Futura Medical plc
Focused on the future
Annual Report and Accounts 2023
INTRODUCING
Our 2023 Annual Report
WELCOME TO THE FUTURA MEDICAL ANNUAL REPORT
Futura Medical specialises in the development and global commercialisation of innovative and proprietary sexual health products. Our lead product is Eroxon®, a clinically proven breakthrough treatment for erectile dysfunction.
We are experts in the research, development and commercialisation of topically delivered gel formulations.
Our purpose is to provide a range of clinically proven sexual health products that enhance quality of life.
STRATEGIC REPORT
CONTENTS
STRATEGIC REPORT
Business at a glance | 02 |
Investment case | 03 |
Year at a glance | 05 |
Chairman's Statement | 07 |
Chief Executive's Review | 08 |
Our marketplace | 11 |
Eroxon® progress at a glance | 13 |
Commercialisation process | 14 |
Commercialisation at a glance | 15 |
Spotlight on commercial partners | 16 |
How Eroxon® has changed lives: | |
two real-life case studies | 17 |
Our business model | 19 |
Our strategy | 21 |
Key performance indicators | 23 |
Product Review - Eroxon® | 25 |
Our strategy in action - European launch | 27 |
Our strategy in action - US go-to-market | |
strategy | 28 |
Financial Review | 29 |
Stakeholder engagement | 31 |
Key risks and mitigation | 34 |
Sustainability Review | 37 |
GOVERNANCE FINANCIAL STATEMENTS
GOVERNANCE
Board of Directors | 39 |
Corporate Governance Statement | 41 |
Spotlight on our new Chairman | 42 |
Our Governance Structure | 44 |
Corporate Governance Report | 45 |
Audit Committee Report | 49 |
Remuneration Committee Report | 50 |
Directors' Report | 56 |
FINANCIAL STATEMENTS
Independent Auditor's Report to the | |
Members of Futura Medical plc | 59 |
Consolidated Statement of | |
Comprehensive Loss | 67 |
Consolidated Statement of Financial Position | 68 |
Consolidated Statement of Changes in Equity | 69 |
Consolidated Statement of Cash Flows | 70 |
Notes to the Consolidated Financial | |
Statements | 71 |
Parent Company Balance Sheet | 87 |
Parent Company Statement of Changes | |
in Equity | 88 |
Notes to the Parent Company Financial | |
Statements | 89 |
Company information | 91 |
Futura Medical plc Annual Report 2023 | 01
STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS |
BUSINESS AT A GLANCE
Delivering clinically proven products to improve sexual health
Futura specialises in the development and global commercialisation of innovative and proprietary sexual health products. Our lead product is Eroxon®, a clinically proven breakthrough treatment for erectile dysfunction ("ED"). We are experts in the research, development and commercialisation of topically delivered gel formulations to improve sexual health. Our purpose is to provide a range of clinically proven sexual health products that enhance quality of life.
Futura Medical is based in Guildford, United Kingdom ("UK") and is listed on the AIM market of the London Stock Exchange. We are an agile, driven and committed team with extensive experience in the research, development and commercialisation of consumer health products globally with a particular expertise in Europe and the United States of America ("USA").
Futura's business model focuses on a de-riskedgo-to- market strategy via leading consumer healthcare partners who are well resourced to commit significant marketing spend and expertise. Futura has distribution partners
in place for Eroxon® in a number of major consumer markets including Haleon plc ("Haleon") in the USA, the largest consumer health market in the world, and Cooper Consumer Health in Europe.
Eroxon®, Futura's clinically proven lead product, has been developed for the treatment of ED. Eroxon® is approved in a number of markets across the world including in Europe and the USA. Eroxon® launched in its first markets the UK and Belgium in March 2023, being available to consumers for the first time and changing the lives of men with ED and their partners. Launches in the UK and Belgium were followed by "soft-launches" in other European countries and by the first launch in the Middle East in 2023 with further launches in both regions taking place in 2024.
The highly differentiated product, which is the only topical gel treatment for ED available over-the-counter ("OTC") and helps men get an erection in ten minutes, addresses significant unmet needs in the ED market.
EROXON® IS THE ANSWER:
- It is the first OTC topical gel clinically proven for the treatment of ED
- It is the only topical gel treatment for ED available without the need of a doctor's prescription
- It helps men get an erection in ten minutes, addressing significant unmet needs in the ED market.
