REG - Futura Medical PLC - Results for the Year ended 31 December 2023
10/04/2024 07:00
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RNS Number : 9291J Futura Medical PLC 10 April 2024
10 April 2024
Futura Medical plc
("Futura" or the "Company")
Results for the Year ended 31 December 2023
Initial market launches of Eroxon(®) and first meaningful revenues mark a
transformational year for Futura
Futura Medical plc (AIM: FUM), the consumer healthcare company behind
Eroxon(®), that specialises in the development and global commercialisation
of innovative and clinically proven sexual health products, is pleased to
announce its final results for the year ended 31 December 2023 ("FY23").
Operational Highlights
ü Significant progress has been made in key target markets
o FDA Marketing Authorisation for Eroxon(®) in the USA, the largest consumer
healthcare market in the world
o Haleon plc secured as distribution partner for the USA and US$ 4 million
upfront payment received which will be recognised in FY24
o Successful UK and Belgium launches in March 2023 through Cooper Consumer
Health ("Cooper")
o Granted allowance of EU patent which will provide protection for Eroxon(®)
until 2040 in all key European markets
o Approvals received in a number of new markets, including Saudi Arabia, Mexico
and Australia, as well as launching in the UAE
ü Proven demand for Eroxon(®) - early data shows c. 20% market share in the UK
and Belgium
Financial Highlights
· The Company delivered first meaningful revenues of £3.1 million (2022: nil)
following the launch of Eroxon(®)
· Gross profit of £1.8 million (2022: nil) reflecting a gross margin of 57%
· Adjusted operating loss of £4.2 million*
· Loss after tax £6.51 million (2022: £5.85 million)
· Strong cash position of £7.7 million (2022: £4.0 million) supported by the
Company's efficient operating model and tight cost controls
Post period end
ü Extension of licencing agreement with Cooper to 2029
ü Eroxon(®) available on prescription in England and Wales, improving
availability and raising awareness
* adjusted for a non-cash share-based payment charge of £2.72 million (2022:
£0.67 million). The share-based payment charge predominately relates to the
LTIP award in October 2023.
James Barder, Chief Executive Officer, commented:
"I am delighted to be reporting on this landmark set of results in which the
Group has delivered its first set of meaningful revenues following a year of
huge progress. After the first launch of Eroxon(®) in the UK and Europe in
partnership with Cooper Consumer Health, marketing authorisation in the USA
and with launch preparations going well with Haleon, our distribution partner
in the largest consumer healthcare market in the world, we are well set for
our next stage of growth.
"Our team has worked tirelessly to get Futura to this point and we are
incredibly excited for what's to come. We have a lean operating model and
clearly defined growth strategy, which underpins everything we do. The size of
our target market and the early take up of Eroxon(®) in the markets where we
have launched gives us great confidence as we look to make Eroxon(®)
available to more people across the globe and on the path towards
profitability in the next 12 months."
Investor Presentation
The Company will be hosting a live presentation for investors via the Investor
Meet Company platform on 10 April 2024, at 09:00 BST. Investors can register
for the presentation via the following link:
https://www.investormeetcompany.com/futura-medical-plc/register-investor
(https://www.investormeetcompany.com/futura-medical-plc/register-investor)
Contacts:
Futura Medical plc James Barder investor.relations@futuramedical.com
(mailto:Investor.relations@futuramedical.com)
Chief Executive Officer
+44 (0)1483 685 670
Angela Hildreth
www.futuramedical.com (http://www.futuramedical.com/)
Finance Director and COO
Liberum Phil Walker +44 (0)20 3100 2000
Nominated Adviser Ben Cryer
and Broker Nikhil Varghese
Stifel Nicolaus Europe Limited Alan Selby +44 (0)207 710 7600
Joint Broker Ben Maddison
Alma Strategic Communications Rebecca Sanders-Hewett +44 (0)20 3405 0205
Sam Modlin futura@almastrategic.com
Will Ellis Hancock
Notes to Editors:
Futura Medical plc (AIM: FUM) is the developer of innovative sexual health
products, including lead product Eroxon(®). Our core strength lies in our
research, development and commercialisation of topically delivered gel
formulations in sexual health products.
