Earnings Call: H1 2021

Sep 29, 2021

Quarterly report

Well, good morning, everybody. Welcome to Futura Medical's interim results for six months, thirtieth of June twenty twenty one webcast. I'm delighted to say I'm being joined, and I being James Barder, the CEO by Ajay Hildreth, who is the chief operating officer and finance director of the company, and also by Ken James, who is the executive head of r and d. Without further ado, can we please move to slide four? For those that don't know much about Futura, this is just a brief overview about the company. We are an aim listed company, located in the Research Park in Guildford. We describe ourselves as a virtual organization. We have 13 staff with low overheads, but we have a significant outsourced infrastructure with over 30 consultants, which we plug in and out as when we need to to keep our costs down. Our real core expertise loosely describe as dermasys and this is about applying skin science to deliver novel topically clinically proven treatments. We have a track record of developing clinically proven innovation and our two key areas, which again are both pretty late stage, are sexual health and pain relief. Our main product we describe as MED three thousand. This is a topical trial for the treatment of erectile dysfunction. It's clinically proven for the treatment of erectile dysfunction without the need of a doctor's prescription. It is highly differentiated treatment with a fast onset of action, helped to get an erection within ten minutes, and earlier this year we got approval throughout Europe as a class two medical device enabling us to make such strong claims about a clinically proven treatment. We've also recently started a study, which Ken will talk about a little bit later, in The States, which are in need to get approval there. We have two other products in our portfolio, CBD one hundred, which is a topical gel containing cannabidiol, and TPR one hundred, which is a topical gel containing diclofenac. Next page. The last six months have been a very busy period for us, and our priority remains focused on delivering for MED three thousand and in particular getting licensing deals and generating further clinical data for US approval. We are in the process of establishing a global distributor network and the key thing for us is to build a sustainable and profitable brand for MED three thousand as it is a fast acting clinically proven treatment for rectal assumption, and we expect to see initial launches during 2022. We also, whilst it is not a priority for us at the moment, we do expect further realization of value from our pain relief portfolio, but as I said, that is not where our real focus is. Our real focus, as I said, is MED three thousand, and I will talk a little bit later really about the different I will talk about the commercial, and then Ken will also talk about the, the regulatory development that we're doing particularly for America. But the key thing for this year is that we got EU approval, which is a key milestone for us as a company. As I said, we also have other products from pain relief. We're not gonna really talk too much about that today because our priority remains on MED 3,000, though I can confirm that we during the year, we did, file a patent for CVD 100. And finally, Angela will will talk in greater detail in due course on the financials for for the period. We had a net loss of 1,500,000.0. We have a healthy cash balance at the moment, and the important thing is we believe this is sufficient financial resource to deliver on our strategic objectives. Moving to the next slide. These objectives are really three key things: gain US approval for MED three thousand as a clinically proven over the counter treatment for erectile dysfunction within the next eighteen months. Again, it's important to stress this would be the first clinically proven treatment in America which you would be able to buy with an over the counter treatment, in other words, available without needing to go and see a doctor. Secondly is continue building a global distributor network to establish MED three thousand as a long term sustainable and profitable brand. And I think we've made some very good progress in the first six months of this year. Again, I'll talk about that a little bit more in due course. And then, obviously, focus very much on the successful initial launch in 02/2022 to demonstrate commercial traction and repeat purchase credentials of MED three thousand as we progress with other commercial deals. Moving on to the commercial side of med, a little bit more about med or what we hope it will be called irroxan. This is the first over the counter gel to treat erectile dysfunction in adult men throughout Europe. As I said earlier, we got approval for this earlier on in the year which is a major breakthrough for us as a company. It's clinically proven to treat erectile dysfunction and again the key claim that we can say is it helps you get an erection within ten minutes. Obviously, part of the process now is to build a global distributed network to enable us to optimize and maximize the value of this key asset of us. And to date this year, we've signed three deals. We signed a deal earlier on in the year, I think in March, for Southeast Asia with a company called Cohai Investment Management, and that is a joint venture type arrangement. The reason behind that is that we know that to get approval in the key market there, which is China, further clinical needs to be done and Cohai will be in charge of that and paying all remaining clinical work to get approval there. The deal also covers a number of other territories in the region. And although, or rather, we we believe we'll be able to have faster track approval there because we can rely on the EU approval. But those launches will follow what we're looking to do in some of the key territories like in Europe. In addition to that, we signed a deal in August in Latin America with a group called M8 Pharmaceuticals and more recently, actually only a couple of days ago, we signed a deal in The Middle East for Labotec Pharma. In these