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13 June 2018 RNS - FUM AGM

lse:fum

#1

Futura’s Chairman, John Clarke, will make the following statement at the AGM.

“We continue to make good progress in the development and commercialisation of our pipeline of product opportunities.”

-This is just not true in terms of Pain Killers. There have been no reported successful negotiations, so Pain Killer development remains parked.

“The design of the (Phase III) study incorporates feedback from regulators and from potential commercial partners with whom the Company remains at an advanced stage of discussions. This feedback has, for example, highlighted the importance of the initial commercial target markets being men who are dissatisfied by the slow onset of action of PDE5 inhibitors or by side-effects and contraindications, such as those men with ED who are prescribed nitrates.”

- Its good that input from potential partners is being discussed / agreed. Discussions will maintain or increase potential partner interest / involvement, and assures that informed potential partners can see their priorities being taken into consideration. This might be the cause of the delay to Phase III doseing.

“Completion of a significant out-licensing agreement for MED2002 remains a top priority for the Company and, whilst negotiations proceed, we will continue to maintain the momentum in the product’s development.”

- Note agreement, not agreements.

“On our novel condom, CSD500, we are pleased to announce that the product has recently received regulatory approval in Kuwait, enabling our commercial partner in the MENA region to launch in Kuwait as soon as practicable. This follows the previous launch in the Kingdom of Saudi Arabia, from which repeat orders continue to be generated. In a number of other countries, the steps towards CSD500 launches are also underway. We continue in commercial discussions with potential partners for CSD500 for those territories where a commercial partner is not currently appointed.”

- Kuwait is good news, but only 4 million people (so 2 million men) live there.

- Still looking for partners for ex C&D territories. How hard are they looking with TTT a possibility?

"On TPR100, our diclofenac gel for topical pain relief, we await the UK regulatory dossier submission to the MHRA by Thornton & Ross, a UK subsidiary of STADA. The completion and submission of the dossier, which is substantial, remains a priority and we will provide a further update once the dossier has been filed.2

- Thornton & Ross are responsible for late submission? I hear what is being said, but I feel FUM may have its own timetable for submission that avoids problems for a TTT outcome.
- The dossier was one of the bigger problems JB had before he hired Angela.

“Futura has a strong balance sheet, an experienced team, an exciting product portfolio and a particularly valuable asset in MED2002, which has the potential to be the world’s fastest-acting ED treatment. We look forward to providing further updates in the current financial year.”

- Its official. MED2002 is now a ‘particularly valuable asset’, hence the employment of advisors. You get the feeling JB is getting an appetite for what the company is really worth, not just the Punchy Numbers.

Note:
From Wikipedia the following:

Kuwaiti Ethnic groups:
Kuwaiti 28%
other Arab 27.9%
Asian(mostly south) 37.8%
African 1.9%
other 1.1% (includes European, North American, South American, and Australian) (2013 est.)

I think a large part of the Saudi Arabian population is from similar sources?
This being the case, instead of just sending money home to families, the more entrepreneurial Arabs and Asians might start sending these super new condoms home to sell.
Possible or Probable do you think Aberdeen?


#2

Trump, I would have hoped that the CEO of any company would think their company was valuable…it’s just a question of whether that valuation is realistic and whether there are ‘interested’ parties who agree with that valuation. From Mr B’s talk of punchy numbers then there would appears to be at least one company who is still talking…but we don’t actually know the nature of the deal they are discussing…although most of us would prefer some form of TTT imo.

It would be interesting to know what Mr B thinks the company is realistically worth…but getting an answer may be expecting too much.


#3

Definitely >1 interested party Oil.

As negotiations proceed, I would expect FUM to get a better feel from each party, a ball park figure for what each party thinks MED2002 (or more likely FUM) is worth.


#4

Trump
Agree with you
Will reply in more detail later on


#5

Yes Oil, I did try to find out in the past but you guessed it - no luck


#6

I see there are absolutely no timelines given on anything - Probably a good thing as I think everyone stopped believing them (the timelines) ages ago…It’ll happen whenever it happens.

