21st Sep 2006 07:01
Futura Medical PLC21 September 2006 For immediate release 21 September 2006 Futura Medical Plc Interim Results for the six months ended 30 June 2006 Futura Medical plc (AIM: FUM), the pharmaceutical and medical device group, ispleased to announce its Interim Results for the six months ended 30 June 2006. Operational Highlights in the year to date • MED2002: global development agreement with GSK • CSD500: regulatory approval on track • FLD500: dossier submission scheduled for 2007 • DCF100: excellent permeation study results Financial Highlights • Pre-tax loss of £1.0 million for the six months ended 30 June 2006 (H1 2005: pre-tax loss of £1.0 million - as restated) • Cash of £1.4 million at 30 June 2006 (30 June 2005: £2.7 million) • Successful placing raised £3.4 million net in July 2006 Commenting on the results James Barder, Futura's Chief Executive, said: "Theperiod under review, and post the period end, has been transformational for theCompany in that, with GSK and SSL, we now have routes to market with blue chippartners for all of our three leading products. In addition we have progressedour new product portfolio by leveraging our intellectual property portfolio tocreate value for shareholders." For further information:Futura Medical plc Tel: +44 (0) 1483 685 670James Barder, Chief Executiveemail to: [email protected] www.futuramedical.co.uk Media enquiries:Buchanan Communications Tel: +44 (0) 20 7466 5000Mark Court / Rebecca Skye Dietrich CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT The end of the beginning The first three products upon which Futura was founded are now at an advancedstage of development: the dossier for CSD500 has been submitted to EUregulators; we expect to follow suit with the submission of the FLD500 dossiernext year; in July we announced a development agreement for MED2002 withGlaxoSmithKline Consumer Healthcare, a division of GlaxoSmithKline plc ("GSK"),to complete MED2002's clinical development programme. With this in mind, Futura is currently undergoing a strategic review todetermine the best way of leveraging our intellectual property assets, know-howand commercial expertise in order to assure the continued success and growth ofthe company. Futura has developed a highly efficient and proprietary deliverysystem for the rapid absorption of active molecules through the skin. By usingthis system, low doses of certain compounds can be targeted, which bringspotential benefits such as localised site of action, rapid speed of onset andreduced side effects. We are assessing its use in a range of compounds. Our new product evaluation is already showing excellent progress with the recentannouncement of impressive skin permeation rates for DCF100, our topicalanalgesic, and discussions have commenced with potential distributors. We hopeto be able to report further new product initiatives to our shareholders duringthe coming months. Key Product Development MED2002Treatment for Erectile Dysfunction (ED) Since the founding of Futura we have received in excess of 60 approaches fromdifferent pharmaceutical companies for the distribution and marketing rights forMED2002. We have always had faith in the huge commercial potential of MED2002and for its becoming the world's first over-the-counter ("OTC") treatment forED. Only one in five patients with ED seek treatment as all existing ethicalmedicines require a doctor's prescription. As an OTC treatment, the possibilityof buying MED2002 through the pharmacy will be easier and less embarrassing.Accordingly, it has been absolutely critical to us that we secured the bestpossible distributor capable of successfully addressing the sensitivitiesassociated with the positioning and marketing of MED2002. We were therefore delighted when in July this year we announced a developmentagreement with GSK for MED2002. Within the OTC industry, GSK's infrastructureis considered to be the best. This makes them an ideal partner for MED2002. Under the development agreement GSK will primarily run and manage the ongoingclinical trial programme for MED2002 through to regulatory submission in 2008and provide global regulatory and technical support. 