Interim Results for the Six Months 30 June 2018

Chairman's and Chief Executive's Review

During the year to date we have continued to make excellent progress with our key asset, MED2002, our topical gel for erectile dysfunction ("ED"). Results from a Phase 1 Pharmacokinetic ("PK") study, as well as continuing discussions with regulators and potential licensees, have allowed us to refine and finalise solid plans for the MED2002 Phase 3 programme, the last step in clinical development prior to filing for marketing authorisation(s). This builds upon the promising Phase 2 data, particularly in mild to moderate ED patients, as headlined in 2016 and scientifically published with peer review in early 2018. Our first MED2002 Phase 3 trial in Europe is on track for first patient dosing in the next month and headline data is expected by the end of 2019.

The commercialisation of our pain relief portfolio also continues as planned. In July 2018, the UK regulatory filing was submitted for TPR100, our diclofenac gel for topical pain relief by Thornton & Ross, a UK subsidiary of STADA Arzneimittel AG ("STADA").

As an innovative, specialist, R&D company, it is very important that our strategy is focused on where we can deliver most value for our shareholders - by developing our portfolio of innovative products for the sexual health and pain markets, and then partnering at the optimum time to generate maximum value. The Company recently undertook an extensive review of its pipeline and product portfolio and determined that a more concentrated R&D focus on MED2002 and our pain relief gels will best enable us to achieve these aims. The CSD500 condom is a compelling commercial asset, out-licensed in 27 territories, and discussions with current and potential distribution partners on next steps are ongoing with a view to ensure a profitable income stream from the product without extensive additional investment by Futura.

Our balance sheet includes cash resources of £6.03 million as at 30 June 2018 (30 June 2017: £10.12 million). We will continue to use our cash resources prudently and are exploring a number of options for additional financing, as we progress the first MED2002 Phase 3 programme to topline data towards the end of 2019. This will ensure the Company has sufficient resources to maximise shareholder value from the commercial opportunity for MED2002.

Portfolio updates - Sexual healthcare

MED2002: Eroxon^® - Topical treatment for erectile dysfunction

MED2002, which uses our DermaSys^® drug delivery system, is the development name for our topical glyceryl trinitrate ("GTN") gel. It has the potential to be a highly differentiated therapy for the treatment of men with ED, especially mild to moderate ED. MED2002's rapid onset of action means that it has the potential to become the world's fastest-acting treatment for ED, with a speed of onset of around five minutes and rapid clearance therefore offering a favourable safety profile. Viagra^® and Cialis^® which dominate the existing on-market ED therapies are taken orally and do not take effect for at least 30 minutes and typically one hour or more¹. Speed of onset and method of administration of MED2002 also help restore spontaneity and intimacy. Importantly, MED2002 may also be appropriate for ED sufferers on nitrates and other drugs that are contraindicated for use with phosphodiesterase-5-inhibitors ("PDE5is") such as Viagra^® and Cialis^® and other existing oral ED treatments.

We hold patents to the product in a market worth US$5.6 billion² for currently available treatments and have registered the brand name Eroxon^®, though potential distributors may choose to use other brand names. The potential market for MED2002 alone is large with potential peak US and EU sales in excess of US $1 billion. If MED2002 is approved, there is an estimated US$560 million prescription-only market potential (sources: Decision Resources and Cello), and an estimated US$660 million+ market potential as an over-the-counter (OTC) product of which 70% is estimated to represent incremental sales potential to the prescription-only market (source: Ipsos Mori forecasts commissioned by Futura). Prospective partners have arrived at similar estimates of the market opportunity, sourced at their expense which underpins our confidence.

MED2002's patent protection runs until August 2028 in the USA and August 2025 in Europe. An additional patent filing could extend patent protection through to 2038 if granted.

We previously announced breakthrough clinical results in September 2016 for MED2002 and extensive, compelling data from these Phase 2 studies, including statistical significance for internationally accepted IIEF-EF clinical trial endpoints, were published in a peer reviewed paper in The Journal of Sexual Medicine in February 2018. The article is available at the following link: http://www.jsm.jsexmed.org/article/S1743-6095(17)31852-0/fulltext.

Earlier in 2018, positive results from the Phase 1 Pharmacokinetic ("PK") study were announce to inform and define the higher MED2002 doses to be used in Phase 3 studies. Doses of 0.2%, 0.4% and 0.6% w/w glyceryl trinitrate ("GTN") were shown to be safe and well tolerated along with a dose related absorption profile and equivalence to similar systemic doses of GTN in the form of Nitrostat^®. This will be the reference drug for safety, if Phase 3 data are positive, in the planned abbreviated regulatory filings for approval via the European Article 8 (3) procedure and the 505 (2) (b) pathway in the USA. These regulatory routes will also give us 10 years and three years, respectively, of data exclusivity from the date of approval, thereby further strengthening our intellectual property position. The PK data were also encouraging with respect to the potential for greater clinical efficacy at higher doses than 0.2% in the Phase 3 clinical studies whilst maintaining safety and tolerability.

The Company has had extensive discussions with a number of interested commercial partners for the out-licensing of MED2002. These discussions are ongoing. However, in the majority of instances potential commercial partners would like to see positive Phase 3 data on MED2002, especially at the higher doses, ahead of more advanced licensing discussions and have indicated that they are likely to pay more for the product after such data have been generated.

