Interim Results

RNS Number : 4990Z

Futura Medical PLC

23 September 2009

 



For immediate release

23 September 2009

Futura Medical plc

('Futura' or 'the Group' or 'the Company')

Interim Results for the six months to 30 June 2009

Futura Medical plc (AIM: FUM), the pharmaceutical group that develops innovative products for consumer healthcare, is pleased to announce its Interim Results for the six months to 30 June 2009.

Highlights

• Five products currently in development, comprising both medical devices and pharmaceuticals predominantly focused on the over the counter market

• CSD500 - Completion of manufacturing data progressing prior to European marketing authorisation

• PET500 - Positioning of enhanced sexual control means a shorter regulatory process and potential for early launch in the USA subject to finalisation of a commercial agreement

• TPR100 - Evaluation agreement signed in July 2009 with major pharmaceutical company

• Pre-tax loss of £0.7 million for the six months ended 30 June 2009 (H1 2008: Pre-tax loss of £1.1 million)

• Cash of £1 million at 30 June 2009 (31 December 2008: £0.8 million)

James Barder, Futura Medical's Chief Executive, said: 'Progress to date in 2009 continues to reinforce our confidence in the future. CE mark approval for CSD500 is anticipated around the end of the year. We are also excited by the rapid progress on PET500, and on progress elsewhere in our pipeline of opportunities.'

For any further information please contact:

Futura Medical plc
James Barder, Chief Executive	Tel: [phone]
mail to: [e-mail]	www.futuramedical.co.uk
Canaccord Adams
Ryan Gaffney / Adria Da Breo-Richards	Tel: [phone]
For media enquiries please contact:
Buchanan Communications
Mark Court / Stasa Filiplic / Jennie Spivey	Tel: [phone]

Notes to Editors

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.co.uk

Chairman's and Chief Executive's Joint Review

The six months to 30 June 2009 represent another important period of progress towards the launch of our first commercial product, CSD500. The pace of this progress has been influenced by a number of factors however we remain on course to receive marketing authorisation ('CE mark') around the end of the year, propelling us closer to our goal of becoming a revenue generating company with a recurring royalty stream. 

The award of the CE mark for CSD500 will represent the final step in the regulatory process and allow the launch of the product with our commercial partner, SSL International plc ('SSL'), as a Durex® branded condom. We expect the CE mark to be awarded around the end of the year with the launch of the product by SSL to follow as soon as practicable thereafter.  

As well as advancing CSD500, we have made significant progress across our pipeline of product opportunities by leveraging our DermaSys® drug delivery technology in other therapeutic areas. In particular we believe that recent developments with PET500, our product for 'enhanced sexual control', offer a potential early opportunity for revenue generation subject to finalisation of a commercial agreement.

We now have a total of five products in development, comprising both medical devices and pharmaceuticals, focused predominantly on the over the counter market. The products use four different active compounds, which, in line with our strategy, already have regulatory approval and are safe and well-characterised. This substantially reduces the development risk since we are not dealing with new chemical entities. All five products have the potential to return a high royalty income compared with the related development costs incurred by the Company.

In the year to date, we have been engaged in multiple discussions with potential licensing partners for our unpartnered products. We believe that the level of interest in these products is an endorsement of our strategy of selecting only commercially attractive products for our development pipeline.

Portfolio updates - Sexual healthcare 

CSD500: Condom safety device

The Company's primary focus remains the achievement of EU marketing authorisation of CSD500, an innovative condom to help healthy men maintain a firm erection during sex whilst wearing a condom. As supported by our market research we believe that CSD500 will have a strong appeal to men and women who already use condoms as well as men and women who do not currently use condoms. 

We have protected CSD500's unique intellectual property position throughout the world including the principal consumer markets within Europe, the USA and Canada through patents now granted or proceeding to grant in 34 countries and applications pending in a further three.

CSD500 is being regulated as a Class III medical device with an ancillary medicinal substance. Since the condom contains a low dose of a regulated drug, it was necessary for the Notified Body, the organisation that is responsible for issuing the CE mark, to undertake a formal consultation with an appropriate medicines regulatory body within Europe (the Competent Authority) on the pharmaceutical aspects of the product. A positive opinion from this consultation was received in November 2008 from the nominated Competent Authority. This opinion forms an important regulatory step towards the award of the CE mark.