Eroxon(®), Futura's clinically proven lead product, has been developed for
the treatment of Erectile Dysfunction ("ED"). The highly differentiated
product, which is the only topical gel treatment for ED available over the
counter and helps men get an erection in ten minutes, addresses significant
unmet needs in the ED market.
ED impacts around 20% of men globally across all adult age brackets, with
approximately 50% of all men over 40 experiencing ED and around 25% of all new
diagnoses being in men under 40.
Futura has distribution partners in place in a number of major consumer
markets including Haleon in the USA, the largest consumer healthcare market in
the world, and Cooper Consumer Health in Europe. Eroxon(®) has been nominated
for a number of healthcare industry awards and has won several to-date.
Forward-looking statements
This document contains certain projections and other forward-looking
statements with respect to the financial condition, results of operations,
businesses, and prospects of Futura. The use of terms such as "may", "will",
"should", "expect", "anticipate", "project", "estimate", "intend", "continue",
"target" or "believe" and similar expressions (or the negatives thereof) are
generally intended to identify forward-looking statements. These statements
are based on current expectations and involve risk and uncertainty because
they relate to events and depend upon circumstances that may or may not occur
in the future. There are a number of factors that could cause actual results
or developments to differ materially from those expressed or implied by these
forward-looking statements. Any of the assumptions underlying these
forward-looking statements could prove inaccurate or incorrect and therefore
any results contemplated in the forward-looking statements may not actually be
achieved. Nothing contained in this document should be construed as a profit
forecast or profit estimate. Investors or other recipients are cautioned not
to place undue reliance on any forward-looking statements contained herein.
Futura undertakes no obligation to update or revise (publicly or otherwise)
any forward-looking statement, whether as a result of new information, future
events or other circumstances.
Chairman's Statement
It gives me great pleasure to present my first set of results as the Chairman
of Futura. 2023 was a momentous year for Futura, with the Group successfully
commercialising and generating its first meaningful revenues from sales of its
lead product, Eroxon(®), delivering on the objectives we set out at the
beginning of the period. This achievement cannot be overstated, and my thanks
go to the wider team for all of their efforts this year, which are beginning
to bear fruit as we enter the next, exciting phase of Futura's journey.
Since taking over the role of Chairman from John Clarke in July and while
serving on the Board as a Non-Executive Director before this, I have seen how
tirelessly the team has worked to make such excellent progress. I would like
to thank John again, for all his contributions and guidance which left the
Company well positioned for its next phases of growth. I undertook my role as
Chairman with great excitement as we are on the cusp of huge commercial
potential having a unique product already approved in the two key erectile
dysfunction (ED) markets of the USA and Europe.
The market opportunity for Eroxon(®) is large and there are three crucial
factors that give me great confidence that Eroxon(®) will establish itself as
a leading brand in the markets in which it is launched.
Firstly, it is the first pure OTC brand on the shelf that will be accessible
to consumers without a prescription or the need for interaction with a
pharmacist during the purchasing process. This "open accessibility" for the
consumer is critical to creating a large market for the brand. Secondly,
Eroxon(®)'s fast onset of action, with its key brand claim of "helps you get
an erection within 10 minutes", is a major product advantage over the
traditional oral ED drugs that typically take 30 to 60 minutes to have an
effect. And, thirdly, Futura has been successful in entering into agreements
with market leading commercial partners that possess deep expertise in
executing and managing successful consumer brand launches. We are excited
that we have the building blocks in place to realise success in our key
markets.
In the year, we have seen the successful rollout of Eroxon(®) in the UK and
Belgium, FDA marketing authorisation in the USA and the subsequent licencing
agreement with Haleon, as well as further agreements made with our
distributors across our other markets. The Board's priority now is to build on
this and ensure the successful commercialisation of Eroxon(®) around the
world, especially in the USA, the largest consumer healthcare market in the
world. This, coupled with the delivery of recurring revenues and profits is
what the whole business is working towards and is energised to achieve.
