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Futura Medical plc
Annual Report and Accounts 2019
Welcome to the
Futura Medical
Annual Report 2019
WHAT WE DO
Futura Medical is a
pharmaceutical company
developing a portfolio of
innovative products based on
our proprietary, transdermal
technology DermaSys®.
These products are
optimised for clinical efficacy,
safety, mode of
administration and patient
convenience and are
developed for the
prescription and consumer
healthcare markets as
appropriate.
Current therapeutic areas are
sexual health and pain relief.
Development and
commercialisation strategies
are designed to maximise
product differentiation and
value creation whilst seeking
to minimise clinical and
regulatory risk.
" Our purpose is to enhance our
patients and consumers’ quality
of life to enable them to live their
lives to the full."
JAMES BARDER
Chief Executive
www.futuramedical.com
INVESTMENT CASE
Futura has a proven track record in delivery and completion of
Research & Development (‘R&D’) projects up to value inflection
points at which they are suitable for commercialisation partners.
1
2
Advanced proprietary
technology DermaSys®
Clinical development of
treatments for unmet needs
Our focus is on differentiated
products, addressing areas of two
large markets, sexual health and
pain, seeking to solve unmet needs
that will help improve patients’ and
consumers’ lives.
We are exploiting the potential of our
transdermal technology DermaSys®
to innovate and develop topical
treatments offering a fast onset of
action and low systemic side effects.
Our long-term strategy is to expand
the product pipeline based on
DermaSys®. We are currently
exploring opportunities with
cannabidiol in CBD100. Our products
are underpinned by strong IP, usually
specific to each product.
3
4
De-risked strategy which
focuses on rapid routes
to market
Short-term value creation
from our lead product
MED3000
We are prioritising the development
and regulatory approval for MED3000,
our treatment for erectile dysfunction,
owing to its significant short to
medium term value creation potential
in a large market where there is an
unmet need for new treatment
options. In a Phase 3 clinical trial
MED3000 achieved all co-primary
clinical endpoints against baseline
(before treatment). We are now
pursuing regulatory filings as a
medical device in the EU and US.
Read more information
on Strategy on page 16
We have a late stage pipeline of
products, developed from well
characterised molecules and
excipients with an established safety
profile. This means that there is a lower
development risk and potentially
shorter regulatory pathway.
5
Experienced
management team
The management team has
significant experience in researching
and developing innovative products
for the global consumer healthcare
and prescription markets, with
extensive development and regulatory
expertise in the US and Europe.
Follow this icon to see
further information in this
Annual Report
STRATEGIC REPORT
CONTENTS
STRATEGIC REPORT
Investment case
Highlights
DermaSys® at a glance
Our business model
Products and pipeline
Chairman and Chief Executive’s Review
Our strategy
Key performance indicators
Portfolio Review – MED3000
Portfolio Review – Other products
Financial Review
Key risks and mitigation
Sustainability Review
Our stakeholders
GOVERNANCE
Board of Directors
Remuneration Committee Report
Corporate Governance Statement
by Non-Executive Chairman
Corporate Governance Report
Directors’ Report
Audit Committee Report
Independent Auditor’s Report to the
members of Futura Medical plc
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive
Income
Consolidated Statement of Changes
in Equity
Consolidated Statement of Financial
Position
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial
Statements
Parent Company Balance Sheet
Parent Company Statement of
Changes in Equity
Notes to the Parent Company Financial
Statements
Company information
01
02
04
06
08
10
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25
28
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01
STRATEGIC REPORTwww.futuramedical.com HIGHLIGHTS
OPERATIONAL HIGHLIGHTS
Solid pipeline progress with MED3000
nearing regulatory filings in EU and US
KEY HIGHLIGHTS
MED3000 discussions
progressing well with
regulators with EU filing
expected by end of July;
and with good dialogue
with US FDA providing
optimism for submission
for medical De Novo
device approval filing by
end of Q3 2020.
Company expects cash
runway to be sufficient
to Q2 2021, based on
significantly reduced
Research and
Development (R&D) spend
and current activities.
Currently expect limited
impact from COVID-19
during 2020.
Cash balance at year-end
£2.51m
Fundraising (gross)* post year-end
£3.25m
* Completed January 2020
Net loss
£8.92m
02
MED3000 – TOPICAL GEL FOR THE
TREATMENT OF ERECTILE
DYSFUNCTION (ED)
Top line results for European
Phase 3 study (FM57) were
reported in December 2019 with
all treatment arms consistently
meeting all primary endpoints
against a pre-treatment baseline
and across all ED severities as well
as in a pooled ED patient
population.
FM57 demonstrated that
MED3000 has the potential to be
a highly effective, clinically proven,
topical treatment for erectile
dysfunction with a rapid onset of
action and excellent safety profile
in a US$5 billion market1.
New patent application filed in
December 2019 around the novel
and surprising effects of the
MED3000 formulation shown in
FM57 to potentially provide patent
protection until 2040.
Ongoing support from Key
Opinion Leaders (KOLs) for an
effective, fast-acting, topically
applied ED treatment with low
side effects.
MED3000 – POST PERIOD
HIGHLIGHTS
Following positive interactions
with an EU Notified Body2 as
announced in February 2020
Futura subsequently commenced
formal proceedings for MED3000
to be approved as a medical
device for the treatment of ED
with expected submission to EU
regulators by the end of July 2020.
Recent positive initial pre-
submission meeting with US FDA.
Futura are awaiting the meeting
minutes and expect to pursue
regulatory approval for MED3000
as a medical device with a De
Novo Classification in the US.
TPR100 – TOPICAL NON-
STEROIDAL ANTI-INFLAMMATORY
FOR THE PAIN AND
INFLAMMATION ASSOCIATED
WITH SPRAINS, STRAINS AND
BRUISES AND SOFT TISSUE
RHEUMATISM
UK partner Thornton & Ross (a
subsidiary of STADA AG) received
feedback from UK Medicines and
Healthcare products Regulatory
Agency (MHRA) in February 2019
requiring additional laboratory
work to be conducted to support
the UK submission.
Ongoing laboratory work
continues with formulation dosing
adjustment and in vitro studies to
enable TPR100 to meet the strict
criteria established by the MHRA
(to avoid the need to conduct a
Phase 3 pain relief efficacy study)
delaying the response to the
MHRA by at least six months.
Ongoing commercial discussions
with several potential distribution
partners for other countries. Any
further licensing deals are
expected to be after UK regulatory
approval.
CBD100 – FUTURA’S ADVANCED
PROPRIETARY TRANSDERMAL
TECHNOLOGY, DERMASYS® FOR
TRANSDERMAL DELIVERY OF
CANNABIDIOL
Joint venture collaboration with
CBDerma Technology Limited
announced in September 2019.
Optimisation work is continuing
and on track to deliver first stage
development by end July 2020.
Stock Code: FUMFutura Medical plc Annual Report 2019 FINANCIAL HIGHLIGHTS
CASH BALANCE
R&D SPEND
FINANCIAL HIGHLIGHTS
£9.16M
£8.36M
£10.05M
£6.04M
£4.10M
£2.51M
2017
2018
2019
2017
2018
2019
OPERATING LOSS
R&D TAX CREDIT RECEIVED
£11.16M
£1.36M
£7.27M
£4.86M
£0.93M
£0.85M
£8.92 million net loss in the period
(31 December 2018: net loss £5.88
million).
Cash resources of £2.51 million at
31 December 2019 (31 December
2018: £9.16 million).
R&D tax credits of £1.36 million for
year ended 2018 received in
August 2019 (Year ended 2017:
£0.93 million R&D tax credits
received in August 2018).
£3.25 million (gross) fundraising
completed post period end in
January 2020.
2017
2018
2019
2017
2018
2019
Read the Financial
Review on page 28
1 Manufacturers’ Selling Prices 2018: Data available for
75 countries IQVIA IMS Health.
2 Notified Bodies are the regulatory authorities that
oversee the approval of medical devices within the EU
for all EU countries including the UK.
03
STRATEGIC REPORTwww.futuramedical.com DERMASYS® AT A GLANCE
Futura Medical is an innovative R&D company. We are
experts in transdermal delivery and the science of the skin.
We have developed an advanced proprietary and patented
transdermal technology, DermaSys®.
At the core of DermaSys®
APPLYING SKIN SCIENCE TO
DELIVER NOVEL TOPICAL TREATMENTS
Our core strength lies in our research and development
capabilities in the field of topical formulations and
transdermal delivery. Futura’s unique technology, expertise
and know-how, enables targeted and rapid delivery of active
pharmaceutical ingredients (API) and Generally Recognized
As Safe (GRAS) pharmaceutical excipients onto and through
the skin to the required site of action with a high level of
safety. We take off-patent, generic molecules and excipients
and offer improvements over existing products or create
novel indications with compelling commercial potential. This
means that our products are highly differentiated in their
markets whilst avoiding the risks normally associated with
the development of new molecules and with potentially
shorter regulatory pathway. We protect this valuable IP and
ensure that we maximise both the strength of our patents’
protection and their duration.
DERMASYS® AND THE PROCESS
BEHIND OUR UNIQUE FORMULATIONS
Our unique patented technology DermaSys® is designed to
deliver clinically proven effective medical treatments via
the skin.
DermaSys® is a versatile and bespoke technology. Each gel is
uniquely formulated using the DermaSys® platform with
volatile solvent and/or penetration enhancer components
tailored for each product to suit the specific therapeutic
indication and desired speed of onset and duration of action.
Such targeted delivery offers an optimised profile in terms of
dose, onset time and duration of effect as well as an improved
safety profile reducing the risk of side effects. Each product is
formulated to maximise its benefits for patients and
consumers. Each new unique formulation offers the
opportunity for additional patent applications and potential
patent protection.
The gels we develop are versatile, clear and odourless and
provide effective and local topical application to the required
site of action. For our erectile dysfunction treatment,
MED3000, this translates into a fast-acting treatment for
erectile dysfunction with an excellent safety profile. For our
pain relief treatments, TPR100 and TIB200, this translates into
effective penetration for enhanced therapeutic benefits with
fast, effective and long-lasting relief.
04
Combination
of volatile solvent
components
creates an
evaporative
action
DermaSys® process
PROPRIETARY
DERMASYS®
TECHNOLOGY
Combined with Futura’s know-
how and expertise in formulation
TARGET PRODUCT PROFILE
To deliver unique benefits
to patients and
consumers
Stock Code: FUMFutura Medical plc Annual Report 2019 With
active
drug
With
excipients
Targeted and rapid
delivery through
the skin
The combination of volatile
solvent components, gentle
penetration enhancers and
active creates a concentration
gradient that drives the
active through the skin.
Local targeted
physical action
The combination of volatile
solvent components creates an
evaporative and novel action that
stimulates nerve sensors and
creates a physical action.
CBD100 – DERMASYS® FOR
TRANSDERMAL DELIVERY
OF CANNABIDIOL
Futura announced a joint
venture collaboration
with CBDerma
Technology Limited
in September 2019 to
explore the application
of Futura’s advanced
proprietary transdermal
technology, DermaSys®
for the delivery of
cannabidiol. As part of
the agreement, Futura
will develop and optimise
a DermaSys® cannabidiol
formulation as well as
establish early ex vivo
proof of concept studies
likely to include certain
disease states most
suited for local or regional
(non-systemic) topical
treatment such as pain
relief.
GEL SPECIFICALLY
TAILORED AND
FORMULATED
MED3000
Fast onset of action
Duration of action
to suit the natural
length of intercourse
Excellent
safety profile
TPR100
Fast delivery of
the active diclofenac
through the skin
Superior absorption
12-hour efficacy for
twice daily dosing
05
STRATEGIC REPORTwww.futuramedical.com OUR BUSINESS MODEL
KEY
RESOURCES
HOW WE
CREATE VALUE
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& D a n d e x pertise orchestratin
a l e a n o perating model
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MARKET DYNA M I C S
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PEOPLE
Highly experienced and
motivated team focused
on innovative solutions
Team of 30 consultants
used for their specialist
knowledge and
leadership in the field
Strong results driven
culture and teamwork
EXPERTISE AND
INNOVATION
Highly efficient patented
proprietary transdermal
technology
Semi-virtual structure
with outsourcing
optimised to maximise
expertise and minimise
overhead cost
STRONG LEADERSHIP
Experienced
management team with
background in
researching and
developing innovative
products for global
consumer healthcare and
prescription markets
06
Stock Code: FUMFutura Medical plc Annual Report 2019
1
Outsourcing – R&D and expertise
orchestrating a lean operating model
Semi-virtual model using in-house
specialist expertise in Clinical
Development, Regulatory and
Chemistry, Manufacturing and Controls
(CMC) to lead strategy and co-ordinate
the outsourcing of key activities with a
range of experienced consultants and
highly regarded subcontractors.
2
Expertise – Proven Innovation
Expertise in optimising formulations of
molecules and excipients to ensure a
rapid and targeted action and to
minimise side effects.
3
Market dynamics – Understanding
our markets
Our lead asset MED3000, as well as the
rest of our pipeline assets, are well
positioned to meet the demands
behind the current market dynamics
driving chronic disease such as ageing
populations, obesity, stress and anxiety
which, combined with increasing
prosperity and expectations from
patients and consumers for a high
quality of life, lead to increased demand.
Not only are people living longer but
they want to live an active, pain-free
and fulfilled lifestyle for longer. Products
such as MED3000 are well placed to
accommodate such demands.
4
Impact – Understanding patient needs
In sexual health, current treatments do
not meet the needs of many ED
sufferers who are looking for a fast-
acting and well tolerated treatment that
can help restore spontaneity and
intimacy back into their relationship.
ED can also contribute to low confidence
and self-esteem and have a significant
impact on male mental health.
MAXIMISING
VALUE
VALUE CREATED
FOR OUR
STAKEHOLDERS
We continue to execute
our R&D strategy whilst
evaluating our options to
maximise value from
future commercialisation
of our lead assets with
potential commercial
partners.
Read more about
our Strategy on
page 16
PATIENTS
Erectile dysfunction and
chronic pain can be
debilitating and have a
detrimental impact on day-to-
day life, leading to low self-
esteem, relationship issues and
limiting day-to-day activities.
Our products focus on
improving quality of life to
enable patients and consumers
to live their lives to the full.
SHAREHOLDERS
Our aim is to create maximum
value for our shareholders. By
prioritising resources we aim
to deliver additional value to
our shareholders, maximising
the value that Futura retains
from our US$1 billion1 sales
potential erectile dysfunction
product. This is to be achieved
by gaining regulatory approval
as an effective clinically proven
treatment for erectile
dysfunction.
EMPLOYEES
Our aim is to attract and retain
the best people. We aim to
empower our employees
through our culture of
openness, freedom to operate
and teamwork. We reward
them through our performance
based and results driven share
option and long-term incentive
schemes. This enables us to
align employees and
shareholders’ interests.
Read more information
on Our Stakeholders on
pages 34 and 35
1 Previous market research conducted by Cello
Health Consulting as a prescription product
and Ipsos Group as an over the counter
product on MED2005 showed potential peak
sales in excess of US$1 billion. Whilst
MED3000 is a slightly different proposition as
it has a different mode of action, it offers the
same benefits and therefore the Group
believes that the market potential is similar.
07
STRATEGIC REPORTwww.futuramedical.com PRODUCTS AND PIPELINE
Futura Medical is developing a portfolio of innovative products for two large
markets, sexual health and pain. We have four products in late-stage
development, with MED3000 and TPR100 being the lead products.
SEXUAL HEALTH
PAIN RELIEF
Lead product MED3000 is a unique and highly
differentiated easy to use topical gel for erectile
dysfunction which has Phase 3 clinical data
demonstrating highly statistically significant
improvement across all ED patient severities with
potential peak sales of US$1 billion1.
Pain relief gels TPR100 and TIB200 offer targeted and
long-lasting pain relief and have the potential for
improved patient benefit by offering a fast, highly
effective and long lasting (12-hour) relief. CBD100, which
will be an optimised cannabidiol formulation for potential
use in a variety of conditions including pain, is in early
stage development.
1 Previous market research conducted by Cello Health Consulting as a prescription product and Ipsos Group as an over the counter product on MED2005 showed potential peak
sales in excess of US$1 billion. Whilst MED3000 is a slightly different proposition as it has a different mode of action, it offers the same benefits and therefore the Group believes
that the market potential is similar.
08
Stock Code: FUMFutura Medical plc Annual Report 2019 OUR PRODUCT PIPELINE
LEAD PRODUCTS
Concept
Development
Commercialisation
MED3000
Description: Topical gel for erectile dysfunction
Status: Phase 3 study completed. Regulatory submissions targeted for mid-2020. Out-licensing discussions ongoing.
TPR100
Description: Topical diclofenac pain relief gel
Status: Futura and UK licensing partner addressing MHRA requirements leading to revised regulatory strategy.
OTHER PRODUCTS
Concept
Development
Commercialisation
CBD100
Description: Topical cannabidiol formulation
Status: Joint venture collaboration. Early development stage to explore a number of disease states including pain relief.
CSD500
Description: Condom containing an erectogenic gel
Status: Approved in the EU, 24 months shelf life.
TIB200
Description: Topical ibuprofen pain relief gel
Status: Out-licensing discussions ongoing.
09
STRATEGIC REPORTwww.futuramedical.com CHAIRMAN AND CHIEF EXECUTIVE’S REVIEW
JOHN CLARKE
Chairman
COVID-19 UPDATE
Futura Medical is
monitoring closely the
rapid development of
events in relation to the
coronavirus outbreak and
all necessary steps have
been taken to maintain the
integrity of the Company’s
assets and the health and
well-being of our
employees.
To date we have not seen a
material impact as the
Company is used to
operating as a semi-virtual
business and we have been
able to transition quickly to
a fully remote and flexible
working model with ease.
We are currently not
conducting any trials
requiring the use of
patients or healthy
volunteers. All operational
activities can be managed
using existing internal
resource and our extensive
resource of external
consultants and sub-
contractors should any of
our employees become ill.
We therefore currently
expect limited impact from
COVID-19 during 2020.
10
Clinical execution in 2019
will lead to MED3000
regulatory filings in 2020
As an innovative R&D company, Futura’s strategy is to
leverage its proprietary patented transdermal technology
platform DermaSys® to develop a pipeline of late stage,
novel products that solve clinically meaningful problems
for patients, particularly where they are dissatisfied with
existing treatments. Our current focus is on sexual health
and pain.
Meeting this objective goes hand in
hand with value creation, which we
seek to maximise by partnering at
key inflection points. As a small,
innovative company we are also
adaptable and nimble which allows
us to take advantage of new
opportunities and strategies as the
need arises.
It was also a huge logistical and
organisational undertaking for our
team and third party providers to
execute on the substantial Phase 3
study (FM57) which started in Q4
2018, dosed the last patient in
October 2019 and from which
headline data was reported in
mid-December 2019.
This year has been an eventful one
for Futura. Throughout, Futura has
been continuing research and
presenting clinical data for its erectile
dysfunction (ED) treatment at
international medical conferences
and in other expert forums as part of
an ongoing educational and
outreach programme for physicians
and their patients in the ED field. The
reception has been encouraging
both in the US and Europe with
consistent feedback from leading
urologists and practitioners in sexual
medicine indicating demand for an
effective topical product that works
rapidly and has a very low side effects
profile.
The results from the Phase 3 clinical
study were unexpected and
surprising. While FM57 did not meet
the primary endpoints versus
placebo, we are excited that
MED3000 achieved positive results,
with a striking consistency in being
significantly statistically superior to
baseline ED for all three co-primary
endpoints (using validated and
globally accepted measurement
tools), as well as in each separate
cohort of severity (mild, moderate
and severe) and at one, two and
three month treatment time points
statistically superior improvement
over baseline was achieved. Key
secondary endpoints were also all
Stock Code: FUMFutura Medical plc Annual Report 2019 JAMES BARDER
Chief Executive
statistically met compared to the
pre-treatment baseline.
Data analysed was also positive on
measures of clinically meaningful
benefit which physicians and
patients, as well as regulators view as
increasingly important.
Futura intends to submit MED3000
for regulatory approval as a medical
device and continues to target the
next six months for submissions in
both Europe and US. This will present
prescription (Rx) opportunities and in
future potentially broader patient
product availability opportunities for
MED3000 may be explored that
leverage an excellent safety and
tolerability profile, such as
combination use, including with
existing oral medications and the
availability Over the Counter (OTC).
DERMASYS® – OUR PROPRIETARY
PATENTED TRANSDERMAL
TECHNOLOGY PLATFORM
Futura’s unique patented technology
DermaSys® is designed to deliver
clinically proven effective medical
treatments via the skin.
DermaSys® is a versatile and bespoke
technology. Each product gel is
uniquely formulated using the
DermaSys® platform with volatile
solvent component formulations
tailored for each product to suit the
specific therapeutic indication and
desired speed of onset and duration
of action. Such targeted delivery
offers an optimised profile in terms of
dose, onset time and duration of
effect as well as an improved safety
profile reducing the risk of side
effects. Each product is formulated to
maximise its benefits for patients
and consumers. Each new unique
formulation offers the opportunity for
additional patent applications and
potential patent protection.
MED3000 – TOPICAL GEL FOR
ERECTILE DYSFUNCTION (“ED”)
MED3000 is now the codename for a
formulation of our proprietary
technology DermaSys®, developed
specifically for the treatment of ED.
MED3000 has the potential to be a
highly differentiated product by
addressing significant unmet needs,
across all patient severities in the
US$5 billion ED market1, which
include rapid speed of onset
enabling spontaneity for both
partners, significant clinical benefits
alongside excellent safety and low
side effects and no interactions with
alcohol, food or other products as
well as providing a potential
treatment option for patients contra-
indicated from using existing ED
therapies.
