Futura Medical plc (FUM) Earnings Call Transcript & Summary

Good morning, and welcome to the Futura Medical plc Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself, however, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit following poll. And I would now like to hand you over to CEO, James Barder. Good morning to you.

Good morning. My name is James Barder, and I am the CEO of Futura Medical, and I'm joined for today's presentation of the '23 year results by Angela Hildreth, who is Finance Director and Chief Operating Officer in Futura. Futura specializes in the development and commercialization of innovative and proprietary sexual health products. Our lead product being Eroxon is a clinically proven breakthrough treatment for erectile dysfunction. We also describe ourselves as experts in research, development and commercialization of topically delivered gel formulations. I appreciate that for those longer-term shareholders, this is a change from Futura's previous focus. Following the success of Eroxon, this is a deliberate change in strategy to concentrate our efforts and resource exclusively within the area of over-the-counter sexual health treatments. Erectile dysfunction, or ED, is a large underserved market with only a limited number of treatment options. Furthermore, there has not really been any new innovation in the treatment of erectile dysfunction in the past 20 years, nothing really since the approval of Viagra and Cialis and Levitra some 2 decades ago, a group of ED treatments collectively known as PDE5 inhibitors. ED impacts roughly 20% of men across all ages. Even though older men are more severely impacted by ED, there is a growing number of younger men presenting to doctors. Even then, as young as 18 are now seeking treatments for their erectile dysfunction. And most historically, ED was always considered not a health condition, this is very much no longer the case. In 2023, the global market for ED in prescription terms was worth around $3.5 billion. In spite of ED being a multibillion dollar market, only around 20% of men are on treatments. So why such a low take up? Viagra and Cialis, don't get me wrong, are very successful and effective drugs. However, they do have some drawbacks. Firstly, planning is required for those types of drugs as they can take typically at least an hour to have an effect thereby removing the optional spontaneity within the bedroom. Secondly, you generally require some form of interaction with doctors to obtain a prescription. In the U.K., Viagra and Cialis are now available over-the-counter. But it is important to understand, this still requires the man to complete a questionnaire, which, depending on his answers can be up to 41 questions in the case of Cialis, before the pharmacist can supply the medication. This is both the cost and embarrassment implication. Some men will just not want to talk about their ED, and it's an admission to themselves they have a problem, let alone discuss in front of other people in the pharmacy. Finally, on PDE5's side effects. PDE5's are affecting around about 75% of men, but up to 20% men will experience side effects typically in the form of a headache or blushing. Aside from the issues associated with men using PDE5's, we believe the real opportunity lies in the 80% men that are not treated. We believe the main reason behind this -- around about 20% of men are unable to use PDE5 inhibitors as they are contraindicated because of their existing cardiovascular medication. Many men have already said, talk about ED, certainly, they will not want to go and see a doctor which requires an admission that they have a problem. Cost. Even though the cost of PDE5 has dropped since our initial launch some 12 years ago, this doesn't factor the expense of a doctor's consultation typically twice a year, which can be quite considerable, obviously depending on the market, especially in the market like America, which is a negative factor when patients are weighing up their options. Finally, many partners want to have an active sex lives as well. However, many ED sufferers will simply back away from any form of intimacy. They will not even want to kiss their partner in the fear this will lead in a direction they do not want to go. The partner, in turn, [indiscernible] no longer an attractive and so a treatment where there are no medical restrictions on whether the buyer is a sufferer or not represents a huge opportunity. Eroxon. This is Futura's breakthrough clinically proven treatment for erectile dysfunction. Available without even a doctor's prescription or any interaction with a health care practitioner. So this is truly an over-the-counter treatment and can just be taken off the shelf without having to discuss the condition with anybody, and also can be done over partner as well. Helps you get an erection within 10 minutes. This is a key differentiator in time and also allows spontaneity before back into the bedroom. Again important, Eroxon is a clinically proven drug to treat erectile dysfunction. Finally, I would like to add Eroxon has an extremely favorable side effect profile with less than 1% of men experiencing any form of side effect. Angela?

