TIDMFUM
RNS Number : 6251J
Futura Medical PLC
13 September 2016
For immediate release 13 September 2016
Futura Medical plc
("Futura" or "the Company")
Interim Results for the six months ended 30 June 2016
Futura Medical plc (AIM: FUM), the innovative healthcare company
focused on advanced transdermal technology, is pleased to announce
its interim results for the six months ended 30 June 2016.
Highlights
-- MED2002 Eroxon(R) (treatment for erectile dysfunction) -
pivotal efficacy study completed with breakthrough results in US$5
billion market
-- MED2002 Eroxon(R) - peak estimated annual sales potential in excess of US$500 million
-- CSD500 (erectogenic condom) - commercial order manufactured
for licensee partner ready for Q4 2016 launch
-- CSD500 - two new licensing agreements signed, manufacturing
agreement signed for second facility with regulatory approval
expected shortly
-- Pain relief products TPR100 (diclofenac) and TIB200
(ibuprofen) - strong commercial interest for both products with
discussions at advanced stage
-- Net loss of GBP1.89 million in the period (H1 2015: net loss
GBP2.47 million), reflecting planned reduction in R&D
expenditure
-- Cash resources of GBP2.90 million at 30 June 2016 (30 June 2015: GBP7.23 million)
James Barder, Futura's Chief Executive, commented: "We continue
to make good progress in the clinical and commercial development of
our portfolio of product opportunities. This was highlighted last
week with the announcement of positive clinical study results for
MED2002. We are increasingly excited about MED2002's commercial
potential as well as the first partner launch of CSD500 later in
the year and the first pain relief out-licensing deal."
Analyst meeting and webcast
A meeting for analysts will be held at 10am this morning, 13
September 2016, at the offices of Buchanan, 107 Cheapside, London
EC2V 6DN. There will be a live webcast of the analyst presentation.
To listen to the webcast, please log on to the following web
address approximately 5 minutes before 10.00am:
http://vm.buchanan.uk.com/2016/futuramedical130916/registration.htm
A recording of the webcast will also be made available at
www.futuramedical.com and www.buchanan.uk.com following the results
meeting.
For any further information please contact:
Futura Medical plc
James Barder, Chief Executive Tel: +44 (0)1483 685 670
mail to: james.barder@futuramedical.com www.futuramedical.com
N+1 Singer (Nominated Adviser and
Broker)
Aubrey Powell / Liz Yong Tel:+44 (0) 20 7496 3000
For media enquiries please contact:
Buchanan
Mark Court / Sophie Cowles / Stephanie Tel: +44 (0)20 7466 5000
Watson
Notes to Editors
Futura Medical plc
Futura Medical is a pharmaceutical group that develops
innovative products for consumer healthcare. The Company is
developing a portfolio of products and its strategy is to license
their manufacture and distribution to major pharmaceutical and
healthcare groups.
Futura is based in Guildford, Surrey, and its shares trade on
the AIM market of the London Stock Exchange.
www.futuramedical.com
Chairman's and Chief Executive's Review
During the first half of our financial year we continued to make
good progress in the clinical and commercial development of our
portfolio of product opportunities. The pace of progress has
continued in the second half, highlighted last week with the
announcement of positive clinical study results for MED2002, our
topical gel for erectile dysfunction. Since announcing the results,
we have continued to analyse the data and the full study report
will be issued later in the year. We are increasingly excited about
MED2002's commercial potential and research commissioned in the USA
by Futura indicated that MED2002 could achieve peak annual sales in
excess of US$500 million.
We have made considerable progress throughout our portfolio.
CSD500, our novel erectogenic condom, is close to regulatory
approval for a longer shelf life and partner launch. Our two pain
relief products have attracted a high level of interest from
potential commercial partners and we anticipate signing at least
one agreement this year.
This progress has been enabled by the GBP12 million fundraising
in March 2014, one of the major benefits of which was allowing us
to develop our three core product opportunities in parallel rather
than sequentially.
As previously indicated, the shelf life of CSD500 has been
holding back the launch of the product by our commercial partners.
It is very pleasing to be able to confirm that this hurdle has been
overcome through modifications to the manufacturing process.