Read more about our | Read about our | ||
Strategy on page 21 | commercial partners | ||
on page 16 | |||
Read more about our | Read about Eroxon® | ||
Marketplace on page 11 | on page 25 |
20% 50% 25%
ED impacts around 20% of men globally across all age brackets1
Approximately half of all men over 40 experience ED2
Around 25% of new diagnoses are in men under 403
- EMA, Withdrawal assessment report for Viagra, 2008
- Feldman HA et al. J Urol 1994; 151: 54 - 61
- Pozzi, J of Sexual Medicine, Volume 20, 2022
Futura Medical plc Annual Report 2023 | 02
STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS |
INVESTMENT CASE
We utilise our expertise to deliver long-term shareholder value
LARGE, GROWING AND UNDERSERVED ADDRESSABLE MARKET
ED impacts around 20% of men globally across all adult age brackets1, with approximately 50% of all men over 40 experiencing ED2 and around 25% of all new diagnoses being in men under 403. Over-the-counter ("OTC") availability, longer lasting, faster acting and affordability are the top unmet needs for ED treatments4.
Read more about the ED market on page 11
HIGH BARRIERS TO ENTRY
Futura has already taken first mover advantage with regulatory approvals in key markets such as the USA and European Union ("EU") as well as having distribution agreements in place with leading consumer healthcare partners. In addition, the Company has patents granted or pending in over 30 countries including all the key ED markets.
View our regulatory approvals and licensing deals on page 15
INNOVATIVE AND EXPERIENCED TEAM
Futura has an innovative and experienced Research and Development ("R&D") team in place to broaden the Eroxon® range and develop range extension products.
Futura has gained unique knowledge and expertise in the new and underserved OTC sexual health category and therefore has the capability to build upon market research already undertaken to identify product extensions and potentially new market segments for OTC products.
Read more about our Board of Directors on page 39
- EMA, Withdrawal assessment report for Viagra, 2008
- Feldman HA et al. J Urol 1994; 151: 54 - 61
- Pozzi, J of Sexual Medicine, Volume 20, 2022
- Ipsos research carried out on behalf of Futura in the USA, 2022
Futura Medical plc Annual Report 2023 | 03
STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS |
INVESTMENT CASE
SIGNIFICANTLY DIFFERENTIATED LEAD PRODUCT
Our lead clinically proven product Eroxon® is significantly differentiated against its peers, being OTC and quicker to work.
Eroxon® is the only topical gel treatment for ED available over the counter and helps men get an erection in ten minutes. Being OTC significantly improves access for men or their partners without the normal cost or embarrassment, issues often associated with consultation of a healthcare practitioner. According to IPSOS research,
users who are dissatisfied with their current medication mostly cite limited efficacy, slow onset of action, and side effects as the source of their dissatisfaction4.
Read more about
Eroxon® on page 25
DE-RISKEDGO-TO-MARKET STRATEGY
Significant low-cost opportunity to broaden the availability of Eroxon® rapidly and efficiently worldwide through de-riskedgo-to-market strategy via leading consumer healthcare partners who are well resourced to commit significant marketing spend and expertise.
Futura has distribution partners in place in a number of major consumer markets including Haleon in the USA, the largest consumer healthcare market in the world, and Cooper Consumer Health in Europe. These partners manage the marketing and distribution of the product, investing their own significant capital to market Eroxon® and broaden its availability rapidly and efficiently.
Read more about our business model on page 19
AT AN INFLECTION POINT
The Company is at an inflection point following recent commercialisation with first meaningful revenues generated. Strong cash balance and capital light corporate structure provide sufficient funding for the growth strategy.
The first meaningful revenues generated from product sales and the broader success of the UK launch have been a catalyst for significant strategic progress across multiple markets. With the nature of the model, partnering with leading consumer healthcare partners, there is low capital commitment needed from Futura to significantly broaden the reach of Eroxon® and deliver on the Company's growth strategy.
Read more in our Financial
Review on page 29
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STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS |
YEAR AT A GLANCE
A transformational year for the Group
2023 has been a year of huge progress across the business with key milestones being achieved towards the commercialisation of Eroxon®, particularly in Europe and the USA.