Thanks, James. We thought it might be useful to summarize some data generated by an Ipsos study in 2022 for the U.S. market, and what we wanted to show you is how huge the opportunity for Eroxon is and how that compares to the overall current ED treatment spectrum. Whilst there was a huge amount of data compiled, we wanted to try and distill it down into something that was quite simple and also show whether a potential upside on the assumptions used. We know that there are approximately 20 million men in the U.S. who suffer from ED. The exact number is likely to be higher. In fact, the current number is thought to be around 23 million. We also know that the prevalence of ED in younger men is increasing. A reason to be suggested that at least 14% of men aged between 18 and 31 now suffer from some form of ED. And with the problem of ED growing, along with the prevalence of anxiety, obesity, cause in diabetes and other health conditions, and in addition to that, an aging population who wish to enjoy a healthy sex life later in life than ever before, it is anticipated that an additional 7 million men in the U.S. will suffer from ED by 2042. Moving down. The Ipsos data suggests that Eroxon could be a solution for around 7% of men who suffer from ED by year 5. The 7% is based on a number of factors, including purchase intent, adoption rate, response to the Eroxon concept, and it includes an assumption of $5 per dose for the purposes of this survey. I do need to be clear that the $5 per dose is indeed a price used for this research. The price in the U.S. market has not yet been confirmed. The research does suggest a higher price point could be worn before you start to see volume erosion. But the U.S. commercial partner will ultimately decide on pricing strategy for that region. What I can tell you is that it is currently to stay in the U.K. for GBP 5 per dose, and around $10 per dose in the Middle East. Looking at that 7% uptake, this does not seem unreasonable when you consider PDE5's, Viagra, Cialis, et cetera, have an uptake of around 20%. And then add that to the fact that there is around 80% of men with ED who are not treating, as James touched on before. The Ipsos study also collected data from female partners found out Eroxon is available without the need for a doctor's prescription, the partner would be able to purchase it. And the data suggests that ED sufferers were highly likely to try Eroxon if their partner purchase it and ask them to. And that this could result in around 15% of lift to the 7% just discussed. We have then conservatively assumed that an ED sufferer might use the product on average once per week. The fact is, we really don't know how many tubes or doses per year will be consumed by an ED sufferer. The Ipsos data suggests that the number of users per year could be on average around 114, especially if the product is used by a younger population who engage in sexual activity more frequently, and clear this would have an impact on overall peak sales estimates as well. There are other factors that come into play when we're looking at the overall forecast of the overall potential for the U.S. market such as the level of distribution, the spend on advertising and promotion. But looks like comfortable that our U.S. partner have the resources and capabilities to satisfy some of those of the basic assumptions. So you'll see, with the assumptions I've taken you through, Ipsos quite comfortably arrives at a potential peak sales opportunity in excess of $350 million for the U.S. market. We obviously focus that data on the U.S., but this data can be extrapolated out quite easily for other regions. So how are we going to maximize that opportunity to deliver long-term shareholder value? Well, we show you that there was a large addressable market when you look at men with ED and how many of them are currently not treating at all. James talked to you about how Eroxon is highly differentiated against other treatments, especially given its availability OTC and its speed of action. We are going to come to our market strategy with leading consumer health care companies who can deploy significant marketing expertise and resources. And while that partnering strategy provides us with a low-cost opportunity to broaden the availability of Eroxon globally and how that derisks it for Futura, we're currently at inflection points given the generation of first meaningful revenues and a clear pathway to profitability. And all of this is supported by a healthy cash balance, especially in an efficient cost base, which provides sufficient financial resources for our growth strategy. We continue to use our innovative and highly experienced R&D team to look at ways we can broaden the Eroxon range with new and other extension products. We're not saying too much about this currently, but we will update you when we're in a position to. And finally, Eroxon is well protected from competition with the EU patent branded in '23 and patent applications filed in other key markets, including the U.S. 2023 was quite the year for Futura. U.S. FDA branded marketing authorization of Eroxon as an OTC product, and the U.S. is the biggest OTC market in the world. Haleon became our commercial partner to the U.S. market with a $4 million milestone already received and further milestones to come. I'll talk about Haleon itself in more detail shortly in the presentation. Our European and U.K. partner, Cooper Consumer Healthcare, successfully launched in the U.K. and Belgium, and they follow that with further launches in other key European markets since. Early data shows that the Eroxon obtained a market share of around 20% across approved ED products in the U.K. Eroxon received a number of industry awards and Cooper then extended their agreement out to 2029. We generated revenues of GBP 3.1 million in 2023, and we achieved a gross margin of 57%. We ended 2023 with a cash balance of GBP 7.7 million, which we believe is sufficient to fill the business beyond the U.S. launch expected in early 2025. And especially, as we touched on before, all advertising promotional spend is borne by our commercial partners. To summarize, the foundations were laid in 2023, and early signs are showing significant potential. We also thought it might be useful to quickly touch upon our commercial partners. Our strategy was always to partner with companies who have experience and a track record of launching new products, especially in the OTC arena and also partners who have the financial resources and expertise to commit to those launches. This is extremely important for a product like Eroxon. It's a new product and new brand. And in the U.S. and most of the markets, it's creating a whole new category within LTC as current ED treatments require a doctor's prescription in the main. Firstly, let's take a look at Haleon. Haleon are a world-leading consumer healthcare company. Anyone not familiar with Haleon will certainly be familiar with some of their brands, which include, amongst others, Sensodyne and pain relief products such as Voltaren, Advil and Tramadol. In particular, Haleon are incredibly experienced when it comes to switching products from prescription to OTC. And this is a huge benefit to Eroxon which will launch OTC, but given all of the oral treatments such as Viagra and Cialis require a doctor's prescription, that knowledge is going to be hugely beneficial. Moving on to Cooper, another leading healthcare company in the EU and U.K. Cooper have a lot of experience launching OTC products. They're well versed with the nuances of the different routes to market within the individual countries, such as the retail chain store model like Boots in the U.K. and the independent pharmacy model you see across France, for example. The launches, so far, have gone well. We're seeing some early signs of repeat purchases, but it is still a little too early in the European rollout to provide any solid data. Then so far across the rest of the world, we have Labotec, who cover the Middle East and the Gulf states. We have Moksha8 or m8, who covers Central and South America, and we have Menarini, who will be covering South Korea. It's likely that in most of these regions, Eroxon will be sold through pharmacy outlets. But we also know that whilst PDE5 remain prescription only, unapproved purchasing of PDE5 does exist in some of those markets. And that may have an impact on the uptake within those regions. However, these partners have successfully obtained approvals in 9 countries, including Saudi Arabia and Mexico, which are the biggest markets. Labotec have launched in some of the Middle Eastern regions, and the other partners will be gearing up to launch soon. I'm going now pass you on to James, who will walk you through the strategic progress that has been made.

