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Futura Medical plc
Annual Report and
Accounts 2021
Welcome to the
Futura Medical
Annual Report 2021
WHAT WE DO
Futura Medical is a
pharmaceutical company
developing innovative
products based on our
proprietary, transdermal
technology DermaSys®.
Products are optimised for clinical efficacy,
safety, mode of administration, patient and
consumer 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.
Futura has a proven track record in delivery and completion of Research and Development (“R&D”)
projects up to value inflection points at which they are suitable for commercialisation partners.
INVESTMENT CASE
1 LONG-TERM VALUE CREATION FROM OUR
LEAD PRODUCT MED3000
3 CLINICAL DEVELOPMENT OF TREATMENTS
FOR UNMET NEEDS
We are prioritising the development and regulatory approval
of MED3000, our treatment for erectile dysfunction (“ED”),
owing to its significant long-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
statistically significant and clinically important improvements
in ED over baseline (before treatment). In 2021 MED3000
received its MDR EU Quality Management Certificate for the
placing on the market of a Class 2B medical device (“CE mark
approval”) making it the first clinically proven, pan-European
topical treatment for adult men with ED available without a
doctor’s prescription (“OTC”). A confirmatory Phase 3 clinical
trial is also underway in preparation for a regulatory filing in
the US by the end of Q3 2022.
Read more about MED3000
on page 22
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.
Our purpose is to enhance quality of life to enable our patients
and consumers to enjoy their lives to the full whilst being
ethical in all we do.
Read more about the
erectile dysfunction market
on page 15
Read more about our SDG
goals on page 38
2 ADVANCED PROPRIETARY TECHNOLOGY
DERMASYS®
4 DE-RISKED STRATEGY WHICH FOCUSES
ON RAPID ROUTES TO MARKET
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.
Our lead product has already received CE mark approval
which will provide in many non-EU countries a “fast-track”
approval. Confirmation has also been received on the
remaining clinical trial requirements expected for US approval
which will complete in Q3 2022. This means that there is a
lower development risk and shorter regulatory pathway to
monetisation of our products in many countries.
Read more about DermaSys®
on page 4
Read more about our
strategy on page 20
5 DISTRIBUTION NETWORK BASED
ON STRATEGIC PARTNERSHIPS
As a semi-virtual company we value our commercial
partners and place much emphasis on selecting and
establishing a network of licensing and distribution partners
with brand building strength, healthcare credibility, regional
infrastructure and marketing expertise for long-term
distribution of MED3000 across the globe. We look for
committed commercial partners who have the regulatory
and commercial expertise as well as the tenacity, drive and
enthusiasm to make our products a success.
Read more about our
partnerships on page 28
6 EXPERIENCED
MANAGEMENT TEAM
The management team has significant experience in
researching and developing innovative products for the
global consumer healthcare and prescription markets
and has recently strengthened the Board’s business and
commercial expertise as Futura moves into the next phase
of MED3000’s commercialisation.
Read more about governance
at Futura on page 50
Our purpose is to
enhance our patients
and consumers’
quality of life to enable
them to enjoy their
lives to the full.”
JAMES BARDER
Chief Executive
5 DISTRIBUTION NETWORK BASED
ON STRATEGIC PARTNERSHIPS
As a semi-virtual company we value our commercial
partners and place much emphasis on selecting and
establishing a network of licensing and distribution partners
with brand building strength, healthcare credibility, regional
infrastructure and marketing expertise for long-term
distribution of MED3000 across the globe. We look for
committed commercial partners who have the regulatory
and commercial expertise as well as the tenacity, drive and
enthusiasm to make our products a success.
Read more about our
partnerships on page 28
6 EXPERIENCED
MANAGEMENT TEAM
The management team has significant experience in
researching and developing innovative products for the
global consumer healthcare and prescription markets
and has recently strengthened the Board’s business and
commercial expertise as Futura moves into the next phase
of MED3000’s commercialisation.
Read more about governance
at Futura on page 50
CONTENTS
STRATEGIC REPORT
Investment case
Highlights
DermaSys® at a glance
Products and pipeline
Chairman’s Statement
Chief Executive’s Review
Marketplace – Erectile dysfunction
Our business model
Our strategy
Key performance indicators
Product Review – MED3000
Product 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
FINANCIAL STATEMENTS
IFC
02
04
06
08
09
15
18
20
21
22
31
33
34
38
40
44
46
50
51
56
59
Independent Auditor’s Report to the Members of
Futura Medical plc
61
Consolidated Statement of Comprehensive Income 69
Consolidated Statement of Changes in Equity
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Independent Auditor’s Report to the Members of
Futura Medical plc (Parent Company)
Parent Company Balance Sheet
Parent Company Statement of Changes in Equity
70
71
72
73
93
102
103
Notes to the Parent Company Financial Statements
104
Company information
107
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INVESTMENT CASE
1 LONG-TERM VALUE CREATION FROM OUR
LEAD PRODUCT MED3000
3 CLINICAL DEVELOPMENT OF TREATMENTS
FOR UNMET NEEDS
We are prioritising the development and regulatory approval
Our focus is on differentiated products, addressing areas of two
of MED3000, our treatment for erectile dysfunction (“ED”),
large markets, sexual health and pain, seeking to solve unmet
owing to its significant long-term value creation potential
needs that will help improve patients and consumers’ lives.
in a large market where there is an unmet need for new
Our purpose is to enhance quality of life to enable our patients
treatment options. In a Phase 3 clinical trial MED3000 achieved
and consumers to enjoy their lives to the full whilst being
statistically significant and clinically important improvements
ethical in all we do.
Read more about the
Read more about our SDG
erectile dysfunction market
goals on page 38
on page 15
in ED over baseline (before treatment). In 2021 MED3000
received its MDR EU Quality Management Certificate for the
placing on the market of a Class 2B medical device (“CE mark
approval”) making it the first clinically proven, pan-European
topical treatment for adult men with ED available without a
doctor’s prescription (“OTC”). A confirmatory Phase 3 clinical
trial is also underway in preparation for a regulatory filing in
the US by the end of Q3 2022.
Read more about MED3000
on page 22
2 ADVANCED PROPRIETARY TECHNOLOGY
DERMASYS®
4 DE-RISKED STRATEGY WHICH FOCUSES
ON RAPID ROUTES TO MARKET
We are exploiting the potential of our transdermal technology
Our lead product has already received CE mark approval
DermaSys® to innovate and develop topical treatments offering
which will provide in many non-EU countries a “fast-track”
a fast onset of action and low systemic side effects. Our long-
approval. Confirmation has also been received on the
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.
remaining clinical trial requirements expected for US approval
which will complete in Q3 2022. This means that there is a
lower development risk and shorter regulatory pathway to
monetisation of our products in many countries.
Read more about DermaSys®
on page 4
Read more about our
strategy on page 20
Futura Medical plc Annual Report 2021STRATEGIC REPORT Highlights
MED3000 – EUROPE AND US
REGULATORY
▶ In April 2021, the Company received its MDR
EU Quality Management Certificate for
placing MED3000 on the market as a Class 2B
medical device also known as European “CE
mark approval”.
− Futura’s breakthrough, topical gel
formulation MED3000, will be the first
pan-European topical treatment for
erectile dysfunction (“ED”) available
without the need of a doctor’s
prescription (“OTC”).
▶ The US Food and Drug Administration
(“FDA”) agreed that an application could be
made for MED3000 as a medical device for
ED treatment, with a De Novo classification.
A number of productive and positive pre-
submission meetings with FDA followed
during 2021 to discuss existing Phase 3
clinical data, pathway to OTC status and
any additional clinical and non-clinical
requirements:
− In March 2021 an agreement was reached
between FDA and Futura on the detailed
clinical study design (protocol) for a small
supplemental clinical trial (known as
“FM71”).
− In August 2021 the FDA confirmed that to
enable OTC classification a non-clinical,
“Human Factors” study would need to
take place to test the ability of subjects
to self-diagnose their ED, correctly select
the product based on label information
and test their ability to correctly use the
product without supervision of a doctor.
The FDA asked for a minimum of 15
subjects to complete the study.
− On 14 September 2021 the first patient
was enrolled in the FM71 confirmatory
clinical study. Patient recruitment was
completed at the end of 2021 and the
study remains on track for US filing by the
end of Q3 2022.
− In December 2021 Futura announced
successful completion of the Human
Factors study, with 32 subjects
entering the study. Results supported
the regulatory submission for OTC
designation and will enable Futura to
finalise the OTC product label for a US
filing expected to be made after FM71 has
completed.
− US marketing authorisation remains on
track for potential approval of MED3000
in Q1 2023.
0 2
MED3000 – COMMERCIAL AND
MANUFACTURING
▶ Joint collaboration agreement for China
and South East (“SE”) Asia with 50/50 share
of profits signed in March 2021. Initial
submissions have been made to the Chinese
National Medical Products Association
(“NMPA”) initially for determination of the
regulatory classification of MED3000 in what
is expected to be a three-year regulatory
process.
▶ In August 2021 Futura entered into a licensing
agreement with m8 Pharmaceuticals,
Inc (“m8”), a specialty biopharmaceutical
company focused on commercialisation in
Latin America, for the rights to exclusively
develop and commercialise the Company’s
MED3000, in the key ED markets of Brazil
and Mexico.
▶ In September 2021 Futura signed a licensing
agreement with Labatec Pharma (“Labatec”),
a Swiss-based specialty pharma company
with expertise in commercialisation in Europe
and the Middle East and North
Africa (“MENA”) region for exclusive rights
to commercialise MED3000 in the Gulf
Co-operation (“GCC”) region, Jordan, Lebanon
and Iraq.
▶ MED3000 manufacturing capabilities
expanded in August 2021 with the addition
of a new third party, FDA, EMA and UK
approved manufacturer and extended shelf
life to three years, as Futura strengthens
resources in the build up towards initial
product launches over the next year.
POST PERIOD END HIGHLIGHTS
▶ Entered into a period of exclusivity with an,
as yet, unnamed party regarding a potential
agreement for the EU and UK marketing
rights for MED3000.
▶ In March 2022 Futura signed a commercial
licensing agreement for MED3000 in South
Korea with A. Menarini Korea Limited, a
subsidiary of Italy-based, multinational
specialty pharma company Menarini Group.
▶ In April 2022, the Company received UKCA
mark approval following an application in
March 2022 to the UK Notified Body for
MED3000 as a Class 2A medical device. This
is required before end of June 2023 to replace
the CE mark approval which currently covers
the UK according to Brexit legislation.
Highlights
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BOARD UPDATES
▶ In October 2021 management strengthened the
Company’s Board with additional commercial
expertise with the appointment of two Non-
Executive Directors, Jeff Needham and Andrew
Unitt as Futura moves into the next phase of
MED3000’s commercialisation.
▶ Jonathan Freeman stepped down as Senior
Independent Non-Executive Director on
31 December 2021 having been on the Board of
Futura since the IPO in 2003.
FINANCIAL HIGHLIGHTS
▶ In May 2021 the Company conducted a £12.00
million (gross) fundraise including retail offer.
▶ £4.96 million net loss in the period (31 December
2020: net loss £2.41 million).
▶ Cash resources of £10.37 million at 31 December
2021 (31 December 2020: £1.02 million).
▶ Current cash runway extends beyond initial
MED3000 launches expected over the next year
and expected US regulatory approval in 2023,
assuming no contributions from milestone
payments or other revenues.
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DermaSys® at a Glance
At the core of DermaSys®
Unique combinations
of skin penetration and
permeation enhancers
With active
drug
Non-drug
action
Targeted and rapid
delivery through
the skin
The combination of
solvent components
and permeation
enhancers increases
skin penetration and
permeation to drive the
active through the skin
to the site of action.
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.
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®.
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”)
ingredients onto and through the skin to the
required site of action with a high level of
safety. We take off-patent, generic molecules
and ingredients 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
a potentially shorter regulatory pathway. We
protect this valuable IP and ensure that we
maximise both the strength of our patents’
protection and their duration.
0 4
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
penetration and permeation 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
provide effective and local topical application
to the required site of action. For our ED
treatment, MED3000, this translates into a
fast-acting treatment for erectile dysfunction
with an excellent safety profile. For CBD100 this
translates into a uniquely stable cannabidiol
formulation, effective penetration for enhanced
therapeutic benefits with fast, effective and
long-lasting 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
Gel specifically
tailored and
formulated
MED3000
▶ Fast onset of
action
CBD100
▶ Highly effective
skin penetration
▶ Duration of
▶ Rapid permeation
action to suit the
natural length of
intercourse
▶ Excellent safety
profile
to the site of
action
▶ Superior stability
0 5
Futura Medical plc Annual Report 2021STRATEGIC REPORT Products and Pipeline
Futura Medical is developing innovative products for two
large markets, sexual health and pain. We have products
in late-stage development, with MED3000 and CBD100
being the lead products.
GLOBAL TRENDS OUR PRODUCTS ADDRESS
1 Ageing populations
3 Increased quality of life
Population ageing is a global phenomenon with
virtually every country in the world experiencing
growth in the size and proportion of older people in
their population. Globally, the share of the population
aged 65 years or over increased from six per cent in
1990 to nine per cent in 20191. Age is a main factor for
the incidence of erectile dysfunction as well as local
pain.
2 Increasing prosperity
According to a Brookings Institute report, as of 2016,
3.2 billion people globally are considered middle
class and it is estimated this number will increase by
140 million annually. In developed countries people in
their older years have fewer financial commitments
and therefore more disposable income.
OUR MARKET CATEGORIES
With an increasing prosperity and increasing life
expectancy, patients and consumers have high
expectations to lead a full, active and enjoyable life
well into their later years.
4
Increasing overall patient
demand
With more disposable income and higher
expectations from patients towards their sexual
health and the desire to lead a full, active and
enjoyable lifestyle, we anticipate that overall patient
demand and spending will increase.
Sexual Health
Lead product MED3000 is a unique and
highly differentiated easy to use topical gel
for erectile dysfunction (“ED”) which has been
approved as a medical device in the EU and
has Phase 3 clinical data demonstrating highly
statistically significant and clinically important
improvement across all ED patient severities
with potential over the counter peak sales of
over US$ 650 million2.
Cannabidiol
CBD100 may be able to provide rapid and
targeted 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 with a particular focus on
local or regional treatment, such as pain relief. In
recent years there has been significant interest
in cannabidiol as more data is emerging on its
potential benefits with the market forecast to
grow to US$ 15 billion by 20283.
1. World Population Ageing 2019 report, United Nations.
2. Previous market research conducted by Ipsos Group as an over the counter product on MED2005 showed potential peak sales of US$660
million. 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.
3. Report by Reports and Data, 2021.
0 6
OUR PRODUCT PIPELINE
MED3000 pipeline stage
Development
Regulatory
Distribution
agreements
EU
MENA
Brazil/
Mexico
Asia
US
MED3000 approved as a medical device in
the EU after receiving its MDR EU Quality
Management Certificate as a Class 2B medical
device (“CE mark approval”).
Post-Brexit UKCA mark approval received in
April 2022.*
Supporting Labatec with their regulatory
dossiers and submissions which have already
commenced.
Supporting m8 with their regulatory dossiers.
Dossiers being prepared for submission in 2022.
Discussions being held with the
Chinese regulator (“NMPA”) to clarify
scope of clinical work.
In a number of additional South East Asian
markets supporting Co-High with regulatory
dossiers and submissions.
Successful completion of
Human Factors study to support
OTC designation
Headline clinical data Q3 2022
Phase 3 FM71 study underway and on
track for submission to the FDA by the
end of Q3 2022
Regulatory submission by end of Q3 2022
Clear regulatory pathway as a medical device
with OTC designation in the US.
Licensing deal signed
with Labatec
Licensing deal signed
with m8
Licensing deal signed
with Co-High
* The UKCA (UK Conformity Assessed) marking is a new UK product marking that is used for goods being placed on the market in Great Britain (England, Wales
and Scotland). It covers most goods which previously required the CE marking. The UKCA mark will be needed from 1 July 2023 and in the meantime the EU CE
mark is valid in the UK. We received UKCA mark approval in April 2022, well ahead of the deadline.
Development stage for other products
CBD100
Topical cannabidiol formulation
Joint venture collaboration. Early development stage completed. IP application
filed. Advisers retained to explore commercial opportunities.
TPR100
Topical diclofenac pain relief gel
Scientific advisory meeting held with MHRA confirming the need of a Phase
3 study to support the improved skin permeation including potential superior
efficacy claims. Exploring the feasibility of a clinical study to satisfy the Phase 3
requirements for both UK and US approval. Development currently on hold.
TIB200
Topical ibuprofen pain relief gel
Partnering discussions ongoing.
SPOTLIGHT
Our lead product, MED3000 was approved in April 2021 as a
medical device in the EU and will be the first clinically proven,
pan-European OTC topical treatment for erectile dysfunction
available without a doctor’s prescription.
MED3000 is a unique and highly differentiated, easy to use
topical gel for erectile dysfunction with a rapid speed of onset
which has Phase 3 clinical data demonstrating highly statistically
significant and clinically important improvement across all ED
patient severities. Licensing deals have been signed for key
regions worldwide with launches expected over the next year.
Futura has developed an illustrative pack and branding that
licensing partners can select to use at their discretion.
07
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Futura Medical plc Annual Report 2021STRATEGIC REPORT
Chairman’s Statement
Evolving towards
commercialisation from a
position of strength”
JOHN CLARKE
Non-Executive Chairman
2021 was a landmark year for Futura Medical with
its lead product MED3000 gaining EU approval as a
clinically proven treatment for erectile dysfunction
(“ED”) available without the need of a doctor’s
prescription and rapidly transforming from a
solely R&D focused operation into a high growth,
commercial-stage Company poised for sustainable
long-term revenues. The MED3000 regulatory
approval was an exceptional achievement for the
Company especially when you consider it was
achieved against the backdrop of a global pandemic.
In June 2021, we completed a £12 million
fundraise which was supported by our key
existing shareholders as well as new shareholders.
Importantly, this enables the Company to complete
the remaining clinical development activities
expected to be required by the FDA to gain approval
in the US. The US is the largest potential market
by value over the counter (“OTC”) with all the well-
known oral treatments such as Viagra® and Cialis®
requiring a doctor’s prescription. The fundraise also
strengthened our balance sheet ahead of partnering
discussions.
Our commercialisation strategy continues to be
to engage with licensing or distribution partners
who have extensive local knowledge of their
markets, experience of building brands within the
pharmaceutical and OTC sector as well as a strong
commitment and belief in MED3000. During 2021,
we concluded partnering arrangements in China
and South East Asia, Latin America, South Korea
and the Gulf region including Jordan, Lebanon and
Iraq. Our intentions for US commercialisation are to
successfully complete data requirements for the US
and submit for US approval before progressing US
commercial options.
We continue to bring new skills and experience
to our already highly skilled Board. A great deal of
thought and focus was placed on expanding the
Company’s commercial and business expertise with
a particular focus on the US. Futura strengthened the
Board with the appointment of two Non-Executive
Directors, Jeff Needham and Andrew Unitt.
0 8
Both bring OTC market expertise and exceptional
skills in strategic development and business
management which will further enhance our
ambition and focus on building a global brand and
distribution network to accelerate Company growth.
