Futura Medical plc (FUM) Earnings Call Transcript & Summary

Okay. Well, good morning, everybody, and welcome to the Futura webcast for our interim results for 6 months ending 30th of June 2022. I'm delighted to be joined by Angela Hildreth, our FD and COO; and also by Ken James, our Executive Director and Head of R&D. So without further ado, let's move on to Slide 4. A little bit of Futura and corporate overview. We describe ourselves as a virtual organization. We have 13 staff and low overheads. We tend to subcontract a [indiscernible], including our contract manufacturer, and we currently have around 30 consultants that we call on over when we need them. Our key sort of expertise is applying skin science to deliver novel topical clinically proven treatments and DermaSys is kind of our brand that embodies that. We've got an experienced team, and we're very much focused on developing clinically proven innovations, which we then look to license that to commercial partners. Our main product, MED3000, is a topical gel for erectile dysfunction, and it now has U.K. and EU approval to be available without a doctor's prescription. It is a highly differentiated treatment with a fast onset of action. And mainly claim that we can make in Europe is -- helps you get an erection within 10 minutes. The FDA dossier, we expect to submit by the end of September, and we are focusing on, certainly over the next 6 months as we go into 2023, initial launches, and further launches again in the back end or back half of 2023. And our other sort of key focus is very much looking to secure a U.S. commercial partner to complement our existing distribution network. MED3000 on our commercial, our real aim is building the long term profitable global distribution network, and I'll touch on that a little bit more in due course. We do have other products in our portfolio, to name one there's CBD100. But Ken will talk a little bit about that a little later, but our main focus is very much on developing MED3000. So turning the page. Six months highlights, very much focusing on our strategic decision to maximize our R&D pipeline by derisking the assets through getting approval. We've had successful completion of FM71. In August, that again, Ken will talk about that just bit more in due course, and also our manufacturing now is really ready for initial long suppliers and beyond, and when we mean beyond, certainly for the next couple of years based on the forecast that we've got today. MED3000, we've also, on a commercial perspective, we signed a deal with Cooper Consumer Healthcare to distribution throughout, basically all of the EU and the U.K. and Switzerland. And we now have -- again, pleased to say initial orders have already come in, are ready for the launch, which will be in the first half of 2023. Again, I think it's important to stress that a lot of this information will become commercially sensitive, and therefore, we won't necessarily be able to say that much ahead of the launch other than, as I already said, we will be launching in a number of countries in the first half of 2023. And then obviously, further countries will be along during the year. Again, on the clinical data, Ken will talk about the 2 studies that we've done in the last year, which is critical for the FDA submission, to obtain marketing authorization. And with that in mind, we have now appointed specialist corporate advisors that same the company have used previously as we continue to build or as we complete our global distribution network to very much focus on finding a commercial partner for the U.S. Angela?

Thanks, James. Not a lot to say really because financially, everything is very much as we expect it to be. We had a net loss in the period of GBP 2.5 million. This is an increase of around GBP 1 million on the period last year, but also not surprising as FM71 began running in the second half of 2021 and continue to run through 2022 today. In terms of cash, we ended the period with GBP 6.68 million in the bank. And then when added to the expected tax credit refund, we expect it to be received before year-end. That provides the company with cash of just over GBP 7.5 million. And we believe, even without further milestone payments and the revenues generated from product sales of MED3000, this should be sufficient to take the company through to the expected U.S. regulatory approval and beyond, under the current plans. Back to you.