ED disrupts the lives of 1 in 5 men
globally2, affecting the sexual and
emotional health of around 27
million men and their partners in the
US alone. There has been little
innovation in ED treatments for over
ten years and many patients
continue to suffer dissatisfaction with
existing treatments, a statement
frequently made by KOLs.
Top line results from the Phase 3
FM57 study announced in December
2019 demonstrated that MED3000
has the potential to be a highly
effective, clinically proven, topical
treatment for ED, with a fast onset of
action. As part of FM57, the Company
observed that MED3000 began to
work immediately in some patients,
with 60% of patients seeing onset of
their erection within 5-10 minutes of
application. Futura believes
MED3000 has a unique evaporative
mode of action which stimulates
nerve endings to cause an erection.
Initial Company assessments
indicate MED3000’s combination of
volatile solvent components creates
an evaporative and novel action that
stimulates nerve sensors in the
highly innervated glans penis rapidly
leading to smooth muscle relaxation,
tumescence and erection.
11
STRATEGIC REPORTwww.futuramedical.com CHAIRMAN AND CHIEF EXECUTIVE’S REVIEW
FM57 STUDY
FM57, the Phase 3 study was
designed to investigate the efficacy
and safety of topically applied
Glyceryl Trinitrate (GTN) (MED2005) –
(DermaSys® with 0.2% GTN,
DermaSys® with 0.4% GTN and
DermaSys® with 0.6% GTN) – against
that of the placebo using IIEF-EF and
SEP 2 and 3 as co-primary clinical
endpoints in mild, moderate and
severe ED patients. An ED-specific
DermaSys® formulation (now known
as MED3000) was used as a control
arm (placebo) following regulatory
requirements to have a placebo as
near as possible to the active
product.
The 1,000 patient study included
approximately 60 centres across nine
Central and Eastern European
countries. FM57 was a dose ranging,
randomised, double blind, placebo
controlled, home use, parallel group
clinical trial. Patients being enrolled
into FM57 for the initial four weeks
had to attempt intercourse on at
least four occasions in order to
establish the severity of their ED,
known as the pre-treatment
‘baseline’.
FM57’s protocol had incorporated
feedback from potential commercial
partners, opinion-leading physicians,
US and EU regulatory agencies as
well as the Company’s learnings from
the Phase 2a study (FM53), to support
the best chance of clinical success
and to optimise the likelihood of
subsequent regulatory approval as
well as the commercial value.
Futura announced study enrolment
completion in June 2019 with last
patient dosed in October 2019.
FM57 Results
FM57 top line results were
announced in December 2019. All
three co-primary endpoints (IIEF-EF,
SEP2 and SEP3) were statistically
significantly achieved against
baseline (pre-treatment) data for the
three MED2005 treatment groups
and MED3000 in addition to
important, supporting secondary
endpoints in terms of efficacy, speed
of onset, duration of action and
clinically meaningful differences in
patient benefit.
However, the control arm used in the
study which was Futura’s proprietary
transdermal DermaSys® formulation
(now known as MED3000) also
demonstrated statistically significant
and clinically meaningful top line
results meaning that FM57 did not
meet primary endpoints versus
placebo. Whilst this placebo does not
contain the active pharmaceutical
ingredient, GTN, used in MED2005, it
uses the key ingredients that
constitute DermaSys®’ proven
transdermal technology, specifically
formulated for ED, and was shown to
be as effective in the treatment of ED
as the active doses. Futura believes
MED3000 was so effective, for
example 83% of patients with mild
ED were able to insert their penis
into their partner’s vagina (SEP2
Primary Endpoint for FM57), that the
likelihood of the study design
showing a consistent and statistically
significant improvement over
MED3000 for SEP2 with the inclusion
of GTN was significantly reduced.
FM57 demonstrated that MED3000
has the potential to be a highly
effective, clinically proven, topical
treatment for erectile dysfunction.
MED3000 has a unique evaporative
mode of action which the Company
believes stimulates nerve endings in
the glans penis to cause an erection.
As such, it does not require the
inclusion of GTN.
MED3000 – shown to be an
extremely effective treatment for
ED with an excellent safety profile
in FM57
MED3000 results demonstrated a
highly statistically significant
improvement (with highly
statistically significant p values of less
than 0.001 in all instances) in erectile
function across ‘pooled’ patient
severities (mild, moderate, and
severe) as well as being statistically
significantly superior within the
separate mild, moderate and severe
patient groups, than before
treatment, along with an excellent
safety profile.
Importantly, all formulations had a
significant clinically meaningful
effect in 60% of patients as
calculated using the Rosen and
Araujo statistical method, a standard
assessment technique for measuring
Patient Reported Outcomes
recognised and accepted by leading
ED experts. Such Patient Reported
Outcomes in ED are key evaluation
criteria for regulators as well as
physicians and their patients.
MED3000 begins to work
immediately in some patients, with
60% of patients seeing onset of their
erection within 5-10 minutes of
application, substantially faster than
sildenafil3 with significant benefits
for spontaneous rather than pre-
planned sexual intercourse.
Overall the level of efficacy was
broadly equivalent to lower doses of
current oral ED treatments. Safety
and tolerability data were also highly
positive, with no serious adverse
events recorded in any patient, or
their female partner, with a highly
favourable overall side effect profile
across all doses against baseline
affirming data from the prior Phase
2a study.
This excellent safety profile, together
with a rapid speed of onset and high
efficacy creates a substantial and we
believe highly competitive product
opportunity for MED3000.
The results from FM53 and FM57 are
expected to support regulatory
applications for MED3000 as a
medical device with clinically proven
claims for the treatment of ED. The
clinical study report (CSR) is already
available for FM53 and the CSR for
FM57 is expected to be available by
the end of April 2020.
Futura has received strong interest for
the marketing rights for MED3000
12
Stock Code: FUMFutura Medical plc Annual Report 2019 and is continuing to progress these
discussions now that it has good
insight into the clinical benefits and
regulatory pathway for MED3000.
MED3000 – MEDICAL DEVICE
REGULATORY PATHWAY
Europe
The Company announced in
February 2020, following positive
interactions with an EU Notified
Body4, that it had commenced
formal proceedings for MED3000 in
Europe. These proceedings will allow
the Company to submit its technical
file for review by the said Notified
Body, including the CSR for FM57
and the Company’s Quality
Management System by the end of
July 2020.
US
The Company also recently held an
initial positive pre-submission
meeting with the US FDA. As a result,
we believe that an application may
be made for MED3000 as a medical
device with a De Novo Classification
although we await confirmation of
the drafted minutes from the FDA.
The Company presented the case for
filing for FDA clearance with the
existing clinical evidence from FM57.
FDA agreed to consider this
approach pending detailed review of
the CSR for FM57 and offered Futura
another pre-submission meeting to
reach final agreement on clinical
sufficiency once the CSR for FM57 is
available at the end of April. If
successful this could lead to a
submission filing by the end of
September 2020 for FDA review for
pre-marketing clearance. The
Company has been advised by its
regulatory consultants that the FDA’s
preference is to adopt an interactive
approach to data requirements with
its clients wherever possible ahead of
regulatory submissions.
MED3000 INTELLECTUAL
PROPERTY
MED3000 was subject to a recent
filing application made in December
2019. If successful this could provide
patent protection until 2040. After
the Phase 3 FM57 study indicated
the value and efficacy of MED3000
(a formulation developed specifically
for the treatment of ED) a new
patent application was filed in
December 2019. Aside from
Futura’s current patent lawyers, the
Company recently retained a
specialist biotech IP and strategic
advice company to assist in
maximising the robustness of the
MED3000 intellectual property.
13
STRATEGIC REPORTwww.futuramedical.com CHAIRMAN AND CHIEF EXECUTIVE’S REVIEW
EDUCATION AND OUTREACH ON
ERECTILE DYSFUNCTION AND
MED3000
The Company continues to see a
positive reception from European
and US Key Opinion Leaders (KOLs)
in the field of ED. Following data
announced in December 2019, KOLs
have continued to express interest in
a locally acting, fast and new
treatment for ED with an excellent
safety profile, and are encouraged by
the recent MED3000 Phase 3 data.
We believe this data approaches the
efficacy of current first line therapy
but with significantly lower adverse
events, and will be of high interest to
the medical community for those
patients who are seeking a treatment
with a very rapid onset of action and
a very low side effects profile. This
echoes feedback received following
the Company’s EU and US advisory
meetings held respectively at the
European Society for Sexual Medicine
(ESSM) congress in Slovenia in
February 2019 and at the Sexual
Medicine Society of North America
(SMSNA) congress in Nashville, US in
October 2019.
TPR100 – TOPICAL NON-STEROIDAL
ANTI-INFLAMMATORY FOR THE
TREATMENT OF PAIN AND
INFLAMMATION ASSOCIATED WITH
SPRAINS, STRAINS, BRUISES AND
SOFT TISSUE RHEUMATISM
TPR100 is partnered for
manufacturing and distribution in
the UK with Thornton & Ross, one of
the UK’s largest consumer healthcare
companies and a subsidiary of STADA
AG. In February 2019, the UK
Medicines and Healthcare products
Regulatory Agency (MHRA)
responded to Thornton & Ross’
marketing authorisation application
filed in July 2018, with a number of
questions requiring additional
laboratory work specifically around
the permeation characteristics of
TPR100 to be conducted. This work is
progressing but requires further
laboratory formulation adjustment
and in vitro studies to enable TPR100
to meet the strict criteria established
by the MHRA and thereby avoid the
need of a Phase 3 pain relief efficacy
study. It has delayed the response to
MHRA by at least six months to
accommodate this regulatory
approach.
CBD100 – FUTURA’S ADVANCED
PROPRIETARY TRANSDERMAL
TECHNOLOGY, DERMASYS® FOR
THE DELIVERY OF CANNABIDIOL
Futura announced a joint venture
collaboration with CBDerma
Technology Limited in September
2019 to explore the application of
Futura’s advanced proprietary
transdermal technology, DermaSys®
for the delivery of cannabidiol.
14
Stock Code: FUMFutura Medical plc Annual Report 2019 approval. In the US, Futura continues
to be in consultation with the Center
for Devices and Radiological Health
(CDRH) the medical device arm of
the FDA over data requirements,
however the Company does not
believe that a further significant
study, similar to FM57, will be
required to support a MED3000
filing, but any additional clinical data
and therefore expenses will depend
on the finalised requirements
expected to be agreed by the end of
July 2020.
OUTLOOK
Following the analysis of the data
from the FM57 clinical study which
completed in December 2019, the
Company is well positioned to deliver
further positive news through 2020.
The team is focused on completion
of the regulatory submissions in the
US and EU for MED3000 to be
approved as a clinically proven,
fast-acting topical gel for the
treatment of ED. We are also
increasingly excited at the financial
prospects that an approved
MED3000 could bring to Futura as
we progress commercialisation
discussions in earnest.
The Company is closely monitoring
the rapid development of events in
relation to the coronavirus outbreak.
To date we have not seen a material
impact as the Company is used to
operating as a semi-virtual business
and we have been able to transition
quickly to a fully remote and flexible
working model with ease. We
therefore currently expect limited
impact from COVID-19 during 2020.
JOHN CLARKE
Chairman
JAMES BARDER
Chief Executive
CBDerma Technology is a company
that has been established and
funded to specifically exploit the
therapeutic potential of cannabis.
The company’s management,
backers and advisers have extensive
knowledge, expertise and
investments in plant derived product
manufacturing.
As part of the agreement, Futura will
develop and optimise a DermaSys®
cannabidiol formulation as well as
establish early ex vivo proof of
concept studies likely to include
certain disease states most suited for
local or regional (non-systemic)
topical treatment such as pain relief.
Optimisation work is progressing,
and the first stage of this will
complete by the end of July 2020
before the next stage of potential
ex vivo proof of concept studies are
being considered.
Cannabidiol is a major component
of the cannabis plant and is generally
regarded as non-addictive and
non-psychoactive, making it ideal for
consideration as a topically delivered
molecule for local or regional (non-
systemic) use. The market for
cannabidiol products is growing
rapidly. A report by Reports and Data
forecasts that the market for
cannabidiol products is forecast to
grow from US$1 billion in 2018 to
US$16 billion by 2026, at a CAGR of
27.7%, during the forecast period.
The market is primarily driven by the
increase in the usage of cannabidiol
in medical application, supplements,
beverages and skin care.
CORPORATE AND FINANCIAL
The £3.25 million fundraising in
December 2019, with funds received
by the Company post year-end in
late January, provided additional
working capital to allow the
Company to pursue a medical device
regulatory pathway for MED3000 in
ED.
The Company believes that further
significant clinical cost will not be
required in relation to EU approval
based on its past experience of
obtaining EU medical device
1 Manufacturers’ Selling Prices 2018: Data available for
75 countries IQVIA IMS Health.
2 EMEA, Withdrawal assessment report for Viagra, 2008.
3 Sildenafil is an active pharmaceutical ingredient, sold
under the brand name Viagra among others, as a
medication used to treat ED. “Viagra Connect
normally starts to work in 30 to 60 minutes” – Viagra
Connect UK website.
4 Notified Bodies are the regulatory authorities that
oversee the approval of medical devices within the EU
for all EU countries including the UK.
15
STRATEGIC REPORTwww.futuramedical.com OUR STRATEGY
Our strategy is to develop our portfolio of innovative products for two large market
categories, sexual health and pain, and then partner at the optimum time to generate
most value.
This strategy is aligned with the well-publicised demographic changes of ageing populations, increasing prosperity,
the increased demand from patients and consumers who expect to lead a full and active life well into their later years,
their natural desire for an improved quality of life and our expectations that overall patient demand and spending will
increase as a result. The objective is to develop products such that each on its own has the potential to generate
significant annual revenues.
WE INVEST . . .
IN INNOVATIVE PRODUCTS . . .
INVEST
INNOVATE
We are investing in our lead product MED3000
to generate most value for shareholders.
We are focused on innovative products that
are highly differentiated in their markets.
2020 FOCUS
Regulatory
submissions in EU and
US for MED3000 as a
medical device.
2019 PRIORITIES
AND PERFORMANCE
The FM57 Phase 3
study was completed
and results
demonstrated that
MED3000 was a
clinically proven
effective treatment for
erectile dysfunction.
2020 FOCUS
Resources are focused
on the submission of
required dossiers to
regulators in the EU
and US.
2019 PRIORITIES
AND PERFORMANCE
Whilst the primary
endpoints of FM57
study were not met
compared to placebo,
they were met when
compared to baseline
and showed a positive
treatment response for
MED3000.
TO INCREASE VALUE FOR SHAREHOLDERS
THAT IMPROVE TREATMENTS . . .
INCREASE
IMPROVE
We are focused on increasing value for
shareholders and the quality of life for patients.
2019 PRIORITIES
AND PERFORMANCE
The profile of our
topical treatment for
erectile dysfunction
was raised with both
the medical
community and
potential commercial
partners.
2020 FOCUS
Increase the profile of
MED3000 and value of
its unique commercial
proposition to
potential commercial
partners on the back
of the data readout
from FM57.
We aim to improve treatments to give more
choice to patients and doctors and improve
the quality of life of those suffering from ED
and local pain.
2019 PRIORITIES
AND PERFORMANCE
We improved the
profile of DermaSys®
as a platform
technology and looked
to expand our
portfolio.
2020 FOCUS
Improve overall
commercial
proposition of
MED3000 and
continue to develop
CBD100 with our
partner CBDerma
Technology.
16
Stock Code: FUMFutura Medical plc Annual Report 2019 STRATEGIC REPORT
KEY PERFORMANCE INDICATORS
The Directors consider the successful achievement of development, licensing and commercialisation milestones and
the number of products under development (beyond the evaluation stage) to be the major drivers of value creation for
the Group.
There are other financial and non-financial Key Performance Indicators (KPIs) which the Directors use as a measure of
the Group’s performance.
GROUP CASH
2019
2018
2019
2018
2019
* A further £3.25 million was raised post year-end.
2018
R&D COSTS
2019
2018
2019
2018
2019
2018
2019
ADMINISTRATIVE AND CENTRAL OVERHEAD SPEND
2018
2019
2018
2019
2018
NON-FINANCIAL MEASURE – HEADCOUNT
R&D
Central
Executive Directors
8
2018: 10
2
2018: 2
3
2018: 3
£2.51m*
£9.16m
£2.51m*
£9.16m
£2.51m*
£9.16m
£10.05m
£6.04m
£10.05m
£6.04m
£10.05m
£6.04m
£1.14m
£1.22m
£1.14m
£1.22m
£1.14m
£1.22m
Given the funding requirements
of the business to ensure
completion of the development
programmes, cash is considered
to be a key metric.
We invest in R&D to generate
future revenue and value from
our assets. The increase in 2019 is
related to the activities linked to
the FM57 Phase 3 study and
associated manufacturing
activities.
We operate as a “semi-virtual”
company and keep tight control
of central costs. The spend was
broadly in line with the previous
year and further demonstrates
that spend is focused on value
adding R&D activities.
The Group is focused on the
development of its lead asset
MED3000 and the tight control of
central costs.
www.futuramedical.com
17
STRATEGIC REPORT PORTFOLIO REVIEW – MED3000
MED3000 – A topical gel for the treatment
of erectile dysfunction
MARKET OVERVIEW
There are a number of studies that
support the belief that sexual activity
has health benefits citing frequency
of sexual activity as a predictor of
longevity in men as well as
potentially reducing cardiac death1.
Moreover erectile dysfunction (ED)
can lead to low self-esteem, lack of
confidence and depression. This
detrimental impact on partners and
relationships is well documented and
acknowledged by the medical
community. The discovery and
approval of the PDE5i’s to treat ED
over 20 years ago (such as Viagra®
and Cialis®) not only revolutionised
available treatments for men with ED
but dramatically increased
awareness in the general public of
this significant problem.
Despite their success PDE5i’s have
certain limitations. Although proven
highly efficacious, oral PDE5i's have
several adverse effects as well as
significant drug-drug interactions in
the target population. The most
commonly reported adverse events
include headache, flushing,
dyspepsia, nasal congestion and
impaired vision. They are
contraindicated for use with a
number of medications such as
nitrates, anti-hypertensives and
alpha blockers. They generally take
significant time to work requiring
pre-planning for sexual intercourse.
Viagra Connect for example only
starts to work in 30-60 minutes. As a
result many men and their partners
are dissatisfied with PDE5i’s and it
has been estimated that almost 50%
discontinue use after one year3.
ED SUFFERERS' UNMET NEEDS
There has been little effective
innovation in the last ten years for the
treatment of ED and there remains
today a significant unmet clinical
need for those men wanting a
fast-acting treatment that can give
greater spontaneity and can form part
of sexual foreplay thereby giving
greater intimacy. ED sufferers are also
looking for a product with a more
favourable side effects profile which
can be used safely with some of their
other medications and which they are
comfortable using over a period of
years.
1 The Duke Longitudinal Study of Ageing (1982)
– Frequency of intercourse a significant predictor of
longevity in men; Swedish Study (1981) – Early
cessation of sex associated with premature death;
Caerphilly Cohort Study (BMJ 1997) – 50% reduction in
cardiac death with more than two orgasms per week.
2 Adapted from McKinlay JB. Int J Impot Res. 2000;
12(suppl 4): S6-S11.
3 Corona G., “First-generation phosphodiesterase type 5
inhibitors dropout: a comprehensive review and
meta- analysis”, Andrology, 2016, 4, 1002–1009.
ED SUFFERERS PREDICTED TO INCREASE FROM 152 MILLION TO 322 MILLION BY 20252
NORTH AMERICA
9.1 MILLION
EUROPE
11.9 MILLION
ASIA
113 MILLION
AFRICA
19.3 MILLION
OCEANIA
0.9 MILLION
SOUTH / CENTRAL
AMERICA AND
CARIBBEAN
15.6 MILLION
18
Stock Code: FUMFutura Medical plc Annual Report 2019 US$660 million potential
‘Over the Counter’ sales at
US$5 per dose with
70% incremental to
prescription sales11
Research and forecast
provided by Ipsos Mori
for Futura
US$560 million potential
prescription peak sales at
US$5 per dose11
Research by Cello and model
provided by Decision
Resources for Futura
THE MARKET OPPORTUNITY FOR MED3000
The ED prescription market
is worth
US$5.6 billion (2018)7
+ 6% on previous year
Oral PDE5i's are the first line
of treatment. They are
effective but don’t meet the
needs of many patients.
68% of ED patients are
not fully satisfied with their
treatment8
Around 20% of ED
patients cannot take oral
PDE5i's as they are contra-
indicated with other
medicines they take9
Almost 50% of ED
patients will discontinue
therapy after 1 year10
MED3000 is a
US$1 billion
market
opportunity11
There has been limited
innovation in over ten years
in the treatment of ED.
There are clear unmet
medical needs.
ERECTILE DYSFUNCTION – AN
UNMET MEDICAL NEED
Erectile dysfunction affects
around 50% of men between 40
and 70 years old4. ED is an
indicator of other serious
conditions such as diabetes and
heart disease.
Both severity and prevalence of
ED increase with age – a factor
of great consequence given our
ageing population.
The relationship between ED
and other disorders such as
obesity and diabetes, which are
themselves reaching epidemic
proportions, may also contribute
to the increase in ED worldwide.
ED is increasingly affecting
younger men with the
prevalence of ED in young men
being as high as 30%5.