The remaining regulatory data required for submission to the Notified Body in order to complete the CE mark dossier relates to the manufacture of CSD500 at SSL's manufacturing site in India. In particular this data is in connection with the establishment of the necessary Quality Assurance and Quality Control procedures as well as conducting trial production and validation runs of CSD500. These runs have now been conducted and discussions are ongoing with the Notified Body to ensure that the additional information will be presented and reviewed in a timely manner. We estimate that the CE mark will be awarded around the end of the year with the subsequent launch of CSD500 by SSL to follow as soon as practicable thereafter. We will keep our shareholders informed regarding the launch of CSD500. Futura will receive a modest milestone payment on award of the CE mark, providing further support for the Company's balance sheet.

SSL is well advanced with the branding, marketing and launch plans for the condom, which will be marketed within the Durex® range of products.

MED2002: Treatment for erectile dysfunction

MED2002, our topical gel for the treatment of men with erectile dysfunction, was the first product to be developed using our innovative DermaSys® system, a highly efficient transdermal delivery system that provides rapid transfer of active ingredients through the skin. The product is also licensed to SSL and has the potential to become the world's first non-prescription pharmaceutical treatment for men with erectile dysfunction, a condition that affects, to some degree, as many as 52% of men aged 40 or over1.

CSD500 and MED2002 are somewhat interdependent as they share the same active compound. To a large extent, the positioning of MED2002 in the market and the final details of the regulatory strategy, will depend upon SSL's and our experience following the launch of CSD500. It has therefore been agreed between us to prioritise resources towards launching CSD500 as soon as practicable.

PET500: Enhanced sexual control

We have made significant progress with PET500, our product for enhanced sexual control which combines our DermaSys® delivery system with a well known and regulatory approved mild topical anaesthetic compound. In December 2008 we announced positive results from a Phase I clinical study of 20 healthy volunteers in which PET500 was shown to give a rapid and controlled reduction in penile sensitivity, thereby having the potential to delay ejaculation. No adverse events were recorded in the study.

PET500's formulation is designed to delay ejaculation for a period of approximately eight minutes, after which time the effect of the mild anaesthetic dissipates. These requirements were devised following consultation with leading medical experts in the field of premature ejaculation and on the basis of qualitative market research in patients. The Phase I study suggested that PET500 could meet these requirements.

In considering how to market the product, our focus has been on developing a product that reduces penile sensitivity to help those men who suffer occasionally from early ejaculation and who would like to prolong the sexual experience with their partner. We believe that 'enhanced sexual control' is a more attractive positioning for the product than a treatment for 'clinically diagnosed premature ejaculation'. The UK regulatory authority has confirmed that an abbreviated clinical trial programme - comprising a small local tolerability study and an appropriately powered Phase III trial - would be sufficient to obtain marketing authorisation within the UK. The regulatory requirements for product approval are therefore simplified with this approach.

Based on regulatory advice received from the USA, the PET500 formulation is being modified to comply with an existing FDA monograph. Independent regulatory advice has confirmed that the product can be marketed in the USA without any further clinical data. This gives us the exciting opportunity that, within a relatively short period of time, we could potentially have our second product launched commercially. Significant effort is now being made to complete the product modification for the US market, to refine both our regulatory and marketing strategies and to conclude commercial discussions. We hope to update our shareholders later this year on the commercial strategy.

  Portfolio updates - Pain relief management 

TPR100: Topical pain relief

TPR100 leverages our key proprietary asset, DermaSys®. The active compound used in TPR100 is a non-steroidal anti-inflammatory drug ('NSAID') that already has regulatory approval for topical pain relief.

We believe that TPR100 is superior to the comparable, market-leading topical NSAID product, owing to the speed of onset of action resulting from the DermaSys® delivery technology. We have recorded skin permeation rates between 30 to 40 times higher than that achieved by the market-leading product and with none of the systemic side effects which are seen with oral NSAID products.

In July 2009 we signed an evaluation agreement with a major pharmaceutical company in connection with the development and commercialisation of TPR100. Futura received an upfront £50,000 payment from the major pharmaceutical company, which is expected to conclude its evaluation work by the end of this year. We are hopeful that a commercial agreement for rights to TPR100 in certain territories will follow.

