Full Year Results for the year ended 31 Dec 2020

Full Year Results for the year ended 31 December 2020

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 2020.

Key highlights

Operational highlights

MED3000 - Topical fast acting treatment for erectile dysfunction ("ED")

• Significant progress made with recent recommendation by EU Notified Body¹ for approval of MED3000 as a breakthrough, fast acting, clinically proven treatment for erectile dysfunction:
  • In February 2020 formal proceedings commenced for approval as a medical device available throughout EU without the need of a doctor's prescription ("OTC").
  • In July 2020, Futura submitted the Technical Dossier for MED3000 for marketing approval.
  • In August 2020 positive audit opinion received for Futura's Quality Management Systems ("QMS").
  • EU certificate expected before the end of May 2021 under Medical Device Regulation.

• De Novo medical device status for MED3000 confirmed by US Food and Drug Administration ("FDA") in February 2020 pre-submission meeting.
  • Four pre-submission meetings held to determine design of small supplemental clinical trial (known as "FM71") and Human Factors study required by FDA for OTC marketing approval in USA.
  • Detailed planning and preparatory activities for FM71 following receipt of final minutes from FDA.

• Specialist corporate advisors retained in July 2020 to progress commercialisation of MED3000:
  • Joint collaboration agreement for China and South East Asia with 50/50 share of profits signed in March 2021 with expected additional R&D costs of up to £4 million being fully met by Asian partner.
  • Discussions progressing with a number of other parties for licensing rights for MED3000 in other countries.

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

• Initial laboratory and optimisation work on a cannabidiol gel under the joint venture collaboration agreement with CBDerma Technology Limited completed in August 2020.
• In vitro studies supporting a stable formulation with enhanced permeation through the skin of cannabidiol.
• An intellectual property application filed in August 2020 covering a novel and inventive formulation with recent progression to PCT² patent application.
• Advisors recently retained to explore commercial opportunities.

TPR100 - Futura's advanced proprietary transdermal technology, DermaSys® for transdermal delivery of diclofenac for the pain and inflammation associated with sprains, strains and bruises and soft tissue rheumatism

• Completion of additional laboratory work required by the UK Medicines and Healthcare Products Regulatory Agency ("MHRA") to support the UK submission made by partner Thornton & Ross supporting improved skin permeation of TPR100 compared to market leading products.
• Scientific advisory meeting held with MHRA confirming the need of a Phase 3 study to support the improved skin permeation and potential potency of TPR100 including potential superior efficacy claims.
• Futura is exploring the feasibility of a clinical study that would satisfy the Phase 3 requirements for both UK and USA marketing approval.

Financial highlights

• £2.41 million net loss in the period (2019: net loss £8.92 million).
• R&D tax credit receipt for 2020 year of £0.52 million expected mid-2021.
• Cash resources of £1.02 million at 31 December 2020 (2019: £2.51 million).
• Futura received £1.50 million through the issuance of convertible loan notes to Atlantis via HT Riverwood Fund, with a three year conversion period at a premium price of 20 pence.
• Futura also received £0.50 million following the exercise of warrants by Atlantis via HT Riverwood Fund, issuing 2,272,727 shares at an exercise price of 22 pence per warrant.

John Clarke, Chairman of Futura Medical, commented: "This year against the backdrop of the turbulence and challenges posed by the COVID-19 pandemic, the team at Futura has been resolutely focused on gaining regulatory approval for MED3000 in Europe and the USA.  We look forward to receiving the EU certificate to enable MED3000 to be marketed as a breakthrough, fast acting, clinically proven OTC treatment for ED shortly as well as commencing the remaining clinical work we believe will also deliver a similar approval for MED3000 in the USA."

James Barder, Chief Executive of Futura Medical, commented: "Futura has achieved major milestones in terms of securing partnering for the development and commercialisation of MED3000 in China and South East Asia in a deal structured to capture significant long-term value, as well as the EU Notified Body's recommendation to certificate MED3000 for Class 2B approval as a medical device for ED treatment under the European Medical Device Regulations."

"The Company is well positioned to deliver further positive news through 2021 especially around commercialisation of MED3000 and our objective to deliver a long term and sustainable revenue for shareholders."

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 at 10am BST on 14 April 2021.

1.   Notified Bodies are organisations designated by EU countries to oversee the approval of medical devices within the EU and the UK.