65% of the costs of theclinical programme will be met by GSK. The main licensing terms between GSK andFutura have also been established. These are currently being incorporated into aglobal distribution and marketing agreement for which both companies intend toobtain formal Board approval as soon as practicable. Since signing the development agreement arrangements have been progressing toenable the next clinical study to start before the end of 2006. We expect to beable to update our shareholders later this year on this study along with thelikely timetable for the results. CSD500 - ZanifilTMCondom safety device In the past few days we have received a detailed response from the relevantNotified Body and Competent Authority (regulators) regarding the regulatorydossier for CSD500's marketing authorisation within the EU. There are some remaining questions on the chemical and pharmaceutical aspects ofthe regulatory dossier but these are being addressed as part of the ongoingprogramme. We expect to be able to provide a full and satisfactory response tothese questions in the near future. The assessment by regulators of the clinical aspects and potential marketingclaims is more complex. The regulators have proposed a hearing where theseissues can be discussed between all parties to determine the necessary steps togain regulatory approval. The regulatory approval of CSD500 will be a major milestone achievement forFutura which will lead to our generating revenues from the first of our threekey products. FLD500Female lubrication device Real progress has been made this year in addressing the technical challenges ofcoating a thin elastomer film containing the active compound onto the outersurface of a Durex(TM)condom without damaging the integrity of the condom orcompromising the stability of the active compound. Following encouraginginitial laboratory results SSL conducted pilot scale-up trials in July. Assuming a successful outcome of these trials we would expect a submission to EUregulators during 2007 for FLD500's marketing authorisation. This willrepresent Futura's second regulatory filing within two years. DCF100A topical formulation of the non-steroidal anti-inflammatory drug (NSAID)Diclofenac Several weeks ago we announced impressive results for our novel topicalformulation of Diclofenac in human in vitro skin permeation studies withpermeation rates in excess of eight times higher than the world's current marketleader, Voltarol (R) Emulgel. Global topical NSAID sales in 2005 were US$2.35 billion. Notably, this excludesthe world's largest pharmaceutical market, the USA, where no topical NSAID hasyet received marketing approval from the Food and Drug Administration. This isdue to concerns over the inability of existing topical NSAID formulations todeliver sufficient dose through the skin to achieve a therapeutic effect. Incontrast, we believe DCF100's potent trans-dermal delivery addresses this issue.With Voltarol (R) Emulgel achieving global sales of US$215 million even withoutsales in the USA, we believe DCF100 represents a significant commercialopportunity. Plans are now at an advanced stage to conduct Phase I human tissuemicro-dialysis and plasma level studies on the final formulation later in theyear, with results anticipated for mid-2007. In the meantime, discussions havecommenced with potential global distributors for DCF100 and we will update ourshareholders on their progress in due course. The technology upon which DCF100 is based has been developed in-house as aby-product of the challenges we resolved last year in reformulating MED2002. Thecost of adapting the technology to create DCF100 has therefore been minimal,although there is valuable intellectual property associated with it.Furthermore, the regulatory hurdles normally faced with new products orindications are considerably less as Diclofenac is already well-characterisedand is licensed in oral form throughout the world and in topical form in mostregions. A patent was filed in early 2006 for DCF100. PET500An OTC treatment for Premature Ejaculation (PE) As with DCF100, the technology used in PET500 largely exploits that alreadydeveloped for MED2002. We remain optimistic that we can develop aconsumer-friendly, fast-acting and rapidly-dissipating treatment to enable mento have greater sexual control without compromising their sexual satisfaction.PE is considered the most common form of sexual dysfunction in men. Perhaps even more than ED, PE has many social and emotional taboos associatedwith the condition. As a consequence, we believe that it is essential for thepositioning and design of PET500 to accurately reflect these issues. For thisreason extensive market research is underway in order that we can fullyunderstand the needs of men with PE as well as those of their partners. We expect to conclude our extensive market research by the end of the year.Assuming satisfactory outcomes, we would expect to commence phase II studies inthe first half of 2007. Under the MED2002 agreement GSK hold the right of firstrefusal for PET500. As with MED2002 we consider it essential for the success ofPET500 that we have a strong global distribution partner. Business