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Futura Medical PLC (FUM)

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Wednesday 01 April, 2020

Futura Medical PLC

Full Year Results for the year ended 31 Dec 2019

RNS Number : 3152I
Futura Medical PLC
01 April 2020
 

Full Year Results for the year ended 31 December 2019

 

Futura Medical plc (AIM: FUM) ("Futura" or the "Company"), a pharmaceutical company developing a portfolio of innovative products based on its proprietary, transdermal DermaSys® technology and currently focused on sexual health and pain, is pleased to announce its audited results for the year ended 31 December 2019.

 

Key highlights

  • MED3000 discussions progressing well with regulators; EU filing expected by end of July with good dialogue with US FDA providing optimism for submission for medical de novo device approval filing by end of Q3 2020
  • Company expects cash runway to be sufficient to Q2 2021, based on significantly reduced R&D spend and current activities
  • Currently expect limited impact from COVID-19 during 2020

 

Operational highlights

 

MED3000  - Topical gel for the treatment of erectile dysfunction (ED)

  • Top Line Results for European Phase 3 study (FM57) were reported in December 2019 with all treatment arms consistently meeting all primary endpoints against a pre-treatment baseline and across all ED severities as well as in a pooled ED patient population.
  • FM57 demonstrated that MED3000 has the potential to be a highly effective, clinically proven, topical treatment for erectile dysfunction with a rapid onset of action and excellent safety profile in a $5 billion market1.
  • New patent application filed in December 2019 around the novel and surprising effects of the MED3000 formulation shown in FM57 to potentially provide patent protection until 2040.
  • Ongoing support from Key Opinion Leaders (KOLs) for an effective, fast acting, topically applied ED treatment with low side effects.

 

MED3000 - Post period highlights

  • Following positive interactions with an EU Notified Body2 as announced in February 2020 Futura subsequently commenced formal proceedings for MED3000 to be approved as a medical device for the treatment of ED with expected submission to EU regulators by the end of July 2020.
  • Recent positive initial pre-submission meeting with US FDA.  Futura are awaiting the meeting minutes and expect to pursue regulatory approval for MED3000 as a medical device with a De Novo Classification in the USA.

 

TPR100 - Topical non-steroidal anti-inflammatory for the pain and inflammation associated with sprains, strains and bruises and soft tissue rheumatism

 

  • UK partner Thornton & Ross (a subsidiary of STADA AG) received feedback from UK Medicines and Healthcare products Regulatory Agency (MHRA) in February 2019 requiring additional laboratory work to be conducted to support the UK submission.
  • Ongoing laboratory work continues with formulation dosing adjustment and in vitro studies to enable TPR100 to meet the strict criteria established by the MHRA (to avoid the need to conduct a Phase 3 pain relief efficacy study) delaying the response to the MHRA by at least six months.
  • Ongoing commercial discussions with several potential distribution partners for other countries. Any further licensing deals are expected to be after UK regulatory approval.

 

CBD100 - Futura's advanced proprietary transdermal technology, DermaSys® for transdermal delivery of Cannabidiol

  • Joint venture collaboration with CBDerma Technology Limited announced in September 2019.
  • Optimisation work is continuing and on track to deliver first stage development by end July 2020.

 

Financial highlights

  • £8.92 million net loss in the period (31 December 2018: net loss £5.88 million).
  • Cash resources of £2.51 million at 31 December 2019 (31 December 2018: £9.16 million).
  • R&D tax credits of £1.36 million for year ending 2018 received in August 2019 (Year ending 2017: £0.94 million R&D tax credits received in August 2018).
  • £3.25m (gross) fundraising completed post period end in January 2020.

 

COVID-19 Update

 

Futura Medical is monitoring closely the rapid development of events in relation to the coronavirus outbreak and all necessary steps have been taken to maintain the integrity of the Company's assets and the health and wellbeing of our employees.

 

To date we have not seen a material impact as the Company is used to operating as a virtual business and we have been able to transition quickly to a fully remote and flexible working model with ease. 

 

We are currently not conducting any trials requiring the use of patients or healthy volunteers.  All operational activities can be managed using existing internal resource combined with our extensive resource of external consultants and sub-contractors should any of our employees become ill. We therefore currently expect limited impact from COVID-19 during 2020.

 

John Clarke, Chairman of Futura Medical, commented: "I would like to thank all the staff of Futura and external third party providers who made huge efforts to deliver FM57, on time and on budget during 2019.  The results are hugely exciting for MED3000 as the implications for a simpler regulatory pathway and broader commercial potential for a product that, we believe, is not expected to have contraindications against existing medications become clearer."

 

James  Barder, Chief Executive of Futura Medical, commented: "Futura completed extensive and rigorous clinical studies in over 480 patients for MED3000. These have shown MED3000 to be an extremely effective and differentiated treatment for ED with an excellent safety profile delivering meaningful clinical benefits for patients. MED3000 also has a fast onset of action that allows spontaneity for ED sufferers and their partners. Following positive feedback after consultations with regulators we are confident MED3000 has a well-defined path to approval as a medical device as a clinically proven ED therapy. Futura remains in consultation with the FDA regarding overall data requirements as we move towards targeted regulatory submissions for MED3000 in both the US and EU in the next six months.

 

"We continue to explore wider commercial opportunities for MED3000, given its excellent safety and tolerability as a clinically proven treatment for ED with and without the requirement of a doctor's prescription, as well as a treatment for those patients currently unable to take existing oral ED medications or who find them unsuitable."

 

Webcast

The Executive Team will host a webcast of the presentation which will be available within the  Investor Centre  section of the Futura company website at  www.futuramedical.com from 10am on 1 April 2020.  The webcast will also include an update following the extensive internal evaluation of the clinical data from the Phase 3 study (FM57) announced on 10 December 2019, which was previously planned to be presented at the Investor Seminar on 26 March which was cancelled due to COVID-19. The Company will provide an update on ongoing research and analysis of FM57 and MED3000. 

 

Note

1. Manufacturers' Selling Prices 2018: Data available for 75 countries IQVIA IMS Health  

2. Notified Bodies are the regulatory authorities that oversee the approval of medical devices within the EU for all EU countries including the UK.

 

For further information please contact:

 

Futura Medical plc

James Barder, Chief Executive

Angela Hildreth, Finance Director and COO

Email: [email protected]  

Tel: +44 (0) 1483 685 670

www.Futuramedical.com

 

Nominated Adviser and Sole Broker:

Liberum

Bidhi Bhoma/ Euan Brown/ Kane Collings

Tel: +44 (0) 20 3100 2000

 

For media enquiries please contact:

 

Optimum Strategic Communications

Mary Clark/ Eva Haas/ Hollie Vile

Email: [email protected]

Tel: +44 (0) 203 950 9144

 

About Futura Medical plc

Futura Medical plc (AIM: FUM), is a pharmaceutical company developing a portfolio of innovative products based on its proprietary, transdermal DermaSys® technology. Each DermaSys® formulation is separately patented and specifically tailored for the selected indication and application, as well as being optimised for clinical efficacy, safety, administration and patient convenience. The products are developed for the prescription and consumer healthcare markets as appropriate. Current therapeutic areas are sexual health, including erectile dysfunction, and pain relief. Development and commercialisation strategies are designed to maximise product differentiation and value creation whilst minimising risk.  