Regulatory submissions to enable an extended shelf life of at least
18 months have been filed for both our European manufacturer and
for TTK Protective Devices Limited ("TTK"), the Indian manufacturer
with whom we have also signed a distribution agreement. In the past
week we have heard from the regulators that there are no major
outstanding issues on the TTK submission and we therefore
anticipate the first approval of these submissions shortly.
Blue Diamond(R) , our own brand of the CSD500, has been
available in the Netherlands since October 2014 under the 12 month
shelf life approval. The product, which has limited marketing
support, continues to provide valuable feedback and data from
users. Up to 40% of users report that they experience a benefit
from using Blue Diamond(R) and we are very pleased with the
product's quality and safety. This is very encouraging and supports
our view that CSD500 can achieve at least a 10 per cent share of
the international condom market given appropriate marketing
support.
Our two non-steroidal, anti-inflammatory drug ("NSAID") pain
relief products both showed statistically significant pain relief
in a pivotal clinical study completed last year. Our focus with
these products in the first half has been on advancing their
out-licensing. We appointed an adviser to assist us in the
out-licensing process and we are pleased to report that we are at
the heads-of-terms stage with a number of potential partners.
In March 2016, we announced the appointment of Ken James, the
former head of consumer healthcare R&D at GlaxoSmithKline, as a
Non-Executive Director. Mr James brought more than 200 innovative
consumer healthcare products to market during an executive career
spanning four decades. We are already benefiting from his input to
the Company.
Having completed the MED2002 study in the first half of this
year, and the pain relief clinical study last year, our costs are
now significantly lower than a year ago. Our balance sheet remains
strong with cash resources of GBP2.90 million at 30 June 2016 (30
June 2015: GBP7.23 million).
Portfolio updates - Sexual healthcare
CSD500: Condom containing the erectogenic Zanifil(R) gel
CSD500 benefits from three clinically proven claims: the
maintenance of a firmer erection, maximised penile size and a
longer lasting sexual experience for women. CSD500, which gained CE
marking in 2013, represents real innovation in an industry where
there has been limited new product development. Futura's unique
intellectual property position for CSD500 has been protected
throughout the world. We are continuing to progress a further
patent application worldwide based on our extended shelf life
manufacturing process, which we anticipate will extend patent
protection for CSD500 through to 2033.
CSD500 has been out-licensed on a territorial basis worldwide
and our existing licensee partners cover a total of 39 countries
including major commercial markets in North America and Europe.
During the first half, we signed a licensing agreement with Milsing
for the marketing and distribution of CSD500 in seven territories
in Southeast Europe including Croatia and Serbia and also with TTK
for marketing and distribution within India. TTK owns the fastest
growing condom brand in India, SKORE(R) , and it is intended that
CSD500 will be part of the SKORE(R) brand.
We continue in discussion with potential licensing partners for
areas where we have not yet licensed the product, including South
America and further regulatory submissions are underway in a number
of territories worldwide including the Middle East, Asia and South
America.
Commercial manufacture of product for the launch of CSD500 in
the first Middle East country, where regulatory approval has
already been granted, has already taken place with the launch
expected later this year. The initial royalty payment has already
been received for this and will be recognised upon launch. We
anticipate further launches of the product in other territories
during 2017.
Considerable progress was also made during the first half with
the manufacturing strategy for CSD500. In June, we announced that
India's TTK, a pioneer in condom manufacture, will also produce
CSD500 for worldwide supply. It is intended that TTK will be
complementary to our existing European manufacturer and a
regulatory filing has been made with EU regulatory authorities to
grant TTK the relevant authorisation to manufacture the
product.
MED2002: Eroxon(R) Treatment for erectile dysfunction
MED2002, which uses our DermaSys(R) drug delivery system, is the
development name for our topical gel for the treatment of men with
erectile dysfunction ("ED"). We hold worldwide rights to the
product and have registered the brand name Eroxon(R) .
Whilst MED2002 shares the same active ingredient as our consumer
healthcare product CSD500, we have been developing MED2002 as a
prescription-only product. This is because it is addressing the
medical indication of ED whereas CSD500 has been developed for
healthy men who are sometimes unable to maintain an erection whilst
using a condom.