Many ED sufferers do not seek
treatment. In addition over two
thirds of men who discuss their
condition with their physician
are not on treatment6.
For those who go on treatment,
discontinuation rates for long-
term therapy are high with
almost 50% of men stopping
treatment after one year 10.
4 Feldman HA et al. J Urol 1994; 151: 54 – 61
5 Nguyen Sex Med Rev. 2017 Oct, vol 5, 508-520
6 Jannini J Sex Med 2014 Jan :11(1).40.50
7 Manufacturers’ Selling Prices 2018: Data available for
75 countries, IQVIA IMS Health
8 Decision Resources Group research conducted in
the US
9 Cello Healthcare research conducted in the US,
France and Germany, commissioned by Futura
Medical
10 Corona G., “First-generation phosphodiesterase type
5 inhibitors dropout: a comprehensive review and
meta- analysis”, Andrology, 2016, 4, 1002–1009
11 Previous market research conducted by Cello Health
Consulting as a prescription product and Ipsos
Group as an over the counter product on MED2005
showed potential peak sales in excess of US$1 billion.
Whilst MED3000 is a slightly different proposition as
it has a different mode of action, it offers the same
benefits and therefore the Group believes that the
market potential is similar.
19
STRATEGIC REPORTwww.futuramedical.com PORTFOLIO REVIEW – MED3000
MED3000 – AN INNOVATION
IN THE TREATMENT OF ED
MED3000 is a treatment applied
directly to the glans or head of
the penis for 15 seconds. Because
it’s a gel it means that patients or
their partners can apply it as part
of foreplay. It is fast-acting (5-10
minutes) and easy to use helping
to restore spontaneity and
intimacy in the relationship.
MED3000 works rapidly to help
achieve and maintain an erection
whilst offering an excellent safety
profile.
KOL ENGAGEMENT PROGRAMME
KOL ENGAGEMENT PROGRAMME
Over the last two years, Futura has
engaged an outreach programme to
increase awareness in the ED
medical community of the
development and potential benefits
that our topical treatment could
bring to ED sufferers. Key scientific
data has been published and
presented at scientific conferences
and two advisory boards (US and
Europe) comprising world renowned
urologists and researchers in erectile
dysfunction have been convened to
review data, share information and
obtain feedback regarding the
programme.
There has been strong interest
shown in our topical treatment
because it offers a novel and unique
treatment that could address
patients’ unmet needs.
US ADVISORY BOARD
EU ADVISORY BOARD
PRESENTATIONS AT THE
FOLLOWING CONFERENCES
The European Society for Sexual
Medicine (ESSM) congress in
Slovenia in February 2019
The Sexual Medicine Society of
North America (SMSNA) congress in
Nashville in October 2019
PUBLICATIONS
The FM53 Phase 2a data was published in February 2018 in the peer-
reviewed Journal of Sexual Medicine.
A manuscript on the development of our topical formulation for the
treatment of erectile dysfunction was published in the International
Journal of Impotence Research in January 2020.
A number of abstracts and posters have been published and presented
including a poster on the Phase 3 clinical trial results for MED3000
accepted in January 2020.
20
Stock Code: FUMFutura Medical plc Annual Report 2019 WHAT KEY OPINION LEADERS ARE SAYING ABOUT OUR INNOVATIVE TREATMENT FOR ERECTILE
DYSFUNCTION MED3000
"The efficacy of MED3000 is remarkable and
approaches the efficacy of current first line
therapy but with significantly lower adverse
events. With topical application, it will be of
particular appeal to patients who want a fast
onset of action. Lack of drug interactions with
prescription products will enable the product to
be used with other medications such as nitrates
and other cardiovascular drugs. It can also be
used in conjunction with other ED products to
improve overall efficacy to patients. As such the
product will be of great interest to the medical
community.”
"All formulations tested in FM57, including the
control product MED3000, have demonstrated
positive and statistically significant efficacy
results against baseline data together with an
excellent safety profile.
MED3000 will be of high interest to the Medical
Community for those patients who are seeking
a very rapid onset of action and a very low side-
effect profile. It will likely find use in a substantial
number of patients, especially those with ED of a
mild to moderate nature and those patients who are
contraindicated for use with existing products.”
PROFESSOR DAVID RALPH
Consultant Urologist, St. Peter’s Andrology
Centre & Institute of Urology, UCLH, London
PROFESSOR YACOV REISMAN
Consultant Urologist, Amstelland Hospital,
Netherlands
Past President of the European Society of
Sexual Medicine
Past President of the European Society of
Sexual Medicine
MED3000 – DEVELOPMENT AND KEY CLINICAL STUDIES
MED3000 has been a surprising and intriguing finding, which resulted from the development work on MED2005. Whilst
MED3000 does not contain the active pharmaceutical ingredient Glyceryl Trinitrate(GTN), used in MED2005, it uses the
key ingredients that constitute DermaSys®' proven transdermal technology, specifically formulated for ED, and in our
recent clinical study was shown to be as effective in the treatment of ED as the doses with GTN. MED3000 is now the
codename for this formulation of our proprietary technology DermaSys®. MED3000 is supported by efficacy and safety
data from two key studies a Phase 2a and a Phase 3 study. Details of key clinical studies are summarised below.
STUDY
CODE
STUDY
TYPE
STUDY
DESIGN
DOSES
COMPLETED CONCLUSIONS
KEY CLINICAL STUDIES FOR MED3000
FM53
Phase 2a
Placebo controlled,
double blind, home
use, crossover design
MED3000,
MED2005
0.2%
September
2016
FM57
Phase 3
Multicentre,
randomised, double
blind, placebo
controlled, home use,
parallel group
MED3000,
MED2005
(0.2%, 0.4%,
0.6%)
December
2019
Met its primary endpoint
Showed a rapid speed of
onset of 5 to 10 minutes
All treatment arms
consistently met all
primary endpoints against
a pre-treatment baseline
and across all ED severities
as well as in a pooled ED
patient population.
MED3000 showed
efficacy, safety, speed of
onset and duration of
action.
21
STRATEGIC REPORTwww.futuramedical.com PORTFOLIO REVIEW – MED3000
MED3000 – FM57 PHASE 3
CLINICAL TRIAL DESIGN
The 1,000 patient study included
approximately 60 centres across
nine Central and Eastern European
countries. FM57 was a dose ranging,
randomised, double-blind, placebo-
controlled, home use, parallel group
clinical trial. Patients being enrolled
into FM57 for the initial four weeks
had to attempt intercourse on at
least four occasions in order to
establish the severity of their ED,
known as the pre-treatment
‘baseline’. FM57 was designed to
investigate the efficacy and safety
of topically applied Glyceryl
Trinitrate (GTN) (MED2005 0.2%,
0.4%, 0.6% GTN) against that of the
placebo using IIEF-EF and SEP 2
and 3 as co-primary clinical
endpoints in mild, moderate and
severe ED patients. An ED-specific
DermaSys® formulation (now
known as MED3000) was used as a
control arm (placebo) following
regulatory requirements to have a
placebo as near as possible to the
active product.
Subjects pre-screening
Run-in
period
4 weeks run-in period to establish degree of patient’s
erectile dysfunction (“Baseline”)
Treatment
period
MED2005
0.2%
N=250
MED2005
0.4%
N=250
MED2005
0.6%
N=250
MED3000
N=250
Open
Label
period*
MED2005 0.6%
N=300 patients
6 months use*
MED2005 0.6%
N=100 patients
12 months use*
Follow-up
period
Follow-up visit
* Following the FM57 results the open label phase was discontinued prematurely and is no longer active.
22
MED3000 – FM57 PHASE 3 RESULTS
The results from the Phase 3 clinical
study were unexpected. While FM57
did not meet the primary endpoints
versus placebo, MED3000 achieved
positive results, with a striking
consistency in being highly
significantly statistically superior to
baseline for all three co-primary
endpoints (using validated and
globally accepted measurement
tools), as well as being statistically
significant in each separate cohort of
severity (mild, moderate and severe).
At one, two and three months
treatment time points highly
statistically superior improvement
over baseline was achieved.
Key secondary endpoints were also all
statistically met compared to the
pre-treatment baseline. Data
analysed was positive on measures of
clinically meaningful benefit which
physicians and patients, as well as
regulators view as increasingly
important. All formulations had a
significant clinically meaningful effect
in 60% of patients as calculated using
the Rosen and Araujo statistical
methods, standard assessment
techniques for measuring Patient
Reported Outcomes recognised and
accepted by leading ED experts.
MED3000 begins to work
immediately in some patients, with
60% of patients seeing onset of their
erection within 5-10 minutes of
application, substantially faster than
oral tablets with significant benefits
for spontaneous rather than pre-
planned sexual intercourse.
FM57 demonstrated that MED3000 is
a highly effective, clinically proven,
topical treatment for erectile
dysfunction. MED3000 has a unique
evaporative mode of action which the
Company believes stimulates nerve
endings in the glans penis to cause
an erection. As such, it does not
require the inclusion of GTN which
did not show an incremental benefit.
Stock Code: FUMFutura Medical plc Annual Report 2019
PRIMARY ENDPOINTS VS BASELINE – DERMASYS® COMPARED TO LOW DOSE CIALIS®
Overall the level of efficacy of MED3000 was broadly equivalent to lower doses of current oral ED treatments such as
Cialis®. The table below compares the improvement in efficacy for MED3000 and low dose Cialis® compared to baseline.
The parameters compared are validated and globally accepted measurement tools for the efficacy of ED treatments: the
erectile function domain of the International Index for Erectile Function (IIEF), the Sexual Encounter Profile (SEP)
Question 2 and 3. MED3000 shows clinical trial efficacy results that are similar to those of Cialis® 5mg.
PRIMARY EFFICACY PARAMETERS
MED3000
IIEF
SEP2
(Were you able to insert your penis into your partner’s vagina?)
SEP3
(Did your erection last long enough for you to have successful
intercourse?)
5.1
24%
37%
CIALIS® 5MG*
CHANGE FROM
BASELINE (NON US
PHASE 3 STUDIES)
4.6
17%
22%
* For illustrative purposes only as data is derived from different clinical studies, Cialis® data from 2 non US phase 3 studies. Cialis® US Prescribing information, 2018
EXCELLENT SAFETY PROFILE
Safety and tolerability data were also highly positive, with no serious adverse events recorded in any patient, or their
female partner, with a highly favourable overall side effect profile across all doses against baseline affirming data from
the prior Phase 2a study. The table below compares the side effects profile for men for MED3000 and Cialis® 5mg with an
occurence over 2%. This excellent safety profile, together with a rapid speed of onset and high efficacy creates a
substantial and highly competitive product opportunity for MED3000.
ADVERSE EVENTS
Headache
Flushing
Nasal congestion
Back pain
Dizziness
MED3000**
(N=250)
ADVERSE EVENTS
CIALIS® 5MG
(N= 151)*
3%
Headache
–
–
–
–
Flushing
Nasal Congestion
Back pain
Myalgia
11%
2%
2%
3%
2%
* For illustrative purposes only as data is derived from different clinical studies, Cialis® data from 2 non US phase 3 studies. Cialis® US Prescribing information, 2018.
** Users of MED3000 noticed 1.2% penile burning in men and 0.4% vulvovaginal burning in women.
23
STRATEGIC REPORTwww.futuramedical.com PORTFOLIO REVIEW – MED3000
The results from FM53 and FM57 are
expected to support regulatory
applications for MED3000 as a
medical device with clinically proven
claims for the treatment of ED. We
believe MED3000, has the potential to
be a significant innovation in the
US$5.6 billion global market7 for
erectile dysfunction, especially for
patients looking for a rapid speed of
onset and spontaneity, with an
excellent safety profile. It also offers a
potential new treatment option to ED
patients contraindicated from using
existing medications such as nitrates,
anti-hypertensives and alpha blockers
and in combination with oral ED
medications.
MED3000 MECHANISM OF
ACTION– HOW DERMASYS®
WORKS TO TREAT ERECTILE
DYSFUNCTION
MED3000 has been an intriguing
finding which resulted from the
development work on MED2005.
MED3000 works through an
evaporative and unique mode of
action. MED3000’s combination of
volatile solvent components creates
an evaporative and novel action that
stimulates nerve sensors in the highly
innervated glans penis rapidly leading
to smooth muscle relaxation,
tumescence and erection as shown
on the diagram opposite.
The glans penis is very highly
innervated and there are sensors
which are reactive to a range of
physical sensations, including touch,
pressure and temperature. Research
has indicated that the cooling from
the evaporation of these specific
combinations of solvents, with
subsequent warming, following
topical application of the MED3000
gel stimulates the required physical
response in order to achieve an
erection.
24
MED3000 MECHANISM OF ACTION
Endothelial cells
Natural NO
production
NANC
neurons
MED3000
Novel evaporative
action stimulates
nerve sensors in the
highly innervated
glans penis through
temperature, touch
and pressure
NO
GMP
GTP
cGMP-specific
phosphodiesterase
type 5
Soluble
guanylyl cyclase
PDE5i's: PDE5
inhibition
Oral treatment
with systemic
absorption.
Primarily
selective
for PDE5
cGMP
Smooth muscle
relaxation
Tumescence
and penile
erection
NO = nitric oxide
GMP = guanosine monophosphate
cGMP = cyclic guanosine monophosphate
GTP = guanosine triphosphate
NANC = nonadrenergic, noncholinergic
Stock Code: FUMFutura Medical plc Annual Report 2019 PORTFOLIO REVIEW – OTHER PRODUCTS
TPR100 – A Diclofenac 1.86%
Pain Relief Gel targeting pain
and inflammation
The gel brings relief from joint and rheumatic pain for long-lasting pain relief.
It is applied to the local site of pain or inflammation.
MARKET AND OVERVIEW
The rapid skin permeation rate
offered by our transdermal delivery
system, DermaSys®, is ideally suited
for targeted topical pain relief. Rapid,
targeted and effective skin
permeation offers potential benefits
in pain management including:
improved onset of action, duration
and degree of pain relief. Futura has a
portfolio of two pain relief products
with well characterised active
ingredients including diclofenac and
ibuprofen but has prioritised its gel
containing 1.86% diclofenac known as
TPR100. Diclofenac is a nonsteroidal
anti-inflammatory drug (NSAID) used
to treat pain and inflammatory
diseases and can be taken by mouth
or applied to the skin.
Our objective is for TPR100 to be
considered a major competitor to the
market leading topical diclofenac
treatments such as Voltarol® gel.
Topical diclofenac for the treatment of
pain relief is widely available
throughout the world without the
requirement of a doctor’s
prescription, other than in the US
where the requirement of a
prescription remains.
UNMET NEED
INSIGHTS
FUTURA’S
PROPOSITION
Efficacy can be poor
due to inadequate
penetration
Treatment required
to be applied 2 to 4
times daily
Need for a treatment
that:
is easy to apply and
doesn’t stick to
clothes after it has
been applied
TPR100 is a topical
1.86% diclofenac gel for
pain relief using its
DermaSys®
transdermal
technology.
need for a twice
daily application
regimen to improve
adherence
PAIN – AN UNDERSERVED
MARKET
Osteoarthritis is a condition
that affects the joints, causing
pain and stiffness and affecting
mobility. It is a degenerative
condition with no cure
affecting the daily lives of
millions and causing joint pain.
Prevalence is high affecting
23% of all adults – 54 million
people have arthritis in the US1.
Arthritis is the US’s most
common cause of disability1.
Musculoskeletal conditions
range from those that arise
suddenly and are short-lived,
such as sprains and strains to
lifelong conditions associated
with ongoing pain and disability.
Musculoskeletal conditions are
the leading contributor to
disability worldwide, with low
back pain being the single
leading cause of disability
globally2.
1 CDC website
2 WHO website accessed March 2020
25
STRATEGIC REPORTwww.futuramedical.com PORTFOLIO REVIEW – OTHER PRODUCTS
Global OTC
sales of topical
NSAIDs1
US Rx sales
of topical
NSAIDS2
>US$2.9bn
>US$1bn
Significant
opportunity
for TPR100
both Rx
and OTC
1 2015 IMS Health Estimate
2 2015 IMS Data source
DEVELOPMENT
In 2015, a randomised, double blind,
crossover clinical proof of concept
study in 20 healthy volunteers was
conducted using a model of induced
pain. The skin of healthy volunteers
was carefully exposed to a controlled
amount of ultra-violet light to
increase the sensitivity of the skin to
pain stimuli. The effect of TPR100,
Voltarol® gel and a placebo gel were
assessed over a six-hour time period
post dosing using two criteria: the
primary pain measurement was the
volunteers’ sensation of pain (heat
pain tolerance test) and the
secondary pain measurement was
the level of inflammation (as
indicated by erythema, reddening of
the skin). The study data was
encouraging, with TPR100 achieving
efficacy against its clinical endpoints.
The data provides a pathway for the
product’s further development and
formed the basis of the submission
for TPR100 for UK marketing
approval by Thornton & Ross.
FUTURA DEVELOPMENT AND
COMMERCIALISATION
In January 2017, Futura announced a
licensing agreement with Thornton &
Ross Ltd, the UK subsidiary of
international healthcare company
STADA Arzneimittel AG, for the
commercialisation in the UK of
TPR100. Under the terms of the
agreement, Thornton & Ross Ltd will
conduct the manufacturing scale-up
of TPR100 and hold rights to
manufacture, market and distribute
the product in the UK for the lifetime
of the product’s patents, which run
to at least 2028 in the UK. Futura
received an upfront payment and
will receive a further milestone
payment upon the product receiving
UK regulatory marketing
authorisation along with royalties on
product sales.
In July 2018, Thornton & Ross Ltd
submitted a product licence
application to the Medicines and
Healthcare products Regulatory
Agency (MHRA) for the marketing
authorisation of TPR100 in the UK. In
February 2019, the MHRA responded
to Thornton & Ross with a number of
questions requiring additional
laboratory work specifically around
the permeation characteristics of
TPR100 to be conducted. This work is
progressing but requires further
laboratory formulation adjustment
and in vitro studies to enable TPR100
to meet the strict criteria established
by the MHRA without the need of a
Phase 3 pain relief efficacy study.
This has delayed the response to
MHRA by at least six months.
Commercial discussions are ongoing
with several potential distribution
partners for other countries. Any
further licensing deals are expected
to be after UK regulatory approval.
26
Stock Code: FUMFutura Medical plc Annual Report 2019 DEVELOPMENT JOINT
VENTURE WITH CBDERMA
TECHNOLOGY
CBDerma Technology is a
company that has been
established and funded to
specifically exploit the
therapeutic potential of
cannabis. The company’s
management, backers and
advisers have extensive
knowledge, expertise and
investments in plant derived
product manufacturing.
As part of the agreement, Futura
will develop and optimise a
DermaSys® cannabidiol
formulation as well as establish
early ex vivo proof of concept
studies likely to include certain
disease states most suited for
local or regional (non-systemic)
topical treatment such as pain
relief. Optimisation work is
progressing, and the first stage
of this will be complete by end of
July 2020 before the next stage
of early proof of concept studies
are being considered. All
Intellectual Property will be
owned jointly by the Company
and CBDerma Technology
Limited.
CBD100 – DermaSys® for the
delivery of cannabidiol
Futura announced a joint venture collaboration with CBDerma Technology
Limited in September 2019 to explore the application of Futura’s advanced
proprietary transdermal technology, DermaSys® for the delivery of cannabidiol.
DERMASYS® CANNABIDIOL
FORMULATION
DermaSys® may be able to provide a
rapid and targeted local delivery of
cannabidiol through the skin to the
required site of action with a high
level of safety and more effectively
than other cannabidiol products. It is
a versatile and bespoke technology
that we are currently seeking to tailor
and adapt for the specific
requirements of cannabidiol. We are
seeking to develop our formulation
to pharmaceutical standards in order
that any future product could
potentially be sold as a cosmetic or
potential pharmaceutical product
although, in the case of the latter, it is
likely to require significant clinical
development.
Derived from both the Hemp and
Marijuana plants, cannabidiol is one
of the 113 cannabinoid compounds
found within the cannabis family.
Cannabidiol has no effect on one's
consciousness or lucidity. It is
generally regarded as non-addictive
and non-psychoactive, making it
ideal for consideration as a topically
delivered molecule for local or
regional (non-systemic) use.
In recent years there has been
significant interest in cannabidiol as
more data is emerging on its
potential benefits in a wide range of
conditions particularly pain and
epilepsy but also in a range of other
conditions including skin conditions,
multiple sclerosis, migraines, arthritis
and cancer side effects.
CANNABIDIOL’S MARKET
POTENTIAL
The market for cannabidiol products
is growing rapidly. A report by
Reports and Data forecasts that the
market for cannabidiol products is
forecast to grow from US$1 billion in
2018 to US$16 billion by 2026, at a
Compound Annual Growth Rate
(CAGR) of 27.7% during the forecast
period. The market is primarily driven
by the increase in the usage of
cannabidiol in medical application,
supplements, beverages and skin
care.
27
STRATEGIC REPORTwww.futuramedical.com FINANCIAL REVIEW
ANGELA HILDRETH
FINANCE DIRECTOR AND CHIEF OPERATING OFFICER
Judicious use of cash to see
Futura through MED3000
regulatory filing inflection
point and beyond to Q2 2021
RESEARCH AND DEVELOPMENT
COSTS
Research and Development costs for
the period ended 31 December 2019
were £10.05 million, compared to
£6.03 million for the period ended
31 December 2018. The increase of
£4.02 million is attributable to the
FM57 Phase 3 study which
completed on time and within
budget.
There was no capitalisation of R&D
costs in 2019.