MED3000 is Futura's topical gel formulation that is a breakthrough treatment for erectile dysfunction (ED) through a unique evaporative mode of action. Futura has conducted a Phase 3 study using MED3000 in ED, referred to as "FM57". This was a 1,000 patient, dose-ranging, multi-centre, randomised, double blind, placebo-controlled, home use, parallel group study delivering highly statistically significant results compared to pre-treatment baseline, consistently meeting all co-primary endpoints of IIEF, SEP2 and SEP3 (internationally accepted clinical trial endpoints in ED) with over 60% of patients experiencing a clinically meaningful improvement in their ED.  MED3000 also begins to work immediately in some patients, with 60% of patients seeing onset of their erection within 10 minutes of application.

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

 

 

Chairman and Chief Executive's Review

 

As an innovative R&D company, Futura's strategy is to leverage its proprietary patented transdermal technology platform DermaSys® to develop a pipeline of late stage, novel products that solve clinically meaningful problems for patients, particularly where they are dissatisfied with existing treatments. Our current focus is on sexual health and pain .

 

Meeting this objective goes hand in hand with value creation, which we seek to maximise by partnering at key inflection points. As a small, innovative company we are also adaptable and nimble which allows us to take advantage of new opportunities and strategies as the need arises.

 

This year has been an eventful one for Futura. Throughout, Futura has been continuing research and presenting clinical data for its erectile dysfunction (ED) treatment at international medical conferences and in other expert forums as part of an ongoing educational and outreach programme for physicians and their patients in the ED field. The reception has been encouraging both in the USA and Europe with consistent feedback from leading urologists and practitioners in sexual medicine indicating demand for an effective topical product that works rapidly and has a very low side-effect profile.

 

It was also a huge logistical and organisational undertaking for our team and third party providers to execute on the substantial Phase 3 study (FM57) which started in Q4 2018, dosed the last patient in October 2019 and from which headline data was reported in mid-December 2019.

 

The results from the Phase 3 clinical study were unexpected and surprising. While FM57 did not meet the primary endpoints versus placebo, we are excited that MED3000 achieved positive results, with a striking consistency in being significantly statistically superior to baseline ED for all three co-primary endpoints (using validated and globally accepted measurement tools), as well as in each separate cohort of severity (mild, moderate and severe) and at one, two and three month treatment time points statistically superior improvement over baseline was achieved. Key secondary endpoints were also all statistically met compared to the pre-treatment baseline. Data analysed was also positive on measures of clinically meaningful benefit which physicians and patients, as well as regulators view as increasingly important.

 

Futura intend to submit MED3000 for regulatory approval as a medical device and continue to target the next six months for submissions in both Europe and USA. This will present prescription (Rx) opportunities and in future potentially broader patient product availability opportunities for MED3000 may be explored that leverage an excellent safety and tolerability profile, such as combination use, including with existing oral medications and the availability Over the Counter (OTC).

 

DermaSys® - Our proprietary patented transdermal technology platform

 

Futura's unique patented technology DermaSys® is designed to deliver clinically proven effective medical treatments via the skin.

 

DermaSys® is a versatile and bespoke technology. Each product gel is uniquely formulated using the DermaSys® platform with volatile solvent component formulations tailored for each product to suit the specific therapeutic indication and desired speed of onset and duration of action. Such targeted delivery offers an optimised profile in terms of dose, onset time and duration of effect as well as an improved safety profile reducing the risk of side effects. Each product is formulated to maximise its benefits for patients and consumers. Each new unique formulation offers the opportunity for additional patent applications and potential patent protection.

 

MED3000 - Topical gel for erectile dysfunction ("ED")

 

MED3000 is now the codename for a formulation of our proprietary technology DermaSys®, developed specifically for the treatment of ED.  MED3000 has the potential to be a highly differentiated product by addressing significant unmet needs, across all patient severities in the $5 billion ED market1, which include rapid speed of onset enabling spontaneity for both partners, significant clinical benefits alongside excellent safety and low side effects and no interactions with alcohol, food or other products as well as providing a potential treatment option for patients contra-indicated from using existing ED therapies.

 

ED disrupts the lives of at least 1 in 5 men globally2, affecting the sexual and emotional health of around 27 million men and their partners in the USA alone. There has been little innovation in ED treatments for over ten years and many patients continue to suffer dissatisfaction with existing treatments, a statement frequently made by KOLs.

 

Top line results from the Phase 3 FM57 study announced in December 2019, demonstrated that MED3000 has the potential to be a highly effective, clinically proven, topical treatment for ED, with a fast onset of action. As part of FM57, the Company observed that MED3000 began to work immediately in some patients, with 60% of patients seeing onset of their erection within 5-10 minutes of application. Futura believe MED3000 has a unique evaporative mode of action which stimulates nerve endings to cause an erection. Initial Company assessments indicate MED3000's combination of volatile solvent components creates an evaporative and novel action that stimulates nerve sensors in the highly innervated glans penis rapidly leading to smooth muscle relaxation, tumescence and erection.

 

FM57 Study

FM57, the Phase 3 study was designed to investigate the efficacy and safety of topically applied Glyceryl Trinitrate (GTN) (MED2005) - (DermaSys® with 0.2% GTN, DermaSys® with 0.4% GTN and DermaSys® with 0.6% GTN) against that of the placebo using IIEF-EF and SEP 2 & 3 as co-primary clinical endpoints in mild, moderate and severe ED patients. An ED-specific DermaSys® formulation (now known as MED3000) was used as a control arm (placebo) following regulatory requirements to have a placebo as near as possible to the active product.

 

The 1,000 patient study included approximately 60 centres across nine Central and Eastern European countries. FM57 was a dose ranging, randomised, double blind, placebo controlled, home use, parallel group clinical trial.  Patients being enrolled into FM57 for the initial four weeks had to attempt intercourse on at least four occasions in order to establish the severity of their ED, known as the pre-treatment 'baseline'.

 

FM57's protocol had incorporated feedback from potential commercial partners, opinion-leading physicians, US and EU regulatory agencies as well as the Company's learnings from the Phase 2 study (FM53), to support the best chance of clinical success and to optimise the likelihood of subsequent regulatory approval as well as the commercial value.

 

Futura announced study enrolment completion in June 2019 with last patient dosed in October 2019 .

 

FM57 Results

FM57 top line results were announced in December 2019. All three co-primary endpoints (IIEF-EF, SEP2 and SEP3) were statistically significantly achieved against baseline (pre-treatment) data for the three MED2005 treatment groups and MED3000 in addition to important, supporting secondary endpoints in terms of efficacy, speed of onset, duration of action and clinically meaningful differences in patient benefit.

 

However, the control arm used in the study which was Futura's proprietary transdermal DermaSys® formulation (now known as MED3000) also demonstrated statistically significant and clinically meaningful top line results meaning that FM57 did not meet primary endpoints versus placebo. Whilst this placebo does not contain the active pharmaceutical ingredient, GTN, used in MED2005, it uses the key ingredients that constitute DermaSys®' proven transdermal technology, specifically formulated for ED, and was shown to be as effective in the treatment of ED as the active doses. Futura believe MED3000 was so effective, for example 83% of patients with mild ED were able to insert their penis into their partner's vagina (SEP2 Primary Endpoint for FM57), that the likelihood of the study design showing a consistent and statistically significant improvement over MED3000 for SEP2 with the inclusion of GTN was significantly reduced.

 

FM57 demonstrated that MED3000 has the potential to be a highly effective, clinically proven, topical treatment for erectile dysfunction. MED3000 has a unique evaporative mode of action which the Company believe stimulates nerve endings in the glans penis to cause an erection.  As such, it does not require the inclusion of GTN.

 

MED3000 - shown to be an extremely effective treatment for ED with an excellent safety profile in FM57

MED3000 results demonstrated a highly statistically significant improvement (with highly statistically significant p values of less than 0.001 in all instances) in erectile function across 'pooled' patient severities (mild, moderate, and severe) as well as being statistically significantly superior within the separate mild, moderate and severe patient groups, than before treatment, along with an excellent safety profile.