In Europe, MED2002 has patent protection until 2025 and in the
USA it has patent protection until 2028.
The ED market is dominated by PDE5 inhibitors, such as Viagra(R)
, which are taken orally and take around an hour or more to take
effect. In market research commissioned by Futura, a survey
conducted in the US involving 200 physicians and 400 ED patients
found that the top three characteristics patients and physicians
desired in a new ED treatment were: fast onset, safety, and ability
to be used by all ED patients. As a topical treatment, MED2002 has
been developed to meet these requirements of physicians and
patients by offering a safe and effective treatment with a rapid
speed of onset and no contraindications for ED sufferers.
Currently, approximately 7.5% of ED sufferers are unable to be
prescribed PDE5 inhibitors due to contraindications with nitrate
medicines taken by them for cardiovascular conditions. These
patients are a target market for MED2002 as its active ingredient,
glyceryl trinitrate, is unlikely to be contraindicated.
In October 2015, the Company signed an agreement with Quantum
Pharma Plc under which MED2002 is available for prescription as a
special. Specials are medicines that have not been authorised and
which are requested and prescribed on a named patient basis by
appropriately qualified doctors under their own authority. It is
intended that MED2002 will remain available as a special until it
gains marketing authorisation.
Our primary focus during the half year for the development of
MED2002 has been on the pivotal clinical study, whose positive
results were announced last week. In summary, the study met its
primary endpoint and MED2002 showed efficacy, safety and speed of
onset.
The study, which began in June 2015, comprised a total of 232
randomised males and it measured, as its primary endpoint,
improvement in the erectile function ("EF") domain score of the
International Index of Erectile Function ("IIEF"), the scoring
system used for the approval of PDE5 inhibitors. The study, which
used one dosage of 0.2% w/w glyceryl trinitrate gel, was of a
placebo-controlled, double blind, home use, crossover design.
The study which included mild, moderate and severe ED patients,
achieved its primary endpoint in demonstrating a statistically
significant improvement in erectile function (p-value = <
0.0132) in the EF domain score, averaged across the entire patient
set, when using MED2002 compared with placebo.
The study also achieved statistical significance (p-value = <
0.0272) in its secondary endpoint for the number of patients with
an increase from baseline in the EF domain greater than or equal to
4, which is published as a minimally clinically important
difference ("MCID").
The results for the MCID analysis in the mild ED patient
sub-group were highly statistically significant (p-value = <
0.0001) with over twice as many patients reporting an MCID greater
than or equal to 4 when using MED2002 compared with placebo.
The results for the MCID analyses in the moderate and severe ED
patient sub-groups were not found to be statistically significant,
however a higher dose may provide increased efficacy in these
groups.
The speed of onset of action of MED2002 was rapid, partly
reflecting the method of application with the gel being applied
directly to the penis. 82% of patients with mild ED had an onset of
action within 10 minutes and 54% of mild ED patients had an onset
of action within 5 minutes. This rapid onset of action means that
MED2002 has the potential to be the world's fastest-acting
treatment for ED.
No major safety concerns were identified. No serious adverse
events or serious adverse reactions were recorded and there were no
drop-outs from the study owing to side-effect issues. Fewer than 2%
of patients reported mild side-effects of a headache, which is
considered a very low percentage in pharmaceutical terms.
The study results give us great confidence in the future
development of the product. Professor David Ralph (former president
of European Society for Sexual Medicine) stated "The positive data
from this study provides an exciting new innovation with the
potential to be a first line therapy in erectile dysfunction.
MED2002 has the required efficacy, speed of onset and safety
profile consistent for an over-the-counter as well as prescription
use product. MED2002, for the first time in the treatment of ED,
has the potential to meet the needs of primary care providers and
of patients."
In parallel to our commercial out-licensing discussions we are
continuing to develop the commercial strategy and have assumed the
requirement for a second pivotal clinical study in line with the
standard requirements of regulatory authorities. A scientific
advice meeting within the EU has already been requested and we
intend to request a pre-investigational new drug ("IND") meeting
also with US regulators later in the year to confirm the
requirements for marketing authorisation.