OPERATIONAL HIGHLIGHTS
Significant progress has been made in key target markets
- Food and Drug Administration ("FDA") marketing authorisation for Eroxon® in the USA, the largest consumer healthcare market in the world
- Haleon plc secured as distribution partner for the USA and US$ 4 million upfront payment received which will be recognised in FY24
- Successful UK and Belgium launches in March 2023 through Cooper Consumer Health ("Cooper")
- Granted allowance of EU patent which will provide protection for Eroxon® until 2040 in all key European markets
- Approvals received in a number of new markets, including Saudi Arabia, Mexico and Australia, as well as launching in the United Arab Emirates ("UAE")
Proven demand for Eroxon® - early data shows c. 20% market share in the UK and Belgium
FINANCIAL HIGHLIGHTS
- The Company delivered first meaningful revenues of £3.1 million (2022: £nil) following the launch of Eroxon®
- Gross profit of £1.8 million (2022: £nil) reflecting a gross margin of 57%
- Adjusted operating loss of £4.2 million*
- Loss after tax of £6.51 million (2022: £5.85 million)
- Strong cash position of £7.7 million (2022: £4.0 million), supported by the Company's efficient operating model and tight cost controls
POST PERIOD END
Extension of licensing agreement with Cooper to 2029
Eroxon® available on prescription in England and Wales, improving availability and raising awareness
Presentation at ESSM Congress
FEB 2023
Key
Regulatory approvals
Product launches
Licensing deals Other
Eroxon® granted US | Regulatory approval | First launch in the | Eroxon® awarded "New | Eroxon® approved on | |||||
FDA approval for | granted in Saudi Arabia | Middle East | product of the year" | the NHS Drug Tariff | |||||
OTC sale | and Australia | by Boots | |||||||
JUN 2023 | AUG 2023 | OCT 2023 | NOV 2023 | DEC 2023 | |||||
MAR 2023 | JUL 2023 | OCT 2023 | OCT 2023 | NOV 2023 | |||||
Launch in the UK and | Commercialisation | European patent | Marketing | M8 Pharmaceuticals | |||||
Belgium | agreement with | granted for Eroxon® | authorisation granted | partnership expanded | |||||
Haleon for the USA | in Mexico |
- Adjusted for a non-cashshare-based payment charge of £2.72 million (2022: £0.67 million). The share-based payment charge predominantly relates to the Long Term Incentive Plan ("LTIP") award in October 2023.
Futura Medical plc Annual Report 2023 | 05
STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS | ||
Strategic
Report
STRATEGIC REPORT
Chairman's Statement | 07 |
Chief Executive's Review | 08 |
Our marketplace | 11 |
Eroxon® progress at a glance | 13 |
Commercialisation process | 14 |
Commercialisation at a glance | 15 |
Spotlight on commercial partners | 16 |
How Eroxon® has changed lives: | |
two real-life case studies | 17 |
Our business model | 19 |
Our strategy | 21 |
Key performance indicators | 23 |
Product Review - Eroxon® | 25 |
Our strategy in action - European launch | 27 |
Our strategy in action - US go-to-market | |
strategy | 28 |
Financial Review | 29 |
Stakeholder engagement | 31 |
Key risks and mitigation | 34 |
Sustainability Review | 37 |
Futura Medical plc Annual Report 2023 | 06
STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS |
CHAIRMAN'S STATEMENT
We have built a solid foundation from which to seize our clear opportunity for growth
"2023 was a momentous year for Futura, with the Group successfully commercialising and generating its first meaningful revenues from sales of its lead product, Eroxon®."
JEFF NEEDHAM
Non-Executive Chairman
It gives me great pleasure to present my first set of results as the Chairman of Futura. 2023 was a momentous year for Futura, with the Group successfully commercialising and generating its first meaningful revenues from sales of its lead product, Eroxon®, delivering on the objectives we set out at the beginning of the period. This achievement cannot be overstated, and my thanks go to the wider team for all of their efforts this year, which are beginning to bear fruit as we enter the next, exciting phase of Futura's journey.
Since taking over the role of Chairman from John Clarke in July and while serving on the Board as a Non-Executive Director before this, I have seen how tirelessly the team has worked to make such excellent progress. I would like to thank John again, for all his contributions and guidance which left the Company well positioned for its next phases of growth. I undertook my role as Chairman with great excitement as we are on the cusp of huge commercial potential having a unique product already approved in the two key erectile dysfunction (ED) markets of the USA and Europe.
The market opportunity for Eroxon® is large and there are three crucial factors that give me great confidence that Eroxon® will establish itself as a leading brand in the markets in which it is launched.
Firstly, it is the first pure OTC brand on the shelf that will be accessible to consumers without a prescription or the need for interaction with a pharmacist during the purchasing process. This "open accessibility" for the consumer is critical to creating a large market for the brand. Secondly, Eroxon®'s fast onset of action, with its key brand claim of "helps you get an erection within 10 minutes", is a major product advantage over the traditional oral ED drugs that typically take 30 to 60 minutes to have an effect. And, thirdly, Futura has
been successful in entering into agreements with market leading commercial partners that possess deep expertise in executing and managing successful consumer brand launches. We are excited that we have the building blocks in place to realise success in our key markets.