Jeff, who joined the Board in October 2021 brings a
wealth of knowledge and experience to the Board
having been at Perrigo Company plc, the US-based
manufacturer and marketer of consumer healthcare
products, for 36 years, and a board director of the
Consumer Healthcare Products Association (US)
for 11 years. Andrew, who joined the Board on 1
January 2022, brings strong financial experience
having spent eleven years at Boots plc, where he was
Finance Director for four years of Boots Healthcare
International, its over the counter medicines
business. Andrew will chair the Audit Committee as
Jonathan Freeman’s successor, following Jonathan
stepping down at the end of 2021.
I would like to take this opportunity to thank
Jonathan for his wise counsel and his huge
contribution over the years. He has been a highly
valued and appreciated member of the Board and
the Board is unanimous in thanking him for all his
efforts.
The COVID-19 pandemic continued through 2021
and I would like to thank all of Futura’s employees for
their dedication, hard work and commitment during
several lockdowns and for successfully working from
home when required in the last twelve months.
Finally, I would like to thank our shareholders for
their continued support and belief in our strategy for
making a commercial success of MED3000.
JOHN CLARKE
Non-Executive Chairman
Chief Executive’s Review
Poised for growth and
sustainable long-term
revenues”
JAMES BARDER
Chief Executive
COVID-19 UPDATE
Futura Medical monitored closely the constantly
evolving situation in relation to the COVID-19
pandemic and all necessary steps were taken to
maintain the integrity of the Company’s assets
and the health and well-being of our employees.
We have supported our staff to work from home
and implemented a COVID secure workplace
with thorough risk assessments updated as and
when Government guidance changes.
To date we have not seen a material impact as
the Company is used to operating as a semi-
virtual business and we have adapted very well
to a remote and flexible working model. As the
pandemic hopefully reaches its endemic phase
we plan to make suitable adjustments to the
working environment.
The clinical study FM71 is fully recruited and
underway and thus far any disruption as a result
of COVID-19 has been minimal.
2021 has been a year of transformational progress
and momentum for Futura as the Company
achieved major milestones in terms of first regulatory
approval for our lead product, MED3000, as an
approved erectile dysfunction treatment (“ED”) and
completion of a number of commercial MED3000
licensing deals as we continue to build a global
distribution platform.
The Company received CE mark approval from
the European regulator for MED3000 in April 2021.
The product is a breakthrough, fast-acting topical
gel formulation for the treatment of ED. MED3000
now has the potential to become the first globally
available, clinically proven, over the counter (“OTC”)
treatment option available to the 1 in 5 men1 that
suffer from a variety of severities of ED worldwide, a
market that has seen little innovation in the last two
decades.
The Company is now preparing for first product
launches over the next year and 2023, not just in
Europe but also countries where recognition of the
CE mark may allow “fast-track” review, importantly
making a highly differentiated treatment option
accessible and available to ED sufferers without a
doctor’s prescription. In line with this, recognising
how crucial disciplined supply is, we have recruited
key quality, manufacturing and supply talent, and
are scaling up production to ensure continuity
and certainty of supply for launches and future
international sales growth.
The US remains the largest market opportunity
globally for ED treatments OTC and we are making
steady progress towards completing our US
Food and Drug Administration (“FDA”) regulatory
submission for MED3000 and continue to target
filing for approval by the end of Q3 2022. We
were pleased to announce completion of patient
recruitment for our FM71 study (a confirmatory
study stipulated by the FDA) at the end of 2021 and
reported in December 2021 that the “Human Factors”
study was successfully completed, with results
able to support the regulatory submission for OTC
designation as well as allowing us to finalise the OTC
product label for the US filing.
The Board and its commercial advisers believe
that post-US-submission with launches underway
in other regions is an optimal, key, de-risked
inflection point at which to focus on US commercial
discussions in earnest to explore all options
to capture long-term value and cashflow for
shareholders.
2021 also saw the Company begin to execute upon its
strategic plan to leverage commercialisation globally
with a network of licensing and distribution partners
with brand building strength, healthcare credibility
and infrastructure and marketing expertise,
choosing partners for the development and
commercialisation of MED3000 in major markets for
ED. In 2021 this covered China, South East Asia, Latin
America and the Gulf region in deals structured to
capture significant long-term value.
In 2022 to-date we have signed an agreement
covering South Korea bringing the total number of
MED3000 commercial deals to four, and we have
also entered into a period of exclusivity with an, as
yet, unnamed party regarding a potential agreement
for the EU and UK marketing rights for MED3000,
although there can be no guarantee that an
agreement can be successfully reached at this stage.
0 9
Chief Executive’s Review
A further announcement will be made as
appropriate.
We look forward to further updates for shareholders
during what we believe will continue to be an
exciting 2022 for Futura as we prepare for initial
launches of MED3000, further commercial
agreements and target US regulatory filing by the
end of Q3 2022.
OPERATIONAL REVIEW
Futura’s strategy is to leverage its proprietary and
tailored DermaSys® transdermal delivery technology
to bring innovative products to market in sexual
health and pain, bringing new treatment options to
patients particularly in areas of significant unmet
need. The Company is accumulating critical know-
how, particularly in new market segments of sexual
health, including OTC treatments for ED, that it aims
to leverage commercially as it continues to build
a brand franchise around MED3000 and achieve
sustainable revenue growth.
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 – FUTURA’S BREAKTHROUGH, FAST-
ACTING TOPICAL GEL FORMULATION WITH THE
POTENTIAL TO BECOME THE FIRST GLOBALLY
AVAILABLE, CLINICALLY PROVEN, OTC
TREATMENT FOR ED
MED3000 is a formulation of the proprietary
technology DermaSys®, 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
multi-billion dollar ED market2, 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 or food as well as providing
a potential treatment option for patients contra-
indicated from using existing ED therapies.
The prevalence of ED disrupts the lives of at least
1 in 5 men globally1, with around 23 million men
suffering ED in the US and 20 million men in the UK,
France, Italy, Spain and Germany3. Whereas there
has been little innovation in ED treatments for nearly
two decades and many patients continue to suffer
dissatisfaction with existing treatments, the market
continues to evolve especially within the US with the
advent of subscription services such as For Hims and
Go Roman, and also in the UK with Numan, which
offer a branded concierge service for ED prescription
medicines online. These subscription services charge
a monthly subscription fee, typically in the region
of US$50 in return for a doctor’s consultation and
ten generic 50mg sildenafil tablets per month. This
increased affordability of around US$5 per tablet (to
the end user) is driving volumes especially in the
US which have increased by 85% between 2018 and
20202.
Studies have shown MED3000 to be an effective
treatment for ED with an excellent safety profile.
MED3000 has a unique evaporative mode of action
which the Company believes stimulates nerve
endings in the glans penis to cause an erection.
MED3000 helps men get an erection within 10
minutes, substantially faster than on-demand oral
tablet phosphodiesterase-5 inhibitors (“PDE5i’s”),
with significant benefits for spontaneous rather than
pre-planned sexual intercourse.
Futura’s objective of OTC status as a clinically proven
treatment for ED for MED3000, particularly in the
US, continues to be a top priority given the potential
this offers with the difficulties that PDE5i’s seem
to be encountering in most major markets to get
approval for switch from prescription to OTC status.
Most recently in January 2022 BfArM’s (the Federal
Institute for Drugs and Medical Devices in Germany)
Expert Committee for Prescription rejected the
prescription to OTC reclassification of sildenafil
(50mg) for oral use to treat ED. Sildenafil currently
has OTC status only in Ireland, New Zealand, Norway,
Poland, and the UK.
MED3000 – APPROVED AS THE FIRST PAN-
EUROPEAN TOPICAL TREATMENT FOR ED
AVAILABLE WITH OTC STATUS
Futura’s breakthrough, fast-acting topical gel
formulation MED3000, is the first clinically proven,
pan-European topical treatment for adult men with
ED available without a doctor’s prescription. In April
2021 the Company announced that it received its
MDR EU Quality Management Certificate for the
placing on the market of a Class 2B medical device
known as MED3000 (“CE mark approval”).
The CE mark approval of MED3000 from the EU
Notified Body paves the way for approval in many
countries around the world, including in Latin
America, the Middle East, Africa and the Far East
regions with many countries considering “fast-track”
review based on recognition of the EU CE mark.
1. EMA, Withdrawal assessment report for Viagra, 2008
2. IQVIA IMS Health, 2020
3. 2021 JSB Partners estimate based on US Census International
Programs Population by age groups and “Prevalence of erectile
dysfunction: Massachusetts Male Aging Study”, 1987 ± 1989
(n=1626); source Kleinman et al. J Clin Epidemiol 2000.
1 0
Due to post-Brexit arrangements, the EU CE mark
can be used to market the product in Great Britain
until 30 June 2023 by which time a specific UKCA
mark has to be obtained. In anticipation of this
Futura filed for a UKCA mark for MED3000 as a
Class 2A medical device and received approval in
April 2022.
US – THE LARGEST POTENTIAL OTC ED
MARKET GLOBALLY
In 2020, the FDA agreed that an application may
be made for MED3000 as a medical device for ED
treatment, with a De Novo classification. This was
followed by a number of productive and positive pre-
submission meetings with the FDA during 2020 and
2021 to discuss existing Phase 3 clinical data, pathway
to OTC status and any additional clinical and non-
clinical requirements.
In August 2021 Futura agreed with FDA the
design of a “Human Factors” study to achieve
OTC classification. Successful completion of
the Human Factors study was announced in
December 2021, with 32 subjects recruited. It
was demonstrated that individuals are able to
correctly self-diagnose ED and to make correct
self-selection decisions by considering their own
health history and the instructions for use and
warnings on the label. Overall, there was a very high
degree of comprehension of the label and leaflet
to increase confidence that the product will be
used appropriately in an OTC setting. These results
therefore support the regulatory submission for OTC
designation and will enable Futura to finalise the
OTC product label for a US filing.
FM71 – US confirmatory clinical study design
In March 2021 Futura announced that it received
official minutes from the FDA agreeing the design
for a confirmatory clinical trial. FM71 is a Phase 3,
24-week multicentre, comparative, randomised,
open-label, home use, parallel group study in
100 subjects with mild, moderate or severe ED.
Co-primary endpoints were agreed with FDA as
significant improvement with MED3000 from
baseline (pre-treatment) ED, and ensuring that the
change from baseline is clinically important defined
as at least a 4-unit change on the internationally
recognised IIEF-EF scale. Secondary endpoints
include FDA agreed criteria to support fast-acting
claims, a key product differentiator. Tadalafil 5mg is
also included in the study to provide exploratory end-
points and inform FDA of the relative benefit and risk
of MED3000 versus a currently marketed product.
FM71 was fully recruited by the end of December
2021 using subjects from Eastern Europe and the
US. Timelines remain on track to enable planned US
regulatory submission by the end of Q3 2022, and
for targeting potential US FDA granting De Novo
and OTC classification for marketing authorisation in
Q1 2023.
MED3000 COMMERCIALISATION
2021 saw the Company enter into several commercial
licensing deals in major markets for ED.
In March 2021 Futura announced investment
into the Company and joint collaboration with
Co-High Investment Management Limited (“Co-
High”) and certain subsidiaries of Atlantis Group
to commercialise MED3000 in China and South
East Asia.
Futura also announced in August 2021 that it
had entered into a licensing agreement with m8
Pharmaceuticals to commercialise MED3000 in
Brazil and Mexico, swiftly followed in September
by a licensing agreement with Labatec Pharma
(“Labatec”) for exclusive rights to commercialise
MED3000 in the Gulf region, Jordan, Lebanon
and Iraq.
In early 2022 Futura entered into its fourth licensing
agreement with A. Menarini to commercialise
MED3000 in South Korea.
Futura is establishing a network of licensing
and distribution partners with strength in brand
building, pharmaceutical credibility and regional
infrastructure and marketing expertise for long-
term distribution of MED3000 across the globe.
With multiple commercial agreements to date
Futura now has a strong and expanding distribution
platform in place for regions outside the key US
market. The Board’s US commercialisation strategy
is to successfully complete data requirements for the
US and submit for US approval before progressing
US commercial options which is also expected
to be reinforced by validation of initial product
launches in other countries. Nevertheless Futura has
already received a number of inquiries regarding
commercialisation opportunities for MED3000 in the
US and the Board and its advisers are keeping an
open mind on the best options in order to maximise
long-term value and sustainable revenues whilst
minimising risk for Futura’s shareholders.
China and South East Asia – Co-High
In March 2021 Futura entered into £1.5 million
convertible debt and £0.5 million of warrants
financing transactions with HT Riverwood Multi-
Growth Fund (“Riverwood”), a fund managed by
Atlantis Investment Management Limited (“Atlantis”),
which provided the Company with £2 million in cash.
These financial instruments were respectively
converted and exercised by Riverwood in March
and April 2021 and there are no further amounts
outstanding to Riverwood from Futura.
Atlantis is a 100% owned subsidiary of the Atlantis
Group and Co-High is a 60% owned subsidiary
of the Atlantis Group. Ms Yang Liu, now Atlantis’
Chairperson and Chief Investment Officer, acquired
the Atlantis Group in 2009.
1 1
Futura Medical plc Annual Report 2021STRATEGIC REPORT Chief Executive’s Review
m8 will be responsible for all costs related to the
regulatory approval and marketing of the product.
Futura will provide reasonable ongoing technical
support for OTC product development and
commercialisation. Futura will receive payments
on all sales of MED3000 from m8, and up to four
milestone payments totalling US$8.5 million based
on cumulative sales volumes within the initial term.
Gulf Co-operation Council (“GCC”) region and
Middle East – Labatec
In September 2021 Futura entered into a licensing
agreement with Labatec Pharma (“Labatec”), a
Swiss-based specialty pharma company focused on
commercialisation in Europe and the Middle East
and North Africa (“MENA”) regions, for the rights
to exclusively commercialise MED3000 in the GCC
region as well as Jordan, Lebanon and Iraq.
Futura is eligible to receive initial upfront payments,
as well as undisclosed milestone payments based on
regulatory approval. Labatec will pay an agreed price
to Futura for the manufacture and supply of MED3000
by Futura’s Contract Manufacturing Organisation
(“CMO”), plus royalties on all sales. Labatec is
responsible for all local MED3000 development and
regulatory costs as well as all launch and marketing
expenses. The initial licence agreement term is for
eight years with the ability to extend for successive
two-year terms by mutual consent.
South Korea – A. Menarini Korea Ltd
In March 2022 Futura announced a licensing
agreement with A. Menarini Korea Limited
(“Menarini”) for the rights to exclusively
commercialise MED3000 for the treatment of ED in
South Korea. A.Menarini Korea Ltd is a wholly owned
subsidiary of the Italian-based specialty pharma
company Menarini Group. Menarini Group is the
world’s largest Italian biopharmaceutical company
Additionally, Futura entered into a licensing
agreement with Pride Century Ventures, a special
purpose vehicle owned by Co-High for the rights
to exclusively develop and commercialise the
Company’s topical, gel-based ED treatment
MED3000, in China and South East Asia (the
“Region”). Co-High will provide funding currently
estimated to be up to £4 million for the expected
remaining R&D work required to gain approval of
MED3000 throughout the Region. Futura will be
entitled to 50% of profits from the commercialisation
of MED3000 within the Region including any profits
derived from local partner agreements within
the Region.
Atlantis is a leading international asset management
company with a focus on the Greater China Region
and South East Asia. Co-High is a specialist private
equity company in the Greater China region and
invests in and collaborates with some of the world’s
most promising companies which are believed to
be poised to enter a hypergrowth phase. Healthcare
investment and collaboration is targeted at
companies with a clear scientific edge who are
working to solve the major unmet medical needs of
the Greater China region.
Under the terms of the agreement, Futura
and Co-High will work together to develop and
commercialise MED3000 as a clinically proven OTC
treatment for ED throughout South East Asia.
Discussions are being held with the Chinese
regulator, the National Medical Products
Administration, to clarify the scope of clinical
work required to gain approval in China and initial
submissions have been made to determine whether
MED3000 will be designated a medical device or
drug. Current expectations are that a Chinese clinical
trial will be required to establish safety as well as
efficacy in Chinese men. The Chinese regulatory
process is currently expected to take up to three
years, inclusive of the likely time required to conduct
a local clinical trial although more accurate timings
can only be given once designation is complete.
Brazil and Mexico – m8 Pharmaceuticals
In August 2021 Futura entered into a licensing
agreement for MED3000 with m8 Pharmaceuticals,
Inc (“m8”), a specialty biopharmaceutical company
focused on commercialisation in Latin America, for
the rights to exclusively develop and commercialise
MED3000, in Brazil and Mexico.
Under the terms of the agreement Futura and m8
will work together to gain marketing authorisation
and commercialise MED3000 as a clinically proven
treatment for ED available OTC in Brazil and Mexico,
the two biggest countries and healthcare markets in
Latin America. The agreement is for an initial term of
15 years.
1 2
with a heritage of over 135 years and over 17,500
employees in more than 140 countries. Menarini
Korea possesses the capability to successfully
register, launch and commercialise brands in the
market, with key strengths in therapeutic areas such
as cardiovascular, hemato-oncology/pain, men’s
health, consumer health, and specialty/orphan
diseases and is a trusted medicines supplier in the
region that is ideally placed to market retail products,
with local teams that have a deep understanding
and experience of the South Korean market.
Currently, Futura’s approved contract manufacturing
facilities are located in the UK as well as the EU.
The Company is actively exploring additional
manufacturing sites, including in the US, to support
continuity of supply for future international sales
growth as well as the logistical challenges of inter-
market sales. Submissions for further regulatory
approvals of MED3000 outside Europe have already
started through Futura’s partners and manufacturing
scale up and validation is well advanced as we move
towards manufacturing launch supplies.
Futura is eligible to receive initial undisclosed
upfront payments and under agreement terms, will
support Menarini to gain marketing authorisation
and commercialise MED3000 for ED in South Korea.
Menarini will be responsible for all costs related
to the regulatory approval and marketing of the
product in the region including a clinical bridging
study, if required. Futura will provide reasonable
technical support for product development and
commercialisation and provide manufactured
product from Futura’s CMO at an agreed price.
MANUFACTURING
Futura’s team has been significantly strengthened
with key recruitment in both supply and
manufacturing expertise and additional quality
management as the Company moves from R&D
to commercial production and supply for its main
product. MED3000 manufacturing scale up and
production capacity to meet projected demand is
progressing well. We are cognisant that good supply
discipline is crucial and are also continuing to work
on optimising cost of goods.
In August 2021, the Company announced the
addition of a new, US FDA, EMA and UK approved
contract manufacturer as Futura works towards
initial launches of MED3000 over the next year.
Futura now has an approved shelf life for MED3000
of three years across all temperature zones an
important feature for markets such as the Middle
East where ambient temperatures and humidity are
much higher than within the UK.
PATENTS
An initial UK patent was filed in December 2019
around MED3000’s clinically significant and
novel findings shown in FM57 followed by further
supplementary UK filings to establish a priority date
prior to a Patent Cooperation Treaty (“PCT”) and
certain non-PCT patent applications in late 2020. The
PCT currently has 153 contracting countries where
the Company can seek patent protection claiming
priority from an original application such as the
UK. An application to the European Patent Office
was also made in August 2021 for examination and
further national applications in line with normal
PCT filing procedure will be made in Q2 2022 in
those countries considered necessary to protect
the commercial interests of MED3000. If national
applications are successful this will provide patent
protection until 2040.
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 and Ross, one
of the UK’s largest consumer healthcare companies
and a subsidiary of STADA AG.
Following the Medicines and Healthcare products
Regulatory Agency’s (“MHRA”) request for a Phase
3 study to support the improved skin permeation
and potential potency of TPR100 including potential
superior efficacy claims, Futura has determined that
the feasibility of a clinical study that would satisfy the
Phase 3 requirements for both UK and US marketing
approval will require a US distribution partner prior to
the commencement of any Phase 3 programme. The
project is currently on hold as the Company focuses
its resources on its leading asset, MED3000.