Discussions with the relevant regulatory authorities have indicated that the minimum requirements to satisfy EU regulators are likely to comprise a Phase I trial of around 24 healthy volunteers, to demonstrate a lack of skin irritation or sensitisation, followed by a pivotal Phase III trial of around 250 subjects to demonstrate non-inferiority to a market-leading product in the treatment of pain secondary to osteoarthritis in the knee. It is anticipated that the costs for this study will be met by the commercial partner.

RAD100: Rapid anaesthetic delivery

The impressive results seen in our Phase I study of PET500, which used a low dose of a topical anaesthetic compound prompted us to explore the potential of using the same concept to provide rapid topical anaesthesia prior to injection, vaccination or cannulation. Demand in this market is already well developed but poorly served with treatments taking at least 30 to 45 minutes to take effect. We believe that there is clear commercial potential for a product in which the speed of onset of skin desensitisation is significantly faster.

By modifying the formulation and substantially increasing the dose of the anaesthetic compound we have demonstrated, in early clinical work already completed, a 250% increase in the rate of permeation of the topical anaesthetic across the skin when compared to an established product. This substantial increase in skin permeation is expected to equate to a more rapid onset of skin desensitisation compared to existing products.

RAD100 has attracted interest from potential commercial partners and we look to progress development on RAD100 over the coming year, mindful of the level of resource employed within Futura and our understandable priorities with our more advanced products.

Finance

Our retained loss for the six months ended 30 June 2009 was £658,450. Research and development costs of £376,804 are lower than half that for the corresponding six months period ended 30 June 2008: £774,748 (year ended 31 December 2008: £1,390,616), largely due to the concentration of effort on receiving regulatory approval for CSD500. Other administrative costs of £368,274 are also lower than that for the corresponding six months period ended 30 June 2008: £570,544 (year ended 31 December 2008: £1,007,964).

During the period we raised £1.00 million (£918,250 net) following a placing of five million shares at 20 pence per share. The funds raised are for general corporate and research and development purposes. 

The cumulative research and development spend since formation of the business in 1997 totals £9.6 million, 55% of total operating costs. Since formation in 1997 our total net cash spent on operations was £14.5 million. We continue to maintain tight control over expenditure and cash and our current burn rate is around £100,000 per month.

Outlook

Progress to date in 2009 continues to reinforce our confidence in the future. CE mark approval for CSD500 is anticipated around the end of the year, followed by the product's commercial launch by SSL, as a Durex® branded condom as soon as practicable thereafter. We are excited by the progress on PET500 and the potential prospects which this could bring to Futura and look forward to updating shareholders in due course.

Dr W D Potter                        J H Barder

Chairman                         Chief Executive

Note

1    Massachusetts Male Aging Study (MMAS), J Urol. 1994, Jan; 151 (1): 54-61

  Consolidated Income Statement

		Unaudited   6 months   ended   30 June 2009	Unaudited   6 months ended   30 June 2008	Audited  year  ended 31 December 2008
	Note	£	£	£
Revenue		-	150,000	150,000
Grant income		30,000	59,644	73,828
Research and development costs		(376,804)	(774,748)	(1,390,616)
Administrative costs		(368,274)	(570,544)	(1,007,964)
Operating loss		(715,078)	(1,135,648)	(2,174,752)
Finance income		9,446	62,401	96,550
Loss before tax		(705,632)	(1,073,247)	(2,078,202)
Taxation		47,182	68,186	143,443
Loss for the period attributable to equity holders of the parent company		(658,450)	(1,005,061)	(1,934,759)
Basic and diluted loss per share (pence)	3	(1.1p)	(1.7p)	(3.4p)

All amounts relate to continuing activities.

Consolidated Statement of Changes in Equity

		Share  capital	Share  premium	Merger  reserve	Retained losses	Total equity
	Note	£	£	£	£	£
At 1 January 2008 - audited		115,238	13,261,376	1,152,165	(11,755,289)	2,773,490
Loss for the period		-	-	-	(1,005,061)	(1,005,061)
Share-based payment		-	-	-	18,544	18,544
At 30 June 2008 - unaudited		115,238	13,261,376	1,152,165	(12,741,806)	1,786,973
Loss for the period		-	-	-	(929,698)	(929,698)
Share-based payment		-	-	-	29,077	29,077
At 1 January 2009 - audited		115,238	13,261,376	1,152,165	(13,642,427)	886,352
Loss for the period		-	-	-	(658,450)	(658,450)
Share-based payment		-	-	-	14,467	14,467
Shares issued in the period	6	10,000	990,000	-	-	1,000,000
Costs of share issue	6	-	(81,750)	-	-	(81,750)
At 30 June 2009 - unaudited		125,238	14,169,626	1,152,165	(14,286,410)	1,160,619

Share premium represents amounts subscribed for share capital in excess of nominal value less the related costs of share issues.

