Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
According to our FD, the company is now covered by 3 brokers: Trinity Delta, Liberum and Stifel Nicolaus. Respectively, their current valuations for Futura are 121p, 131p, and 125p per share.
Closing market price tonight? 36p.
With c 301m shares in issue, the company is undervalued by the best part of £300m. That’s a whopping amount.
Part of this undervaluation is due to the company being valued on a marginal rather than an average basis. Marginal sellers are ‘happy’ to sell at 36p, because no buyers are currently offering prices in line with analysts’ estimates. But Lombard, which owns just under 30% of the shares will not be a marginal seller if the company is eventually sold. As well, Futura’s executives would point to analysts estimates and say they have a fiduciary duty to seek at least as much as £1.20 a share to agree a sale of the company.
Part of the undervaluation is also due to marginal buyers being unduly influenced by anonymous reviews rather than by solid science. As an example of dodgy reviews, look at https://www.yell.com/biz/pro-energy-ltd-romford-9879988/#:~:text=Pro%20Energy%20team%20was%20on,Pro%20Team%20for%20similar%20work. 145 reviews, 4.9/5 rating. Good eh?
Look again. Look at the names behind the reviews. Anything seem strange? How many are written by eg people called Muhammad? Or are simply Asian?
Unfortunately, too many private investors on this board agonise over information they have easy access to - eg product reviews for Eroxon - rather than seeing beyond the many manufactured reviews to the solid science underpinning Eroxon. Science approved by the EU and FDA, supported by in-house research by Cooper, and which global companies worth billions of dollars are prepared to back with their money. There are now many AI tools that will write bad product reviews. Amazon itself has lots of misleading reviews, attached to the wrong product or, as I have experienced, sellers offering financial inducements to buyers to give a 5 star review for a product that is in reality just plain poor.
These are not the only reasons for the undervaluation. Eroxon is a completely new product, so has imponderables about roll out, penetration, and repeat take-up, for example. Futura has always emphasised the key importance of the US market. Launch there will immediately transform the company into a profit-making one. I would like to see more institutions invested in Futura. Not because that would influence my decision to buy the shares, but rather to have more of the shares owned by professional investors, who see the true value of the science, rather than the private investors on here who agonise over bunkum, or try to get others to buy or sell according to their own trading strategies.
At the moment, the tail is wagging the dog. I hope the actual launch of Eroxon in the US will enable the dog to finally start to control its tail.
Worth noting parts of the summary of analyst coverage today, via Proactive Investors:
“Futura Medical PLC's clinically proven, topical gel treatment for erectile dysfunction, Eroxon, offers a "significant and still underappreciated opportunity", said Stifel as it initiated coverage on the stock with a 'buy' rating.
The shares offer "a compelling investment opportunity" as the US launch approaches, said the brokerage, setting a 125p share price target.
The initiation note also highlighted the ED market is large at $3.5 billion annually and still growing, with Eroxon's key differentiating features versus current treatments being rapid onset of action, cleaner safety profile and unique off-the-shelf status.
Future generated first revenue last year of £3.1 million and Stifel forecasts this rising to £9.2 million this year and £15.8 million in 2025, when it forecasts a first pre-tax profit.
House broker Liberum's estimates are for £10 million sales this year and £18 million in 2025.
Stifel forecasts peak worldwide sales of $364 million for Eroxon in 2029, though a chunk of that will be absorbed by distributors and other middlemen.
The majority of expected sales are seen derived from the US market, around $223 million (£176m) in that year, with Europe peaking at $117 million by 2028.
"Importantly, Futura is fully funded through to profitability, supported by UK and European revenues, with US royalty revenues expected in FY25.
"We note that profitability might come sooner than our current expectations if there is an earlier-than-anticipated US launch in FY24, triggering an estimated $5m launch milestone in the process."
Liberum noted that 2023 revenues had been pre-announced and that gross profit was in line with expectations and that the 57% gross margin "should be indicative of steady state margins.”
News of Eroxon’s launch in the US could arrive at any time, and Futura’s shares gap up very substantially. Those ‘investors’ waiting in the wings for ‘tablets of stone’ from Haleon / Futura can expect to find themselves chasing after a ship that has left port, and - like cruise ship passengers who have missed their ship - will have to rejoin elsewhere, at a much higher share price, reducing their possible return.
Investment is about prospecting through mountains of, often, useless information, recognising and joining the dots of the really key information. It’s a skill, and part of that skill is having patience. As well, part of that skill is recognising the limits of virtually any investor operating on the right side of the law to consistently successfully ‘market time’ buying and selling.