 

Importantly, all formulations had a significant clinically meaningful effect in 60% of patients as calculated using the Rosen and Araujo statistical method, a standard assessment technique for measuring Patient Reported Outcomes recognised and accepted by leading ED experts. Such Patient Reported Outcomes in ED are key evaluation criteria for regulators as well as physicians and their patients.

MED3000 begins to work immediately in some patients, with 60% of patients seeing onset of their erection within 5-10 minutes of application, substantially faster than sildenafil3 with significant benefits for spontaneous rather than pre-planned sexual intercourse.

Overall the level of efficacy was broadly equivalent to lower doses of current oral ED treatments. Safety and tolerability data were also highly positive, with no serious adverse events recorded in any patient, or their female partner, with a highly favourable overall side effect profile across all doses against baseline affirming data from the prior Phase 2a study.

 

This excellent safety profile, together with a rapid speed of onset and high efficacy creates a substantial and we believe highly competitive product opportunity for MED3000.

 

The results from FM53 and FM57 are expected to support regulatory applications for MED3000 as a medical device with clinically proven claims for the treatment of ED.  The clinical study report (CSR) is already available for FM53 and the CSR for FM57 is expected to be available by the end of April 2020 .

 

Futura has received strong interest for the marketing rights for MED3000 and is continuing to progress these discussions now that it has good insight into the clinical benefits and regulatory pathway for MED3000.

 

MED3000 - Medical Device Regulatory Pathway

Europe: The Company announced in February 2020, following positive interactions with an EU Notified Body4, that it had commenced formal proceedings for MED3000 in Europe. These proceedings will allow the Company to submit its technical file for review by the said Notified Body, including the CSR for FM57 and the Company's Quality Management System by the end of July 2020.

 

USA: The Company also recently held an initial positive pre-submission meeting with the US FDA, as a result, we believe that an application may be made for MED3000 as a medical device with a De Novo Classification although we await confirmation of the drafted minutes from the FDA. The Company presented the case for filing for FDA clearance with the existing clinical evidence from FM57. FDA agreed to consider this approach pending detailed review of the CSR for FM57 and offered Futura another pre-submission meeting to reach final agreement on clinical sufficiency once the CSR for FM57 is available at the end of April.  If successful this could lead to a submission filing by the end of September 2020 for FDA review for pre-marketing clearance. The Company has been advised by its regulatory consultants that the FDA's preference is to adopt an interactive approach to data requirements with its clients wherever possible ahead of regulatory submissions.

 

MED3000 Intellectual Property

After the Phase 3, FM57 study indicated the value and efficacy of MED3000 (a formulation developed specifically for the treatment of ED) a new patent application was filed in December 2019 which has the potential, if successful, to extend protection of MED3000 until 2040. Aside from Futura's current patent lawyers, the Company recently retained a specialist biotech IP and strategic advice company to assist in maximising the robustness of the MED3000 intellectual property. 

 

Education and outreach on erectile dysfunction and MED3000

The Company continues to see a positive reception from European and US Key Opinion Leaders (KOLs) in the field of ED. Following data announced in December 2019, KOLs have continued to express interest in a locally acting, fast and new treatment for ED with an excellent safety profile, and are encouraged by the recent MED3000 Phase 3 data. We believe this data approaches the efficacy of current first line therapy but with significantly lower adverse events, and will be of high interest to the medical community for those patients who are seeking a treatment with a very rapid onset of action and a very low side-effect profile. This echoes feedback received following the Company's EU and USA advisory meetings held respectively at the European Society for Sexual Medicine (ESSM) congress in Slovenia in February 2019 and at the Sexual Medicine Society of North America (SMSNA) congress in Nashville, USA in October 2019.

 

TPR100 - Topical non-steroidal anti-inflammatory for the treatment of pain and inflammation associated with sprains, strains, bruises and soft tissue rheumatism

 

TPR100 is partnered for manufacturing and distribution in the UK with Thornton & Ross, one of the UK's largest consumer healthcare companies and a subsidiary of STADA AG. In February 2019, the UK Medicines and Healthcare products Regulatory Agency (MHRA) responded to Thornton & Ross's marketing authorisation application filed in July 2018, with a number of questions requiring additional laboratory work specifically around the permeation characteristics of TPR100 to be conducted. This work is progressing but requires further laboratory formulation adjustment and in vitro studies to enable TPR100 to meet the strict criteria established by the MHRA and thereby avoid the need of a Phase 3 pain relief efficacy study.  It has delayed the response to MHRA by at least six months to accommodate this regulatory approach.

 

CBD100 - Futura's advanced proprietary transdermal technology, DermaSys® for the delivery of Cannabidiol

 

Futura announced a joint venture collaboration with CBDerma Technology Limited in September 2019 to explore the application of Futura's advanced proprietary transdermal technology, DermaSys® for the delivery of Cannabidiol.

 

CBDerma Technology is a company that has been established and funded to specifically exploit the therapeutic potential of Cannabis. The company's management, backers and advisors have extensive knowledge, expertise and investments in plant derived product manufacturing.

 

As part of the agreement, Futura will develop and optimise a DermaSys® cannabidiol formulation as well as establish early ex-vivo proof of concept studies likely to include certain disease states most suited for local or regional (non-systemic) topical treatment such as pain relief. Optimisation work is progressing, and the first stage of this will complete by the end of July 2020 before the next stage of potential ex-vivo proof of concept studies are being considered.

 

Cannabidiol is a major component of the cannabis plant and is generally regarded as non-addictive and non-psychoactive, making it ideal for consideration as a topically delivered molecule for local or regional (non-systemic) use.  The market for Cannabidiol products is growing rapidly. A report by Reports and Data forecasts that the market for Cannabidiol products is forecast to grow from $1bn in 2018 to $16bn by 2026, at a CAGR of 27.7%, during the forecast period. The market is primarily driven by the increase in the usage of Cannabidiol in medical application, supplements, beverages and skin care.

 

Corporate & Financial

 

The £3.25 million fundraising in December 2019, with funds received by the Company post year end in late January, provided additional working capital to allow the Company to pursue a medical device regulatory pathway for MED3000 in ED.

 

The Company believe that further significant clinical cost will not be required in relation to EU approval based on its past experience of obtaining EU medical device approval. In the USA, Futura continues to be in consultation with the Center for Devices and Radiological Health (CDRH) the medical device arm of the FDA over data requirements, however the Company does not believe that a further significant study, similar to FM57, will be required to support a MED3000 filing, but any additional clinical data and therefore expenses will depend on the finalised requirements expected to be agreed by the end of July 2020.

 

Outlook

 

Following the analysis of the data from the FM57 clinical study which completed in December 2019, the Company is well positioned to deliver further positive news through 2020.  The team is focussed on completion of the regulatory submissions in the US and EU for MED3000 to be approved as a clinically proven, fast-acting topical gel for the treatment of ED.  We are also increasingly excited at the financial prospects that an approved MED3000 could bring to Futura as we progress commercialisation discussions in earnest.

 

The Company is closely monitoring the rapid development of events in relation to the coronavirus outbreak. To date we have not seen a material impact as the Company is used to operating as a virtual business and we have been able to transition quickly to a fully remote and flexible working model with ease. We therefore currently expect limited impact from COVID-19 during 2020.