It is reassuring that the design of phase 3 trials is incorporating the feedback from potential partners. If they can target the initial market which would be quite substantial, it means MED2002 achieves higher sales which in turn means more royalties if it’s a licensing deal being discussed. I also note, the words “Completion of a significant out-licensing agreement for MED2002 remains a top priority for the Company” - I hope it is indeed “significant” and if it’s a licensing deal, then I hope it comes with a significant upfront payment, showing commitment from the partner.

However I note, no progress on dossier submission for TPR100 by Stada/Thornton Ross… No Launches of CSD500… Even if they got regulatory approval for Kuwait, so what? It does not mean anything until we see launches. Furthermore I am convinced they received approval from the UAE earlier this year and were pretty eager to launch, so I’m sorry to say, something still smells fishy…IMHO, TTT is still not discounted…However whatever it turns out to be, as long as it’s significant, I couldn’t really care less.


#7

Agree about the absence of the timelines. Didn’t do FUM (and in particular Mr B) any favours whatsoever and now knowing a deal could be completed between tomorrow and eternity is quite comforting! But I do reckon we’re very very close to completion.

A very wishy washy mention of CSD with no attempt being made to explain the painfully slow progress re the launches, so I still strongly believe the new partner/TTT will buy out the CSD contracts which haven’t been launched (unless TTT of course then they’ll buy the whole lot - I can’t imagine it’ll cost much to terminate the Kabey deal, and non-launches I guess will cost next to nothing just like Church & Dwight walked away).

I know this never ending wait is really doing everyone’s head in and is extremely frustrating, but I still believe FUM are working very hard behind the scenes and it’ll be worth the wait. GLA.


#8

The wait is killing everyone I think, I’ve been counting the days down until the AGM for the past month (I’ve officially gone mad). Hopefully something might happen in terms of a deal before the end of the month but I could be being very optimistic. The no mention of any deadline isn’t good or bad really, the deal could either be really close to being finalised or could’ve had some sort of setback so they’d rather not put a date on it.


#9

I suppose re-iterating the deal is on track to be completed before the end of H1 (no matter how “certain”) is a very dangerous thing to do seeing there’s only a couple of weeks left. So maybe the mention of timelines at this (hopefully) late stage is not really an option.


#10

Yeah that’s a good point, I guess what they’ve done is the safest thing possible. I guess any deadline set could’ve been bad for the market as well. Push it back to early H2 the market will start to think they’ll never get a deal over the line, saying they’re on track for the end of H1 and not meeting it would be just as bad. I do believe that they will get a deal done it’s just when.


#11

I was at the AGM and the board got a bit of a grilling especially regards the non movement on CSD500 and the slow progress on MED.

I’m very positive though- there was a frank discussion, all spare cash is either being conserved or channelled to take MED forwards.

I personally think FUM are very weak on marketing, PR & somewhat on strategy. However, this is balanced by their strength in R&D.

Personally, for a small company to have such a good product pipeline on the very limited resource they have is very impressive.

Importantly (for me), the phase 3 trials are separated into part 1 & part 2. We just have the money & cashflow to get to the results of part 1. Now, part 2 is essentially a continuation of part 1. Hence, if part 1 results are very favourable, then it’s highly likely (especially with the fact that the active is welll researched) that part 2 will be fine.

We got a sense that there is a lot of interest in MED at this stage. IMHO, there’s a chance a deal may be done very soon but if not, I reckon by the very latest with the results of part 1 of the phase 3 trials (assuming they’re good).

The chairman seemed to get a little caught out by a Q regarding if Phyzer are involved in the discussion- he didn’t say anything directly but was very red Faced and repeatedly looked at JB.

I personally feel the future is the TTT we’ve all discussed at some length and I really think it’s not far off now (fingers crossed).

Thanks to lots of questioning from PI’s the 4.30pm meee went on past 6pm!

GLA


#12

Great post Fx it’s nice to hear from someone who actually went to the AGM and even better that you feel pretty positive from it all.

Just interested in what they said about CSD when you gave them a grilling about it?


#13

As previously mentioned, IMHO, I think FUM have a substantial weakness in not having anyone on the board with a credible sales & strategy background- it really does show.