ADMINISTRATIVE COSTS
Administrative costs were
£1.14 million for the period ended
31 December 2019 compared to
£1.23 million for the period ended
31 December 2018 and were
reflective of the Company’s strategy
to keep central costs lean and focus
cash resources on delivering the R&D
programme.
TAX
An R&D tax credit of £2.22 million will
be claimed in respect of 2019 and the
cash refund is expected to be
received mid-2020 from HMRC.
As outlined in the Chairman and
Chief Executive‘s Review, during the
year we continued to focus our
financial resources on the
development programme for our
fast-acting topical treatment for
erectile dysfunction (ED). As we
carried out the FM57 study, spend on
research and development activities
increased with other central and
administration costs remaining
broadly the same as the prior year.
Gross funds of £3.25 million were
raised in December 2019 (completion
January 2020) through the
combination of subscription for
shares through PrimaryBid and
institutional placing to allow the
Company to proceed with MED3000
regulatory approval as a medical
device in the EU and US.
REVENUE
The Company continued to focus its
financial and human resources on
late stage clinical development of its
fast-acting topical treatment for ED
and accelerate progress towards
achieving a significant, continuous
revenue stream within a few years.
Revenue recognised was in relation
to the CBDerma Technology
Agreement.
28
LOSS PER SHARE
The basic loss per share for 2019 was
4.36p (2018: 4.46p). Details of the loss
per share calculations are provided in
Note 10 to the consolidated financial
statements.
CASH BALANCE
The cash balance at the end of 2019
was £2.51 million (2018: £9.16 million).
Gross proceeds of £3.25 million were
received in January 2020 and the
usual refund of R&D tax credits of
£2.22 million is expected to be
received during 2020. Cash burn
during the year was £8.01 million
(2018: £5.63 million) primarily in
relation to the FM57 clinical activities.
Cash burn in relation to R&D
activities for 2020 is expected to be
significantly lower than 2019 as
clinical activities are replaced with
lower cost regulatory activities.
Futura is funded until Q2 2021.
POST PERIOD EVENTS
The Company completed a
fundraising of £3.25 million in
January 2020. The COVID-19
pandemic arose in February 2020
and we expect the pandemic to have
limited impact on operations in 2020.
Further information in relation to
COVID-19 is available in the Key risks
and mitigation section on page 31.
ANGELA HILDRETH
Finance Director and
Chief Operating Officer
Stock Code: FUMFutura Medical plc Annual Report 2019 KEY RISKS AND MITIGATION
The development of pharmaceutical drugs and medical devices requires the necessary safety, quality and efficacy to
be demonstrated in clinical and technical programmes in order to meet the requirements of the appropriate
regulatory bodies. Clinical programmes may not achieve their endpoints. The Board considers that the key risks of the
Group are:
RISK
MITIGATION
CLINICAL DEVELOPMENT AND
REGULATORY RISK
There can be no guarantee that any of the
Group’s products will be able to obtain or
maintain the necessary regulatory approvals
in any or all of the countries in respect of
which applications for such approvals are
made.
There can also be no guarantee that the
approval timelines estimated are accurate.
The estimates are based on information
from the Regulators but the time taken to
review the dossiers is not within our control.
Where regulatory approvals are obtained,
there can be no guarantee that the
conditions attached to such approvals will not
be considered too onerous by the Group or its
distribution partners in order to be able to
market its products effectively.
COMMERCIAL
RISK
There can be no guarantee that the Group
will succeed in establishing and maintaining
the necessary contractual relationships with
licensing partners for the Group’s products
under development. Even if the Group’s
products are successfully developed and
approved by the appropriate regulatory
bodies, they may not be launched by the
Group’s licensing partners, be successfully
promoted or enjoy commercial acceptance.
The Group is reliant on commercial partners
to carry out their contractual obligations and
the degree to which these can be enforced by
the Group is limited.
The Group has reduced this risk by developing products using safe,
well-characterised active compounds and excipients, has sought
and will continue to seek, where appropriate, advice from
regulatory advisers, consultations with regulatory approval bodies
and by working with experienced distribution partners.
The regulatory pathway for our treatment for erectile dysfunction
MED3000 has been significantly de-risked with data generated
from the Phase 3 study FM57 providing a greater level of
confidence of success:
Efficacy
Clinical efficacy demonstrated against a pre-treatment baseline
in FM57 Phase 3 trial in mild, moderate and severe ED sufferers.
Safety
No treatment related Serious Adverse Events or Reactions were
observed in FM57 Phase 3 trial in over 10,000 sexual intercourse
attempts. Very favourable adverse event profile.
No concerns relating to reactions with other cardiovascular
medication such as nitrates, alpha-blockers and anti-
hypertensives.
Regulatory position
Feedback has been received from EU and US Regulators
suggesting faster route to market as a medical device (subject to
data review).
The Group seeks to reduce this risk by carefully selecting
experienced licensing partners, maintaining and developing these
relationships and seeking to develop new products of commercial
interest to these and other partners.
Strong interest has been shown for both Rx and OTC rights for a
clinically proven topical treatment for ED with discussions
continuing following the results of the FM57 Phase 3 study where
MED3000 was shown to have meaningful clinical benefits in
approximately two thirds of patients in treating their ED.
Market access work with Key Opinion Leader endorsement and
engagement programme is continuing with positive feedback
received in relation to the product and the data generated in the
FM57 Phase 3 trial.
29
STRATEGIC REPORTwww.futuramedical.com KEY RISKS AND MITIGATION
RISK
MITIGATION
FINANCIAL RISK
The successful development of the Group’s
assets requires financial investment. There
can be no guarantee that Futura will have
sufficient funds to execute its business plans.
INTELLECTUAL
PROPERTY RISK
The commercial success of the Group and its
ability to compete effectively with other
companies depend, amongst other things, on
its ability to obtain and maintain patents
sufficiently broad in scope to provide protection
for the Group’s intellectual property rights
against third parties and to exploit its medical
products. The absence of any such patents may
have a material adverse effect on the Group’s
ability to develop its business.
Futura is focusing its financial resources on its lead asset MED3000.
The Group successfully completed a fundraising exercise in January
2020 raising £3.25 million to fund the product through to regulatory
approval as a medical device in the EU and potentially the US.
Additional financing needs are expected to arise in the second
quarter of 2021 and the Group is continually pursuing other sources
of dilutive and non-dilutive fundraising, including seeking business
opportunities from potential out-licensing partners, which would
enable the Group to support the future costs of development of its
products and the ability to commercialise them successfully.
Additionally, the Group places considerable emphasis on
communication with existing shareholders and potential investors,
to maximise the chances of successful future fundraising.
The Group seeks to reduce this risk by only developing products
where legal advice indicates patent protection would be available,
seeking patent protection for the Group’s products, maintaining
confidentiality agreements regarding Group know-how and
technology and monitoring technological developments and the
registration of patents by other parties.
During the year, the Group filed additional patents for MED3000
relating to erectile dysfunction and will be looking to strengthen
this further in 2020. Whilst the Group is confident that the patents
will be granted, they cannot guarantee this will be the case.
KEY PEOPLE
The expertise and experience of its key people
can have an enormous impact on business
results. Poor recognition and incentivisation
could undermine the Group’s success.
The Group appreciates the high level of expertise and contributions
made by its key people. It offers a merit-based, stimulating work
environment with a culture focused on teamwork and freedom to
operate. In addition there is a competitive performance based reward
structure, including share options that vest over a number of years.
30
Stock Code: FUMFutura Medical plc Annual Report 2019 The following risks have also been identified by the Group and will be kept under review as the situations develop and
any potential impact becomes clearer.
RISK
MITIGATION
IMPACT OF BREXIT
The impact of the UK leaving the EU is still
uncertain.
IMPACT OF COVID-19
The impact of the COVID-19 pandemic is
uncertain.
The impact of Brexit has been considered and the following has been
assessed and concluded that there will be minimal to no impact.
Regulatory strategy
Separate UK and EU submissions may be considered whilst the
impact of Brexit remains unclear.
Clinical trial data
We currently have no reason to believe that the UK regulator will
insist on clinical trial data generated in the UK. Data generated
in six EU and three non-EU countries is expected to continue to
be deemed suitable for inclusion in the approval submission.
Patent protection
Our current assessment is that UK Companies will continue to
be included within the European Patent Office.
Clearly uncertainty around Brexit remains and we will continue to
monitor relationships with regulatory bodies such as the European
Medicines Agency and the European Patent Office as new
information is provided.
The impact of COVID-19 has been considered and the Directors do not
believe that Futura will be significantly impacted during 2020. This is
based on the following assessments:
OPERATIONAL ACTIVITIES
The 2020 operational activities are focused on the completion and
submission of regulatory dossiers which will be completed, in the
main, by Futura employees. As a semi-virtual organisation, our
employees are already used to effectively working remotely, flexibly
and alongside our valued and skilled network of Consultants and
Sub-Contractors. Contingency plans are in place to draw upon this
capacity should we experience any issues with employees being
unable to perform their duties as a result of illness.
We have no ongoing clinical trials and no plans to conduct any
clinical trials requiring patient enrolment in 2020. FM57 completed
in December 2019 and the data has been analysed and collated
with the clinical study report expected to be received without any
delays. We also have no requirement to be manufacturing any
clinical trial material.
There is a possibility that COVID-19 may impact on the timelines
with Regulators to review and approve the dossiers. However, the
Regulators have confirmed that they are still working and they
have not yet advised of any delays to their timelines. We will keep
this under review.
COVID-19 may impact on the Group’s ability to raise further finance
but given we do not have an immediate requirement for funding
as we are funded until Q2 2021 and funding could come from a
number of sources, this is something we will keep under review.
The current cash runway does not assume any income from
revenue or licensing payments which could be delayed as a result
of COVID-19.
31
STRATEGIC REPORTwww.futuramedical.com SUSTAINABILITY REVIEW
KEY SDG GOALS WHERE WE CAN
HAVE THE GREATEST IMPACT
3
3
O
O
O
O
G
G
D H E A L T
D H E A L T
W ELL-B
W ELL-B
N D
N D
G
G
H A
H A
E I N
E I N
U
D
IN
IN
AN
D IN
AN
D IN
S
U
D
F
T
S
R
T
Y
R
Y
I
I
N
R
F
A
R
N
N
S
9
9
A
T
S
O
N
R
V
O
T
U
A
R
V
C
U
A
T
T
C
I
T
O
I
U
T
N
O
R
U
N
E
R
E
ENHANCING
ENHANCING
QUALITY
QUALITY
OF LIFE
OF LIFE
D
E
E
D
C
E
C
E
O
C
C
E
N
O
N
E
T
N
O
N
T
W
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O
8
8
M
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I
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C
G
R
O
R
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R
O
R
K A
K A
ND
ND
WTH
WTH
O
Y
Y
R E Q UALIT
R E Q UALIT
5
5
E
E
D
D
N
N
G E
G E
Our purpose is to enhance
our patients and
consumers’ quality of life
to enable them to live
their lives to the full.
Our approach to sustainability is
an important part of living our
purpose. We are committed to
maintaining a culture whereby
we behave in a responsible and
ethical manner and make a
positive impact on all our
stakeholders. We believe that
operating responsibly and
ethically is vital to our long-term
success.
Good governance enables
investment, innovation and
sustainable growth. Our
approach to sustainability is
underpinned by our Corporate
Governance principles of
responsibility, transparency and
integrity for the benefit of our
shareholders, employees and
other stakeholders. We strive to
be fair, accountable and
responsible in all our dealings. We
monitor and report on our
activities in a way that is accurate,
balanced, reliable and clear and
enables our shareholders and
stakeholders to compare our
progress year on year.
The focus of our sustainability
reporting is the UN Sustainable
Development Goals (SDGs). The
UN SDGs are a universal call to
action to end poverty, protect the
planet and ensure that all people
enjoy peace and prosperity. Each
SDG has global sustainable
development priorities and
aspirations for 2030, which give a
common set of goals and targets
to mobilise global efforts around.
Our focus is on the four SDGs
where we believe we can have
the greatest impact and therefore
the greatest opportunity to make
a real and lasting difference.
32
Stock Code: FUMFutura Medical plc Annual Report 2019
GOOD HEALTH AND WELL-BEING
We are developing medical products that are
optimised for clinical efficacy, safety, mode of
administration and patient convenience, and will
lead to improved health and well-being.
We continue to place the health and safety of our
staff and consultants at the heart of our business
and are committed to providing a thriving
working environment for all, offering benefits
such as heavily subsidised gym membership and
health screenings for employees.
INDUSTRY, INNOVATION AND INFRASTRUCTURE
We invest heavily in R&D to develop a portfolio of
innovative products based on our proprietary
technology, DermaSys® to generate future
revenue and value for our shareholders. We invest
in clinical research to test our products and
optimise their safety and efficacy and we share
and publish this research with the medical
community to enhance scientific research.
Our semi-virtual structure supports economic
and infrastructure development through the
outsourcing of numerous activities including
clinical research, statistical analysis,
manufacturing, analytical testing and laboratory
work. If we are successful with our products this
creates more opportunities for our partners.
DECENT WORK AND ECONOMIC GROWTH
Our employees are our most important asset. We
are reliant on a skilled workforce for the success of
the Group. We treat our employees fairly and
support their ongoing development. We seek to
empower them and ensure that they are fully
engaged in all aspects of Futura’s objectives and
high quality standards. Each of our employees
contributes and shares in Futura’s success. In 2019
we retained all our employees.
We are focused on commercialising our
technology and growing the value of the Group,
which will lead to developmental benefits for the
shareholders and employees of the Group.
GENDER EQUALITY
We believe in a diverse and gender balanced
workforce. We are committed to supporting
employment policies and practices that make
provision for equal opportunities and non-
discrimination in our workforce. We have a
balanced workforce with near equal number of
men and women in our R&D team, as well as
across the Group.
TOTAL WORKFORCE GENDER SPLIT
Men
Women
33
STRATEGIC REPORTwww.futuramedical.com HOW WE ENGAGE WITH OUR STAKEHOLDERS
OUR STAKEHOLDERS
The Board sought to
understand the views of the
stakeholders through its
interactions with them
during the year and had
regards for their interests in
Board discussion and
decision-making.
s172 COMPANIES ACT 2006
The Board is aware of its duties
under s172 of the Companies Act
and has worked throughout the
year to promote the success of
the Company for the benefit of
its members as a whole. In doing
so, it has regard to those
stakeholders identified under
s172, as well as the additional
stakeholders set out here.
The Company launched a brand
new website with the Investor
Section and FAQs updated. All
Investor events are recorded and
webcast so information is freely
available to all shareholders. In
addition to the standalone events,
our Annual General Meeting
provides an opportunity for all
shareholders to meet and engage
with the Board and attendance is
always very much encouraged.
SHAREHOLDERS
The Board naturally considers its
shareholders to be key stakeholders
of the Company and is focused
upon delivering long-term value for
their benefit. The Company
engages with its shareholders and
potential shareholders on a regular
basis with investor meetings
throughout the year as well as
focused roadshows at the time of
our published results. The results of
this investor engagement are
reported to the Board to help
inform our strategy and
communications. During 2019 we
were proud to host a very well
attended R&D Seminar in London
which gave our shareholders an
opportunity to look at the market
opportunity for a fast-acting topical
treatment for erectile dysfunction
which is our lead product.
34
Stock Code: FUMFutura Medical plc Annual Report 2019 HOW WE ENGAGE WITH OUR STAKEHOLDERS
EMPLOYEES
PATIENTS
The Board considers its employees
to be a primary stakeholder of the
Company and is conscious of the
regard it has to them under s172.
The Board, and especially the
Remuneration Committee, have
also had particular regards to
employees as they reviewed and
revised the long-term incentive
arrangements as part of its
strategy to attract, retain and
motivate employees in order to
deliver value for shareholders.
These actions were consistent with
the Board’s commitment to
investing in and responsibly
rewarding employees as they
deliver the Company’s strategy.
Our purpose is clear, “to enhance
our patients and consumers’
quality of life to enable them to
live their lives to the full”. The
patients our therapies are
designed to treat are at the heart
of why we do it. We hold regular
Advisory Boards and conduct
market research to help us with
patient insights. We are focused
on bringing innovative products to
market where there are unmet
patient needs with existing
treatments.
DEVELOPMENT PARTNERS
AND SUPPLIERS
As a semi-virtual company,
Futura relies upon its relationships
with external service providers,
consultants and sub-contractors
to provide resources on an “as
needed” basis. These resources
provide the Company with
specialist skills and insights as well
as additional capacity. In 2019, the
Company conducted a large
clinical study, FM57 which relied
upon the resources from Clinical
Research Organisations (CROs) to
conduct and complete the trial on
our behalf and Contract
Manufacturing Organisations
(CMOs) to ensure that trial
materials were available at the trial
sites, as well as providing key
insights into our patients’ needs.
35
STRATEGIC REPORTwww.futuramedical.com BOARD OF DIRECTORS
JOHN CLARKE
Non-Executive Chairman
JAMES BARDER
Chief Executive
ANGELA HILDRETH
Finance Director, Chief
Operating Officer and
Company Secretary
Current roles: John Clarke is the
Chairman of Futura Medical plc. He
chairs the Nominations Committee,
and is a member of the Audit
Committee and the Remuneration
Committee. He is also the Non–
Executive Chairman of Science in
Sport plc, Kind Consumer Holdings
Limited and is a senior adviser to
Helios Investment Partners LLP.
Current roles: James Barder is the
Group’s Chief Executive. He assists
the Remuneration Committee and
the Nominations Committee (but is
not a member of and does not vote
on either). He has overall
responsibility for all activities of the
Group, is a principal contact for
shareholder and investor relations
and leads commercial negotiations.
Past roles: Retired from GSK as
President of GSK Consumer
Healthcare. Non–Executive Chairman
of Quantum Pharma plc, which was
subsequently acquired by Clinigen
plc.
Past roles: Managing Director of Aon
Capital Markets Limited and Non-
Executive Director of Lorega Limited.
James predominantly worked in the
field of insurance and finance
including firms he founded.
Brings to the Board: Extensive
experience of the healthcare sector,
having worked at a senior level at
GSK for more than 35 years.
Brings to the Board: Over 25 years
of experience in setting up,
managing and running companies.
Current roles: Angela joined the
Group in February 2018. She leads
the Group’s finance, HR and IT
functions, inputs into commercial
and financial strategy, ensures its
compliance procedures and is a
principal contact for shareholder and
investor relations matters.
Past roles: Senior financial roles in a
diverse range of industries, including
seven years as UK Finance Director at
Shield Therapeutics plc (quoted on
AIM).
Brings to the Board: Strategic and
operational financial experience of
developing and commercialising
pharmaceutical products.
36
Stock Code: FUMFutura Medical plc Annual Report 2019 KEN JAMES
Executive Director
and Head of R&D
JONATHAN FREEMAN
Senior Independent
Non-Executive Director
Current roles: Ken James is the
Head of R&D. He oversees the
development, regulatory and
manufacturing strategies for the
Group’s existing pipeline and the
evaluation of early stage pipeline
opportunities. He is also an Executive
Director.
Past roles: Senior Vice President of
Research and Development for
GlaxoSmithKline Worldwide
Consumer Healthcare, having
worked in the UK and the United
States.
Brings to the Board: Over 40 years’
experience in the research,
development and commercialisation
of consumer healthcare products.
Current roles: Jonathan Freeman is
a Senior Independent Non-Executive
Director. He chairs the Audit
Committee and the Remuneration
Committee and is also a member of
the Nominations Committee. He is
also a Non-Executive Director of
Braveheart Investment Group plc
and of Kingswood Holdings Limited
Past roles: Director of Beeson
Gregory, Chief Executive Officer of
Syndicate Asset Management plc, a
Director of Hume Capital Securities
plc and a Director of Bould
Opportunities plc.
Brings to the Board: Over 25 years
of experience in the financial services
sector, guidance on City regulatory
matters, corporate finance and
investor relations.
37
www.futuramedical.comGOVERNANCE REMUNERATION COMMITTEE REPORT
REMUNERATION COMMITTEE:
COMPOSITION AND TERMS OF
REFERENCE
During the period under review the
Remuneration Committee
comprised the independent Non-
Executive Directors and was chaired
by Jonathan Freeman. In 2018, the
Company adopted the Quoted
Companies Alliance’s Corporate
Governance Code (the “QCA Code”)
and the report has been prepared in
accordance with the principles of the
QCA Code. The contents of this
report are unaudited unless
otherwise stated.
The purpose of the Remuneration
Committee is to ensure that the
Executive Directors and other
employees are fairly rewarded for
their individual contribution to the
overall performance of the Group.
The Committee considers and
recommends to the Board the
remuneration of the Executive
Directors and is kept informed of the
remuneration packages of senior
staff and invited to comment on
these. There were four Remuneration
Committee meetings during 2019.
The Board retains responsibility for
overall remuneration policy. The
terms of reference of the
Remuneration Committee are set
out in the Investor Centre/Corporate
Governance section on the Group’s
website at www.futuramedical.com.
POLICY ON EXECUTIVE
DIRECTORS’ REMUNERATION
Executive remuneration packages
are designed to attract and retain
executives of the necessary skill and
calibre to run the Group. Direct
benchmarking of remuneration is
difficult given the specialised nature
and size of the Group. The
Remuneration Committee
recommends to the Board
remuneration packages by reference
to individual performance and uses
the knowledge and experience of the
Committee members, published
surveys relating to AIM companies,
the pharmaceutical industry and
market changes generally. The
Remuneration Committee has
responsibility for recommending any
long-term incentive plans.