instances, both M8 and Labotec have a strong track record of being able to build new prescription products in most cases as well as OTC, building awareness, building credibility, and therefore that is why we chose both of these partners for these two areas because we felt they really had the expertise and core ability to deliver on what we're seeking to do. As you can imagine, with an asset like this, with the strong claims that we can have, we'd had a number of approaches and therefore we spent a lot of time going through this before we made the decision on the partners that we had chosen. Key thing again to stress, focus on building sustainable and profitable brand. Where we can, the idea is for the brand to be called a Roxxon, but that will be dependent on regulatory and marketing preferences in those local markets, and obviously to make sure that the word like a rock song in whatever language it's been communicated is an appropriate and suitable name for a brand for erectile dysfunction in those markets. Again, think the key thing with these agreements are all regulatory costs and submission in Thailand are at partner expense. There are some very strong performance obligations around launch timing and advertising and promotional spend. It's one thing putting it on the market, and we could find a number of players who would just stick it on the market. It's about building a long term sustainable brand, and that takes money and expertise and experience. Again, that very much underlines the reasons why we've taken the partners we have. Again, it's very much around looking to have a product which has a global recognition and a global brand. In addition to that, again very much to support that, I'm also pleased to say we have added a further contract manufacturing organization, So we now have two. The second one that has recently joined has very extensive manufacturing capabilities, and certainly we believe will be able to provide us with sufficient product at a cost effective price, certainly for expected launch program for the first three years, and we'll be looking to build on that as we move further forward. In addition, there are many other markets where we are in negotiations and we do expect to be able to provide shareholders with further updates during the remainder of this year and probably moving into 2022. I think one other thing which is interesting, which is changing and I think very much lends itself to us, is there is a change in the market dynamics, certainly in the key markets. The global leading market is continuing to rise, and I think more recently with the impact of COVID, the whole dynamics of how products such as erectile dysfunction are being prescribed or being sold is changing. Very interesting to see whereas we're seeing year on year about an 8% increase in volumes and sales for ED prescription products. In America, we've seen this grow by its going at 85% in the past two years, and this is because the market is moving onto much more of a subscription type service. In America, you have Get Roman and for HIMSS. In The UK, for example, you have a company called Newman, and these are where they're targeting men who were probably a little embarrassed about going into a shop. They want to go to buy something online from a credible, company, with an ability to consult the health care practitioner. And what we're planning to do, in some respects, follows this. Obviously, we will have an over the counter, so we don't need to have a doctor to enable people to buy the product, but it's just showing this dynamic as people increasingly look to buy, especially a product like this, which can be embarrassing, where they can buy and feel reassured they're buying it from a credible company and also with strong healthcare provider support. Key thing here is also affordability, which again is in part driving some of the volumes. And what we're seeing, especially in the American markets, typically with these type of subscription services, same in The UK, you're looking at around about a £5 cost per dose. And again, that's very much the sort of price that we're looking to target MED three thousand, albeit it has some very novel and different characteristics to existing products. Next slide. Just a little bit about those different characteristics. Don't get me wrong, the market has been revolutionized by particular Viagra and Cialis, but for a lot of men, the fact that there is a need to plan these treatments, certainly in the case of the Viagra, can typically take at least an hour. There's no spontaneity in that. In addition, there are a number of side effects, and aside from The UK where Viagra is over the counter, all of these treatments, and especially in a big market like America, remain very much a prescription market. We're not particularly looking to target men that are comfortable with those treatments, but there are a lot of men who are dissatisfied quite often because of this planning requirement or the side effect profile. You've also got up to twenty percent of men are contraindicated. In other words, they cannot take these treatments because there are other medications which could interfere and have a safety issue associated with that. So a treatment like MED, a clinically proven treatment with no contraindication, a massive appeal to them. And then in addition, you've got a lot of men who suspect they may have a degree of erectile dysfunction, but they're too embarrassed even to actually go to one of these subscription services. And therefore, if they can go in and buy this online themselves or maybe put it in their shopping basket if they go to shop without having to talk to somebody, again that has strong appeal. And certainly in the research that we've done, typically you could see that seventy three percent of over the counter sales could come from patients that are not currently on treatment. Finally, there are several newer segments that we're very much looking to target: young men there is a growing prevalence of erectile dysfunction in younger men. In part, this may be attributed to the fact that they've grown up in the age