CBD100 – FUTURA’S ADVANCED, PROPRIETARY
DERMASYS® FORMULATION FOR TRANSDERMAL
DELIVERY OF CANNABIDIOL
CBD100 is part of a joint venture collaboration with
CBDerma Technology Limited aiming to explore
the application of Futura’s advanced proprietary
transdermal drug delivery technology, DermaSys® for
delivery of cannabidiol.
1 3
Futura Medical plc Annual Report 2021STRATEGIC REPORT Chief Executive’s Review
CBDerma Technology is a company that was
established and funded to specifically exploit the
therapeutic potential of cannabis. 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 2021 report by Reports and Data
forecasts that the market for cannabidiol products is
forecast to grow from US$3 billion in 2020 to US$15
billion by 2028, at a Compound Annual Growth Rate
of 22.6%, during the forecast period. The market
is primarily driven by the increase in the usage of
cannabidiol in medical applications and consumer
products such as supplements, beverages and skin
care cosmetics.
Futura’s extensive DermaSys® cannabidiol
formulation work has demonstrated highly efficient
penetration of cannabidiol into and through the skin,
superior to an established, marketed, comparator
product. Additionally, cannabidiol is known to be
unstable with many common excipients. CBD100
was specially formulated to minimise this issue and
has shown encouraging early stability work, which is
expected to ensure potency is retained during shelf-
life. This work resulted in robust intellectual property
filings covering various unique aspects of the CBD100
gel formulation.
As the medical and consumer applications of
cannabidiol become more and more accepted
and the regulatory environment becomes ever
clearer a gel that has been formulated using strict
pharmaceutical development principles with
strong delivery characteristics, stability and high
quality continues to be a very attractive commercial
proposition when compared to current market
incumbents in either cosmetic or more traditional
pharmaceutical markets for cannabidiol such as pain
and inflammation. Both options are being examined.
Whilst Futura’s resources are focused on key asset
MED3000, the Company has received interest in
CBD100 and continues to explore commercial
opportunities for the product with discussions
progressing and further validation work being
conducted both internally and externally by a
potential partner to validate the power of the
DermaSys® technology which may result in a
commercial agreement and we intend to update
shareholders in due course.
RESEARCH AND DEVELOPMENT
Futura is committed to delivering long-term and
sustainable value to the Company allowing a
long-lasting growth franchise to be built around
MED3000 and other DermaSys® formulated products.
Whereas Futura’s priority remains the approval and
subsequent successful launch of MED3000 in major
markets throughout the world, Futura aims to build
a significant MED3000 franchise across sexual health
by leveraging and expanding its unique knowledge
and expertise in underserved and new categories
1 4
in sexual health, building upon market research
already undertaken to identify product extensions
and potentially new market segments for an OTC
product treating ED. Futura intends, in due course, to
commission further in-market research, especially for
the US, to identify commercially attractive product
line extension opportunities.
OUTLOOK
The fundraise in May 2021 was pivotal in terms
of strengthening the Company’s finances and
commercial negotiating positions and so the
last year has seen Futura achieve considerable
milestones both in the evolution of the Company as
it approaches a sustainable revenue stream and in
terms of bringing closer the availability of MED3000
to men with ED where treatments that meet their
needs are lacking. This includes CE mark approval
for Europe and the UK as an ED treatment for adult
men without the need for a doctor’s prescription
and multiple commercial licensing deals in large
markets for ED in regions such as China and South
East Asia, Latin American, the Middle East and South
Korea. The Company has also entered into a period of
exclusivity with an, as yet, unnamed party regarding
a potential agreement for the EU and UK marketing
rights for MED3000, although there can be no
guarantee that an agreement can be successfully
reached at this stage.
Going forward we will continue to gear up
manufacturing and supply in line with expected
demand ready for first product launches over the
next year, having strengthened the Company’s team
of direct employees and directors in terms of global
commercial, quality, manufacturing and supply
experience as well as gain manufacturing regulatory
approvals through regional partners to support
international expansion beyond 2022.
We are also firmly focused on the US regulatory
pathway for MED3000 with the US confirmatory
FM71 clinical trial well underway having fully enrolled
patients towards the end of 2021 and the short,
non-clinical, “Human Factors” study successfully
completed to support US OTC designation. Everything
is on track for planned MED3000 regulatory dossier
submission in the US by the end of Q3 2022 and a
potential marketing authorisation in Q1 2023. The
US remains the largest potential OTC market for ED
and OTC status would be a first in the US, as it is for
the majority of countries within the EU, providing ED
sufferers with an accessible, new treatment option,
for their ED. We look forward to reporting on these
important inflection points to shareholders as the year
progresses and Futura gathers increasing momentum
as it transitions to commercial operations to capture
the value of MED3000.
JAMES BARDER
Chief Executive
Marketplace – Erectile Dysfunction
One in five men suffer from erectile dysfunction worldwide1.
Erectile dysfunction (“ED”) is closely linked to age and a number
of co-morbidities associated with obesity such as diabetes and
heart disease with the incidence of erectile dysfunction expected
to increase to 322 million worldwide by 20252.
Both severity and prevalence of ED increase
with age, a factor of great consequence given
the ageing of the population and rising levels
of obesity and diabetes in many countries.
ED can result from organic or psychological
causes and is increasingly affecting younger
men who can also suffer from performance
anxiety due to social pressure and false
expectations from easy online access to
pornography. ED can lead to low self-
esteem, lack of confidence and depression.
The 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 also
dramatically raised awareness amongst the
general public of this significant problem.
Erectile dysfunction affects
around 50% of men between
40 and 70 years old3”
The approval of PDE5i’s over 20 years ago
has transformed the treatment of ED,
nevertheless whilst highly efficacious for
many patients, oral PDE5i’s have several
adverse effects as well as potentially
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 the patient to anticipate
or pre-plan for sexual intercourse. Viagra®
for example only starts to work in 30-60
minutes. For these reasons many men and
their partners are dissatisfied with PDE5i’s
and it has been estimated that almost 50%
discontinue use after one year4. In most
countries oral PDE5i’s are only available
as a prescription only product which
presents too high a barrier to men seeking
treatment requiring an inconvenient and
often expensive consultation with a doctor
regarding a condition often perceived as
highly embarrassing.
ED is increasingly affecting
younger men with the
prevalence of ED in young men
being as high as 30%5”
ED SUFFERERS’ UNMET NEEDS
There has been little effective innovation in
nearly two decades for the treatment of ED.
Today, there remains a significant unmet
clinical need for those men wanting easy
access to a fast-acting treatment that can give
greater spontaneity and can form part of sexual
foreplay thereby offering enhanced 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. Crucially they
are looking for a treatment which could be
available without a doctor’s prescription
normalising their condition and removing the
financial and practical barriers to treatment for
men with ED and their partners.
1. EMA, Withdrawal assessment report for Viagra, 2008
2. McKinlay JB. Int J Impot Res. 2000; 12 (suppl 4): S6-S11
3. Feldman HA et al. J Urol 1994; 151: 54 – 61
4. Corona G., “First-generation phosphodiesterase type 5 inhibitors
dropout: a comprehensive review and meta- analysis”, Andrology,
2016, 4, 1002–1009
5. Nguyen Sex Med Rev. 2017 Oct, vol 5, 508-520
6. IQVIA data 2020, volumes in the US have increased by 85% between
2018 and 2020
7. Previous market research conducted by Ipsos Group as an over
the counter product on MED2005 showed potential peak sales of
US$660 million. 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.
8. Frederick L., “Undertreatment of erectile dysfunction: claims analysis
of 6.2 million patients”, J Sex Med, 2014, Oct, (10):2546-53.
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Futura Medical plc Annual Report 2021STRATEGIC REPORT Marketplace – Erectile Dysfunction
THE MARKET OPPORTUNITY FOR MED3000
Availability without a doctor’s consultation or prescription opens up a large
market with unmet needs
MOST MEN WITH ED ARE NOT ON TREATMENT DUE TO BARRIERS TO ACCESS
GLOBAL ED
PRESCRIPTION
MARKET
US $3.1bn (2020)6
PDE5i’S USERS
▶ ~ 50% drop out after
the first year on oral
PDE5i’s therapy4
LARGE OTC OPPORTUNITY
73%7 of OTC sales would be from sufferers not currently on treatment
NON TREATERS
DIAGNOSED BUT NOT TREATING UNDIAGNOSED
▶ Only 1 in 4 men diagnosed with ED in
▶ Embarrassment of speaking to
the US is on treatment8
the doctor
▶ Cost and inconvenience
▶ Partner cannot take the initiative
1 6
Marketplace – Erectile Dysfunction
US MARKET DYNAMICS
The ED prescription market is considered
a mature market. However, substantial
numbers of ED sufferers remain untreated.
In the US, three out of four men diagnosed
with ED are not on treatment8. Following
the expiry of patents covering the oral
PDE5i’s the cost of medication has reduced
significantly although the cost of access
to these prescription treatments with the
requirement of a doctor’s consultation
remains high. Although the value of the
US prescription ED market has reduced,
volumes have almost doubled from 2018 to
20206, highlighting the strong continued
demand. The embarrassment, inconvenience
and particularly in the US the cost of a
doctor’s visit represent significant barriers
to diagnosis and treatment. Many men will
also have significant out-of-pocket costs as
most health insurance schemes including
Medicare and Medicaid do not cover
prescriptions for ED.
The market continues to evolve with the
increase of telemedicine offering a paid for
subscription service for ED prescriptions
online. The advent of the COVID-19 pandemic
has accelerated a growing trend towards
online healthcare in general. Consumer
demand for telemedicine is forecast to
represent 60% of the prescription market
revenues by 2024 up from 5% in 20199. ED
is the second most common condition
for direct to consumer telemedicine
representing one in five visits10. Following
the price erosion of the PDE5i’s in the
US, the out-of-pocket costs from a
doctor’s consultation become one of the
most important financial aspects of the
pharmaceutical treatment of ED. This
is the reason why internet pharmacies
and telemedicine companies attempt to
include counselling and prescribing as part
of their services to subscribers. Subscription
services such as For Hims and Roman, offer a
branded concierge service for ED prescription
medicines online. They offer a monthly
subscription fee, typically in the region of
US$50 in return for a doctor’s consultation and
ten generic 50mg sildenafil tablets per month.
The removal of the barriers to accessing
prescription ED treatments, such as the
oral PDE5i’s, as well as the costs normally
associated with a doctor’s consultation
makes MED3000, once approved as an OTC
clinically proven treatment for ED, a significant
commercial opportunity.
3 out of 4 men diagnosed
with ED in the US are not on
treatment8”
25%(cid:28)
75%(cid:28)
Diagnosed, on treatment
Diagnosed, no treatment
9. NACD-Kearny Presentation “Winning with Consumers Post Covid-19” October 29, 2020
10. Comparison of Direct-to-Consumer Telemedicine Visits With Primary Care Visits Tara Jain, MD, MBA; Ateev Mehrotra, MD, MPH JAMA, Network Open. 2020
1 7
Futura Medical plc Annual Report 2021STRATEGIC REPORT Our Business Model
KEY RESOURCES
HOW WE CREATE VALUE
Our resources and operating
model as a semi-virtual
company has enabled us
to manage well during the
COVID-19 pandemic.
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 expertise in
researching and developing
innovative products as well
as business and commercial
acumen in the global
consumer healthcare and
prescription markets
O U T S
COUR ING
te r
p
o p er ngati
n
a
ise com nbi e
o m
wd
del
hit
a
D
&
R
e x
l e
T
C
A
P
M
I
d
n
t a
n
e
i
t
a
p
g
n
d
n
a
s
d
e
e
n
r
e
m
u
s
n
o
i
t
s
r
c
e
d
n
U
P
r
o
v
e
n
i
n
n
o
v
a
t
io
n
E
X
P
E
R
T
I
S
E
s
t
e
a r k
U
nderstandi
ng o mr
u
MARKET
DY A
N
S
CM I
Outsourcing – R&D expertise combined with a lean
operating model
Semi-virtual model using in-house specialist expertise in Clinical
Development, Regulatory and Chemistry, Manufacturing and
Controls (“CMC”), Quality and Supply Chain to lead strategy and co-
ordinate the outsourcing of key activities with a range of experienced
consultants and highly regarded subcontractors and manufacturers.
Expertise – Proven innovation
Expertise in optimising formulations of molecules and excipients to
ensure a rapid and targeted action and to minimise side effects.
Market dynamics – Understanding our markets
Our lead asset MED3000 in particular is 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 and enjoyable life, lead to increased
demand. Not only are people living longer but they want to live an
active, enjoyable and fulfilled lifestyle for longer. Products such as
MED3000 are well placed to accommodate such demands.
Impact – Understanding patient and consumer 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.
1 8
MAXIMISING VALUE
FUTURA IS EVOLVING TO MEET
THE NEXT PHASE OF ITS GROWTH
AND READYING FOR THE
COMMERCIALISATION OF MED3000
BUILDING A
DISTRIBUTION
NETWORK
AROUND THE
WORLD
DEVELOPING ITS
INFRASTRUCTURE
AND
MANUFACTURING
CAPABILITIES
CREATING
A STRONG
BRAND
IDENTITY
TO SUCCESSFULLY LAUNCH
MED3000
AS WE EXECUTE THE COMMERCIALISATION OF MED3000
OUR AMBITION AND FOCUS IS TO BUILD A GLOBAL BRAND,
EXPAND OUR LICENSING AND DISTRIBUTION NETWORK
AND CONTINUE TO ACCELERATE COMPANY GROWTH
TOWARDS LONG-TERM, SUSTAINABLE REVENUES.
Commercialising our products
With the approval in the EU of MED3000 as a Class 2B medical
device available without a prescription and with a clear US
regulatory pathway to approval as an OTC medical device in
the US, we have and continue to focus our efforts on finding
the best commercial options and partners. We are focused
on building our infrastructure, expertise and capabilities
which, combined with building a strong distribution network
around the world and a strong brand identity will underpin the
successful commercialisation of MED3000.
A number of licensing deals have been signed in 2021 and 2022,
part of our plans to build a network of licensing and distribution
partners with brand building strength, healthcare credibility
and regional infrastructure and marketing expertise for long-
term distribution of MED3000 across the globe. Our strategy
is to work with committed commercial partners who have the
regulatory and commercial expertise as well as the drive and
enthusiasm to make MED3000 a success.
1 9
CREATING VALUE
FOR OUR KEY
STAKEHOLDERS
Patients and sufferers
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 enjoy their
lives to the full.
Shareholders
Our aim for MED3000 is to
achieve long-term sustainable
value for our shareholders. By
prioritising resources, we aim
to deliver additional value to
our shareholders, maximising
value for Futura from the
over the counter opportunity
MED3000 represents with a
potential of over US$650 million1
from over the counter sales
alone. This is being achieved
by gaining regulatory approval
as an effective clinically
proven treatment for erectile
dysfunction and building
a strong global network of
licensing and distribution
partners.
1. Previous market research conducted by Ipsos
Group as an over the counter product on MED2005
showed potential peak sales as an over the counter
product of US$660 million. 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.
Futura Medical plc Annual Report 2021STRATEGIC REPORT 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 and enjoyable 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.
2021 PRIORITIES AND PERFORMANCE
2022 FOCUS
1
2
3
4
5
6
Approval in the EU of MED3000 as a medical
device by the Notified Body.
A number of constructive meetings took place
with the FDA to confirm the requirements of
a further Phase 3 clinical study FM71 which
commenced in September 2021.
Agreements signed in China and South East Asia,
the Middle East and Brazil/Mexico.
Manufacturing and internal capabilities
strengthened to prepare for the
commercialisation and supply of MED3000.
The approval of MED3000 as a Class 2B medical
device in the EU means that MED3000 will be
the first pan-European topical treatment for
ED available without the need of a doctor’s
prescription.
The Company has been developing its
capabilities, infrastructure and expertise to
supply and support our new commercial
partners around the world. This has included an
extension of shelf life from two to three years.
1
2
3
4
5
Completion of Phase 3 study FM71
and submission to the FDA as an OTC
medical device by the end of Q3 2022.
Sign further agreements for key
markets and countries worldwide. Focus
on building a strong global network of
licensing and distribution partners and
on building a strong brand identity for
MED3000.
Support our commercial partners
in their own submissions to local
regulatory bodies and in some instances
additional clinical studies which will
be paid for in all instances by our
commercial partners.
Continue to expand on our quality,
supply chain, manufacturing and
commercial capabilities to supply and
support our commercial partners in
their launches.
Ensure ED sufferers can have access to
MED3000 as quickly as possible and
continue to develop CBD100.
2 0
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
£10.37m
2021
2020
£1.02m
NON-FINANCIAL MEASURE –
HEADCOUNT
RESEARCH AND DEVELOPMENT
£10.37m
7
2021
2020
Given the funding requirements of the business to ensure
completion of the development programmes, cash is
considered to be a key metric.
RESEARCH AND DEVELOPMENT COSTS
£3.77m
CENTRAL
1
2021
2020
1
2021
2020
£1.93m
£3.77m
EXECUTIVE DIRECTORS
7
8
2
3
3
3
2021
2020
The Group is focused on the
development of its lead asset
MED3000 and the tight control
of central costs.
We invest in Research and Development (“R&D”) to
generate future revenue and value from our assets. The
increase in 2021 is related to the commencement of
MED3000 FM71 study and scale-up activities relating to
MED3000 manufacturing ahead of anticipated launches
over the next year.
ADMINISTRATION AND
CENTRAL OVERHEAD SPEND
£2.09m
2021
2020
£1.00m
£2.09m
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 demonstrates our commitment
to keep central costs low. Some one-off costs relating to
non-capitalised fundraising fees and fees associated with
the conclusion of MED3000 commercial deals were also
incurred in the year.
2 1
Futura Medical plc Annual Report 2021STRATEGIC REPORT Product Review – MED3000
MED3000 – A BREAKTHROUGH
TOPICAL GEL FOR THE
TREATMENT OF ERECTILE
DYSFUNCTION
MED3000 is a treatment applied directly to
the glans or head of the penis for 15 seconds.
Because it is a gel it means that men with
erectile dysfunction (“ED”) or their partners
can apply it as part of foreplay. It is fast-acting
with 60% of men noticing an erection within
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. In 2021, MED3000
received its MDR EU Quality Management
Certificate for the placing on the market of a
Class 2B medical device (“CE mark approval”)
and will be the first pan-European topical
treatment for erectile dysfunction available
without the need of a doctor’s prescription
with the potential to be the first clinically
proven treatment available over the counter
in the US, with potential global peak sales of
over US$650 million1.
KOL ENGAGEMENT
PROGRAMME
Futura has engaged in 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.
Two advisory boards (US and Europe)
comprising world renowned urologists and
researchers in erectile dysfunction have been
formed and convene as needed to review
data, share information and obtain feedback
regarding the programmes. The COVID-19
pandemic has hampered our programme
of face to face interactions at Conferences
but we continue to be committed to our
KOL engagement programme for 2022 and
beyond. There has been growing interest
from leading Key Opinion Leaders in our
topical product because it offers a novel and
unique treatment and additional armoury in
their therapy options to address their
patients’ needs.
1. Previous market research conducted by Ipsos Group
as an over the counter product on MED2005 showed
potential peak sales of US$660 million. 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.
