Interim Results
Futura Medical PLC
27 September 2004
Press Release 27 September 2004
Futura Medical plc
Interim Results for the six months ended 30 June 2004
Futura Medical plc, the pharmaceutical and medical device group that develops
innovative products for the sexual healthcare market, announces its Interim
Results for the six months ended 30 June 2004.
Highlights
- Product development programme delivering positive results
- £2.5 million, after costs, raised by exercise of call option and by joint
placing
- Operating loss £720k (£966k for six months ended 31 July 2003)
- Pre-tax loss £644k (£946k for six months ended 31 July 2003)
- Loss per share 1.2p (2.1p for six months ended 31 July 2003)
- Approximately £4.3m of cash at 30 June 2004
Commenting on the results, James Barder, Chief Executive, said: 'We continue to
make solid progress with our product development and believe we have sufficient
financial resources to complete the development of our lead products which
remains our absolute priority.'
For further information:
Futura Medical plc
James Barder, Chief Executive Officer +44 (01483) 685670
Anthony Clayden, Finance Director
james.barder@futuramedical.co.uk www.futuramedical.co.uk
anthony.clayden@futuramedical.co.uk
Media enquiries:
Abchurch
Peter Curtain / Alex Tweed Tel: +44 (0) 20 7398 7700
alex.tweed@abchurch-group.com www.abchurch-group.com
Chairman and Chief Executive Joint Interim Statement
It is now just over a year since Futura Medical plc was admitted to trading on
the Alternative Investment Market and we are pleased with both the significant
progress we have made in product development terms as well as the strong
financial position Futura now enjoys. This, we believe, will move us closer to
exploiting the potential of our exciting product range.
Product Development
MED2001 / MED2002 - Eroxon(TM)
Treatment for Erectile Dysfunction ('ED')
In our last report we mentioned ongoing commercial discussions regarding
distribution partners as well as concerns raised about the potential risk of
misuse and possible interaction with PDE5 inhibitors(1). As a result of these
concerns we decided to adjust the formulation of MED2001 to maximise the
localised effect of the drug when directly applied to the penis and also reduce
the systemic uptake thereby minimising any possible drug interaction. This
development work is progressing well and the new formulation (MED2002) has
already been completed, showing dramatically improved dermal absorption rates.
We are now completing this development work by conducting two small studies to
confirm dose and blood plasma levels on MED2002 prior to conducting Phase III
studies in 2005.
Currently it is estimated that between 5% and 10% of ED sufferers also
experience angina(2). For safety reasons, medication normally used to treat
angina restricts this significant subset of ED patients from taking any of the
current oral PDE5 inhibitors. This therefore represents a significant subset of
patients with an unmet clinical need. In addition to the reformulation work we
have also completed a study on 14 patients taking oral nitrates to treat their
mild angina. These patients, who had a low cardiovascular risk and moderate to
severe ED, took part in a clinical study at St Jean's Hospital in Brussels. The
product was found to be safe and well tolerated with no clinically significant
changes in blood pressure. Pending regulatory and ethical clearance we would
expect to include a group of angina patients suffering from ED within our Phase
III study next year.
We are conscious that shareholders are keen for us to announce further
distribution partners for MED2002. Our shareholders have supported our stated
strategy of financing our development programme through the issue of new shares
rather than distribution partner milestone payments. As a consequence we are
well financed and can largely dictate when we sign distribution agreements, to
maximise shareholder returns, rather than just to be able to pay for continued
product development. Prior to the start of our Phase III trials our objectives
were to complete successfully the design of the novel applicator, the angina
study and the formulation adjustment, as well as sign further distribution
agreements with key partners. We are well advanced in this process and believe
we will achieve all our current objectives in time for the announcement of our
full year results, if not sooner.
CSD500 - Zanifil(TM)
Condom safety device
Earlier in the year we commented that, although the formulated gel Zanifil(TM)
was stable, we were seeing some loss of the Glyceryl Trinitrate ('GTN'), the
active ingredient, when the gel was added to the condom. Considerable pilot
work has been undertaken to deepen our understanding of the chemistry within
this complex system of condom, lubricant, gel and packaging and improve the
stability of GTN within this. A number of potential solutions have been
identified to improve stability and further work is underway to investigate
these in order for production trials to take place.
Notes
(1) Viagra(TM), Cialis(TM) and Levitra(TM) are all PDE5 inhibitors.
Phosphodieterase type 5 enzyme is responsible for the breakdown of CGMP, a
messenger molecule produced, inter alia, as a result of sexual stimulation.
CGMP causes smooth muscle relaxation within the penis, resulting in an increased
inflow of blood.
(2) Angina (heaviness or tightness in the centre of the chest) is caused when
arteries supplying the heart become so narrow that not enough oxygen-containing
blood can reach the heart muscle.
FLD 500
Female lubrication device
We announced in April the pilot stage results of a single-blind,
placebo-controlled study being conducted at the Porterbrook Clinic in Sheffield.