Moving on to the next slide. Sort of core strategic objectives, which as I said earlier, we're very much focusing on, I think it didn't creep well on. It's gained the U.S. marketing authorization of MED3000 over the next -- sorry, within the next 12 months, complete our global distribution network, along with a robust supply chain to enable us to make -- made into a long-term sustainable profitable brand. Initial country launches of MED or Eroxon, which will be branded in certain markets next year, and to really validate consumer interest and repeat purchase potential and to progress MED3000 commercial negotiations for the biggest market in the world, which is the U.S. Moving on, a little bit more now about Eroxon itself. This will become the first topical gel to treat erectile dysfunction in adult men throughout Europe, which has already gained approval for there and also U.K. Available without the need of a doctor prescription. This is very critical. As in most countries, apart from, I think, the U.K. in Europe, it is still requires a doctor's prescription. And obviously, in the States, which is by far the biggest market it is, again, oral treatments for PD5 such as Viagra, which is known to most people is a prescription-only product. Eroxon is a clinically proven gel to treat erectile dysfunction, and its key differentiating claim as it helped to get erection within 10 minutes. So therefore, removes the need to preplan when you're also normally taking oral treatment. It brings spontaneity back into the treatment of erectile dysfunction. Turning on to the next slide. There is a significant commercial potential. I get the back of changing dynamics in the market, the global ED market has grown and it continues to grow as volume rises, but it's also becoming more of a generic market. In other words, the main products of Viagra Cialis have become what is known as generic. And therefore, as the competitors can come in because their patent just now expired, it has had an impact on dropping price. Obviously, the increased affordability drives up volumes, which is a good thing. Nevertheless, even with the reduction of price, then there's definitely still a barrier for patients using the treatment, still because of costs because they have to see a doctor and there are economic costs with doctor, not just for the cost of the prescription. And also as inferred by that, because you have to see doctors get treatment. Certainly, we're in the process of doing further market research at the moment, and one of the initial filings we've seen in this is that typically U.S. patients are paying between $600 and $3,500 per annum for their treatment for erectile dysfunction. And whilst the actual physical cost of the actual medications drop, they still have to pay, even take into account what coverage they can claim back under insurance, the cost of the doctor's visits. And if you then kind of equate that into frequency of intercourse, and again, research have shown typically men are having 70 intercourse times a year. This still means that typically, a patient is paying between $10 and $50 each time they have attempted intercourse. So to have a topical over-the-counter treatment, which is probably going to launch around a $5 mark and maybe a little bit more. There is still a huge opportunity there as the barriers of cost and the barriers of seeing the doctor do not exist. Turning the page to the next slide. Again, one of our core strategic objectives is to build a global network, and we're making very good progress on that. Over the last 2 years, we have signed 5 deals. Now the main exception is very much the U.S. and having completed the recent study and the submission shortly. We do expect to focus very much on finding a commercial partner, and have already instructed our corporate advisors to move ahead on that. All the deals to date very much focus on some key performance obligations. Obviously, where our regulatory costs are required and the submission timelines, we expect partners to adhere to those. And then there are certain performance obligations around the launch times, and advertising and promotional spend, which has been critical to really build the brand. As I touched on earlier, our CMC, or chemistry manufacturing controls, is progressing well. We have an accredited supplier. We now have a 42-month shelf life product, which means that after a manufacturer shipping, we would expect to see at least a 3-year shelf life at the point of sale once it gets onto the shelves. Manufacturing is now sort of underway, as we've already received first orders. And we have capacity based on the CapEx that we made, to supply us for certainly the first couple of years, and we are now really focusing on how we expand that as sales build up, and looking at alternative sites just to, again, increase the supply chain robustness. So moving on to the next slide. New research is underway. But I think the key components still remain. They're kind of traditional, and adds to newer segments that we see where MED3000, there's a big opportunity for. Yes, the Viagra Cialis are effective treatments. And for a lot of men, they are happy with this. Nevertheless, there are a number of men who either are contraindicated, in other words, they cannot use this medication. So at the moment, that is a completely untapped market, they're a lot of men who have dropped out after using these products certainly in the first year. And the reason cited behind that is the side effect profile and also the requirement of preplan before they take the treatment. There's no spontaneity and therefore, a treatment like MED, which has a rapid on -- speed of onset within 10 minutes, can bring spontaneity back into treatment. Again, Viagra and Cialis are prescription-only products other than in some markets such as the U.K. for Viagra only. There's an embarrassment for men going to see a doctor. And there's the cost as we've already touched on, and then the inconvenience associated with that. So there is huge interest, huge demand. The research historically has shown typically -- this could account for 2/3 of men who are suffering with erectile dysfunction. So a huge appeal for a treatment that they're able to buy over the counter by just walking into the pharmacy or through the pharmacy's online website. There are also newer segments which are coming in. There's a growing amount of young men who have, if you like, grown up with widely available access to pornography, who have concerns around their performance. A treatment like MED3000 could help them with their concerns around this. And then finally, as an over-the-counter product, we've done market research, which has shown that a lot of women whose partners have erectile dysfunction would be really interested in trying to help that partner overcome their issues. And now they will be able to buy a treatment to help him in that regard. So we see this as a significant opportunity. Previous research has shown around about $660 million as a global opportunity. We are doing some further research on that, which is halfway through, and we look forward to updating the market in due course, but we still see this as a big opportunity. And then I think finally, from my slides on this, intellectual property. If MED is as big an opportunity as we think it is, it's very important that we try to protect this asset as fast as possible. And for us, the best way of doing that, and we take in both corporate and strategic advice, is to have as many different layers of protections we can do. Again, we're not going to tell everything, obviously, to the market for obvious reasons. But aside from the patent, which has been filed in a number of markets, and certainly, initial EPO, European Patent Office's examination confirm the novel and the inventive nature of the patent application, and that is critical in the process of securing intellectual property of patent on our product, is progressing well. Some other things that we've done, one of the excipients, one of the components in the gel is under exclusivity to Futura and even as using other products, in the area of sexual health, it can only be supplied to us. And this company has 2 different factories that, again, from a robustness of supply, we feel comfortable around that. Also, we're looking for MED to launch under the Eroxon brand wherever possible. And again, you can build and establish global awareness and consumer trust behind that. On Special Controls, I kind of refer to Ken.