Merger reserve represents the reserve arising on the acquisition of Futura Medical Developments Limited on 6 June 2001 via a share for share exchange accounted for as a group reconstruction using merger accounting under UK GAAP.

Retained losses represent cumulative net losses recognised in the consolidated income statement. The loss for each period represents the total recognised income and expense for that period.

Consolidated Balance Sheet

		Unaudited   30 June   2009	Unaudited   30 June   2008	Audited  31 December   2008
	Notes	£	£	£
Assets
Non-current assets
Plant and equipment		14,396	27,838	20,493
Total non-current assets		14,396	27,838	20,493
Current assets
Inventories		11,093	10,595	10,435
Trade and other receivables	4	87,944	881,617	60,020
Income tax asset		212,708	90,270	165,526
Cash and cash equivalents	5	964,553	1,036,218	782,253
Total current assets		1,276,298	2,018,700	1,018,234
Liabilities
Current liabilities
Trade and other payables		(130,075)	(259,565)	(152,375)
Total liabilities		(130,075)	(259,565)	(152,375)
Total net assets		1,160,619	1,786,973	886,352
Capital and reserves attributable to equity holders of the parent company
Share capital	6	125,238	115,238	115,238
Share premium	6	14,169,626	13,261,376	13,261,376
Merger reserve		1,152,165	1,152,165	1,152,165
Retained losses		(14,286,410)	(12,741,806)	(13,642,427)
Total equity		1,160,619	1,786,973	886,352

Consolidated Cash Flow Statement 

	Unaudited 6 months ended 30 June 2009	Unaudited 6 months ended   30 June   2008	Audited year   ended  31 December 2008
	£	£	£
Cash flows from operating activities
Loss before tax	(705,632)	(1,073,247)	(2,078,202)
Adjustments for:
Depreciation	6,097	9,082	16,427
Finance income	(9,446)	(62,401)	(96,550)
Share-based payment charge	14,467	18,544	47,621
Cash flows from operating activities before changes in working capital	(694,514)	(1,108,022)	(2,110,704)
(Increase)/decrease in inventories	(658)	12,749	12,909
(Increase)/decrease in trade and other receivables	(26,986)	23,852	103,150
Decrease in trade and other payables	(22,301)	(104,566)	(162,786)
Increase in bank overdraft	-	48,970	-
Cash used in operations	(744,459)	(1,127,017)	(2,157,431)
Income tax received	-	186,633	186,634
Net cash used in operating activities	(744,459)	(940,384)	(1,970,797)
Cash flows from investing activities
Purchase of plant and equipment	-	(1,505)	(1,505)
Acquisition of medium term deposits	-	(725,939)	-
Interest received	8,509	66,154	116,663
Cash generated by/(used in) investing activities	8,509	(661,290)	115,158
Cash flows from financing activities
Issue of ordinary shares	1,000,000	-	-
Expenses paid in connection with share issue	(81,750)	-	-
Cash generated by financing activities	918,250	-	-
Increase/(decrease) in cash and cash equivalents	182,300	(1,601,674)	(1,855,639)
Cash and cash equivalents at beginning of period	782,253	2,637,892	2,637,892
Cash and cash equivalents at end of period	964,553	1,036,218	782,253

Notes to the Consolidated Interim Financial Information 

1.       Accounting policies

         1.1 Basis of preparation

The unaudited Interim Report was approved by the Board of Directors on 22 September 2009.

The consolidated interim financial information for the six months ended 30 June 2009 and for the six months ended 30 June 2008 is unaudited.

The consolidated interim financial information presented for the group does not constitute 'statutory accounts' within the meaning of section 240 of the Companies Act 1985.

The consolidated financial information for the year ended 31 December 2008 has been extracted from the financial statements of the statutory accounts of Futura Medical plc which were prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS') and have been delivered to the Registrar of Companies. The auditors have reported on those financial statements; their report was unqualified, did not include any references to which the auditors drew attention by way of emphasis without qualifying their report and did not contain any statements under either sections 237(2) or 237(3) of the Companies Act 1985.