2.   Patent Cooperation Treaty.

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

Richard Lindley/ 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) 203 922 0891

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

Futura is an innovative R&D company with a strategy to develop a pipeline of late stage, novel products borne out of its proprietary patented transdermal technology platform, DermaSys®. The Company is currently focused on sexual health and pain. It seeks to develop products with high tolerability, safety and convenience of administration that solve clinically meaningful problems, including dissatisfaction with existing treatments, to improve health, quality of life and well-being for patients worldwide. Whilst we apply strict pharmaceutical principles and discipline to both the R&D and manufacturing process to all our product candidates, we also aim to ease access to our treatments for patients, for example through the registration and ultimately availability as over-the counter ("OTC"), non-prescription, products.

This year against the backdrop of the turbulence and challenges posed by the COVID-19 pandemic across the world, the team at Futura has been resolutely focused on execution, particularly the regulatory submission for MED3000 in Europe (completed H2 2020) and the USA (an ongoing iterative consultation and review process), as well as advancing activities for its commercialisation. At the same time, we also progressed additional pipeline product candidates, such as our CBD100 cannabidiol formulation, that will address attractive and substantial markets.

These efforts are now starting to bear fruit, most recently culminating in the March 2021 recommendation for approval of MED3000 from the EU Notified Body, a transformational milestone for the Company. Once EU certification and the resultant CE mark is granted, expected before the end of May 2021, Futura's breakthrough, fast acting topical gel formulation MED3000, will become the first clinically proven, pan-European topical OTC treatment for erectile dysfunction ("ED") available without a doctor's prescription (i.e. OTC).

Due to post-Brexit arrangements, the EU CE mark can be used to market the product in Great Britain¹ until 30 June 2023 by which time a specific UKCA mark has to be obtained. This will be a streamlined process since it is understood the UK application can bridge to the EU approval.

We look forward to further MED3000 marketing approvals in multiple regions across the world, including the USA and Asia. Expedited Medical Device Registrations may be possible in most Middle East, Far East, African and Latin American countries based on the EU CE mark and we will be targeting both further regulatory approvals as well as commercial launch in a number of countries.

Futura retained specialised corporate advisers in Q3 2020 to facilitate active commercial discussions for MED3000 with potential licensing and marketing partners. In early March 2021 we announced a joint collaboration and investment to commercialise MED3000 in China and South East Asia, a significant market for ED. Our new partners have extensive experience, resource, and strong pharmaceutical connections in the Asia Region which we are confident will maximise the market reach and opportunities for MED3000 in those geographies, creating significant long term value. Key components of this partnership mean that Futura shares 50% of MED3000 profits from the Region without further R&D spend (from Futura).  In addition, the Company has received £2 million cash from partner investment in Futura. This partnership is an example of Futura's strategy to maximise value creation by partnering or out licensing its products at key inflection points with agreements that look to capture long term and sustainable returns for the Company.

As a small innovative company Futura is adaptable and nimble, allowing us to take advantage of new opportunities and strategies as those opportunities arise as well as evolve to meet challenges. We would like to thank all Futura's employees for their tremendous efforts and focus during the year and shareholders for their ongoing support. We have been able to leverage the lean, semi-virtual working processes at Futura to adapt to the pandemic efficiently and safely, whilst making significant progress for our products. Post-pandemic, Futura will be adopting a partly remote working model moving forward.

Operational Review

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 partition and diffusion 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.

A transformational year with EU recommendation for approval of MED3000 - Topical gel for erectile dysfunction ("ED")

MED3000 is a formulation of the proprietary technology DermaSys®, developed specifically for the treatment of ED. Data from a Phase 3 clinical study "FM57" has supported the regulatory submission for MED3000 as a medical device in Europe with clinically proven claims for the treatment of ED. The studies have demonstrated that MED3000 has the potential to be a highly differentiated product by addressing significant unmet needs, across all patient severities in the $5.6 billion ED market², thanks to its rapid 10 minute speed of onset enabling spontaneity for both partners, significant clinical benefits alongside low side effects and no interactions with alcohol or food, as well as providing a potential treatment option for around 20% of ED³ patients contra-indicated from using existing ED therapies. Futura also believe MED3000 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 that provides them and their partners spontaneity through MED3000's very rapid onset of action along with a very low side-effect profile. Its excellent safety profile makes it ideally suited to become a unique topical formulation available without a doctor's prescription.

ED disrupts the lives of at least 1 in 5 men globally⁴, affecting the sexual and emotional health of around 23 million men and their partners in the USA, and 20 million men in the UK, France, Italy and Germany alone. The prevalence of ED amongst adult males⁵ is estimated to be 340 million worldwide, with China ranked first and USA ranked fourth. Of note, the prevalence of ED in young men is increasing; now as high as 30%⁶. 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 Key Opinion Leaders in the field of sexual medicine.

