fum on the move again ,load up guys while its still terrible undervalued .New recommendation out today for our fum
Bargain Shares for 2019
Futura Medical (FUM)
Aim: Share price: 14.75p
Bid-offer spread: 14.5-14.75p
Market value: £30.2m
Shares inFutura Medical (FUM), a pharmaceutical company that is developing a portfolio of innovative products based on its proprietary, transdermal Dermasys drug delivery technology and one that is focused on sexual health and pain, have been battered in the past 12 months, shedding 70 per cent of their value. They are also priced almost 90 per cent below their all-time high of 110p hit in 2012 after long-suffering shareholders became increasingly frustrated at the lack of licensing deals to monetise the company’s intellectual property.
However, sentiment has improved markedly since the company raised £5.85m, at 7p a share, through a placing and open offer last October. This boosted Futura’s cash pile to £11m and has provided the cash required for the company to take its flagship product, MED2005, a breakthrough topical gel for erectile dysfunction (ED), through Phase III development with a view to seeking a partner or selling the asset. Please note that MED2005 is the codename used by Futura for the ‘locked’ formulation for use in clinical trials. MED2002 is the codename used by Futura for all proprietary formulations of glyceryl trinitrate (GTN).
The cash raised also provides additional headroom for the long-term, open-label arm of the Phase III trial in Europe, which will provide additional safety reassurance as well as enabling Futura to conclude arrangements for a second, confirmatory Phase III trial. Expect top-line Phase III data from the first trial to be announced at the end of 2019.
Reasons for enthusiasm
It’s easy to see why investors are becoming enthusiastic as MED2005 has the potential to be a highly differentiated therapy for the treatment of men with ED, especially in mild and mild-to-moderate cases. MED2005’s rapid onset of action means that it has potential to become the world’s fastest-acting treatment for ED, with a speed of onset of around five minutes. Its rapid clearance offers a favourable safety profile too.
An earlier Phase I pharmacokinetic study highlighted that doses of 0.2 per cent, 0.4 per cent and 0.6 per cent of GTN were shown to be safe and well tolerated, along with an absorption profile to similar systemic doses of GTN in the form of Nitrostat. This will be the reference drug for safety, if Phase III data are positive, in the planned regulatory filings.
The Phase III study builds on Futura’s promising Phase II data, particularly in mild and mild-to-moderate ED patients, as scientifically published in the Journal of Sexual Medicine. This demonstrated rapid speed of onset with 44.2 per cent of patients reporting a positive impact within five minutes and 69.5 per cent reporting it within 10 minutes. This is significantly faster than oral PDE5 inhibitors (Viagra and Cialis) which typically have an onset of action of between 30 and 90 minutes.
Moreover, patient uptake research conducted by Cello Healthcare has highlighted that more than half of physicians consider that MED2005 is a significant improvement over currently available ED treatments and believe it could attract high levels of patient uptake, ranging from 20 to 33 per cent of the potential patient pools. In addition, at least 10 per cent of patients are unable to take oral inhibitors because they are on nitrate therapy, so would benefit from MED2005. An average of 72 per cent of physicians considered that helping to restore spontaneity and intimacy in their sexual relationship would be very appealing to their patients too.
Details of the Phase III study
The first European Phase III study of MED2005 involves the participation of 1,000 patients in 61 centres across nine countries: Czech Republic, Hungary, Poland, Slovakia, Georgia, Russia, Ukraine, Latvia and Bulgaria. The protocol is to incorporate feedback received from potential commercial partners, opinion-leading clinicians and also US and EU regulatory agencies to optimise the commercial value and maximise the likelihood of regulatory approval.
As part of the study, Futura will be conducting a long-term open-label study to provide additional safety reassurance involving 300 patients for six months, and 100 patients for 12 months across all 61 centres. The total cost of the first Phase III study and the long-term open-label study is expected to be £8m. A second Phase III study is planned to commence by the end of 2019 to test 700 patients in Eastern Europe and the US using two of the doses from the first Phase III study, and a placebo.
The market for ED undoubtedly offers Futura a huge opportunity. Independent market research conducted on the company’s behalf indicates MED2005 could generate potentially $1bn (£781m) in annual sales from both prescription and over-the-counter sales priced at $5 (£3.90) per dose. The prescription market alone was worth over $5.6bn in 2016. The profit margin on the product, which will have patent protection, is massive, too, as the cost is expected to be under €0.30 per dose (26.5p). Extensive work is being carried out to produce the chemistry, manufacturing and controls package required for regulatory submission and to establish the supply chain. A huge addressable market and profit margin makes this a blue-sky opportunity. However, it comes with a fair amount of risk too.
Other products in the portfolio
That said, the company is not a one-trick pony. Although the focus is firmly placed on the planned Phase III programme on MED2005, Futura is exploring ways to ensure income streams for its Erotogenic condom (CSD500) and pain relief gel products.
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. Futura has demonstrated statistically significant results from its two non-steroidal anti-inflammatory drug programmes, TPR100 (2 per cent diclofenac gel) and TIB200 (10 per cent 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.
Bearing this in mind, last summer Thornton & Ross filed the product’s marketing authorisation application with the UK Medicines and Healthcare Products Regulatory Agency. Futura has received expressions of interest from a number of parties that will enable the company to expand the geographical reach of TPR100, and in particular within the EU. However, it is awaiting regulatory authorisation in the UK, expected in 2019, before progressing further.
Futura’s CSD500 condom contains the erectogenic Zanifil gel and benefits from three clinically proven claims: the maintenance of a harder erection, maximising penile size and a longer lasting sexual experience. 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 the company’s manufacturing partners have the required approvals to ship CSD500 to any country in which the product is approved.
However, 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 is focusing its efforts on licensing the condom product and/or technology with partners. Futura still expects to benefit from the intellectual property of CSD500 through potential royalties, but in the absence of a large global brand ‘carrier’ to take the product forward, the immediate potential for substantial royalties is low. Discussions are ongoing with potential partners to license the product in a number of markets, but this has been the case for some time.
Potential for Futura’s share price to rise several-fold
Ultimately, the investment case rests on Futura delivering positive data results on the Phase III study of MED2005 to support the potentially huge market opportunity for the product. There is no hiding from the fact that the shares are speculative, and are highly volatile so not for the faint-hearted. But equally the company’s market capitalisation of £30.2m could increase several times over if the ongoing Phase III study proves successful, and a licensing deal with a partner is signed or the product is sold. Please note that the company will be hosting an R&D day for analysts and institutional investors on Monday 11 February 2019. Speculative buy.