The total worldwide market for all ED treatments is estimated at
US$5.0 billion. Current sales for oral treatments are approximately
US$4.3 billion worldwide. Research commissioned by Futura in the
USA estimated that the contraindicated market for MED2002 could be
worth over US$0.3 billion. The balance of US$0.4 billion is made up
of other treatments: intra-urethral, injections and non-invasive
devices. With superior speed of onset, compelling safety profile
and the potential to switch to over-the-counter we believe that
MED2002 as a first line therapy could achieve peak annual sales in
excess of US$500 million.
Portfolio updates - Pain relief management
Topical pain relief
The rapid skin permeation rates offered by Futura's transdermal
delivery system, DermaSys(R) , have created a major opportunity in
topical pain relief. Rapid skin permeation offers potential
benefits in pain management including: improved onset of action,
duration and degree of pain relief. DermaSys(R) also allows the
potential to have a twice a day dosing regimen which provides a
compelling commercial proposition for ibuprofen which is currently
dosed three to four times per day.
During 2015, Futura demonstrated statistically significant
results from its two NSAID programmes, TPR100 (2% diclofenac gel)
and TIB200 (10% ibuprofen gel), in a clinical study.
The clinical study of a total of 60 subjects compared Futura's
products against a placebo. It also compared them against currently
marketed products to show equivalence, which is a strategy
frequently used in the consumer healthcare industry as it gives the
potential for strong marketing claims, such as superior delivery of
drug (through the skin) whilst reducing the clinical requirements
for regulatory approval. No comparator product, topical or oral
outperformed our two NSAID products.
Our objective is for our 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 on 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 billion.
We continue to work on regulatory submissions for territories
within the EU for both products though anticipate that in due
course these submissions will be taken over by commercial
partners.
In Europe we believe that the two products could be launched
over-the-counter and potentially, depending on the indication, on a
prescription basis. In the US, we expect that TPR100 only is likely
to be made available on a prescription only basis and will require
additional clinical data. A pre-IND meeting has been requested with
the US Food & Drug Administration.
During the first half of 2016, our focus has been on the
commercialisation of these two products. We appointed an adviser to
assist us in the out-licensing process and we are now at the
heads-of-terms stage with a number of potential partners. It is a
reflection of the robustness of the clinical data generated last
year that the two products have attracted considerable interest
from major pharmaceutical and consumer healthcare companies. In the
current year, we anticipate signing at least one of a number of
potential regional licensing deals.
Finance
Cash and cash equivalents at 30 June 2016 were GBP2.90 million
(30 June 2015: GBP7.23 million) with a net cash outflow of GBP1.29
million in the period.
In the period under review, we earned royalty and milestone
payments of GBP67k (H1 2015: GBP16k). The loss for the period ended
30 June 2016 was GBP1.89 million (H1 2015: GBP2.47m). Research and
development ("R&D") costs of GBP1.79 million were lower than
for the corresponding period (H1 2015: GBP2.48 million), as the
rate of development expenditure on the relevant clinical studies
was concentrated in 2015. Other administrative costs of GBP549k
were slightly lower than that for the corresponding period (H1
2015: GBP558k) as we continue to manage our financial resources
carefully.
Outlook
We continue to make good progress in the clinical and commercial
development of our portfolio of product opportunities. This was
highlighted last week with the announcement of positive clinical
study results for MED2002. We are increasingly excited about
MED2002's commercial potential as well as the first partner launch
of CSD500 later in the year and the first pain relief out-licensing
deal.
Group Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Notes GBP GBP GBP
Revenue 1.5 66,900 16,141 29,476
Research and development costs (1,785,356) (2,480,175) (4,778,039)
Administrative costs (548,803) (558,078) (1,368,240)
Operating loss (2,267,259) (3,022,112) (6,116,803)
Finance income 7,037 20,068 38,325
Loss before tax (2,260,222) (3,002,044) (6,078,478)
Taxation 369,058 535,594 997,036
---------------------------------- ------ --------------------- --------------------- ---------------------
Total comprehensive loss for the
period attributable to owners
of the parent company (1,891,164) (2,466,450) (5,081,442)
---------------------------------- ------ --------------------- --------------------- ---------------------
Loss per share (pence) 3 (1.91p) (2.49p) (5.13 pence)
---------------------------------- ------ --------------------- --------------------- ---------------------
All amounts relate to continuing activities.