FM57 Study

FM57, the Phase 3 study conducted with MED3000 was a 1,000-patient study including approximately 60 centres across nine Central and Eastern European countries. FM57 was a dose ranging, randomised, double blind, 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 to establish the severity of their ED, known as the pre-treatment 'baseline'.

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

In study FM57 all three co-primary endpoints (IIEF-EF, SEP2 and SEP3; internationally accepted clinical trial endpoints in ED) were statistically significantly achieved against baseline (pre-treatment) data in addition to important, supporting secondary endpoints in terms of efficacy, speed of onset, duration of action and clinically meaningful differences in patient benefit.

FM57 demonstrated that MED3000 has the potential to be a highly effective, clinically proven, topical treatment for ED. MED3000 has a unique evaporative mode of action which the Company believe stimulates nerve endings in the glans penis to cause an erection.

MED3000 results demonstrated a highly statistically significant improvement (p<0.001) 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, compared to before treatment baseline, along with an excellent safety profile.

Importantly, MED3000 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 10 minutes of application, substantially faster than PDE5i's (oral tablets) 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 partners.

MED3000 - Medical device regulatory pathway

During 2020 the Company navigated the complex formal regulatory proceedings for MED3000 in both Europe and the USA. Regulatory procedures, timelines and approaches differ by region.

Europe: In March 2021, Futura announced that the EU Notified Body had successfully completed its review of the Company's Technical Dossier for MED3000 with a recommendation to approve MED3000 for the medical device class and indication as applied for in July 2020. A Class 2B approval is by definition an approval allowing marketing of MED3000 as a non-prescription treatment across the European Union.  European approval for MED3000 will be final upon issuance of a Medical Device Regulation certificate by the panel, which is expected before the end of May 2021.

In order to obtain pre-marketing clearance within the EU under the new Medical Device Regulations, two requirements have to be met: Submission of Technical Documentation which includes sufficient efficacy, safety and quality data and demonstration that the Company can operate to a high standard of quality through a Quality Management System ("QMS").

In July 2020, Futura submitted the Technical Dossier for MED3000 for treatment of ED under the European Medical Device Regulation for marketing approval in Europe by an EU Notified Body as a Class 2B medical device. The Technical Dossier included data in support of quality, safety and efficacy of MED3000.

Once EU certification and the resultant CE mark is granted, MED3000 will become the first pan-European topical OTC treatment for ED. This paves the way for approval in many countries around the world, including in the Middle East, Africa, the Far East and Latin American regions which allow "fast-track" review based on recognition of the EU CE mark. The CE mark will also be recognised in Great Britain until 30 June 2023 and in the period leading up to this Futura will secure the new post-Brexit UKCA mark. This will be a streamlined process since it is understood the UK application can bridge to the EU approval.

USA: FDA's guidance documents indicate that their preference is to adopt an interactive and iterative approach to data requirements through pre-submission meetings with sponsors. According to FDA, careful considerations of their feedback may improve the quality of subsequent submissions, shorten total review times and facilitate the development process for new devices. Thus, our productive and positive pre-submission meetings were held during 2020 and early 2021 to discuss existing FM57 Phase 3 clinical data, pathway to OTC status and any additional clinical and non-clinical requirements.

Summarising activity to date: it has been established that an application may be made for MED3000 as a medical device for ED treatment, with a De Novo Classification. FDA requires an additional 6-month confirmatory clinical study, known as "FM71", with MED3000 taking a "least burdensome approach" with detailed design now agreed. A short, non-clinical, Human Factors Study, testing ease of patient understanding of an OTC label and product administration and use is also requested to support the regulatory submission and facilitate OTC status as well as a finalised OTC product label.

A 5th pre-submission meeting with FDA is planned for H2 2021 to define and confirm the detail of the work required for OTC application and Futura is targeting completion of the FM71 study and Human Factors study for Q2 2022.

US confirmatory clinical study, FM71

FM71 is a confirmatory clinical study with MED3000 designed to provide supplementary 6-month efficacy data with a "least burdensome" approach and modest cost.

FM71 will be of a 6-month duration (24 weeks) versus three month duration for FM57 to reassure the FDA that efficacy does not diminish over a longer period of time, although it is Futura's belief that this is unlikely as in the FM57 study efficacy improved from the first to third month of patient use.