2 2
MED3000 – DEVELOPMENT
AND CLINICAL STUDY
MED3000 is a unique and exciting development
in the field of erectile function. It is a topical gel
applied to the glans (head) of the penis using the
DermaSys® technology. MED3000 has been shown
to be effective in a large Phase 3 study and is fast-
acting with 60% of men noting an erection within
10 minutes. The incidence of side-effects is very low
and its drug-free formulation means that adverse
interactions with drug products are unlikely.
A confirmatory clinical study FM71 is underway as
part of the regulatory dossier required for the
FDA submission.
MED3000 – FM57 PHASE 3
CLINICAL TRIAL
FM57 was a Phase 3 clinical trial involving 1,000
patients across 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. FM57 was designed to investigate the
efficacy and safety of a range of topically applied gels
using IIEF-EF and SEP 2 and 3 as co-primary clinical
endpoints in mild, moderate and severe ED patients.
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.
MED3000 begins to work immediately in some
patients, with 60% of patients seeing onset of
their erection within 10 minutes of application,
substantially faster than on demand oral tablets
with significant benefits for spontaneous rather than
pre-planned sexual intercourse.
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.
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 mild to moderate ED
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 for patients. As such the
product will be of great interest
to the medical community.”
PROFESSOR DAVID RALPH
Consultant Urologist
St. Peter’s Andrology Centre & Institute of Urology,
UCLH, London
Past President of the European Society of
Sexual Medicine
In my humble opinion and as
an expert in the field of erectile
dysfunction management, I am
very supportive of MED3000
and do believe that it offers an
important and valid addition to
the armamentarium of treatments
we can offer our patients for
erectile dysfunction.”
PROFESSOR ARTHUR BURNETT
Johns Hopkins University School of Medicine,
Baltimore, US
MD, MBA, FACS, Patrick C Walsh Distinguished
Professor of Urology
Past President of the Sexual Medicine Society of
North America
2 3
Futura Medical plc Annual Report 2021STRATEGIC REPORT Product Review – MED3000
MED3000 – FM71 PHASE 3 CLINICAL
TRIAL FOR US REGULATORY DOSSIER
In March 2021 Futura received the official minutes
from the FDA agreeing the design for a confirmatory
clinical trial. FM71 is a Phase 3, 24-week multicentre,
comparative, randomised, open-label, home use,
parallel group study in 100 subjects with mild,
moderate or severe ED. Co-primary endpoints were
agreed with FDA as significant improvement with
MED3000 from baseline (pre-treatment) ED, and
ensuring that the change from baseline is clinically
important, defined as at least a 4-unit change on the
internationally recognised IIEF-EF scale. Secondary
endpoints include FDA agreed criteria to support
fast-acting claims, a key product differentiator.
Tadalafil 5mg is also included in the study to provide
exploratory endpoints and inform FDA of the relative
benefit and risk of MED3000 versus a currently
marketed product. FM71 was fully recruited by the
end of December 2021 using subjects from Eastern
Europe and the US. Timelines remain on track to
enable planned US regulatory submission by the
end of Q3 2022, and for targeting US FDA granting
De Novo and OTC classification for marketing
authorisation in Q1 2023.
1st patient in September 2021
MED3000 MECHANISM OF ACTION –
HOW DERMASYS® WORKS TO TREAT
ERECTILE DYSFUNCTION
MED3000 works through a unique mode of
action. MED3000’s combination of volatile solvent
components creates an evaporative action that
stimulates nerve sensors in the highly innervated
glans penis by a cooling and recovery warming
effect, rapidly leading to smooth muscle relaxation,
tumescence and erection as shown on the
diagram below.
Test 1
Test 2
Test 3
Test 4
Test 5
Test 6
)
c
(
p
m
e
T
30.5
28.5
26.5
24.5
22.5
20.5
18.5
Last patient in December 2021
0
30
60
90
120
150
180
210
240 270 300
Time (seconds)
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. Futura conducted further research
and analysis which demonstrated the mode of
Headline data end of Q3 2022
FM71 CLINICAL TRIAL STUDY DESIGN
Subjects pre-screening
4 weeks
run-in
period
24 weeks
treatment
period
1 week
follow-up
period
Run-in period to establish degree of patient’s
erectile dysfunction (baseline)
MED3000
N=50
Tadalafil
5 mg
N=50
Follow-up visit
2 4
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
NO = nitric oxide
GMP = guanosine monophosphate
cGMP = cyclic guanosine
monophosphate
GTP = guanosine triphosphate
NANC = nonadrenergic, noncholinergic
Tumescence
and penile
erection
2 5
action for MED3000 as shown in the
graph. MED3000 generates a rapid
cooling and recovery warming action,
promoting a sensory stimulation of
the nerves on the glans penis leading
to fast smooth muscle relaxation,
tumescence and erection.
A YEAR OF GREAT
REGULATORY PROGRESS
WITH THE APPROVAL OF
MED3000 IN THE EU AND
DOSSIER SUBMISSION
EXPECTED IN 2022 IN THE US
MED3000 was approved in the EU
in April 2021 after receiving its MDR
EU Quality Management Certificate
for placing on the market as a Class
2B medical device also known as
European “CE mark approval”. A
Class 2B approval is by definition
an approval allowing marketing
of MED3000 as a non-prescription
treatment across the European Union.
With the CE mark certificate, this
also paves the way for faster approval
in many countries around the world
including the Middle East, Africa, Far
East and Latin America who allow
“fast-track” review based on their
recognition of the EU CE mark. The
CE marking is also recognised in
Great Britain until 30 June 2023 and
Futura submitted an application
for the new post-Brexit UKCA mark,
which was received in April 20222. This
will be a streamlined administrative
process since the UK application
can bridge to the EU approval. We
are also supporting our distribution
partners with their regulatory dossiers
and submissions have already
commenced.
In 2020, the FDA agreed that an
application may be made for
MED3000 as a medical device for
the treatment of ED, with a De Novo
classification. This was followed by a
number of productive and positive
pre-submission meetings with the
FDA during 2020 and 2021 to discuss
existing Phase 3 clinical data, pathway
to OTC status and any additional
clinical and non-clinical requirements.
2. The UKCA (UK Conformity Assessed) marking
is a new UK product marking that is used for
goods being placed on the market in Great
Britain (England, Wales and Scotland). It covers
most goods which previously required the CE
marking.
Futura Medical plc Annual Report 2021STRATEGIC REPORT Product Review – MED3000
In August 2021 Futura agreed with the FDA the
design of a “Human Factors” study to achieve
OTC classification. Successful completion of
the Human Factors study was announced in
December 2021, with 32 subjects recruited. It
was demonstrated that individuals are able to
correctly self-diagnose ED and to make correct
self-selection decisions by considering their own
health history and the instructions for use and
warnings on the label. Overall, there was a very high
degree of comprehension of the label and leaflet
to increase confidence that the product will be
used appropriately in an OTC setting. These results
therefore support the regulatory submission for OTC
designation and will enable Futura to finalise the OTC
product label for a US filing.
FUTURA READYING FOR
COMMERCIAL SUCCESS
2021 has been a year of substantial effort to
prepare the Company for the next phase in its
growth, the commercialisation of MED3000,
with the strengthening of its infrastructure and
expertise, particularly in quality, supply chain and
manufacturing, all key capabilities necessary to
successfully supply and support our commercial
partners around the world. In particular Futura has
recruited a new Head of Quality and a new Head
of Alliance Partnerships and Supply, both highly
experienced and knowledgeable in their fields as well
as having appointed two highly experienced new
independent Non-Executive Directors to the Board.
Scale-up of manufacturing and production
capacity to meet projected demand continues
to progress well as Futura works towards initial
launches of MED3000 over the next year. MED3000
manufacturing capabilities were expanded in August
2021 with the addition of a new third party, FDA,
EMA and UK approved manufacturer as Futura
strengthens resources to ensure continuity of supply
and geographic expansion in the build up towards
commercial launches. Futura is also focused on
increasing the flexibility in the supply chain with a
recently approved extension from a two to a three
year shelf life. This three year shelf life will cover all
global zones, meaning MED3000 will have a three
year shelf life across the world even in very hot and
humid countries such as the Middle East region.
Futura has been preparing
for the successful
commercialisation of
MED3000 building
key capabilities and
infrastructure across
the Company.
Commercial
Alliance
Management
Manufacturing
Clinical
Successful
commercialisation
of MED3000
Supply chain
Regulatory
Quality
2 6
SUPPLY CHAIN
The role of the Supply Chain function at
Futura is to ensure that MED3000 transitions
smoothly from development to commercial
supply. At the heart of this is the responsibility
for all operational activities and the
implementation of processes and procedures
to deal with artwork generation and approval,
customer service, order fulfilment and risk
management. A key part of this function
will be the management of Futura Medical’s
Contract Manufacturers and the development
of sales and operations planning functions,
coupled with forecasting and long-term
capacity planning. Third-party distributor
customer service levels, manufacturing cost of
goods, and efficiencies are a particular focus.
In 2021 the focus has been on developing a
detailed commercial forecasting model and
implementing changes to address supply
chain risk management and artwork approvals
in preparation for MED3000 launches in
multiple countries.
QUALITY
The main role of Quality at Futura Medical is to
be accountable for the Quality Management
System (“QMS”). This is the set of procedures that
we follow to conduct our product development
and commercial supply activities (such as device
design, risk management, supplier approval,
product release, legal manufacturer duties and
post-launch safety review).
Having a QMS certified, and audited annually,
to a recognised international standard is a
central part of the approval of MED3000 in
Europe which, in turn, supports the ability
for us to supply and distribute MED3000 in
countries around the world. We also provide
independent oversight of activities to ensure
that they are being conducted in compliance
with the procedures as well as identifying
areas of opportunity to improve compliance,
make efficient use of Futura Medical’s
resources or to streamline procedures
where possible.
In 2022, the Supply Chain function’s focus
will be on expanding existing processes
and implementing procedures to support
full commercialisation of MED3000 across
multiple markets whilst engaging with Futura’s
distributors to finalise MED3000 artwork,
sales forecasts and launch plans to refine our
planning and commercial model. Throughout
the year, Supply Chain will continue to identify
savings opportunities to improve efficiency and
manage cost of goods.”
For 2022, the focus for the Quality function will
be to support the ability to supply product to
Futura’s distributors by maintaining our QMS
certification; support the continued supply
of product in the UK after Brexit by obtaining
certification of our QMS against the new UK
Regulation; ensure that the QMS is ready for
the start of commercial supply and ensure
that the QMS is adapted to meet local market
requirements to support geographic expansion
plans.”
GRAHAM SMITH
Head of Alliance Partnerships and Supply
KEVIN LANGRIDGE
Head of Quality
Over 30 years’ experience in commercial operations and
supply chain management in the pharmaceutical and
medical devices industry.
Over 30 years’ experience in quality covering R&D and com-
mercial supply operations at GSK Consumer Healthcare.
2 7
Futura Medical plc Annual Report 2021STRATEGIC REPORT
Product Review – MED3000
SIGNIFICANT PROGRESS IN BUILDING A GLOBAL DISTRIBUTION NETWORK
WITH A STRONG BRAND IDENTITY
Commercial licensing status
NORTH AMERICA
26 million ED sufferers
300 million doses
EUROPE
33 million ED sufferers
355 million doses
Exclusive negotiations
underway for EU and UK
ASIA*
150 million ED sufferers
170 million doses
Menarini KR (South Korea)
Co-High (China and
South East Asia)
SOUTH/CENTRAL
AMERICA
37 million ED sufferers
630 million doses
m8 (Brazil/Mexico)
GCC/MENA
12 million ED sufferers
400 million doses
Labatec SA (GCC, Jordan,
Lebanon and Iraq)
*Excludes Indian subcontinent
Data sources: Data on doses from IQVIA, standard units, 2020; Data on ED sufferers from 2021 JSB Partners estimate based on US Census International Programs
Population by age groups and “Prevalence of erectile dysfunction: Massachusetts Male Aging Study”, 1987 ± 1989 (n=1626); source Kleinman et al. J Clin Epidemiol 2000.
Pantone 485 C
Pantone 7622 C
COMMERCIALISATION OF MED3000
PROGRESSING WITH DEALS SIGNED
IN KEY TERRITORIES WORLDWIDE
We are executing upon our strategic plans to
leverage commercialisation globally with a network
of licensing and distribution partners with brand
building strength, healthcare credibility, regional
infrastructure and marketing expertise for long-
term distribution of MED3000 across the globe. Just
as importantly we have chosen partners who have
demonstrated their enthusiasm for MED3000 and
for whom its success will be meaningful whilst being
firmly focused on our goal of delivering long-term
and sustainable value to the Company. Over the past
twelve months the Company has entered into several
commercial licensing deals in large markets for ED
in regions such as China and South East Asia, South
Korea, Latin America and the Middle East.
In March 2021, Futura entered into a joint
collaboration agreement for China and South
East (SE) Asia with 50/50 share of profits with
Co-High, via a licensing agreement with Pride
Century Ventures, a special purpose vehicle owned
by Co-High Investment Management Limited
(“Co-High”). Discussions are being held with the
Chinese regulator, the National Medical Products
Administration, to clarify the scope of clinical
work required to gain approval in China and initial
submissions have been made to determine whether
MED3000 will be designated a medical device or
drug. Current expectations are that a Chinese clinical
trial will be required to establish safety as well as
efficacy in Chinese men which is likely to take up to
two years such that the regulatory process could take
up to three years overall. Expected additional R&D
costs of up to £4 million are being fully met by our
partner. In a number of additional SE Asian markets
Futura and Co-High are also working on nearer term
regulatory submissions although the priority remains
approval in the largest Asian market, China.
2 8
We are delighted to license Futura’s MED3000 for the GCC and other
Middle Eastern countries. We feel that there is significant market potential
in the region for MED3000 as a trusted, branded medicine for enhancing
erectile performance, optimally through pharmacy sales and are confident
of generating significant value and long-term sustainable growth for both
Futura and Labatec with this innovative, clinically proven product.”
FAISAL DARWAZEH
Chief Executive Officer, Labatec Pharma SA
In August 2021 Futura entered into a licensing
agreement with m8 Pharmaceuticals, Inc (“m8”), a
specialty biopharmaceutical company focused on
commercialisation in Latin America, for the rights to
exclusively develop and commercialise MED3000 in
Brazil and Mexico. Under the terms of the agreement
Futura and m8 will work together to gain marketing
authorisation and commercialise MED3000 as a
clinically proven treatment for ED available OTC in
Brazil and Mexico, the two biggest countries and
healthcare markets in Latin America. The agreement
is for an initial term of 15 years.
m8 will be responsible for all costs related to the
regulatory approval and marketing of the product.
Futura will provide reasonable ongoing technical
support for OTC product development and
commercialisation. Futura will receive payments
on all sales of MED3000 from m8, and up to four
milestone payments totalling US$8.5 million based
on cumulative sales volumes within the initial term.
In September 2021 Futura signed a licensing
agreement with Labatec Pharma (“Labatec”), a Swiss-
based specialty pharma company with expertise
in commercialisation in Europe and the Middle
East and North Africa (“MENA”) region for exclusive
rights to commercialise MED3000 in the Gulf Co-
operation region, Jordan, Lebanon and Iraq. Futura
is eligible to receive initial upfront payments, as
well as undisclosed milestone payments based on
regulatory approval.
Labatec will pay an agreed price to Futura for the
manufacture and supply of MED3000 by Futura’s
contract manufacturer, plus royalties on all sales.
Labatec is responsible for all local MED3000
development and regulatory costs as well as all
launch and marketing expenses. The initial licence
agreement term is for eight years with the ability
to extend for successive two-year terms by mutual
consent.
In March 2022 Futura announced a licensing
agreement with A. Menarini Korea Limited
(“Menarini”) for the rights to exclusively
commercialise MED3000 for the treatment of ED in
South Korea. A. Menarini Korea Ltd is a wholly owned
subsidiary of the Italian-based specialty pharma
company Menarini Group. Menarini Group is the
world’s largest Italian biopharmaceutical company
with a heritage of over 135 years and over 17,500
employees in more than 140 countries. Menarini
is a trusted medicines supplier in the region that
is ideally placed to market retail products, with
local teams that have a deep understanding and
experience of the South Korean market.
Futura is eligible to receive initial undisclosed
upfront payments and under agreement terms will
support Menarini to gain marketing authorisation
and commercialise MED3000 for ED in South Korea.
Menarini will be responsible for all costs related
to the regulatory approval and marketing of the
product in the region including a clinical bridging
study, if required. Futura will provide reasonable
technical support for product development
and commercialisation and provide
manufactured product from
Futura’s contract manufacturer
at an agreed price.
Futura has also entered
into a period of
exclusivity with an,
as yet, unnamed
party regarding a
potential agreement
for the EU and UK
marketing rights for
MED3000.
2 9
Futura Medical plc Annual Report 2021STRATEGIC REPORT Product Review – MED3000
FOCUS ON BUILDING A STRONG
BRAND IDENTITY
Futura has been developing a potential brand
identity for MED3000 based on the Eroxon®
proposition in order to support the delivery of long-
term and sustainable value to the Company. Futura’s
distributors will be able to use the Eroxon® brand
name at their discretion to build awareness and
brand equity. As part of building the commercial
proposition for MED3000 and supporting its launch
in countries around the world, Futura has developed
materials for partners including an illustrative pack
and various communication tools such as a website
and presentation materials which licensing partners
can select to use at their discretion, which Futura
hopes will be adopted by as many of its commercial
partners as possible depending on local trademark
and regulatory constraints.
To support MED3000’s unique proposition, Futura
commissioned an extensive strategic review of
its Intellectual Property which was conducted by
independent pharmaceutical patent specialists
retained by Futura.
An initial UK patent was filed in December 2019
around MED3000’s clinically significant and
novel findings shown in FM57 followed by further
supplementary UK filings to establish a priority date
prior to a Patent Cooperation Treaty (“PCT”) and
certain non-PCT patent applications in late 2020.
The PCT currently has 153 contracting countries
where the Company can seek patent protection
claiming priority from an original application such
as the UK. An application to the European Patent
Office was also made in August 2021 for examination
and further national applications in line with normal
PCT filing procedure will be made in Q2 2022 in
those countries considered necessary to protect
the commercial interests of MED3000. If national
applications are successful this will provide patent
protection until 2040.
Futura has developed an
illustrative pack and branding
that licensing partners can
select to use at their discretion.”
JAMES BARDER
Chief Executive
3 0
Product Review – Other Products
CBD100 – DERMASYS® FOR THE
DELIVERY OF CANNABIDIOL
Futura announced a joint venture collaboration with
CBDerma Technology Limited in 2019 to explore
the application of Futura’s advanced proprietary
transdermal technology, DermaSys® for the delivery
of cannabidiol.
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.
MARKET OVERVIEW
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.
While still in its infancy, the consumer cannabidiol
market has rapidly developed over the past five years
and is widely anticipated to further increase in scale.
Cannabidiol products are now commonplace across
supermarkets, pharmacies, beauty and convenience
stores in many parts of the world, and a significant
percentage of the general population has at least
heard of this cannabinoid. As medical cannabis
access schemes have been rapidly adopted across
the globe, awareness and interest in cannabidiol
has risen as a result. In combination with scientific
research, this has created a generalised sentiment
that cannabis is beneficial in a large subsection of
consumers and has led to the growth of a significant
wellness and consumer market for cannabidiol
products.