The notes form part of the Group interim financial
information.
Group Statement of Changes in Equity
Share Share Merger Retained Total
Capital Premium Reserve Losses Equity
GBP GBP GBP GBP GBP
At 1 January
2015 -
audited 198,045 33,028,735 1,152,165 (24,657,134) 9,721,811
--------------- ------------------ ------------------- ----------------- -------------------- -------------------
Total
comprehensive
loss for the
period - - - (2,466,450) (2,466,450)
Share-based
payment - - - 47,159 47,159
At 30 June 2015
- unaudited 198,045 33,028,735 1,152,165 (27,076,425) 7,302,520
--------------- ------------------ ------------------- ----------------- -------------------- -------------------
Total
comprehensive
loss for the
period - - - (2,614,992) (2,614,992)
Share-based
payment - - - 73,953 73,953
Shares issued
during
the period 140 24,610 - - 24,750
At 31 December
2015
- audited 198,185 33,053,345 1,152,165 (29,617,464) 4,786,231
--------------- ------------------ ------------------- ----------------- -------------------- -------------------
Total
comprehensive
loss for the
period - - - (1,891,164) (1,891,164)
Share-based
payment - - - 60,200 60,200
At 30 June 2016
- unaudited 198,185 33,053,345 1,152,165 (31,448,428) 2,955,267
--------------- ------------------ ------------------- ----------------- -------------------- -------------------
Share premium represents amounts subscribed for share capital in
excess of nominal value, less the related costs of share
issues.
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 using merger
accounting under UK GAAP.
Retained losses represent cumulative net losses recognised in
the Group Statement of Comprehensive Income. The total
comprehensive loss for the year represents the total recognised
income and expense for the year.
The notes form part of the Group interim financial
information.
Group Statement of Financial Position
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
Notes GBP GBP GBP
Assets
Non-current assets
Plant and equipment 17,283 22,550 20,115
Total non-current assets 17,283 22,550 20,115
---------------------------------- ----- ---------------- ---------------- ----------------
Current assets
Inventories 197,733 194,757 163,767
Trade and other receivables 4 179,114 253,228 146,137
Current tax asset 369,058 535,594 997,036
Cash and cash equivalents 5 2,900,248 7,234,528 4,188,294
---------------------------------- ----- ---------------- ---------------- ----------------
Total current assets 3,646,153 8,218,107 5,495,234
---------------------------------- ----- ---------------- ---------------- ----------------
Liabilities
Current liabilities
Trade and other payables (708,169) (938,137) (729,118)
---------------------------------- ----- ---------------- ---------------- ----------------
Total liabilities (708,169) (938,137) (729,118)
---------------------------------- ----- ---------------- ---------------- ----------------
Total net assets 2,955,267 7,302,520 4,786,231
---------------------------------- ----- ---------------- ---------------- ----------------
Capital and reserves attributable
to
owners of the parent company
Share capital 198,185 198,045 198,185
Share premium 33,053,345 33,028,735 33,053,345
Merger reserve 1,152,165 1,152,165 1,152,165
Retained losses (31,448,428) (27,076,425) (29,617,464)
---------------------------------- ----- ---------------- ---------------- ----------------
Total equity 2,955,267 7,302,520 4,786,231
---------------------------------- ----- ---------------- ---------------- ----------------
The notes form part of the Group interim financial
information.
