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Futura Medical has a lot to offer, says CEO

Futura has been making significant headway with MED2002 and may be in a position to bring in an industry partner next year.
Futura Medical has a lot to offer, says CEO
Sometimes men need an alternative to the little blue pill.

The bipolar nature of the market, particularly the one for growth stocks, means that companies can be crucified for even the most minor slip.

Of course this trigger-happy mentality causes problems for those on the receiving end. But the overreaction creates an opportunity - for those savvy enough to grasp it.

This perhaps the way one should approach the analysis of Futura Medical (LON:FUM), whose share price has been hit by this investor manic depression.

A year ago it was flying high at 40p. Today, after a setback, it is trading down to 23.5p.

So what has Futura done to deserve this? Well, it struggled with the teething problems that come with a business making the transition from research and development to commercial scale-up.

Specifically its CSD500 condoms designed to help men maintain an erection had shelf life issues.

The current product can be stocked for a year when two years would be preferable, no, almost mandatory.

While the product is on sale in the Netherlands and online, this hiccup has caused blue-chip partners such as Trojan and Mates to press the pause button on condoms carrying the Futura magic ingredient.

Investors have not been impressed.

Chief executive James Barder believes the glitch should be solved soon. “We will be updating the market shortly,” he told Proactive.

If Futura is able to fully resolve the shelf life challenge, then the company is back on track. Its five commercial partners will start rolling out the product and sales royalties should start hitting the bank account.

All the while Futura has been making significant headway with MED2002, a gel that is applied directly to the base of the penis that helps men with difficulties in that area achieve an erection.

It is currently undergoing a pivotal efficacy study, which is due to be completed next June.

Once the results are collated the hunt will begin for a partner to carry out a second phase-III efficacy trial, before taking the finished product out into the market.

“It is unlikely we would do the second trial without a partner,” said Barder.

“In the past we have had interest. We really want to get this [first] study done to show it works. It then, from a commercial perspective, removes 95% of the uncertainty.”

Any deal would likely see Futura receive upfront and staged milestone payments that would augment an already healthy bank balance, which was over £7mln at the end of June. And of course there would be a royalty on any sales the product achieves.

There is a need for an alternative to the current erectile dysfunction treatments, Barder reveals.

People report side effects such as headaches and heartburn from taking Viagra and Cialis, while for others the blue pill isn’t an option as it clashes with existing medication they are being prescribed.

Research commissioned by Futura found a widespread dissatisfaction with these sorts of drugs with the speed of onset cropping up as the most common complaint.

MED2002 provides a far more rapid solution to the current crop of pills - two to three minutes before the effect is felt versus 20.

All of this provides an opportunity – a ready-made market of men who either can’t or don’t like taking the current help available.

In fact Futura’s partner Quantum Pharma has already managed to have MED2002 categorised as an unlicensed special product that can be prescribed by doctors here in the UK. Not just that it is eligible for full NHS reimbursement.

It is probably more appropriate to classify Futura as a med-tech rather than a traditional pharma or biotech firm. And this is a crucial distinction.

For what it has created is a mode of action that gets drugs through the skin more quickly and effectively than other gels of this type.

It is a patented delivery method. For erectile dysfunction, it is incorporated with glyceryl trinitrate, which has been used to treat angina for decades.

So its researchers already know MED2002 is safe to use on humans, all they have to do is ensure the new indication works in the way it is supposed to.

This eliminates a lot of risk from the research and development process.

You won’t be surprised to learn, then, the technology is being developed to carry traditional and well tolerated painkillers quickly and effectively to the point they are most needed.

It means the company is not a one trick pony – it has a pipeline quick-to-market products that have consumer and medical indications.

Using a discounted cash flow model, the broker N+1 Singer values Futura at 58p a share – well ahead of the current share price and a premium to where the stock was even a year ago.

In fact that price target aptly underlines the scale of the potential opportunity offered by the recent sell-off.

“I have stopped looking at the bulletin boards,” admits Barder alluding to the recent criticism Futura has received from private investors.

“But I know we have a lot to offer.”

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Futura Medical plc. Timeline

Big Picture
June 22 2016

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