As it is a £60mln valued company with plans to launch a disruptive new product into a multibillion dollar market, it is probably not shocking to hear an expert say shares in Futura Medical Plc (LON:FUM) ought to go higher.
Futura’s price jumped some 300% in August – thanks to a breakthrough with its new erectile dysfunction product – and now, following a pull-back and a pause for breath it is predicted that there can be a fresh rally.
Technical analyst Zak Mir has noted that Futura had seen a significant transformation in recent weeks and he highlighted that the share price chart now showed a ‘good consolidation’ since the summer breakout.
“The shares aren’t even overbought now, they’ve cooled off” Mir said in a Tips TV segment for Proactive Investors.
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The chart guru believes the share can push on to reach between 100p to 120p over the next three to six months – and that’s a target that he says is valid whilst the price holds above the 50-day average, around the 45p mark.
Mir adds, however, that when it comes to timing an entry technically minded traders may be conservative.
“I think you probably wait if you’re really cautious. You wait for the RSI to go back towards the oversold area. So maybe there’s a move below 60p that puts the RSI lower. You’ll feel at least that you’re not paying too much money near the top.
“But we have come back already, we are off the top already. So from these areas probably going in stages is the right way.”
A breakthrough
The uptick in Futura’s fortunes coincided with some very positive data from a 232-strong trial of its erectile dysfunction drug, MED2002.
It boasts one advantage that marks it out from the current treatments - pills such as Viagra and Cialis - and that’s speed of onset.
For while the little blue pill can take up to 30 minutes to work its magic, Eroxon, a gel applied directly to the nether regions, takes effect in as little as five minutes.
Stockbroker N+1 Singer, citing Futura’s own market research, N+1 suggests that based on this superior onset of action, the safety profile and the switch to selling Eroxon over the counter, annual revenues could be in excess of £380mln (US$500mln).
Sales of drugs treating erectile dysfunction currently stands at £3.8bn (US$5bn).
If the new discovery does achieve anywhere near its potential, then the bout of profit-taking witnessed in recent weeks may be misplaced.
Futura isn’t a one-trick pony.
The same delivery mechanism used for Eroxon, a gel that penetrates the skin, could be used to deliver all sorts of drugs, including pain relief.
The company has, crucially, solved the shelf-life problems with its CSD500 condoms, designed to help men maintain an erection and maximise penile size.
Regulatory submissions to enable an extended shelf life of at least 18 months have been filed for both its European manufacturer and for TTK Protective Devices Limited, the Indian manufacturer with whom it has also signed a distribution agreement.
Futura is also making progress with out-licensing talks for the topical pain relief gels, and it is now at the heads-of-terms stage with a number of potential partners.
In a recent Proactive Investors interview Futura chief executive James Barder said: “We’ve already got approval for the product in Europe, but that was with one German manufacturer where we currently have a shelf life of twelve months,”
“The problem with that is that most retailers want to have at least twelve months shelf life when the product hits the store, so bearing in mind the logistics of the supply chain you’re not going to be able to achieve that unless you’ve got eighteen months.”
“Now that we’ve got that it will help us move forward.”
Barder added that the company expects, and is already seeing, a lot of interest in the product.