Group Statement of Cash Flows
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
Cash flows from operating activities
Loss before tax (2,260,222) (3,002,044) (6,078,478)
Adjustments for:
Depreciation 3,332 3,304 6,958
Finance income (7,037) (20,068) (38,325)
Share-based payment charge 60,200 47,159 121,112
--------------------------------------- ---------------------- ---------------- ----------------
Cash flows from operating activities
before changes
in working capital (2,203,727) (2,971,649) (5,988,733)
--------------------------------------- ---------------------- ---------------- ----------------
(Increase) in inventories (33,966) (53,240) (22,250)
(Increase) / decrease in trade and
other receivables (21,815) (68,603) 45,212
(Decrease) / increase in trade and
other payables (45,724) 330,251 121,232
--------------------------------------- ---------------------- ---------------- ----------------
Cash used in operations (2,305,232) (2,763,241) (5,844,539)
--------------------------------------- ---------------------- ---------------- ----------------
Income tax received 997,036 480,689 480,689
--------------------------------------- ---------------------- ---------------- ----------------
Net cash used in operating activities (1,308,196) (2,282,552) (5,363,850)
--------------------------------------- ---------------------- ---------------- ----------------
Cash flows from investing activities
Purchase of plant and equipment (500) (14,739) (15,958)
Interest received 20,650 40,043 51,576
Cash generated by investing activities 20,150 25,304 35,618
--------------------------------------- ---------------------- ---------------- ----------------
Cash flows from financing activities
Issue of ordinary shares - - 24,750
Expenses paid in connection with share - - -
issues
Cash generated by financing activities - - 24,750
--------------------------------------- ---------------------- ---------------- ----------------
Decrease in cash and cash equivalents (1,288,046) (2,257,248) (5,303,482)
Cash and cash equivalents at beginning
of period 4,188,294 9,491,776 9,491,776
--------------------------------------- ---------------------- ---------------- ----------------
Cash and cash equivalents at end of
period 2,900,248 7,234,528 4,188,294
--------------------------------------- ---------------------- ---------------- ----------------
The notes form part of the Group interim financial
information.
Notes to the Group Interim Financial Information
1. Accounting policies
1.1 Basis of preparation
The unaudited Interim Report was approved by the Board of
Directors on 12 September 2016.
The interim financial information for the six months ended 30
June 2016 and for the six months ended 30 June 2015 does not
constitute statutory accounts within the meaning of section 434(3)
of the Companies Act 2006 and is unaudited.
The Group financial information for the year ended 31 December
2015 which has been extracted from the financial statements of the
statutory accounts ("Annual Report") of Futura Medical plc, which
were prepared in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the European Union and
International Financial Reporting Interpretations Committee
("IFRIC") interpretations that were applicable for the year ended
31 December 2015, does not constitute the full statutory accounts
for that period. The Annual Report for 2015 has been filed with the
Registrar of Companies. The Independent Auditor's Report on those
financial statements was unqualified, did not draw attention to any
matters by way of emphasis and did not contain a statement under
sections 498(2) or 498(3) of the Companies Act 2006.
1.2 Going concern
The Group had cash balances of GBP2.90 million at 30 June 2016,
with a net cash outflow of GBP1.29 million in the period.
The Interim Report has been prepared on the going concern basis
which assumes that the Group will continue in operational existence
for the foreseeable future. The financial statements do not reflect
any adjustments that would be required if they were to be prepared
on a basis other than the going concern basis.
1.3 Accounting developments
The following amendments have been adopted in the period however
the Directors do not expect them to have a material effect on the
Group financial statements:
-- Amendments to IAS 16 and IAS 38: Clarification of Acceptable
Methods of Depreciation and Amortisation
-- Disclosure Initiative: Amendments to IAS 1 Presentation of Financial Statements
The following new standards, amendments and interpretations,
which are not yet effective and have not been adopted early in
these financial statements, will or may have an effect on the
Group's future financial statements:
-- IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018)
-- IFRS 9 Financial Instruments (effective 1 January 2018)
-- IFRS 16 Leases (effective 1 January 2019)
1.4 Basis of consolidation
Where the Company has the power, either directly or indirectly,
to govern the financial and operating policies of another entity or
business, so as to obtain benefits from its activities, it is
classified as a subsidiary. The Group financial information present
the results of the Company and its subsidiaries Futura Medical
Developments Limited and Futura Consumer Healthcare Limited as if
they formed a single entity ("the Group"). Intra-group transactions
and balances are eliminated in preparing the Group financial
information.
1.5 Revenue
Revenue comprises the fair value received or receivable for:
exclusivity arrangements, consultancy fees, milestone income or
royalties, net of value added tax.