Approximately 100 patients in total will be recruited including a mix of mild, moderate and severe ED sufferers. Recruited patient population will include 20 African American patients (from a leading US medical centre) and 80 patients recruited from Eastern Europe where sites include some of the same centres used in the FM57 trial. No placebo is required hence the study is relatively small in size compared to FM57 where the Company recruited in excess of 1000 patients. The primary endpoints are a significant change from baseline and exceeding a minimal clinically important difference calculated using the Rosen et al statistical method, a standard assessment technique for measuring Patient Reported Outcomes. Both endpoints were previously met for MED3000 over the 12-week duration of study FM57. Additional statistical study design has been agreed to support a fast speed of onset claim of 5, 10 or 15 minutes (10 minutes was achieved in FM57).

A Tadalafil 5mg (the active in Cialis®) comparator arm is included for informational purposes only to assess relative safety, speed of onset and overall efficacy; non-inferiority of MED3000 against Tadalafil is not required to be shown. This will more accurately enable FDA to determine the relative benefit/risk ratio of MED3000 versus a commercially available comparator.

MED3000 commercialisation plans

As regulatory processes continue Futura has been working with retained specialised corporate advisers on active commercial discussions with potential licensing and marketing partners in line with an agreed process being managed by the advisers.

Futura announced in late-October 2020 that it had given priority to certain negotiations for one specific region for the exclusive marketing rights for MED3000, with certain parties. These discussions were formalised in early March 2021 with the announcement of investment and joint collaboration with Co-High Investment Management and certain subsidiaries of Atlantis Group to commercialise MED3000 in China and South East Asia.

Futura is making steady progress on commercial discussions for MED3000 marketing rights in multiple other regions. Partnering discussions generally follow the path of interested parties submitting a non-binding offer which is followed by an invitation for due diligence of full MED3000-related data under a Confidential Disclosure Agreement and thereafter a formal offer which if accepted contractually by Futura would be binding. Currently a number of interested parties have made submissions at the non-binding offer stage with further offers expected although there can be no guarantee of deal completion at this stage. The Company look forward to providing further updates in the coming months. Futura is committed to prioritising commercial deals that will deliver long term and sustainable value to the Company allowing a long-lasting growth franchise to be built around the pipeline of DermaSys® formulated products and in particular MED3000.

An initial UK patent was filed in December 2019 around MED3000's clinically significant and novel findings shown in FM57. This was supplemented with a further UK patent filing in August 2020 following a complete analysis of all the data sets provided by FM57 and a head-to-toe strategic review conducted by independent pharmaceutical patent specialists retained by Futura. An initial examination report conducted by the UK patent office, requested at the time of the first UK filing by the Company, supports the patentability of the application which is an important first step in the patent approval process.  In October 2020 further patent filings were made and in particular a Patent Cooperation Treaty ("PCT") application taking priority from the two earlier UK applications.  The PCT currently has 153 contracting countries where the Company can seek patent protection claiming priority from an original application made in any one of the countries that are signatories to the PCT, such as the UK. In Q2 2022 national applications will need to be made and the Company, in consultation with its commercial partners, will decide those countries in which to file applications and considered necessary to protect the commercial interests of MED3000. If national applications are successful this will provide patent protection until 2040.

Co-High licensing agreement - China and South East Asia

In March 2021 Futura entered into £1.5 million convertible debt and £0.5 million of warrants financing transactions with HT Riverwood Multi-Growth Fund ("Riverwood"), a fund managed by Atlantis Investment Management Limited ("Atlantis"), a leading asset manager, which has provided the Company with £2 million in cash.

Atlantis is a 100% owned subsidiary of the Atlantis Group and Co-High is a 60% owned subsidiary of the Atlantis Group. Ms Yang Liu, now Atlantis' Chairperson and Chief Investment Officer, acquired the Atlantis group in 2009.

Additionally, Futura entered into a licensing agreement with Pride Century Ventures, a special purpose vehicle owned by Co-High Investment Management Limited ("Co-High") for the rights to exclusively develop and commercialise the Company's topical, gel-based ED treatment MED3000, in China and South East Asia. Co-High will provide funding currently estimated to be up to £4 million for the expected remaining R&D work required to gain approval of MED3000 throughout the region. Futura will be entitled to 50% of regional profits from the commercialisation of MED3000 (the "Joint Collaboration") including any profits derived from local partner agreements within the Region.