38
The Board determines whether or
not Executive Directors are permitted
to serve in roles with other
companies. Such permission is only
granted where a role is on a strictly
limited basis, where there are no
conflicts of interest or competing
activities and providing there is not
an adverse impact on the
commitments required to the Group.
Earnings from such roles are not
disclosed to the Group.
There are four main elements of the
remuneration package for Executive
Directors and staff:
Basic salaries and benefits in kind
Basic salaries are recommended to
the Board by the Remuneration
Committee, taking into account the
performance of the individual and
the rates for similar positions in
comparable companies. Benefits in
kind comprising death in service
cover and private medical insurance
are available to all staff and Executive
Directors. Benefits in kind are
non-pensionable.
Share options and other share-
based incentives
The Group operates approved and
unapproved share option schemes
for the Executive Directors and other
employees to motivate those
individuals through equity
participation. Unapproved share
options are also sometimes granted
to key consultants. Exercise of share
options under the schemes is subject
to specified exercise periods and
compliance with the AIM Rules. The
schemes are overseen by the
Remuneration Committee which
recommends to the Board all grants
of share options based on the
Remuneration Committee’s
assessment of personal performance
and specifying the terms under
which eligible individuals may be
invited to participate.
The Remuneration Committee
considers that the best alignment of
employee interests with those of its
shareholders is through the
continued use of incentives for
performance through the award of
share options or other share-based
arrangements.
The Group operates a Long-Term
Incentive Plan (“LTIP”). The quantum
of any awards receivable by the staff
and all Directors will depend on
achieving set Group performance
milestones and the share price at the
time relative to targets set in
advance. As a guide, if all of the
approved milestones are achieved at
the share price targets over the next
48 months and if the Group
exercised its discretion to settle the
awards in equity then the additional
shares issued would be equivalent to
approximately 1.37% of the issued
share capital.
Bonus scheme
Bonuses are granted on a
discretionary basis and linked to
performance objectives set by the
Remuneration Committee at the
end of each calendar year in order to
quantify the bonus that has been
achieved by each individual within
the scheme.
Pension contributions
The Group pays a defined
contribution to the pension scheme
of Executive Directors and other
employees. The individual pension
schemes are private and their assets
are held separately from those of the
Group.
Salaries and benefits are reviewed in
December to cover the following
calendar year. The timing of the
review enables the Group’s
performance over the preceding
financial year and the strategy for
the forthcoming year to be
considered.
SERVICE CONTRACTS
The Executive Directors are
employed under service contracts
requiring six months’ notice by either
party. Non-Executive Directors and
the Chairman receive payments
under appointment letters which are
terminable by three months’ notice
by either party. The service contracts
of the Non-Executive Directors are
made available for inspection on
request.
Stock Code: FUMFutura Medical plc Annual Report 2019 POLICY ON NON-EXECUTIVE DIRECTORS’ REMUNERATION
The Non-Executive Directors and the Chairman each receive a fee for their services as a director, which is approved by
the Board, mindful of the time commitment and responsibilities of their roles and of current market rates for
comparable organisations and appointments. Non-Executive Directors and the Chairman are reimbursed for travelling
and other incidental expenses incurred on Group business in line with the Group Expenses Policy. The Non-Executive
Directors and the Chairman are also included under the long-term incentive plan.
The Board encourages the ownership of Futura shares by Executive and Non-Executive Directors alike and in normal
circumstances does not expect Directors to undertake dealings of a short-term nature.
The Non-Executive Directors receive a proportion of their remuneration in the form of shares. The quantum of shares is
determined at the start of each calendar year based on the average closing mid-price of the last ten trading days prior
to the year-end. The award for 2019 was settled on 28 January 2020 by the issue of 341,659 shares at 6.01 pence per
share. The 2020 award has been determined at 12.20 pence per share and the Non-Executive Directors will accrue
these shares over 2020 and receive them, or such lower number as have accrued if they leave the Group earlier, in
January 2021.
The Board considers ownership of Futura shares by Non-Executive Directors as a positive alignment of their interest
with shareholders. The Board periodically reviews the shareholdings of the Non-Executive Directors and will seek
guidance from its advisers if, at any time, it is concerned that a shareholding may, or could appear to, conflict with their
duties as an independent Non-Executive Director of the Group.
DIRECTORS’ EMOLUMENTS
The emoluments of the Directors, who represent the key management personnel, were as follows in 2019:
Salary &
Directors’
Fees
£
235,593
170,663
153,750
–
63,140
35,947
659,093
Year ended 31 December 2019
Bonus
£
Share
Awards
£
Benefits
In Kind
£
Pension
£
Total
£
Year ended
31 December
2018
£
–
–
–
–
–
–
–
–
–
–
–
25,699
8,562
34,261
2,652
2,130
2,350
–
–
15,375
–
–
–
–
–
–
7,132
15,375
238,245
172,793
171,475
–
88,839
44,509
715,861
276,388
203,453
194,971
144,465
86,795
43,464
949,356
Executive Directors
James Barder
Ken James
Angela Hildreth
Derek Martin*
Non-Executive Directors
John Clarke
Jonathan Freeman
Totals
* Derek Martin resigned in February 2018 and his total fees included £55,000 compromise payment.
The above fees and emoluments exclude reimbursed expenditure incurred in the conduct of Group business.
There were no settlements under the LTIP in 2019 (2018: £nil).
39
www.futuramedical.comGOVERNANCE REMUNERATION COMMITTEE REPORT
DIRECTORS’ INTERESTS IN SHARES
John Clarke
James Barder
Jonathan Freeman
Ken James
Angela Hildreth
Totals
31 December 2019
31 December 2018
Beneficial
Interests
Non-beneficial
Interests
Beneficial
Interests
Non-beneficial
Interests
256,226
968,472
90,621
299,581
142,857
–
117,500
–
–
–
198,976
968,472
71,043
299,581
142,857
–
867,500
–
–
–
1,757,757
117,500
1,680,929
867,500
DIRECTORS’ INTERESTS IN SHARE OPTIONS
The Board uses share options to align Executive Directors’ and employees’ interests with those of shareholders in order
to provide incentives and reward them based on improvements in Group performance. Options granted to the
Executive Directors were as follows:
James Barder
Ken James
Angela Hildreth
Totals
31 December 2019
31 December 2018
Options
Held
1,750,000
800,000
400,000
2,950,000
Share-based
Payment
Expense
18,410
14,728
14,728
47,866
Options
Held
1,500,000
600,000
200,000
2,300,000
Share-based
Payment
Expense
28,711
22,968
450
52,129
All share options were granted with an exercise price at or above market value on the date of grant. The main vesting
condition of the share options is that the Director remains employed with the Group as at the date of exercise or
continues to provide consultancy services as at the date of exercise. The share options of the Directors under the
Futura Medical plc Enterprise Management Incentive Scheme are set out below:
Grant Date
Number
Awarded
Exercise Price/
Share
Earliest
Exercise Date
Expiry Date
23 September 2013
34,615
71.50 pence
1 October 2015
30 September 2020
124,348
250,000
250,000
200,000
200,000
200,000
200,000
200,000
200,000
1,858,963
57.50 pence
1 October 2018
30 September 2023
7.50 pence
1 October 2020
30 September 2025
31.00 pence
1 October 2021
30 September 2026
57.50 pence
1 October 2018
30 September 2023
30.50 pence
1 October 2019
30 September 2024
7.50 pence
1 October 2020
30 September 2025
31.00 pence
1 October 2021
30 September 2026
7.50 pence
1 October 2020
30 September 2025
31.00 pence
1 October 2021
30 September 2026
James Barder
James Barder
James Barder
James Barder
Ken James
Ken James
Ken James
Ken James
13 January 2017
19 November 2018
17 September 2019
13 January 2017
12 September 2017
19 November 2018
17 September 2019
Angela Hildreth
19 November 2018
Angela Hildreth
17 September 2019
Totals
40
Stock Code: FUMFutura Medical plc Annual Report 2019 DIRECTORS’ INTERESTS IN LONG-TERM INCENTIVE PLAN
The performance milestones, which are non-market related milestones, were not met in 2019 and therefore no charge
was recognised in the period. Assuming that each remaining Group performance milestone is met, at the target share
price and before the next target date ends, and if the awards were to be equity-settled then the number of shares that
could be awarded, before tax, to the participants are:
James Barder
Angela Hildreth
Ken James
John Clarke
Jonathan Freeman
Other employees
At discretion of Remuneration Committee
Totals
2020
101,535
88,721
95,621
88,721
56,362
2021
101,535
88,721
95,621
88,721
56,362
2022
101,535
88,721
95,621
88,721
56,362
369,679
369,679
369,679
44,363
44,363
44,363
2023
101,535
88,721
95,621
88,721
56,362
369,679
44,363
845,002
845,002
845,002
845,002
The Directors consider that until a milestone has been met it is not appropriate to recognise a share-based
remuneration charge in the Consolidated Statement of Comprehensive Income in respect of the LTIP.
JONATHAN FREEMAN
Chairman of the Remuneration Committee
41
www.futuramedical.comGOVERNANCE CORPORATE GOVERNANCE STATEMENT
The Board is committed to
building long-term
shareholder value in an
open and ethical manner.
Dear Shareholder,
As Chairman of Futura Medical, and
on behalf of the Board, I am pleased
to present our Corporate Governance
Statement for the year ended
31 December 2019. I am responsible
for leading the Board so as to ensure
that the Group has in place the
strategy, people and structure to
deliver value to shareholders and
other stakeholders of the Group as a
whole over the medium to long term,
supported by a corporate culture
based on sound ethical values and
behaviour, as more fully explained in
the Corporate Governance Report on
the following pages. Angela Hildreth
in her capacity of Company Secretary,
has assumed responsibility for
ensuring the Group has appropriate
corporate governance standards in
place and that these requirements
are followed and applied within the
Group as a whole.
Futura Medical has adopted the QCA
Corporate Governance Code (the
“QCA Code”) as it considers that this
is the most suitable framework for
smaller listed companies. We
continue to evaluate how we govern
the Group on an ongoing basis,
working for the best long-term
interests of our shareholders in an
open, transparent and ethical
manner. The Board considers that
this framework can grow with the
Company, yet it is considered
premature to plan for an evolution of
the governance framework at this
stage. If the Company undertakes
significant transactions that would
require growth, then the Board will
consider the implication of this on
the corporate governance structure
at that point in time.
The principal methods of
communicating our application of
the QCA Code are this Annual Report
and the Investor section of our
website at www.futuramedical.com.
The QCA Code sets out ten principles
and in the Corporate Governance
Report on pages 43 to 46 we have set
out the Group’s application of the
QCA Code, including, where
appropriate, cross references to other
sections of the Annual Report and to
our website.
JOHN CLARKE
Non-Executive Chairman
31 March 2020
42
Stock Code: FUMFutura Medical plc Annual Report 2019 CORPORATE GOVERNANCE REPORT
PRINCIPLE 1
Business Model and Strategy
The strategy and business
operations of the Group are set out
in the Strategic Report section of
the Annual Report. The full Board
meets at least six times per year and
is responsible for formulating and
monitoring Group strategy, as well
as complying with legal, regulatory
and corporate governance matters.
The strategy and business model
and amendments thereto, are
developed by the Chief Executive
Officer and his senior management
team, and approved by the Board.
The management team, led by the
Chief Executive Officer, is
responsible for implementing the
strategy and managing the
business at an operational level.
The Group’s overall strategic
objective is to develop innovative
products with compelling
commercial potential in the
pharmaceutical and consumer
healthcare market, leveraging our
core skills in transdermal
technology. This strategy is aligned
with the well-publicised
demographic changes of ageing
populations, increasing prosperity,
government initiatives to increase
self-medication, pressures on payers
and healthcare systems, the rapid
growth of prescription and over the
counter (“OTC”) opportunities in
developing countries, the natural
desire for an improved quality of life
and our expectations that consumer
healthcare spending will increase as
a result. The objective is to develop
products such that each on its own
has the potential to generate
significant annual revenues.
At an appropriate stage of
development, the Group may
choose to realise monetary value
from such products via out-
licensing deals with pharmaceutical
companies with interests in both
prescription (“Rx”) and OTC
products. Alternatively, if resources
permit, the Group may choose to
advance a product through clinical
development and approval in order
to retain the full value of the product
within the Group.
The Group operates in a high risk
and heavily regulated sector and
this is reflected in the principal risks
and uncertainties set out on pages
29 to 31 of our Strategic Report. The
key challenge to successful
development of this strategy is
ensuring that there are sufficient
financial resources that can be
deployed in the short-term in
advance of the products being able
to generate financial rewards for the
Group in the longer term.
PRINCIPLE 2
Understanding Shareholder
Needs and Expectations
The Group seeks to maintain a
regular dialogue with both existing
and potential new shareholders in
order to communicate the Group’s
strategy and progress and
understand the needs and
expectations of shareholders.
Institutional shareholders and
analysts have the opportunity to
discuss general issues and provide
feedback at meetings with the
Company. In addition, all
shareholders are encouraged to
attend the Company’s Annual
General Meeting.
PRINCIPLE 3
Stakeholder Responsibilities
The Group is aware of its corporate
and social responsibilities and the
need to maintain effective working
relationships across a range of
stakeholder groups. These include
the Group’s employees, regulators,
partners, suppliers and patients
involved in the Group’s clinical
development activities. The Group’s
operations and working practices
need to balance the needs of all of
these stakeholder groups while
maintaining focus on the Board’s
primary responsibility to promote
the success of the Group for the
benefit of its members as a whole.
The Group endeavours to take
feedback received from
stakeholders by meeting regularly
and responding accordingly. This
feedback ensures that the Group
can respond to new issues and
opportunities that arise to further
the Group in the delivery of its
long-term strategy. Further
information can be found on pages
34 and 35.
PRINCIPLE 4
Risk Management
The Audit Committee and the Risk
and Oversight Committee are
responsible to the Board for risk
management and internal controls
and for ensuring that procedures
are in place, and are being
effectively implemented to identify,
evaluate and manage the
significant risks faced by the Group.
The internal controls are designed
to manage rather than eliminate
risk and provide assurance against
material misstatement or loss.
The Audit Committee is responsible
for reviewing the effectiveness of
these internal controls on an annual
basis. In 2017, the Board created a
Risk and Oversight Committee
(ROC) to provide additional
oversight of its operational
compliance in respect of its assets.
During 2019 the ROC provided
oversight of the Company’s Medical
Device Quality Management System
(QMS) as defined in the Medical
Device Quality Manual. In addition
the ROC provided oversight of the
clinical trials that have been
planned and undertaken. The ROC
meets at least once a year or more
frequently if required and agenda
items are driven by a management
review which assesses compliance
against the QMS and issues arising
out of the clinical trials that the
Company is planning and
undertaking.
Given the current size and
transparency of the operations of
the Group, the Board has concluded
that an internal audit function is not
required and this will be continually
reviewed as the Company grows. A
summary of principal risks and
uncertainties facing the Group, as
well as mitigating actions, are set
out on pages 29 to 31 of our
Strategic Report.
43
www.futuramedical.comGOVERNANCE CORPORATE GOVERNANCE REPORT
PRINCIPLE 5
A Well-functioning Board of Directors
Futura’s Board currently comprises two Non-Executive Directors and three Executive Directors. All of the Directors are
subject to election by shareholders at the first Annual General Meeting after their appointment and will continue to
seek re-election by rotation at least once every three years.
Board of Directors
During the year under review, the Board comprised three Executive Directors, a Non-Executive Chairman and one
additional Non-Executive Director. Details of the Directors who served in the year can be found on page 47.
Attendance at Board and Committee meetings
The Board is responsible to the shareholders for proper management of the Group and meets at least six times per
year to set the overall direction and strategy of the Group, to review scientific, operational and financial performance
and to advise on other strategic matters as they arise. All key operational and investment decisions are subject to
Board approval. During the year the Board met six times in person and on two occasions by telephone. In addition,
authority was delegated on an ad hoc basis to subcommittees to deal with statutory matters, such as the approval of
the full year results and interim statement.
Director
John Clarke
Jonathan Freeman
James Barder
Angela Hildreth
Ken James
Board
6/6
6/6
6/6
6/6
6/6
Audit
Committee
Remuneration
Committee
Nominations
Committee
3/3
3/3
4/4
4/4
2/2
2/2
Attendance is expressed by the number of meetings attended/number eligible to attend. Directors’ attendance by
invitation at meetings of committees of which they are not a member is not reflected in the table above.
Independence of Board Directors
The Board considers itself independent. The QCA code suggests that a Board should have at least two independent
Non-Executive Directors who currently sit on the Board of the Company and are regarded as independent under the
QCA’s guidance for determining such independence. Jonathan Freeman has served on the Board for a concurrent
period longer than nine years but on the basis he had no association with, and was independent from the Group at the
time of his appointment and, as such, the Directors consider he satisfies the independence criteria set out in the QCA
Code. The Chairman considers Mr Freeman’s conduct at Board meetings demonstrates continuing independence and
represents appropriate challenge to the executives.
Non-Executive Directors receive their fees in the form of a basic cash fee and an equity-based fee which takes the form
of nominal price share options under the Company’s Non-Executive Share Option Scheme. To avoid any incentive that
may influence the Non-Executive Directors’ independence, the options grants are not deemed significant, either for
any individual Non-Executive Director or in aggregate. The current remuneration structure for the Board’s Non-
Executive Directors is deemed to be proportionate and in line with market rates. The Directors commit the time
required to fulfil their duties.
PRINCIPLE 6
Appropriate Skills and Experience of the Directors
The Board considers that all of the Non-Executive Directors are of sufficient competence and calibre to add strength
and objectivity to its activities and bring significant experience in commercial, operational and financial development
of the Group’s products.
The Board regularly reviews the composition of the Board to ensure that it has the necessary depth and breadth of
skills to support the ongoing delivery of the Group’s long-term strategy and the Board is committed to ensuring
diversity of skill, experience and gender balance. Board members maintain their skillsets through practice in day-to-
day roles, enhanced with attending specific training where required. This is a combination of in-house Company
arranged briefings and external courses.
44
Stock Code: FUMFutura Medical plc Annual Report 2019 The Board uses external advisers where necessary to enhance knowledge or to gain access to particular skills or
capabilities. Accountants and lawyers are used for diligence work on specific projects; both the Nominations
Committee and Remuneration Committee use recruitment and employment consultants and specialist advisers have
been used by the Board to ensure compliance in specific areas.
The Chairman, in conjunction with the Company Secretary, ensures that the Directors’ knowledge is kept up to date
on key issues and developments pertaining to the Group, its operational activities and the Directors' responsibilities as
members of the Board. During the course of the year, the Directors received updates from the Company Secretary on
a number of corporate governance matters.
The Company Secretary provides information and advice on corporate governance and individual Directors on any
aspect of their role, particularly supporting the Chairman and those who chair Board Committees. The Company
Secretary is also responsible for ensuring that Board procedures are followed, that the Company complies with
company law and AIM Rules and that the Board receives the information it needs to fulfil its duties effectively.
Biotech/
Pharma sector
Financial
General
Management
Other public company
(Board level)
John Clarke
Jonathan Freeman
James Barder
Angela Hildreth
Ken James
PRINCIPLE 7
Evaluation of Board Performance
Internal evaluation of the Board, the Committees and individual Directors is undertaken on an annual basis and was
recently completed in December 2019 in the form of peer appraisal, questionnaires and discussions led by the
Chairman to determine the effectiveness and performance as well as the Non-Executive Directors’ continued
independence. The Board may utilise the results of the evaluation process when considering the adequacy of the
composition of the Board, to identify any training and development needs and for succession planning.
The Board as a collective is evaluated on diversity, balance, governance and strategy and individual members are
evaluated on a range of criteria such as leadership, strategy, governance, interpersonal skills and integrity. The
performance of the Chairman was also evaluated in the same way and this was led by Non-Executive Director
Jonathan Freeman.
The Chairman is responsible for the annual performance assessment of the Chief Executive Officer and the Chief
Executive Officer reviews the performance of the other Executive Directors, the Finance Director/Chief Operating
Officer and Head of R&D where performance against corporate objectives set at the start of the year is measured.
The Nominations Committee continues to monitor the requirement for succession planning.
PRINCIPLE 8
Corporate Culture
The Board recognises that their decisions regarding strategy and risk will impact on the culture of the Group as a
whole and that this will impact the performance of the Group. The Board seeks to maintain the highest standards of
integrity in the conduct of the Group’s operations. An open culture is encouraged within the Group with regular
communications to staff regarding progress and staff feedback regularly sought. The Board assessment of the culture
within the Group at the present time is one where there is respect for all individuals, there is open dialogue within the
Group and there is a commitment to provide the best service possible to all the Group’s customers which include
commercial partners and patients and clinicians who are participating in our clinical development programmes.
45
www.futuramedical.comGOVERNANCE
CORPORATE GOVERNANCE REPORT
PRINCIPLE 9
Maintenance of Governance
Structures and Processes
The Board has overall responsibility
for promoting the success of the
Group. The Executive Directors have
day-to-day responsibility for the
operational management of the
Group’s activities. The Non-Executive
Directors are responsible for the
overall operational management of
the Group’s activities and for bringing
independent and objective
judgement to Board decisions.
There is a clear separation of the roles
of Chief Executive Officer and Non-
Executive Chairman. The Chairman is
responsible for overseeing the
running of the Board, ensuring that
no individual or group dominates the
Board’s decision making and
ensuring the Non-Executive Directors
are properly briefed on matters. The
Chairman has overall responsibility
for corporate governance matters in
the Group and chairs the
Nominations Committee. The Chief
Executive Officer has the
responsibility for implementing the
strategy of the Board and managing
the day-to-day business activities of
the Group. The Company Secretary is
responsible for ensuring that Board
procedures are followed and
applicable rules and regulations are
complied with.
