23 February 2004
Preliminary Results for the eleven months to 31 December 2003
Futura Medical plc ("Futura"), the AIM-quoted pharmaceutical and medical device group that develops innovative products for the sexual healthcare market, reports its Preliminary Results for the eleven months ended 31 December 2003.
Highlights
- Futura introduced to the AIM market of the London Stock Exchange after successful fundraising prior to Introduction
- Pre-tax loss of £1.46 million for 11 month period to 31 December 2003 (12 months ended 31 January 2003: £1.23 million loss)
- Cash balances of £2.4 million at 31 December 2003, (£1.5 million at 31 January 2003)
- DTI grant awarded to offset development of FLD500
- Phase II study for MED2001 completed. Change in regulatory strategy to potential first ethical over-the-counter treatment of erectile dysfunction
- Discussions regarding distribution rights for MED2001 at an advanced stage
- Worldwide distribution deal with SSL International plc for CSD500 extended to cover Japan
- SSL International plc global option for FLD500.
Commenting on the maiden Preliminary Results, James Barder , Chief Executive, said: "The progress that Futura has made developing and licensing innovative products, such as MED2001 and CSD500, for the sexual healthcare markets, along with the work that we are doing on identifying the potential of other pharmaceutical drugs and devices, encourages us to believe that the Group can deliver profitable growth for the future."
Chairman and Chief Executive Joint Review
Our decision to align Futura Medical plc's financial year with the calendar year means our last trading period is only 11 months. However, significant progress has been made in this shorter financial period.
Product Development MED2001 - EroxonT
Treatment for erectile dysfunction
In our 2003 Interim Report we reported on the completion of the 67-patient Phase II double-blind, placebo controlled, escalating-dose ranging study. The primary purpose of this study was to assess safety on a dose-escalating basis and we were pleased to say that MED2001 was well tolerated. The systemic adverse events seen in some patients were pharmacologically predictable, dose-dependent and consisted mainly of mild, transient headaches. Local tolerability was also good.
Overall good efficacy was seen for MED2001 but we also saw an unexpectedly high placebo response. This compromised our ability to demonstrate a statistically significant improvement over placebo in this study. Nevertheless, subsequent analyses have identified several factors, which we believe contributed to the high placebo response and these are being taken into account as we design the protocol for the Phase III trial.
Apart from the statistical data we gained from the Phase II study we also received extremely valuable 'user' feedback. One of the main consequences of this feedback has been the design of a customised, single-unit dose container and applicator for MED2001. The container will allow direct application of the cream to the glans by the patient or their partner without the complication of product transference to their hands and fingers. Penile massage is an important part of sexual foreplay and this new device will enable the partner to become more involved without coming directly into contact with the cream. The directors believe this container will provide significant benefits for the patients and improve the safety of the product, thereby making it more acceptable to the regulatory authorities.
Following the completion of our Phase II study a robust regulatory review took place with external independent experts. In light of this review we have recently modified our regulatory strategy to seek to licence MED2001 as a pharmacy line ("P-line") product rather than a Prescription Only Medicine ("POM") within the EU. We believe this will differentiate MED2001 from all other ethical treatments for erectile dysfunction ("ED") and potentially have significant commercial advantages for us.
Currently, as few as one in five men with symptoms of ED will seek treatment from their General Practitioner. The remaining four out of five sufferers represent a market opportunity. We believe that MED2001, as potentially the first ethical 'over the counter' ("OTC") treatment within the EU, will help to address the embarrassment problem faced by many ED sufferers when seeking treatment. It would also have the added advantage of removing the issues facing many governments over the state funding of what is considered by some to be a 'lifestyle' medication.
It is estimated that five to ten percent of all ED sufferers take treatment for angina, which means they are not allowed to use any of the existing PDE5 inhibitors, such as Viagra or Cialis. This represents a significant subset of patients with an unmet clinical need. Futura do not underestimate the clinical and medical challenges that will need to be overcome in developing a safe and efficacious treatment for this patient group. Nevertheless, a cardiac safety study was started in December 2003 at St John's Hospital in Brussels to assess safety of MED2001 in patients suffering from chronic angina. The trial is ongoing with initial results expected in May 2004.
Our patent applications for MED2001 continue to be granted with some 22 territories already having proceeded to grant. Moreover an additional patent, covering MED2001, was submitted in October 2003 as a direct result of our Phase II study which, if it proceeds to grant, will further strengthen our patent position.
Significant commercial discussions and due diligence have taken place over the past six months. The directors believe that these discussions have confirmed the attractive commercial opportunities for an OTC status in certain territories. However a safety concern has been raised during technical collaborations with potential licensing partners. We intend to advise patients through product labelling that MED2001 should not be used with any of the PDE5 inhibitors. However, the OTC status would make the product more widely available, with consequent increased risk of misuse if patients chose to ignore this advice. These safety issues do not occur for MED2001 when used alone.
In order to maximise the chances of an OTC regulatory status and maximise commercial licensing opportunities, we are investigating an adjustment to the formulation of MED2001. This is aimed at improving the localisation of the physiological effect whilst minimising systemic levels of Glyceryl Trinitrate ("GTN"), thereby decreasing the risk of interaction with drugs such as PDE5 inhibitors. We do not expect this to adversely impact any of our existing clinical work although we do not intend to commence our Phase III trials until this adjustment is complete.
