Trinity Delta Are these unprecedented results a major opportunity?

Futura Medical

Are these unprecedented results a major opportunity?

Update | 10 December 2019

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Futura Medical has reported the results of the pivotal Phase III study (FM57) for its lead compound, MED2005. Whilst all doses achieved all primary endpoints against baseline (p<0.001) at 12 weeks, there was no differentiation between any active arms and placebo. The placebo arm consisted of the DermaSys formulation and these results suggest that this proprietary gel has an effect comparable to the active arms at all three glyceryl trinitrate doses (0.2%, 0.4%, and 0.6%). This data is clinically relevant and suggests that DermaSys alone may be effective in treating Erectile Dysfunction (ED). Clearly the data needs to be digested before licensing discussions with possible partners continue. Equally, the commercial opportunity, especially the OTC potential, will need to be assessed. Until we have greater visibility, we suspend our valuation and forecasts; for context our model valued Futura Medical at £127m (62p a share).

Year-end: December 31	2017	2018	2019E	2020E
Sales (£m)	0.4	0.0	0.0	-
Adj. PBT (£m)	(4.8)	(7.2)	(10.4)	-
Net Income (£m)	(3.9)	(5.9)	(8.6)	-
Adj. EPS (p)	(3.2)	(4.5)	(4.2)	-
Cash (£m)	8.4	9.2	1.5	-
EBITDA (£m)	(4.8)	(7.2)	(10.4)	-

Source: Trinity Delta Note: Adjusted PBT excludes exceptionals. Cash includes short-term investments.

What has happened? MED2005 is a fast-acting glyceryl trinitrate (GTN) gel that was evaluated in a pivotal FM57 Phase III study. The trial had three active dose arms (0.2%, 0.4%, and 0.6%) and a DermaSys gel formulation alone arm to act as a placebo. The headline results have shown that all three active arms and the placebo arm showed highly statistically significant improvements (p<0.0001) across all three primary endpoints (IIEF-EF, SEP2 and SEP3). However, there was no differentiation between any active arm and placebo. The effect was consistent across the three patient groups of Mild-, Moderate-, and Severe-ED. Similar outcomes were seen for the secondary endpoints such as efficacy, speed of onset, and duration of action.
What does this mean? The data appears to show that the action of the proprietary DermaSys formulation alone has an effect comparable to all the GTN active doses studied. The results are clinically significant (FM57 was a 1,000 patient study) and Futura Medical has now filed patents to protect this use. Interestingly, this opens the path to apply for market authorisation, in both the US and Europe, using the simpler medical device routes. Some small studies may be required but these will be simpler than the previously proposed confirmatory Phase III study (FM59).
What are the next steps? These remarkable results have created understandable uncertainty and until we have greater visibility, we are obliged to suspend our valuation and forecasts (beyond FY19). There are clear opportunities, not least in terms of patent life and market opportunities, but equally there are potential unknowns that may unexpectedly crop up to dampen our enthusiasm. For context, our last published current valuation was £127m (equivalent to 62p/share).

Update

10 December 2019


Price	29.0p
Market Cap	£59.3m
Enterprise Value	£52.7m
Shares in issue	205m
12 month range	5.65-49.2p
Free float	70.4%
Exchange	AIM London
Sector	Healthcare
Company Code	FUM.L

Corporate client	Yes

Company description

Futura Medical is an R&D driven small pharma company, with a novel DermaSys transdermal delivery platform. The lead programme, MED2005, is a topically applied gel that is in Phase III trials for erectile dysfunction (ED). A pain relief gel, TPR100, is awaiting UK approval.

Analysts

Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043

Mick Cooper PhD
mcooper@trinitydelta.org
+44 (0) 20 3637 5042

Franc Gregori
fgregori@trinitydelta.org
+44 (0) 20 3637 5041

Exhibit 1: Summary of historic financials and our previous estimates

Source: Company, Trinity Delta Note: Adjusted numbers exclude exceptionals. The funding requirement is shown as short-term debt in FY20e, until transaction type, source and size are confirmed.

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