the launch of the product as a Durex® branded condom. The correct positioning within the market of CSD500 is critical to its commercial success as sexual healthcare is an area that requires sensitive marketing. Pfizer and Eli Lilly, the US pharmaceutical groups, have shown what can be achieved in the way that they raised awareness and acceptability of erectile dysfunction. We believe Reckitt Benckiser has the commercial expertise to make CSD500 a financial success and we look forward to updating the market on this work where possible. Our agreement with Reckitt Benckiser restricts further comment.
As previously announced, the results of our own market research reinforce the commercial potential of CSD500 with men and women who already use condoms as well as with men and women who do not currently use them. Market research, conducted by an internationally recognised research company, showed that 88% of existing condom users would be interested in purchasing CSD500 and that 49% of non-condom users would be interested in purchasing the product. The research also showed that 46% of men had experienced some loss of sensitivity when using a condom during sexual intercourse, which can lead to loss of erection. This is one reason why some men avoid condoms, thereby increasing the risks of unwanted pregnancies and contracting or spreading sexually transmitted infections.
MED2002: Treatment for erectile dysfunction
MED2002, our topical gel for the treatment of men with erectile dysfunction, is also licensed to Reckitt Benckiser and shares the same active ingredient as CSD500. MED2002 has the potential to become the world's first non-prescription pharmaceutical treatment for men with erectile dysfunction, a condition that affects, to some degree, as many as 52% of men aged 40 or over¹.
Initial discussions have taken place with regulators with the objective of identifying the most appropriate regulatory pathway for marketing approval. We are now in discussions with our commercial partner regarding progression of development and we look forward to providing further updates.
PET500: Enhanced sexual control
In February we were delighted to announce that Ansell Limited, one of the world's major sexual health companies, had signed an exclusive worldwide agreement to commercialise PET500, our enhanced sexual control product. PET500 is a topical spray that combines our DermaSys® AquaFree delivery system with a well-known mild topical anaesthetic. It is designed to take effect rapidly and to delay male ejaculation.
Under the terms of the agreement with Ansell, Futura will receive a significant royalty rate on sales. The branding of the product is being developed by Ansell, which is also responsible for the product's manufacture. It is expected that the product will be launched in early 2012.
Futura will work closely with Ansell on the successful completion of any clinical work in territories where regulators require additional data. However PET500, as previously announced, was designed to comply with the current USA Food and Drug Administration ("FDA") monograph for male genital desensitisers. The product can therefore be marketed in the USA without any further regulatory approval or clinical data.
Since February we have been working closely with Ansell in preparation for the launch of the product under Ansell's LifeStyles® brand. Initial production is now underway and subject to the necessary export licences being granted in a timely manner the initial launch will take place in a major market in early 2012. Our agreement with Ansell restricts further comment.
Portfolio updates - Pain relief management
TPR100: Topical pain relief
In June 2010, we signed a development agreement for TPR100 with GlaxoSmithKline Consumer Healthcare ("GSK"). Under the terms of the agreement GSK is responsible for all clinical and regulatory development, which it is funding. GSK is also making modest annual payments to Futura whilst development work proceeds.
Development work is progressing well and GSK is now close to finalising the formulation of TPR100, having taken into account manufacturing scale-up so that the product is capable of volume production. In accordance with the development timetable TPR100 will begin its pivotal clinical program in the first half of 2012, which is expected to complete towards the end of 2013. Assuming satisfactory clinical outcomes and regulatory approval both parties expect to enter into a commercial distribution agreement.
TPR100 uses our highly efficient transdermal delivery system, DermaSys®, for the delivery of a non-steroidal anti-inflammatory drug ("NSAID"). As previously announced, clinical tests carried out by Futura have shown that TPR100 achieves between 30 to 40 times higher bioavailability than that achieved by the market-leading product. TPR100's speed of permeation brings potential benefits including the rapid onset of action of pain relief.
TPR100-Rx: Higher strength topical pain relief for prescription based indications
When we conducted the low dose in vitro and clinical permeation studies for TPR100 we also studied a significantly higher dose of the same NSAID. These studies gave positive results, showing an excellent dose-related response, which creates the potential to treat more acute indications such as osteoarthritis and rheumatic pain. TPR100-Rx, with its targeted delivery through the skin, has the potential benefit of avoiding the systemic side-effects seen in the use of oral NSAIDs.
TPR100-Rx will be a prescription product and we believe that this represents a substantial market opportunity. It is our intention to seek a commercial partner for this product, initially targeting the North American markets of the USA and Canada. We are in early stage discussions with several potential development partners and will update shareholders when we can.