An innovative product with positive Phase 3 data is significantly clinically de-risked and greater value is likely to be obtained by an innovator such as Futura when partnering or out-licensing the product, than structuring an earlier arrangement. Data from Futura's out-licensing advisers and the Company's own ongoing internal assessments of comparable licensing deals indicate that the innovator's share of product net present value increases by approximately 50% moving between Phase 2 to Phase 3 datasets. Consequently, the Board recognises the importance to shareholders of achieving this milestone, in order to maximise shareholder value.

Futura therefore plans to take MED2002 through Phase 3 development and then partner or sell the asset. The first European Phase 3 study, "FM57", a 1,000 patient study of MED2002 for the treatment of erectile dysfunction is progressing on track with first patients expected to enter study within the next month and with headline data expected by the end of 2019. FM57's protocol has incorporated feedback received from potential commercial partners, opinion-leading clinicians and also US and EU regulatory agencies to optimise the commercial value as well as maximise the likelihood of regulatory approval.

In parallel to the clinical studies, a market access and engagement programme for MED2002 is underway. Futura is in the process of setting up a scientific advisory council involving high profile US Key Opinion Leaders ("KOLs") in the field of erectile dysfunction as well as the European KOLs already retained.

Note ¹ US patient information for Viagra^® and Cialis^®

Note ² IMS Health - MSP 2016 (15 key countries)

CSD500: Condom containing the erectogenic Zanifil^® gel

Futura has developed CSD500 into a product with significant commercial potential. The product benefits from three clinically proven claims: the maintenance of a firmer erection, maximised penile size and a longer lasting sexual experience for women whilst wearing a condom. CSD500, which is CE Marked, represents real innovation in an industry where there has been limited new product development. Futura's unique intellectual property for CSD500 has been protected throughout the world through the filing and granting of a range of patents.

Both of our manufacturing partners - TTK in India and our European manufacturer - have the required approvals to ship CSD500 to any country in which the product is approved. In September, our European manufacturer received regulatory approval from the relevant EU Notified Body to manufacture the two-year shelf life product. TTK received regulatory approval in 2017 and CSD500 can now be supplied with the more commercially viable two-year shelf life in all approved regions, a long-awaited milestone.

As an innovative specialist R&D company, Futura does not have the marketing or regulatory resources to support the day-to-day requirements in a growing compliance-driven medical device market and will focus its efforts on licensing the condom product / technology with partners who can accommodate the increasingly complex regulatory obligations. Futura expects to still benefit from the Intellectual Property of CSD500 through potential royalties, but the immediate potential for substantial royalties is low in the absence of a large global brand 'carrier' to take the product forward. The Company will continue to explore national, multi-territory and regional deals where the opportunities arise. The Company would benefit from annual cost savings of approximately £0.4 million in the event that it no longer maintains regulatory clearance itself for CSD500 as a medical device.

Discussions are ongoing with potential partners to licence the product in a number of markets.

Portfolio updates - Topical pain relief

The rapid skin permeation rates enabled by Futura's transdermal delivery system, DermaSys^®, offer potential benefits in pain management including: improved onset of action, duration and degree of pain relief. DermaSys^® also allows the potential to have a twice daily dosing regimen which provides an attractive commercial proposition for ibuprofen which is currently dosed three to four times per day.

Futura has previously demonstrated statistically significant results from its two non-steroidal anti-inflammatory drug ("NSAID") programmes, TPR100 (2% diclofenac gel) and TIB200 (10% ibuprofen gel), in a clinical study.

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 July 2018, Thornton & Ross filed the product's marketing authorisation application with the UK Medicines and Healthcare Products Regulatory Agency (MHRA).

The Company has received expressions of interest from a number of parties that will enable Futura to expand the geographical reach of TPR100 especially within the EU. Futura is awaiting regulatory authorisation in the UK, expected in 2019, before progressing further.

The objective is for our pain relief products to be best-in-class. The rationale for this is that the National Institute for Health and Care Excellence (NICE) gives clear guidance to physicians to prescribe topical NSAIDs in the first instance for joint pain associated with osteoarthritis, in preference to oral NSAIDs, owing to concerns over the long-term use of oral NSAIDs. This means that the best-in-class topical treatment should be the first choice for doctors in the initial treatment of pain and therefore represents a substantial opportunity in a market with global sales estimated at US$2.9 billion³.

Outlook

Futura's strategy is focused on where we can deliver most value for our shareholders - by developing our portfolio of innovative products for two large market categories, sexual health and pain, and then partnering at the optimum time to generate maximum value.  We believe a more concentrated focus on MED2002 and our pain relief gels will enable us to achieve this. We will also be continuing to explore ways to generate income streams from CSD500. 

Whilst it progresses its first Phase 3 trial for MED2002, Futura is exploring a range of options for additional funding to support the development of its lead asset, MED2002.  This activity aims to ensure the Company has sufficient resources to maximise shareholder value from the commercial opportunity for MED2002.

John Clarke                                                      James Barder

Chairman                                                          Chief Executive

Note ³ IMS Health Estimate, MSP, 2015