We were delighted to welcome Roy Davis to the Board in January 2024, further
strengthening our ability to deliver on our strategy. With a wealth of
experience in the commercialisation of medical device development companies
and a proven track record of successfully scaling businesses and delivering
substantial shareholder value, Roy's expertise will be invaluable moving
forward.
Alongside the commercialisation of Eroxon(®), we remain focused on the
evolution and development of innovative sexual health products. We have a
small but highly experienced R&D team, who have delivered a world first
product in Eroxon(®). We are proud of our R&D heritage and are already
exploring where next to apply this resource, in a cost-efficient way, as we
seek to develop further clinically proven sexual health products in the medium
to long term.
Looking to the year ahead, we are excited to continue to build on the progress
made this year. With a clearly laid out strategy, motivated team, solid
foundations to build on and exciting partnerships in place, we are confident
in the long-term prospects of the Group.
Jeff Needham
Non-Executive Chairman
Chief Executive's Review
I am very proud to be able to report the progress we achieved in 2023. The
year marks a pivotal moment for Futura having delivered our first meaningful
revenues from our lead product, Eroxon(®). To be able to walk into the UK's
leading Pharmacy and Health and Beauty retailers across the country and see
our product on the shelves in over 2,500 stores is truly momentous, but just
the start.
We delivered on the three key objectives that we set out in 2023: achieving
marketing authorisation in the US; securing a standout US distribution partner
in Haleon plc for the largest consumer healthcare market in the world and
reporting our first meaningful revenues.
Erectile dysfunction ("ED") should not be underestimated. Globally it impacts
approximately 20% of men(1), affecting all age ranges, with approximately 50%
of men over 40 experiencing ED(2) and around 25% of new diagnoses being in men
under 40(3). Moreover, with a globally ageing population, this is a large
market that is expected to continue to grow. Research shows this is an
under-served market with the majority of those affected yet to be diagnosed,
whilst within the cohort that have been diagnosed, there is a high proportion
that are not on treatment or stop treatment after one year. Our market
research shows limited efficacy, slow onset of action, side effects and costs
as the main sources of their dissatisfaction(4).
Our lead product, Eroxon(®), addresses many of these needs. Clinically
proven, it is the only topical gel treatment for ED available over the counter
("OTC") and helps men get an erection in ten minutes. Cost and embarrassment
can be a blocker to seeking a solution to ED, particularly in many parts of
the world where erectile dysfunction still holds a significant stigma within
society. Eroxon(®), being a clinically proven treatment available without the
need of consulting with a doctor, reducing the need for consultation fees,
significantly improves ease of access for men and their partners.
Following the launch of Eroxon(®) in the UK and Belgium, we generated revenue
of £3.1m from product sales in 2023. As noted in our trading update in
February, this performance was then followed by a strong start to 2024, as
orders in excess of £0.5m placed with our UK manufacturer for contractual
delivery in December 2023 were delivered late in early January 2024. The
Company delivered a gross margin of approximately 57% and ended the period
with a cash position of £7.7m, providing a solid foundation for Futura as it
enters 2024.
We continue to build on a leading position in the development of a topical gel
treatment for ED, with high barriers to entry and first mover advantage. Our
leading position is the result of the significant resources we have invested
into R&D and a lot of hard work, and I would like to extend my thanks to
our dedicated and loyal team for their unwavering commitment and support of
the business which has now started to come to fruition.
Strategy update
In our 2022 Annual Report we set out five priorities for the year ahead, below
we cover the progress we have made during 2023 against these priorities.
1. Marketing authorisation of Eroxon(®) by the US FDA as an OTC De Novo
medical device in Q2 2023.
In June 2023, Eroxon(®) received FDA Marketing Authorisation in the USA, the
largest consumer healthcare market in the world. Eroxon(®) is the first OTC
topical gel available to treat ED in the USA, a huge breakthrough for Futura
and a significant milestone on our journey. The FDA sets a very high standard
in evaluating the effectiveness and safety of De Novo Medical Devices and I am
therefore delighted that we met this standard with our submission of 22
clinical, biocompatibility, human factor studies and performance bench tests
which were rigorously reviewed and accepted by the FDA.