         1.2 Accounting developments

The following new standards, amendments to standards and interpretations have been issued but are not effective for the year ending 31 December 2009. The new standards, amendments to standards and interpretations will be relevant to the group but they have not been adopted early as the Directors do not expect these standards and interpretations to have a material effect on the financial statements:

• IFRS 3 (Revised) 'Business Combinations' effective 1 July 2009.

• IAS 27 (Amendment) 'Consolidated and Separate Financial Statements' effective 1 July 2009.

• 'Improvements to IFRSs (2007)' effective 1 July 2009 and 1 January 2010.

There are a number of standards, interpretations and amendments to published accounts not listed above which the Directors consider not to be relevant to the group.

         1.3 Basis of consolidation

Where the Company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business, so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial information presents the results of the Company and its sole subsidiary Futura Medical Developments Limited ('FMDL') as if they formed a single entity ('the group'). Intra group transactions and balances are eliminated in preparing the consolidated financial statements.

         1.4 Revenue

Revenue comprises the fair value received or receivable for exclusivity arrangements, consultancy fees, milestone income and royalties, net of value added tax.

The accounting policies for the principal revenue streams of the group are as follows:

(i)    Exclusivity arrangements and similar agreements are recognised as revenue in the accounting period in which the related services, or required activities, are performed or specified conditions are fulfilled in accordance with the terms of completion of the specific transaction.

(ii)    Consultancy fees are recognised as revenue in the accounting period in which the revenue becomes receivable.

(iii)    Royalty income relating to the sale by a licensee of licensed product is recognised on an accruals basis in accordance with the substance of the relevant agreement and based on the receipt from the licensee of the relevant information to enable calculation of the royalty due.

(iv)    Non-refundable milestone income is recognised as revenue in the accounting period in which the milestones are achieved. If any milestone income is creditable against royalty payments then it is deferred and released to the income statement over the accounting periods in which the royalties would otherwise be receivable.

         1.5 Leased assets

Leases, which contain terms whereby the group does not assume substantially all the risks and rewards incidental to ownership of the leased item are classified as operating leases. Operating lease rentals are charged to the income statement on a straight line basis over the lease term. The group does not hold any assets under finance leases.

         1.6 Intangible assets

          Research and development 

Certain group products are in the research phase and others are in the development phase. Expenditure incurred on the development of internally generated products is capitalised if it can be demonstrated that:

• it is technically feasible to develop the product for it to be sold;

• adequate resources are available to complete the development;

• there is an intention to complete and sell the product;

• the group is able to sell the product;

• sale of the product will generate future economic benefits; and

• expenditure on the project can be measured reliably.

Capitalised development costs are amortised over the periods in which the group expects to benefit from selling the products developed. The amortisation expense is included in research and development costs recognised in the income statement. The useful life and the value of the capitalised development cost are assessed for impairment at least annually. The value is written down immediately if impairment has occurred and the unimpaired cost amortised over the reduced useful life. The Directors consider that the criteria to capitalise development expenditure are not met for a product prior to that product receiving regulatory approval for sale in at least one country.

Development expenditure, not satisfying the above criteria, and expenditure on the research phase of internal projects are included in research and development costs recognised in the income statement as incurred.

          Patents and trademarks

The costs incurred in establishing patents and trademarks are either expensed or capitalised in accordance with the corresponding treatment of the development expenditure for the product to which they relate.

         1.7 Plant and equipment

Plant and equipment is initially recognised at cost, and subsequently at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is charged to the income statement at rates calculated to write off the cost, less estimated residual value, of each asset on a straight line basis over their estimated useful lives.

The assets' residual values and useful lives are determined by the Directors and reviewed and adjusted if appropriate at each balance sheet date.

         1.8 Impairment of non-financial assets

Assets that are subject to depreciation are reviewed for impairment on a half yearly basis and when events or circumstances suggest that the carrying amount may not be recoverable. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). An impairment loss is recognised immediately in the income statement for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of fair value, less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods. A reversal of an impairment loss is recognised immediately in the income statement.

         1.9 Inventories

Inventories are materials and supplies to be consumed in the course of research and development and are initially recognised at cost, and subsequently at the lower of cost and net realisable value. Cost includes materials, related contract manufacturing costs and other direct costs. Cost is calculated using the first-in first-out method. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and disposal.