 

James Barder

Chief Executive

 

Notes
1. Manufacturers' Selling Prices 2018: Data available for 75 countries IQVIA IMS Health]

2. EMEA, Withdrawal assessment report for Viagra, 2008

3. Sildenafil is an active pharmaceutical ingredient, sold under the brand name Viagra among others, as a  medication  used to treat  ED . " Viagra Connect starts to work in 30-60 minutes" - Viagra Connect PIL in UK

4. Notified Bodies are the regulatory authorities that oversee the approval of medical devices within the EU for all EU countries including the UK.

 

Financial Review

 

As outlined in the Chairman and Chief Executive's Review, during the year we continued to focus our financial resources on the development programme for our fast-acting topical treatment for ED.  As we carried out the FM57 study, spend on research and development activities increased with other central and administration costs remaining broadly the same as the prior year.  Gross funds of £3.25 million were raised in December 2019 (completion January 2020) through the combination of subscription for shares through PrimaryBid and institutional placing to allow the Company to proceed with MED3000 regulatory approval as a medical device in the EU and US.

 

Revenue

The Company continued to focus its financial and human resources on late stage clinical development of its fast-acting topical treatment for ED and accelerate progress towards achieving a significant, continuous revenue stream within a few years.  Revenue recognised was in relation to the CBDerma Technology Agreement.

 

Research and Development Costs

Research and Development costs for the period ended 31 December 2019 were £10.05 million, compared to £6.03 million for the period ended 31 December 2018.  The increase of £4.02 million is attributable to the FM57 Phase 3 study which completed on time and within budget. 

 

There was no capitalisation of R&D costs in 2019.

 

Administrative Costs

Administrative costs were £1.14 million for the period ended 31 December 2019 compared to £1.23 million for the period ended 31 December 2018 and were reflective of the Company's strategy to keep central costs lean and focus cash resources on delivering the R&D programme. 

 

Tax

It is expected that an R&D Tax Credit of £2.22 million will be claimed in respect of 2019 and the cash refund is expected to be received mid-2020 from HMRC.

 

Loss Per Share

The basic loss per share for 2019 was 4.36p (2018: 4.46p). Details of the loss per share calculations are provided in Note 11 to the consolidated financial statements.

 

Cash Balance

The cash balance at the end of 2019 was £2.51 million (2018: £9.16 million).  Gross proceeds of £3.25m were received in January 2020 and the usual refund of R&D tax credits of £2.2m are expected to be received during 2020.  Cash burn during the year was £8.01 million (2018: £5.63 million) primarily in relation to the FM57 clinical activities. Cash burn in relation to R&D activities for 2020 is expected to be significantly lower than 2019 as clinical activities are replaced with low cost regulatory activities.  Futura is funded until Q2 2021.

 

Post Period Events

The Company completed a fundraising of £3.25m in January 2020.  The COVID-19 pandemic arose in February 2020 and we expect the pandemic to have limited impact on operations in 2020.  Further information in relation to COVID-19 will be available in the Risks and Mitigations section of the 2019 Annual Report.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2019

 

 

Year ended

31 December

  2019

Year ended

31 December

  2018

 

Notes

  £

  £

Revenue

2.4

31,778

  -

Research and development costs

 

(10,051,148)

(6,038,941)

Administrative costs

 

(1,144,397)

(1,227,547)

Operating loss

6

(11,163,767)

(7,266,488)

Finance income

8

  22,283

  27,576

Loss before tax

 

(11,141,484)

(7,238,912)

Taxation recoverable 

9

2,222,194

   1,358,336 

Loss for the year being total comprehensive loss attributable to owners of the parent company

 

 

 

(8,919,290)

 

(5,880,576)

 

 

 

 

Basic and diluted loss per share (pence)

10

(4.36 pence)

(4.46 pence)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2019

 

 

Share

 Capital

Share  Premium

Merger

 Reserve

  Retained

  Losses

  Total

  Equity

 

Notes

  £

  £

  £

  £

  £

At 1 January 2018

 

  241,392

  44,671,396

  1,152,165

  (36,959,195)

  9,105,758

Total comprehensive loss for the year

 

 

  -

 

  -

 

  -

 

  (5,880,576)

 

  (5,880,576)

Share-based payment

18

  -

  -

  -

  146,833

  146,833

Shares issued during the year

17

  167,775

  5,312,464

  -

  -

  5,480,239

Transactions with owners

 

167,775

5,312,464

-

146,833

5,627,072

At 31 December 2018

 

  409,167

  49,983,860

  1,152,165

  (42,692,938)

  8,852,254

Total comprehensive loss for the year

 

 

  -

 

  -

 

  -

 

  (8,919,290)

 

  (8,919,290)

Share-based payment

18

  -

  -

  -

  101,404

  101,404

Shares issued during the year

17

  154

  19,130

  -

  -

  19,284

Transactions with 0wners

 

154

19,130

-

101,404

120,688

At 31 December 2019

 

  409,321

  50,002,990

  1,152,165

  (51,510,824)

53,652

 

 

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

 

Retained losses represent all other net gains and losses not recognised elsewhere.

 

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

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2019

 

 

As at

31 December

  2019

As at

31 December

  2018

 

Notes

  £

  £

Assets

 

 

 

Non-current assets

 

 

 

Plant and equipment

11

59,505

Total non-current assets

 

59,505

 

 

 

 

Current assets

 

 

 

Inventories

12

7,780

7,780

Trade and other receivables

14

101,192

306,408

Taxation recoverable

9

2,222,194

1,358,192

Cash and cash equivalents

15

2,510,501

Total current assets

 

4,841,667

 

 

 

 

Liabilities

 

 

 

Current liabilities

 

 

 

Trade and other payables

16

(4,847,520)

Total liabilities

 

(4,847,520)

Total net assets

 

53,652

8,852,254

 

 

 

 

Capital and reserves attributable to

owners of the parent company

 

 

 

Share capital

17

409,321

409,167

Share premium

 

50,002,990

49,983,860

Merger reserve

 

1,152,165

1,152,165

Retained losses

 

  (51,510,824)

Total equity

 

53,652

  8,852,254

 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2019

 

 

 

Notes

 Year ended

  31 December

  2019

 Year ended

  31 December

  2018

 

 

 

£

£

 

Cash flows from operating activities

 

 

 

 

Loss before tax

 

  (11,141,484)

  (7,238,912)

 

Adjustments for:

 

 

 

 

Depreciation

  11

  20,704

  19,850

 

Loss on disposal of fixed assets

 

-

703

 

Finance income

  8

  (22,283)

  (27,576)

 

Share-based payment charge

  18

  101,404

  146,833

Cash flows used in operating activities before changes in working capital

 

  (11,041,659)

  (7,099,102)

 

 

 

 

 

Decrease in inventories

  12

  - 

  62,633

 

(Increase) / decrease in trade and other receivables

 

204,928 

  (125,332) 

 

(Decrease) / increase in trade and other payables

  16

  2,822,004

  1,526,375

Cash used in operations

 

  (8,014,727)

  (5,635,426)

 

 

 

 

 

Income tax received

 

  1,358,480

  927,391

Net cash used in operating activities

 

  (6,656,247)

  (4,708,035)

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Purchase of plant and equipment

 11

  (32,736)

  (4,510)

 

Interest received

 

  22,283

  27,576

Cash generated (used in)/by investing activities

 

  (10,453)

  23,066

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Issue of ordinary shares

  17

  19,284

  5,943,421

 

Expenses paid in connection with share issue

 

  -

  (463,182)

Cash generated by financing activities

 

  19,284

  5,480,239

 

 

 

 

 

 

(Decrease) / increase in cash and cash equivalents

 

  (6,647,415)

  795,270

 

Cash and cash equivalents at beginning of year

 

  9,157,916

  8,362,646

Cash and cash equivalents at end of year

15

  2,510,501 

  9,157,916 

 

           

 

NOTES
For the year ended 31 December 2019

1.  Corporate Information

 

Futura Medical plc (the "Company") is a public limited company incorporated and domiciled in the United Kingdom and whose shares are publicly traded on the AIM Market of the London Stock Exchange.  The registered office is located at Surrey Technology Centre, 40 Occam Road, Guildford, Surrey, GU2 7YG.