The Audit Committee
The Audit Committee normally
meets twice a year and has
responsibility for, amongst other
things, reviewing the annual report
and accounts and interim statements
involving, where appropriate, the
External Auditor. The Committee also
approves the External Auditor’s fees
and ensures the Auditor’s
independence as well as focusing on
compliance with legal requirements
and accounting standards. It is also
responsible for ensuring that an
effective system of internal control is
maintained. The ultimate
responsibility for approving the
annual financial statements and
interim statements remains with
the Board.
46
The Finance Director/Chief Operating
Officer, and the External Auditor
attend meetings by invitation only.
The Audit Committee meets privately
(without any other Board member
present) with the External Auditor at
least once per year.
The Group’s Auditor is Grant Thornton
LLP based at 1020 Eskdale Road,
Winnersh, Wokingham,
RG41 5TS and was appointed in 2019
as part of a tender process. The
current Audit partner is Mark Bishop.
The Remuneration Committee
The Remuneration Committee which
meets as required, but at least once
per year, has responsibility for making
recommendations to the Board on
the compensation of senior
executives and determining, within
agreed terms of reference, the
specific remuneration packages for
each of the Executive Directors. It also
supervises the Group’s share
incentive schemes and sets
performance conditions for share
options granted under the schemes.
The independent Non-Executive
Director(s) and the Non-Executive
Chairman sit on the Committee, and
the Chief Executive Officer attends by
invitation only.
The Directors’ remuneration can be
found in the Remuneration
Committee Report on pages 38 to 41.
The Directors believe that the above
disclosures constitute sufficient
disclosure to meet the requirements
of the QCA Code for a Remuneration
Committee Report. Consequently, a
separate Directors’ Remuneration
Report is not presented in the
Group’s Annual Report. However, the
Committee will continue to review
guidance in relation to the contents
of remuneration reports and ensure
the reporting evolves as the
Committee considers appropriate.
The Nominations Committee
The Nominations Committee, which
meets as required, but at least once
per year, has responsibility for
reviewing the size and composition
of the Board, the appointment of
replacement of Directors, the
monitoring of compliance with
applicable laws, regulations and
corporate governance guidance and
making appropriate
recommendations to the Board.
The independent Non-Executive
Director(s) and the Non-Executive
Chairman sit on the Committee, and
the Chief Executive Officer attends by
invitation only.
The terms of reference for the above
committees can be found in the
Investors section of our website at
www.futuramedical.com.
The Board also oversees the Group’s
share dealing code and its whistle-
blowing policies and procedures.
PRINCIPLE 10
Shareholder Communication
The Group places a high priority on
regular communication with its
various stakeholder groups and aims
to ensure that all communications
concerning the Group’s activities are
clear, fair and accurate. The website is
regularly updated and users can
register to be alerted when
announcements or details of
presentations and events are posted
onto the website. We also held a R&D
day in February 2019 which was
recorded and added to the website
for all investors to view.
The Group’s financial reports can be
found in the Investors section of our
website at www.futuramedical.com.
Notice of General Meetings of the
Company and results of voting on
all resolutions in future general
meetings can be found in the
RNS section of our website at
www.futuramedical.com.
The results of voting on all resolutions
in future general meetings will be
posted to the Group’s website after
the relevant meeting.
JOHN CLARKE
Non-Executive Chairman
31 March 2020
Stock Code: FUMFutura Medical plc Annual Report 2019 DIRECTORS’ REPORT
DIRECTORS
DIRECTORS’ INTERESTS
The Directors during the year were:
John Clarke
James Barder
Angela Hildreth
Ken James
Non-Executive
Chairman
Chief Executive
Officer
Finance Director/
Chief Operating
Officer
Head of R&D/
Executive
Director
Jonathan Freeman Non-Executive
Director
GENERAL INFORMATION
Futura Medical plc is a public limited
company incorporated in the United
Kingdom, registered number
04206001, which is listed on the
Alternative Investment Market (“AIM”)
of the London Stock Exchange.
REVIEW OF BUSINESS
The Group continues to invest in the
development of its transdermal
technology DermaSys® with focus
being on sexual health and pain relief
management. The Strategic Report
on pages 1 to 35 provides a review of
the business, including the Group’s
trading for the year ended
31 December 2019, an indication of
likely future developments, key
performance indicators and risks.
DIVIDENDS
The Group has reported its
consolidated financial statements in
accordance with International
Financial Reporting Standards
(“IFRSs”) as adopted by the European
Union. The results for the year and
financial position of the Company
and the Group are set out in the
financial statements and reviewed in
the Financial Review within the
Strategic Report. The Directors do
not recommend the payment of a
dividend (2018: £nil).
The Directors’ interests in the
Company’s shares and options over
ordinary shares are shown in the
Remuneration Committee Report on
pages 38 to 41. No Director has any
beneficial interest in the share capital
of any subsidiary or associate
undertaking.
DIRECTORS’ REMUNERATION
Details of the Directors’ remuneration
appear in the Remuneration
Committee Report on pages 39 to 41.
DIRECTORS’ AND OFFICERS’
LIABILITY INSURANCE
The Company has, as permitted by
the Companies Act 2006, maintained
insurance cover on behalf of the
Directors, indemnifying them against
certain liabilities which may be
incurred by them in relation to the
Company.
POLITICAL DONATIONS
The Group made no political
donations during the current or prior
year.
FINANCIAL INSTRUMENTS – RISK
MANAGEMENT
The Group’s financial risk
management policy is set out in
Note 4 to the financial statements.
RESEARCH AND DEVELOPMENT
(R&D)
During the year ended 31 December
2019 the Group’s expenditure on R&D
was £10,051,148 (2018: £6,038,941).
ADEQUACY OF INFORMATION
SUPPLIED TO AUDITOR
Each Director who held office at the
date of approval of this Report
confirms that, so far as the Director is
aware, there is no relevant audit
information of which the Company’s
Auditor is unaware and the Director
has taken all the steps that he or she
ought to have taken as a Director to
make himself or herself aware of any
relevant audit information and to
establish that the Company’s Auditor
is aware of that information. This
confirmation is given and should be
interpreted in accordance with the
provisions of section 418 of the
Companies Act 2006.
CHANGE OF CONTROL PROVISIONS
There are some agreements that
may take effect, alter or terminate on
a change of control of the Company,
such as commercial contracts,
property leases and share option
schemes. None of these are
considered to be significant in their
likely impact on the business as
a whole.
STATEMENT OF ENGAGEMENT
WITH SUPPLIERS, CUSTOMERS
AND OTHERS IN A BUSINESS
RELATIONSHIP WITH THE
COMPANY
The Directors are mindful of their
statutory duty to act in the way they
each consider, in good faith, would
be most likely to promote the success
of the Company for the benefits of its
members as a whole, as set out in our
s.172(1) statement on page 34. A
consideration of the Company’s
relationship with wider stakeholders,
including supplier and customers, is
disclosed in the Stakeholders section
on pages 34 and 35.
SUBSEQUENT EVENTS
Fundraising of £3.25 million (gross)
was completed in January 2020. The
COVID-19 pandemic arose in
February 2020, the impact of this has
been considered and we do not
expect this pandemic to materially
impact on Futura’s business in 2020.
Further details can be found within
the Risks and mitigation section on
pages 29 to 31.
47
www.futuramedical.comGOVERNANCE DIRECTORS’ REPORT
SIGNIFICANT INTERESTS
On 31 March 2020 the Company had
been notified of the following
shareholders with 3% or more of the
issued share capital of the Company
in accordance with the Disclosure
Guidance and Transparency rules:
Lombard Odier Asset
Management (Europe)
Limited
T Adams
W T Lamb Investments Ltd
R A Lamb
21.04%
8.08%
5.23%
3.71%
Most recently notified details of
significant shareholdings may be
found in the Investor section of our
website, at www.futuramedical.com.
STATEMENT OF DIRECTORS’
RESPONSIBILITIES IN RESPECT OF
THE ANNUAL REPORT AND THE
FINANCIAL STATEMENTS
The Directors are responsible for
preparing the Annual Report and the
Group and Parent Company financial
statements in accordance with
applicable law and regulations.
Company law requires the Directors
to prepare Group and Parent
Company financial statements for
each financial year. Under the AIM
Rules of the London Stock Exchange
they are required to prepare the
Group financial statements in
accordance with International
Financial Reporting Standards as
adopted by the European Union
(IFRSs as adopted by the EU) and
applicable law and they have elected
to prepare the Parent Company
financial statements in accordance
with UK accounting standards and
applicable law (UK Generally
Accepted Accounting Practice),
including FRS 101 Reduced Disclosure
Framework.
Under company law the Directors
must not approve the financial
statements unless they are satisfied
that they give a true and fair view of
the state of affairs of the Group and
Parent Company and of their profit
or loss for that period.
48
In preparing each of the Group and
Parent Company financial
statements, the Directors are
required to:
select suitable accounting policies
and then apply them consistently;
make judgements and estimates
that are reasonable, relevant,
reliable and prudent;
state whether they have been
prepared in accordance with IFRSs
as adopted by the EU;
for the Parent Company financial
statements, state whether
applicable UK accounting
standards have been followed,
subject to any material departures
disclosed and explained in the
financial statements;
assess the Group and Parent
Company’s ability to continue as a
going concern, disclosing, as
applicable, matters related to
going concern; and
use the going concern basis of
accounting unless they either
intend to liquidate the Group or
the Parent Company or to cease
operations, or have no realistic
alternative but to do so.
The Directors are responsible for
keeping adequate accounting
records that are sufficient to show
and explain the Parent Company’s
transactions and disclose with
reasonable accuracy at any time the
financial position of the Parent
Company and enable them to ensure
that its financial statements comply
with the Companies Act 2006. They
are responsible for such internal
control as they determine is
necessary to enable the preparation
of financial statements that are free
from material misstatement,
whether due to fraud or error, and
have general responsibility for taking
such steps as are reasonably open to
them to safeguard the assets of the
Group and to prevent and detect
fraud and other irregularities.
The Directors have decided to
prepare voluntarily a Remuneration
Committee Report in accordance
with Schedule 8 to The Large and
Medium-sized Companies and
Groups (Accounts and Reports)
Regulations 2008 made under the
Companies Act 2006, as if those
requirements applied to the
Company. The Directors have also
decided to prepare voluntarily a
Corporate Governance Statement as
if the Company were required to
comply with the Listing Rules and
the Disclosure Guidance and
Transparency Rules of the Financial
Conduct Authority in relation to those
matters. Under applicable law and
regulations, the Directors are also
responsible for preparing a Strategic
Report and a Directors’ Report that
comply with that law and those
regulations.
We consider the Annual Report and
Accounts, taken as a whole, are fair,
balanced and understandable and
provide the information necessary for
shareholders to assess the Group’s
position and performance, business
model and strategy.
GOING CONCERN
The Directors believe that it remains
appropriate to prepare the financial
statements on a going concern basis.
However, there is a material
uncertainty which may cast
significant doubt on the Group’s and
the Company’s ability to continue as
a going concern and, therefore, to
continue realising its assets and
discharging its liabilities in the
normal course of business. The
financial statements do not include
any adjustments that would result
from the basis of preparation being
inappropriate. Further details can be
found in Note 2.2.
WEBSITE PUBLICATION
The Directors are responsible for the
maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation in the United Kingdom
governing the preparation and
dissemination of financial statements
may differ from legislation in other
jurisdictions.
By order of the Board
ANGELA HILDRETH
Company Secretary
31 March 2020
Stock Code: FUMFutura Medical plc Annual Report 2019 AUDIT COMMITTEE REPORT
THE AUDIT COMMITTEE
During the year the Audit Committee
considered the adequacy of financial
standards and how existing and new
accounting standards apply to the
business. In addition, the Audit
Committee considered how applying
these standards may flow through
into internal processes and controls,
the Group accounting policies and
the Group’s financial reporting to
shareholders.
Whilst the Board has overall
responsibility for the review and
approval of the annual and interim
accounts, certain aspects are
delegated to the Audit Committee
including:
Monitoring the integrity of the
financial statements of the Group
and any formal announcements
relating to the Group’s financial
performance.
Reviewing accounting standards,
policies and judgements.
Reviewing internal controls and
risk management procedures
which arise during the external
audit process, or if concerns are
raised by a member of the Board
or by an employee under the
Company’s whistle-blowing
process.
Oversight of the Group’s
compliance with legal
requirements ensuring that an
effective internal control system is
maintained.
Full terms of reference for the Audit
Committee can be found in the
Investor section of the Company
website at www.futuramedical.com.
There were three meetings held in
the year and matters discussed were
as follows:
April 2019 Presentation of 2018
Audit Report
September
2019
December
2019
Review of 2018 audit
performance
Selection of External
Auditor following
tender process
Review of audit
planning including
audit risk areas for the
year ended 2019
Review and
confirmation of
External Auditor
Independence
EXTERNAL AUDITOR
The Audit Committee has
responsibility for the relationship
between the Group and its External
Auditor. Representatives from the
External Auditor are invited to attend
Audit Committee meetings and
whilst the Finance Director and other
executives are invited to attend the
Committee meetings, time at the
end of a meeting is allowed without
any other Executive Directors or
other executives present, to give the
External Auditor an opportunity to
raise any issues of concern.
The Audit Committee is responsible
for reviewing the scope of work and
fee proposals presented by the
Auditor to ensure that their
independence is not compromised.
The independence of the Auditor is
kept under review and is reported
once per year, as part of the Audit
Committee Report presented to the
Audit Committee by the Auditor.
The Group’s External Auditor, Grant
Thornton LLP, is engaged to provide
its independent opinion on the
Group’s financial statements. A full
scope of their work for the year
ended December 2019 is included
within the Independent Auditor's
Report on pages 50 to 54. Grant
Thornton were appointed this year
following a tender process. The
Partner is Mark Bishop.
INTERNAL AUDIT
The Audit Committee reviews the
requirement for an internal audit
function on an annual basis, taking
into account the scale and
complexity of the Group’s activities
and any issues identified in the
assessment of controls. The
Committee remains of the opinion
that an internal audit function is
currently not appropriate for the
Group and the Committee will
continue to review the
appropriateness of these
arrangements.
JONATHAN FREEMAN
Audit Committee Chairman
49
www.futuramedical.comGOVERNANCE INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FUTURA MEDICAL PLC
listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 2.2 in the financial statements,
which indicates that management have made significant
assumptions in preparing the financial statements on a
going concern basis. As stated in note 2.2, the group has
recorded a loss for the year of £11.16m and had total cash
of £2.51m at the year end. The most significant
assumptions made in the cash flow forecast projection
prepared by the directors include the ability to raise
further financing, which could come from a variety of
dilutive and non-dilutive sources, to support its ongoing
activities, following the anticipated submission of
marketing authorisation applications for MED3000 in
Europe and the US, and to generate significant funding
through entering into strategic collaborations for the
commercialisation of MED3000 and its other products, in
the US and Europe. These events or conditions, along
with the other matters as set forth in note 2.2, indicate
that a material uncertainty exists that may cast
significant doubt on the group and parent company’s
ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
Overview of our audit approach
Overall group materiality: £547,000, which represents
approximately 4.9% of the group’s loss on ordinary
activities before taxation.
The key audit matter identified was the valuation of
investment in the subsidiary.
We performed full scope audit procedures on the
financial statements of the significant components
Futura Medical plc and Futura Medical Developments
Limited, and analytical procedures on the financial
statements of Futura Consumer Healthcare Limited.
OPINION
Our opinion on the financial statements is unmodified
We have audited the financial statements of Futura
Medical plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 31 December 2019, which
comprise the consolidated statement of comprehensive
income, the consolidated statement of changes in equity,
the consolidated statement of financial position, the
consolidated statement of cash flows, the parent
company balance sheet, the parent company statement
of changes in equity, and notes to the financial
statements, including a summary of significant
accounting policies. The notes to the financial statements
comprise the notes to the consolidated financial
statements and the notes to the parent company
financial statements. The financial reporting framework
that has been applied in the preparation of the group
financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the
European Union. The financial reporting framework that
has been applied in the preparation of the parent
company financial statements is applicable law and
United Kingdom Accounting Standards, including
Financial Reporting Standard 101 ‘Reduced Disclosures
Framework’ (United Kingdom Generally Accepted
Accounting Practice).
In our opinion:
the financial statements give a true and fair view of the
state of the group’s and of the parent company’s affairs
as at 31 December 2019 and of the group’s loss for the
year then ended;
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the ‘Auditor’s responsibilities for the audit of
the financial statements’ section of our report. We are
independent of the group and the parent company in
accordance with the ethical requirements that are
relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to
50
Stock Code: FUMFutura Medical plc Annual Report 2019 KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the
overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key Audit Matters – Parent company
Valuation of investment in the subsidiary
The assessment of impairment of the investment is
carried out when there is an indication of impairment.
The assessment of any potential impairment requires
management to make significant assumptions and
judgements about the recoverability of the investment,
especially as concerns the future cash flows of the
subsidiary.
We therefore identified the valuation of investment in
the subsidiary as a significant risk, which was one of the
most significant assessed risks of material misstatement.
How the matter was addressed in the audit –
Parent company
Our audit work included, but was not restricted to:
Obtaining management’s impairment review and
comparing the recoverable amounts to the valuation
of the investment;
Inspecting in detail the key underlying assumptions
within management’s impairment review, assessing
each against market data, where relevant and
available, and performing a sensitivity analysis on each
of these assumptions;
Corroborating the key inputs used in support of the
key underlying assumptions to relevant supporting
documentation;
An auditor expert assessed and challenged the key
assumptions within management’s model;
Assessing the disclosures of estimates and
judgements made in the financial statements for
compliance with the requirements of International
Accounting Standard (IAS) 1 ‘Presentation of Financial
Statements’.
The company's accounting policy relating to carrying
value of investment in subsidiaries is shown in note 2 of
the parent’s financial statements.
Key observations
Based on our audit work we determined that
management’s assesment that the recoverability of the
investment exceeded the book value with reference to
future cashflows was reasonable.
51
www.futuramedical.comGOVERNANCE INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FUTURA MEDICAL PLC
OUR APPLICATION OF MATERIALITY
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in
determining the nature, timing and extent of our audit work and in evaluating the results of that work.
Materiality was determined as follows:
Materiality measure
Group
Parent
Financial statements as a whole
£547,000, which is approximately
4.9% of the group’s loss on ordinary
activities before taxation. This
benchmark is considered the most
appropriate because the purpose of
the group is to produce economic
benefit.
£513,000, which is approximately
1.0% of the parent company’s total
assets at year end. This benchmark
is considered the most appropriate
because the parent company is a
holding company which has the
purpose of holding significant assets
on behalf of the group.
Performance materiality used to drive
the extent of our testing
70% of financial statement materiality,
being £383,000.
70% of financial statement materiality,
being £359,000.
Specific materiality
We determined a lower level of
specific materiality for certain areas
such as Directors’ remuneration.
Communication of misstatements to
the audit committee
£27,000 and misstatements below
that threshold that, in our view,
warrant reporting on qualitative
grounds.
£26,000 and misstatements below
that threshold that, in our view,
warrant reporting on qualitative
grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for
potential uncorrected misstatements.
Overall materiality – Group
Overall materiality – Parent
30%
30%
70%
70%
Tolerance for potential uncorrected mis-statements
Performance materiality
52
Stock Code: FUMFutura Medical plc Annual Report 2019 OUR OPINION ON OTHER MATTERS PRESCRIBED BY
THE COMPANIES ACT 2006 IS UNMODIFIED
In our opinion, based on the work undertaken in the
course of the audit:
the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
the strategic report and the directors’ report have been
prepared in accordance with applicable legal
requirements.
MATTER ON WHICH WE ARE REQUIRED TO REPORT
UNDER THE COMPANIES ACT 2006
In the light of the knowledge and understanding of the
group and the parent company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the
directors’ report.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT
BY EXCEPTION
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
the parent company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified
by law are not made; or
we have not received all the information and
explanations we require for our audit.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit approach was a risk-based approach founded
on a thorough understanding of the group's business, its
environment and risk profile and in particular included:
Evaluating the group’s internal control environment
and documenting our understanding of controls
relevant to the audit;
Determining the scope of the group audit based on
the relative contribution of revenue, expenses and net
assets of each component to the group. We performed
full scope audit procedures on the financial statements
of Futura Medical plc and Futura Medical
Developments Limited. We performed analytical
procedures on the financial statements of Futura
Consumer Healthcare Limited;
Our audit procedures provided coverage of 100% of
each of the group and parent company’s revenue and
100% of the group’s loss before tax; and
Reperforming the group consolidation, to confirm the
accuracy of management’s computations and to
demonstrate the group financial information was
consistent with the financial information per the
audited financial statements of the significant
components.
OTHER INFORMATION
The directors are responsible for the other information.
The other information comprises the information
included in the annual report and accounts 2019, other
than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does
not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and, in
doing so, consider whether the other information is
materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such
material inconsistencies or apparent material
misstatements, we are required to determine whether
there is a material misstatement of the financial
statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
53
www.futuramedical.comGOVERNANCE INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FUTURA MEDICAL PLC
USE OF OUR REPORT
This report is made solely to the company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company
and the company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
MARK BISHOP FCA
Senior Statutory Auditor for and on behalf of
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
31 March 2020
RESPONSIBILITIES OF DIRECTORS FOR THE
FINANCIAL STATEMENTS
As explained more fully in the statement of directors’
responsibilities in respect of the Annual Report and the
financial statements set out on page 48, the directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of
financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless
the directors either intend to liquidate the group or the
parent company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free
from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our
auditor’s report.