2. First launches of Eroxon(®) in Europe and first revenues reported,
with further launches planned in 2024.
Our European distribution partner, Cooper, launched in the UK and Belgium in
March, followed in July with soft launches, providing initial online only
availability without advertising or promotional spend in France, Italy and
Spain. The results of the launches in these initial markets have been
encouraging, with Eroxon(®) taking c. 20% market share of approved ED
treatments in the UK and Belgium within 12 months of launch, very strong media
interest in the launch, early signs of repeat purchase from customers, and
Eroxon(®) receiving several industry awards.
The success of the partnership with Cooper to date was demonstrated through
the recent extension of the licencing agreement until January 2029, with full
launches in at least ten countries including key European markets such as
France, Italy and Spain already occurred or expected during the first half of
2024. The granting of Futura's EU patent for Eroxon(®) until 2040 further
cements the intellectual property of the product as Cooper continues the roll
out.
3. Sign further agreements for key markets and countries worldwide - with
the USA being the main focus - to build a strong global network of licensing
and distribution partners and a strong brand identity for Eroxon(®).
Following FDA marketing authorisation in the USA, we were delighted to secure
agreement with Haleon, one of the world's leading consumer healthcare
companies, for exclusive marketing and distribution rights in the USA. As part
of the agreement, Haleon will commercialise Eroxon(®) in the USA as the first
and only clinically proven gel treatment for ED, available OTC without a
prescription. The USA is the biggest consumer healthcare market globally.
Haleon will be responsible for all advertising and promotional activities
related to the launch and marketing of the product in the USA. We believe
Haleon, with its strong capabilities in brand-building and marketing through
an unrivalled breadth of channels, as well as its connections and market
reach, makes the ideal partner to introduce Eroxon(®) to the millions of men
with ED in the USA. We continue to work closely with Haleon on the preparation
for the launch which is progressing well and will update shareholders on
timings as appropriate.
During the year, we also further strengthened our relationship with our
distribution partner for Central and South America, M8 Pharmaceuticals Inc
("M8"), by expanding our current agreement for Brazil and Mexico to include a
further fourteen countries covering the Central and South American region. M8
is an excellent partner with dedicated brand-building and marketing
experience, as well as a strong and reputable consumer healthcare presence in
South and Central America.
In conjunction with our advisors, we continually look to strengthen our
Intellectual Property portfolio whenever possible and have recently filed
three new patent applications in relation to Eroxon(®). These are new
submissions in addition to the patent that the EU granted allowance in
September 2023 and we expect to receive further patent approval across other
key ED markets during 2024 and beyond providing protection for Eroxon(®)
until 2040.
4. Continue to support our commercial partners in their own submissions to
local regulatory bodies and in their launch preparations.
Alongside our distribution partner for the Middle East, Labatec Pharma,
Eroxon(®) has been granted regulatory approval in seven Middle Eastern
countries, including the Kingdom of Saudi Arabia and the United Arab Emirates.
In addition, the Mexican Secretariat of Health granted OTC sale Marketing
Authorisation for Eroxon(®) in Mexico.
We also continue to make submissions in those countries where we currently do
not have distributors but where the existing EU MDR approval is evidence of
conformity of local national requirements thereby simplifying the regulatory
approval procedure. Australia being one of such countries where in 2023 we
received approval for Eroxon(®).
Post-period end, we announced that Eroxon(®), with effect from 1 March 2024,
is available to be prescribed by doctors in England and Wales for the
treatment of ED as well as the existing OTC availability of Eroxon(®). The
purpose is to increase the awareness and credibility of Eroxon(®) amongst
healthcare professionals.
5. Expand our supply chain and manufacturing capabilities to increase
supply chain robustness and capacity.