Thank you, Angela. For me, the slides are the really 3 key taking messages. One, Eroxon has essentially been in development since 2014 with over 20 studies completing the work to achieve EU and ultimately FDA marketing authorization. This robust development program allows us to make clinically proven claim and represents a significant hurdle or barrier for any potential competition. Secondly, as Andrew has already mentioned, we have also achieved our first patent approval in EU in September last year, and our progressive patent applications, including dominations across all major ED markets and expect a further approvals in both this year and obviously beyond that. You will appreciate for competitive reasons, I do not want to delve too much about our IP strategy, other than to say that in the past 6 months, we have filed a further 3 new patent applications. Thirdly, our launches are progressing well, following on from the 2 term launches in '23 in U.K. and Belgium. Total launches have already commenced this year, and I'm confident that Eroxon will be launched in at least 10 further countries in the first of the '24 with further launches also in the second half of '24 and obviously going into '25. For example, France launched at the beginning in March of this year, and I'm pleased to report, again, early days, but a very positive initial feedback. This is quite a busy slide and is being put together in response to a fair amount of shareholder charge around the length of time it is taking from signing print with the commercial partners to the point of launch. I do not plan to specifically talk through the sell side other than to say that there's a huge amount of work to provide ahead of any launch to optimize the chances of success, and this does take time. I would also point out that the advertising and promotion can run to millions of dollars and no distributor is going to commit to this loan or investment until they have all their ducks in a row. All our agreements have strong commitments through our launch, but equally so our commercial partners and their experienced OTC customers, and then they need to make sure everything is in place to optimize the chance to success before they start, and this is something that we strongly support. The next slide. This is a global graphic of the markets where we currently have licensing. Again, key message for this slide is being basically it covers all the top ED markets other than [indiscernible]. This market represents a different set of challenges, especially in our break-through partners, and we are actively considering our options at the moment whilst not being distracted from the launching. Moving on to the next slide. This shows those markets we've launched in the majority of markets we expect to launch in the first half of 2024. Angela?

Thanks, James. Taking a closer look at the financial results of 2023. As we've previously noted, we have generated our first meaningful revenues of GBP 3.1 million. And as the Eroxon rollout continues, we expect this to rise. The GBP 3.1 million does not include the GBP 4 million upfront payment, which we received in '23, and I can confirm that this will be recognized in the first half of 2024. We delivered gross margin of 57%, and then that resulted in a net loss after tax of GBP 6.5 million. If we strip out the noncash share-based payment charge, which was a lot higher in '23, this is due to the [indiscernible], we see an adjusted net loss after tax of GBP 3.8 million. The cash balance at the end of the year was GBP 7.7 million. Given the company's efficient and cost-effective operating model and added to expected sales provides us with sufficient funding to the expected U.S. launch and beyond and to profitability.

Looking ahead, our strategy is very much address the brand demand for Eroxon through strengthening our supply chain and launching through our commercial partners across the world, while serving those also gain any remaining regulatory approvals. We have a highly experienced creative team, and we're keen to broaden our product partner. Although as before Angela says it, this is minor costs and return on investment as we move to come to profit. We are also committed to Futura become profitable as soon as we can, and we are making very good progress in this regard. To sum up, '23 provides a solid foundation with huge achievements and significant derisking of the regulatory and commercial pathways. 2024 represents a year of execution on their foundations as well as further research and development on the Eroxon range, which we look forward to updating shareholders in due course. It just remains for me to thank our entire team of Futura and also our shareholders as we move into what I will believe will be a period of significant growth as we move away from being a pure R&D loss-making company to a profitable consumer care company with a huge growth potential in the short term. That concludes the presentation. Thank you very much for listening.

[Operator Instructions] While the company takes a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via the Investor dashboard. James, Angela, as you can see, we have received a number of questions throughout today's presentation. And if I may now hand back to you and kindly ask you to read out the questions, give responses where appropriate to do so, and I'll pick up from you both at the end.

Thank you very much of that.