In the year, we have seen the successful rollout of Eroxon® in the UK and Belgium, FDA marketing authorisation
in the USA and the subsequent licensing agreement with Haleon, as well as further agreements made with our distributors across our other markets. The Board's priority now is to build on this and ensure the successful commercialisation of Eroxon® around the world, especially in the USA, the largest consumer healthcare market in the world. This, coupled with the delivery of recurring revenues and profits is what the whole business is working towards and is energised to achieve.
We were delighted to welcome Roy Davis to the Board in January 2024, further strengthening our ability to deliver on our strategy. With a wealth of experience in the commercialisation of medical device development companies and a proven track record of successfully scaling businesses and delivering substantial shareholder value, Roy's expertise will be invaluable moving forward.
Alongside the commercialisation of Eroxon®, we remain focused on the evolution and development of innovative sexual health products. We have a small but highly experienced R&D team, who have delivered a world first product in Eroxon®. We are proud of our R&D heritage and are already exploring where next to apply this resource, in a cost-efficient way, as we seek to develop further clinically proven sexual health products in the medium to long term.
Looking to the year ahead, we are excited to continue to build on the progress made this year. With a clearly laid out strategy, motivated team, solid foundations to build on and exciting partnerships in place, we are confident in the long-term prospects of the Group.
By order of the Board
JEFF NEEDHAM
Non-Executive Chairman Futura Medical plc
9 April 2024
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STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS |
CHIEF EXECUTIVE'S REVIEW
2023 - Delivering against our strategic objectives
"We delivered on the three key objectives that we set out in 2023: achieving marketing authorisation in
the USA; securing a standout US distribution partner in Haleon plc and reporting our first meaningful revenues."
JAMES BARDER
Chief Executive
I am very proud to be able to report the progress we achieved in 2023. The year marks a pivotal moment for Futura having delivered our first meaningful revenues from our lead product, Eroxon®. To be able to walk into the UK's leading pharmacy and health and beauty retailers across the country and see our product on the shelves in over 2,500 stores is truly momentous, but just the start.
We delivered on the three key objectives that we set out in 2023: achieving marketing authorisation in the USA; securing a standout US distribution partner in Haleon plc for the largest consumer healthcare market in the world and reporting our first meaningful revenues.
Erectile dysfunction ("ED") should not be underestimated. Globally it impacts approximately 20% of men1, affecting all age ranges, with approximately 50% of men over 40 experiencing ED2 and around 25% of new diagnoses being in men under 403. Moreover, with a globally ageing
population, this is a large market that is expected to continue to grow. Research shows this is an underserved market with the majority
of those affected yet to be diagnosed, whilst within the cohort that have been diagnosed, there is a high proportion
that are not on treatment or stop treatment after one year. Our market research shows limited efficacy, slow onset of action, side effects and
costs as the main sources of their dissatisfaction4.
Our lead product, Eroxon®, addresses many of these needs. Clinically proven, it is the only topical gel
treatment for ED available over the counter ("OTC") and helps men get an erection in ten minutes. Cost and embarrassment
can be a blocker to seeking a solution to ED, particularly in many parts of the world where erectile dysfunction still holds a significant stigma within society.
Eroxon®, being a clinically proven treatment available without the need of consulting with a doctor, reducing the need for consultation fees, significantly improves ease of access for men and their partners.
Following the launch of Eroxon® in the UK and Belgium, we generated revenue of £3.1 million from product sales in 2023. As noted in our trading update in February, this performance was then followed by a strong start to 2024, as orders in excess of £0.5 million placed with our UK manufacturer for contractual delivery in December 2023 were delivered late in early January 2024. The Company delivered a gross margin of approximately 57% and ended the period with a cash position of £7.7 million, providing a solid foundation for Futura as it enters 2024.
We continue to build on a leading position in the development of a topical gel treatment for ED, with high barriers to entry and first mover advantage. Our leading position is the result of the significant resources we have invested into R&D and a lot of hard work, and I would like to extend my thanks to our dedicated and loyal team for their unwavering commitment and support of the business which has now started to come to fruition.
STRATEGY UPDATE
In our 2022 Annual Report we set out five priorities for the year ahead, below we cover the progress we have made during 2023 against these priorities.
