The past year has seen the pieces of the puzzle fall neatly into place for UK-based Futura Medical PLC (AIM:FUM, OTC:FAMDF), according to boutique investment bank, Liberum.
The company has successfully obtained US marketing authorisation and secured a US marketing partner, Haleon, for its erectile dysfunction (ED) treatment.
According to a recent research note by Liberum, the company is transitioning from a loss-making biotech to a revenue-generating entity, and the risk profile has largely dissipated.
Significant opportunity
The ED market is far-reaching, affecting 52% of men over the age of 40. According to Liberum, the serviceable addressable market (SAM) for Futura's ED treatment is a substantial $418 million. The firm's offering, MED3000/Eroxon, is poised to fill a significant gap in this market.
Eroxon is a topical gel that acts quickly, eliminating many of the side effects associated with current treatments like PDE-5 inhibitors.
It is available over-the-counter, thus removing the need for a potentially embarrassing consultation with a healthcare provider.
The product has received approval in most major markets, including a recent US Food and Drug Administration (FDA) authorisation.
Financial horizon
According to Liberum's updated forecasts, Futura is expected to break even by the financial year 2024 (FY24E).
This marks a significant milestone, as the company transitions from a loss-making biotech firm to a revenue-generating entity. Cash flow concerns, often a stumbling block for biotech companies, appear to be a thing of the past for Futura.
Futura has adopted a go-to-market strategy that leverages partnerships with experienced marketing firms.
Cooper, Futura's European partner, has already launched the product in the UK and Belgium, with plans to expand into larger European markets by 2024.
In the US, Futura has teamed up with Haleon, a company with significant experience in prescription to over-the-counter (OTC) switches.
Valuation and risks
While Liberum has reduced its target price for Futura from 152p to 131p, this still represents an upside of more than 150%.
The primary risks now appear to be centred around commercialisation and market penetration.
However, with key approvals and marketing partnerships in place, these risks seem manageable, Liberum reckons.