Futura Medical Regulatory News (FUM)

Futura Medical plc

("Futura" or the "Company")

Interim Results for the six months ended 30 June 2014

Futura Medical plc (AIM: FUM), the innovative healthcare company focused on advanced transdermal technology, is pleased to announce its interim results for the six months ended 30 June 2014.

Highlights

· Significant evolution in Futura's strategy following a £12 million fundraising in March 2014 allowing the Company to build further value in its product pipeline prior to out-licensing through robust clinical data and regulatory work

· CSD500 - Condom containing an erectogenic gel. Major commercial progress with initial launch anticipated later this year under the Futura-owned brand Blue Diamond™

· MED2002 - Topical treatment for erectile dysfunction. Protocol for a Phase II/III clinical study nearing finalisation and planning under way to launch the product initially as a special product in 2015

· PET500 - Topical spray for enhanced performance. Early stage of commercial availability throughout the USA under the Ansell brand EPIC® 

· Pain Relief Portfolio - Clinical trial to begin shortly with headline results expected in H1 2015

· Net loss of £1.45 million in the period (H1 2013: net loss £0.88 million)

· Cash resources of £11.21 million at 30 June 2014 (30 June 2013: £2.12 million) to fund Futura through key value inflexion points across its product portfolio and to support out-licensing discussions

James Barder, Futura's Chief Executive, said: "We have made significant progress in the year to date and are close to starting clinical trials with the pain relief portfolio and MED2002. We are also preparing for the initial launch next year of MED2002 as a special product. CSD500 will be launched under the Futura brand Blue Diamond™ in several European countries later this year with an expected wider roll-out of the product during 2015.

"The successful equity fundraising earlier this year will support the clinical development of Futura's earlier-stage product portfolio through to key value inflexion points, thereby creating major opportunities to deliver shareholder value."

For further information:

Notes to editors:

About Futura Medical plc

Futura Medical is a pharmaceutical group that develops innovative products for consumer healthcare. The Company is developing a portfolio of products and its strategy is to license their manufacture and distribution to major pharmaceutical and healthcare groups.

Futura is based in Guildford, Surrey, and its shares trade on the AIM market of the London Stock Exchange.

www.futuramedical.com

CHAIRMAN'S AND CHIEF EXECUTIVE'S REVIEW

The first half of 2014 has been significant for Futura in that the Company successfully raised £12 million in gross proceeds from new and existing shareholders. This fundraising has allowed Futura's strategy to evolve considerably. Most importantly, it is allowing the Company to build greater value in its product pipeline by funding clinical trials and regulatory work. It is also giving the Company greater leverage in its commercial out-licensing discussions and is allowing certain products to be launched, in some instances, under Futura brands. Brand ownership is significant in consumer healthcare because the brand name extends in perpetuity, whereas patent life is finite.

The date has been set in 2014 when we expect our novel condom CSD500 to be launched under the Futura owned brand Blue Diamond™, which will initially be made available online in certain EU countries. We consider the longer term opportunity for online sales is substantial and will also, in the initial stages, provide useful feedback for driving sales in other regions for both Futura and our distribution partners. We expect MED2002, our erectile dysfunction treatment, to be available in 2015 within the UK to doctors to supply on a named patient basis (known as a "special"). Further details are given in the portfolio updates below.

The commercialisation of CSD500 has remained our core focus in the half year and discussions continued on the out-licensing of the product in geographic regions where we have not already licensed it. We were pleased to announce earlier this month that Kwang Dong Pharmaceutical Co Ltd ("Kwang Dong Pharmaceutical") will market and distribute the product in South Korea under the Blue Diamond™ brand.

In total, distribution agreements are now in place for CSD500 in 33 countries through six different distributors covering all of North America and substantial parts of Europe, Middle East and Asia. Out-licensing discussions are continuing in a number of other territories throughout the world.

The majority of our commercial partners have indicated that they require a minimum shelf life of two years prior to their launch of CSD500 which will influence the timing of the global roll-out of the product.

There are frequently challenges with any product when scaling up for industrial production and CSD500 is no exception, particularly in the extension of the current one year shelf life. Whilst CSD500 will be launched initially with a one year shelf life under the Blue Diamond™ brand we are seeking to extend the shelf life to at least two years to comply with accepted practice in the condom industry for a product, such as CSD500, containing an active pharmaceutical substance.

In a laboratory setting, we have achieved up to four years' shelf life. We are continuing to make progress on transferring these results to industrial production and we expect this work to conclude by the end of the year to enable us to manufacture product with a shelf life of at least two years. We therefore anticipate further launches during 2015.

Our innovative spray for enhanced sexual control, PET500, became available in stores throughout the USA during the first half, and is also available online, under the brand name EPIC®. Initial sales have been modest, which we believe reflects the early stages of commercial availability and the lack of promotional activity supporting the product.