1. Marketing authorisation of Eroxon® by the US FDA as an OTC De Novo medical device in Q2 2023.
In June 2023, Eroxon® received FDA marketing authorisation in the USA, the largest consumer healthcare market in the world. Eroxon® is the first OTC topical gel available to treat ED in the USA, a huge breakthrough for Futura and a significant milestone on our journey. The FDA sets a very high standard in evaluating the effectiveness and safety of De Novo Medical Devices and I am therefore delighted that we met this standard with our submission of 22 clinical, biocompatibility, human factor studies and performance bench tests which were rigorously reviewed and accepted by the FDA.
Futura Medical plc Annual Report 2023 | 08
STRATEGIC REPORT | GOVERNANCE | FINANCIAL STATEMENTS |
CHIEF EXECUTIVE'S REVIEW
2. First launches of Eroxon® in Europe and first revenues reported, with further launches planned in 2024.
Our European distribution partner, Cooper, launched in the UK and Belgium in March, followed in July with soft launches, providing initial online-only availability without advertising or promotional spend in France, Italy and Spain. The results of the launches in these initial markets have been encouraging, with Eroxon® taking c. 20% market share of approved ED treatments in the UK and Belgium within 12 months of launch, very strong media interest in the launch, early signs of repeat purchase from customers, and Eroxon® receiving several industry awards.
The success of the partnership with Cooper to date was demonstrated through the recent extension of the licensing agreement until January 2029, with full launches in at least ten countries including key European markets such as France, Italy and Spain already occurred or expected during the first half of 2024. The granting of Futura's EU patent for Eroxon® until 2040 further cements the intellectual property of the product as Cooper continues the roll out.
3. Sign further agreements for key markets and countries worldwide - with the USA being the main focus - to build a strong global network of licensing and distribution partners and a strong brand identity for Eroxon®.
Following FDA marketing authorisation in the USA, we were delighted to secure agreement with Haleon, one of the world's leading consumer healthcare companies, for exclusive marketing and distribution rights in the USA. As part of the agreement, Haleon will commercialise Eroxon® in the USA as the first and only clinically proven gel treatment for ED, available OTC without a prescription. The USA is the biggest consumer healthcare market globally. Haleon will be responsible for all advertising and promotional activities related to the launch and marketing of the product in the USA. We believe Haleon, with its strong capabilities in brand-building and marketing
through an unrivalled breadth of channels, as well as its connections and market reach, makes the ideal partner to introduce Eroxon® to the millions of men with ED in the USA. We continue to work closely with Haleon on the preparation for the launch which is progressing well and will update shareholders on timings as appropriate.
During the year, we also further strengthened our relationship with our distribution partner for Central and South America, M8 Pharmaceuticals Inc ("M8"), by expanding our current agreement for Brazil and Mexico to include a further fourteen countries covering the Central and South American region. M8 is an excellent partner with dedicated brand-building and marketing experience, as well as a strong and reputable consumer healthcare presence in South and Central America.
In conjunction with our advisers, we continually look to strengthen our Intellectual Property portfolio whenever possible and have recently filed three new patent applications in relation to Eroxon®. These are new submissions in addition to the patent that the EU granted allowance in September 2023 and we expect to receive further patent approval across other key ED markets during 2024 and beyond providing protection for Eroxon® until 2040.
4. Continue to support our commercial partners in their own submissions to local regulatory bodies and in their launch preparations.
Alongside our distribution partner for the Middle East, Labatec Pharma, Eroxon® has been granted regulatory approval in six Middle Eastern countries, including the Kingdom of Saudi Arabia and the United Arab Emirates.
In addition, the Mexican Secretariat of Health granted OTC sale marketing authorisation for Eroxon® in Mexico.
We also continue to make submissions in those countries where we currently do not have distributors but where the existing EU MDR approval is evidence of conformity of local national requirements thereby simplifying the regulatory approval procedure. Australia being one of such countries where in 2023 we received approval for Eroxon®.
Post-period end, we announced that Eroxon®, with effect from 1 March 2024, is available to be prescribed by doctors in England and Wales for the treatment of ED as well as the existing OTC availability of Eroxon®. The purpose is to increase the awareness and credibility of Eroxon® amongst healthcare professionals.
5. Expand our supply chain and manufacturing capabilities to increase supply chain robustness and capacity.
As we start to supply Eroxon® to our distributors around the globe it is essential that we have a robust supply chain in place to provide greater supply certainty, as well as additional capacity based on both Futura and distribution partners' sales projections moving forwards. To this end, we have developed strategic partnerships with two new contract manufacturers ("CMO"), one located in the
Futura Medical plc Annual Report 2023 | 09
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Futura Medical plc published this content on 24 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 May 2024 06:09:04 UTC.