So it's not the first question, but we have had a question around the sound on the presentation and whether we are going to invest in better sound production. The answer is, yes, we are doing something about that. Apologies if the sound wasn't clear on the presentation today. But the good news is it's also not going to cost a lot either. So I don't need to worry about the cost. So anyway, moving on. We've had a number of questions around breakeven and profitability. And I think rather than kind of repeating the question, it might be easier if I just take that as a whole and try and explain that. So it really is about the U.S. in the near term. I think trying to differentiate between breakeven and profitability becomes a little bit blurry, because essentially, when the U.S. launches, we will become profitable. And Haleon, as James said, has confirmed in their results on the 29th of February that they will be launching within 12 months. They have not confirmed whether that would be within '24 or whether that will be within early '25. But what I can say is that at the point that the U.S. launches, that's at the point that we'll start to become profitable. We have into respect Haleon's wishes in terms of not disclosing the launch date. I know that there's also a number of questions being asked around the U.S. launch. We are happy to respect that. We are fully supportive of them not disclosing too much commercially, and we are working very, very closely with them behind the scenes in terms of all of their activities that they're going through prelaunch, and it's all very exciting.

I think I'd also add to Angela's comment, this is no different to any of our other distributors. There are some very important commercial sensitivities around disclosing ahead of launch when you're going to launch because competitors, they may not be specific in this area, but other -- they will do things to try and make life difficult for them. So none of our commercial distributors want us to disclose ahead of the launch when we're going to launch. So you'll see, we've made some announcements today but we will not be disclosing ahead of any launch when it's going to happen because none of our commercial partners want to do that because basically it could actually potentially damage the launch, and all the commercial partners are spending a lot of money. They are responsible for the advertising and promotional spend, and this can run into millions of dollars, and we have to respect their wishes. Angela?

Next question. So again, we've had a number of questions around repeat purchases. So I won't read out any specifically, but the general theme is, can you tell us what the repeat purchase levels are. The short answer is we can't give you any definitive data on it at the moment. Because the product was launched in the U.K. and available OTC, the only real data that you can get around repeat purchase is if the individuals use an advantage card for Boots or a loyalty card elsewhere. And first of all, because this is predominantly male products, predominantly males don't carry advantage cards or the loyalty cards, making it difficult. Cooper also launched in all of the other major retailers towards back end of the year. So if someone has bought a pack of Eroxon in Boots and then they've gone to Superdrug or Tesco for another pack, that also doesn't get captured under repeat purchase. We are working with our commercial partners to see if there is anything that we can do to try and -- either through customer surveys, other market research, to try and get a little bit more accurate data. But at the moment, I won't be drawn in to give a repurchase rate because I just can't be -- I can't be certain that, that won't change, and I'd rather only provide data to the market that is accurate and backed up by other data that we believe.

I think also, we have discussed this Cooper and they want to know everything is going very well. They would like to have a better clarity around this. And as Angela said, that there are other ways that you can get the stage of where you go and just basically do a mass survey. So it's not specific to loyalty cards. For all the reasons that somebody might buy once in Boots, he might buy somewhere else, or might be the partner buying so and so. But the reality is until you have got to a certain size, certain amount of time on the launch and sales will be out there, the data you're going to get from that just will not be accurate. So it's going to achieve nothing. And the number is going to be wrong, either high or low, and it's going to react accordingly. And for us, it's very important that information that we do provide is not misleading. So when we have accurate data, we will share that with you. So we're not trying to hide behind anything. It's just until we have that data, this is early days. We've only really have 2 test launches. Now we're now into very much the big rollout launches, we will share that information. Now it's just too soon.

Next question. What is the approximate launch date for each country where MED3000 has been approved but not yet launched? In which countries have clinical data been submitted to the regulatory authorities, but approval has not been granted yet and is pending? In what countries have partial or full launch actually occurred? This is data that should be readily and easily accessible on your website, but it is not without digging through numerous press releases, and even then it is not all there. Yes. We appreciate that the website has not been as up to date as it should be. We are going to make some small updates to the website this week, but we do have some plans in place to give the website a full refresh in the next few months. It is a time-consuming process, but we -- as we get more data and as we get more updates from commercial partners, we will have more data to put on that. In terms of countries where regulatory submissions have been made but not yet launched, I think James has spoke previously about not providing a running commentary every time we get a small regulatory approval or every time there's a launch in a specific country that the partners are launching.

Yes. I mean I think I can say that in every market where we have a commercial partner, where the product has not been approved yet, a submission has been made, right? This does vary from market to market on the time it takes to get approval, but the submission has been made in every market. Again, when we sign the deals, not only are there financial commitments around the launch, the A&P spend and so on, there are also commitments where product design is not approved, there are commitments around time lines towards getting ready submissions approved or 5. So I'm pretty certain just to my head, we have filed in or our commercial partners filed in every market where we have an agreement in place. Was there anything else in that question, Angela?

No [indiscernible].

Yes. Okay.

Okay. What hard info is that on sell-through and rate of sale?

We can't really answer that.

First of all, we can't really answer that. We get a lot of questions around how many units to be sold. So there are 2 things. One, we are selling products to our commercial partner in Europe, for example. And we're not going to publish how many units we've sold to them because we don't want to disclose what our margin or -- the equivalent of the royalty rate is via the transfer price. And James touched upon that before, we're still in commercial negotiations for a number of other regions and we just do not want to put any of that commercially sensitive information in the public domain.

I think it's uninteresting, but also there were confidential obligations under the agreements any.