The fundraising announced in March this year has also allowed us to advance our pain relief portfolio and MED2002 (our topical gel for the treatment of erectile dysfunction) towards clinical studies. As mentioned above, MED2002 is expected to be launched in 2015 as a special product but we are also finalising the protocol for a clinical study, the details of which will be announced later this year. We are also close to beginning a clinical study of the three compounds in our pain relief portfolio. The headline results from this study are expected to be available by the end of June 2015.

We continue to hold out-licensing discussions on both MED2002 and the pain relief portfolio but, at the moment, our principal focus is to build the value of the products through completion of the clinical programme thereby substantiating the value that we believe these products represent.

The proceeds from the fundraising have also allowed us to build up our internal resource with the addition of two new members to the team including a manufacturing specialist focused on product delivery. This role seeks to ensure the optimal route from proof of concept to commercialisation. We also are in the process of recruiting an additional member of staff to further strengthen the development team.

In summary, our strategy to build value in the company has advanced significantly in the year to date. We are close to starting clinical trials with the pain relief portfolio and MED2002; and the launch of CSD500 is imminent under the Futura brand Blue Diamond™. Our commercial partners' requirement for a longer shelf life is currently determining the pace of the wider commercial rollout of CSD500 but our ability to close new licensing deals for the product continues to underline its commercial attractiveness.

Portfolio updates - Sexual healthcare

CSD500: Condom containing the erectogenic Zanifil® gel

CSD500 benefits from three marketing claims, which have been clinically proven and approved by EU regulatory authorities: the maintenance of a firmer erection, maximised penile size and a longer lasting sexual experience for women. CSD500, which gained CE marking last year, represents real innovation in an industry where there has been very little new product development. Moreover a recent consumer study of CSD500, conducted by a potential distribution partner with whom we remain in discussions, has reported similar results to those shown in our original clinical study. In summary, at least 55% of men and women reported an increase in their (or their sexual partner's) penile firmness along with a longer lasting and improved sexual experience.

CSD500's unique intellectual property position has been protected throughout the world including the principal consumer markets within Europe, the USA and Canada through patents now granted in 37 countries.

Our strategy is to license CSD500 on a territorial basis, with our most recent licensing deal announced on 8 September for South Korea. To date we have licensed exclusive rights to CSD500 as follows:

Discussions are ongoing in connection with further geographic regions.

In addition to out-licensing CSD500 to companies that will launch the product under their own brand names we have also created our own condom brand, Blue Diamond™, which will be used by some of our licensing partners. Blue Diamond™ will be launched during 2014 by our licensing partner who has rights to some of the European countries not included in the Church & Dwight or RFSU agreements. It will initially be made available online.

The branding, positioning, pricing and packaging of the product have all been finalised and launch plans are well advanced with a launch day set. For commercial reasons we have been asked not to disclose this date ahead of launch. A further announcement will be made as soon as Blue Diamond™ is launched.

We are very pleased that the Blue Diamond™ brand will also be launched in South Korea by our most recent licensing partner, Kwang Dong Pharmaceutical.

The decision to create our own brand is in line with our strategic objective of building value wherever possible within Futura. Having our own brand gives us greater flexibility in our licensing discussions but the key attraction of brand ownership in consumer healthcare is that the brand is owned in perpetuity whereas patent protection usually expires twenty years after application. We are fortunate with CSD500 to have an extensive patent with a remaining life of up to nine years and this could potentially be extended through the new intellectual property that we create through our ongoing R&D work by a further ten years.

As highlighted above, we have had a particular focus in the year to date on the shelf life of CSD500. We look forward to providing an update on the work we have been carrying out with our manufacturing partners in due course.

MED2002 - Eroxon®: Treatment for erectile dysfunction

MED2002, which uses our DermaSys® drug delivery system, is the development name for our topical gel for the treatment of men with erectile dysfunction ("ED"). We hold worldwide rights to the product, which shares the same active ingredient as CSD500. We anticipate that MED2002 is likely to be a prescription-only product and branded Eroxon®.

We have made major progress with the development of MED2002 in the year to date. In addition to being close to finalising the protocol for the clinical study we have also established that it can be prescribed initially as a special product. Special products, or unlicensed medicines, are medicines that have already been approved in one indication, giving doctors the authority, subject to certain conditions, to prescribe them in other indications and formats provided that other options have been exhausted and until such time as the product achieves regulatory approval in the applicable territory.

MED2002 meets the criteria required within the UK for special product status because of the estimated 7.5% of ED sufferers who cannot be prescribed PDE5 inhibitors (products such as Viagra®) due to contra-indications with other medications taken by them.

We have already identified a specials distributor and we expect that MED2002 will be available to UK doctors as a special product in 2015. Moreover the specials distributor believes MED2002 will also be sought out by doctors in other EU countries, where the distributor foresees no significant regulatory barriers to the product becoming available as a special. We expect to provide shareholders with a further update later this year.