Thank you, James. So Special Controls are controls which are applied to de novo medical devices, which ensure the safety and effectiveness of the device, and they are entwined in the marketing authorization, which is granted by FDA. And what they do is create a very high bar of clinical and nonclinical data which generic products have to replicate if they attempt to use our product as a predicate for a 510(k) approval.

Thank you, Ken. So moving on. And in fact, I'm going to switch it pass back to Ken, again.

The key event for R&D over the last few months has been the completion of study FM71. And this was a study that was requested by FDA for us to carry out as part of the approval process. We had some very productive pre-submission meetings with the FDA leading up to the conduct of FM71. And in essence, they agreed the protocol. They agreed the endpoints in advance. So on that basis, the study we reported out just over a week ago. And very good news. We met all the primary and secondary endpoints, specifically on the secondary endpoint, that related to the differentiated claim that we have, which is the first signs of an erection within 10 minutes, which we hope will be translated into more consumer-friendly language, or helps you get erection within 10 minutes, which is the same claim that we're using in the EU. Overall, the clinical study, in our opinion, presents a very favorable benefit to risk profile versus a leading prescription product, paving the way for OTC marketing authorization in the U.S.A. The next slide gives a little bit of color around the primary endpoints. And the measure that was used for both primary endpoints is called the IIEF domain, which is the internationally accepted gold standard measure for all erectile dysfunction products in clinical studies. And there were 2 elements of this, which comprise the co-primary endpoints. The first one was that at 24 weeks we had to get a statistically different improvement in the erectile functionality over the baseline or pretreatment result, and that was achieved. We were highly significantly better than the baseline result. And the second element of this was that the magnitude of that difference had to be so large that we exceeded the minimal clinically important difference, which is a value of 4 units bigger than the baseline. And you can see the tabulation on the left-hand side that through the entire study, week 4, 8, 12, 16, 20, 24, we exceeded 4 units, the critical one in respect of the primary -- co-primary endpoints was the last one at 24 weeks, which was 5.73 in excess, obviously, of 4. And as I've mentioned, we've got highly statistical significant difference of the baseline on that. So both the co-primary endpoints were achieved. The graph on the right is merely a graphical representation of the tabulation on the left-hand side. So very, very pleasing on that. Both MED and tadalafil were clinically affected with more time points, although tadalafil will show slightly greater improvement than MED. But there are some advantages that MED achieved over tadalafil, which I'll now come on to talk about. The secondary endpoint focused on achieving a speed-of-action claim. And the criteria for approving this claim was agreed ahead of time with FDA. And I'm pleased to report that MED achieve that onset of action endpoint at 10 minutes. And that difference was highly statistically significant, again. Oral tadalafil, when you apply the same criteria, did not meet the FDA criteria, which is not surprising because the oral medications typically take 30 to 60 minutes before they start working. So 10 minutes was probably never going to be achieved with tadalafil. But it's good to have that data supporting the product, which is a key differentiating claim for an our product, helps you get an erection within 10 minutes. The other advantages that we achieved with MED over tadalafil, again, perhaps not unexpectedly, are the adverse event profile. There's a well-known phenomenon that the PDE5 inhibitors have side effects of headache, backache, and some stomach upsets occasionally. And the differences that we've got here were certainly the instance of headaches where 19.1% of tadalafil subjects had headaches, only 4.3% on MED. Back pain was a significant issue with tadalafil. And also noncardiac chest pains of 2 subjects just happened to be the U.S. subjects who achieved that particular side effect. On MED, we got 2 instances of nausea and 3 instances of female headache. Given the product only works topically, we think that that's purely idiosyncratic. We got virtually no local side effects on MED. We've got mild burning sensation in 1 subject on MED, and no instances in