The accounting policies for the principal revenue streams of the
Group are as follows:
(i) Exclusivity arrangements and similar agreements are
recognised as revenue in the accounting period in which the related
services, or required activities, are performed or specified
conditions are fulfilled in accordance with the terms of completion
of the specific transaction.
(ii) Consultancy fees are recognised as revenue in the
accounting period in which the revenue becomes receivable.
(iii) Non-refundable milestone income is recognised as revenue
in the accounting period in which the milestones are achieved. If
any milestone income is creditable against royalty payments then it
is deferred and released to the Group Statement of Comprehensive
Income over the accounting periods in which the royalties would
otherwise be receivable.
(iv) Royalty income relating to the sale by a licensee of
licensed product is recognised on an accruals basis in accordance
with the substance of the relevant agreement and based on the
receipt from the licensee of the relevant information to enable
calculation of the royalty due.
1.6 Leased assets
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 Group Statement of Comprehensive Income
on a straight-line basis over the lease term. The Group does not
hold any assets under finance leases.
1.7 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.
Capitalised development costs are amortised over the periods in
which the Group expects to benefit from selling the products
developed but not exceeding five years. The amortisation expense is
included in R&D costs recognised in the Group Statement of
Comprehensive Income. The useful life and the value of the
capitalised development cost are assessed for impairment at least
annually. The value is written down immediately if impairment has
occurred and the unimpaired cost amortised over the reduced useful
life. The Directors consider that the criteria to capitalise
development expenditure are not met for a product prior to that
product being commercially launched in at least one country.
Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects are included
in R&D costs recognised in the Group Statement of Comprehensive
Income as incurred.
Patents and trademarks
The costs incurred in establishing patents and trademarks are
either expensed or capitalised in accordance with the corresponding
treatment of the development expenditure for the product to which
they relate.
1.8 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 Group 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 its estimated useful
life.
The assets' residual values and useful lives are determined by
the Directors and reviewed and adjusted if appropriate at each
Group Statement of Financial Position date.
1.9 Impairment of non-financial assets
Assets that are subject to depreciation are reviewed for
impairment on a half-yearly basis and when events or circumstances
suggest that the carrying amount may not be recoverable. For the
purpose of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash
generating units). An impairment loss is recognised immediately in
the Group Statement of Comprehensive Income for the amount by which
the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of fair value, less disposal
costs, and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss is recognised immediately in the
Group Statement of Comprehensive Income.
1.10 Inventories
Inventories are materials and supplies to be consumed in the
course of R&D 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 Group Statement of
Comprehensive Income in respect of obsolete, slow-moving or
defective items, where appropriate.
1.11 Financial instruments
Financial assets
The Group classifies its financial assets in the category of
loans and receivables, comprising 'trade and other receivables' and
'cash and cash equivalents'. They are recognised initially at fair
value and subsequently at amortised cost using the effective
interest rate method.
Trade and other receivables are recognised initially at fair
value and are subsequently measured at amortised cost using the
effective interest rate method, less an estimate made for
impairment based on a review of all past due amounts at the year
end. A provision for impairment of trade and other receivables is
established when there is objective evidence that the Group will
not be able to collect all amounts due. If an impairment loss is
required the carrying amount of the trade or other receivable is
reduced through the use of an allowance account and the amount of
the loss recognised immediately in the Group Statement of
Comprehensive Income in administrative costs.
Cash and cash equivalents are financial assets and comprise cash
in hand and sterling fixed rate deposits which are held by the
Group so as to be available to meet short-term cash
commitments.
The Group assesses at each Group Statement of Financial Position
date whether there is objective evidence that a financial asset is
impaired.
Financial liabilities
The Group's financial liabilities comprise 'trade and other
payables' recognised initially at fair value and subsequently at
amortised cost using the effective interest rate method.
1.12 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 Group 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 Group 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 Group
Statement 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.
1.13 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 Group Statement of
Comprehensive Income in the period in which they arise.
1.14 Employee benefits
(i) Defined contribution plans
The Group provides retirement benefits to all employees and
Executive Directors 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 Group Statement
of Comprehensive Income in the period in which they become
payable.