However, products are often questionable in
quality with little thought given to the amount of
cannabidiol actually contained in the product in
respect of the intended bioavailability other than
to be able to say ‘contains cannabidiol’. Regulatory
and compliance issues have deterred large FMCG
companies from moving rapidly into the space, and
those which have, have often taken cautious steps by
introducing hemp seed oil rather than cannabidiol in
their products. However, this is likely to change once
there is sufficient regulatory clarity, with positive
recent developments in both the US and Europe.
CANNABIDIOL’S MARKET POTENTIAL
The market for cannabidiol products is growing
rapidly. A 2021 report by Reports and Data forecasts
that the market for cannabidiol products is forecast
to grow from US$3 billion in 2020 to US$15 billion by
2028, at a Compound Annual Growth Rate of 22.6%
during the forecast period. The market is primarily
driven by the increase in the usage of cannabidiol in
medical applications, supplements, beverages and
skin care.
An independent report commissioned in 2021
by Futura to provide market insights into the
cannabidiol market estimates the European market
to be worth €1.4 billion in 2020 of which between
one-quarter and one-fifth of the total European
market are made up of the topicals market.
Awareness of cannabidiol and market penetration
are increasing and vary by region, in large part
depending on the regulatory framework of the
country. Consumer surveys from New Frontier Data
suggest that usage rates are lowest in France, Spain
and Portugal, all three of which have restrictions of
some kind on cannabidiol in their national markets.
Awareness of cannabidiol is highest in the UK at
78% and lowest in France at 36%. Consumption of
cannabidiol also varies greatly by country in Europe
from 7% in France to 33% in Austria.
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. As part of a robust
formulation process using strict pharmaceutical
development principles, Futura has carried out
extensive DermaSys® cannabidiol formulation work
and initial in vitro tests on human epidermis. The
studies demonstrate highly efficient penetration
3 1
Futura Medical plc Annual Report 2021STRATEGIC REPORT Product Review – Other Products
AWARENESS AND MARKET PENETRATION OF CANNABIDIOL
Switzerland/
Austria
UK/Ireland
69%
33%
78%
14%
Italy
52%
11%
France
Germany
36%
7%
49%
14%
Spain/
Portugal
44%
10%
Have heard of cannabidiol
Have consumed
cannabidiol
Source: New Frontier data
of cannabidiol into and through the skin, superior
to an established, marketed, comparator product.
Additionally, cannabidiol is believed to be unstable
with many common excipients. The DermaSys®
cannabidiol gel was specially formulated to minimise
this issue and early stability work is showing
encouraging results, which is expected to ensure
potency is retained during the shelf-life. This work
resulted in intellectual property patent applications
being submitted covering various unique aspects of
the CBD100 gel formulation.
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 is developing and
optimising a DermaSys® cannabidiol formulation
and has conducted early ex vivo proof of concept
studies highlighting the known permeation and
stability qualities of our DermaSys® technology
when used in conjunction with cannabidiol. We are
aiming for CBD100 to be highly differentiated from
existing, largely unregulated, low-tech products in
the fast growing cannabidiol market on the basis
of quality, stability and efficient delivery to the
skin for a number of applications and indications
expected to range from cosmeceutical through to
pharmaceutical dermal and pain relief treatments.
All Intellectual Property will be owned jointly by the
Company and CBDerma Technology Limited.
Futura continues to believe that as the medical
and consumer applications of cannabidiol become
more widely accepted from both a regulatory
and consumer perspective a gel that has been
formulated using strict pharmaceutical development
principles with strong delivery characteristics,
stability and high quality will be an attractive
commercial proposition. Whilst Futura’s resources
are focused on key asset MED3000, the Company
has received interest in CBD100 and continues to
explore commercial opportunities for the product
with discussions progressing and further validation
work being conducted both internally and externally
by a potential partner to validate the power of the
DermaSys® technology.
TPR100 – A DICLOFENAC 1.86% PAIN
RELIEF GEL TARGETING PAIN AND
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. TPR100 is a nonsteroidal anti-inflammatory
diclofenac gel that brings relief from the pain and
inflammation associated with sprains, strains,
bruises and soft tissue rheumatism offering
long-lasting pain relief. It is applied to the local site
of pain or inflammation.
STATUS
At a scientific advisory meeting with the
Medicines and Healthcare products Regulatory
Agency (“MHRA”) by Futura in conjunction with
its commercial partner, the regulator recognised
the improved skin permeation characteristics of
TPR100 compared to market-leading diclofenac
formulations. In vitro studies demonstrated that
a 20% TPR100 dose relative to certain market-
leading diclofenac formulations delivered the same
permeation of active pharmaceutical ingredient
through the skin. Due to this increased potency, a
key differentiating characteristic for TPR100, MHRA
now require data from a patient efficacy study with
TPR100 in support of a marketing authorisation and
are willing to consider superiority claims if the study
is successful.
The UK market opportunity for TPR100 does not
justify the potential costs of a patient efficacy study
without the ability for Futura to be able to use the
same data to support US approval. However, this
will require a US distribution partner prior to the
commencement of any Phase 3 programme and
currently Futura’s priority and resources are clearly
focused on the successful US approval for MED3000
and launch.
3 2
Financial Review
Strengthened balance sheet
enabling robust progress
towards commercialisation”
A N G E L A H I L D R E T H
Finance Director and Chief Operating Officer
As outlined in the Chairman’s Statement and
Chief Executive‘s Review, during the year Futura
focused its financial resources on MED3000, its
fast-acting topical treatment for erectile dysfunction
(“ED”) concentrating on the US path to regulatory
submission, and enabling commercialisation
through securing licensing and distribution deals
with commercial partners to build and grow a
worldwide distribution and marketing network.
In March 2021, the Company concluded a funding
transaction which resulted in £1.50 million received
upon the issuance of convertible loan notes and
in April 2021 the Company received an additional
£0.50 million following the exercise of warrants by HT
Riverwood Fund (part of the Atlantis Group).
In April 2021 the Company was notified that
MED3000 had been approved as a Class 2B medical
device in Europe and the FDA confirmed that a
further, smaller, supplementary study was required
for approval in the US. Following a Placing and
Retail Offer in June 2021, securing gross proceeds
of £12.00 million, this supplementary study
(FM71) commenced in July 2021 with recruitment
completing in December 2021 and headline data
followed by US regulatory submission expected by
the end of Q3 2022.
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 on
accelerating progress towards achieving a significant,
continuous revenue stream within a few years. No
revenue was recognised in the period.
RESEARCH AND DEVELOPMENT
COSTS
Research and Development (“R&D”) costs for the
period ended 31 December 2021 were £3.77 million,
compared to £1.93 million for the period ended
31 December 2020. The increase of £1.84 million is
reflective of the commencement and recruitment of
the FM71 study and focus on manufacturing scale-up
activities ahead of anticipated MED3000 launches.
There was no capitalisation of R&D costs in 2021.
ADMINISTRATIVE COSTS
Administrative costs were £2.09 million for the period
ended 31 December 2021 compared to £1.00 million
for the period ended 31 December 2020. This is an
increase on the prior year and partly driven by higher
costs associated with expansion of the team and
resources relating to commercial, manufacturing and
supply chain in readiness for launching MED3000
over the next year. In addition there were some one-
off costs incurred relating to fundraising costs and
fees associated with negotiating and concluding
commercial arrangements for MED3000.
TAX
It is expected that an R&D tax credit of £0.91 million
will be claimed in respect of 2021 and the cash refund
is expected to be received mid-2022 from HMRC.
LOSS PER SHARE
The basic loss per share for 2021 was 1.83p (2020: 0.99p).
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 2021 was
£10.37 million (2020: £1.02 million). Cash burn during
the year was £4.39 million (2020: £6.77 million)
primarily in relation to the start and execution of the
FM71 clinical study, manufacturing scale-up activities
associated with MED3000 and other one-off costs
associated with fundraising and the conclusion of
commercial agreements with MED3000 licensing
and distribution partners.
Current cash runway extends beyond initial
MED3000 launches expected over the next year and
expected US regulatory approval in 2023, assuming
no contributions from milestone payments or other
revenues.
ANGELA HILDRETH
Finance Director and Chief Operating Officer
3 3
Futura Medical plc Annual Report 2021STRATEGIC REPORT Key Risks and Mitigation
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. 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.
HOW WE MANAGE RISK
RISK MANAGEMENT
Risks facing the business are identified and assessed on
a regular basis
INTERNAL CONTROL
Internal controls are designed and developed to
mitigate these risk to an accepted level
COMPLIANCE
Compliance activities assess compliance against the
QMS and issues arising out of the clinical trials that the
Company is planning and undertaking
The Audit Committee and the Risk and Oversight Committee
The Board
Operational Level
3 4
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:
Mitigation
The Group has reduced this risk by developing products
using safe, well-characterised active compounds and
ingredients, has sought and will continue to seek, where
appropriate, advice from regulatory advisers, consultations
with regulatory approval bodies and by working with
experienced commercial 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 and the CE
mark approval of MED3000 as a Class 2B medical device in
the EU providing a greater level of confidence of success.
The FM71 study commenced in July 2021 and recruitment
was completed on time in December 2021. The outline
design of this study, protocol and endpoints were agreed
with FDA through a series of pre-submission meetings
which are offered by FDA to help improve the quality of
subsequent submissions, shorten total review times and
facilitate the development process for new devices.
The Group seeks to reduce this risk by carefully selecting
experienced commercial and distribution partners,
maintaining and developing these relationships and
seeking to develop new products of commercial interest to
these and other partners.
In 2021, the Company entered into a number of licensing
and distribution agreements covering China and South
East Asia, the Middle East and Brazil/Mexico.
Risk
Clinical
development
and
regulatory
risk
Commercial
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.
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.
3 5
Futura Medical plc Annual Report 2021STRATEGIC REPORT Key Risks and Mitigation
Risk
Financial risk
Mitigation
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.
Futura is focusing its financial resources on its lead asset
MED3000. The Group successfully completed a fundraising
exercise in May 2021 raising £12.00 million gross to fund the
product through to US regulatory approval. The Company
also received £1.50 million in March 2021, issuing convertible
loan notes and £0.50 million in April 2021 following the
exercise of warrants by HT Riverwood Fund.
The Group also entered into commercial agreements
relating to MED3000 with launches anticipated over the
next year.
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 for examination with the
European Patent Office for MED3000 and also within
the GCC region and will be seeking to file PCT national
applications during 2022. Whilst the Group is confident
that the patents will be granted, it cannot guarantee this
will be the case.
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 annual performance bonus and share options
that vest over a number of years.
Intellectual
property risk
Key people
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.
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.
3 6
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
Impact of
Brexit
Mitigation
The full impact of the UK
having left the EU is still
uncertain.
The impact of Brexit has been considered and the following
has been assessed and concluded that there will be
minimal to no impact.
Impact of
COVID-19
The full impact of the
COVID-19 pandemic remains
uncertain.
▶ Regulatory strategy
The EU Notified Body has confirmed that the UK will
be included in the approval until 2023. The Company
applied for a UKCA mark in the meantime and this was
received in April 2022, well before the current CE mark
approval coverage of the UK expires on 30 June 2023.
▶ Patent protection
Both the UK and the European Patent Office are
members of the Patent Cooperation Treaty and therefore
we believe Brexit will have limited impact on patent
prosecutions or filings.
Some uncertainty still remains around the full impact of
Brexit and we will continue to monitor relationships with
regulatory bodies such as the EU Notified Body and the
European Patent Office as new information is provided.
The impact of COVID-19 is thankfully diminishing and the
Directors do not believe that Futura will be significantly
impacted during 2022. This is based on the following
assessments:
Operational activities
▶ 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.
▶ The FM71 clinical study is now fully recruited across
Eastern Europe and the US and has not been materially
affected by the pandemic.
▶ There is a possibility that COVID-19 may impact on the
timelines with Regulators. The US Regulator has not yet
advised of any delays to its timelines. We will keep this
under review.
▶ COVID-19 impact in general seems to be reduced given
the positive response to the UK vaccination programme
and the symptoms of COVID-19 now becoming less
severe for most patients who contract it.
3 7
Futura Medical plc Annual Report 2021STRATEGIC REPORT
Sustainability Review
Our purpose is to enhance
our patients and consumers’
quality of life to enable them to
enjoy 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, commercial partners 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.
3 8
Our focus is on the four SDGs where we believe we can have the
Our focus is on the four SDGs where we believe we can have the
greatest impact and therefore the greatest opportunity to make
greatest impact and therefore the greatest opportunity to make
a real and lasting difference. These are:
a real and lasting difference. These are:
GOOD HEALTH AND WELL-BEING
INDUSTRY, INNOVATION AND INFRASTRUCTURE
▶ 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 have adopted a policy to allow our
staff to optionally work approximately 50% of
the time from home giving them the flexibility
to balance their work and family commitments.
▶ 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.
▶ 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 aim to have a balanced workforce across
the Group.
TOTAL WORKFORCE GENDER SPLIT
Men
Women
3 9
Futura Medical plc Annual Report 2021STRATEGIC REPORT 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.
However, the Board also acknowledges that in light of the COVID-19
pandemic, face to face engagement in 2021 remained challenging.
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.
HOW WE ENGAGE WITH OUR STAKEHOLDERS
SHAREHOLDERS
Our stakeholders’ concerns
The Board naturally considers its shareholders to
be key stakeholders of the Company and is focused
upon delivering long-term value for their benefit.
EMPLOYEES
Our stakeholders’ concerns
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. Employees want
to be valued and rewarded for their contribution to
the Company’s development and success.
How we engage
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. As a result of the COVID-19
pandemic, we were unable to hold any Investor
or R&D Seminars and the AGM was held by
telephone conference. The Company has
ensured that regular webcasts and interviews
have been posted to the Investor section of the
website to compensate for the lack of face to face
engagement and as the pandemic restrictions
subside, we hope to be able to return to hosting
events and face to face AGMs.
Impact review post engagement
The results of this investor engagement are
reported to the Board to help inform our strategy
and communications.
How we engage
The executive team favours an open door policy
where employee feedback is encouraged. There
are regular formal and informal meetings and
gatherings to keep employees informed of
key developments in the Company as well as
Company events to promote team spirit and
thank employees.
Impact review post engagement
The Board, and especially the Remuneration
Committee, has had particular regards to
employees as it 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.
4 0
PATIENTS AND SUFFERERS
Our stakeholders’ concerns
The patients our therapies are designed to treat are
at the heart of why we do it. Our purpose is clear, “to
enhance our patients and consumers’ quality of life
to enable them to enjoy their lives to the full”.
How we engage
We consult with Key Opinion Leaders regularly,
hold Advisory Boards at key stages and conduct
market research to help us with patient and
consumer insights.
Impact review post engagement
We are focused on bringing innovative products
to market where there are unmet patient needs
with existing treatments. We look forward to
bringing MED3000 our treatment for erectile
dysfunction to sufferers across the world.
DEVELOPMENT PARTNERS, MANUFACTURERS AND SUPPLIERS
Our stakeholders’ concerns
Our development partners, manufacturers and
suppliers want to work in a collaborative way that
allows them to plan work and become part of
the team.
How we engage
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.
We work closely with our partners, define clear
responsibilities, work in an ethical and collaborative
manner to achieve mutually beneficial outcomes to
build sustainable and long-term relationships.
Impact review post engagement
As the Company prepares to supply MED3000
to commercial partners around the globe our
contract manufacturing partners are central to
the long-term success of the product and we are
working closely with them to deliver continuity
of supply, with a product of high quality at the
lowest cost possible.
41
Futura Medical plc Annual Report 2021STRATEGIC REPORT Our Stakeholders
REGULATORS
Our stakeholders’ concerns
Regulators are agencies that regulate medicines
and/or medical devices in their territories. They
play a leading role in protecting and improving
public health and supporting innovation. Key
agencies for Futura include the Medicines and
Healthcare products Regulatory Agency (“MHRA”;
UK), the US Food and Drug Administration
(“FDA”), the European Medicines Agency (“EMA”
European Union) and the Notified Bodies in the
European Union.
How we engage
Futura works proactively and collaboratively
with regulators through the pre-submission
and submission process with an open and
constructive dialogue which enables Futura to
optimise its clinical development programme.
Impact review post engagement
Constructive discussions with regulators enables
Futura to optimise its clinical development
costs and timeline and shorten the time from
development of the product to access by
consumers and patients.
COMMERCIAL PARTNERS
Our stakeholders’ concerns
The Board keeps itself aware of changes in the
industry by fostering existing relationships and
through extensive networking. The Board places
great emphasis on selecting the most suitable
commercial partners who have the regulatory
and commercial expertise as well as the drive and
enthusiasm to make our products a success.
How we engage
When looking to license the rights to one of our
products, the Company appoints specialist advisers
to identify and target the right potential partners
and facilitate discussions and negotiations.
Impact review post engagement
The Company has signed several deals around
the world to build a network of licensing and
distribution partners for MED3000. The Company
is working closely with its new commercial
partners building mutually beneficial long-term
relationships to ensure the success of MED3000.
The Company is supporting commercial partners
with regulatory, IP, supply chain management and
commercial input.
4 2
Governance
CONTENTS
Board of Directors
Remuneration Committee Report
Corporate Governance Statement
Corporate Governance Report
Directors’ Report
Audit Committee Report
44
46
50
51
56
59
4 3
Futura Medical plc Annual Report 2021GOVERNANCE Board of Directors
The Board is responsible to shareholders for the 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.
JOHN
CLARKE
JAMES
BARDER
ANGELA
HILDRETH
KEN
JAMES
Non-Executive Chairman
Chief Executive
Finance Director,
Chief Operating Officer
and Company Secretary
Executive Director
and Head of R&D
JEFF
NEEDHAM
ANDREW
UNITT
JONATHAN
FREEMAN
( joined 8 October 2021)
( joined 1 January 2022)
(stepped down
Independent
Senior Independent
31 December 2021)
Non-Executive Director
Non-Executive Director
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.
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.
Brings to the Board
Extensive experience of the
healthcare sector, having
worked at a senior level at
GSK for more than 35 years.
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.
He is also a Non-Executive
Director of Caisson Investment
Management and a Director
of the Mary How Trust for
Cancer Prevention.
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
Over 25 years of experience
in setting up, managing and
running companies.
Current roles
Angela joined the Group in
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. She
is also an Independent
Non-Executive Director and
Chair of the Audit Committee
at AIM-listed Aptamer plc.
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
Over 15 years’ strategic
and operational financial
experience of developing
and commercialising
pharmaceutical products.
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 US.
Brings to the Board
Over 40 years’ experience in
the research, development
and commercialisation
of consumer healthcare
products.
4 4
Senior Independent
Non-Executive Director
Jonathan Freeman was a
Senior Independent Non-
Executive Director. He chaired
the Audit Committee and the
Remuneration Committee
and was also a member of the
Nominations Committee.
Current roles
Jeff Needham is an
Current roles
Andrew Unitt is an
Independent Non-Executive
Independent Non-Executive
Director and Chair of the
Director and Chair of the
Remuneration Committee.
Audit Committee. He is
He is also a member of the
also a member of the
Nominations Committee. Jeff
Remuneration Committee
is currently on the Board of
and the Nominations
McKee Foods Corp.
Past roles
President of Perrigo
Committee. Andrew is
currently Independent
Non-Executive Director
of AIM-listed Company
Consumer Self-Care Americas
Oncimmune Holdings Plc.
(including US) and Senior
Vice President at Perrigo
Past roles
Company Plc, the US-based
Chief Financial Officer at the
manufacturer and marketer
University of Nottingham
of consumer healthcare
until 2016. Andrew spent
products, and a board director
11 years at Boots plc, where
of the Consumer Healthcare
he was Managing Director
Products Association for 11
and Finance Director for four
years.