Atlantis is a leading international asset management company with a focus in the Greater China Region and South East Asia. Co-High is a specialist private equity company in the Greater China region and invests into and collaborates with some of the world's most promising companies which are believed to be poised to enter a hypergrowth phase. Healthcare investment and collaboration is targeted at companies with a clear scientific edge who are working to solve the major unmet medical needs of the Greater China region.

Under the terms of the agreement, Futura and Co-High will work together to develop and commercialise MED3000 as a clinically proven OTC treatment for ED throughout South East Asia.

TPR100 - Futura's advanced proprietary transdermal technology, DermaSys® for transdermal delivery of diclofenac for the pain and inflammation associated with sprains, strains and bruises and soft tissue rheumatism

TPR100 is a proprietary DermaSys® product formulation engineered to achieve targeted and controlled permeation of diclofenac through the skin for local relief of pain and inflammation associated with soft tissue damage caused by sprains, strains, bruises and rheumatism. It 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.

Futura has completed additional laboratory formulation adjustment and work specifically around the skin permeation characteristics of TPR100 in response to the UK MHRA's questions after Thornton & Ross' initial filing of a UK marketing authorisation application.

At a recent scientific advisory meeting with MHRA by Futura in conjunction with its commercial partner, the regulator recognised the improved skin permeation characteristics of TPR100 compared to market-leading diclofenac formulations. In vitro studies demonstrated that a 20% TPR100 dose relative to certain market-leading diclofenac formulations delivered the same permeation of active pharmaceutical ingredient through the skin. Due to this increased potency, a key differentiating characteristic for TPR100, MHRA now require data from a patient efficacy study with TPR100 in support of a marketing authorisation and are willing to consider superiority claims if the study is successful.

Since Voltaren® 1% has recently gained OTC status in the USA a new and attractive potential market opportunity has arisen in that geography for TPR100. Futura is therefore exploring designs, funds permitting, for a clinical study to achieve approval for a superior product without a prescription in the USA as well as fulfilling data requirements for UK and EU regulatory submissions as a topical pain relief and anti-inflammatory treatment.

Commercial discussions with several potential distribution partners for other countries continue however any further licensing deals are expected to be after a regulatory approval is achieved.

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

CBD100 is part of Futura's joint venture collaboration with CBDerma Technology Limited 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.

Completion of initial laboratory and optimisation work on CBD100 was announced in August 2020.

As part of a robust formulation process using strict pharmaceutical development principles, Futura carried out extensive DermaSys® cannabidiol formulation work and initial in vitro tests on human epidermis during 2020. The studies demonstrated highly efficient penetration of cannabidiol into and through the skin, superior to an established, marketed, comparator product. Additionally, cannabidiol is known to be unstable with many common excipients used in gels and other topically applied forms. CBD100 was specifically formulated to minimise this issue and has shown encouraging early stability work, which is expected to ensure potency is retained during shelf-life.

The Futura R&D team's development work on CBD100 is further evidence of the broad utility and power of the DermaSys® system for effective and controlled transdermal delivery of a wide range of active pharmaceutical ingredients.

An intellectual property application was made in August 2020 covering various unique aspects of the CBD100 gel formulation. Initial patent office examination has suggested that CBD100 is a novel and inventive formulation and the patent application is expected to progress into the international Patent Cooperation Treaty (PCT) stage in Summer 2021.

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 estimates 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 applications, supplements, beverages and skin care.

In conjunction with its joint venture partner Futura is exploring the potential of CBD100 from both a development and commercial standpoint. External advisors with a strong commercial track record, experience and credentials in the cannabis-derived active ingredients market have been appointed. A structured process is ongoing for validating and understanding CBD100's market potential, where the best commercial opportunity lies and then development requirements prior to planning and execution of further work. The finalisation of plans will be defined by ongoing regulatory changes that are occurring with respect to marketing authorisation requirements for cannabidiol. For example, the EU is set to provide a regulatory update for cannabidiol use in cosmetics during Q1 2021. Futura plans to update shareholders in due course.

In light of increasing regulation, a gel that has been formulated using strict pharmaceutical development principles with strong delivery characteristics, stability and high quality could be a very attractive commercial proposition when compared to current market incumbents in either cosmetic or more traditional pharmaceutical markets for cannabidiol such as pain and inflammation. Both options are being examined however it is likely that a "cosmeceutical" will be developed first.

The route to an approved cosmetic product is expected to be fastest where there is a large existing market opportunity but with lower barriers to entry where quality and differentiated brand attributes are important. Whilst a pharmaceutical development route for an effective cannabidiol gel remains of significant potential, it also involves higher risk and cost until the clinically proven benefits of cannabidiol and specific indications to which it is applicable are better understood.