54
Stock Code: FUMFutura Medical plc Annual Report 2019 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2019
Revenue
Research and development costs
Administrative costs
Operating loss
Finance income
Loss before tax
Taxation recoverable
Loss for the year being total comprehensive loss attributable to owners of
the Parent Company
Basic and diluted loss per share (pence)
All amounts relate to continuing activities.
The Notes on pages 59 to 74 form part of these consolidated financial statements.
Year
ended
31 December
2019
£
Year
ended
31 December
2018
£
31,778
–
(10,051,148)
(6,038,941)
(1,144,397)
(1,227,547)
(11,163,767)
(7,266,488)
22,283
27,576
(11,141,484)
(7,238,912)
2,222,194
1,358,336
Notes
2.4
6
8
9
(8,919,290)
(5,880,576)
10
(4.36)
(4.46)
55
www.futuramedical.comFINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
At 1 January 2018
241,392
44,671,396
1,152,165
(36,959,195)
9,105,758
Share
Capital
£
Share
Premium
£
Merger
Reserve
£
Retained
Losses
£
Total
Equity
£
Notes
Total comprehensive loss for the year
Share-based payment
Shares issued during the year
Transactions with owners
At 31 December 2018
Total comprehensive loss for the year
Share-based payment
Shares issued during the year
Transactions with owners
At 31 December 2019
18
17
18
17
–
–
–
–
167,775
167,775
5,312,464
5,312,464
–
–
–
–
(5,880,576)
(5,880,576)
146,833
146,833
–
5,480,239
146,833
5,627,072
409,167
49,983,860
1,152,165
(42,692,938)
8,852,254
–
–
154
154
–
–
19,130
19,130
–
–
–
–
(8,919,290)
(8,919,290)
101,404
–
101,404
101,404
19,284
120,688
53,652
409,321
50,002,990
1,152,165
(51,510,824)
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 previously using merger accounting under
UK GAAP.
Retained losses represent all other net gains and losses not recognised elsewhere.
Share premium represents amounts subscribed for share capital in excess of nominal value, less the related costs of
share issues.
The Notes on pages 59 to 74 form part of these consolidated financial statements.
56
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Assets
Non-current assets
Plant and equipment
Total non-current assets
Current assets
Inventories
Trade and other receivables
Taxation recoverable
Cash and cash equivalents
Total current assets
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total net assets
Capital and reserves attributable to owners of the Parent Company
Share capital
Share premium
Merger reserve
Retained losses
Total equity
As at
31 December
2019
£
As at
31 December
2018
£
Notes
11
12
14
9
15
59,505
59,505
47,473
47,473
7,780
101,192
2,222,194
2,510,501
7,780
306,408
1,358,192
9,157,916
4,841,667
10,830,296
16
(4,847,520)
(2,025,515)
(4,847,520)
(2,025,515)
53,652
8,852,254
17
409,321
409,167
50,002,990
49,983,860
1,152,165
1,152,165
(51,510,824)
(42,692,938)
53,652
8,852,254
The consolidated financial statements were approved and authorised for issue by the Board on 31 March 2020.
The Notes on pages 59 to 74 form part of these consolidated financial statements.
By order of the Board
JAMES BARDER
Chief Executive
Registered number: 04206001
57
www.futuramedical.comFINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2019
Cash flows from operating activities
Loss before tax
Adjustments for:
Depreciation
Loss on disposal of fixed assets
Finance income
Share-based payment charge
Cash flows used in operating activities before changes in working capital
Decrease in inventories
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Cash used in operations
Income tax received
Net cash used in operating activities
Cash flows from investing activities
Purchase of plant and equipment
Interest received
Cash generated (used in)/by investing activities
Cash flows from financing activities
Issue of ordinary shares
Expenses paid in connection with share issue
Cash generated by financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The Notes on pages 59 to 74 form part of these consolidated financial statements.
Year ended
31 December
2019
£
Year ended
31 December
2018
£
Notes
(11,141,484)
(7,238,912)
20,704
–
(22,283)
101,404
19,850
703
(27,576)
146,833
(11,041,659)
(7,099,102)
–
62,633
204,928
(125,332)
11
8
18
12
16
2,822,004
1,526,375
(8,014,727)
(5,635,426)
1,358,480
927,391
(6,656,247)
(4,708,035)
11
(32,736)
22,283
(10,453)
(4,510)
27,576
23,066
17
19,284
5,943,421
–
(463,182)
19,284
5,480,239
(6,647,415)
795,270
9,157,916
8,362,646
15
2,510,501
9,157,916
58
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1. CORPORATE INFORMATION
Futura Medical plc (the “Company”) is a public limited company incorporated and domiciled in the United Kingdom
and whose shares are publicly traded on the AIM Market of the London Stock Exchange. The registered office is
located at Surrey Technology Centre, 40 Occam Road, Guildford, Surrey, GU2 7YG.
These Group financial statements consolidate those of the Company and its subsidiaries (together referred to as “the
Group” and individually as “Group entities”) for the year ended 31 December 2019.
The consolidated financial statements of the Company and the Group for the year ended 31 December 2019 were
authorised for issue by the Board of Directors on 31 March 2020.
The Group is principally engaged in the development of pharmaceutical and healthcare products.
2. ACCOUNTING POLICIES
2.1 Basis of preparation
The consolidated financial statements have been prepared on a going concern basis and under the historical cost
convention and have been prepared and approved by the Directors in accordance with International Financial
Reporting Standards (“IFRSs”) as adopted by the European Union. The principal accounting policies applied in the
preparation of the consolidated financial information are set out below. These policies have been consistently applied
to all years presented, unless otherwise stated.
The consolidated financial statements are presented in sterling.
2.2 Going Concern
For the year ended 31 December 2019, the Group made an operating loss of £11.16 million. Cash and cash equivalents at
31 December 2019 were £2.51 million. The Board has considered the applicability of the going concern basis in the
preparation of the financial statements. This included the review of internal budgets and financial results and a review
of cash flow forecasts for the 12 months period following the date of signing the financial statements. Under current
business plans which assume a significant reduction in R&D spend, the Group’s cash resources will extend to Q2 2021.
Based on this, additional funding is expected to be required to support the Group’s and the Company’s going concern
status. Dependent upon the funds raised and the level of income generated from licensing activities, further funding
may be required to reach profitability. The Group completed a £3.25 million fundraising with existing and new
investors in January 2020. The Directors have a reasonable expectation that the Group will be able to raise further
financing, which could come from a variety of dilutive and non-dilutive sources, to support its ongoing activities,
following the anticipated submission of regulatory dossiers for MED3000 in Europe and the US, both expected in H2
2020. The Directors also have a reasonable expectation that the Group will be able to generate significant funding
through entering into strategic collaborations for the commercialisation of MED3000 and its other products in the US
and Europe.
However, there can be no guarantee that the Group will be able to raise sufficient funding from existing and new
investors, nor that the Group will be able to secure strategic collaborations for its product pipeline. In the event that
the Group does not successfully raise new financing, the Directors consider that the Group would be able to reduce
expenditure on its development programmes, potentially extending the Group’s cash resources to more than 12
months from the date of signing the financial statements.
Based on the above factors the Directors believe that it remains appropriate to prepare the financial statements on a
going concern basis. However, the above factors give rise to a material uncertainty which may cast significant doubt
on the Group’s and the Company’s ability to continue as a going concern and, therefore, to continue realising its assets
and discharging its liabilities in the normal course of business. The financial statements do not include any
adjustments that would result from the basis of preparation being inappropriate.
2.3 Standards, amendments and interpretation to existing standards
The Directors have considered all new standards, amendments to standards and interpretations which are mandatory
for the first time for the financial year beginning 1 January 2019. From 1 January 2019 the Group adopted IFRS 16 Leases.
The Group has taken the exemption not to account for short-term leases on the balance sheet. The Group has elected
to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a
right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on
a straight-line basis over the lease term.
59
www.futuramedical.comFINANCIAL STATEMENTS 2. ACCOUNTING POLICIES (CONTINUED)
2.4 Revenue
To determine whether to recognise revenue, the Group follows a five-step process:
1
Identifying the contract with a customer
2 Identifying the performance obligations
3 Determining the transaction price
4 Allocating the transaction price to the performance obligations
5 Recognising revenue when/as performance obligation(s) are satisfied.
During the year, revenue was recognised on a collaborative transaction. In accordance with IFRS 15, revenue is
calculated based on the consideration to which the Group expects to be entitled and is recognised over the length of
services provided under the contract and once performance obligations have been met. The transaction fee is
allocated over the length of the service being provided in accordance with the project plan. It is recognised as a
contract liability at the time of the initial transaction and is released over the expected period of service on the basis of
work completed and performance obligations delivered. The progress is re-evaluated by management at each
reporting date and the revenue recognised is remeasured accordingly. No revenue was recognised in the prior year.
2.5 Leased assets
As described in Note 2.3, the Group has applied IRFS 16 using the modified retrospective approach and therefore
comparative information has not been restated. This means that comparative information is still reported under IAS 17.
For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains a
lease. A lease is defined as a contract, or part of a contract, that conveys the right to use an asset (the underlying asset)
for a period of time in exchange for consideration. To apply this definition the Group assesses whether the contract
meets three key evaluations which are whether:
The contract contains an identified asset, which is either explicitly in the contract or implicitly specified by being
identified at the time the asset is made available to the Group.
The Group has the right to obtain substantially all of the economic benefits from the use of the identified asset
throughout the period of use, considering its rights within the defined scope of the contract.
The Group has the right to direct the use of the identified asset throughout the period of use. The Group assess
whether it has the right to direct “how and for what purpose” the asset is used throughout the period of use.
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
Consolidated Statement of Comprehensive Income on a straight-line basis over the lease term. The Group does not
hold any assets under finance leases.
2.6 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.
60
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 2. ACCOUNTING POLICIES (CONTINUED)
Capitalised development costs, including patents and trademarks, 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 Consolidated Statement of Comprehensive Income. The useful life and the
value of the capitalised development cost are assessed for indicators of 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 yet met for any of its products as
they have either not yet been approved or commercially launched in at least one major market therefore commercial
feasibility of the product is not yet certain.
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 Consolidated Statement of Comprehensive Income as incurred.
2.7 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 Consolidated 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 their estimated useful lives.
Computer equipment
2 – 5 years straight-line
Fixtures and fittings
3 – 10 years straight-line
The assets’ residual values and useful lives are determined by the Directors and reviewed and adjusted, if appropriate,
at each Consolidated Statement of Financial Position date.
2.8 Impairment of non-financial assets
An impairment review is carried out for assets being amortised or depreciated when a change in market conditions
and other circumstances indicate that the carrying value may not be recoverable. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value-in-use. For the purpose of assessing impairment, assets are
grouped at the lowest levels for which they are separately identifiable cash flows.
2.9 Inventories
Inventories are consumable materials to be used in development 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 Consolidated Statement of Comprehensive Income in respect of obsolete
or defective items, where appropriate.
2.10 Financial instruments
i) Recognition and initial measurement
At the year-end, the Group had no financial assets or liabilities designated at fair value through the Consolidated
Statement of Comprehensive Income (2018: £nil). Trade receivables and debt securities are initially recognised when
they are originated. All other financial assets and liabilities are initially recognised when the Group becomes a party to
the contractual provisions in the instrument. A financial asset (unless it is a trade receivable without a significant
financing component) or a financial liability is initially measured at fair value plus, for items not measured at fair value
through profit and loss (“FVTPL”), transaction costs that are directly attributable to its acquisition or issue. A trade
receivable without a significant financing component is measured at the transaction price.
ii) Classification and subsequent measurement
Financial assets
On initial recognition a financial instrument is classified as measured at: amortised cost, fair value through other
comprehensive income (“FVOCI”) or FVTPL. Financial assets are not reclassified subsequent to their initial recognition
unless the Group changes its business model for managing financial assets.
61
www.futuramedical.comFINANCIAL STATEMENTS
2. ACCOUNTING POLICIES (CONTINUED)
2.10 Financial instruments (continued)
A financial asset is measured at amortised cost if it meets both the following conditions and is not designated
as FVTPL:
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on a specified date to cash flows that are solely the payment of principal and interest
on the principal outstanding.
A debt investment is measured at FVOCI if it meets both the following conditions and is not designated as FVTPL:
it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading the Group may irrevocably elect to present
subsequent changes in the investment’s fair value in OCI. This election is made on an investment by investment basis.
Financial assets at amortised cost are subsequently measured at amortised cost using the effective interest method.
The amortised cost is reduced by impairment losses.
Financial liabilities
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as FVTPL if it is
held for trading, it is a derivative or it is designated as such on initial recognition. Other financial liabilities are
subsequently measured at amortised cost using the effective interest method. Interest expense is recognised in profit
or loss. At the year-end, the Group had no financial assets or liabilities designated at FVOCI (2018: £nil).
iii) Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire,
or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and
rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains
substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
Financial liabilities
The Group derecognises a financial liability when the contractual obligations are discharged or cancelled, or expire.
The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified
liability are substantially different, in which case a new financial liability based on the modified terms is recognised at
fair value. On derecognition of a financial liability, the difference between the carrying amount extinguished and the
consideration paid is recognised in profit or loss.
2.11 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 Consolidated 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 Consolidated
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 Consolidated 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.
62
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 2. ACCOUNTING POLICIES (CONTINUED)
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.
2.12 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 Consolidated Statement of Comprehensive Income in the period in which they arise.
2.13 Employee benefits
Defined contribution plans
The Group provides retirement benefits to all employees 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 Consolidated Statement of Comprehensive Income in the
period in which they become payable.
Accrued holiday pay
Provision is made at each Consolidated Statement of Financial Position date for holidays accrued but not taken, at
applicable rates of salary. The expected cost of compensated short-term absence (holidays) is charged to the
Consolidated Statement of Comprehensive Income on an accruals basis.
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
Consolidated 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 Consolidated 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 Consolidated 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 HM Revenue & Customs joint election to transfer the employers’ national
insurance contribution potential liability to the employee, therefore no Group asset or liability arises.
Long-term incentive plan
The Group operates a long-term incentive plan for all staff and 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 plan is intended to be settled in equity with cash settlement possible at the discretion of the Board. There was
no charge recognised in the year as the milestones and targets were not met.
2.14 Finance income
Interest income is recognised on a time-proportion basis using the effective interest rate method.
63
www.futuramedical.comFINANCIAL STATEMENTS 3. CRITICAL ACCOUNTING JUDGEMENTS, ASSUMPTIONS AND ESTIMATES
The preparation of the consolidated financial statements in conformity with IFRS requires management to make
certain estimates, assumptions and judgements that affect the application of accounting policies and the reported
amounts of assets and liabilities and the reported amounts of income and expenses in the year.
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. No significant estimates were identified during the year. Other estimates are disclosed
below.
3.1 Estimates and assumptions
Share-based payments
The Group operates an equity-settled share-based compensation plan for employee (and consultant) services to be
received and the corresponding increases in equity are measured by reference to the fair value of the equity
instruments as at the date of grant. The fair value determination is based on the principles of the Black–Scholes Model
which uses an input of volatility based on historical data. Historical volatility may not be indicative of future volatility, yet
the Directors judge this to be the most appropriate method of calculation. Given the share option expense of £101,404
(2018: £146,833), the volatility methodology used is not expected to have a material impact on these financial
statements. Details of the fair value calculation for options granted during the year, including other inputs into the
Black–Scholes model, are disclosed in Note 18.
3.2 Judgements
Deferred tax recognition
The determination of probable future profits, against which the Group’s deferred tax profits can be offset, requires
judgement. To date no deferred tax assets have been recognised.
R&D tax credits
The current tax receivable as disclosed in Note 9, represents an R&D tax credit based on an advance claim with HMRC.
The final receivable is subject to the correct application of complex R&D rules and HMRC approval. Historically, claims
have been successful and the Group expects the current year to be successful too.
R&D costs
Management are required to make a judgement about certainty of commercial success of their products. No
Research and Development costs have been capitalised in the current or prior period and further details can be found
in Note 2.6.
4. FINANCIAL RISK
4.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange rate risk, cash flow
interest rate risk and fair value interest rate risk); credit risk and liquidity risk. It is Group policy not to enter into
speculative positions using complex financial instruments.
(i) Market risk
Foreign exchange rate risk
The Group primarily enters into supplier contracts which are to be settled in sterling. However, some contracts involve
other currencies including the US dollar and the euro. The Group may use forward exchange contracts as an economic
hedge against currency risk, where cash flow can be judged with reasonable certainty. There were no material open
forward contracts as at 31 December 2019 or at 31 December 2018.
At 31 December 2019 the Group had trade payables denominated in a foreign currency totalling £101,899 (31 December
2018: £931,532).
Cash flow interest rate risk and fair value interest rate risk
The Group’s interest rate risk arises from short-term money market deposits.
64
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 4. FINANCIAL RISK (CONTINUED)
(ii) Credit risk
Credit risk arises from cash and cash equivalents and money market deposits as well as credit exposure in relation to
outstanding receivables. The exposure relating to outstanding receivables is immaterial and the carrying amount of
cash balances is as follows:
Cash at bank and in hand
Sterling short-term money market funds
31 December
2019
£
31 December
2018
£
2,137,599
5,706,519
372,902
3,451,397
2,510,501
9,157,916
The Directors consider the Group’s exposure to credit risk to be acceptable and normal for a similar entity at its stage
in development.
(iii) Liquidity risk
The Group’s approach to managing liquidity is to ensure that, as far as possible, it will always have sufficient liquidity to
meet its liabilities when due, under both normal and stressed conditions, without incurring losses or risking damage
to the Group’s reputation.
The Group manages all of its external bank accounts centrally and in accordance with defined treasury policies. The
policies include a minimum acceptable credit rating of relationship bank accounts and financial transaction authority
limits. Any material change to the Group’s principal bank facility requires Board approval.
4.2 Capital risk management
The Group’s policy is to maintain a strong capital base. The Group does not yet have significant recurring revenues and
has mainly financed its operations through the issue of new shares and management of working capital. The Group’s
capital resources are managed to ensure it has resources available to invest in operational activities designed to
generate future income. These resources were represented by £2,510,501 of cash and fixed-term deposits as at
31 December 2019 (31 December 2018: £9,157,916).
5. SEGMENT REPORTING
The Group is organised and operates as one segment. The Group’s R&D costs are analysed by development
programme as follows:
MED
TPR
CSD
Other
Year ended
31 December
2019
£
Year ended
31 December
2018
£
8,019,710
3,538,059
230,639
41,554
183,038
172,925
391,782
70,217
8,474,941
4,172,984
65
www.futuramedical.comFINANCIAL STATEMENTS
6. OPERATING LOSS
Operating loss is stated after charging:
Depreciation of plant and equipment (Note 11)
Loss on disposal of plant and equipment
Inventories consumed in R&D
Short-term leases: property
Gain/(loss) on foreign exchange
Year ended
31 December
2019
£
Year ended
31 December
2018
£
20,704
–
–
117,275
8,468
19,850
703
62,633
114,142
(12,606)
The 2019 fees of the Group’s Auditor Grant Thornton LLP (2018: KPMG LLP) for services provided are analysed below:
Audit services
Parent Company
Subsidiaries
Other Non-audit services
iXBRL Tagging
Total fees
The 2018 fees of the Group’s Auditor KPMG LLP for services provided are analysed below:
Audit services
Parent Company
Subsidiaries
Tax services
Parent Company
Subsidiaries
Total fees
Year ended
31 December
2019
£
35,000
7,000
1,000
43,000
Year ended
31 December
2018
£
33,000
9,000
4,000
–
46,000
7. STAFF NUMBERS AND COSTS
The average number of persons (including all Executive and excluding Non-Executive Directors) employed by the
Group during the year, analysed by category, was as follows:
R&D staff
Finance and Administration staff
Executive Directors
66
Year ended
31 December
2019
Year ended
31 December
2018
8
2
3
13
10
2
3
15
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 7. STAFF NUMBERS AND COSTS (CONTINUED)
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension and insurance benefits costs
Total cash-settled emoluments
Share-based payment remuneration charge
Total emoluments
All employees of the Group are employed by Futura Medical Developments Limited.
Directors’ emoluments
Aggregate emoluments
Other pension and insurance benefit costs
Subtotal per remuneration report
Share-based payment remuneration charge
Employer’s national insurance charge
Total emoluments
Year ended
31 December
2019
£
Year ended
31 December
2018
£
1,315,760
1,603,513
181,544
180,342
172,805
182,282
1,677,646
1,958,600
101,404
146,833
1,779,050
2,105,433
Year ended
31 December
2019
£
Year ended
31 December
2018
£
693,353
22,506
715,859
47,866
73,811
929,608
19,748
949,356
74,647
86,991
837,536
1,110,994
In 2019 there were no Directors whose share options were exercised under the Group share option schemes and no
gain was realised (2018: £6,000). In respect of the highest paid Director the realised gain was £nil (2018: £nil).
In 2019 there were no Directors (2018: no Directors) who participated in a private money purchase defined contribution
pension scheme. Emoluments for individual Directors are disclosed within the Remuneration Committee Report.
The Directors consider that there are no Key Management Personnel other than the Directors.