RAD100: Rapid anaesthetic delivery
RAD100 was conceived in a similar way to TPR100-Rx in that the success of a low dose of topical anaesthetic compound in PET500 prompted us to explore the potential of a higher dose to provide rapid topical anaesthesia prior to injection, vaccination or cannulation. Demand in this market is already well developed, but poorly served, with existing treatments taking at least 30 to 45 minutes to take effect.
In early in vitro work, previously reported, we have shown a 250% increase in the rate of permeation of a topical anaesthetic across the skin using RAD100 and the DermaSys® AquaFree delivery system when compared with an established product. This substantial increase in skin permeation is expected to equate to a more rapid onset of skin desensitisation compared with existing products.
Our commercial investigations have led us to believe that for RAD100 to become a financial success and attract an out-licensing partner RAD100 will require a faster speed of onset of skin desensitisation. We do not believe that the current formulation of RAD100 is fully optimised to give this speed of onset. RAD100 is currently being redesigned by our scientists to achieve this milestone which we consider essential for attracting an out-licensing partner. In common with TPR100-Rx, RAD100 would be a prescription product.
Early Stage Product Development
We have a rigorous approach to vetting new products and should stress that our interest is only in evidence-based products where robust clinical data can be generated. Our initial evaluation includes four key criteria: performance, aesthetics, stability and defensible intellectual property. Unless a new opportunity gives a clear indication of meeting these criteria then the product will not be moved forward to the next stage.
We have a number of internally developed product concepts that are going through this evaluation and assuming that we can meet the criteria set out above we will progress development as well as inform shareholders. Since the completion of our fundraising in March, work has commenced.on a number of potential product opportunities. We would expect to update shareholders on at least one product opportunity before the end of the year once our intellectual property position has been protected.
Finance
In March 2011 Futura strengthened its balance sheet through a placing of shares which raised £3.07 million in net proceeds. Our cash and cash equivalents at the period end was £3.4 million (31 December 2010: £1.3 million) and our cash burn remained modest throughout the period under review. We continue to manage our financial resources carefully with costs incurred by the Company remaining steady.
We are pleased to be able to report that in the period under review, we earned milestone payments from Ansell and GSK totalling £120,555 (12 months to 31 December 2010: £125,000). Our retained loss for the six months ended 30 June 2011 was £617,509. Research and development ("R&D") costs of £515,117 were higher than that for the corresponding six month period ended 30 June 2010: £380,836 (year ended 31 December 2010: £760,637) as we are investigating new products to add to the development pipeline. Other administrative costs of £319,928 were slightly lower than that for the corresponding six month period ended 30 June 2010: £354,151 (year ended 31 December 2010: £700,399).
Outlook
The current year has started extremely well. We have signed a commercial deal with Ansell for PET500 and we were delighted to receive notification of the CE mark award to Reckitt Benckiser for CSD500 in early August. We look forward to the launch of the first of these products in early 2012.
| Dr W D Potter | J H Barder | |
| Executive Chairman | Chief Executive |
Note 1: Massachusetts Male Aging Study (MMAS), J Urol. 1994 Jan; 151 (1): 54-61
Group Statement of Comprehensive Income
| Unaudited 6 months ended 30 June 2011 |
Unaudited 6 months ended 30 June 2010 |
Audited Year ended 31 December 2010 |
||
| Notes | £ | £ | £ | |
| Revenue | 1.5 | 120,555 | 125,000 | 125,000 |
| Research and development costs | (515,117) | (380,836) | (760,637) | |
| Administrative costs | (319,928) | (354,151) | (700,399) | |
| Operating loss | (714,490) | (609,987) | (1,336,036) | |
| Finance income | 13,363 | 12,219 | 19,265 | |
| Loss before tax | (701,127) | (597,768) | (1,316,771) | |
| Taxation | 83,618 | 156,149 | 225,731 | |
| Total comprehensive loss for the period attributable to owners of the parent company |
(617,509) | (441,619) | (1,091,040) | |
| Loss per share (pence) | 3 | (0.85p) | (0.65p) | (1.61p) |
All amounts relate to continuing activities.