Today’s RNS was disappointing. The investor meet overwhelmingly so. But the FD did provide the clue to the exact moment when Futura will become profitable. That’s worth staying invested for, I think.
So, there it is. Nowt new from Futura.
Or did the RNS alone tell the whole story?
Fast forward to the investor call.
Lots of disappointing “no news”: News on product extensions promised last September did not materialise. China, which accounts for c 1/5th of global population, was another area without news. Futura declares that its strategy has shifted to focus on sexual health, begging the question - no answer provided - what will happen to its cannabidiol assets. Will they be sold?
Gold prospecting among all this and more of disappointing material, for me the golden nugget was the clarity of realising that the Big Bang moment in Futura’s share price will be Haleon announcing the launch of sales in the US. The FD stated more than once that when Haleon launches sales in the US, Futura will become profitable. At a stroke, red ink will become black ink. The US launch “expected by early 2025” point in the RNS was explained by the FD as simply a “read across” from Haleon’s February announcement that it planned to launch Eroxon “within the next year”. “Early 2025” is simply a worst case scenario; the best case is well before then.
Nothing else really matters now. Country launches by Cooper and other distributors will be important, but sparklers rather than the explosive firework provided by Haleon launching sales in the US.
At that point, the “keep delivering” mantra of James et al as a response to poor share price performance will, the company expects, turn red ink to black, and thereby create real fruit for long term shareholders.
We just need to remember James’s parting words - “bear with us”.
The RedX delisting announcement today is a wake up call. Worth over 100p a few years ago, and sub-20p last Thursday, and 6p today - far below its broker valuation of 130p per share.
Sound familiar? Like RedX, Futura has a current share price around £1 lower than its broker valuation.
Being publicly quoted is not for every company, because valuation may become disconnected from progress on fundamentals. It’s a problem that not all company managements and their advisers are up to resolving.
On 10 April, James Barder will no doubt repeat a long list of (known) operational positives over the past year. But one he won’t voluntarily touch on is the share price, which is half its level of 3 years ago, and more than 20% lower than the last time he formally spoke to investors, last September. Quoted companies live or die by their share price. Investors continue to be ‘Doubting Thomases’ with respect to the overall financial worth of Futura’s list of operational accomplishments. He really needs to sing a different song to us on 10 April. We know he’ll re-hash almost verbatim the trading statement, 58% gross margin, additional country launches, tie up with Haleon, blah, blah, blah. We also know he’ll say more about derivatives of Eroxon - packaging, delivery etc, perhaps even usage for women. Will any of this get the share price up to around £1.30, the broker target? I think more will be needed. Actual launch of Eroxon in the US, news of a solid licensing partner in China, sales triggering additional / improved royalties, and news of near term profitability and start of dividend payments. A dividend payout would provide a concrete way of valuing the company, and signal management’s confidence in the company’s financial future, based on its expectations of sales growth and how this will trigger further / higher royalty payments.
It would be very dispiriting to listen to James bumble along as in the past, providing a heavily scripted, largely already known, set of news. It would mean another 6 months at least of a languishing share price. One way or another, that is not a sustainable situation, either for Futura’s executives, or for the company. The far higher value inherent in the company - implicit for years in the broker valuations north of £1 - must be unlocked. If not by the current team and its advisers, then by others with more focus on delivering better share price performance.
In the end, that’s all we really care about as investors.
Welcome news from Boots. Muted price movement today on heavy volume, with average trade size way up.
Not sure we’re clear of the seller, though. A buyer appeared on the order book early this morning for 150,000 shares at 33p, quickly filled by 2 sales of 75,000 each. Rapidly followed by a sale of 65,000 shares to market makers. All this within 13 seconds. 20 minutes later another 75,000 shares sold to market makers. Half an hour later we had 100,000 shares sold, and this afternoon another 200,000. These 6 sells, or 2% of the day’s trades, accounted for over 23% of the day’s overall trading volume, muting the price response today to yesterday’s announcement. Without the big seller, I’m sure the upward price momentum would have brought in more buyers, produced more upward price pressure etc. A virtuous circle.
The big seller spoiled the party.
I’ve no idea how much more big selling there is to come. But we’ve made significant inroads today to finally clearing the imbalance, so that future positive news is likely to have a much bigger positive price impact.