Well, that was what I was going to come to next. In terms of sell-out to consumers, they're not our numbers. We are not able to disclose the unit sales that our commercial partners are selling into consumers. And we are working very closely. And we've been fortunate so far with Cooper, for example, who has, at our Capital Markets Day, did allow us release some information. We're working very closely with them. And when we have information and when it is and what we believe to be accurate, we will try and update you as much as we can, but it's -- we're going through a launch phase, and it is very commercially sensitive. Do you have anything to add to that, James?

No.

Customer ratings are poor, partly as a result of poor expectation management. How is that being addressed?

Yes. I mean I think the first thing -- and this is one of the learnings and one of the reasons we want to do a test launch in both U.K. and Belgium or commercial parters. There are a lot of people out there, don't get me wrong, Viagra and Cialis are affective drugs, but they're working around about 80% now. So there are a lot of men where these products don't work. And they are invariably the first to try. So we have seen a number of men be disappointed. And men generally, they complain when things aren't right. They don't complain when they're not. We saw significant numbers of packs now. And certainly, the complaints we're getting are very, very low. Yes, the main area of complaint is around efficacy. But I think we're getting 1 complaint for, I think, 20,000 packs that have been sold. So it's -- yes, it is something. And for us, what is important is to try to get the education right, the managing the expectations of potential users. The efficacy readiness is around about 63%. What is more if there is foreplay involved, then the efficacy rate improves. And so it's trying to manage that, trying to improve the education, and we're certainly working on that with a number of the other launches to manage their expectation. And also PR, when the product launches, papers love them. We've had a very good PR. They love talking about sort of sexual health and products like this. The challenge is trying to keep the journalist in control that they don't kind of advertise this as a product that is kind of a miracle for everybody. And certainly Viagra and Cialis, which I think, they're still only working around about 80% in men. So it's trying to manage those expectations as we move forward, and we're working with the commercial partners to do that. But yes, we're seeing some complaints. But overall, we're pretty happy the way we'll take on the sell-through rates and people wanting the product.

Okay. Next question. Why is it taking so long for the products to be released in the U.S.? So I appreciate when the webcast was on the screen, James didn't go through every single element of one particular slide, Slide 16. What we have tried to do is produce some information on the different activities that the commercial partners needs to complete in relation to supply chain, market engagement and then their retail launch advertising, promotional plans. I'd encourage you to take a look at that once it's on the website because it just gives a good picture of what is actually involved in getting a product to market like these studies a new product, a new brand and essentially, particularly for the U.S., a whole new category in sexual health.

Yes. I mean it just takes a long time.

And we're supportive of what they're doing.

Absolutely. So these comments are going to be saying millions of dollars on advertising and promotion, as I said earlier on. And it's very important that they get the positioning right, education, rolling out to the different distributors, the manufacturing, getting that in line, getting the resource in line advertising. Again, retailers only look to typically refresh their range probably once a year. And it's not like, well, we're just sticking on the shelf. They've got to take something else. So it does take a long time. Especially when you look in the advertising promotion, you won't be able to -- when you switch that expense on, you want to make sure you've got at least, probably 70% distribution through a market so that if a consumer goes out and buys it, that they can find a product. 70% -- 65% to 70% is typically the sort of going rate because if somebody will go into one shop, but if they can't get it, they might go over the second shop. They certainly wouldn't go to third shop. So therefore, you do want to have at least 2/3 coverage. So it does take time.

Obviously, you've got to have enough stock manufacturing. And you look at that 70% distribution.

And you've got to get the tubes and there are all sorts of environment. So it does take time. Trust me. There's a lot of work going on at this stage, and we're seeing nothing with any of the commercial partners that they're driving their vision. It's just getting a lot of work in place ready for those launches. And again, this is an embarrassing product. There's a lot of men in positioning is very critical, and it will be different from one market to next depending on the cultural issues. Some markets, we will have certain challenges around sort of creating an absolute new category here. We have challenges on culturally. And from an advertising standard perspective, what can and can't be said. So there's a lot of work that goes on to make sure that you've got all that correct and signed off before you go out and launch.

Okay. Next question is, I think this is just a slide repeat. What will the USD 350 million retail sales equate to in terms of revenue for Futura after retailer and distributors margins? Well, first of all, the agreement with Haleon is a royalty agreement, and we've not disclosed that royalty rate until, and we won't. And as I said, similarly, we are in the middle of negotiating for other commercial agreements in other regions where agreements are now in place, and we just don't want to set a question for that.

I think it's worth going back to the announcement we made last summer. We get a royalty on all sales, as I've said. That is not being disclosed. We also received milestones up to GBP 45 million in performance and sales-based milestones. So performance may be less related to the physical sales [indiscernible] approval and so running patents. And then there are sales-based milestones. I think one thing that I would say is these milestones -- that's just part of the deal. But these are achievable, certainly seen before where you have companies that come out with quite uncaptured milestone payments where they don't disclose the triggers, if you like, for the release of those funds. And in some instances, they are completely unrealistic. Certainly, we believe that those GBP 45 million milestone payments are all readily achievable in short to medium term based on what we believe and tell you what Ipsos believes sales could be.

This one's for you, I think, James. Every announcement by Futura causes a stock price crash. Is there anything more that could be done to avoid this?

