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Edited Transcript of FUM.L earnings conference call or presentation 11-Sep-19 9:00am GMT

Half Year 2019 Futura Medical PLC Earnings Call

Surrey Sep 26, 2019 (Thomson StreetEvents) -- Edited Transcript of Futura Medical PLC earnings conference call or presentation Wednesday, September 11, 2019 at 9:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Angela Hildreth

Futura Medical plc - COO, Finance Director, Company Secretary & Director

* James Henry Barder

Futura Medical plc - CEO & Executive Director

* Kenneth William James

Futura Medical plc - Head of R&D & Executive Director

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Presentation

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Angela Hildreth, Futura Medical plc - COO, Finance Director, Company Secretary & Director [1]

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Good morning, everybody. Thank you for joining us at Futura Medical Interim Results for the period ending 30th of June 2019. I'm Angela Hildreth. I'm the Finance Director and COO. I'm joined by James Barder, who's our CEO; and Ken James, who is our Head of R&D.

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James Henry Barder, Futura Medical plc - CEO & Executive Director [2]

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Thank you, Angela.

Turning to Slide 4. A little bit of -- sort of a bit of our corporate overview.

Fundamentals for the company. We're listed on AIM. And we describe ourselves as a virtual organization with 15 staff and with low overheads. We have 2 -- actually, 3 service offices in Guildford. And we have a lot of our infrastructures outsourced with over 30 consultants.

Our key asset is our clinically proven transdermal science known as DermaSys, where we look to drive drugs through the skin. Ken will talk about that a little bit later during his presentation.

Our real track record is really around clinical innovation around driving existing drugs more efficiently through the skin. And we have a sexual health and pain relief focus and a late-stage product portfolio with an experienced management team.

Our key portfolio is really 2 products: MED2005, which is a topical gel for erectile dysfunction. Key differentiator on this is the rapid speed of onset, typically 5 to 10 minutes; and then we also have TPR100, which is a topical gel for pain relief.

Turning the slide to Slide 5, our 6 months sort of highlights. We made a decision last year to very much maximize our efforts around developing our R&D pipeline. And very much our priorities on that relate to MED2005. And we remain on track to complete our Phase III study by the end of this year. In addition to that, we are spending a lot of time and effort in increasing the awareness for MED2005 within both the scientific and pharmaceutical communities. As we said, the first Phase III FM57 recruitment completed back in June, and we remain on track for headline data by the end of this year. We've also made a statement today that 500 patients so far have completed the study with 80% of those patients electing to continue into the open label extension. Again, Ken will talk more about this in due course. And we have already started planning for our second confirmatory study, FM59.

On pain relief, we have received initial feedback -- or rather Thornton & Ross, our commercial partner, has from the MHRA. And we are working on addressing those questions, which does require some additional laboratory work in order that, that can be returned to the MHRA in Q1 next year. And we've also actually yesterday announced an agreement to develop a topical cannabidiol gel.

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Angela Hildreth, Futura Medical plc - COO, Finance Director, Company Secretary & Director [3]

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So in the period, we had a net loss of GBP 4.46 million. That is compared to a net loss last year of GBP 1.95 million. The increase have been predominantly attributed to the increase in R&D spend associated with the FM57 Phase III study. At the end of June, we had cash resources of GBP 5.6 million, and that was then added to with the GBP 1.36 million tax credit that we received in August.

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James Henry Barder, Futura Medical plc - CEO & Executive Director [4]

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So turning the page to, really, Slide 7. MED2005 is an innovation in the treatment of erectile dysfunction. Erectile dysfunction is a growing and bigger issue. It affects quality of life and is a significant problem. There's already data out there to say that sexual activity is beneficial, and those men that suffer from erectile dysfunction suffer from low self-esteem and confidence. And it also affects the relationship with the loss of intimacy. It affects work and family and often leads to depression. This said, it is a growing market, and recent research has shown that we could be looking up to 300-plus million men by 2025 suffering from erectile dysfunction. And with the growing aging population with obesity, that is set to continue to grow even more.