of the Internet and pornography, and therefore as a consequence have a perception of how they should perform, and they're seeking treatment. And a lot of doctors do not want for a young man to prescribe a treatment like Viagra cells, which are pretty potent drugs, but potentially the remainder of the individual's life. So a treatment like MED could be a first line treatment for them, because it's safe and effective. And then in addition, as an over the counter treatment, there are a lot of women whose partners have a Rett Gargestruction who feel very frustrated. They want to continue having a healthy sexual life, which is part of that relationship with their partner, and in this instance they could go and buy the product. As we said, has a very fast speed of onset and can be used as part of foreplay. So overall, we see this as a significant opportunity with a large untapped market without trying to tackle, if you like, or targeting directly those men who are satisfied users that don't use Viagra or Cialis. That is sort of the commercial side. I will now hand over to Ken Che. Ken? Thank you, James. And if you can move on to the next slide, please. So we continue to make very good progress in The United States towards OTC approval, and FM71, the small confirmatory clinical and the small human factors study, are on track to enable us to submit to the FDA a dossier third quarter next year. In fact, we announced recently that the first patient was recruited into our FM 71 clinical study on the September 14, so that study has now officially commenced. In respect of Europe, importantly, we now have achieved EU approval for a class two b medical device, which gives us the CE mark. And we we need to go through a small administrative process, which we understand from our notified body is a fairly routine and simple process to regularize that for the the Brexit conditions by attaining a UK CA mark by June 2023, and and that will be achieved well ahead of that time frame. Importantly, the EU approval in the CE Mark is acknowledged as an important document for many non EU countries and facilitates a more rapid approval in some of the countries where we currently have an interest with our new partners. So that's an important milestone that has been achieved, the EU approval. In respect of the FDA, it's important, I think, to acknowledge that we've followed FDA's guidelines here very, very carefully, and they do encourage companies to have early interaction with them on planned non clinical and clinical studies, and careful consideration of FDA's feedback may improve the quality of subsequent submissions, shorten total review times, and facilitate the development process for new devices. So we've had five consultations or pre submission meetings with FDA to define the need for a new clinical and a small human factors study. We've had detailed discussion around the design of those studies to de risk them as much as possible and make them as least burdensome as possible, whilst meeting FDA's requirements. I'll talk in a little bit more detail about how we've done that in a moment, but very successful meetings. We've now got FDA agreement to the protocols for both of those studies, And as I mentioned, data generation will be complete q two twenty twenty two, dossier submission q three, and approval, if that goes well, in q one twenty twenty three. Move to the next slide. So the confirmatory clinical FM 71. This is a phase three multicenter comparative randomized open label home use parallel group study of MED three thousand and Tadalafil five milligram in in a hundred subjects. That's quite a mouthful, and I'm gonna break that down for you in a little bit more detail. So clinical studies are defined in terms of the endpoints, and the primary endpoint is the most critical endpoint because the success or failure of the study is often judged by whether or not you meet the primary endpoint. What we've negotiated with FDA is that we can use an improvement of MED three thousand over the pretreatment baseline effect using the internationally recognized scale, the gold standard measure of IIE FEF at twenty four weeks, and also observed that this change is greater than or equal to the minimal clinically important difference, the MSID as it's known for, as published by Rosen. He fully validated this and it's now recognized as an acceptable patient reported outcome. Now it's important to note that we achieved these two endpoints in our previous clinical study FM57, over a twelve week period, and therefore we have a high degree of confidence that we'll be able to achieve them at twenty four weeks in the new study. FDA wanted us to put a comparative product in there to help them assess the benefit risk ratio, So tadalafil five mg has been included to achieve that, and it's defined as an exploratory endpoint to enable them to do this benefit risk ratio. It is not a requirement that we match the efficacy of tadalafil in this particular study. Also, as a secondary endpoint, we've agreed with FDA a statistical design to look at the key differentiated claim of speed, and we're going to be measuring that at five minutes, ten minutes, and fifteen minutes. Ten minutes was achieved in the FM57, so again, we're following a similar pathway there to what was achieved in the earlier clinical study that we conducted. FDA wanted us to include a mix of mild, moderate and severe ED sufferers. That's exactly what we did in FN57, so it presents no issue for us. In addition to conducting the study in Eastern Europe, we discussed with FDA how we could extrapolate from the total study population to The United States. The bottom line is we agreed to include a small cohort of 20 African Americans in the study coming out of Johns Hopkins to supplement 80 patients coming from Eastern Europe. Some of the centers that were used in FM57 are same centers that we're using in FM71. So move to the next slide. This issue of twenty four week duration, FDA had concern that efficacy may tail off after twelve weeks. That really wasn't our experience with FM57, albeit we only studied it up to twelve weeks. But you