I mean, [indiscernible], and all I think we can say is we can control what the company does, but we can't control what the share price does. I think there's a lot of excitement for people. I think it's worth mentioning that any material information or news that we have, we are under an obligation to announce it without undue delay. So for example, say, the year-end results. It does get any material significant update. We can't wait until the day to do it. We have to announce it what it is. I think there's quite a lot of speculation. People try and look at well, try and second guess what it is. We are certainly getting more and more interest from institutional shareholders and certainly as the company moves from a R&D loss-making company to a consumer healthcare-profit company, I think we'll increasingly see the greater interest in shareholders or institutional shareholders. I think what we can just keep working on this. So I think...

We'll keep delivering.

Yes, we'll keep delivering. And I think the share price will make its own mind.

Okay. What minimum offtake sales targets are there in current distribution agreements? We've talked about this before. We could have put some unrealistic sales targets and minimum purchase requirements into the agreements. But actually, for a product like Eroxon, which, as I said, is a new brand, a new end products that no one's ever heard of, that's getting launched into essentially new categories in most of the key markets, it is more important for us to get commitments around advertise and marketing spends, resources, expertise. What we didn't want to do was partner with someone with minimum obligations, have them buy the product, stick it on the shelf and hope for the best. We have intentionally partnered with companies who are able and have a track record of building a brand. We want Eroxon to be a long-term, sustainable brand. I'm sure you're going to have something to add to that. But that is what we focused on in the main and the agreements. And there are some very, very fixed obligations in respective advertising, marketing and building that brand.

I think I can add bullet of that in that. When the Ipsos research was done apart from the financial forecast, there was a lot of analysis done around what the key kind of ticks from a consumer perspective or [indiscernible] perspective versus the negatives. We scored extremely highly on the speed, safety, all the key kind of criteria of the fact that it can be used as a [indiscernible]. One area where we were quite weak was in the area of credibility. Nobody has ever heard of -- nobody has ever heard of the product. Is it too good to be true? So that has very much influenced and will probably continue to influence how the product of all that. For example, very important that when the product launched, it launched with -- in the U.K. was a credible distributor like Moods, which is a very trusted brand. Ipsos research touched on all the commercial partners, it was very important for us. Now this is a product going straight to over-the-counter. So there's no legacy, no history if you like and legal prescription products. So very important, we find distributors where we felt that they had a proven credible track record of building a brand from start. I mean to give you an example, and I know I touched on earlier deals that we look at in China. We've had at least 70 approaches with different companies wanting the rights in that region. And I do apologize for us taking time finding the right partner who's got the credibility for patients and commitment to build a brand in an exciting new category. Yes, we got a license in pretty much every country in the market very quickly, but you're dealing with a lot of slightly -- there are a number of those, I call flighty type entrepreneur distributors, who today will be about something, tomorrow something else. So it's very important for us to build a credible distribution network with commercial partners who know what it takes to build a brand. And if there are some challenges, because there will be some challenges in some markets because of the cultural differences and the positioning of the product, it's very important that they have the will power and the staying power and the commitments that we've put into the commercial agreements to deliver on that over a period of time.

Okay. This is actually the question there. We've put Eroxon from behind the counter where it sits with PDE5 treatments that does involve an interaction with its staff. Does this approach optimize sales? And is it solved this way at other retailers in the U.K., Belgium and Middle East? So I think this has got quite a lot of -- it's a really good question, but it's got quite a lot of components to answer. Do you want to start?

Yes. I mean, the answer is sort of yes, it does. In some Boots, it sits behind the counter, but it is also on the shelf. So I think it's meant to be at all the Boots both behind the counter, which are more driven by credibility because it's sitting next to Viagra. So again, it's the fact that it's seen, if you like, in the same context, with those 2 products, is adding to the credibility. But the key differentiator here is there are no questions. You can go in there and you can buy it. So it was very important that it's also available and it should be in all Boots available off the shelf. So you can walk in or your partner can walk in, pick it off the shelf, put it in their basket, and go to the checkout -- go to self-service checkout. They do not need to have any interaction with any health care practitioner or any other human being if they do not wish to do that. That is a key differentiator because Viagra and Cialis -- again, the U.K. I think is the only market in the world where both products have switched. You still need to go through an algorithm. I think in the case of Cialis -- of Viagra, you have to answer up to 17 questions. In the case of Cialis, it's up to 41 questions depending on the responses you give. So there is still an interaction. And for us, the real opportunity is to those men who do not want to have that interaction, do not want to admit they may have a problem and just be able to buy the product. And we've certainly seen that with sales to date that in the U.K., in particular and Belgium, the sales are largely incremental. In other words, we are not taking sales away from Viagra and Cialis, which we never thought we would do. The real opportunity is in the 80% of men who don't treat, and of course, the likes of Boots that might -- they love that. They love the fact that they're not seeing, if you like, cannibalization that are customers switching from one product to the next, which, to a large extent, probably doesn't make you have a lot of differences. The fact is we're increasing footfall, and we're generating additional sales, so we like that. And we expect to see a similar thing in other markets though, again, you will find depending on the market, the cultural differences, the way products are positioned may be slightly different. But again, the key differentiator for this product, and again, you go to America, which is a big market that is the fact, because again, in Americas, where is not actually this sort of halfway house. In the U.K., it's an unusual market and that you can have [indiscernible]. So you can pick it off the shelf, you've got behind the counter, which involves the interaction with the pharmacist, and then you've got a prescription. In America, there is not that midway house. You either have interaction with the doctor or it's over-the-counter. You just walk into the supermarket, far off the shelf. And so that is a key differentiator, and I think we'll have significant opportunity and the potential for sales in the States because of that.