A provision is recognised immediately in the income statement in respect of obsolete, slow-moving or defective items where appropriate.

         1.10 Financial instruments

          Financial assets

The group classifies its financial assets in the category of loans and receivables, they comprise 'trade and other receivables' and 'cash and cash equivalents'. They are recognised initially at fair value and subsequently at amortised cost using the effective interest rate method.

Trade and other receivables are recognised initially at fair value and are subsequently measured at amortised cost using the effective interest rate method, less an estimate made for impairment based on a review of all past due amounts at the period end. A provision for impairment of trade and other receivables is established when there is objective evidence that the group will not be able to collect all amounts due. If an impairment loss is required the carrying amount of the trade or other receivable is reduced through the use of an allowance account and the amount of the loss recognised immediately in the income statement in administrative costs.

Medium term deposits, comprising sterling fixed rate deposits, with original maturities of more than three months are included in trade and other receivables.

Cash and cash equivalents are financial assets and comprise cash in hand and sterling fixed rate deposits with original maturities of three months or less which are held by the group so as to be available to meet short term cash commitments.

The group assesses at each balance sheet date whether there is objective evidence that a financial asset is impaired.

          Financial liabilities

The group's financial liabilities comprise trade and other payables recognised initially at fair value and subsequently at amortised cost using the effective interest rate method.

         1.11 Government grants

Government grants are recognised at fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions. Government grants relating to costs defrayed are accrued and recognised in the income statement over the period required to match them with the costs which they reimburse.

         1.12 Taxation

Income tax is recognised or provided at amounts expected to be recovered or to be paid using the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Research and development tax credits are recognised on an accruals basis and are included as an income tax credit under current assets.

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability on the balance sheet differs from its tax base, except for differences arising on:

• the initial recognition of an asset or liability in a transaction which is not a business combination and which at the time of the transaction affects neither accounting nor taxable profit; and

• investments in subsidiaries and jointly controlled entities where the group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profits will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered). Deferred tax balances are not discounted.

Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

• the same taxable group company; or

• different group entities which intend to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, on each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

         1.13 Foreign currency translation

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement in the period in which they arise.

          1.14 Employee benefits

          (i) Defined contribution plans

The group provides retirement benefits to all employees and Executive Directors (except the Chairman) who wish to participate in defined contribution pension schemes. The assets of these schemes are held separately from those of the group in independently administered funds. Contributions made by the group are charged to the income statement in the period in which they become payable.

         (ii) Accrued holiday pay

Provision is made at each balance sheet date for holidays accrued but not taken at the salary of the relevant employee at that date. The expected cost of compensated short term absence (i.e. holidays) is charged to the income statement on an accruals basis.

          (iii) Share-based payment transactions

The group operates an equity-settled, share-based compensation plan. For all share options awarded to employees, and others providing similar services, the fair value of the options at the date of grant is charged to the income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative charge is not adjusted for failure to achieve a market vesting condition. If the terms and conditions of options are modified before they vest, the change in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period.

The proceeds received when options are exercised, net of any directly attributable transaction costs, are credited to share capital (nominal value) and the remaining balance to share premium reserve. All employee option holders enter into a HM Revenue & Customs joint election to transfer the employers' national insurance contribution potential liability to the employee, therefore no asset or liability arises.

         1.15 Finance income

Interest income is recognised on a time-proportion basis using the effective interest rate method.

         1.16 Critical accounting estimates and judgements

Critical accounting estimates, assumptions and judgements are continually evaluated by management based on available information and experience. As the use of estimates is inherent in financial reporting, actual results could differ from these estimates.

         Judgements

         (i) Intangible asset recognition

The Directors consider that the criteria to capitalise development expenditure are not met for a product prior to receiving regulatory approval for sale in at least one country.

          (ii) Deferred tax recognition

The Directors consider that, given the current stage of development of the business, deferred tax assets should not be recognised before the group is generating significant revenue.

         Estimates and assumptions

          (iii) Useful lives of plant and equipment

Plant and equipment is amortised or depreciated over its useful life. Useful lives are based on the Directors' estimates of the periods over which the assets will be used in developing revenue generating products and the estimates are reviewed annually for continued appropriateness. The estimated useful lives are between three and five years for computer equipment and between three and ten years for furniture and fittings. Changes to estimates can result in significant variations in the carrying value and amounts charged to the consolidated income statement in specific periods.