As we start to supply Eroxon(®) to our distributors around the globe it is
essential that we have a robust supply chain in place to provide greater
supply certainty, as well as additional capacity based on both Futura and
distribution partners' sales projections moving forwards. To this end, we have
developed strategic partnerships with two new contract manufacturers ("CMO"),
one located in the USA and the other in the EU to supply product to our
commercial partners. These supply chain partners will be central to the
long-term success of the product, and we are working closely with them to
deliver continuity of supply, with a product of high quality at the lowest
cost possible.
Future strategy
2023 has seen us move from a pre-revenue R&D company to a business with
first meaningful revenues being generated from commercial sales of Eroxon(®).
This is a significant step forward and therefore it feels appropriate to
refine our strategy as follows:
To commercialise innovative and clinically proven products for the OTC sexual
health market. We will partner with leading consumer healthcare partners who
are well resourced to commit significant marketing spend and expertise to
engage effectively with consumers.
This approach is aligned with the demographic changes of ageing populations,
increasing prosperity and the expectation of people to lead a full and active
life no matter their age.
With an innovative R&D team, we will look to fulfil the needs of the
large, underserved OTC sexual health market.
Going forwards, we will report against three strategic pillars:
1. Address the growing needs within the OTC sexual health market
2. Broaden the Company's clinically proven product range leveraging its
innovative and experienced R&D capability whilst being mindful of costs
and focusing on ROI.
3. Commit to delivering strong returns for shareholders, sustained profitability
and financial discipline
Our priorities for 2024 are:
· Address - Address worldwide demand for Eroxon(®) through strengthening our
supply chain and commercial network whilst achieving further regulatory
approvals and further launches across the world
· Broaden - Explore other range extensions as well as new innovative products
within the sexual health category to meet further unmet demand, supported by
clinical data whilst remaining mindful of costs
· Commit - Deliver further revenue growth and progress on the path towards
profitability in the next 12 months
Focus for FY24 and outlook
2023 was a year of significant achievement and I expect 2024 to be a year of
precise execution primarily with the further commercialisation of Eroxon(®).
The first meaningful revenues generated from product sales and the broader
success of the UK launch have been a catalyst for significant strategic
progress across multiple markets and we expect this to continue.
We have a fantastic springboard from which to deliver our de-risked, go to
market strategy, and we have confidence that we have found the best
distribution partners for our product.
As stated previously, we continue to work with Haleon on preparations for the
US launch and look forward to updating shareholders in due course.
Futura has already taken first mover advantage with regulatory approvals and
distribution agreements in place with leading consumer healthcare partners for
Eroxon(®) in key markets such as the USA and EU. With the size of the target
market and the continuous progress we are making, we look forward to the year
ahead with confidence.
James Barder
Chief Executive Officer
Sources:
1. EMA, Withdrawal assessment report for Viagra, 2008
2. Feldman HA et al. J Urol 1994; 151: 54 - 61
3. Pozzi, J of Sexual Medicine, Volume 20, 2022,
4. Ipsos research carried out on behalf of Futura in the US, 2022
Financial Review
As outlined in the Chairman's Statement and Chief Executive's Review, Futura
continued to focus its financial and human resources on Eroxon(®), its
clinically proven breakthrough treatment for erectile dysfunction ("ED").
During the year, Futura launched Eroxon(®) in a number of markets, including
the UK, and I am incredibly proud to be reporting first meaningful revenues.
These initial launches have been highly encouraging with Eroxon(®) taking c.
20% market share of approved ED treatments in the UK and Belgium. The Company
also achieved marketing authorisation in the USA and secured a standout
commercial partner in Haleon to launch Eroxon(®) in the USA.
Financial results at a glance
FY 23 FY22
Revenue 3,100,968 -
Cost of Goods (1,326,743) -
Gross Profit 57% 1,774,225 -
Research and development costs (2,045,988) (4,131,224)
Administrative costs (3,971,710) (2,068,413)
Adjusted operating loss* (4,243,473) (6,199,637)
Share-based payments (2,720,297) (671,852)
Operating Loss before tax (6,963,770) (6,871,489)
*adjusted for a non-cash share-based payment charge of £2.72 million (2022:
£0.67 million). The share-based payment charge predominately relates to the
LTIP award in October 2023.