Turning to Slide 8. The ED market is changing. It's worth well over $5 billion. It has become more generic in recent times with the patents expiring on the key PDE5 inhibitors, Viagra, Levitra and Cialis, but they still make up a large part of this market.

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Kenneth William James, Futura Medical plc - Head of R&D & Executive Director [5]

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Thank you, James. And you can see from this diagram how the product works. The gel is applied to the glans penis, and it's extremely rapidly distributed into the corpus cavernosum, where it dilates blood vessels and causes an erection before entering the systemic circulation. This rapid action results from the DermaSys system where volatile solvents evaporate as soon as the gel is applied to supersaturate the active ingredient, glyceryl trinitrate, and this acts as a powerful driving force. From application of gel to erection typically takes 5 to 10 minutes, allowing for spontaneous intercourse to occur rather than waiting for a swallowable pill to work. And therefore, we have a unique easy-to-apply gel, which will contain between 0.2% to 0.6% of the active ingredient. The exact doses will be determined from the Phase III studies. And the product can be applied by either the male or the partner to the head or the glans of the penis to cause an erection in 5 to 10 minutes for spontaneity and more intimate intercourse, which is important.

The product is strongly supported with data generated thus far, some of which you see here. Pharmacokinetic or blood level data demonstrates the rapid systemic absorption and rapid clearance of the drug from the body versus reported data for Viagra and Cialis, which is quite slow to be absorbed and hangs around in the body for a prolonged period of time. This is a very clear evidence of the clinical effect of the dose of 0.2% that we started in the Phase IIa study, which involved 231 patients, and focused group data in women who confirmed the appeal of this product such as this to restore intimacy into a relationship.

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James Henry Barder, Futura Medical plc - CEO & Executive Director [6]

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MED2005, the value proposition. Over the last year, we spent a lot of time working on spreading awareness with key opinion leaders. And there's a clear message coming out from both the U.S. and Europe. There's been no real innovation in this sector for over 10 years. And the clear differentiators on what MED2005, where there's a lot of interest, is as an alternative first-line treatment for those who are looking for more spontaneous and intimate solution. Obviously, there's a number of patients that are contraindicated primarily because they're taking nitrate. So there's another cohort there where this product could be of use. And then there's a growing number of patients who are dissatisfied with their existing products, and that's often then to the side effect profile where this could really make a difference.

So again, turning the page to Slide 12. MED represents a $1 billion opportunity. We said the market is worth well over $5 billion now. And research that was conducted a little while ago around our -- for MED2005 suggested that we could be looking at, at least a 20% market share, and that's as a prescription product. Again, the market is now becoming generic. And in monetary terms, we have seen a drop. I think in 2017, sales are around -- were over $6 billion. We're now down by 15% sales since 2016. However, we're seeing an increase in volume as prices become more attractive to patients. The usage is growing. And essentially, the market is holding up in value terms across that.

As an OTC product, again, research that we did a while ago, we're looking at a potential of $660 million, so again, a very big opportunity there. And there continues to be strong commercial interest. Going back to our strategic sort of plan, at the moment, our primary focus is on getting the Phase III study program complete and de-risking the project.

As Ken touched on earlier, again, we've also done some recent research on the strong interest from women whose partners have ED. And we looked at both pre- and postmenopausal women. And more recently, we have filed a further patent, which will hopefully go into its national filing stage in Q1 next year.

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Kenneth William James, Futura Medical plc - Head of R&D & Executive Director [7]

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So we've gone through a systematic program of Phase I, Phase II and now Phase III. The Phase I program included blood flow measurements in the penis to confirm the initial dose of 0.2%. And then we investigated this dose in the Phase IIa study, proving efficacy but indicating that higher doses might be even better especially with more severe erectile dysfunction patients. Conducting a pharmacokinetic study confirming the suitability of higher doses of 0.4% and 0.6% are now awaiting results of a large safety and efficacy Phase III study of the 3 doses: 0.2%, the original dose; 0.4%; and 0.6%, with the results expected in December 2019, with a confirmatory Phase III study in the planning phase right now and running through next year.