When CSD was discussed, it’s discussed by the board in a very ‘grey, scientific, matter-of-fact’ manner- no passion, no talk of the potential (due to the very strong USP).

I think this filters right down to the ‘Blue Diamond’ branding. To me, it conjures up a product for elderly men. However, the fact in this market, the user would only consume a pack or two per annum. The real market lies with millenials (people in their 20’s and 30’s).

If I was involved in the CSD strategy, I would have first scoped the market (which as mentioned I think is the millenial market) and then hired a cutting edge marketing company to design and brand the CSD condoms. I would spend some money putting together a few example ads including a very (share-able) short video (for social media). Side by side, I would pay for an independent survey of the target age group and their thoughts of using the product in comparison to the leading ‘ordinary’ condom (durex). I’d also design the packaging for a ‘free sample’ pack.

All the reports of people actually using our condom are great. I truly believe it’s an outstanding product that could (in the right hands) make a serious dent in Durex’s market share. A great way to get people using our condom is a strategic cutting edge social media marketing campaign run side-by-side with giving out the free sample packs eg at music festivals. Targeted social media campaigns are very cost effective- the spend is far lower than TV or media advertising and can be more effective! I believe that once people use our condom, they wouldn’t want to return to Durex-we have a cutting edge erectogenic gel in a condom (where else would you get a pharmaceutical company inventing a condom product like this??).

If this "stategic marketing manual’ was given to prospective partners, I think someone like Church & Dwight would have followed through! Instead, they had to go away and try and evaluate everything about the condoms themselves including second guessing how much it may cost to advertise etc… If they had seen a strategic marketing vision as described, they would be far more excited and willing to take the ‘educated risk’ of presenting this product to the market place.

Instead (IMHO) what prospective partners see is a very ‘grey’ presentation-much like the 1980’s spitting image characterisation of John Major. That’s why I believe we are where we are on CSD!

Re CSD, the board were of the opinion they’re not a sales company and that, for any prospective partner to be able to get even very limited shelf space (next to Durex) would be difficult for any partner, and that once on that shelf, to get people to buy it would be even more difficult. Again, IMHO completely the wrong strategy! Make this an ‘online’ (not available in the shops) product. It adds a bit of ‘intrigue’ to your millenial buyers. Our partner would have a funky website where everyone can sign up for a free sample pack.

If I wasn’t so busy with my own business, I may have been inclined to take it on myself!

Doom and gloom re CSD aside, the board is very strong on the ‘science end’. Hence we have such a great product portfolio. The science side is the ‘nuts & bolts’ of the business- so this is great news.

CSD is not straight forward to ‘sell’ to a prospective partner due to the required up front investment and ‘non-guaranteed’ returns.

MED, on the other hand is a whole different ball game. IMHO, the ‘grey science-related’ approach is a good one. I think the board have clearly identified they have a weakness in ‘deal making’ and hence the advisors. To me, we are in a very strong position here- the press & research on MED speaks for itself. In terms of competition, I asked several questions regarding closest competitors, the strength of our patent and the possible longevity of it. On every front, I was very happy with the answers. My biggest worry was that a competitor could make a slightly differing formulation (of the drug delivery system of diluents). They cannot just tweak our formulation-they would have to have a very differing formulation which would mean they would have to start again from scratch to get it through all the various regulations. The board are also very confident that around 3 years after launch, we’ve got a great chance for MED to be OTC. And we all know how good MED is in comparison to Viagra.

As I mentioned before, once part one of the phase 3 trials are successfully completed, I truly believe we’ll be fighting off the bids (I hope they publish those results asap afterwards!)

When you sell a high end item at auction, if the auction estimate straddles the ‘fair value’ of the item, it doesn’t cause much excitement. However, when you have an auction estimate far below fair value, the item often sells for far in excess of the perceived fair value (everyone does their research and becomes committed to buying the item, thinking they’ll get a huge bargain). I see something very similar with FUM. We have a crazy-low valuation. So much so, that I can honestly state I’ve never come across an investment that is so under-valued. We are completely off the radar (at the moment).