Following the positive early results in both efficacy and safety terms seen in
this study, the trial has been extended with further results expected by the end
of October. We will then be sharing the complete results with SSL International
plc which currently holds an option on the worldwide distribution rights for
this product, to determine their interest in taking the product forward and to
agree the additional work required in order to complete the EU dossier for
regulatory submission.
Financial Matters
Our overall loss for the six months ended 30 June 2004 was £578,702. Research
and development costs of £360,391 are consistent with last year's Interim
Results. Other administrative expenses have increased compared with the
comparative six month period due principally to increased costs for challenging
intellectual property rights, investor relations, AIM-related items, licence
negotiations, and staffing chiefly following the appointment of non-executive
directors appropriate to the stewardship as a quoted company.
Overall costs continue to be within our internal budgets. Cash at the end of
June 2004 was approximately £4.3 million. Unlike in the comparative six month
period cash flow, this year we received the research and development tax credit
relating to last year during July 2004 just outside of the reporting period of
these Interim Results.
Turnover comprises royalty revenue in respect of sales by CST Medical Limited ('
CST'). On 1 July 2004, again just outside of this reporting period, Futura sold
its royalty rights in respect of the UK and the Republic of Ireland back to CST
for a one-off cash payment of £125,000. We retain an equity stake in CST, all
intellectual property transferred to us in accordance with our agreement with
them, and the remaining royalty rights on sales of the Vielle(TM) stimulator in
territories outside the UK and Republic of Ireland.
In February, we exercised the second call option raising £780,000 after costs.
In March we raised a further £1.75 million, after costs, by way of a joint
placing between Williams de Broe plc and Canaccord Capital (Europe) Limited.
Following this, the Board considered the £800,000 available under the third and
final option with Long Fleet Systems Inc to be surplus to requirements and in
April we formally advised them of our intention to decline the option (which has
subsequently lapsed).
We continue to focus on maintaining a tight control on expenditure without
compromising progress on the development projects.
An eye on the future
Our absolute priority remains the completion of the development of our three
products. The current financial resources of Futura clearly remain earmarked
for this purpose. Nevertheless, with the expected completion of our clinical
programme for the last of the three dossiers for EU submission during 2006, a
small period of time in pharmaceutical terms, we have started to explore other
product development and investment opportunities in order to continue generating
shareholder value into the future.
Dr William D Potter James H Barder
Non-executive Chairman Chief Executive
Notes Unaudited Unaudited Audited
6 months 6 months 11 months
ended ended ended
30 June 31 July 31 December
2004 2003 2003
£ £ £
Turnover 4,646 - -
Research and development costs (360,391) (349,942) (626,746)
AIM admission costs - (351,299) (351,299)
Other administrative costs (364,297) (265,093) (530,238)
Administrative expenses (724,688) (966,334) (1,508,283)
Operating loss (720,042) (966,334) (1,508,283)
Other interest receivable and similar income 76,159 20,290 47,733
Interest payable and similar charges - (362) (584)
Loss on ordinary activities before taxation (643,883) (946,406) (1,461,134)
Tax on loss on ordinary activities 2 65,181 58,786 100,771
Loss on ordinary activities after taxation and
retained loss for the period
3 (578,702) (887,620) (1,360,363)
Loss in pence per share - basic and diluted 4 (1.2) (2.1) (3.2)
All amounts relate to continuing activities.
Statement of Total Recognised Gains and Losses
There were no recognised gains and losses in the period, or in the prior
periods, other than those passing through the profit and loss account above and
therefore no separate statement of total recognised gains and losses has been
presented.
Notes Unaudited Unaudited Audited
30 June 31 July 31 December
2004 2003 2003
£ £ £
Fixed Assets
Tangible assets 24,567 25,470 21,901
24,567 25,470 21,901
Current Assets
Stock 16,045 - 17,279
Debtors 260,187 207,128 148,192
Cash at bank and in hand 4,299,913 2,046,433 2,401,708
4,576,145 2,253,561 2,567,179
Creditors: amounts falling due within one year (242,498) (137,596) (180,044)
Net current assets 4,333,647 2,115,965 2,387,135
Total assets less current liabilities 4,358,214 2,141,435 2,409,036
Provision for liabilities and charges - (37,894) -
Net assets 4,358,214 2,103,541 2,409,036
Capital and reserves
Called up share capital 5 97,167 88,051 90,517
Share premium account 6 8,385,347 5,088,345 5,864,117
Other reserves 1,152,165 1,152,165 1,152,165
Profit and loss account (5,276,465) (4,225,020) (4,697,763)
Equity shareholders' funds 7 4,358,214 2,103,541 2,409,036
Notes Unaudited Unaudited Audited
6 months 6 months 11 months
ended ended ended
30 June 31 July 31 December
2004 2003 2003
£ £ £
Net cash outflow from operating activities 8 (691,259) (1,091,880) (1,533,281)
Returns on investments and servicing of finance
Interest received 69,056 27,284 48,157
Interest paid - (362) (584)
Net cash inflow from returns on investments and 69,056 26,922 47,573
servicing of finance
Corporation Tax
Research and development tax credit received - 128,297 128,297
- 128,297 128,297
Capital expenditure
Payments to acquire tangible assets (10,357) - (2,213)
Net cash outflow from capital expenditure (10,357) - (2,213)
Net cash outflow before use of liquid (632,560) (936,661) (1,359,624)
resources and financing
Management of liquid resources
Increase in short term deposits 9 (1,888,089) (404,172) (841,025)
Financing
Issue of ordinary shares 2,604,000 1,700,000 2,500,000
Expenses paid in connection with share issues (76,120) (228,225) (249,987)
Net cash inflow from financing 2,527,880 1,471,775 2,250,013
Increase in net cash 9 7,231 130,942 49,364
1. Basis of preparation
The unaudited Interim Report was approved by the Board of Directors on 24
September 2004.