 

These Group financial statements consolidate those of the Company and its subsidiaries (together referred to as "the Group" and individually as "Group entities") for the year ended 31 December 2019.

 

The consolidated financial statements of the Company and the Group for the year ended 31 December 2019 were authorised for issue by the Board of Directors on 31 March 2020.

 

The Group is principally engaged in the development of pharmaceutical and healthcare products.

 

2.  Accounting policies

 

  2.1 Basis of preparation

 

The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention and have been prepared and approved by the Directors in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union. The principal accounting policies applied in the preparation of the consolidated financial information are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.  The board of directors approved these results on 31 March 2019. The financial information set out above is abridged and does not constitute the Group's statutory financial statements for the year to 31 December 2019. Statutory financial statements for the year ended 31 December 2019 have been reported on by the Group's auditors. The auditors’ report for the year ended 31 December 2019 includes a material uncertainty in relation to going concern and was otherwise unmodified.

 

The consolidated financial statements are presented in sterling.

 

  2.2 Going Concern

 

For the year ended 31 December 2019, the Group made an operating loss of £11.16m.  Cash and cash equivalents at 31 December 2019 were £2.51m. The Board has considered the applicability of the going concern basis in the preparation of the financial statements. This included the review of internal budgets and financial results and a review of cash flow forecasts for the 12 month period following the date of signing the financial statements. Under current business plans which assume a significant reduction in R&D spend, the Group's cash resources will extend to Q2 2021. Based on this, additional funding is expected to be required to support the Group's and the Company's going concern status. Dependent upon the funds raised and the level of income generated from licensing activities, further funding may be required to reach profitability. The Group completed a £3.25m fundraising with existing and new investors in January 2020. The Directors have a reasonable expectation that the Group will be able to raise further financing, which could come from a variety of dilutive and non-dilutive sources, to support its ongoing activities, following the anticipated submission of regulatory dossiers for MED3000 in Europe and the US, both expected in H2 2020. The Directors also have a reasonable expectation that the Group will be able to generate significant funding through entering into strategic collaborations for the commercialisation of MED3000 and its other products, in the US and Europe.

 

However, there can be no guarantee that the Group will be able to raise sufficient funding from existing and new investors, nor that the Group will be able to secure strategic collaborations for its product pipeline. In the event that the Group does not successfully raise new financing, the Directors consider that the Group would be able to reduce expenditure on its development programmes, potentially extending the Group's cash resources to more than 12 months from the date of signing the financial statements.

 

Based on the above factors the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However, the above factors give rise to a material uncertainty which may cast significant doubt on the Group's and the Company's ability to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

 

  2.3 Standards, amendments and interpretation to existing standards

 

The Directors have considered all new standards, amendments to standards and interpretations which are mandatory for the first time for the financial year beginning 1 January 2019. From 1 January 2019 the Group adopted IFRS 16 Leases.

 

The Group has taken the exemption not to account for short-term leases on the balance sheet.  The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

 

2.4 Revenue

To determine whether to recognise revenue, the Group follows a 5-step process:

1 Identifying the contract with a customer

2 Identifying the performance obligations

3 Determining the transaction price

4 Allocating the transaction price to the performance obligations

5 Recognising revenue when/as performance obligation(s) are satisfied.

 

During the year, revenue was recognised on a collaborative transaction. In accordance with IFRS 15, revenue is calculated based on the consideration to which the Group expects to be entitled and is recognised over the length of services provided under the contract and once performance obligations have been met. The transaction fee is allocated over the length of the service being provided in accordance with the project plan. It is recognised as a contract liability at the time of the initial transaction and is released over the expected period of service on the basis of work completed and performance obligations delivered. The progress is re-evaluated by management at each reporting date and the revenue recognised is remeasured accordingly.  No revenue was recognised in the prior year.

 

2.5 Leased assets

As described in Note 2.3, the Group has applied IFRS 16 using the modified retrospective approach and therefore comparative information has not been restated.  This means that comparative information is still reported under IAS 17.

For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains a lease.  A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.  To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

· The contract contains an identified asset, which is either explicitly in the contract or implicitly specified by being identified at the time the asset is made available to the Group.

· The Group has the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract.

· The Group has the right to direct the use of the identified asset throughout the period of use.  The Group assess whether it has the right to direct "how and for what purpose" the asset is used throughout the period of use.

 

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 Consolidated Statement of Comprehensive Income on a straight-line basis over the lease term. The Group does not hold any assets under finance leases.

 

2.6 Intangible assets

Research and development ("R&D")

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 out-license or sell the product;

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

● expenditure on the project can be measured reliably.

 

2.7 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 Consolidated Statement of Comprehensive Income 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.

Computer equipment  2 - 5 years straight line

  Fixtures and fittings  3 - 10 years straight line

The assets' residual values and useful lives are determined by the Directors and reviewed and adjusted, if appropriate, at each Consolidated Statement of Financial Position date.

 

2.8 Impairment of non-financial assets

An impairment review is carried out for assets being amortised or depreciated when a change in market conditions and other circumstances indicate that the carrying value may not be recoverable.  The recoverable amount is the higher of an asset's fair value less costs to sell and value-in-use.  For the purpose of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable cashflows.

 

2.9 Inventories

Inventories are consumable materials to be used in 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 Consolidated Statement of Comprehensive Income in respect of obsolete or defective items, where appropriate.

 

2.10 Financial instruments

i) Recognition and initial measurement

At the year-end, the Group had no financial assets or liabilities designated at fair value through the consolidated statement of comprehensive income (2018: £nil). Trade receivables and debt securities are initially recognised when they are originated. All other financial assets and liabilities are initially recognised when the Group becomes a party to the contractual provisions in the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or a financial liability is initially measured at fair value plus, for items not measured at fair value through profit and loss ("FVTPL"), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is measured at the transaction price.

 

ii) Classification and subsequent measurement

Financial assets

On initial recognition a financial instrument is classified as measured at: amortised cost, fair value through other comprehensive income ("FVOCI") or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both the following conditions and is not designated as FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• its contractual terms give rise on a specified date to cash flows that are solely the payment of principal and interest on the principal outstanding.

 

A debt investment is measured at FVOCI if it meets both the following conditions and is not designated as FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

On initial recognition of an equity investment that is not held for trading the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment by investment basis.

 

Financial assets at amortised cost are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses.

 

Financial liabilities

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as FVTPL if it is held for trading, it is a derivative or it is designated as such on initial recognition. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense is recognised in profit or loss. At the year-end, the Group had no financial assets or liabilities designated at FVOCI (2018: £nil).

 

iii) Derecognition

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

 

Financial liabilities

The Group derecognises a financial liability when the contractual obligations are discharged or cancelled, or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid is recognised in profit or loss.

 

2.11 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 Consolidated Statement of Financial Position date. R&D 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 Consolidated Statement of Financial Position date 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 profit 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 ConsolidatedStatement of Financial Position 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.

 

2.12 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 Consolidated Statement of Comprehensive Income in the period in which they arise.

 

2.13 Employee benefits

Defined contribution plans

The Group provides retirement benefits to all employees 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 Consolidated Statement of Comprehensive Income in the period in which they become payable.