What are predicted sales targets for '24 and '25? As a company, we don't provide forward-looking sales targets.

We're not allowed to.

We're not allowed to, but we do have 3 analysts who are covering us. So Stifel initiated coverage this morning. Liberum, our in-house broker, have research out some time. And Trinity Delta also have some research out. And they will make their own estimates around sales, but it's not something, as a company, that we provide. What are you doing about -- I am glad someone has asked this as well. What are you doing about the fake reviews on websites?

I mean I think -- well, to start with, we have -- we've retained the company some time ago to take down fake websites and the like. I think to date -- and I'm a little bit out of touch. I haven't checked the last couple of weeks, but we were up to about 860-odd websites that we have had removed. So I suppose it's frustrating, on one hand. I look at it almost like a backhanded compliment. If people weren't interested in the product or so, there's no opportunity to exploit it. They wouldn't be trying to do that. But certainly, at the moment, we're very much on the case of taking down websites wherever possible. We are seeing, for example, people buying their product in the U.K. and then putting it on eBay in countries where the product hasn't launched, add a huge mark up, typically $100 or $150. There's not a lot we could do about that. We certainly -- we've been talking to Amazon and eBay trying to get it taken down where we can. But it is a bit like whack-a-mole. You're not won that, another one pops up. As the product launches and rolls out across the world, I think that will become less of a problem. But I think it goes in the territory. The fact there is such a pent-up demand for a product this nature, it's inevitable you're going to get some people trying to do.

I think the crucial thing is though that we are aware of most of it. And when we become aware of it, we do take action to try and get it taken down. Just sometimes, taking these products down take -- some products take longer than this depending on where they're listed. But in general, if there's any trademark infringement or any fake products, we take all the steps that we can to kind of get them removed. In the trading update, 10 countries were to be announced by April. Why the delay?

Well, that was not true. We said we expected to launch in 10 countries or so -- or 10 countries by April or so. We didn't say we'd specify which countries. Now we certainly say the countries where we've now launched or are a commercial partner. So I'm going back to my earlier comment. We're not going to tell you ahead of launch as we've been asked not to do that. I touched on it in my interview with its launch in France. It's launch in Belgium, Netherlands, Germany, Italy, Spain, Norway. I think that's -- and then there's a number of other launches going on this month -- next month. So there is no delay. Again, as I said earlier or I think as I said in my interview, we expect to have launched by the end of the first half of this year in 14 countries. And that remains on track, and we expect further launches later this year. So we can't give an absolute precise running commentary until or after which country. We will tell shareholders once it's launched. But again, I just ask, please be respectful of what our commercial partners want. They do not want us to disclose ahead of launch where we're going to do it for commercial sensitivity. At the end of the day, what it's going to do is it could impact sales forecast or sales because competition try and move in and do fit.

Are you able to disclose who will be responsible for the distribution payments to the eventual manufacturer for U.S.A. supply when and after launch? Futura is elsewhere now or Haleon? Again, we've talked about this before. The commercial agreement with Haleon, they are responsible for manufacturing, quality, regulatory, marketing and distribution of the products in the U.S.A. And in return, we will receive a royalty and event- and sales-based milestones. Now we are working with Haleon in ensuring that supply chain is set up. But after all of the technical transfer and the setup has been completed, Haleon will be responsible for ensuring manufacturing.

Again, I think it's important to stress that is for the U.S. This is a contract manufacturer, and we will also be using the contract manufacturer for other markets, so that -- we're trying to develop the robustness of our supply chain. But again, everything we're trying to do with Futura is -- there's no point creating work for the sake of it. And it seemed crazy in many respects for Haleon, based out of the States to bring us up in the U.K. for us to then run a manufacturer in the U.S. So it's much easier and much more efficient use of time and from an economic perspective now we ask if they deal directly with that. So everything we're seeing through the company is to leverage the expertise, we're really good in R&D, but that we outsource wherever possible all economics around commercial distribution to our different distribution partners -- to our commercial partners.

Okay. I'm just conscious of time, James. There is one question that comes through that's quite interesting. And it's around -- someone who's purchased the products said that the tubes in the packet squeezed before 2/3 -- by about 2/3 before the liquid came out. It seems like the filling mechanism produces this haphazard, and it feels like you are paying for mostly empty tube. Can this be addressed? That is disappointing.