Brings to the Board
Over 35 years of experience
in manufacturing and
marketing of consumer
years of Boots Healthcare
International, its over the
counter medicines business.
Brings to the Board
Over 20 years of experience
healthcare products with
as a Finance Director in a
strategic and corporate
wide range of industries with
management expertise, with
strong financial experience
particular expertise in the US
and OTC market expertise.
market.
JOHN
CLARKE
JAMES
BARDER
ANGELA
HILDRETH
KEN
JAMES
Non-Executive Chairman
Chief Executive
Finance Director,
Executive Director
Chief Operating Officer
and Head of R&D
and Company Secretary
Current roles
Current roles
Current roles
Current roles
John Clarke is the Chairman
James Barder is the Group’s
Angela joined the Group in
Ken James is the Head
of Futura Medical plc. He
Chief Executive. He assists the
2018. She leads the Group’s
of R&D. He oversees the
chairs the Nominations
Remuneration Committee
finance, HR and IT functions,
development, regulatory and
Committee, and is a member
and the Nominations
inputs into commercial and
manufacturing strategies for
of the Audit Committee
and the Remuneration
Committee (but is not a
financial strategy, ensures
the Group’s existing pipeline
member of and does not
its compliance procedures
and the evaluation of early
Committee. He is also the
vote on either). He has overall
and is a principal contact
stage pipeline opportunities.
Non–Executive Chairman
responsibility for all activities
for shareholder and investor
He is also an Executive
of Science in Sport plc, Kind
of the Group, is a principal
relations matters. She
Director.
Consumer Holdings Limited
contact for shareholder and
is also an Independent
and is a senior adviser to
investor relations and leads
Non-Executive Director and
Past roles
Helios Investment Partners
commercial negotiations.
Chair of the Audit Committee
Senior Vice President of
LLP.
He is also a Non-Executive
at AIM-listed Aptamer plc.
Research and Development
Past roles
Retired from GSK as
Director of Caisson Investment
Management and a Director
Past roles
for GlaxoSmithKline
Worldwide Consumer
of the Mary How Trust for
Senior financial roles in a
Healthcare, having worked in
President of GSK Consumer
Cancer Prevention.
diverse range of industries,
the UK and the US.
Healthcare. Non–Executive
Chairman of Quantum
Pharma plc, which was
Past roles
subsequently acquired by
Capital Markets Limited
AIM).
Managing Director of Aon
Therapeutics plc (quoted on
including seven years as UK
Finance Director at Shield
Clinigen plc.
Brings to the Board
Extensive experience of the
healthcare sector, having
worked at a senior level at
GSK for more than 35 years.
and Non-Executive Director
of Lorega Limited. James
Brings to the Board
predominantly worked in the
Over 15 years’ strategic
products.
field of insurance and finance
and operational financial
including firms he founded.
experience of developing
and commercialising
pharmaceutical products.
Brings to the Board
Over 40 years’ experience in
the research, development
and commercialisation
of consumer healthcare
Brings to the Board
Over 25 years of experience
in setting up, managing and
running companies.
JONATHAN
FREEMAN
(stepped down
31 December 2021)
Senior Independent
Non-Executive Director
Jonathan Freeman was a
Senior Independent Non-
Executive Director. He chaired
the Audit Committee and the
Remuneration Committee
and was also a member of the
Nominations Committee.
JEFF
NEEDHAM
ANDREW
UNITT
( joined 8 October 2021)
Independent
Non-Executive Director
( joined 1 January 2022)
Senior Independent
Non-Executive Director
Current roles
Jeff Needham is an
Independent Non-Executive
Director and Chair of the
Remuneration Committee.
He is also a member of the
Nominations Committee. Jeff
is currently on the Board of
McKee Foods Corp.
Past roles
President of Perrigo
Consumer Self-Care Americas
(including US) and Senior
Vice President at Perrigo
Company Plc, the US-based
manufacturer and marketer
of consumer healthcare
products, and a board director
of the Consumer Healthcare
Products Association for 11
years.
Brings to the Board
Over 35 years of experience
in manufacturing and
marketing of consumer
healthcare products with
strategic and corporate
management expertise, with
particular expertise in the US
market.
Current roles
Andrew Unitt is an
Independent Non-Executive
Director and Chair of the
Audit Committee. He is
also a member of the
Remuneration Committee
and the Nominations
Committee. Andrew is
currently Independent
Non-Executive Director
of AIM-listed Company
Oncimmune Holdings Plc.
Past roles
Chief Financial Officer at the
University of Nottingham
until 2016. Andrew spent
11 years at Boots plc, where
he was Managing Director
and Finance Director for four
years of Boots Healthcare
International, its over the
counter medicines business.
Brings to the Board
Over 20 years of experience
as a Finance Director in a
wide range of industries with
strong financial experience
and OTC market expertise.
4 5
Futura Medical plc Annual Report 2021GOVERNANCE 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 until 31 December 2021 when Jeff Needham
took over the position. Since 2018, the Company has
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 two Remuneration Committee meetings
during 2021.
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.
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.
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 no more than 5% of the fully
diluted share capital as at 31 December 2021.
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.
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
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
4 6
terminable by three months’ notice by either party.
The service contracts of the Non-Executive Directors
are made available for inspection on request.
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 Chairman is
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 2021 was settled in January
2022 by the issue of 145,556 shares at 14.97 pence per
share. The 2022 award has been determined at 37.36
pence per share and the Non-Executive Directors will
accrue these shares over 2022 and receive them, or
such lower number as have accrued if they leave the
Group earlier, in January 2023.
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 2021:
Year ended 31 December 2021
Salary &
Directors’
Fees
£
Bonus
£
Share
Awards
£
Benefits
In Kind
£
Pension
£
Total
£
Year ended
31 December
2020
£
242,556
110,785
179,299
87,967
180,000
90,000
–
–
–
3,517
–
–
–
356,858
267,266
1,259
18,000
289,259
309,310
248,224
240,295
James Barder
Ken James
Angela Hildreth
Non-Executive Directors
John Clarke
Jeff Needham
Jonathan Freeman
Totals
715,329
288,752
66,334
9,375
37,765
–
–
–
26,999
–
8,995
35,994
–
–
–
–
–
–
93,333
9,375
46,760
4,776
18,000 1,062,851
91,504
–
45,844
935,177
The above fees and emoluments exclude reimbursed expenditure incurred in the conduct of Group business.
There were no settlements under the LTIP in 2021 (2020: £nil).
47
Futura Medical plc Annual Report 2021GOVERNANCE Remuneration Committee Report
DIRECTORS’ INTERESTS IN SHARES
John Clarke
James Barder
Jonathan Freeman
Ken James
Angela Hildreth
Totals
31 December 2021
31 December 2020
Beneficial
Interests
642,542
1,093,472
222,282
299,581
142,857
Non-
beneficial
Interests
Beneficial
Interests
Non-
beneficial
Interests
–
512,788
–
117,500
1,093,472
117,500
–
–
–
175,718
299,581
142,857
–
–
–
2,400,734
117,500
2,224,416
117,500
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 2021
31 December 2020
Options
Held
Share-based
Payment
Expense
1,880,000
1,304,000
904,000
4,088,000
37,501
30,001
30,001
97,503
Options
Held
1,800,000
1,040,000
640,000
3,480,000
Share-based
Payment
Expense
26,993
21,594
21,594
70,181
4 8
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
James Barder
13 January 2017
124,348
57.50 pence
1 October 2018 30 September 2023
James Barder
19 November 2018
250,000
7.50 pence
1 October 2020 30 September 2025
James Barder
17 September 2019
250,000
31.00 pence
1 October 2021 30 September 2026
James Barder
21 September 2020
300,000
15.50 pence
1 October 2022 30 September 2027
James Barder
5 October 2021
94,322
37.90 pence
1 October 2023 30 September 2028
Ken James
Ken James
Ken James
Ken James
13 January 2017
200,000
57.50 pence
1 October 2018 30 September 2023
12 September 2017
200,000
30.50 pence
1 October 2019 30 September 2024
19 November 2018
200,000
7.50 pence
1 October 2020 30 September 2025
17 September 2019
200,000
31.00 pence
1 October 2021 30 September 2026
Angela Hildreth
19 November 2018
200,000
7.50 pence
1 October 2020 30 September 2025
Angela Hildreth
17 September 2019
200,000
31.00 pence
1 October 2021 30 September 2026
Angela Hildreth
21 September 2020
240,000
15.50 pence
1 October 2022 30 September 2027
Angela Hildreth
5 October 2021
264,000
37.90 pence
1 October 2023 30 September 2028
Totals
2,722,670
DIRECTORS’ INTERESTS IN LONG-TERM INCENTIVE PLAN
The performance milestones, which are non-market related milestones, were not met in 2021 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, will be capped at 5% of the fully diluted share capital
with individual awards to be determined.
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.
JEFF NEEDHAM
Chairman of the Remuneration Committee
4 9
Futura Medical plc Annual Report 2021GOVERNANCE Corporate Governance
Statement
The Board is committed to building
long-term shareholder value in
an open and ethical manner.”
JOHN CLARKE
Non-Executive Chairman
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 2021. 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 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 lead to 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 51 to 55 we have set out the Group’s
application of the QCA Code, including, where
appropriate, cross references to other sections of this
Annual Report and to our website.
JOHN CLARKE
Non-Executive Chairman
25 April 2022
5 0
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 formally at least
six times per year and informally as required. It 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 markets, 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.
Now that MED3000 has had regulatory approval in
the EU, the Group has chosen to realise monetary
value via out-licensing deals with distribution
partners with interests in both prescription (“Rx”)
and OTC products. 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 34 to 37
of our Strategic Report. The key challenge to the
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 when face to
face meetings can be held again without restrictions.
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. In addition to shareholders, these include
the Group’s employees, regulators, commercial
partners, suppliers, patients involved in the Group’s
clinical development activities as well as people
affected by the conditions we seek to treat. 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 40 to 42.
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 and the Risk and Oversight Committee (“ROC”)
provides additional oversight of its operational
compliance in respect of its assets. During 2021 the
ROC provided oversight of the Company’s Medical
Device Quality Management System (“QMS”) as
defined in the Medical Device Quality Manual.
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 34 to 37 of our Strategic Report.
5 1
Futura Medical plc Annual Report 2021GOVERNANCE Corporate Governance Report
PRINCIPLE 5
A WELL-FUNCTIONING BOARD OF DIRECTORS
Futura’s Board comprises three 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
two Non-Executive Directors. Details of the Directors who served in the year can be found on page 56.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The Board is responsible to shareholders for the 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. As COVID-19 restrictions were lifted in the second half
of the year, the Board met three times in person and the other meetings were held by video conference. 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
Jeff Needham
Board
Audit
Committee
Remuneration
Committee
Nominations
Committee
6/6
6/6
6/6
6/6
6/6
2/2
2/2
2/2
2/2
2/2
1/1
1/1
1/1
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.
The 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.
In 2021, Futura strengthened the Company’s Board with the appointment of two Non-Executive Directors, Jeff
Needham and Andrew Unitt as announced in October 2021, expanding the Company’s Board with business
expertise and commercial acumen, particularly in the US as Futura moves into the next phase of MED3000’s
development. Both bring OTC market expertise and exceptional skills in strategic development and business
management which will further enhance our ambition and focus on building a global brand and distribution
network to accelerate Company growth towards long-term, sustainable revenues.
5 2
Jeff Needham brings a wealth of knowledge and experience to the Board having been at Perrigo Company
plc, the US-based manufacturer and marketer of consumer healthcare products, for 36 years, and a board
director of the Consumer Healthcare Products Association (US) for 11 years. Andrew Unitt, who joined the
Board on 1 January 2022, brings strong financial experience having spent eleven years at Boots plc, where he
was Finance Director for four years of Boots Healthcare International, its over the counter medicines business.
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.
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 the 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 to 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.
Pharma/
OTC sector
✓
Financial
General
management
✓
Other public
company
(Board level)
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Director
John Clarke
Jonathan Freeman1
Jeff Needham2
Andrew Unitt3
James Barder
Angela Hildreth
Ken James
1. Jonathan Freeman appointment ended 31 December 2021
2. Jeff Needham appointment commenced 8 October 2021
3. Andrew Unitt appointment commenced 1 January 2022
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 2021 in the form of peer appraisal, questionnaires and discussions
led by the Chairman to determine their 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 and will be led by Andrew Unitt following his departure.
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.
5 3
Futura Medical plc Annual Report 2021GOVERNANCE
Corporate Governance Report
The Finance Director and 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 UK LLP
based at 1020 Eskdale Road, Winnersh, Wokingham,
RG41 5TS and was appointed in 2019 as part of
a tender process. The senior statutory auditor is
Jonathan Oakey.
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 Directors 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 46 to 49.
The Directors believe that the disclosures in that
report 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 or 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 Directors 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 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.
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 two to three
times per 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.
5 4
PRINCIPLE 10
SHAREHOLDER COMMUNICATION
The Group places a high priority on regular
communication with its shareholders 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. Unfortunately, due to the COVID-19
pandemic during 2021, it was not possible to hold
events as we normally would.
The Group’s financial reports can be found in
the Investor 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
25 April 2022
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Futura Medical plc Annual Report 2021GOVERNANCE Directors’ Report
DIRECTORS
The Directors during the year were:
John Clarke
Non-Executive Chairman
James Barder
Chief Executive Officer
Jonathan Freeman
Non-Executive Director1
Jeff Needham
Andrew Unitt
Ken James
Angela Hildreth
Non-Executive Director2
Non-Executive Director3
Head of R&D/Executive
Director
Finance Director/Chief
Operating Officer
1. Appointment ended 31 December 2021
2. Appointment commenced 8 October 2021
3. Appointment commenced 1 January 2022
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 the focus
being on sexual health and pain relief management.
The Strategic Report on pages 1 to 42 provides a
review of the business, including the Group’s trading
for the year ended 31 December 2021, 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 (2020: £nil).
DIRECTORS’ INTERESTS
The Directors’ interests in the Company’s shares
and options over ordinary shares are shown in the
Remuneration Committee Report on pages 46 to 49.
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 46 to 49.
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 2021 the Group’s
expenditure on R&D was £3,774,269 (2020: £1,927,658).
ADEQUACY OF INFORMATION
SUPPLIED TO EXTERNAL 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 External 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 External 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.
5 6
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. 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.
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 benefit of its members as a whole,
as set out in our s.172(1) statement on page 40.
A consideration of the Company’s relationship
with wider stakeholders, including suppliers and
commercial partners, is disclosed in the Stakeholders
section on pages 40 to 42.
SUBSEQUENT EVENTS
In Q1 2022 the Company entered into a period of
exclusivity with an, as yet, unnamed party regarding
a potential agreement for the EU and UK marketing
rights for MED3000.
In March 2022 Futura signed a commercial licensing
agreement for MED3000 in South Korea with A.
Menarini Korea Limited, a subsidiary of Italy-based,
multinational specialty pharma company Menarini
Group.
In April 2022, the Company received UKCA mark
approval following an application in March 2022
to the UK Notified Body for MED3000 as a Class
2A medical device. This was required before the
end of June 2023 to replace the CE mark approval
which currently covers the UK according to Brexit
legislation.
SIGNIFICANT INTERESTS
On 31 March 2022 the Company was 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
WT Lamb Investments Limited
RA Lamb
26.90%
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
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Futura Medical plc Annual Report 2021GOVERNANCE Directors’ Report
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. 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
25 April 2022
5 8
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’s 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 two meetings held in the year and
matters discussed were as follows:
APRIL 2021
Presentation of 2020 Audit Report (see 2020 Annual
Report for 2020 Audit Report)
Review of 2020 audit performance
DECEMBER 2021
Handover from Jonathan Freeman to Andrew Unitt
Review of audit planning including audit risk areas
for the year ended 2021
Key areas of risks discussed were as follows:
▶ The valuation of the investment in the Parent
Company books of the carrying value of its
subsidiaries – the Committee concluded that the
carrying value was justified by the commercial
prospects for MED3000 which were supported
by market research, the licence agreements to
commercialise MED3000 in Latin America and the
Middle East, future potential agreements covering
the UK and EU where approval is already granted
and the potential US approval of MED3000 as a
treatment for ED without the need for a doctor’s
prescription.
▶ Capitalisation of R&D costs – Whilst commercial
agreements are in place in some regions, further
regulatory approval is required within those
regions and where regulatory approval is granted,
commercial agreements are not yet in place.
The Committee concluded that as the product
had not yet launched in one major market,
R&D costs would continue to be recognised in
the Consolidated Statement of Comprehensive
Income as incurred.
▶ Going concern – the Group’s latest cash flow
forecast demonstrated sufficient cash resources to
last at least 18 months. In addition, the Committee
noted that the Company had good prospects of
achieving further licensing deals for MED3000
with upfront payments and product sales that
were not included within the cashflow forecasts
and could further extend the cash runway. On
this basis the Committee concluded that it
was appropriate to prepare the 2021 financial
statements on the going concern basis.
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
External 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 External Auditor.
The Group’s External Auditor, Grant Thornton UK
LLP, is engaged to provide its independent opinion
on the Group’s financial statements. A full scope of
their work for the year ended 31 December 2021 is
included within the Independent Auditor’s Report
on pages 61 to 68. Grant Thornton were appointed in
2019 following a tender process. The senior statutory
auditor is Jonathan Oakey.
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.
ANDREW UNITT
Chairman of the Audit Committee
5 9
Futura Medical plc Annual Report 2021GOVERNANCE Financial
Statements
CONTENTS
Independent Auditor’s Report to the Members of
Futura Medical plc
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
Independent Auditor’s Report to the Members of
Futura Medical plc (Parent Company)
Parent Company Balance Sheet
61
69
70
71
72
73
93
102
Parent Company Statement of Changes in Equity
103
Notes to the Parent Company Financial
Statements
Company information
104
107
6 0
Independent Auditor’s Report
to the Members of Futura Medical plc
OPINION
OUR OPINION ON THE GROUP FINANCIAL STATEMENTS IS UNMODIFIED
We have audited the group financial statements of Futura Medical Plc for the year ended
31 December 2021, 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 and notes to the financial statements, including a summary
of significant accounting policies. The financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international accounting standards.
In our opinion, the group financial statements:
▶ give a true and fair view of the state of the group’s affairs as at 31 December 2021 and of its loss for the
year then ended;
▶ have been properly prepared in accordance with UK-adopted international accounting standards; and
▶ 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 group
financial statements’ section of our report. We are
independent of the group 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 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.
CONCLUSIONS RELATING TO GOING CONCERN
We are responsible for concluding on the
appropriateness of the directors’ use of the going
concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the group’s ability to continue
as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention
in our report to the related disclosures in the financial
statements or, if such disclosures are inadequate,
to modify the auditor’s opinion. Our conclusions are
based on the audit evidence obtained up to the date
of our report. However, future events or conditions
may cause the group to cease to continue as a going
concern.