And a bit more detail. Pivotal work conducted so far, the Phase IIa study, a randomized, double-blind, placebo-controlled study of 0.2% in 231 patients, we used the globally accepted IIEF primary endpoint and a number of secondary endpoints including the speed of onset and safety and acceptability. It was a 4-week study, and we met the primary endpoint, which was great. Primarily, efficacy was found in the mild and the mild-to-moderate patients, then we determined that we have reached the minimum effective dose for the product. We have an extremely favorable side effect profile in patients, and there was a clear evidence that the product was working in 5 to 10 minutes. Very interestingly, product was used for spontaneous intercourse. And in 1/3 of the couples, the female applied to the male.

So moving then on to the Phase III study design. This is a much bigger study. It's in 1,000 patients. It's a dose-ranging, multicenter, randomized, double-blind, placebo-controlled study. And the primary objective, we used the same endpoints as before, the International Index for Erectile Dysfunction. But there are 2 additional endpoints as well, what we call Sexual Encounter Profile questions 2 and 3. One of these asks the ability to insert the penis, and the other one asks for the ability to maintain an erection to have successful intercourse. So all of these endpoints are somewhat related to successful intercourse occurring.

The study has a number of secondary objectives which include, again, the safety and acceptability but also the onset of action and the duration of action as well. Studies being conducted in Central and Eastern Europe, it includes the 3 doses, as explained before, 0.2%, 0.4%, 0.6%. And it's running extremely well at the moment and on schedule to deliver headline data by the end of 2019 of the double-blind phase. And after the double-blind phase, which reads out in December this year, we continue the study in an open label phase to assess long-term safety of MED, with results reporting out later the following year.

With a big study such as this, it's important that we mitigate the risk as much as we possibly can. And of course, we have the confidence of knowing that the Phase IIa study worked very well. Also, we've sought broad regulatory consensus on the remaining clinical program and actually baked into the study design recommendations from the regulators. Our pharmacokinetic study data suggests that higher doses will increase efficacy while maintaining adverse events at an acceptable level, which is reassuring. And we sought world-leading expert opinion in the design, and we are convinced that we have the best possible design going forwards. Also, the work that we've conducted establishes very clear regulatory pathways in both the U.S. and the EU.

So those of you who may have read the Liberum initiation note authored by Graham Doyle would know that we're looking at a number of possible outcomes. It's not a binary outcome. We have 3 different doses and 3 types of erectile dysfunction that are being studied: mild, moderate and severe. A highly successful clinical result is where at least one dose meets all the primary endpoints, but there are other levels of success. So a successful clinical result could be where some primary endpoints are met in certain types of ED but not necessarily all of them. Of course, the better the clinical result, the more the second Phase III study, FM59, will be de-risked. And if the results are very high compelling, the clinical result may allow us to see EU approval ahead of FM59 results.

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James Henry Barder, Futura Medical plc - CEO & Executive Director [8]

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If you look at the patient profile, and this is what we expect in the clinical studies to see, the large proportion of patients are typically mild to moderate, with severe pretty making up around 15% to 20% depending on which data you look at. But I think the key thing here is that the real commercial opportunity very much lies with those men with milder ED, who tend to be younger and more sexually active. Certainly, we've seen some research that indicates severe patients' frequency of intercourse is 3x less than that of a younger man with mild erectile dysfunction. So if you look at the commercial side of that, obviously, the severes diminish and the milds grow. So the real opportunity is within the milder group of patients that have erectile dysfunction. And this has been very much borne out by key opinion leaders, who are very keen to find a product especially for those men that suffer from sort of performance anxiety issues, who typically have mild and mild-to-moderate ED, for product that's safe, that's effective and can be locally applied so a complete different product to what's already on the market.