Group Statement of Changes in Equity
| Share capital |
Share premium |
Merger reserve |
Retained losses |
Total equity |
||
| Note | £ | £ | £ | £ | £ | |
| At 1 January 2010 - audited | 134,967 | 15,556,647 | 1,152,165 | (14,990,970) | 1,852,809 | |
| Total comprehensive loss for the period | - | - | - | (441,619) | (441,619) | |
| Share-based payment | - | - | - | 22,085 | 22,085 | |
| At 30 June 2010 - unaudited | 134,967 | 15,556,647 | 1,152,165 | (15,410,504) | 1,433,275 | |
| Total comprehensive loss for the period | - | - | - | (649,421) | (649,421) | |
| Share-based payment | - | - | - | 49,891 | 49,891 | |
| Shares issued during the period | 6 | 320 | 66,480 | - | - | 66,800 |
| At 31 December 2010 - audited | 135,287 | 15,623,127 | 1,152,165 | (16,010,034) | 900,545 | |
| Total comprehensive loss for the period | - | - | - | (617,509) | (617,509) | |
| Share-based payment | - | - | - | 49,890 | 49,890 | |
| Shares issued during the period | 6 | 10,034 | 3,344,612 | - | - | 3,354,646 |
| Costs of share issues | - | (127,910) | - | - | (127,910) | |
| At 30 June 2011 - unaudited | 145,321 | 18,839,829 | 1,152,165 | (16,577,653) | (3,559,662) |
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 on 6 June 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 each period represents the total recognised income and expense for that period.
Group Statement of Financial Position
| Unaudited 30 June 2011 |
Unaudited 30 June 2010 |
Audited 31 December 2010 |
||
| Notes | £ | £ | £ | |
| Assets | ||||
| Non-current assets | ||||
| Plant and equipment | 5,937 | 6,335 | 8,407 | |
| Total non-current assets | 5,937 | 6,335 | 8,407 | |
| Current assets | ||||
| Inventories | 9,378 | 9,430 | 9,378 | |
| Trade and other receivables | 4 | 209,208 | 170,457 | 64,314 |
| Income tax asset | 83,618 | 76,798 | 146,380 | |
| Cash and cash equivalents | 5 | 3,398,116 | 1,321,351 | 824,821 |
| Total current assets | 3,700,320 | 1,578,036 | 1,044,893 | |
| Liabilities | ||||
| Current liabilities | ||||
| Trade and other payables | (146,595) | (151,096) | (152,755) | |
| Total liabilities | (146,595) | (151,096) | (152,755) | |
| Total net assets | 3,559,662 | 1,433,275 | 900,545 | |
| Capital and reserves attributable to owners of the parent company |
||||
| Share capital | 6 | 145,321 | 134,967 | 135,287 |
| Share premium | 6 | 18,839,829 | 15,556,647 | 15,623,127 |
| Merger reserve | 1,152,165 | 1,152,165 | 1,152,165 | |
| Retained losses | (16,577,653) | (15,410,504) | (16,010,034) | |
| Total equity | 3,559,662 | 1,433,275 | 900,545 |
Group Statement of Cash Flows
| Unaudited 6 months ended 30 June 2011 |
Unaudited 6 months ended 30 June 2010 |
Audited year ended 31 December 2010 |
|
| £ | £ | £ | |
| Cash flows from operating activities | |||
| Loss before tax | (701,127) | (597,768) | (1,316,771) |
| Adjustments for: | |||
| Depreciation | 2,470 | 4,402 | 7,516 |
| Finance income | (13,363) | (12,219) | (19,265) |
| Share-based payment charge | 49,890 | 22,085 | 71,976 |
| Cash flows from operating activities before changes in working capital |
(662,130) | (583,500) | (1,256,544) |
| Decrease in inventories | - | 1,395 | 1,447 |
| (Increase)/decrease in trade and other receivables | (145,540) | (23,131) | 81,193 |
| (Decrease) in trade and other payables | (6,160) | (73,436) | (71,777) |
| Cash used in operations | (813,830) | (678,672) | (1,245,681) |
| Income tax received | 146,380 | 198,640 | 198,640 |
| Net cash used in operating activities | (667,450) | (480,032) | (1,047,041) |
| Cash flows from investing activities | |||
| Purchase of plant and equipment | - | (444) | (5,630) |
| Interest received | 14,009 | 12,654 | 21,519 |
| Cash generated by investing activities | 14,009 | 12,210 | 15,889 |
| Cash flows from financing activities | |||
| Issue of ordinary shares | 3,354,646 | - | 66,800 |
| Expenses paid in connection with share issues | (127,910) | - | - |
| Cash generated by financing activities | 3,226,736 | - | 66,800 |
| Increase/(decrease) in cash and cash equivalents | 2,573,295 | (467,822) | (964,352) |
| Cash and cash equivalents at beginning of period | 824,821 | 1,789,173 | 1,789,173 |
| Cash and cash equivalents at end of period | 3,398,116 | 1,321,351 | 824,821 |
Notes to the Group Financial Statements
The Notes to the Financial Statements are contained in the full results
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