Our evaluation of the directors’ assessment of
the group’s ability to continue to adopt the going
concern basis of accounting included obtaining
management’s going concern assessments covering
the period to 30 June 2023 and performing the
following procedures:
▶ obtaining an understanding of relevant controls
over management’s going concern models,
including those over the inputs and assumptions
used in the models;
▶ corroborating key assumptions, such as assessing
the feasibility of securing new revenue contracts
and the likely timing and quantum of outlay of
expenditure and challenging management where
necessary;
▶ assessing the impact of not achieving expected
revenue and evaluating the impact if no
revenue was generated. We considered whether
the assumptions are consistent with our
understanding of the business and other audit
work undertaken;
▶ assessing the accuracy of management’s past
forecasting by comparing management’s future
forecasts modelled in the prior year to the actual
results for the current year and considering the
impact on the going concern models;
▶ evaluating events that occurred post balance sheet
date and challenging management as to whether
these have been correctly reflected in the forecasts
prepared; and
▶ assessing the adequacy of related disclosures
within the annual report and accounts.
6 1
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Independent Auditor’s Report
to the Members of Futura Medical plc
In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the company’s
business model including effects arising from macro-economic uncertainties such as Brexit and Covid-19, we
assessed and challenged the reasonableness of estimates made by the directors and the related disclosures
and analysed how those risks might affect the company’s financial resources or ability to continue operations
over the going concern period.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
The responsibilities of the directors with respect to going concern are described in the ‘Responsibilities of
directors for the financial statements’ section of this report.
OUR APPROACH TO THE AUDIT
Materiality
Key audit
matters
Scoping
OVERVIEW OF OUR AUDIT APPROACH
Overall materiality: £287,000, which represents 4.9% of the group’s
loss before tax.
Key audit matters were identified
▶ Treatment of convertible loan note and warrants (new)
Our auditor’s report for the year ended 31 December 2020 included
one key audit matter that has not been reported as a key audit
matter in our current year’s report. This relates to the material
uncertainty in relation to going concern. This was not identified
as a key audit matter in the current year because the group had
significantly increased cash balances at the current year end
compared to the prior year.
We performed an audit of the financial information of the
parent company and the other significant component using
component materiality (full-scope audit procedures) on Futura
Medical Developments Limited. 100% of the results for the year
ended 31 December 2021 and 100% of the assets and liabilities as at
31 December 2021 were included within full-scope audit
procedures. This approach is the same as the previous year.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the group
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
group financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Description
Audit response
KAM
Disclosures
Our results
6 2
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit.
High
l
i
a
c
n
a
n
fi
l
a
i
t
n
e
t
o
P
t
c
a
p
m
i
t
n
e
m
e
t
a
t
s
Low
Low
Going
concern
Treatment of convertible
loan note and warrants
Management
override of
controls
Revenue
recognition –
new contracts
Extent of management judgement
High
Key audit matter
Significant risk
Other risk
KEY AUDIT MATTER
HOW OUR SCOPE ADDRESSED THE MATTER
TREATMENT OF CONVERTIBLE
LOAN NOTE AND WARRANTS
We identified the treatment of
convertible loan note and warrants
as one of the most significant
assessed risks of material
misstatement due to error.
During the year a £1.5m convertible
loan note and warrants were issued
and converted to equity, with total
proceeds received from the warrants
exercised of £0.5m.
The convertible loan note and
warrants are accounted for in
accordance with International
Accounting Standards (IAS) 32
‘Financial instruments: Presentation’.
The process for determining
the accounting treatment and
classification of these financial
instruments is complex and requires
significant management judgement
to be applied including bifurcation
the total proceeds received from the
transaction between the separate
financial instruments issued.
In responding to the key audit matter, we performed the following
audit procedures:
▶ obtaining an understanding and assessing the design and
implementation of the group’s processes and relevant controls
relating to: identification of related contracts and determining the
appropriate classification as debt or equity;
▶ obtaining an understanding of management’s assessment of
the most appropriate classification and accounting treatment in
accordance with the requirements of IAS 32;
▶ comparing the accounting policy applied to the requirements of IAS 32;
▶ assessing the key assumptions used by management in
determining the appropriate classification, reading the agreements
and comparing the key assumptions to the clauses included in the
contracts;
▶ recalculating an expected value of the warrant reserve, by using
an appropriate option-pricing model and comparing this to the
amount calculated by management;
▶ recalculating an expected value of the bifurcation of the total
proceeds received and comparing this to the amount calculated by
management; and
▶ examining the disclosures made in the financial statements with
respect to significant estimates and judgements made around the
conclusion of the classification and valuation of the instruments
issued and agreeing these to the requirements of IAS 32.
RELEVANT DISCLOSURES IN
THE ANNUAL REPORT AND
ACCOUNTS 2021
▶ Financial statements:
Note 2.3, Note 3 and Note 19.
▶ Audit committee report.
OUR RESULTS
Based on our audit work, we are satisfied that the assumptions made in
management’s assessment of the accounting treatment is in accordance
with IAS 32 and that the disclosure given in Note 19 is in accordance with
the underlying transactions that occurred during the year.
6 3
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS
Independent Auditor’s Report
to the Members of Futura Medical plc
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of
identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements
and in forming the opinion in the auditor’s report.
Materiality was determined as follows:
MATERIALITY
MEASURE
GROUP
MATERIALITY FOR
FINANCIAL
STATEMENTS AS A
WHOLE
We define materiality as the magnitude of misstatement in the financial
statements that, individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of these financial statements. We
use materiality in determining the nature, timing and extent of our audit work.
Materiality threshold
£287,000, which is 4.9% of the group’s loss before tax for the year.
Significant judgements
made by auditor in
determining materiality
In determining materiality, we made the following significant judgements:
▶ The group’s loss before tax is considered the most appropriate benchmark
because it is a prominent key performance measure for the users of the
financial statements.
Materiality for the current year is higher than the level that we determined for the
year ended 31 December 2020 to reflect the increase in the group’s loss before tax
during the year.
PERFORMANCE
MATERIALITY USED TO
DRIVE THE EXTENT OF
OUR TESTING
We set performance materiality at an amount less than materiality for the financial
statements as a whole to reduce to an appropriately low level the probability that
the aggregate of uncorrected and undetected misstatements exceeds materiality
for the financial statements as a whole.
Performance materiality
threshold
Significant judgements
made by auditor
in determining
performance materiality
£200,900, which is 70% of financial statement materiality.
In determining performance materiality, we made the following significant
judgements:
▶ Our experience with auditing the financial statements in previous years ,
including the number of misstatements identified; and
▶ Our risk assessment and consideration of the group’s control environment.
SPECIFIC MATERIALITY We determine specific materiality for one or more particular classes of
transactions, account balances or disclosures for which misstatements of lesser
amounts than materiality for the financial statements as a whole could reasonably
be expected to influence the economic decisions of users taken on the basis of the
financial statements.
Specific materiality
We determined a lower level of specific materiality for the following areas:
▶ directors’ remuneration; and
▶ related party transactions.
COMMUNICATION OF
MISSTATEMENTS TO
THE AUDIT COMMITTEE
We determine a threshold for reporting unadjusted differences to the audit
committee.
Threshold for
communication
£14,400 and misstatements below that threshold that, in our view, warrant
reporting on qualitative grounds.
6 4
The graph below illustrates how performance materiality interacts with our overall materiality and the
tolerance for potential uncorrected misstatements.
OVERALL MATERIALITY
Loss before tax
£5,866,311
FSM
£287,000
4.9%
PM
£200,900
70%
TFPUM
£86,100
30%
FSM: Financial statements materiality
PM: Performance materiality
TFPUM: Tolerance for potential uncorrected
misstatements
AN OVERVIEW OF THE SCOPE OF
OUR AUDIT
We performed a risk-based audit that requires
an understanding of the group’s business and in
particular matters related to:
UNDERSTANDING THE GROUP, ITS COMPONENTS,
AND THEIR ENVIRONMENTS, INCLUDING
GROUP-WIDE CONTROLS
▶ Evaluating the group’s internal control
environment and documenting our
understanding of controls relevant to the audit.
▶ Performing process walkthroughs and
documenting, and assessing, the relevant controls
covering the Key Audit Matters and certain other
risks in the financial reporting system identified as
part of our risk assessment.
▶ The processes and systems are centralised and as
such our understanding of the group’s controls are
the same for all components.
IDENTIFYING SIGNIFICANT COMPONENTS
▶ We identified the significant components of
the group based on the relative contribution of
revenue, loss before tax and net assets of each
component to the group.
TYPE OF WORK TO BE PERFORMED ON
FINANCIAL INFORMATION OF PARENT AND
OTHER COMPONENTS (INCLUDING HOW IT
ADDRESSED THE KEY AUDIT MATTERS)
▶ We performed a full scope audit on the financial
statements of Futura Medical PLC and Futura
Medical Developments Limited. We performed
analytical procedures at group level on the
financial statements of Futura Medical Healthcare
Limited;
▶ We identified the treatment of convertible loan
note and warrants as key audit matter relating
to the group, and the procedures performed in
respect of this has been included in the key audit
matters section of our report. This key audit matter
was addressed by full-scope audit procedures.
PERFORMANCE OF OUR AUDIT
▶ The year-end audit was conducted remotely
due to Covid-19 restrictions and social distancing
requirements. This was supported through the use
of software collaboration platforms for the secure
and timely delivery of requested audit evidence.
▶ 100% of the group’s revenue, group’s total assets
and of the group’s loss before tax were included in
the scope of our full scope audit procedures based
on the above strategy.
CHANGES IN APPROACH FROM
PREVIOUS PERIOD
▶ There are no changes in the scope of the current
year audit from the scope of that of the prior year.
6 5
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Independent Auditor’s Report
to the Members of Futura Medical plc
OTHER INFORMATION
The directors are responsible for the other
information. The other information comprises the
information included in the annual report and
accounts, 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 group financial
statements, our responsibility is to read the other
information and, in doing so, consider whether the
other information is materially inconsistent with
the group 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 group 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.
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 group financial statements are
prepared is consistent with the group 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 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:
▶ 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.
RESPONSIBILITIES OF DIRECTORS
FOR THE FINANCIAL STATEMENTS
As explained more fully in the Statement of directors’
responsibilities, the directors are responsible for the
preparation of the group 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 group
financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group financial statements, the
directors are responsible for assessing the group’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
to cease operations, or have no realistic alternative
but to do so.
6 6
AUDITOR’S RESPONSIBILITIES FOR
THE AUDIT OF THE GROUP FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance
about whether the group 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 group 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.
OTHER MATTER
We have reported separately on the parent company
financial statements of Futura Medical Plc for the
year ended 31 December 2021. That report includes
details of the parent company key audit matters; how
we applied the concept of materiality in planning
and performing our audit; and an overview of the
scope of our audit.
EXPLANATION AS TO WHAT EXTENT THE AUDIT
WAS CONSIDERED CAPABLE OF DETECTING
IRREGULARITIES, INCLUDING FRAUD
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our responsibilities,
outlined above, to detect material misstatements
in respect of irregularities, including fraud. Owing
to the inherent limitations of an audit, there is an
unavoidable risk that material misstatements in
the financial statements may not be detected, even
though the audit is properly planned and performed
in accordance with ISAs (UK).
The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed
below:
▶ We obtained an understanding of the legal and
regulatory frameworks that are applicable to the
group and determined that the most significant
which are directly relevant to the financial
statements are those related to the reporting
framework, being the Companies Act 2006 and
UK-adopted international accounting standards,
together with the QCA Corporate Governance
Code and the AIM Rules for Companies.
▶ We obtained an understanding of how the group
is complying with those legal and regulatory
frameworks by making enquiries of management.
We corroborated our enquiries through our review
of board minutes and correspondence received
from regulatory bodies.
▶ We assessed the susceptibility of the group’s
financial statements to material misstatement,
including how fraud might occur, by making
enquiries of management and those charged
with governance. We utilised internal and external
information to corroborate these enquiries and to
perform a fraud risk assessment. We considered
the risk of fraud to be highest through the
potential for management override of controls.
Our audit procedures involved:
− evaluation of the design and implementation
of controls that management has in place to
prevent and detect fraud;
− journal entry testing, with a focus on material
manual journals, including those posted
directly to cash and those impacting areas of
estimation uncertainty; and
− challenging assumptions and judgements
made by management in its significant
accounting estimates.
▶ In addition, we completed audit procedures to
conclude on the compliance of disclosures in
the annual report and accounts with applicable
financial reporting requirements.
6 7
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS 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.
JONATHAN OAKEY FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Crawley
25 April 2022
▶ We assessed the appropriateness of the collective
competence and capabilities of the engagement
team, including consideration of the engagement
team’s:
− understanding of, and practical experience
with, audit engagements of a similar nature
and complexity, through appropriate training
and participation;
− knowledge of the industry in which the group
operate; and
− understanding of the legal and regulatory
requirements specific to the group.
▶ Team communications in respect of potential
non-compliance with laws and regulations and
fraud included the potential for fraud in revenue
recognition through manipulation of the identified
performance obligations in contracts. In assessing
the potential risks of material misstatement
we obtained an understanding of the group’s
operations, including the nature of its revenue
sources, products and services to understand the
classes of transactions, account balances, expected
financial statement disclosures and business risks
that may result in risks of material misstatement.
▶ These audit procedures were designed to
provide reasonable assurance that the financial
statements were free from fraud or error. The
risk of not detecting a material misstatement
due to fraud is higher than the risk of not
detecting one resulting from error and detecting
irregularities that result from fraud is inherently
more difficult than detecting those that result
from error, as fraud may involve collusion,
deliberate concealment, forgery, or intentional
misrepresentations. Also, the further removed
non-compliance with laws and regulations is from
events and transactions reflected in the financial
statements, the less likely we would become aware
of it.
6 8
Consolidated Statement of
Comprehensive Income
for the year ended 31 December 2021
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.
Year ended
31 December
2021
£
Year ended
31 December
2020
£
–
–
(3,774,269)
(1,927,658)
(2,092,042)
(1,000,736)
(5,866,311)
(2,928,394)
–
924
(5,866,311)
(2,927,470)
908,600
519,093
Notes
2.4
6
8
9
(4,957,711)
(2,408,377)
10
(1.83)
(0.99)
The Notes on pages 73 to 92 form part of these consolidated financial statements.
6 9
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Consolidated Statement of
Changes In Equity
for the year ended 31 December 2021
Share
Capital
£
Share
Premium
£
Merger
Reserve
£
Other
Reserves
£
Retained
Losses
£
Notes
At 1 January 2020
409,321 50,002,990
1,152,165
– (51,510,824)
Total
Equity
£
53,652
Total comprehensive loss for
the year
Share-based payment
Shares issued during the year
Transactions with owners
At 31 December 2020
Total comprehensive loss for
the year
Share-based payment
Shares issued during the year
Convertible loan notes and
warrants
Convertible loan notes
conversion and warrant
exercise
17
16
17
16
18
–
–
–
–
81,933
81,933
2,811,100
2,811,100
–
–
–
–
–
–
(2,408,377)
(2,408,377)
149,364
149,364
165,868
165,868
–
3,058,901
149,364
3,208,265
491,254 52,814,090
1,152,165
165,868 (53,769,837)
853,540
–
–
–
–
63,503
11,661,978
–
–
–
–
–
–
–
–
–
–
–
(4,957,711)
(4,957,711)
181,822
181,822
–
11,725,481
118,864
196,909
315,773
(118,864)
(196,909)
1,605,707
–
181,822 13,828,783
Transactions with owners
83,048
13,563,913
18
19,545
1,901,935
At 31 December 2021
574,302 66,378,003
1,152,165
165,868 (58,545,726) 9,724,612
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.
Warrants issued are held as a separate “warrant reserve” within equity. The warrant reserve will be transferred
to retained earnings on exercise or lapse, as it is treated as distributable profit from the point of issue.
The Notes on pages 73 to 92 form part of these consolidated financial statements.
70
Consolidated Statement of
Financial Position
as at 31 December 2021
Assets
Non-current assets
Plant and equipment
Total non-current assets
Current assets
Trade and other receivables
Current tax asset
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
Other reserves
Retained losses
Total equity
As at
31 December
2021
£
As at
31 December
2020
£
Notes
11
13
9
14
442,657
442,657
42,869
42,869
79,256
908,312
10,372,571
11,360,139
39,790
518,805
1,018,601
1,577,196
15
(2,078,184)
(2,078,184)
9,724,612
(766,525)
(766,525)
853,540
16
574,302
491,254
66,378,003
52,814,090
1,152,165
165,868
1,152,165
165,868
(58,545,726)
(53,769,837)
9,724,612
853,540
The consolidated financial statements were approved and authorised for issue by the Board on 25 April 2022.
The Notes on pages 73 to 92 form part of these consolidated financial statements.
By order of the Board
JAMES BARDER
Chief Executive
Registered number: 04206001
7 1
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Consolidated Statement
of Cash Flows
for the year ended 31 December 2021
Cash flows from operating activities
Loss before tax
Adjustments for:
Depreciation
Loss on disposal of fixed assets
Finance income
Share-based payment charge
Year ended
31 December
2021
£
Year ended
31 December
2020
£
Notes
(5,866,311)
(2,927,470)
11
8
17
19,808
25,008
125
–
–
(924)
181,822
149,364
Cash flows used in operating activities before changes in working capital
(5,664,556)
(2,754,022)
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 used in investing activities
Cash flows from financing activities
Issue of ordinary shares
Expenses paid in connection with share issue
Cash generated by financing activities
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
–
(39,466)
7,780
61,401
15
1,311,659
(4,080,996)
(4,392,363)
(6,765,837)
519,093
2,222,482
(3,873,270)
(4,543,355)
11
(419,722)
–
(419,722)
(8,371)
924
(7,447)
16
14,319,281
3,270,534
(672,319)
(211,632)
13,646,962
3,058,902
9,353,970
(1,491,900)
1,018,601
14
10,372,571
2,510,501
1,018,601
The Notes on pages 73 to 92 form part of these consolidated financial statements.
7 2
Notes to the Consolidated
Financial Statements
for the year ended 31 December 2021
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 2021.
The consolidated financial statements of the Company and the Group for the year ended 31 December 2021
were authorised for issue by the Board of Directors on 25 April 2022.
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 UK-adopted
International accounting standards in conformity with the requirements of the Companies Act 2006. 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
Notwithstanding a loss for the year ended 31 December 2021 of £4,957,711 the financial statements have
been prepared on a going concern basis which the Directors consider to be appropriate for the following
reasons. 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, the Group’s cash resources will extend beyond April 2023 (at least 12 months from the date of
signing the financial statements).
The Directors have considered scenarios in which commercial launches of MED3000 are delayed compared
to base case forecasts. In these circumstances, mitigating actions such as reduction of discretionary research
and development costs or selling and marketing expenditure could be taken to preserve cash but that in any
event, any significant impact would occur outside of the forecasted period.
The Directors also have a reasonable expectation that the Group will also be able to generate additional
revenue streams through entering into further strategic collaborations for the commercialisation of MED3000
in the EU and rest of the world following the conclusion of commercial agreements relating to MED3000
within the Middle East and North Africa, Latin America, China, South East Asia and South Korea with the US
expected to follow.
Based on the above factors the Directors believe that it remains appropriate to prepare the financial
statements on a going concern basis.
2.3 STANDARDS, AMENDMENTS AND INTERPRETATION TO EXISTING STANDARDS
At the date of authorisation of these consolidated financial statements, several new, but not yet effective,
Standards and amendments to existing Standards, and Interpretations have been published by the IASB.
None of these Standards or amendments to existing Standards have been adopted early by the Group.
Management anticipates that all relevant pronouncements will be adopted for the first period beginning
on or after the effective date of the pronouncement. New Standards, amendments and Interpretations not
adopted in the current year have not been disclosed as they are not expected to have a material impact on the
Group’s financial statements.
7 3
Futura Medical plc Annual Report 2021FINANCIAL 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.
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
re-measured accordingly.
