Liberum has updated its target price for Futura Medical PLC (AIM:FUM, OTC:FAMDF) shares from 121p to 142p after the latter's announcement of US Food & Drug Administration approval for MED3000, a treatment for erectile dysfunction (ED), according to the corporate broker's research note.
This development marks a significant milestone for Futura, further strengthening the investment case in the Liberum's view.
The groundbreaking approval places MED3000 as the first over-the-counter (OTC) ED treatment to be approved in the US.
Compared with existing prescription-based treatments such as Viagra and Cialis, MED3000 offers easier accessibility and faster onset of effect.
Consequently, this could help Futura carve out a substantial market share in the US, the world's largest market for ED treatments, Liberum noted.
The next significant step for Futura, according to the broker, is to secure a US marketing partner, ideally before the end of fiscal year 2023.
This move is anticipated to leverage the partner's experience in building an OTC brand and make a significant impact in the market.
Futura is set to hold a capital markets day (CMD) on June 22, where further details about the launch and the progress of Eroxon (Futura's consumer brand for MED3000) in European markets are expected.
Liberum's financial forecasts do not yet include revenue from the company's launched markets, as it awaits more clarity on the timing and quantum of stocking orders.
Despite ending 2022 with £4m cash and expecting a £1m tax credit refund in mid-2023, Liberum does not view Futura's cash outflow as a significant concern. It believes that Futura is well-funded and does not foresee the need for equity raises in the near future.
The FDA news put a rocket under the shares, which advanced 16% to 49.93p.