As part of finalising our regulatory and commercial strategy, we believe that this timely change will help to maximise the commercial opportunities for MED2001 and enable the successful conclusion of distribution negotiations.
CSD500 - ZanifilT Condom safety device
We are aware of increasing governmental concern over the spread of sexually transmitted infections, particularly amongst young people. The Health Protection Agency announced on 25 November 2003 that an estimated 49,500 people were living with HIV in Britain in 2002, an increase of 20 per cent on the previous year. The announcement went on to highlight that more than one third of these people do not know they are infected and therefore represent a substantial risk to further spread of infection through unprotected sex.
The World Health Organisation announced on the same day that the annual worldwide death toll from Aids has reached three million. This is a stark reminder of the importance of safe sex practices such as protected intercourse through use of a condom. We believe that these statistics demonstrate the market potential for CSD500, which acts to improve the safety of the condom through reduced slippage and breakage and thereby overcomes one of the criticisms of the latex condom.
Early in 2003 we signed a global distribution agreement (excluding Japan ) with the world's largest branded condom manufacturer and distributor, SSL International plc (makers of the Durex® condom range) for the lifetime of the relevant patents. We are delighted to have signed a distribution agreement with such a powerful brand, which we expect to generate significant revenue for the Company once CSD500 is licensed.
An enormous amount of work has taken place over the past eleven months to complete stability in order for SSL International to proceed to manufacturing scale-up and submission of the EU dossier of CSD500 on schedule in 2004. Although the formulated gel, ZanifilT, is stable we have encountered some loss of GTN active in the finished product (i.e. a condom, condom lubricant, ZanifilT incorporated within the condom teat and packaging). Significant progress has already been achieved in understanding and correcting the reasons for this loss in activity. Further development work and stability studies are continuing on schedule for a 2004 submission.
Our regulatory strategy for CSD500 remains the same, with the priority being for an EU dossier submission and with other non-EU territories, including the USA , to follow later.
During February 2004 SSL International exercised the option under the agreement signed between us in early 2003 to extend the territorial scope of the agreement to include Japan .
FLD 500 Female lubrication device
The first stage in the clinical development of the product will be to demonstrate physiological effects in healthy females with an active dose that is safe and well tolerated. This is described as a phase I proof of concept study.
As mentioned in our 2003 Interim Report, a protocol for the proof of concept study at the Porterbrook Clinic had been submitted to the South Sheffield ethics committee. We are pleased to say that approval was subsequently granted and the first subject was enrolled into the study during December. Current timelines expect completion of this study by June 2004.
In the meantime formulation work continues in parallel with the Porterbrook study in order to proceed with a pivotal home-use clinical trial later in 2004.
The agreement with SSL International on our own CSD500 product also contains an option for them to extend the global distribution agreement to include FLD500.
Financing Activities
We have raised over £2.5 million gross during 2003 through share issues and a Government Grant.
In early December we were awarded a Research Project Grant under the new Grant for Research and Development Scheme of the Department of Trade & Industry.
The grant will provide up to £75,000 for the initial stages of research and development of the FLD500 product. Futura's grant submission was assessed according to level of innovation, technical risk, the strength of the management team and the overall business proposition. We were pleased to receive this independent endorsement of our technology and will continue to seek alternative sources of funding to offset development costs.
Our overall loss after tax for the period ended 31 December 2003 was £1.4 million. The loss was in line with our expectations and our costs continue to be in line with our internal budgets. Cash at the end of December 2003 was in excess of £2.4 million.
Board Changes
Prior to our Introduction to the Alternative Investment Market ("AIM") in July, both Richard Drury and Amanda Staveley, conscious of the increasing workload at Futura once listed resigned from the Board due to their other business commitments and. In their place we welcomed both Jonathan Freeman , a former director of Beeson Gregory with over 10 years experience in corporate finance, and Andrew Slater , a former main board director of SSL International plc with over 20 years of international healthcare marketing experience.
Both in preparation for Admission to AIM and since, we have maintained a continued emphasis on good corporate governance. Considerable attention and effort has been made to ensure that we achieve appropriate practice, mindful of our size and complexity, to safeguard the interests of our Shareholders as a newly quoted company.
Recent Transactions
Futura's principal assets are our intellectual property rights and we will take all appropriate steps to protect these and prevent, resolve or prosecute any possible infringements thereon. In November 2003 we became aware of a possible infringement by CST Medical Limited ("CST"), the manufacturers and distributors of Vielle (a medical stimulator device, used for the treatment of female sexual dysfunction).
Following discussions between the parties an agreement was entered into on 13 January 2004. In settlement of this matter, CST will transfer certain intellectual property to Futura. Futura will also receive 10 per cent of the issued share capital of CST as at 13 January 2004 (prior to any subsequent dilution due to fund raising by CST) and a royalty in respect of sales of the Vielle stimulator up to 31 December 2008.
Future Opportunities
As we emphasised in our 2003 Interim Report, the mandate from our Shareholders has always been to seek to develop and licence MED2001 and CSD500. One of the reasons to float Futura on AIM was to increase the public profile of Futura in order to identify potential product distributors and also new development opportunities. As both CSD500 and MED2001 progress to a more advanced stage of their development we emphasise our interest in identifying and developing other pharmaceutical drugs and devices. They should be related to sexual health and well-being and should be able to commercially justify their development costs.
Once more, we would like to extend our thanks for all their hard work not only by the staff of Futura but also by our small army of expert consultants and advisers, for whose efforts we are extremely grateful.