Trinity Delta FY25 revenues to be materially below expectations

FY25 revenues to be materially below expectations

Lighthouse | 30 January 2025

Share this note

Futura Medical’s trading statement outlines expected FY24 revenues of at least £13.7m, compared with market expectations of £13.4m (TD £13.3m), and against £3.1m for FY23. This includes the $5.0m milestone received from Haleon on US Eroxon launch in October. FY24 gross margin (blended across product sales, royalties, and milestones) will be c 73% vs 58% for FY23. Profit after tax is also expected to be ahead of market expectations of £0.5m (TD £0.5m). Cash at end-December 2024 of £6.6m, above our forecast £4.6m, highlights management’s stated aim of actively controlling operating costs. This cash position provides working capital through to H226. Full FY24 results are expected to be reported in April.
The key event in 2024 was Haleon’s launch into the commercially important US market in October; early feedback suggested positive retailer uptake and a positioning that resonated well with consumers. However, learnings from the US and European launches now need to be implemented in marketing strategies, to target Eroxon more effectively to men most likely to benefit. This, together with launch delays in some ex-US markets, and some initial barriers to entry in the US, has resulted in a slower ramp-up, and the rate of sales expansion is falling short of early predictions. Futura’s management and its partners say they remain confident in the future prospects for Eroxon.
As a result, FY25 revenues and profits are now expected to be materially lower than our, and market, expectations. Management now expects FY25 product sales and royalties to be c 50% lower than previously forecast (TD last published estimate: £10.5m) and that sales-based milestones that had been expected will not be triggered (TD last published estimate of £8m). This will likely lead to loss rather than a profit in FY25. As discussed in previous notes, given the limited disclosure from partners, attempts to accurately assess Eroxon’s sales dynamics and forecast near-term revenues remains challenging. Nevertheless, the revenue trajectories, and possibly peak sales potential, may be lower than we had modelled.

Trinity Delta view: Our investment case for Futura Medical is heavily weighted towards the US market, which is the main component of our sum-of-the-parts NPV valuation, worth more than Europe and RoW combined. Investor attention has, rightly, focused on Eroxon’s market traction, particularly repeat purchases, where there remains limited visibility. The slower than expected sales ramp is disappointing and future sentiment now hinges on the success of the revised promotional positioning. However, launch data is still early (particularly in the US where Eroxon has only been on market for three months) and as the market for ED treatments is sizeable even modest commercial success in the US would be transformational for Futura. Line extensions could help capture market attention, with the first, Eroxon Intense, on track for marketing authorisation by end-2025. In addition, new development product, WSD4000, a topical gel similar to Eroxon, could open an equally attractive novel and significant female category. As is usual in such cases, we suspend our forecasts and valuation. For context, our previous valuation was £392m, equivalent to 130p/share.

Lighthouse

30 January 2025


Price	31.00p
Market Cap	£94.2m
Primary exchange	AIM
Sector	Healthcare
Company Code	FUM

Corporate client	Yes

Company description

Futura Medical is the developer of innovative sexual health products; its core strength is in its research, development, and commercialisation of topically delivered gel formulations. Lead product Eroxon (MED3000) is approved as an OTC product for ED (erectile dysfunction) in Europe and the US.

Analysts

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

Philippa Gardner
pgardner@trinitydelta.org
+44 (0) 20 3637 5042

Disclaimer

Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.

ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.

In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.

Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.

This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.