          (iv) Fair value of financial instruments

The group determines the fair value of financial instruments using valuation techniques which can be significantly affected by the assumptions used, including interest and discount rates and estimates of future cash flows.

          (v) Inventories

The group reviews the net realisable value of its inventories on a half yearly basis to provide assurance that recorded inventories are stated at the lower of cost or net realisable value. Factors that could impact realisable value include the timing and success of future technological innovations in relation to product research and development, competitor and Government actions, supplier prices and economic trends.

          (vi) Share-based payments

The group operates an equity-settled, share-based compensation plan. Employee and similar services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of grant.

2.      Segment reporting

The group is organised and operates as one business segment, being the development of pharmaceutical drugs and medical devices and their commercial exploitation. The main area of research and development continues to be in the field of innovative products for the consumer healthcare market with the main focus being on sexual health.

The group manages any overseas research and development from the UK, the primary business segment. Segment revenue is based on the geographical location of the group's customers which at this stage is solely the UK. Since there is currently only one business segment and one geographical segment, no separate segment reporting has been prepared.

3.       Loss per share

The calculation of the loss per share is based on a loss of £658,450 (six months ended 30 June 2008: loss of £1,005,061; year ended 31 December 2008: loss of £1,934,759) and on a weighted average number of shares in issue of 60,657,514 (six months ended 30 June 2008: 57,618,840; year ended 31 December 2008: 57,618,840).

The loss attributable to equity holders of the parent company for the purpose of calculating the diluted loss per share is identical to that used for calculating the basic loss per share. The exercise of share options, or the issue of shares under the long term incentive scheme, would have the effect of reducing the loss per share and is therefore anti-dilutive under the terms of IAS 33 'Earnings per Share'.

4.      Trade and other receivables

	Unaudited   30 June   2009	Unaudited   30 June   2008	Audited 31 December 2008
	£	£	£
Trade receivables	-	44,447	-
Other receivables	11,034	16,666	13,440
Medium term deposits	-	725,939	-
Prepayments and accrued income	76,910	94,565	46,580
	87,944	881,617	60,020

Trade receivables that are under three months past due are not considered impaired. As of each period end there were no trade receivables past due but not impaired.

5.     Cash and cash equivalents

	Unaudited   30 June   2009	Unaudited   30 June   2008	Audited 31 December 2008
	£	£	£
Cash in hand	62,918	103,612	24,701
Sterling fixed rate deposits of up to three months maturity	901,635	932,606	757,552
Cash and cash equivalents	964,553	1,036,218	782,253

Medium term deposits, comprising sterling fixed rate deposits, with original maturities of more than three months are included in trade and other receivables.

Bank overdraft of £Nil (30 June 2008: £48,970, 31 December 2008: £Nil) is included in trade and other payables.

  6.      Share capital and share premium

The group raised £1.00 million (£918,250 net) following a placing of five million shares at 20 pence per share on 12 March 2009. The funds raised are for general corporate and research and development purposes.

During the period 280,000 options lapsed. As at 30 June 2009 following these changes, there were 790,000 options over new ordinary shares outstanding.

7.      Related party transactions

Related parties are the wholly owned subsidiary company, Futura Medical Developments Limited, and the Board. Transactions between the Company and the wholly owned subsidiary company have been eliminated on consolidation and are not disclosed in this note.

W D Potter, a Director of the Company, provides consulting services to the wholly owned subsidiary, Futura Medical Developments Limited, through Stapleford Scientific Services Limited. Of the total fees and expenses, excluding VAT, invoiced during the period of £42,798 (six months ended 30 June 2008: £42,804; year ended 31 December 2008: £85,230), the amount outstanding at 30 June 2009 including VAT was £8,131 (six months ended 30 June 2008: £8,822; year ended 31 December 2008: £8,060).

8.      Post balance sheet events

On 20 July 2009 the group announced that it had signed an evaluation agreement with a major pharmaceutical company in connection with the development and commercialisation of TPR100, a topically applied product for pain relief. 

On 23 July 2009 options over 965,000 new ordinary shares were granted to employees, including Directors, and a consultant. Following these changes there were 1,755,000 options over new ordinary Shares outstanding.

 

END

 

 

IR SEDFAESUSELU