Take a small cap stock with circa 300m shares in issue, then
Add
- a determined seller of up to 9.8 million shares (Co High) +
- up to 2.65m shares that may be sold by company insiders +
- wretchedly poor guidance and communications by its CEO (James Barder)
- poor investor relations, especially over-dependence on Lombard, a lack of success in securing buying interest from the hundreds of investment managers out there, use of Trinity Delta (who they?) for investment coverage
- poor public relations, reflected in choice of ‘fireside chats’ with who’s he? analysts and use of public backwaters (Proactive Investors) rather than eg breakfast TV, or Radio 4’s Today (3 hours listened to every day by major political, economic and social ‘rainmakers’)
- poor corporate / PR advisers, who are simply disconnected from the concerns of rank and file long term investors
Then the circa 40% collapse in the share price since the interims becomes eminently explainable. Note - some companies would by now have issued a statement to the effect that “they are unaware of any reason for the movement in share price...” The fact that hasn’t happened means JB is (painfully) aware of all of the above (to lesser or greater degrees). In his defence, we can’t really expect him to tell us Co High are actively selling down their stake.
Share prices overshoot, in both directions. At sub £100m tonight, against £1.7m H1 sales from two countries and, in the UK, two outlets. Yes, the valuation is ridiculously low. But the seller is determined to exit, especially now Futura has made the market aware the agreement has been terminated. It’s frustrating in the extreme for other shareholders, and awful for those forced to meet their liquidity needs by selling at these prices. It would all have been avoidable IF the other factors above had not meant market demand for Futura’s shares since the interims had not dried up.
Things will improve. BUT the supply-demand imbalance needs to be cleared, so that positive newsflow pushes the share price up rather than, as now, simply facilitating the dumping of more unwanted shares, and a further decline in their market price. This is how markets work. Without an obvious institutional or trade buyer for Co High’s stake, the unwanted shares are flowing through the market, and the price is adjusting downwards as a result.
It’s an ugly, stomach-churning, watch. JB should have strategised this as a threat to the future share price when he sold the shares to Co High in 2021. He has done absolutely nothing to minimise that threat. Strategising is the role of corporate strategy. From memory, Futura has a permanent staff of 15, focused on R&D rather than other functions. It needs to upskill its approach to business, employing people with new skills, in order to protect and grow shareholder value.
For me, JB has made 4 big and costly missteps, that are forming a ‘perfect storm’ to create a backlash among rank and file shareholders.
1. At least 2 1/2 two wasted years caused by his venture with Co High. They delivered nothing. So 30 months of lost sales among hundreds of millions of Chinese men, compounded by selling 9.8m shares to Co High without any restrictions on their sale. Bought at 20p and 22p, termination of the venture has seen these being sold by Co High at a hefty profit, helping trash Futura’s share price.
2. Ignoring the need to build relationships with actual and potential investors. James got too comfortable with the presence of Lombard on the shareholder register, and didn’t actively court other investment institutions. With Lombard maxed out, and without a powerful broker to help find an alternative home, when Co High wanted out, their shares couldn’t be crossed to another institutional, and have instead had to pass through the market, helping to trash the price.
3. Poor information flows / messaging. Futura has signed multiple licensing deals, but licensees have repeatedly tied James’ hands in terms of what he can tell shareholders about royalties, launch timelines, etc. James’ delivery around the interims was poor, and over-cautious. Investors have had to become like gold prospectors at Klondike to find the nuggets within his RNS retreads. Film stars attend premiers to help promote their films. James should have been on Radio 4 Today and breakfast TV telling the world about Futura’s world first, rather than rocking up in the backwater of Proactive Investors, or in ‘fireside chats’. Lost opportunities. Poor flows mean information is not efficiently reaching the needed target audiences - institutional investors and Joe Public. Without their awareness and interest in Futura as an investment, the shares have lost a source of support, and slipped badly. The poor messaging has been further highlighted by the shambles surrounding issuing deeply ‘in the money’ options to insiders, whilst external shareholders nurse losses of up to hundreds of thousands of pounds after the collapse in Futura’s share price over the past 3 weeks.
4. Doing nothing. In Magnum Force, Clint Eastwood opined that “a man’s gotta know his limitations”. James needs to really take the 360 degree feedback being offered by this board and build on it positively. A child of 5 no longer fits into its baby clothes: the old ways of doing things at Futura have to change as it becomes a commercially focused company. James needs to ‘professionalise’ Futura, by bringing in new people with a laser focus on external investors and understanding and satisfying their needs, and pivot away from reliance on Lombard, and seeing them alone as sufficient in terms of institutional presence. They are not, as both the share price debacle of the past 3 weeks and yawning value gap between analyst price and market price demonstrate.
