Results for the Year ended 31 December 2023

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

Contacts:

Futura Medical plc	James Barder Chief Executive Officer Angela Hildreth Finance Director and COO	[e-mail] [phone] www.futuramedical.com
Liberum Nominated Adviser and Broker	Phil Walker Ben Cryer Nikhil Varghese	[phone]
Stifel Nicolaus Europe Limited Joint Broker	Alan Selby Ben Maddison	[phone]
Alma Strategic Communications	Rebecca Sanders-Hewett Sam Modlin Will Ellis Hancock	[phone] [e-mail]

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 men¹, affecting all age ranges, with approximately 50% of men over 40 experiencing ED² and around 25% of new diagnoses being in men under 40³. 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 dissatisfaction⁴.

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

 

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