Analysis Our retained loss for the six months ended 30 June 2006 was £923,220. Researchand development costs of £588,901 were 15% lower compared with last year'sinterim results. This reflects decreased clinical research activity on MED2002pending the GSK development agreement signed in July. Other administrativeexpenses have risen by only £96,954 over 6 months, with the increase beingchiefly divided between legal and negotiation costs culminating in the deal forMED2002 and the expansion of our core team, including a marketing executive. Wecontinue to maintain a tight control on expenditure. Cash at the end of June2006 was £1.4 million prior to raising a further £3.4 million net of costs inJuly 2006. Outlook We go into the next stage of Futura's development with growing anticipation aswe continue to build a company with a range of exciting and commerciallyattractive products. This anticipation is shared by your Board of Directors,who recently took the opportunity to invest in Futura by ploughing the profitsrealised from the exercise of their shortly-to-expire options into Futurashares. Directors' holdings have thereby increased from an aggregate holding of 566,649to 1,377,890 ordinary shares in Futura, with all Executive Directors now owningshares in Futura as opposed to only half owning shares prior to this recentexercise. In the case of every Director this represents a holding value of atleast double their respective Futura annual salary based on the share price atthe time of exercise, a meaningful sum that demonstrates the underlyingcommitment of all of your Executive Directors. Futura's biggest asset is its staff and its team of consultants. Theircontribution was strongly demonstrated this year with DCF100 being developedpurely out of their ingenuity and creativity. Again we offer our thanks to themfor all their continued efforts and fertile imaginations! Dr W D Potter, Chairman J H Barder, Chief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT Notes Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 June 30 June 31 December 2006 2005 2005 As restated As restated £ £ £ Turnover 492 - 1,660 Research and development costs (588,901) (691,624) (1,547,872)Other administrative costs (481,631) (384,677) (801,256) Administrative expenses (1,070,532) (1,076,301) (2,349,128) Operating loss (1,070,040) (1,076,301) (2,347,468) Other interest receivable and similar income 37,592 77,937 133,467 Loss on ordinary activities before taxation (1,032,448) (998,364) (2,214,001)Tax on loss on ordinary activities 3 109,228 132,530 286,973 Loss on ordinary activities after taxation andretained loss for the period 4 (923,220) (865,834) (1,927,028) Basic and diluted loss per share (pence) 5 (1.9) (1.8) (4.0) All amounts relate to continuing activities. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Notes Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 June 30 June 31 December 2006 2005 2005 As restated As restated £ £ £ Loss for the period (923,220) (865,834) (1,927,028) Prior period adjustments- Share-based payment 2 (39,462) Total gains and losses recognised since lastfinancial statements (962,682) CONSOLIDATED BALANCE SHEET Notes Unaudited Unaudited Audited 30 June 30 June 31 December 2006 2005 2005 £ £ £ Fixed AssetsTangible assets 24,989 27,914 25,370 24,989 27,914 25,370Current AssetsStock 31,956 5,320 31,956Debtors 172,576 398,445 351,079Cash at bank and in hand 1,448,665 2,661,562 1,808,913 1,653,197 3,065,327 2,191,948 Creditors: amounts falling due within one year (242,266) (200,753) (237,147) Net current assets 1,410,931 2,864,574 1,954,801 Total net assets 1,435,920 2,892,488 1,980,171 Capital and reservesCalled up share capital 99,337 97,357 97,877Share premium account 6 8,925,420 8,425,707 8,560,987Other reserves 1,152,165 1,152,165 1,152,165Profit and loss account 7 (8,741,002) (6,782,741) (7,830,858) Equity shareholders' funds 8 1,435,920 2,892,488 1,980,171 CONSOLIDATED CASH FLOW STATEMENT Notes Unaudited Unaudited Audited 6 months 6 months year ended ended ended 30 June 30 June 31 December 2006 2005 2005 As restated As restated £ £ £ Net cash outflow from operating activities 9 (1,046,286) (1,064,305) (2,292,863) Returns on investments and servicing of financeInterest received 41,880 64,154 139,306 Net cash inflow from returns on investments andservicing of finance 41,880 64,154 139,306 Corporation TaxResearch and development tax credit received 282,636 - 167,858 282,636 - 167,858 Capital expenditurePayments to acquire tangible assets (4,414) (10,934) (13,835)Proceeds on disposal of fixed assets 43 - - Net cash outflow from capital expenditure (4,371) (10,934) (13,835) Net cash outflow