Financial Review

The £2 million cash investment arising from the MED3000 collaboration agreement for China and South East Asia post year end in March and April 2021, in addition to a year end cash balance of £1.02 million and usual refund of R&D tax credits of £0.5 million, will fund the Company's working capital through to Q1 2022, with a focus on formalising further MED3000 partnering and license agreements in additional regions, particularly where marketing approval is near-to-medium term.

Outlook

Futura has achieved major milestones in terms of securing partnering for the development and commercialisation of MED3000 in China and South East Asia in a deal structured to capture significant long-term value, as well as the EU Notified Body's recommendation to certificate MED3000 for Class 2B approval as a medical device for ED treatment under the European Medical Device Regulations.

The Company is well positioned to deliver further positive news through 2021. Futura expect the final certificate of EU CE mark approval for MED3000 by the end of May and the team is focused on preparation and execution of the confirmatory clinical study and non-clinical studies to finalise an OTC label for the regulatory submission for MED3000 in the USA which the Company aims to achieve in 2022. Furthermore, given the potential for expedited Medical Device Registrations possible in most Middle East, Far East, African and Latin American countries based on EU CE Mark Futura look forward to achieving additional progress in a worldwide roll out of registrations followed by commercialisation of MED3000 as a fast-acting topical ED treatment without the need for a physician prescription. The rapidly solidifying potential of MED3000's value also means that the Company look forward to being able to update shareholders on the progress of commercial licensing discussions in the coming months.

John Clarke                        James Barder

Chairman                           Chief Executive

References

1.                Under Brexit terms Northern Ireland is exempt.

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

3.                Cello Health Consulting research conducted in the US, France and Germany, commissioned by Futura Medical.

4.                EMA, Withdrawal assessment report for Viagra, 2008.

5.                Global Data Epidemiological Analysis 2020

6.                Nguyen Sex Med Rev. 2017 Oct, vol 5, 508-520

Financial Review

As outlined in the Chairman and Chief Executive's Review, during the year Futura focused its financial resources towards approval and commercialisation of its fast-acting topical treatment for ED.  As the FM57 study was concluded, activities shifted toward Regulatory and Manufacturing.  With the majority of the work conducted or overseen by in-house personnel already in place, external 3rd party costs were significantly lower than in the prior year.

A fundraise was completed in January 2020 resulting in gross funds of £3.25 million 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.

In March 2021 the Company was notified that MED3000 had been recommended for approval as a Class 2B medical device in Europe and the FDA confirmed that a further, smaller, supplementary study was required for approval in the USA.

In addition, in March 2021, the Company concluded a further funding transaction which resulted in £1.5 million received upon the issuance of convertible loan notes and in April 2021 the Company received an additional £0.5 million following the exercise of warrants by HT Riverwood Fund.

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. No revenue was recognised in the period.

Research and Development Costs

Research and Development costs for the period ended 31 December 2020 were £1.93 million, compared to £10.05 million for the period ended 31 December 2019. The decrease of £8.12 million is reflective of the focus towards regulatory and manufacturing activities, which were conducted in-house by existing personnel and significantly reducing the cost of external 3rd party providers. There was no capitalisation of R&D costs in 2020.

Administrative Costs

Administrative costs were £1 million for the period ended 31 December 2020 compared to £1.14 million for the period ended 31 December 2019 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 £0.52 million will be claimed in respect of 2020 and the cash refund is expected to be received mid-2021 from HMRC.

Loss Per Share

The basic loss per share for 2020 was 0.99p (2019: 4.36p). Details of the loss per share calculations are provided in Note 10 to the consolidated financial statements.

Cash Balance

The cash balance at the end of 2020 was £1.02 million (2019: £2.51 million). Gross proceeds of £3.25 million were received in January 2020 and the usual refund of R&D tax credits of £2.22 million was also received in May 2020. Cash burn during the year was £6.77 million (2019: £8.01 million) primarily in relation to the concluding FM57 clinical study and, regulatory and manufacturing activities associated with MED3000. Cash burn in relation to R&D activities for 2021 is expected to increase as clinical study costs relating to FM71 are incurred during H2 2021.

Post Period Events

The Company concluded funding of £2 million in March and April 2021. The COVID-19 pandemic has continued through 2021 and Futura expect the pandemic to have continued limited impact on operations in 2021. Further information in relation to COVID-19 is available in the Risks and mitigation section of the 2020 Annual Report.