Trinity Delta FDA green lights MED3000 for OTC approval

Futura Medical

FDA green lights MED3000 for OTC approval

Update | 14 July 2020

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Futura Medical’s update on MED3000, its novel treatment for erectile dysfunction (ED), confirms progress is in line with our expectations. The regulatory filings with both the US FDA and European Notified Body are progressing well. Importantly, the FDA has indicated there is a pathway for MED3000 to be launched as an OTC product in the US. This will require an additional, albeit modest, supplementary clinical trial to demonstrate longer term efficacy. More details should be known by the time of H120 results, likely in early-September. Our DCF-based model, using conservative assumptions, values Futura Medical at £153.8m, equivalent to 60.9p a share.

Year-end: December 31	2018	2019	2020E	2021E
Sales (£m)	0.0	0.0	0.0	0.0
Adj. PBT (£m)	(7.2)	(11.1)	(4.8)	(3.9)
Net Income (£m)	(5.9)	(8.9)	(4.0)	(3.9)
Adj. EPS (p)	(4.5)	(4.4)	(1.6)	(1.3)
Cash (£m)	9.1	2.5	1.0	3.1*
EBITDA (£m)	(7.2)	(11.1)	(4.8)	(3.9)

Source: Trinity Delta Note: Adjusted PBT excludes exceptionals, Cash includes short-term investments. *FY21e cash includes assumed additional funding of £5m.

MED3000 set to be an OTC product Productive discussions with the FDA have confirmed MED3000 will likely be approvable immediately as an OTC (over-the-counter) medical device, without the need for a prescription-only phase. Importantly, the FDA is comfortable with the quality of the data generated to date and will require only a small six-month clinical study to confirm the efficacy seen in FM57. The patient numbers required have yet to be established; however, we expect these, and hence the cost of the trial, to be modest, with the company and the FDA cooperating on establishing the ‘least burdensome design’ for the study.
European regulatory pathway also clear The MED3000 clinical dossier, including the Clinical Study Report (CSR) for FM57 and the Quality Management System (QMS) documentation, has been filed with the European Notified Body for review. Early indications suggest the data is sound and complete, confirming that our expectations of a first approval by Q421 are realistic. To date COVID-19 has not impacted on the timeline, but we are conscious that it remains a consideration.
Partnering discussions will now be simpler The direct to OTC pathway for the commercially important US market removes a degree of complexity from partnering discussions. The intricacies of requiring a prescription-only phase would have probably needed separate companies to address each of the prescription-only and subsequent OTC stages. In Europe, MED3000 is expected to be available immediately as an OTC product in those countries, such as the UK, that have established precedents. Some other countries are expected to take longer.
Undervalued and relatively low risk We value Futura Medical at £153.8m (60.9p/share) using a risk-adjusted DCF model with conservative assumptions. We shall revisit our assumptions as further regulatory progress is achieved and as the visibility of the commercialisation and partnering strategies improves.

Update

14 July 2020


Price	15.5p
Market Cap	£38.1m
Enterprise Value	£26.5m
Shares in issue	245.6m
12 month range	7.16-47.9p
Free float	62%
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

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

Exhibit 1: Summary of financials

Source: Company, Trinity Delta Note: Adjusted numbers exclude exceptionals. The funding requirement is shown as short-term debt in FY21e, until transaction type, source and size are confirmed.

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