I mean, I think we -- part of the obligations around the MDR we have on a monthly basis reports from our quality management team. And I said earlier, we've had a number of -- we get all complaints that come through. But we're seeing around about 1 complaint in 20,000 packs sold. So this has been flagged a couple of times, and we think there's a misunderstanding here. We are putting a 300 -- or actually putting 800 ml of gel into a tube that potentially can hold up to, I think, 2x more than that. So the tube -- yes, when you start opening it, you may find that there's a bit of air in that. That is deliberate. It is not a misfill. It is the fact that this is the smallest tube that we could go to. And if you go too small, then people can't handle it. So the fill is correct. There is not a problem in that regard. Certainly, every batch is quality checked. And where we do get complaints to go back because we have the hold back a certain amount of tubes in each batch. So if there are complaints, we can double check and make sure that it's filled corrected. It is not haphazard. Those tubes are correctly filled. I think one other thing I would personally get, one of the learnings that we want to get out there and we're working on it with the commercial partners, is that the first time men use the treatment -- this, it doesn't always work from. And this is no different to Viagra. Viagra recommends or states to take up to 8 tablets before optimal efficacy is seen. So only we saw in the clinical data that efficacy takes time, it takes up 4 doses before the patient becomes -- or the man using it reaches optimal efficacy. And if you take a step back and think about it, a lot of men, they're nervous, they've got clearly an erectile dysfunction problem, they're not sure whether the product is going to work. So it does take time for people to get comfortable and familiar with products. So I think it's important to stress on that again, it's time that we're trying to get greater education, greater communication out there to explain to people that it will take maybe more than 1 dose. Typically, we see up to 20% improved efficacy once you get up to using 4 tubes. Again, this is one of the reasons why -- happy to say, why don't you sell this as a single dose of pack, yes. And that is, again, the reason behind that is that optimal efficacy is used after 4 tubes have been used by a man.

Just one final question that I can quickly answer. I appreciate that you can't disclose too much information around sales, but could you let us know whether sales are in line with your expectations? The answer is yes. And Cooper extended their agreement out to 2029. And the fact that they've rolled the launch out into all of the other key markets in Europe, I think should suggest some level of confidence that the European partner has in respect of those sales.

Can I answer that as well. About China. So I'll -- let me just read that. What do you mean by considering your options with respect to China? Look, China for us, is -- and again, I've touched on it earlier. We think in a very simplistic macro terms. We've now covered with our distribution partners, 75%, 80% of the global market. If you compare that to the prescription market sales data that we can get over, which is the only real indicator we can look at. China is a huge market. Again, culturally, it is slightly different, and there are regulatory challenges with getting approval in China. And when we say considering our options, as I said, we've had 70-odd approaches. And it's very important that we just don't dismiss them -- lot of them out of hand. We studied that. We learned a lot going through that process because different companies will give you different aspects of what can be done. And with our previous experience with Co-High, where we got marked around, it's very important from a Board perspective that we get from it. As I said earlier, '23 was a year of really building on -- delivering on key things. '24 is about execution. What is much more a priority for us is to launch in those markets where we've got commercial partners. And we're working as hard as we can do with the commercial partners to achieve those aims. Yes, we're looking at new R&D, and we're also looking at what we can do in China, but that will require additional regulatory options. And for us, therefore, it's not just about the distribution capabilities, it's also about the capabilities of going through a pretty complex regulatory pathway to get approval in China. So that's kind of what I mean by considering our options. And again, I don't want to put a time line on this. If I put a time line on it, is disclosed and then commercial partners know there's a time line on it, then they will exploit it. If I say, look, we're going to do a deal by July, they sit on the hand because they know that I'm under pressure if we don't sign a deal by July. So we are considering our options, and we will sign a deal as and when. But for me, the priority I know the whole Board's priority is execution this year on the areas where we've already got reach approval and launching with our commercial partners as soon as we can on a successful basis.

That's great. Yes, James, Angela, we have just gone past the hour, and thank you for addressing all those questions that you could from investors today. And of course, the company can review all questions submitted today, and we will publish those responses on the Investor Meet Company platform. But before we direct the investors to provide you with their feedback, which I know is particularly important to the company, James, could I please ask you for a few closing comments.

Yes. Thank you for that. Look, I appreciate I sense that some shareholders are a bit frustrated. Why can't we disclose more information. And I suspect that some of the answers we've given today may be [indiscernible] defensive. At the end of the day, for me, what is most important is for us to deliver and execute on what we're saying we're going to do to optimize sales and we're going to do nothing in the short term, which damages that by, frankly, upsetting our commercial partners if we start to disclose things when they don't want us to do. So again I just have to say to show you need to bear with us. We've been working on this a long time. And we are very pleased to waiting to go and will deliver -- still we can do, and we will share information as soon as we can do that. So really, just to wrap up, thank you very much for listening. Lots of very interesting questions. I'm sorry we haven't answered all of them. But we look forward to meeting again online, hopefully, in due course. And really, as this kind of moves forward and moves away from being a loss-making R&D company to a profitable consumer company. So from -- on behalf of Angela and myself, thank you very much for joining in.

That's great. James, Angela. Thank you once again for updating investors today. Can I please ask investors not to close the session as you will now be automatically redirected to provide a feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Futura Medical plc, we'd like to thank you for attending today's presentation, and good morning to you all.