In the 3 weeks since James Barder gave 3 presentations around the interims, Futura’s shares have become Johnny No Friends. Rather than his words instilling excitement among investors, they have simply injected apathy - making the shares unwanted and unloved by investors to such an extent that exit selling by Futura’s former China partner, Co High, has driven the price down around 15p, or around 30%.
The slide has wiped hundreds, thousands, tens of thousands, and hundreds of thousands from the value of private investors’ holdings in the company. This alone has led Futura’s Executive to start losing shareholder support among the rank and file on this board.
That loss of support snowballed yesterday, with the announcement of options for Futura’s Executive and staff. Rather than an alignment of internal and external shareholders’ interest, we were served up the distasteful counterpoint of “in the money” options for internal shareholders versus, today, the 30% loss and counting for external shareholders. No win-win. The words of “We're In The Money” come to mind..
The counterpoint echoes Napoleon’s famous quote in Animal Farm, that “All animals are equal, but some animals are more equal than others.” So, as an internal shareholder, “I win, you (as an external shareholder) lose”. In making this counterpoint, James is akin to Armstrong and Aldrin planting their flag on the moon. He is making it clear external shareholders are not respected, at least not smaller private ones with holdings too low to make him lose sleep at night.
In “The Stretch Goal Paradox”, published in the Harvard Business Review, it is written
“What executive hasn’t dreamed of transforming an organization by achieving seemingly impossible goals through the sheer force of will? We’re not talking about merely challenging goals. We’re talking about management moon shots—goals that appear unattainable given current practices, skills, and knowledge. In the parlance of the business world, these are often referred to as stretch goals.” Contrast this as a target for achieving options with that in Futura’s announcement yesterday: “The main ongoing vesting condition is that the individual remains an employee or Director at the time of vesting.” No moon shots, no stretch goals. Nothing about share price levels, share price growth, or total return to shareholders. Just sit tight for another three years, and ….kerching! You’d think Futura is a private rather than a public company, a private partnership rather than one owned overwhelmingly by external investors.
James dominates Futura, has made missteps in the past (Co High is a case in point), and will do so in the future. He needs to listen more and / or get better advisers / employ someone whose primary task is to filter internal business thinking into its impact on share price / help build a following by quality investment managers.
He has to stop the rot.
Another 25% x 10.6m = 2.65m shares that can now possibly be sold into a market which indigestion for Futura’s shares, forcing the price to reverse from 65p in July to less than 40p tonight. Not good, especially when the big seller for months (I suspect Co High) may not be finished yet. The supply-demand imbalance needs to be reversed, not exacerbated through a possible additional 2.65m shares looking for a new home.
I understand the two events - grant of options and share price fall - are independent. But the optics of granting the options at 20p against this backdrop is slightly bizarre. They will simply reward keeping existing office seats warm rather than behaviours that drive the share price higher.
If there were eager new investors looking to buy Futura’s shares, I’m sure none of us would really care. Apart from licensing in China, Futura’s Executive has pretty much delivered on things within its control. But the shares are currently friendless, with their price the best part of £1 below where its own analysts believe it should be.
“Signalling” is a hugely important factor in business. For example, in insurance, we may opt for a higher voluntary excess, signalling that we are less likely to make a claim, which reduces our premium.
Today, Futura could have sent a signal to the market of its confidence in the future level of its share price by pitching the vesting price for the majority of options much higher - say, 80p, or even £1. It bottled the opportunity, taking the lowest road possible, by granting options with an immediate 100% upside.
That’s not aligning shareholders’ interests (higher price) with employees’ interest, which - whilst also is a higher price - is “already in the money”, so they can still turn around happy at any share price above 20p between now and October 2026. Many shareholders need far higher exit prices to see a profit.
The mood music surrounding Futura has soured since the Haleon deal in general, but the interims in particular. That may simply be (and I feel overwhelmingly is) the Co High “exit effect” (millions of shares being sold after termination of its agreement with Futura).
Currently, we shareholders are not happy bunnies. At all. Now more than ever, James and his team should consider much more carefully the optics of their words and actions on investor sentiment.
Some time ago, I read that Trinity Delta’s modelling for Futura’s shares put a value of 30-40p on a MED3000 patent extension to 2040. Today, after news of the actual extension, the shares inched forward just over one penny.
The good news seeds of consistent operational achievements are falling on a fairly barren investor ground. Rather than producing the high yields we had been led to expect, and rationally ought to expect, the seeds are currently producing very low, and even zero, yields in terms of pushing the share price up. We are left scratching our heads for answers.