Emoluments above include the following amounts in respect of the highest paid Director:
Aggregate emoluments
Employer pension contributions
Subtotal per remuneration report
Share-based payment remuneration charge
Employer’s national insurance charge
Total emoluments
8. FINANCE INCOME
Interest receivable in 2019 on treasury funds was £22,283 (2018: £27,576).
Year ended
31 December
2019
£
Year ended
31 December
2018
£
235,593
273,855
–
–
235,593
273,855
18,410
31,680
28,711
36,284
285,683
338,850
67
www.futuramedical.comFINANCIAL STATEMENTS 9. TAXATION
9.1 Current tax
UK corporation tax credit on loss on ordinary activities
Year ended
31 December
2019
£
Year ended
31 December
2018
£
2,222,194
1,358,336
The tax assessed for the year was lower than the UK corporation tax rate (2018: higher). The differences are explained below:
Loss on ordinary activities before tax
Loss on ordinary activities at an average standard rate of corporation tax in the UK of 19%
(2018: 19%)
Expenses not deductible for tax purposes
Unrecognised deferred tax
Unutilised tax losses
Share scheme deduction
R&D expenditure credit
Loss surrendered for refund
Additional relief for R&D claims
UK corporation tax credit
Adjustment to tax charge relating to prior period
R&D expenditure credit re 2018
R&D expenditure credit re 2019
UK corporation tax credit reported in the Consolidated Statement
of Comprehensive Income
Year ended
31 December
2019
£
Year ended
31 December
2018
£
11,141,484
7,238,912
2,116,882
1,375,393
(304)
(15,701)
(215)
(29,578)
(841,959)
(581,892)
–
(4,969)
5,529
(3,296)
(683,072)
(417,236)
1,630,136
995,722
2,201,013
1,344,427
–
–
21,181
(144)
14,053
–
2,222,194
1,358,336
The Group has tax losses of approximately £31,265,826 (2018: £26,834,483) available for offset against future taxable profits.
The corporation tax credit for the year represents research and development tax credits of £2,201,012 (2018: £1,344,428),
arising from the surrender of losses (rather than carrying forward to future years) of £15,179,395 (2018: £9,271,916) at
14.5%, under HMRC’s small and medium size enterprise scheme. The taxable loss for the year is in excess of the
accounting loss for various reasons, principally the additional deductions given for tax purposes on research and
development expenditure.
In addition a small claim under the large company Research and Development Expenditure Credit (RDEC) scheme
resulted in a refund of £21,181 (2018: 14,053).
68
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 9. TAXATION (CONTINUED)
9.2 Deferred tax
Deferred tax assets amounting to £5,649,021 (2018: £4,881,640) have not been recognised due to it not being probable
that taxable profits will be available, against which these deductible temporary differences can be utilised. Reductions
in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) were substantively enacted on 26 October
2015. The unrecognised deferred tax asset at 31 December 2019 has been calculated assuming a prevailing tax rate
when the timing differences reverse of 17% (2018: 17%) and comprises:
Depreciation differential versus capital allowances
Other short-term timing differences
Unutilised tax losses
Year ended
31 December
2019
£
Year ended
31 December
2018
£
(1,770)
2,108
335,600
317,670
5,315,191
4,561,862
5,649,021
4,881,640
10. LOSS PER SHARE
The calculation of basic and diluted earnings per share (“EPS”) is based on the following data:
Loss for the purposes of basic EPS and diluted EPS (£)
2019
2018
8,919,290
5,880,576
Weighted average of ordinary shares for purposes of basic and diluted EPS (number)
204,657,741
131,936,761
Loss per share basic and diluted (pence)
4.36
4.46
Diluted EPS is calculated in the same way as basic EPS but also with reference to reflect the dilutive effect of share
options in existence at the year-end which were 7,255,000 (2018: 5,700,000). The diluted loss per share is identical to the
basic loss per share, as potential dilutive shares are not treated as dilutive since they would reduce the loss per share.
69
www.futuramedical.comFINANCIAL STATEMENTS 11. PLANT AND EQUIPMENT
Cost
At 1 January 2019
Additions
Disposals
At 31 December 2019
Depreciation
At 1 January 2019
Eliminated on disposals
Charge for year
At 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
Cost
At 1 January 2018
Additions
Disposals
At 31 December 2018
Depreciation
At 1 January 2018
Eliminated on disposals
Charge for year
At 31 December 2018
Net book value
At 31 December 2018
At 31 December 2017
Computer
Equipment
£
Furniture
and Fittings
£
86,602
32,736
–
63,285
–
–
Total
£
149,887
32,736
–
119,338
63,285
182,623
47,495
54,919
102,414
–
19,250
66,745
52,593
39,107
–
1,454
56,373
6,912
8,366
Computer
Equipment
£
Furniture
and Fittings
£
–
20,704
123,118
59,505
47,473
Total
£
91,243
63,285
154,528
4,510
(9,151)
–
–
4,510
(9,151)
86,602
63,285
149,887
37,915
(8,447)
18,027
47,495
39,107
53,328
53,096
–
1,823
54,919
8,366
10,189
91,011
(8,447)
19,850
102,414
47,473
63,517
All fixed assets of the Group are held in Futura Medical Developments Limited.
70
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 12. INVENTORIES
Consumable materials used for development
13. FINANCIAL INSTRUMENTS BY CATEGORY
31 December
2019
£
31 December
2018
£
7,780
7,780
The accounting policies for financial instruments have been applied to the line items below:
Assets as per Consolidated Statement of Financial Position
Loans and receivables at amortised cost
Trade and other receivables (Note 14)
Cash and cash equivalents (Note 15)
Total receivables
Liabilities as per Consolidated Statement of Financial Position at amortised cost
Trade and other payables (Note 16)
Total payables
31 December
2019
£
31 December
2018
£
59,968
2,510,501
248,426
9,157,916
2,570,469
9,406,342
31 December
2019
£
31 December
2018
£
4,847,520
1,246,247
4,847,520
1,246,247
The Directors consider that there is no material difference between the carrying values of financial assets and liabilities
and their fair value.
14. TRADE AND OTHER RECEIVABLES
Amounts receivable within one year:
Trade receivables
Other receivables
Financial assets (Note 13)
Prepayments
31 December
2019
£
31 December
2018
£
5,627
54,341
59,968
41,224
101,192
627
247,799
248,426
57,982
306,408
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 Consolidated Statement of Financial Position date is the fair value of each
class of receivable.
15. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Sterling short-term money market funds
31 December
2019
£
31 December
2018
£
2,137,599
5,706,519
372,902
3,451,397
2,510,501
9,157,916
71
www.futuramedical.comFINANCIAL STATEMENTS 16. TRADE AND OTHER PAYABLES
Trade payables
Social security and other taxes
Deferred Income
Accrued expenses
31 December
2019
£
31 December
2018
£
2,625,359
1,246,247
39,970
218,222
42,684
–
1,963,969
736,584
4,847,520
2,025,515
The increase in payables is reflective of the increase in research and development activities relating to the Phase 3
study completed in the year.
17. SHARE CAPITAL
Authorised
31 December
2019
Number
31 December
2018
Number
31 December
2019
£
31 December
2018
£
Ordinary shares of 0.2 pence each
500,000,000 500,000,000
1,000,000
1,000,000
Allotted, called up and fully paid
Ordinary shares of 0.2 pence each
31 December
2019
Number
31 December
2018
Number
31 December
2019
£
31 December
2018
£
204,660,267 204,583,439
409,321
409,167
The number of issued ordinary shares as at 1 January 2018 was 120,696,002. During the year ended 31 December 2018,
the Company issued shares of 0.2 pence each as follows:
Month
January 2018
January 2018
May 2018
Reason for issue
Option exercise at 30.00 pence per share
Option exercise at 30.00 pence per share
Option exercise at 30.00 pence per share
November 2018
Share placing at 7.00 pence per share
November 2018
Open Offer placing at 7.00 pence per share
Gross
Consideration
£
24,000
24,000
45,000
Shares
Issued
Number
80,000
80,000
150,000
5,600,000 80,000,000
250,421
3,577,437
5,943,421
83,887,437
72
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 17. SHARE CAPITAL (CONTINUED)
The number of issued ordinary shares as at 1 January 2019 was 204,583,439. During the year ended 31 December 2019,
the Company issued shares of 0.2 pence with each ordinary share carrying the right to one vote as follows:
Month
Reason for issue
January 2019
Non-Executive Director Share Award
Gross
Consideration
£
19,284
19,284
Shares
Issued
Number
76,828
76,828
18. SHARE OPTIONS
At 31 December 2019, the number of ordinary shares of 0.2 pence each subject to share options granted under the
Company’s Approved and Unapproved Share Option Schemes were:
Exercise Period
1 October 2014 – 30 September 2019
1 October 2015 – 30 September 2020
1 October 2016 – 30 September 2021
1 October 2017 – 30 September 2022
1 October 2018 – 30 September 2023
1 October 2019 – 30 September 2024
7 January 2020 – 6 January 2029
31 August 2020 – 6 January 2029
Exercise
Price per
Share
Pence
61.50
71.50
51.75
30.00
57.50
30.50
7.20
7.20
At
1 January
2019
Number
310,000
620,000
580,000
750,000
960,000
1,140,000
–
–
1 October 2020 – 30 September 2025
7.50
1,340,000
1 October 2021 – 30 September 2026
31.00
–
5,700,000
Options
Exercised
Number
–
–
–
–
–
–
–
–
–
–
–
Options
Lapsed
Number
(310,000)
–
–
–
–
–
–
–
–
–
Options
Granted
Number
At
31 December
2019
Number
–
–
–
–
–
–
212,500
212,500
–
620,000
580,000
750,000
960,000
1,140,000
212,500
212,500
–
1,340,000
1,440,000
1,440,000
(310,000)
1,865,000
7,255,000
On 12 November 2019 share options over 1,390,000 new ordinary shares were granted to employees (including
Executive Directors) at a price of 31.00p. The options have a two-year vesting period and the exercise period for these
options is 1 October 2020 to 30 September 2025.
The share options outstanding at 31 December 2019 represented 3.54% of the issued share capital as at that date (2018:
2.78%) and would generate additional funds of £2,433,900 (2018: £2,159,300) if fully exercised. The weighted average
remaining life of the share options outstanding at 31 December 2019 was 51 months (2018: 52 months) with a weighted
average remaining exercise price of 33.55 pence (2018: 50.26 pence).
The share options exercisable at 31 December 2019 totalled 3,850,000 (2018: 3,220,200) with an average exercise price of
48.48 pence (2018: 51.28 pence) and would have generated additional funds of £1,766,650 (2018: £2,318,200) if fully
exercised.
The Group’s share option scheme rules apply to 6,550,000 of the share options outstanding at 31 December 2019
(31 December 2018: 5,320,000) and include a rule regarding forfeiture of unexercised share options upon the cessation
of employment (except in specific circumstances).
Options have historically been issued to advisers under the unapproved scheme. Such options generally vest
immediately and are exercisable between one and two years after grant. There were 705,000 share options
outstanding to advisers at 31 December 2019 (31 December 2018: 380,000).
There were no market vesting conditions within the terms of the grant of the share options.
The Black–Scholes formula is the option pricing model applied to the grants of all share options made in respect of
calculating the fair value of the share options.
73
www.futuramedical.comFINANCIAL STATEMENTS 18. SHARE OPTIONS (CONTINUED)
Share-based payments
Inputs to share option pricing model
Grant date
Number of shares under option
Share price as at date of grant
Option exercise price
Expected life of options: based on previous exercise history
Expected volatility: based on median fluctuations over 3 years
Dividend yield: no dividends assumed
31 December
2019
31 December
2018
17 September
19 November
1,390,000
1,340,000
30.70 pence
6.95 pence
31.00 pence
7.50 pence
3 years
82.70%
0%
3 years
82.70%
0%
Risk-free rate: yield on 3 year treasury stock as at date of grant
0.48% p.a.
0.84% p.a
Outputs generated from share option pricing model
Fair value per share under option
Total expected charge over the vesting period
Recognised in Consolidated Statement of Comprehensive Income
The share-based remuneration charge comprises:
Share-based payments – employees
Share-based payments – consultants
Share-based payments
31 December
2019
31 December
2018
16.19 p
£225,041
3.57p
£47,838
31 December
2019
£
31 December
2018
£
32,019
–
32,019
3,016
–
3,016
The total expense recognised for the year arising from share-based payments is as follows:
Group equity-settled share-based payment expense
19. PENSION COSTS
31 December
2019
£
31 December
2018
£
101,404
146,833
The pension charge represents contributions payable by the Group to independently administered funds which
during the year ended 31 December 2019 amounted to £164,458 (2018: £86,990). Pension contributions payable in
arrears at 31 December 2019, included in accrued expenses at the relevant Consolidated Statement of Financial
Position date, totalled £10,225 (2018: £6,183).
20. COMMITMENTS
At 31 December 2019 the Group had operating lease commitments in respect of property leases cancellable on one
month’s notice of £9,802 (2018: £9,767).
21. 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.
Key management compensation
The Directors represent the key management personnel. Details of their compensation and share options are given in
Note 7 and within the Remuneration Committee Report.
74
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 PARENT COMPANY BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 2019
Company No. 04206001
Fixed assets
Investment
Current assets
Debtors – due within one year
Debtors – due after more than one year
Total debtors
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Net assets
Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Shareholders’ funds
As at
31 December
2019
£
As at
31 December
2018
£
Notes
2
50,178,526
43,023,474
3
3
13,267
10,559
–
–
13,267
10,559
1,099,413
8,569,753
1,112,680
8,580,312
4
(200,158)
(119,328)
912,522
8,460,984
51,091,048
51,484,458
5
409,321
409,167
50,002,990
49,983,860
678,737
1,091,431
51,091,048
51,484,458
The loss in respect of the Company for the year was £514,098 (2018: £104,316). The Parent Company financial
statements were approved and authorised for issue by the Board on 31 March 2020.
The Notes on pages 77 to 79 form part of these Parent Company financial statements.
By order of the Board
JAMES BARDER
Chief Executive
75
www.futuramedical.comFINANCIAL STATEMENTS PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2019
Share
Capital
£
Share
Premium
£
Note
Profit
and Loss
Account
£
Total
Equity
£
At 1 January 2018
241,392 44,671,396 1,048,914 45,961,702
Total comprehensive loss for the year
–
–
(104,316)
(104,316)
Share-based payment
Issue of shares
At 31 December 2018
– –
146,833 146,833
5
167,775 5,312,464
–
5,480,239
409,167
49,983,860
1,091,431
51,484,458
Total comprehensive loss for the year
–
–
(514,098)
(514,098)
Share-based payment
Issue of shares
At 31 December 2019
– –
101,404
5
154
19,130
–
101,404
19,284
409,321
50,002,990
678,737 51,091,048
Share premium represents amounts subscribed for share capital in excess of nominal value, less the related costs of
share issues.
Profit and loss account represents the cumulative net profit recognised. The total comprehensive loss for the year
represents the total recognised income and expense for the year.
The Notes on pages 77 to 79 form part of these Parent Company financial statements.
76
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019 NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1. ACCOUNTING POLICIES
The Parent Company financial statements have been prepared on a going concern basis and under the historical cost
convention and have been prepared and approved by the Directors in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework (“FRS 101”). The principal accounting policies applied in the preparation of the
financial information and where advantage of the FRS 101 disclosure exemptions have been taken are set out below.
These policies have been consistently applied to all years presented, unless otherwise stated.
The Parent Company financial statements presented are in sterling.
As a Consolidated Statement of Comprehensive Income is published, no separate statement of comprehensive
income for the Parent Company has been included in these financial statements, as permitted by section 408 of the
Companies Act 2006. The loss in respect of the Company for the year was £514,098 (2018: £104,316). The remuneration
of the Directors of the Company is disclosed in Note 7 to the consolidated financial statements. Auditor’s remuneration
is disclosed in Note 6 to the consolidated financial statements.
Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by
FRS 101. Therefore these financial statements do not include:
certain comparative information as otherwise required by EU endorsed IFRS;
financial instrument disclosures;
certain disclosures regarding the Company’s capital;
a statement of cash flows;
the effect of future accounting standards not yet adopted;
the disclosure of the remuneration of key management personnel;
disclosure of related party transactions with other wholly owned members of the Group; and
disclosure of impairment of assets.
Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity, trade and other debtors, cash and cash
equivalents and trade and other creditors.
Trade and other debtors
Trade and other debtors are recognised initially at fair value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any impairment losses.
Trade and other creditors
Trade and other creditors are recognised initially at fair value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and treasury fund units.
Share-based employee remuneration
The Company has no employees but does issue shares to satisfy share option awards made by its subsidiary company
Futura Medical Developments Limited.
The grant date fair value of share-based payments awards granted to employees is recognised as an increase in the
investment, with a corresponding increase in equity, over the period in which the employees become unconditionally
entitled to the awards. The fair value of the awards granted is measured using the Black–Scholes model, taking into
account the terms and conditions upon which the awards are granted.
77
www.futuramedical.comFINANCIAL STATEMENTS NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2019
1. ACCOUNTING POLICIES (CONTINUED)
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account
except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case
it is recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the temporary difference can be utilised.
2. INVESTMENT IN SUBSIDIARY
The investment represents 100% of the issued ordinary £1 shares in the subsidiary undertaking Futura Medical
Developments Limited whose registered address is: 40 Occam Road, Guildford, Surrey GU2 7YG. The principal activity
of the Company is the research and development of pharmaceutical drugs and medical devices and their commercial
exploitation. The investment is stated at cost plus amounts capitalised in respect of the intercompany receivable (refer
to Note 3). The results of the subsidiary are included in the consolidated financial statements.
The Company capitalises intercompany balances with its subsidiaries at each month-end (creating an investment in
subsidiaries) up to the point where it believes the subsidiary is in a position to repay any balances within the next 12
months. Capitalised balances are reviewed for impairment annually. It was concluded that there was no impairment
required. This conclusion requires judgement and if regulatory approval of MED3000 is rejected, this could result in
material impairment.
At 1 January 2018
Additions in the year
At 31 December 2018
Additions in the year
At 31 December 2019
£
1,321,798
41,701,676
43,023,474
7,155,052
50,178,526
Futura Medical Developments Limited owns 100% of the issued ordinary £1 shares of Futura Consumer Healthcare
Limited whose registered address is: 40 Occam Road, Guildford, Surrey GU2 7YG. The principal activity of Futura
Consumer Healthcare Limited is the commercial exploitation and branding of pharmaceutical drugs and medical
devices developed by Futura Medical Developments Limited. This is an indirect investment and Futura Consumer
Healthcare Limited has been dormant since the start of 2018.
3. DEBTORS
Amounts receivable within one year: prepayments
4. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Accruals
78
31 December
2019
£
31 December
2018
£
13,267
10,559
31 December
2019
£
31 December
2018
£
107,299
92,859
200,158
78,282
41,046
119,328
Stock Code: FUMFutura Medical plc Annual Report 2019FINANCIAL STATEMENTS 5. CALLED UP SHARE CAPITAL
Authorised
31 December
2019
Number
31 December
2018
Number
31 December
2019
£
31 December
2018
£
Ordinary shares of 0.2 pence each
500,000,000 500,000,000
1,000,000
1,000,000
Allotted, called up and fully paid
Ordinary shares of 0.2 pence each
31 December
2019
Number
31 December
2018
Number
31 December
2019
£
31 December
2018
£
204,660,267 204,583,439
409,321
409,167
Details of shares issued by the Company in the year and details of share options outstanding are given in Notes 17 and
18 to the consolidated financial statements.
6. RELATED PARTY TRANSACTIONS
The Company has taken the exemption in line with FRS 101 not to disclose related party transactions between wholly
owned subsidiaries.
79
www.futuramedical.comFINANCIAL STATEMENTS COMPANY INFORMATION
COMPANY NUMBER
04206001
DIRECTORS
John Clarke
James Barder
Angela Hildreth
Ken James
Jonathan Freeman
AUDIT COMMITTEE
Jonathan Freeman
John Clarke
Non-Executive Chairman
Chief Executive Officer
Finance Director and Chief Operating Officer
Executive Director
Non-Executive Director
REMUNERATION COMMITTEE
NOMINATIONS COMMITTEE
Jonathan Freeman
John Clarke
John Clarke
Jonathan Freeman
SECRETARY AND REGISTERED OFFICE
AUDITOR
Angela Hildreth
Futura Medical plc
Surrey Technology Centre
40 Occam Road
Guildford
Surrey
GU2 7YG
Grant Thornton
1020 Eskdale Road
Winnersh
Wokingham
Berkshire
RG41 5TS
REGISTRAR
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
NOMINATED ADVISER AND BROKER
PATENT ATTORNEY
PUBLIC RELATIONS ADVISER
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London
EC2Y 9LY
Withers & Rogers LLP
4 More London Riverside
London
SE1 2AU
Optimum Strategic Communications
Warnford Court
29 Throgmorton Street
London
EC2N 2AT
PRINCIPAL SOLICITOR
PRINCIPAL BANKER
INVESTMENT MANAGER
Square One Law
Anson House
Fleming Business Centre
Burdon Terrace
Jesmond
Newcastle Upon Tyne
NE2 3AE
HSBC Bank
12A North Street
Guildford
GU1 4AF
Royal London Asset Management Limited
PO Box 9035
Chelmsford
CM99 2XB
80
Stock Code: FUMFutura Medical plc Annual Report 2019 F
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Futura Medical plc
Surrey Technology Centre
40 Occam Road
Guildford
Surrey
GU2 7YG
Tel: +44 (0) 1483 685670
Fax: +44 (0) 1483 685671
Email: info@futuramedical.com
Web: www.futuramedical.com