 

Accrued holiday pay

Provision is made at each Consolidated Statement of Financial Position date for holidays accrued but not taken, at applicable rates of salary. The expected cost of compensated short-term absence (holidays) is charged to the Consolidated Statement of Comprehensive Income on an accruals basis.

 

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 share options at the date of grant is charged to the Consolidated Statement of Comprehensive Income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each Consolidated Statement of Financial Position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of share options that eventually vest. There are no market vesting conditions. If the terms and conditions of share options are modified before they vest, the change in the fair value of the share options, measured immediately before and after the modification, is also charged to the Consolidated Statement of Comprehensive Income over the remaining vesting period. The proceeds received when share options are exercised, net of any directly attributable transaction costs, are credited to share capital (nominal value) and the remaining balance to share premium. All employee share option holders enter into an HM Revenue & Customs joint election to transfer the employers' national insurance contribution potential liability to the employee, therefore no Group asset or liability arises.

 

Long-term incentive plan

The Group operates a long-term incentive plan for all staff and Directors. The quantum of any awards receivable will depend on the Group achieving set milestones and the share price at the time relative to targets set in advance. The Group plan is intended to be settled in equity with cash settlement possible at the discretion of the Board.  There was no charge recognised in the year as the milestones and targets were not met.

 

2.14 Finance income

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

 

3.  Critical accounting judgements, assumptions and estimates

 

The preparation of the consolidated financial statements in conformity with IFRS requires management to make certain estimates, assumptions and judgements that affect the application of accounting policies and the reported amounts of assets and liabilities and the reported amounts of income and expenses in the year.

 

Critical accounting estimates, assumptions and judgements are continually evaluated by the Directors based on available information and experience. As the use of estimates is inherent in financial reporting, actual results could differ from these estimates. No significant estimates were identified during the year. Other estimates are disclosed below.

 

3.1 Estimates and assumptions

 

Share-based payments

The Group operates an equity-settled share-based compensation plan for employee (and consultant) services to be received and the corresponding increases in equity are measured by reference to the fair value of the equity instruments as at the date of grant. The fair value determination is based on the principles of the Black-Scholes Model which uses an input of volatility based on historical data. Historical volatility may not be indicative of future volatility, yet the Directors judge this to be the most appropriate method of calculation. Given the share option expense of £101,404 (2018: £146,833), the volatility methodology used is not expected to have a material impact on these financial statements. Details of the fair value calculation for options granted during the year, including other inputs into the Black Scholes model, are disclosed in Note 19.

 

3.2 Judgements

Deferred tax recognition

The determination of probable future profits, against which the Group's deferred tax profits can be offset, requires judgement.  To date no deferred tax assets have been recognised.

 

R&D tax credits

The current tax receivable as disclosed in Note 9, represents an R&D tax credit based on an advance claim with HMRC.  The final receivable is subject to the correct application of complex R&D rules and HMRC approval.  Historically, claims have been successful and the Group expects the current year to be successful too.

 

Research and Development costs

Management are required to make a judgement about certainty of commercial success of their products.  No Research and Development costs have been capitalised in the current or prior period and further details can be found in Note 2.6.

 

4.  Financial Risk

 

4.1 Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange rate risk, cash flow interest rate risk and fair value interest rate risk); credit risk and liquidity risk.  It is Group policy not to enter into speculative positions using complex financial instruments.

 

(i) Market risk

Foreign exchange rate risk

 

The Group primarily enters into supplier contracts which are to be settled in sterling. However, some contracts involve other currencies including the US dollar and the euro. The Group may use forward exchange contracts as an economic hedge against currency risk, where cashflow can be judged with reasonable certainty.  There were no material open forward contracts as at 31 December 2019 or at 31 December 2018

 

At 31 December 2019 the Group had trade payables denominated in a foreign currency totalling £101,899 (31 December 2018: £931,532).

 

Cash flow interest rate risk and fair value interest rate risk

The Group's interest rate risk arises from short-term money market deposits.

 

(ii) Credit risk

Credit risk arises from cash and cash equivalents and money market deposits as well as credit exposure in relation to outstanding receivables.  The exposure relating to outstanding receivables is immaterial and the carrying amount of cash balances is as follows:

 

31 December

  2019

31 December

  2018

 

  £

  £

 Cash at bank and in hand

2,137,599

5,706,519

Sterling short-term money market funds

372,902

3,451,397

 

2,510,501

9,157,916

 

The Directors consider the Group's exposure to credit risk to be acceptable and normal for a similar entity at its stage in development.

 

(iii) Liquidity risk

The Group's approach to managing liquidity is to ensure that, as far as possible, it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring losses or risking damage to the Group's reputation.

The Group manages all of its external bank accounts centrally and in accordance with defined treasury policies.  The policies include a minimum acceptable credit rating of relationship bank accounts and financial transaction authority limits.  Any material change to the Group's principal bank facility requires Board approval. 

 

4.2 Capital risk management

The Group's policy is to maintain a strong capital base.  The Group does not yet have significant recurring revenues and has mainly financed its operations through the issue of new shares and management of working capital.  The Group's capital resources are managed to ensure it has resources available to invest in operational activities designed to generate future income.  These resources were represented by £2,510,501 of cash and fixed term deposits as at 31 December 2019 (31 December 2018: £9,157,916).

 

5.  Segment Reporting

The Group is organised and operates as one segment. The Group's R&D costs are analysed by development programme as follows:

 

Year ended 31 December 2019

Year ended 31 December 2018

 

  £

  £

MED

  8,019,710

  3,538,059

TPR

  230,639

  172,925

CSD

  41,554

  391,782

Other

  183,038

  70,217

 

  8,474,941

  4,172,984

 

 

6.  Operating loss

 

  Year ended

  31 December

  2019

  Year ended

  31 December

  2018

Operating loss is stated after charging:

 

£

£

Depreciation of plant and equipment (note 12)

  20,704

  19,850

Loss on disposal of plant and equipment

-

703

Inventories consumed in R&D

  -

  62,633

Short term leases: property

  117,275

  114,142

Gain/(Loss) on foreign exchange

  8,468

  (12,606)

 

 

The 2019 fees of the Group's Auditor Grant Thornton LLP (2018: KPMG LLP) for services provided are analysed below:

 

  Year ended

  31 December

  2019

Audit services

£

Parent company

35,000

Subsidiaries

7,000

Other Non-audit services

 

iXBRL Tagging

1,000

Total fees

43,000

 

 

The 2018 fees of the Group's Auditor KPMG LLP for services provided are analysed below:

 

  Year ended

  31 December

  2018

Audit services

£

Parent company

33,000

Subsidiaries

9,000

Tax services

 

Parent company

  4,000

Subsidiaries

  -

Total fees

46,000

 

 

7.  Staff numbers and costs

 

The average number of persons (including all Executive and excluding Non-Executive Directors) employed by the Group during the year, analysed by category, was as follows:

 

  Year ended

  31 December

  2019

  Year ended

  31 December

  2018

R&D staff

  8

  10

Finance and Administration staff

  2

  2

Executive Directors

  3

 

13

15

 

The aggregate payroll costs of these persons were as follows:

 

  Year ended

  31 December

  2019

  Year ended

  31 December

  2018

 

  £

  £

Wages and salaries

  1,315,760

  1,603,513

Social security costs

  181,544

  172,805

Other pension and insurance benefits costs

180,342

  182,282

Total cash-settled emoluments

1,677,646

  1,958,600

Share-based payment remuneration charge

101,404

  146,833

Total emoluments

1,779,050

2,105,433

 

All employees of the Group are employed by Futura Medical Developments Limited.