Over the past few months, the good news seeds have had to contend with a determined seller. I thought it might have been Lombard, but now the China / SE Asia agreement with Co-High has been terminated, the seller might be the latter. Its 9.8 million shares would not be easy to get rid off when annual daily turnover in Futura shares is vastly lower.
Price action does have a momentum element to it, so the fact that there’s been so much selling, with the shares down over 20p from their peak on news of the Haleon deal, has probably made some would-be buyers cautious. Ditto, James Barder’s recent uber-conservative musings. Ditto, many investors are still unaware of the sales volumes underpinning the £1.7m revenue in H1, and therefore exactly how much each sales unit will likely contribute to profit. Added to all this, there’s no sight of a desperately needed ‘Lombard-light’ institutional investor or investors to counterbalance the selling / wait and see pressure surrounding the shares. Plus, the SETSqx trading platform for Futura’s shares, with many more price quotes, is containing the volatility of the old days, when with just market makers we could have expected a 20%-30% gap up on opening today, rather than today’s unchanged movement.
After so many false dawns - of good news seeds with low yielding results - I do think that, among the levers Futura’s exec team could consider [also] using is releasing overall monthly sales volumes for Eroxon. Airlines like Ryanair, EasyJet and Wizzair publish monthly passenger volumes; mining companies publish monthly production reports. The publication of monthly Eroxon sales volumes could be time bound, say for the next 3 years, until most geographies have sales volumes. We are realising that six months is way too long to be waiting to learn sales volumes for a novel product. Investors desperately need to know that Eroxon is SELLING, whatever negative reviewers might want people to believe.
The absence of regular actual sales volumes is creating an information vacuum that is contributing to fragile investor confidence, so that good news seeds are left yielding very little in terms of upward share price movement.
Gaslighting - denying another person’s reality - is rife in all walks of life. So no surprise it’s present on this board.
Quite a few of us are miffed that - after James Barder gives 3 presentations of essentially the same material, skates over sales volumes, fails to link these volumes to countries and retailer numbers, and provides a super-cautious outlook - the share price slips back over 20%.
Some scribes on here tell us that we are short-termists, and should instead sit back and be quiet, because value will eventually out.
As anyone with Economics 101-level knowledge is aware, markets can fail, so that market prices are no longer ‘efficient’ or even ‘rational’ - perhaps for many years. Hence Keynes’ argument that governments need to intervene in markets with spending, or the presence of regulators to control monopolistic practices….
Far less is known about Futura than, say, Rio Tinto or Tesco. There’s less and poorer quality analyst coverage. With fewer followers, including investors, there’s a much higher probability that Futura’s share price will be inefficient, and can be manipulated through bulletin boards, for example. Just look at the pathetically small volumes that sometimes determine its uncrossing price, and so whether it is up or down on the day.
I first invested in Futura at 8p in early 2020, drawn by the “statistically significant and clinically meaningful top line results” of its placebo used in the MED2005 Phase 3 study. So, a 5x return to date. Therefore, I’m not a short term trader, nor am I an ‘under the water’ investor.
To the gaslighters: my concern is not with Futura’s price since last week, since last month, or even since last year. It is that it has gone nowhere since spring 2021, or for 2-3 years, despite the growing list of important operational objectives achieved by the company. Even James Barder has expressed surprise about this in his interviews.
Can more be done to address this poor share price performance? Of course! The comms is dire. Too many ‘retreads’ of information in RNSs, in interviews / investor meets, too much background information about the company, rather than value-adding information about volumes, revenues, shareholder returns…Why isn’t James Barder on some of these TV / news programmes to tell the world about Eroxon? Why are we not changing to a company broker with more powerful fund management clients, rather than the ‘cheap and cheerful’ ones we have at present that the investment community is simply ignoring?
Futura’s Executive needs to include the share price level as an important strategic objective, and be managing levers within their control to achieve and maintain that level. Personally, I want to see Futura’s share always be on the outside of the envelope of its possible value, not languishing as in the past few years (according to those brokers) way inside, at a fraction of its value.
The trajectory its bright prospects deserve.
The dream customer for any business says nothing and does nothing. Underperforming managers of plcs love non-activist shareholders, but know there’s always the threat of takeover, or of an activist investor shaking up company management to improve company performance.
In my opinion, Futura’s current executive has delivered operationally, albeit hampered by the time lags (and costs) created by (1) the FDA and (2) their licensing partners bringing Eroxon to market.