I’m trying to learn not to ‘fret’ about the ridulously low share price at the moment (indeed, I topped up a bit more today!).

IMHO Happy days are coming very soon…


#14

To highlight our ridiculous valuation:

When MED is launched as a product and reaches £1 billion per annum in sales. The revenue from a fortnight of sales is equivalent to our current market capitalisation!!

This is nuts (but it presents an amazing, amazing opportunity which I’ve never seen the like of before!)


#15

Thanks for your feedback fx. Much appreciated. I also note the comments from the other boards and the general mood is a positive one.
With all due respect though (IMHO), I don’t think we will need to wait till the end of 2019 (as one of the scenarios touched upon in your posts) for a licensing deal. The company has been in advanced discussions for some time now, and if there are multiple parties and a deal is “near”, then I for one, would stop announcing dates.
Why? - because consider the following scenario…

  • There are a few companies in discussions with Futura Medical for outlicensing of MED2002 each with their own timeline and at different stages in discussion…
  • Futura announce that a deal is expected by end of the month or July for example, and it’s a totally unrealistic date for some of those companies then it becomes obvious to them that they are not in the mix or the preferred partner…
    -Should any complications arise at the last minute with the “preferred” partner, it significantly weakens Futura Medicals hand…as the other companies get to know things may have not gone to plan with the “preferred” partner.

So it makes total sense not to give dates…
However IMHO, I still expect to see a deal in the near future. I can’t see this being drawn out for too long given the interest…


#16

I agree Aberdeen

I think I may not have communicated effectively- I too, think a deal is likely to be done BEFORE the end of part 1 of the Phase 3 trials. This, as the big players will want to minimise the competition (& hence the price). Also, our safety profile, together with the fact the active compound is an old, established one and the fact we have permission to already use the gel (be it at a much reduced concentration) in the CSD condoms, makes it very unlikely we uncover anything controversial at Phase 3.

To me, the completion of part 1 of the phase 3 trials are our insurance policy (as near as is possible) to ‘guarantee’ a deal will take place.


#17

I assume FUM has advised that FUM want assistance with paying for the phase III trials.

It sounds like by the end of the first part of phase III money will be in short supply.
FUM must not allow a situation to occur where finances have become uncomfortably tight, such that stopping phase III trials is a real possibility.
This situation would be taken advantage of by interested parties, so a plan to avoid the above needs to be ready and good enough to implement.
I assume the advisors have forseen this and have focused JB’s attention on it.
A downpayment from each party to stay in consideration might be applicable, - FUM gets to continue testing, the payers get to stay in contention…
Forcing the issue like this might provoke the ‘auction’ we thought might happen.

Alternatively FUM could announce a date by which offers for a global distribution deal needs to be on the table and a winning bid identified.
Any subsequent ‘auction’ might ensue.

By the end of this year time will not be on JB’s side due to rate of cash burn, and he will have to make a move on these interested parties whether he wants to or not.


#18

Thanks for the feedback, fx2452, very informative.

I suppose it shouldn’t surprise us re FUM’s weakness on the marketing/selling side. I think it’s always been their intention to out-license all that aspect and just sit back and take the royalties.

Looks like CSD is dead. I understand why ………. MED is a far bigger asset and with its rapid speed of onset and categorisation as a sexual performance product maybe they see a selling point as using it in conjunction with a condom anyway which would make the CSD concept somewhat redundant. I take on board your comments about more aggressive online marketing and selling of CSD, fx2452, but I still think it’s a massive task to make any inroads at all into Durex ……… it would take years to build up significant production for starters, and it would certainly need the assistance of a huge distributor (aka Durex) or many regionals. FUM couldn’t do this alone IMO.

Question, fx2452. Were all members of the board at the AGM (including newbie Angela) and who did most of the talking? Who impressed you most (and least!).


#19

Hi FX2452

Many thanks for your efforts attending and recording the AGM proceedings.

It is reported on ADVFN FUM BB today that “JB emphasised that there was no licensing connection between the two ie interested parties in MED are bot (not?) interested in CSD”
If possible, can you confirm this was the case please?
Thanks.