Directors' emoluments

 

 Year ended

  31 December

  2019

 Year ended

  31 December

  2018

 

£

£

Aggregate emoluments

693,353

929,608

Other pension and insurance benefit costs

22,506

Subtotal per remuneration report

715,859

949,356

Share-based payment remuneration charge

47,866

74,647

Employer's national insurance charge

73,811

Total emoluments

837,536

1,110,994

 

In 2019 there were no Directors whose share options were exercised under the Group share option schemes and no gain was realised (2018: £6,000). In respect of the highest paid Director the realised gain was £nil (2018: £nil).

 

In 2019 there were no Directors (2018: no Directors) who participated in a private money purchase defined contribution pension scheme. Emoluments for individual Directors are disclosed within the Remuneration Committee Report.

 

The Directors consider that there are no Key Management Personnel other than the Directors.

 

Emoluments above include the following amounts in respect of the highest paid Director:

Year ended

  31 December

  2019

  Year ended

  31 December

  2018

 

£

£

Aggregate emoluments

235,593

273,855

Employer pension contributions

-

-

Subtotal per remuneration report

235,593

273,855

Share-based payment remuneration charge

18,410

28,711

Employer's national insurance charge

31,680

36,284

Total emoluments

285,683

  338,850

     

 

 

8.  Finance income

 

Interest receivable in 2019 on treasury funds was £22,283 (2018: £27,576).

 

9.  Taxation

 

9.1 Current tax

 

  Year ended

  31 December

  2019

  Year ended

 31 December  2018

 

  £

  £

UK corporation tax credit on loss on ordinary activities

2,222,194

  1,358,336

 

The tax assessed for the year was lower than the UK corporation tax rate (2018: higher).  The differences are explained below:

 

 

 

 

 

Year ended

31 December

2019

  Year ended

  31 December

  2018

 

£

  £

Loss on ordinary activities before tax

11,141,484

 

Loss on ordinary activities at an average standard rate of corporation tax in the UK of 19% (2018: 19%)

 

 

2,116,882

 

1,375,393

Expenses not deductible for tax purposes 

(304)

(215)

Unrecognised deferred tax

(15,701)

(29,578)

Unutilised tax losses

(841,959)

(581,892)

Share scheme deduction 

-

5,529

R&D expenditure credit

(4,969)

(3,296)

Loss surrendered for refund

(683,072)

(417,236)

Additional relief for R&D claims

1,630,136

UK corporation tax credit

2,201,013

1,344,427

Adjustment to tax charge relating to prior period

-

(144)

R&D expenditure credit re 2018

-

14,053

R&D expenditure credit re 2019 

21,181

UK corporation tax credit reported in the

Consolidated Statement of Comprehensive Income

2,222,194

1,358,336

    

 

The Group has tax losses of approximately £31,265,826 (2018: £26,834,483) available for offset against future taxable profits.

 

The corporation tax credit for the year represents research and development tax credits of £2,201,012 (2018: £1,344,428), arising from the surrender of losses (rather than carrying forward to future years) of £15,179,395 (2018: £9,271,916) at 14.5%, under HMRC's small and medium size enterprise scheme. The taxable loss for the year is in excess of the accounting loss for various reasons, principally the additional deductions given for tax purposes on research and development expenditure.

 

In addition a small claim under the large company Research and Development Expenditure Credit (RDEC) scheme resulted in a refund of £21,181 (2018: 14,053).

 

9.2 Deferred tax

Deferred tax assets amounting to £5,649,021 (2018: £4,881,640) have not been recognised due to it not being probable that taxable profits will be available, against which these deductible temporary differences can be utilised.  Reductions in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) were  substantively enacted on 26 October 2015. The unrecognised deferred tax asset at 31 December 2019 has been calculated assuming a prevailing tax rate when the timing differences reverse of 17% (2018: 17%) and comprises:

 

 

  Year ended

  31 December

  2019

  Year ended

  31 December

  2018

 

  £

  £

Depreciation differential versus capital allowances

(1,770)

2,108

Other short-term timing differences

  335,600

  317,670

Unutilised tax losses

  5,315,191

 

  5,649,021

  4,881,640

 

10.  Loss per share

 

The calculation of basic and diluted earnings per share ("EPS") is based on the following data:

  2019

  2018

 

Loss for the purposes of basic EPS and diluted EPS (£)

8,919,290

5,880,576

Weighted average of ordinary shares for purposes of basic and diluted EPS (number)

 

204,657,741

 

131,936,761

Loss per share basic and diluted (pence)

  4.46

 

 

 

     

 

Diluted EPS is calculated in the same way as basic EPS but also with reference to reflect the dilutive effect of share options in existence at the year-end which were 7,255,000 (2018: 5,700,000).  The diluted loss per share is identical to the basic loss per share, as potential dilutive shares are not treated as dilutive since they would reduce the loss per share.

11.  Plant and equipment

 

 

Computer Equipment

Furniture

 and Fittings

 

  Total

Cost

£

£

£

At 1 January 2019

  86,602

  63,285

149,887

Additions

  32,736

  -

  32,736

Disposals

  -

  -

  -

At 31 December 2019

  119,338

  63,285

  182,623

Depreciation

 

 

 

At 1 January 2019

  47,495

  54,919

  102,414

Eliminated on disposals

  -

  -

  -

Charge for year

19,250

  1,454

  20,704

At 31 December 2019

  66,745

  56,373

  123,118

Net book value

 

 

 

At 31 December 2019

  52,593

  6,912

  59,505

At 31 December 2018

  39,107

  8,366

  47,473

 

 

 

 

 

Computer Equipment

 

Furniture

 and Fittings

 

Total

Cost

£

£

£

At 1 January 2018

  91,243

  63,285

  154,528

Additions

  4,510 

-

4,510

Disposals

  (9,151)

-

(9,151)

At 31 December 2018

  86,602

  63,285

149,887

Depreciation

 

 

 

At 1 January 2018

  37,915

53,096

91,011

Eliminated on disposals

(8,447)

-

(8,447)

Charge for year

  18,027

1,823

19,850

At 31 December 2018

47,495

54,919

102,414

Net book value

 

 

 

At 31 December 2018

39,107

8,366

47,473

At 31 December 2017

53,328

10,189

63,517

 

 

All fixed assets of the Group are held in Futura Medical Developments Limited.

 

 

12.  Inventories

 

31 December

  2019

31 December

  2018

 

  £

  £

Consumable materials used for development

 7,780

7,780

 

 

13.  Financial instruments by category

 

The accounting policies for financial instruments have been applied to the line items below:

 

Assets as per Consolidated Statement of Financial Position

31 December

  2019

31 December

  2018

Loans and receivables at amortised cost

  £

  £

Trade and other receivables (note 15)

59,968

248,426

Cash and cash equivalents (note 16)

2,510,501

9,157,916

Total receivables

2,570,469

9,406,342

 

 

  31 December

     2019

  31 December

         2018

Liabilities as per Consolidated Statement of Financial Position at amortised cost

  £

  £

Trade and other payables (note 17)

4,847,520

1,246,247

Total Payables

1,246,247

 

The Directors consider that there is no material difference between the carrying values of financial assets and liabilities, and their fair value.

 

 

14.  Trade and other receivables

 

 

31 December

  2019

31 December

  2018

Amounts receivable within one year:

  £

  £

Trade receivables

5,627

627

Other receivables

54,341

247,799

Financial assets (note 14)

59,968

248,426

Prepayments

41,224

57,982

 

101,192

306,408

 

Trade and other receivables do not contain any impaired assets. The Group does not hold any collateral as security and the maximum exposure to credit risk at the Consolidated Statement of Financial Position date is the fair value of each class of receivable.