(ii) Accrued holiday pay
Provision is made at each Group Statement of Financial Position
date for holidays accrued but not taken at the salary of the
relevant employee at that date. The expected cost of compensated
short-term absence (i.e. holidays) is charged to the Group
Statement of Comprehensive Income on an accruals basis.
(iii) 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 Group 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 Group 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 Group 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
HMRC joint election to transfer the employers' national insurance
contribution potential liability to the employee, therefore no
Group asset or liability arises.
(iv) Long-term incentive scheme
The Group operates a long-term incentive plan for staff and the
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 can exercise
discretion in settling any award in equity or in cash.
1.15 Finance income
Interest income is recognised on a time-proportion basis using
the effective interest rate method.
1.16 Critical accounting estimates and judgements
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.
Judgements
(i) Revenue recognition
Fees invoiced in respect of non-refundable milestones have been
recognised as revenue in the Group Statement of Comprehensive
Income in the period when all criteria for revenue recognition have
been met.
(ii) Intangible asset recognition
The Directors consider that the criteria to capitalise
development expenditure are not met for a product prior to that
product being commercially launched in at least one country.
(iii) Deferred tax recognition
The Directors consider that, given the current stage of
development of the business, deferred tax assets should not be
recognised before the Group is generating recurring royalty
revenue.
Estimates and assumptions
(iv) Fair value of financial instruments
The Group determines the fair value of financial instruments
using valuation techniques which can be significantly affected by
the assumptions used, including interest and discount rates and
estimates of future cash flows.
(v) Inventories
The Group reviews the net realisable value of its inventories on
a half-yearly basis to provide assurance that recorded inventories
are stated at the lower of cost or net realisable value. Factors
that could impact realisable value include: the timing and success
of future technological innovations in relation to product R&D,
competitor and Government actions, supplier prices and economic
trends.
(vi) Share-based payments
The Group operates an equity-settled share-based compensation
plan. Employee (and similar) services received and the
corresponding increase in equity are measured by reference to the
fair value of the equity instruments as at the date of grant.
2. Segment reporting
The Group is organised and operates as one business segment,
being the development of pharmaceutical drugs and medical devices
and their commercial exploitation. The main area of R&D
continues to be in the field of innovative products for the
consumer healthcare market with the focus being on sexual
healthcare and pain relief management. The Group manages any
overseas R&D from the UK, the primary business segment. Segment
revenue is based on the geographical location of the Group's
customers. Since there is currently only one business segment and
one geographical segment, no separate segment reporting has been
prepared.
3. Loss per share (pence)
The calculation of the loss per share is based on a loss of
GBP1,891,164 (six months ended 30 June 2015: loss of GBP2,466,450;
year ended 31 December 2015: loss of GBP5,081,442) and on a
weighted average number of shares in issue of 99,092,318 (six
months ended 30 June 2015: 99,022,600; year ended 31 December 2015:
99,022,600). The loss attributable to equity holders of the Company
for the purpose of calculating the fully diluted loss per share is
identical to that used for calculating the basic loss per share.
The exercise of share options, or the issue of shares under the
long-term incentive scheme, would have the effect of reducing the
loss per share and is therefore anti-dilutive under the terms of
IAS 33 'Earnings per Share'.
4. Trade and other receivables
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
Amounts receivable within one year:
Trade receivables 33,711 - -
Other receivables 46,401 114,094 49,578
Prepayments and accrued income 99,002 139,134 96,559
------------------------------------ ----------------- ----------------- ----------------
179,114 253,228 146,137
------------------------------------ ----------------- ----------------- ----------------
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 Group Statement of Financial
Position date is the fair value of each class of receivables.
5. Cash and cash equivalents
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
Cash at bank and in hand 70,021 8,921 44,110
Sterling fixed rate short-term
deposits 2,830,227 7,225,607 4,144,184
2,900,248 7,234,528 4,188,294
------------------------------- ----------------- ------------------- ----------------
6. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFUESEFMSEEU
(END) Dow Jones Newswires
September 13, 2016 02:01 ET (06:01 GMT)
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