the female participants in the study. So very clean from a local or topical side of that profile. And of course, because MED is a medical device that contains no drug, there's no potential for MED to have adverse drug interactions, which is a problem with the PDE5 inhibitors, the oral medications where they're currently precluded from using a number of prescription medicines such as nitrates whilst they're on the erectile dysfunction medication. So we have a very favorable side effect profile compared to the PDE5 inhibitors. So turn to the next slide. So in summary then on FM71, we've shown that MED3000 is a clinically effective treatment for erectile dysfunction. And in contrast to the PDE5 inhibitors, the oral medications, MED has a fast onset of action with a 10 minute onset claim. No significant side effects, no potentially serious drug interactions. And therefore, in our opinion, has an ideal benefit to risk profile for OTC classification. And indeed, in the EU and the U.K., it already has OTC status. If we move finally on to the regulatory status. We've gone through a number of presubmission meetings with FDA, which are designed that FDA has behest really to help companies get an understanding of what FDA's requirements are, and to discuss areas of the potential differences of opinion and agree the program going forward. So we had a number of productive meetings with the FDA already. They identified 2 key areas that they wanted us to develop data in. And the first was a human factor study, which is designed to test the adequacy of the OTC label on the leaflet. That was successfully completed at the end of December. We got excellent results from that study. And then, of course, the additional clinical study, FM71, which is now complete. And that protocol for that and the endpoints, we're fully agreed with the FDA requirement to the conduct that study, and we've met the requirements there, we feel. We're now on a very fast track actually to wrap all that information up into the submission, which is going into FDA at the end of this month, the end of September. And if FDA keeps to their time line for approval, and there are no major issues with that submission, which we don't think there will be, we are optimistic that we will get an approval at the end of Q1 next year. Thank you. Now moving on, beyond the first product to the pipeline, which is MED3000, we do intend to follow on that with a number of pipeline initiatives. So we've got the lead product here, year 1, which is coming in a tube of unit dose 2. We think there is scope to potentially improve the packaging, and even reduce the cost of goods even further by using some more elegant sachet or snack packaging. That's already in the development pipe. Beyond that, we think that there is scope to improve the sexual experience with new delivery devices such as a noose or a spray. And then longer term, potentially going into new indications such as premature ejaculation or female sexual disorder, and we're already doing some extraordinary work with our key opinion leaders on that. So we don't just see this as a one trick pony. We see this as a succession of products coming on the pipeline over the next few years. So that concludes the discussion on MED. I just wanted to mention very, very briefly another development that we have in our pipeline, and that's topical cannabidiol. Now the focus very much at the whole organization has been on MED and Eroxon, and productions and clinical study and applying for the filing in the U.S. So this work is really only at its exploratory stage, but we do have an excellent prototype, which has been developed with cannabidiol using the DermaSys technology. And is able, as you can see here, to deliver cannabidiol into the skin and through the skin very, very effectively. And we're seeking potential licensing partners on that as part of the exploratory work that we do.

So looking out to next year and beyond, with positive FM71 results in hand, our first priority is for us to submit the dossier for MED3000 to the FDA, and this is scheduled for the end of this month. We're also looking forward to initial EU launches of MED3000 under the Eroxon brand with other regional launches throughout next year. We also expect the FDA to grant marketing authorization in Q1 2023, enabling MED3000 to be available as a clinically proven treatment for ED, which is available without a doctor's prescription. And finally, and very importantly, we look to progress securing commercial agreements for MED3000 in the U.S., which will allow us to deliver long-term sustainable value.

Thank you, Angela, and that concludes the webcast for today. Thank you for listening.