The financial information contained in this Interim Report has been prepared on
the basis of the accounting policies set out in the Group's Annual Report for
the 11 month period ended 31 December 2003.
The financial information for the six months ended 30 June 2004 and for the six
months ended 31 July 2003 is unaudited. The six month comparative periods
correspond to the first six months of each accounting period and reflect the
change in accounting reference date from 31 January to 31 December.
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 11 month period ended 31 December 2003 has been
extracted from the statutory accounts of Futura Medical plc for that period
which received an unqualified audit report and have been delivered to the
Registrar of Companies.
2. Taxation
Taxation represents tax credits for certain research and development expenditure
based on the expenditure incurred in the relevant period or year. Deferred tax
assets have not been recognised on the basis that their future economic benefit
is not certain.
3. Dividends
No dividends have been paid and none are proposed.
4. Loss per ordinary share
The loss attributable to ordinary shareholders and weighted average number of
ordinary shares for the purpose of calculating the diluted earnings per ordinary
share are identical to those used for basic earnings per share. This is because
the exercise of share options would have the effect of reducing the loss per
ordinary share and is therefore not dilutive under the terms of Financial
Reporting Standard 14.
The calculation of the loss per ordinary share is based on a loss of £578,702
(six months to 31 July 2003: loss of £887,620; 11 months to 31 December 2003:
loss of £1,360,363) and on a weighted average of 47,471,613 shares in issue (six
months to 31 July 2003: 41,731,175 shares; 11 months to 31 December 2003:
42,907,701 shares).
5. Share capital
During February 2004 the Company issued 1,125,175 ordinary shares of 0.2 pence
each through a private placing at 71.1 pence each. The shares were issued at a
premium of £797,750.
On 8 March 2004, the Company issued 2,200,000 ordinary shares of 0.2 pence each
through a private placing at 82 pence per share. The shares were issued at a
premium of £1,799,600.
6. Share premium
Unaudited Unaudited Audited
6 months 6 months 11 months
ended ended ended
30 June 31 July 31 December
2004 2003 2003
£ £ £
Opening share premium 5,864,117 3,621,427 3,621,427
Premium on shares issued 2,597,350 1,695,143 2,492,677
Less: share issues costs (76,120) (228,225) (249,987)
Closing share premium 8,385,347 5,088,345 5,864,117
7. Reconciliation of movements in shareholders' funds
Unaudited Unaudited Audited
6 months 6 months 11 months
ended ended ended
30 June 31 July 31 December
2004 2003 2003
£ £ £
Retained loss for the period (578,702) (887,620) (1,360,363)
Net proceeds from issue of shares 2,527,880 1,471,775 2,250,013
Net increase in shareholders' funds 1,949,178 584,155 889,650
Opening shareholders' funds 2,409,036 1,519,386 1,519,386
Closing shareholders' funds 4,358,214 2,103,541 2,409,036
8. Reconciliation of operating profit to operating cashflows
Unaudited Unaudited Audited
6 months 6 months 11 months
ended ended ended
30 June 31 July 31 December
2004 2003 2003
£ £ £
Operating loss (720,042) (966,334) (1,508,283)
Depreciation 7,690 6,758 12,540
Decrease / (increase) in stocks 1,234 - (17,279)
(Increase) / decrease in debtors (39,711) (60,481) 34,593
Increase / (decrease) in creditors 59,570 (71,823) (54,852)
Net cash outflow from operating activities (691,259) (1,091,880) (1,533,281)
9. Reconciliation of net cash flow to movement in net funds
Unaudited Unaudited Audited
6 months 6 months 11 months
ended ended ended
30 June 31 July 31 December
2004 2003 2003
£ £ £
Increase in cash and overdraft in the period 7,231 130,942 49,364
Cash inflow from changes in liquid resources 1,888,089 404,172 841,025
Movement in net funds in the period 1,895,320 535,114 890,389
Net funds at start of period 2,401,708 1,511,319 1,511,319
Net funds at end of period 4,297,028 2,046,433 2,401,708
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