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Futura’s blue sky opportunity

The company is undertaking a Phase III clinical study for its flagship product, MED2005, a breakthrough topical gel for erectile dysfunction, with a view to seeking a partner or selling the asset

Futura Medical (FUM:14.75p), a pharmaceutical company that is developing a portfolio of innovative products based on its proprietary, transdermal Dermasys drug delivery technology, is on track to release headline data by the year-end from its Phase III clinical study for flagship product MED2005, a breakthrough topical gel for erectile dysfunction (ED). The data will help facilitate ongoing discussions with commercial partners. The 1,000 patient study is being run across 60 centres in central and eastern Europe to ensure patients are recruited quickly and efficiently, and has the requisite regulatory and ethics clearance from all nine countries involved.

To put the size of the global market for Futura’s treatment into perspective, ED disrupts the lives of at least one in five men around the world, affecting the sexual and emotional health of 27m men and their partners in the US alone. However, there has been little innovation in ED treatments for over a decade and many patients continue to suffer dissatisfaction from existing treatments (oral inhibitors) especially those looking for a fast-acting treatment that can form part of sexual foreplay, or those that are contraindicated from using existing therapies. Indeed, at least 10 per cent of patients are unable to take oral inhibitors because they are on nitrate therapy, so would benefit from MED2005.

Bearing this in mind, in pharmacokinetic (PK) studies, MED2005 has shown to lead to a rapid rate of glyceryl trinitrate (GTN) absorption, with first detection in blood plasma in four to five minutes, reaching peak levels in the bloodstream within 10 to 12 minutes for all doses. These findings are consistent with a product that has shown a rapid onset of action in Futura’s Phase 2a study. Furthermore, there is a low GTN residue on the skin at five minutes even with a high 0.6 per cent GTN MED2005 dose, providing reassurance that there is likely to be minimal risk in transference of GTN to the sexual partner during intercourse, even at the higher doses.

These findings support the side-effect profile seen in Futura’s earlier Phase 2a study, where only four, mild side effects were seen in sexual partners out of 1,003 sexual intercourse attempts. Data presented by the company at the European Society of Sexual Medicine (ESSM) congress confirmed the favourable safety profile for female partners a fortnight after I included the shares at the current price in my 2019 Bargain Shares portfolio.

Importantly, Futura has funding in place to meet the £8m cost of the Phase III study and a long-term open-label study in order to provide additional safety reassurance. Following an equity raise at the end of last year, the company closed 2018 with net funds of £9.1m, and will benefit from significant research and development (R&D) tax credits, too. If all goes to plan, 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 is not only huge for the treatment, but so too is the profit potential given that MED2005 has independently assessed market potential of over $1bn (£770m) in annual sales from both prescription and over-the-counter sales priced at $5 (£3.90) per dose. The prescription market alone is worth over $5.6bn. The cost is expected to be less than €0.30 per dose (26.5p), so the profit margin to be earned is eye-catching.

Clearly, the shares are not for the faint-hearted, but if you can stomach the risk then Futura’s share price has the potential to multiply many times over if the £30m market capitalisation company delivers the headline data that potential commercial partners are looking for. So, having taken into account the latest update from the directors, I continue to rate the shares a buy.

 

■ Simon Thompson's new book Successful Stock Picking Strategies and his second book Stock Picking for Profit can be purchased online at www.ypdbooks.com, or by telephoning YPDBooks on 01904 431 213 to place an order. The books are being sold through no other source and are priced at £16.95 each plus postage and packaging of £2.95, or £3.75 if you purchase both books. Details of the content of both books can be viewed on www.ypdbooks.com.