15.  Cash and cash equivalents

 

31 December

  2019

31 December

  2018

 

  £

  £

 Cash at bank and in hand

2,137,599

5,706,519

Sterling short-term money market funds

372,902

3,451,397

 

2,510,501

9,157,916

 

 

 

16.  Trade and other payables

 

 

31 December

  2019

31 December

  2018

 

  £

  £

 Trade payables

2,625,359

1,246,247

Social security and other taxes

39,970

42,684

Deferred Income

218,222

-

Accrued expenses

1,963,969

736,584

 

4,847,520

2,025,515

 

The increase in payables is reflective of the increase in research and development activities relating to the Phase 3 study completed in the year.

 

17.  Share capital

 

Authorised

31 December

  2019

31 December

2018

31 December

  2019

 31 December

2018

 

Number

Number

  £

£

Ordinary shares of 0.2 pence each

500,000,000

500,000,000

1,000,000

1,000,000

 

Allotted, called up and fully paid

31 December

  2019

31 December

  2018

31 December

  2019

31 December

  2018

 

Number

Number

  £

  £

Ordinary shares of 0.2 pence each

204,660,267

204,583,439

409,321

409,167

 

 

The number of issued ordinary shares as at 1 January 2018 was 120,696,002. During the year ended 31 December 2018, the Company issued shares of 0.2 pence each as follows:

 

 

Month

Reason for issue

Gross Consideration

  Shares

Issued

 

 

£

  Number

January 2018

Option exercise at 30.00 pence per share

  24,000

  80,000

January 2018

Option exercise at 30.00 pence per share

  24,000

  80,000

May 2018

Option exercise at 30.00 pence per share

  45,000

 150,000

November 2018

Share placing at 7.00 pence per share

  5,600,000

 80,000,000

November 2018

Open Offer placing at 7.00 pence per share

  250,421

  3,577,437

 

 

 

5,943,421

  83,887,437

         

 

 

The number of issued ordinary shares as at 1 January 2019 was 204,583,439. During the year ended 31 December 2019, the Company issued shares of 0.2 pence with each ordinary share carrying the right to one vote as follows:

Month

Reason for issue

Gross Consideration

  Shares

Issued

 

 

£

  Number

January 2019

Non-Executive Director Share Award

19,284

76,828

 

 

 

19,284

76,828

         

 

18.  Share options

 

At 31 December 2019, the number of ordinary shares of 0.2 pence each subject to share options granted under the Company's Approved and Unapproved Share Option Schemes were:

 

Exercise Price per Share

At 1

January 2019

  Options  Exercised

Options  Lapsed

Options  Granted

At 31 December  2019

 

Exercise Period 

  Pence

  Number

  Number

Number

  Number

  Number

1 October 2014 - 30 September 2019

  61.50

310,000

  -

 (310,000)

  -

-

1 October 2015 - 30 September 2020

  71.50

620,000

  -

  -

  -

620,000

1 October 2016 - 30 September 2021

  51.75

580,000

  -

  -

  -

580,000

1 October 2017 - 30 September 2022

  30.00

750,000

-

  -

  -

750,000

1 October 2018 - 30 September 2023

  57.50

960,000

  -

  -

  -

960,000

1 October 2019 - 30 September 2024

  30.50

1,140,000

  -

  -

  -

1,140,000

7 January 2020 - 6 January 2029

7.20

-

-

-

212,500

212,500

31 August 2020 - 6 January 2029

7.20

-

-

-

212,500

212,500

1 October 2020 - 30 September 2025

  7.50

1,340,000

  -

  -

  -

1,340,000

1 October 2021 - 30 September 2026

  31.00

-

  -

  -

1,440,000

1,440,000

 

 

5,700,000

  -

(310,000)

1,865,000

7,255,000

 

On 12 November 2019 share options over 1,390,000 new ordinary shares were granted to employees (including Executive Directors) at a price of 31.00p. The options have a 2 year vesting period and the exercise period for these options is 1 October 2020 to 30 September 2025.

 

The share options outstanding at 31 December 2019 represented 3.54% of the issued share capital as at that date (2018: 2.78%) and would generate additional funds of £2,433,900 (2018: £2,159,300) if fully exercised. The weighted average remaining life of the share options outstanding at 31 December 2019 was 51 months (2018: 52 months) with a weighted average remaining exercise price of 33.55 pence (2018: 50.26 pence).

 

The share options exercisable at 31 December 2019 totalled 3,850,000 (2018: 3,220,200) with an average exercise price of 48.48 pence (2018: 51.28 pence) and would have generated additional funds of £1,766,650 (2018: £2,318,200) if fully exercised.

 

The Group's share option scheme rules apply to 6,550,000 of the share options outstanding at 31 December 2019 (31 December 2018: 5,320,000) and include a rule regarding forfeiture of unexercised share options upon the cessation of employment (except in specific circumstances). 

 

Options have historically been issued to advisors under the unapproved scheme. Such options generally vest immediately and are exercisable between one and two years after grant. There were 705,000 share options outstanding to advisors at 31 December 2019 (31 December 2018: 380,000).

 

There were no market vesting conditions within the terms of the grant of the share options.

 

The Black-Scholes formula is the option pricing model applied to the grants of all share options made in respect of calculating the fair value of the share options.

 

Share based payments

 

 

Inputs to share option pricing model

31 December

  2019

31 December 2018

 

 

 

Grant date

17 September

19 November

Number of shares under option

  1,390,000

  1,340,000

Share price as at date of grant

30.70 pence

  6.95 pence

Option exercise price

  31.00 pence

  7.50 pence

Expected life of options: based on previous exercise history

  3 years

  3 years

Expected volatility: based on median fluctuations over 3 years

  82.70%

  82.70%

Dividend yield: no dividends assumed

  0%

0%

Risk-free rate: yield on 3 year treasury stock as at date of grant

  0.48% p.a.

  0.84% p.a

 

 

 

 

Outputs generated from share option pricing model

31 December

  2019

31 December 2018

 

 

 

Fair value per share under option

16.19 p

3.57p

Total expected charge over the vesting period

  £225,041

  £47,838

 

Recognised in Consolidated Statement

of Comprehensive Income

31 December

  2019

31 December 2018

 

  £

£

The share-based remuneration charge comprises:

 

 

Share-based payments - employees

32,019

3,016

Share-based payments - consultants

  -

  -

Share-based payments

  32,019

3,016

 

The total expense recognised for the year arising from share-based payments is as follows:

 

 

 

 

 

 31 December 2019

£

31 December 2018

£

 

 

 

 

Group equity-settled share based payment expense

 

 

 

101,404

146,833

 

 

19.  Pension costs

 

The pension charge represents contributions payable by the Group to independently administered funds which during the year ended 31 December 2019 amounted to £164,458 (2018: £86,990). Pension contributions payable in arrears at 31 December 2019, included in accrued expenses at the relevant Consolidated Statement of Financial Position date, totalled £10,225 (2018: £6,183).

 

 

20.  Commitments

 

At 31 December 2019 the Group had operating lease commitments in respect of property leases cancellable on one month's notice of £9,802 (2018: £9,767).

 

21.  Related party transactions

 

Related parties, as defined by IAS 24 'Related Party Disclosures', are the wholly owned subsidiary companies, Futura Medical Developments Limited, Futura Consumer Healthcare Limited and the Board. Transactions between the Company and the wholly owned subsidiary companies have been eliminated on consolidation and are not disclosed.

 

Key management compensation

The Directors represent the key management personnel. Details of their compensation and share options are given in note 8 and within the Remuneration Committee Report.


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