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Kenneth William James, Futura Medical plc - Head of R&D & Executive Director [9]

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So the time line, as laid out here on the slide, you can see the work that's already been accomplished, the pharmacokinetic safety study, the Phase IIa study. And we're well down the track now with the first Phase III European efficacy study with headline data coming out in Q4. And the full study report would follow in the early part of 2020. We've already started planning for the second confirmatory Phase III study, and that will run through the course of next year with final dosing at the end of next year and results soon thereafter. And therefore, depending on how compelling the results are from the first Phase III study, there may be a possibility that we could file in Europe later next year or, as is more usual the case, when we have the results of the second Phase III study, which would follow the path of the U.S.A. regulatory submission.

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James Henry Barder, Futura Medical plc - CEO & Executive Director [10]

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Moving on to Slide 20 or Slide 21, a little bit about our topical pain relief portfolio. Our first product, what we call TPR100, this is a topical anti-inflammatory -- or non-steroidal anti-inflammatory product. Market is a big market, around about $3 billion globally from a topical perspective, and the U.S. alone is worth over $1 billion. And there is a demand for safe, effective and long-lasting pain relief product. And again, with our DermaSys technology, a faster drug permeation is a key point of difference.

Turning on to Slide 22. We signed a deal a couple of years ago with Thornton & Ross. And a regulatory submission was filed well over 18 months ago, and we received the response earlier this year from the regulators around that. There were a number of questions there. And in particular, they wanted some further laboratory work done in order to assist with this regulatory approval. And that work is underway, and it's on track to be completed in order that we can resubmit in Q1 -- or rather Thornton & Ross can resubmit in Q1 '20, in line with the recumbent of the regulators.

Moving on to Slide 23. Yesterday morning, we announced a joint venture collaboration with a company called CBDerma Technology. And this is early-stage development to exploit again our DermaSys technology to deliver a cannabidiol topical formulation using cannabis. Cannabidiol is 1 of 113 different cannabinoids found in cannabis. And there is good evidence out there, albeit that it's still very much early stage, to suggest it has a number of anti-inflammatory qualities and, as such, could be used for topical treatment for pain relief amongst other things. The initial part of this development is to really look to optimize the formulation, and that work will carry on over the next 15 months. And there's a joint development agreement associated with the costs associated with that project. And we'll obviously update the market as time goes on. But at this stage, I'd stress it is very much early stage. We see it's a big market and a growing market, but we really want to bring some science to this and have a best-in-class topical delivery of cannabidiol using our DermaSys technology.

Angela?

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Angela Hildreth, Futura Medical plc - COO, Finance Director, Company Secretary & Director [11]

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Thanks, James.

So as stated earlier in the presentation, at the end of June, we had a net loss of GBP 4.46 million compared to a net loss last year of GBP 1.95 million, and that is predominantly related to the increased R&D costs associated with running our Phase III study, FM57. We had cash at the end of June of GBP 5.63 million, and then we received a tax credit claim of GBP 1.36 million in August. That cash is sufficient to complete FM57. We are exploring a number of funding options including non-dilutory funding sources, which would allow us to complete our second Phase III study, FM59. And that funding would also place the company in a position of strength, so we can continue capitalizing on the product development and strengthen our position when we are negotiating any out-licensing agreement for MED2005. Clearly, some of the options that we're looking at here, the results from FM57 will have an impact on the availability of some of these funding options.

And that takes us to Slide 26, where we have a look at the months ahead. First of all, our big event, we've got our headline data from our first Phase III study for MED2005, which we expect at the end of this year. As we come up to that data, in parallel, we are starting the start-up activities for our second Phase III study, which we would commence in 2020. And yes, we were -- we are continuing to increase the awareness of MED2005 through our scientific advisory meetings, which involve high-profile U.S. and EU key opinion leaders, in addition to just generally increasing scientific publicity around the product.

We will continue to work with our commercial partner, Thornton & Ross, to address the questions from the MHRA. And then we will progress with further out-licensing discussions relating to TPR. And again, in parallel with that, we continue to have discussions with potential partners for MED.

And then over the course of the next 15 months, we expect to be able to provide some updates on our most recent joint venture, which is the topical cannabidiol formulation called CBD100.

And I think that is us done presentation-wise. Thank you very much for joining us. And for those who have joined us on our webcast, thank you.