But I do wonder whether it’s not time to bring in an investor relations specialist focused on marketing Futura to investment managers. James Barder has his strengths, but stepping up to the communications plate to ‘sell’ the Futura story through 3 presentations (interims, Proactive Investors, investor meet) of the same slides / information to the same audience clearly isn’t changing the mood music for the share price. Einstein said “ The definition of insanity is doing the same thing over and over again, but expecting different results”.
James can’t rely on investors ‘joining the dots’ in terms of the 200,000 units, or of anything else. After all, you can be sure as eggs are eggs that if Futura publishes any new information, that information is immediately misinterpreted and misrepresented by some investors, and overlooked by others - not necessarily deliberately, but through laziness, or a simple inability to process information accurately. As we see time and again on this board, the ‘arc of distortion’ among some investors is big indeed. So he needs to use his results presentations to be more visionary in terms of the metrics that matter for the share price: revenue and profit growth, presenting not discrete slides but ones that tell a coherent, flowing and embracing story. For example, he really didn’t highlight and follow through the implications of the 200,000 units sold in Q2.
Contrast his skating over this with his probable use of the same information if Futura was having an IPO or fending off a takeover approach at, say, £1. No doubt he’d be showing forecasts with big annual increases in revenue and profit, subject to partners’ roll out plans. Investors would want to buy in to the company or hold onto their shares, rather than chopping another 10% off the company’s market value.
Keynes stated that “In the long run we are all dead”. No current long term investor has an indefinite time in the stock. We will all eventually sell or die. Brokers have current price targets excluding sales that are north of £1. Some of us would like the current share price to reflect these (conservative) targets, so that we can enjoy the fruits of our investment now. But instead Futura’s current share price more resembles a heavy discount investment trust than a fast growing tech company.
James could consider employing an investment specialist whose focus is selling Futura’s story to institutions, to move the company’s share price onto
And so Futura’s share price slips back after the H1 results. No surprises there, as it was full of “known knowns”. The AGM Statement on 22 June 2023 stated that “we are pleased to report that net reported revenues for the six months ending 30 June 2023 will be not less than £1.5 million”. So the £1.7m for H1 was already largely expected. Much of the stuff in the official slides was also already known. It was stuff we’d heard countless times before. So it’s all already in the market price.
“Off piste”, in the Proactive Investors interview we did get a genuinely new “known unknown”, of the £1.7m of revenue being based on circa 200,000 units sold. These are largely from Q2 only, from 2 countries, and in the UK from two retailers, Boots and Amazon. That’s an amazing result, given the narrowness on which it was based.
The 200,000 figure provides us with a window into the soul of Futura. The Co-High venture for China signed in 2021 provided Futura with 50% of the ‘profits’. The 200,000 units is indicating that, with Cooper, Futura’s share is 34%. James Barder seems to have indicated in past interviews that Haleon has driven a harder bargain, with a lower share than 34% for Futura, BUT sweetened by possible future payments by Haleon of up to US $ 45m.
The 200,000 units enables us to calculate break even for Futura. I’ve written in the past that it is not dependent on the US to be profitable. But with volumes in the US it can become monstrously so. This applies even more so if the Eroxon franchise is extended into different delivery systems, to women etc.
James Barder has always been super-cautious in his guidance. It took Cooper around a year after signing its deal to make first shipments, and then only to a couple of countries, and to a couple of retailers. On this basis, Haleon may start sales in the US sometime in H2 2024.
It’s not difficult to see 2024 ending with annual global unit sales well north of 2m (giving a profit north of £10m based on an average £25 unit price, 34% revenue share and flexing costs up a few million for new personnel for new R&D, extending manufacturing supply etc). With 301m shares in issue, and no debt, £10m of profit equates to earnings of 3.3p per share. I’d be really surprised if Futura were not paying a maiden dividend by 2025. Entry price today for the start of this earnings stream. 50p per share. I acknowledge some revenue won’t necessarily recur if buyers are disappointed, but this is all still without the benefit of China etc and product extensions.
Going forward, the revenue and profit bar charts for Futura will be akin to a Harrier jump jet taking off vertically.
The current share price is ridiculously low given what we now know thanks to James’ “known unknown” of the 200,000 units. This more me was the single most important piece of information to investors to understand and really appreciate the significance of.
Clearly, so far, the
The only thing is, James, that we all only have one life to live. We’d like to enjoy the success of Futura sooner rather than later, whilst we have health and strength. So you gotta give Futura some mojo back.