can see from the highly coloured chart here, which looks at the average dosing within certain time frames of baseline up to four weeks, between four and eight weeks, and between eight and twelve weeks, that from the very first doses that we're given, you do get a significant effect from MED three thousand, which builds up on the second, third dose. But you can see, if anything, there's an increase in efficacy over the period four weeks to twelve weeks, so there's no indication that the effect is starting to tail off. So we're pretty confident that we are going to achieve the benefit of twenty four weeks, which was a requirement that FDA asked for. It's a small study. It's one hundred patients. By comparison, FM57 was one thousand patients, so we have 100 patients. It is not a requirement to include a placebo or a sham, as it's called by the medical device people, and we argued quite successfully to FDA that the clinical study size would become too large and too burdensome, particularly for a small company like Future to manage, and they were happy to accept the fact that we don't need to include a placebo in the study. Next slide. So that's the small confirmatory clinical study FM71. The human factors study is a pretty routine study for medical devices, and it also is critical for us to achieve OTC classification because remember, when people select the product from the supermarket shelf, they don't have the benefit of a doctor intervening and explaining whether the product is suitable for them or not, and how to use the product. It's essentially putting people through the process to make sure that firstly, they can self diagnose their erectile dysfunction because they don't have a doctor doing that for them. The first part of the human factor study is to enable people to show that they can self diagnose their ED. So we recruit ED sufferers through advertising, it's an all comers study, so they reckon they've got erectile dysfunction, and then we confirm that diagnosis by a clinician applying the internationally recognized scale that I referred to earlier to confirm they actually do have that condition. And then stage two is can potential purchasers self select appropriately by reading the label? And users are asked to apply the criteria on the label to their own personal medical condition, select or deselect or as appropriate. Now in respect of self diagnosis, this is the way we recruited people for our earlier clinical study FM57. We got an extraordinarily high accuracy in self diagnosing in that. And also, we've conducted already a small pilot study, human factor study, on the label, and we're very confident that we're going to get a good result here with people being able to appropriately select or or deselect without advisement from a doctor. And then finally, once we've got people going through stage one and stage two, they have to conduct performance based tasks, which basically involve undoing the packaging, taking the cap off, and piercing the aluminium seal, and then applying the product to a model to show that they can apply it to the right part of the penis following the instructions on the label. And FDA have asked us to include a minimal of 15 users in that last part of the study. So you can see that this is a relatively small study and will be conducted within the time frame of the overall project, and we'll have results available certainly by the time FN '71 reports out. So I'll now hand you over to Angela to talk about the financial aspects. Thanks, Ken. So in terms of the financial summary for the first half of twenty twenty one, we had a net loss of 1,500,000.0 in the period, which was slightly higher than in the same period in the prior year. This small increase is as expected given the FM 71 study started towards the end of the half year, and we had some one off legal and professional costs associated with transactions in the same period. Following funds raised of £14,000,000 in the period, we ended June with just under 13,000,000 in cash. Under current plans, this provides runway out beyond expected US regulatory approval, and it's important to know that the ex estimated runway does not factor in any of the revenues generated from upfront milestones, royalties, or any other income generated from Med 3 thousand sales. Next slide. So finally, as we look ahead, I think it's safe to say that we are, extremely positive about the the the the coming months since finishing this year. We've we we're entering the second half of twenty twenty one with a strong balance sheet that provides us with sufficient funding to deliver additional Med three thousand approvals and initial launches. We've already concluded commercial arrangements in three key regions, and we look to close out further agreements to expand the MED three thousand distributor network, and we're looking at initial launches in 2022. In parallel with commercial activities, we're also looking to complete the required FM seventy one and human factor studies required for FDA regulate resubmission, and we expect that to happen in the third quarter of next year as Ken touched upon earlier. We may have some updates relating to other products in our pain portfolio, although I'd like to stress again, you know, MED three thousand does remain our core priority. And finally, as James alluded to, within his statement release earlier, we are making some board changes. Jonathan Freeman, the senior independent and executive director, is stepping down at the end of this year and will be announcing his replacement shortly. We don't we'd like to thank Jonathan for his contribution and his support over the years, and we really do wish him well on his next endeavors. As we look to the next phase of Med three thousand, we're also looking to expand the board and strengthen look strengthen the commercial expertise. And, again, we should be announcing something shortly as that process completes. That just leaves me to thank you all for listening this morning. We'd also like to thank our shareholders for their continued support, and we look forward to providing further updates shortly. Thank you.