before use of liquid resources and financing (726,141) (1,011,085) (1,999,534) Management of liquid resourcesDecrease in short term deposits 10 394,061 986,301 1,787,913 FinancingIssue of ordinary shares 365,893 - 135,800 Net cash inflow from financing 365,893 - 135,800 Increase / (Decrease) in net cash 10 33,813 (24,784) (75,821) NOTES TO THE INTERIM FINANCIAL INFORMATION 1. Basis of preparation The unaudited Interim Report was approved by the Board of Directors on 20September 2006. The financial information contained in this Interim Report has been prepared onthe basis of the accounting policies set out in the Group's Annual Report forthe year ended 31 December 2005 as well as applying the requirements ofFinancial Reporting Standard 20 (Share-based payment) for the first time. The financial information for the six months ended 30 June 2006 and for the sixmonths ended 30 June 2005 is unaudited. The financial information for the Group set out above does not constitute "statutory accounts" within the meaning of Section 240 of the Companies Act 1985.The information for the year ended 31 December 2005 has been extracted from the statutory accounts of FuturaMedical plc which have been delivered to the Registrar of Companies. Theauditors have reported on those financial statements; their reports wereunqualified and did not contain statements under Section 237(2) or (3) of theCompanies Act 1985. 2. Change in accounting policy The Group has applied the requirements of Financial Reporting Standard 20(Share-based payment) which it has adopted for the first time with effect from 1January 2006 as its application is obligatory for accounting periods commencingon or after that date. In accordance with the transitional provisions, FinancialReporting Standard 20 has been applied to all grants of equity instruments after7 November 2002 that were unvested at 1 January 2006. The Group issues equity-settled share-based payments, i.e. share options, tocertain directors and employees. Equity-settled share-based payments aremeasured at fair value (excluding the effect of non-market-based vestingconditions) at the date of grant using an appropriate valuation model. The fair value determined at the grant date of the equity-settled share-basedpayments is expensed to the profit and loss account on a straight-line basisover the vesting period, based on the Group's estimate of shares that willeventually vest and adjusted for the effect of non market-based vestingconditions. At each balance sheet date the cumulative charge in respect of eachoption plan is adjusted to reflect expected and actual levels of optionsvesting. Prior to adoption of Financial Reporting Standard 20, equity-settledshare-based payments were not expensed to the profit and loss account. The effect of this is to increase costs for the six months ended 30 June 2006 by£13,076. The prior period comparatives have been restated resulting in anincrease in cost for the six months ended 30 June 2005 of £9,807 and for theyear ended 31 December 2005 of £22,884. The cumulative effect on openingreserves at 1 January 2005 is a charge of £16,578 and a corresponding credit of£16,578 resulting in £nil net change. This has resulted in an increase in lossper ordinary share for the six months ended 30 June 2006 of 0.03 pence per share(six months ended 30 June 2005: increase of 0.02 pence per share; year ended 31December 2005: increase of 0.05 pence per share). 3. Taxation Taxation represents tax credits for certain research and development expenditurebased on the expenditure incurred in the relevant period or year. Deferred taxassets have not been recognised on the basis that their future economic benefitis not certain. 4. Dividends No dividends have been paid and none are proposed. 5. Loss per ordinary share The loss attributable to ordinary shareholders and weighted average number ofordinary shares for the purpose of calculating the diluted earnings per ordinaryshare are identical to those used for basic earnings per share. This is becausethe exercise of share options would have the effect of reducing the loss perordinary share and is therefore not dilutive under the terms of FinancialReporting Standard 14. The calculation of the loss per ordinary share is based on a loss of £923,220(six months to 30 June 2005: loss of £865,834 as restated; year to 31 December2005: loss of £1,927,128 as restated) and on a weighted average of 49,556,032shares in issue (six months to 30 June 2005: 48,678,601 shares; year to 31December 2005: 48,686,327 shares). 