I’m starting to think we need a different / additional broker. I’m sure if we had a Goldman Sachs telling its clients Futura was worth 154p a share without sales and a patent, the shares would not be closing below 48p today. Wishful thinking I know, but my point is only that I feel investors are simply ignoring the current broker, and have been doing so for years. What’s the point of having a broker investors do not listen to? Whose research commands no respect in terms of moving the share price accordingly? If the London market cannot value Futura properly, then what about seeking another, additional, listing on Nasdaq. ARM is relisting soon, with its primary listing there, because of higher valuations. Again, wishful thinking by me, given Futura does not yet sell there.
But something needs to change. Management need to restore upward momentum to the stock. September is their time to speak clearly, convincingly and passionately to the investment community, and to dazzle us with an exciting growth, profits and dividends story that will get us all buying.
After the slew of positive and significant announcements regarding Eroxon / Med3000 this year, most long term investors are probably scratching their heads that rather than trading above £1-£2, Futura’s share price is dribbling down towards the mid 40s in pence. Adjusted for new shares, less than half its value of over 2 years ago after getting EU clearance. Very odd, right? What gives?
In hindsight, there’s been a big loss of momentum. Well over two years with still no product on the shelves in most EU countries, filled with pointless additional and onerous testing and paper work required by the US FDA, and licensing negotiations that are still incomplete geographically. What product that is being sold in the UK is being dribbled out through Boots and Amazon, because of the need to both build brand awareness and learn from limiting mistakes to smaller scale. It will be years before Eroxon / MED3000 is being sold worldwide at full throttle. So there’s been a big loss of momentum since early 2021, reflected in heavy selling. I suspect selling in recent months also reflects the flipping of some of the warrants issued at 40p.
The loss of momentum has also been influenced by investors not knowing just how much sales volumes will be worth to Futura in terms of profit. Yes, commercial confidentiality is a reality of deal making. But to put a value on Futura’s shares, investors need to see through sales volumes to profit, and as a new product we’ve no handle on this at all. The finance director really needs to address the linkage between sales volumes and profit at the interims next month. No wishy washy excuses about confidentiality. We’ve got to know whether the profit per volume will increase as Eroxon is sold through other retail outlets / when those general sales will happen.
When EU clearance was gained, Futura was traded through market makers only. Now, trading in its shares is a mixed market maker - order book model. I’ve got to say that the historically big spikes in its share price have all occurred under the former model. Nowadays, the order book probably will make such dramatic price moves more difficult to achieve, if for no other reason than there are more participants making prices, and not just the limited number of market makers.
I do think Futura’s management needs to address the share price as a matter of urgency. Ordinarily, if a company’s share price underperforms it will get taken over or taken private. I doubt either of those will happen in the short term. James Barder seems to take the ‘field of dreams’ view - build it and they will come. So put in place a global licensing network, add solid KPIs to make licensees deliver, and voilà! Futura will make profits and the share price will increase accordingly.
Each share has a ‘tape’ to provide real time visibility of trades and their execution prices. There is sometimes a delay in the reporting of some trades, especially those way above normal market size. Investors rely on the tape rather than any backward looking (and possibly delayed for weeks) notification of holdings by buyers or sellers. Claiming something isn’t happening simply because it hasn’t yet been reported by the buyer or seller isn’t a smart way to trade.
Selling on the share tape of Futura is heavily influenced by AT trades. It’s glaringly obvious. Check the clustering and frequency of 10,000 lots, so there’s also a clear element of programme trading, with the trades happening at the same time. When liquidity is weak (not much buy volume on the order book), a sudden flurry of AT sells can suddenly crater the share price, which is what happened on Friday, for example. It can happen any time liquidity on the other side of the market is weak.
There’s no other shareholder with the firepower to consistently be selling on the order book at this frequency and length of time than Lombard. Between 15/12/22 and 24/04/23, it sold almost 3m shares. Futura is a company whose 90 day average trading volume is (according to Morningstar) 1.25m, so finding enough buyers for 3m shares (when there are other, smaller, shareholders also looking to sell) means stretching the sales exercise over a lengthy period, and using high volume days like yesterday to undertake the major work.
We can only hope Lombard gets to its target shareholding soon, but whenever it does, the drag on the share at this price level will stop, and trading rebalance in favour of buys, which will help the share price close its discount to valuation.