In addition to MED2002's role as a special product we believe that it has significant potential amongst a much wider patient base. We have previously carried out market research that highlighted the potential benefits of the product when compared with PDE5 inhibitors including a faster onset of action and a favourable safety profile.

We are currently exploring an adaptive design clinical programme so that the study can move quickly from Phase II to Phase III to reduce the timeline for completion of the clinical development programme. Further details of the study will be announced once the protocol is finalised in the coming months ahead of pre-screening of patients.

PET500: Enhanced sexual control

PET500 is a topical spray that combines our highly efficient DermaSys® AquaFree delivery system with a well-known mild topical anaesthetic. PET500 is licensed to Ansell, one of the world's major sexual health companies, who have worldwide rights to the product and have launched the product in the USA under the name EPIC® as part of their well-known LifeStyles® brand. Under the terms of the licensing agreement Futura will receive a significant royalty rate on sales.

EPIC® is designed to take effect rapidly and to delay male ejaculation, thereby offering enhanced sexual control. EPIC® is now available in stores throughout the USA and online. As mentioned above, initial sales have been modest. We receive sales data each quarter and we intend to monitor this closely as well as discussing promotional activity with Ansell. It is still early in the product's commercial availability and we will provide a further update on sales in due course.

Portfolio updates - Pain relief management

Topical pain relief

The rapid skin permeation rates offered by Futura's transdermal delivery system, DermaSys®, have created a major opportunity in topical pain relief. Rapid skin permeation offers potential benefits in pain management including: improved speed of onset, greater depth of penetration and longer duration of pain relief.

Graphs showing the superior skin penetration of Futura's three pain relief programmes are available at this link: www.futuramedical.com/archive/painreliefclinicalgraphs.pdf.

Our recent fundraising has strengthened our position for the remaining clinical development of the three products and it is our intention to build greater value in the portfolio prior to making a licensing decision. It is encouraging to note that a significant number of companies have expressed interest in the portfolio, and individual products in the portfolio, for various territories worldwide.

A European based research organisation has already been appointed to carry out the study, which will be a single-blind, randomised, placebo-controlled, comparative induced pain model design performed on healthy volunteers to ensure a controlled clinical environment. The study will compare the clinical effectiveness of Futura's three pain relief compounds against commercially available products. Headline results are expected during the first half of 2015 and a more detailed update regarding the study will be provided at the time of pre-screening of patients later this year.

The topical pain relief portfolio comprises three compounds:

TPR100: Topical diclofenac

A topical gel combining the Non-Steroidal Anti-Inflammatory Drug diclofenac with the DermaSys® delivery system. TPR100 has been shown to achieve in excess of eight times higher permeation through human skin and 35 times greater bioavailability than achieved by the UK's best-selling topically applied diclofenac-based pain relief product, Voltaren® gel.

TIB200: Topical ibuprofen

A topical gel combining the well-known analgesic ibuprofen with the DermaSys® delivery system. TIB200 has been shown to achieve in excess of twenty times higher permeation through isolated human skin compared with the UK's best-selling topically applied ibuprofen-based topical pain relief product, Nurofen® gel.

SPR300: Sensory pain relief

A topical gel combining methyl salicylate and menthol with the DermaSys® delivery system. SPR300 has been shown to achieve in excess of four times higher permeation through isolated human skin compared with the UK's best-selling topically applied methyl salicylate/menthol-based topical pain relief product, Deep Heat®. In addition SPR300 was directly compared with the best-selling over-the-counter topically applied gels sold in the USA, Icy Hot® and Bengay®, and showed similarly improved permeation rates.

Finance

Cash and cash equivalents at 30 June 2014 was £11.21 million (30 June 2013: £2.12 million) with a net cash inflow of £10.22 million in the period. The equity fundraising earlier this year will support the clinical development of Futura's earlier-stage product portfolio through to key value inflexion points. We continue to manage our financial resources carefully.

In the period under review, we earned royalty payments of £2k from the initial launch of PET500 (six months ended 30 June2013: £321k from milestone payments for CSD500). The retained loss for the six months ended 30 June 2014 was £1.45 million. Research and development ("R&D") costs of £1.07 million were higher than that for the corresponding six month period ended 30 June  2013: £0.89 million as we start to utilise a portion of the new capital raised by investing in developing new products to add to the pipeline. Other administrative costs of £581k were higher than that for the corresponding six month period ended 30 June  2013: £472k.

Outlook

We have made significant progress in the year to date and are close to starting clinical trials with the pain relief portfolio and MED2002. We are also preparing for the initial launch next year of MED2002 as a special product. CSD500 will be launched under the Futura brand Blue Diamond™ in several European countries later this year with the wider roll-out of the product during 2015. The commercial attractiveness of CSD500 is underlined by the success of our out-licensing activities and we continue in discussions in connection with the remaining key regions throughout the world.

The successful equity fundraising earlier this year will support the clinical development of Futura's earlier-stage product portfolio through to key value inflexion points, thereby creating major opportunities to deliver future shareholder value.