6. Share premium Unaudited Unaudited Audited 6 months ended 6 months ended year ended 30 June 30 June 31 December 2006 2005 2005 £ £ £ Opening share premium 8,560,987 8,425,707 8,425,707Premium on shares issued 364,433 - 135,280 Closing share premium 8,925,420 8,425,707 8,560,987 7. Profit and loss reserve Unaudited Unaudited Audited 6 months ended 6 months ended year ended 30 June 30 June 31 December 2006 2005 2005 £ £ £ Opening profit and loss reserve as previously stated (7,830,858) (5,926,714) (5,926,714) Prior period adjustments: - Share-based payment (note 2) (39,462) (16,578) (16,578) - Share-based credit to reserves (note 2) 39,462 16,578 16,578 Opening profit and loss reserve as restated (7,830,858) (5,926,714) (5,926,714) Retained loss for the period (923,220) (865,834) (1,927,028)Share-based credit to reserves 13,076 9,807 22,884 Closing profit and loss reserve (8,741,002) (6,782,741) (7,830,858) 8. Reconciliation of movements in shareholders' funds Unaudited Unaudited Audited 6 months ended 6 months ended year ended 30 June 30 June 31 December 2006 2005 2005 £ £ £ Retained loss for the period (923,220) (865,834) (1,927,028)Net proceeds from issue of shares 365,893 - 135,800Share-based credit to reserves 13,076 9,807 22,884 Net decrease in shareholders' funds (544,251) (856,027) (1,768,344) Opening shareholders' funds as previously stated 1,980,171 3,748,515 3,748,515 Prior year adjustments: - Share-based payment (note 2) (39,462) (16,578) (16,578) - Share-based credit to reserves (note 2) 39,462 16,578 16,578 Opening shareholders' funds as restated 1,980,171 3,748,515 3,748,515 Closing shareholders' funds 1,435,920 2,892,488 1,980,171 9. Reconciliation of operating profit to operating cashflows Unaudited Unaudited Audited 6 months ended 6 months ended year ended 30 June 30 June 31 December 2006 2005 2005 £ £ £ Operating loss (1,070,040) (1,076,301) (2,347,468)Depreciation 5,195 7,758 13,203Share-based payment charge 13,076 9,807 22,884Profit on sale of fixed assets (43) - -Decrease / (increase) in stocks - 9,492 (17,144)Decrease in debtors 805 6,079 20,408Increase / (decrease) in creditors 4,721 (21,140) 15,254 Net cash outflow from operating activities (1,046,286) (1,064,305) (2,292,863) 10. Reconciliation of net cash flow to movement in net funds Unaudited Unaudited Audited 6 months ended 6 months ended year ended 30 June 30 June 31 December 2006 2005 2005 £ £ £ Increase / (decrease) in cash in the period 33,813 (24,784) (75,821)Cash outflow from changes in liquid resources (394,061) (986,301) (1,787,913) Movement in net funds in the period (360,248) (1,011,085) (1,863,734)Net funds at start of period 1,808,913 3,672,647 3,672,647 Net funds at end of period 1,448,665 2,661,562 1,808,913 11. Post balance sheet events On 3 July 2006 our subsidiary, Futura Medical Developments Limited, entered intoa development agreement with GSK for MED2002. Under the terms of the agreementGSK will primarily run and manage the ongoing clinical trial programme forMED2002 through to regulatory submission in 2008, provide global regulatory andtechnical support, and pay 65% of the clinical development programme costs whichwould result in a contribution to those costs of £2.4 million. On 10 July 2006, Futura completed a private placing of 3,400,000 new ordinaryshares at 78 pence per share which raised £2,534,170 net of costs for thecompany. On 10 July 2006, the directors completed the exercise of all of the 2,125,000options over new ordinary shares held by them which would otherwise have expiredon 31 January 2007. This raised £831,250 net of costs for Futura Medical plc andincreased the directors' shareholdings in Futura Medical plc by 811,241 newordinary shares. The directors sold sufficient shares at 78 pence per share to pay a total of£1,001,404 which comprised the purchase price of £831,250 due to Futura for theexercise of options and the tax and national insurance liabilities arising fromthese transactions of £170,154. No director received a cash profit after taxfrom the exercise of options and sale of shares with the exception of DavidDavies who realised a small cash profit of approximately £30,000 but he retaineda total holding of 408,275 ordinary shares. In addition, staff exercised 110,000options. Following the above transactions, resulting in the issue of 5,635,000 newordinary shares, together with 730,000 options exercised by other persons(former directors and consultants) during the six months ended 30 June 2006, theissued share capital of Futura as at 10 July 2006 had increased to 55,303,601. The number of options following the above exercises was 1,160,000 prior to afurther grant of 350,000 options to employees (not directors) on 8 July 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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