Lombard is the conductor of the current share price, with the clout (around 100m shares) to determine its short term level. Great write up in The Sunday Times, followed by news of a US licensing deal with the giant Haleon makes daily trading volume yesterday balloon to over 8m shares, with over 1,000 trades, BUT the share price hardly budges. The significant level of involvement of Lombard is a two-edged sword: supportive at 8p, and through exercising warrants at 40p, but selling consistently above this level, so a stream of good news that would otherwise push the share price much higher has been nullified. Until Lombard stops selling, its share sales will create a brake on the share price, however good the news flow from Futura. A bit like Usain Bolt trying to set a world record into the wind: it can’t be done, or at least not easily, whereas if there is a big buyer or big buyers of the shares (the point of the recent investor open day) they would create a favourable following wind, and that horrid £1 discount to Libernum’s conservative current valuation would soon disappear.
Mis-valuations by the stock market do occur. Some companies respond by going private, others are taken over. Given the staggered release of Eroxon, we are years away from being able to see like-for-like sales globally, or even in the UK, where it’s still unavailable through eg the big supermarkets, and all the countless other places it’s possible to eg buy condoms. Until investors have a better idea of repeat sales for Eroxon, can create their spreadsheet models, sales trajectories, dividend forecasts, discount the cash flows etc, the counter armoury against the continued selling of Lombard is weak: reliance on newspaper tips, news coverage, news of new licensing deals. So far, this hasn’t been sufficient to offset Lombard’s selling.
In September, Futura really needs to present a transparent and compelling view of cash flows from sales, one that really excites potential investors, so that they consistently bid up the share price rather than simply waiting for the price to fall back on Lombard selling, one that replaces that horrid discount with a hefty premium, and one that gives all shareholders an exciting autumn 2023 and beyond to look forward to.
Market makers can and do engage in delayed publication of trades, so a buy can appear as a sell and vice versa. And market makers do have an intra-market for shares, which retail investors don’t see. But in return for these and other advantages, market makers provide buyers and sellers with immediate liquidity, using their skill to price the trade (via a tâtonnement process) to hopefully always make a profit.
Fundamentals are like a guiding star. On fundamentals, FUM is a strong share, which Lombard and others have long recognised and bought into, years ago and at much lower prices, making many multiples to date. There’s a long way to go in the FUM story, which is why I find it incredible that after a single day price movement of a few pence this week the question is even raised about when to sell. Ride your winners, get shot of your losers. But use fundamentals to guide you.
I’m amazed at how many poorly-informed and misguided individuals write about Futura Medical (and the workings of the UK stockmarket) on here and elsewhere, on many levels.
Yesterday, FUM announced net revenues (its receipts minus its costs) for the half year to 30 June 2023 of at least £1.5m. This is off a few months of soft launch of Eroxon in a handful of EU countries and a more recent more purposeful launch in the UK. Given the world is over 200 countries, and the single biggest market, the USA, has only just granted regulatory clearance for OTC sales of Eroxon, the read across for full year revenues (all countries) is huge in the context of a company with less than £7m in costs in calendar year 2022. In other words, even without the USA this company will be profitable; with the USA, it becomes monstrously so. A tsunami wave of profits and dividends will shortly be appearing around the corner, purchasable now at circa 60p. On fundamentals, that price can’t and won’t last long.
Technically, FUM management are stimulating demand for the shares through investor seminars. Lombard cannot be a net buyer anymore given its circa 30% holding. It can provide liquidity to new institutional buyers by selling down from here, but at current ownership levels it will be the kingmaker in deciding FUM’s future. Interestingly, given FUM does not now require any future funding, the supply of its shares are fixed, so upward price movement will be the only way of new investors buying into the company if Lombard doesn’t sell. Basic supply and demand.
Given the different stages of release of Eroxon around the world (especially bad in China), it will take several years before FUM’s net revenues are strictly comparable year on year, as there will be two influences rather than one - new and repeat sales in country, plus sales in new territories.
Keep your eyes on the prize - statistics don’t lie. Hence, each and every study into Eroxon has always confirmed many more men benefit from using it than don’t. Some individuals won’t respond positively to it, but most will. That won’t change, whatever product reviews are written on websites. And remember, sex sells. Always has, always will.
Too many private investors believe market makers are the bogeymen for their investment missteps. They’re not. Their own stupidity is - which is why many derivative firms state that 65%-80% of their retail clients lose money. I guess it’s human nature of many to find a scapegoat for their own shortcomings - including the overconfidence that drives many of them to overtrade in the belief they are Masters of the Universe, able to time their trades at the bottom and top of each price cycle to exponentially make money. Market makers are simply intermediaries between buyers and sellers, but with many advantages over each, particularly visibility of potential and actual order flow. You can’t Google Finance or use 15 minute delayed prices to successful