Revenue
Eroxon(®) initially launched in March 2023 and the Company delivered total
revenue of £3.10 million in 2023 (2022: nil). Revenues were predominantly
generated from Eroxon(®) sales and further details of revenue are provided in
Note 5 to the consolidated financial statements.
In July 2023, the group signed an exclusive commercial agreement with Haleon
to commercialise Eroxon(®) in the USA and an upfront payment of £3.20
million (US$ 4 million) was received in 2023 upon execution of the
agreement. This is expected to be recognised in the Consolidated Statement
of Comprehensive Income in full in the first half of 2024. Details of the
revenue recognition policy can be found in Note 2.6 of the consolidated
financial statements,
Cost of sales
Cost of sales were £1.33 million (2022: nil) and generated a gross profit of
£1.77 million (2022: nil) reflecting a gross margin of 57%.
Research and Development
Research and Development ("R&D") costs for the period ended 31 December
2023 were £2.05 million, compared to £4.13 million for the period ended 31
December 2022. The decrease of £2.08 million reflects the focus shifting
towards commercialisation of Eroxon(®) as headcount costs are now allocated
to administrative expenses. The costs incurred are mainly reflective of the
activities that were required ahead of US FDA marketing authorisation.
There was no capitalisation of R&D costs in 2023 (2022: nil).
Administrative Expenses
Administrative costs were £6.69 million for the period ended 31 December 2023
compared to £2.74 million for the period ended 31 December 2022. This expense
includes a non-cash share-based payment charge of £2.72 million which is a
£2.05 million increase compared to 2022. The share-based payment charge is
predominantly relating to the LTIP award in October 2023.
The increase within administrative expenses includes headcounts costs which
have been historically allocated to R&D and are now allocated to
administrative expenses as the Company has focused on commercialisation of
Eroxon(®). Other costs that have increased compared to 2022 are associated
with supporting commercial partners and supply chain activities as Eroxon(®)
launches continue to be rolled out in other markets. In addition, there were
some one-off costs incurred relating to fees associated with negotiating and
concluding USA commercial arrangements for Eroxon(®).
Loss per share
The basic loss per share for 2023 was 2.21p (2022: 2.03p). Details of the loss
per share calculations are provided in Note 9 to the consolidated financial
statements.
Balance Sheet
The cash balance at the end of 2023 was £7.71 million (2022: £4.03 million).
Current cash runway extends beyond the Eroxon(®) launch in the USA expected
by early 2025.
Trade and other receivables increased from £0.27 million at 31 December 2022
to £1.24 million at 31 December 2023 reflecting the commencement of
Eroxon(®) trading.
Trade and other payables increased from £1.75 million at 31 December 2022 to
£6.34 million at 31 December 2023 predominantly as a result of the £3.20
million Haleon upfront payment, received in 2023, which will be recognised in
2024. The balance is related to an increase in trade creditors as a result of
Eroxon(®) trading volumes and equipment procured to expand the supply chain
capabilities.
The current tax asset of £0.38 million at 31 December 2023 (31 December 2022:
£1.02 million) relates to the anticipated R&D tax credit claim in respect
of the 2023 financial year.
Going Concern
The Directors believe that it remains appropriate to prepare the financial
statements on a going concern basis. However, they also acknowledge that a
material uncertainty exists that may cast significant doubt on the Group's
ability to generate sufficient net revenues and resulting cash inflows and
raise sufficient finance to meet its expected costs to discharge its
liabilities in the normal course of business. The financial statements do not
include any adjustments that would result from the basis of preparation being
inappropriate.
The auditor's report includes reference to the material uncertainty relating
to going concern. Further information in relation to going concern can be
found in Note 2.2 of the Preliminary Results
Angela Hildreth
Finance Director and Chief Operating Officer
Preliminary Results - click below to view Futura Medical's Preliminary
Results
http://www.rns-pdf.londonstockexchange.com/rns/9291J_1-2024-4-9.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/9291J_1-2024-4-9.pdf)
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