During the year, the Company entered into contracts for supply of goods to external customers against orders
received. The majority of contracts that the Company enters into relate to sales orders containing single
performance obligation for the delivery of pharmaceutical products. Revenue is recognised when control
of the goods is passed to the customer. The point at which control passes is determined by each customer
arrangement, but generally occurs when title passes to the customer, either on shipment or on receipt of
goods by the customer, depending on local trading terms.
Product revenue represents net invoice less estimated volume discounts, which are considered to be variable
consideration and include significant estimates. Other variable considerations such as milestones payments
and royalties are not recognised in full until it is highly probable that a significant reversal in the amount
of cumulative revenue recognised will not occur. In management’s opinion, that will be when the Group’s
customer confirms that the milestone has been met or that a royalty is due. Estimates associated with
variable consideration are revisited at each reporting date or when they are resolved and revenue is adjusted
accordingly. At 31 December 2021, our customers were in the process of seeking regulatory approval for the
sale of the product in the relevant jurisdictions. As a result, no sales have been made and no revenue has been
recognised during the year.
The Group applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose information about
remaining performance obligations that have original expected durations of one year or less.
2.5 LEASED ASSETS
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
assesses whether it has the right to direct “how and for what purpose” the asset is used throughout the
period of use.
74
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 2. ACCOUNTING POLICIES (CONTINUED)
2.5 LEASED ASSETS (CONTINUED)
The Group makes the use of leasing arrangements principally for the provision of the main office space and
IT equipment. The rental contracts for offices are typically negotiated on a short-term rolling basis with one
month’s notice. Lease terms for IT equipment have lease terms of three years without any extension terms.
The Group does not enter into sale and leaseback arrangements. All the leases are negotiated on an individual
basis and contain a wide variety of different terms and conditions such as purchase options and escalation
clauses.
The Group assesses whether a contract is or contains a lease at inception of the contract. A lease conveys the
right to direct the use and obtain substantially all of the economic benefits of an identified asset for a period
of time in exchange for consideration.
The Group has elected to account for short-term leases and leases of low-value assets using the practical
expedients. These leases relate to items of certain IT equipment. 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.
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.
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
▶ Furniture 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.
7 5
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS
2. ACCOUNTING POLICIES (CONTINUED)
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 there are separately identifiable cash flows.
2.9 CLASSIFICATION OF FINANCIAL INSTRUMENTS ISSUED BY THE GROUP
In accordance with the requirements of IAS 32, financial instruments issued by the Group are treated as equity
only to the extent that they meet the following two conditions:
▶ they include no contractual obligations upon the Company to deliver cash or other financial assets or to
exchange financial assets or financial liabilities with another party under conditions that are potentially
unfavourable to the Company; and
▶ where the instrument will or may be settled in the Company’s own equity instruments, it is either a
non-derivative that includes no obligation to deliver a variable number of the Company’s own equity
instruments or is a derivative that will be settled by the Company’s exchanging a fixed amount of cash or
other financial assets for a fixed number of its own equity instruments.
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 (2020: £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.
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.
76
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 2. ACCOUNTING POLICIES (CONTINUED)
2.10 FINANCIAL INSTRUMENTS (CONTINUED)
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 (2020: £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 de-recognises 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 de-recognition 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.
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.
7 7
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS 2. ACCOUNTING POLICIES (CONTINUED)
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.
2.15 CONVERTIBLE LOAN NOTES
The component of the convertible notes issued by the Group which exhibits the characteristics of a financial
liability is recognised as a liability in the Consolidated Statement of Financial Position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market
rate for an equivalent non-convertible bond and this amount is recorded as a non-current liability measured
at amortised cost until extinguished on conversion or redemption. The increase in the liability due to the
passage of time is recognised as a finance cost. The remainder of the proceeds are allocated to the conversion
option that is recognised and included in shareholders equity as an other reserve, net of transaction costs.
The carrying amount of the conversion option is not remeasured in the subsequent years. The corresponding
interest on convertible notes is expensed to profit or loss.
7 8
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 2. ACCOUNTING POLICIES (CONTINUED)
2.16 OTHER RESERVES
On initial recognition of the convertible loan notes the consideration received for issuing the notes was split
between the equity and liability components in accordance with IAS 32 ‘Financial Instruments: Presentation’.
This other reserve represents the equity component of the convertible loan notes.
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 £181,822 (2020: £149,364), 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 17.
Valuation of convertible loan notes
The fair value of the liability component of the convertible loan notes was calculated using the prevailing
market interest rate for a similar non-convertible instrument being 10%.
Valuation of warrants
Warrant instruments were measured at fair value using Black-Scholes model. The following inputs were used
for the model:
Share price
Warrant exercise price
Expected life of warrant
Volatility
Dividend yield
Risk-free interest rate
Fair value
16.5p
22.0p
1 year
105.08%
0%
0.14%
5.23p
7 9
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS 3. CRITICAL ACCOUNTING JUDGEMENTS, ASSUMPTIONS AND
ESTIMATES (CONTINUED)
3.2 JUDGEMENTS
Conversion of convertible loan notes and warrant instruments
The Group issued a new convertible loan note and warrants on 4 March 2021. In accordance with the
Group’s accounting policy as detailed in Note 2, the liability and equity components of the instruments were
calculated at fair value as detailed in Note 18. These instruments were converted in April 2021 and converted
to equity. Management has concluded that the £1,184,227 liability converted to equity at its liquidated sum
of £1,500,000 resulting in an increase in retained losses of £315,773 with a corresponding increase in share
premium. On conversion, the warrant reserve and other reserve amounting to £315,773 created on the issue of
the two instruments also reverses therefore decreasing retaining losses by the same amount.
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.
Fair value of derivative instruments
Where the fair value of derivative instruments recorded in the Consolidated Statement of Financial Position
cannot be derived from active markets, their fair value is determined using valuation techniques. The inputs
to these models are taken from observable markets where possible. Where this is not feasible, a degree of
judgment is required in establishing fair values. The judgements include considerations of inputs such as
volatility. Details of the fair value calculation for warrants granted during the year, including other inputs into
the Black-Scholes model, are disclosed in Note 18.
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 open forward contracts as at 31 December 2021 or at 31 December 2020.
8 0
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 4. FINANCIAL RISK (CONTINUED
4.1 FINANCIAL RISK FACTORS (CONTINUED)
At 31 December 2021, the Group held balances of the following denominated currency:
GBP
EUR
USD
Year ended
31 December
2021
£
Year ended
31 December
2020
£
£
€
$
9,163,871
19,514
1,608,363
941,818
7,072
96,127
The majority of operating costs are denominated in Sterling although certain expenditures were payable in
Euros and US Dollars. At 31 December 2021 the Group had trade payables denominated in a foreign currency
totalling £751,499 (31 December 2020: £34,217).
Cash flow interest rate risk and fair value interest rate risk
The Group’s interest rate risk arises from short-term money market deposits.
(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
2021
£
31 December
2020
£
10,372,571
–
10,372,571
644,729
373,872
1,018,601
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 following are the remaining contractual maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted.
31 December 2021
Trade and other payables
Deposit liability
Carrying
amount
£
2 months
or less
£
2 – 12
months
£
More than
1 year
£
2,078,184
2,078,184
109,435
–
2,187,619
2,078,184
–
109,435
109,435
–
–
–
8 1
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS 4. FINANCIAL RISK (CONTINUED)
4.1 FINANCIAL RISK FACTORS (CONTINUED)
31 December 2020
Trade and other payables
Carrying
amount
£
2 months
or less
£
2 – 12
months
£
More than
1 year
£
766,525
766,525
–
–
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 £10,372,571 of
cash at bank as at 31 December 2021 (31 December 2020: £1,018,601) and short-term money market funds £nil
(2020: 373,872).
5. SEGMENT REPORTING
The Group is focused on the development and commercialisation of MED3000 and therefore operates as one
segment. During the year, no revenue was recognised.
6. OPERATING LOSS
Operating loss is stated after charging:
Depreciation of plant and equipment (Note 11)
Loss on disposal of plant and equipment
Short-term leases: property
Gain on foreign exchange
Year ended
31 December
2021
£
Year ended
31 December
2020
£
19,808
125
116,194
39,664
25,008
–
116,714
18,840
The fees of the Group’s Auditor Grant Thornton UK LLP for services provided are analysed below:
Audit services
Parent Company
Subsidiaries
Tax services
Parent Company
Subsidiaries
Other non-audit services
iXBRL Tagging
Total fees
8 2
Year ended
31 December
2021
£
Year ended
31 December
2020
£
58,612
17,505
43,500
7,500
–
–
–
–
1,133
77,250
1,000
52,000
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 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
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
Year ended
31 December
2021
Year ended
31 December
2020
7
1
3
11
8
2
3
13
Year ended
31 December
2021
£
Year ended
31 December
2020
£
1,730,007
1,598,473
243,125
151,912
2,125,044
181,822
154,829
163,910
1,917,212
149,364
2,306,866
2,066,576
All employees of the Group are employed by Futura Medical Developments Limited.
Directors’ emoluments
Aggregate emoluments
Other pension and other benefit costs
Subtotal per Remuneration Report
Share-based payment remuneration charge
Employer’s national insurance charge
Total emoluments
Year ended
31 December
2021
£
Year ended
31 December
2020
£
1,040,075
22,776
1,062,851
97,503
142,846
912,209
22,968
935,177
47,866
77,222
1,303,200
1,060,265
In 2021 there were no Directors whose share options were exercised under the Group share option schemes
and no gain was realised (2020: £nil). In respect of the highest paid Director the realised gain was £nil
(2020: £nil).
In 2021 there were no Directors (2020: 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.
8 3
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS 7. STAFF NUMBERS AND COSTS (CONTINUED)
Emoluments on the previous page include the following amounts in respect of the highest paid Director:
Aggregate emoluments
Employer pension contributions and other benefits
Subtotal per Remuneration Report
Share-based payment remuneration charge
Employer’s national insurance charge
Total emoluments
8. FINANCE INCOME
Interest receivable in 2021 on treasury funds was £nil (2020: £924).
9. TAXATION
9.1 CURRENT TAX
UK corporation tax credit on loss on ordinary activities
Year ended
31 December
2021
£
Year ended
31 December
2020
£
353,341
306,658
3,517
356,858
37,501
56,388
2,652
309,310
18,410
32,266
450,747
359,986
Year ended
31 December
2021
£
Year ended
31 December
2020
£
908,600
519,093
The tax assessed for the year was lower than the UK corporation tax rate (2020: lower). 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% (2020: 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 2020
R&D expenditure credit re 2021
UK corporation tax credit reported in the Consolidated Statement of
Comprehensive Income
8 4
Year ended
31 December
2021
£
Year ended
31 December
2020
£
5,866,311
2,927,470
1,114,599
556,220
(124)
(6)
(37,824)
(37,213)
(616,719)
(224,744)
58,780
–
–
(1,036)
(282,562)
(159,728)
674,326
910,476
(1,876)
–
–
381,186
514,679
(288)
4,414
–
908,600
518,805
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 9. TAXATION (CONTINUED)
9.1 CURRENT TAX (CONTINUED)
The Group has tax losses of approximately £35,694,575 (2020: £32,448,687) available for offset against future
taxable profits.
The corporation tax credit for the year represents research and development tax credits of £910,476 (2020:
£514,679), arising from the surrender of losses (rather than carrying forward to future years) of £6,279,145
(2020: £3,549,507) 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.
A claim under the large company Research and Development Expenditure Credit (RDEC) scheme resulted in
a refund of £nil (2020: £4,414).
9.2 DEFERRED TAX
Deferred tax assets amounting to £9,502,702 (2020: £6,575,569) 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. An increase in the main rate of UK corporation tax from 19% to 25% from 1 April 2023 was substantively
enacted during the year. As a result, the opening asset not recognised is stated at 19% but the unrecognised
asset at 31 December 2021 has been calculated assuming a prevailing rate when the timing differences reverse
of 25% (2020: 19%). The unrecognised asset comprises of:
Depreciation differential versus capital allowances
Other short-term timing differences
Unutilised tax losses
Year ended
31 December
2021
£
Year ended
31 December
2020
£
(9,576)
(496)
588,004
8,823,644
410,814
6,165,251
9,502,072
6,575,569
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 (£)
2021
2020
4,957,711
2,408,376
Weighted average of ordinary shares for purposes of basic and diluted EPS (number)
271,046,179
243,721,303
Loss per share basic and diluted (pence)
1.83
0.99
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 6,642,800 (2020: 7,295,000). 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.
8 5
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS 11. PLANT AND EQUIPMENT
Cost
At 1 January 2021
Additions
Disposals
At 31 December 2021
Depreciation
At 1 January 2021
Charge for year
At 31 December 2021
Net book value
At 31 December 2021
At 31 December 2020
Cost
At 1 January 2020
Additions
At 31 December 2020
Depreciation
At 1 January 2020
Charge for year
At 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
Computer
Equipment
£
Furniture
and Fittings
£
127,709
417,561
–
63,285
2,161
(125)
Total
£
190,994
419,722
(125)
545,270
65,321
610,591
90,339
18,545
108,884
436,386
37,370
57,787
1,263
59,050
148,126
19,808
167,934
6,271
5,498
442,657
42,868
Computer
Equipment
£
Furniture
and Fittings
£
Total
£
182,623
8,371
63,285
–
63,285
190,994
56,373
1,414
57,787
5,498
6,912
123,118
25,008
148,126
42,868
59,505
119,338
8,371
127,709
66,745
23,594
90,339
37,370
52,593
All fixed assets of the Group are held in Futura Medical Developments Limited.
12. FINANCIAL INSTRUMENTS BY CATEGORY
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 13)
Cash and cash equivalents (Note 14)
Total financial assets at amortised cost
31 December
2021
£
31 December
2020
£
7,547
16,067
10,372,571
1,018,601
10,380,118
1,034,668
8 6
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 12. FINANCIAL INSTRUMENTS BY CATEGORY (CONTINUED)
Liabilities as per Consolidated Statement of Financial Position at amortised cost
Trade and other payables (Note 15)
Total financial liabilities at amortised cost
31 December
2021
£
31 December
2020
£
981,392
981,392
182,900
182,900
The Directors consider that there is no material difference between the carrying values of financial assets and
liabilities, and their fair value.
13. TRADE AND OTHER RECEIVABLES
Amounts receivable within one year:
Trade receivables
Other receivables
Financial assets (Note 12)
Prepayments
31 December
2021
£
31 December
2020
£
7,547
–
7,547
71,709
79,256
5,627
10,440
16,067
23,723
39,790
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.
14. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Sterling short-term money market funds
15. TRADE AND OTHER PAYABLES
Trade payables
Social security and other taxes
Deposit liability
Accrued expenses
31 December
2021
£
31 December
2020
£
10,372,571
–
10,372,571
644,729
373,872
1,018,601
31 December
2021
£
31 December
2020
£
981,392
281,766
109,435
705,591
2,078,184
182,900
64,092
–
519,533
766,525
The increase in payables is reflective of the increased activity relating to research and development activities in
comparison to the prior year.
8 7
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS 16. SHARE CAPITAL
Authorised
31 December
2021
Number
31 December
2020
Number
31 December
2021
£
31 December
2020
£
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
31 December
2021
Number
31 December
2020
Number
31 December
2021
£
31 December
2020
£
Ordinary shares of 0.2 pence each
287,150,971
245,626,926
574,302
491,254
The number of issued ordinary shares as at 1 January 2020 was 204,660,267. During the year ended
31 December 2020, the Company issued shares of 0.2 pence with each ordinary share carrying the right to one
vote as follows:
Month
January 2020
January 2020
Reason for issue
Non-Executive Director Share Award
Subscription and PrimaryBid Offer
Gross
Consideration
£
Shares
Issued
Number
20,534
341,659
3,250,000
40,625,000
3,270,534
40,966,659
The number of issued ordinary shares as at 1 January 2021 was 245,626,926. During the year ended
31 December 2021, the Company issued shares of 0.2 pence with each ordinary share carrying the right
to one vote as follows:
Convertible loan conversion at 20 pence per share
1,500,000
7,500,000
Gross
Consideration
£
Shares
Issued
Number
30,600
425,000
500,000
2,272,727
21,581
176,318
75,000
140,300
27,000
250,000
460,000
360,000
12,000,000
30,000,000
24,800
80,000
14,319,281
41,524,045
Month
Reason for issue
March 2021
Exercise of share options at 7.5 pence per share
Exercise of warrants at 22 pence per share
Non-Executive Director Award at 12.24 pence per share
April 2021
April 2021
April 2021
April 2021
April 2021
April 2021
Exercise of share options at 30 pence per share
Exercise of share options at 30.5 pence per share
Exercise of share options at 7.5 pence per share
June 2021
Placing and PrimaryBid Offer
November 2021 Exercise of share options at 31 pence per share
8 8
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 At 31
December
2021
Number
–
350,000
730,000
500,000
850,000
–
–
1,140,000
1,308,000
–
–
–
–
–
–
–
–
–
17. SHARE OPTIONS
At 31 December 2021, 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
Exercise
Price per
Share
Pence
At
1 January
2021
Number
Options
Exercised
Number
Options
Lapsed
Number
Options
Granted
Number
1 October 2016 – 30 September 2021
51.75
480,000
–
(480,000)
1 October 2017 – 30 September 2022
1 October 2018 – 30 September 2023
1 October 2019 – 30 September 2024
1 October 2020 – 30 September 2025
7 January 2020 – 6 January 2029
31 August 2020 – 6 January 2029
1 October 2021 – 30 September 2026
1 October 2022 – 30 September 2027
1 October 2023 – 30 September 2028
30.00
57.50
30.50
7.50
7.20
7.20
31.00
15.50
37.90
600,000
(250,000)
–
810,000
–
(80,000)
990,000
(460,000)
(30,000)
1,240,000
(360,000)
(30,000)
212,500
212,500
(212,500)
(212,500)
–
–
1,250,000
(80,000)
(30,000)
1,500,000
–
–
–
(192,000)
(66,000)
1,654,800
1,588,800
7,295,000
(1,575,000)
(908,000)
1,654,800 6,466,800
On 5 October 2021 share options over 1,654,800 new ordinary shares were granted to employees (including
Executive Directors) at a price of 37.90p. The options have a two-year vesting period and the exercise period for
these options is 1 October 2023 to 30 September 2028.
The share options outstanding at 31 December 2021 represented 2.25% of the issued share capital as at that
date (2020: 2.97%) and would generate additional funds of £1,899,295 (2020: £1,939,700) if fully exercised.
The weighted average remaining life of the share options outstanding at 31 December 2021 was 55 months
(2020: 56 months) with a weighted average remaining exercise price of 29.36 pence (2020: 29.04 pence).
The share options exercisable at 31 December 2021 totalled 3,570,000 (2020: 4,545,000) with an average
exercise price of 31 pence (2020: 26.04 pence) and would have generated additional funds of £1,094,400
(2020: £1,319,700) if fully exercised.
The Group’s share option scheme rules apply to 6,620,000 of the share options outstanding at 31 December 2021
(31 December 2020: 6,720,000) 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 100,000 share options
outstanding to advisers at 31 December 2021 (31 December 2020: 575,000).
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.
8 9
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS 17. 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
2021
31 December
2020
5 October 21 September
1,654,000
1,500,000
37.90 pence 14.72 pence
37.90 pence
15.5 pence
3 years
121.14%
0%
3 years
104.96%
0%
Risk-free rate: yield on 3-year treasury stock as at date of grant
0.75%p.a.
0.05%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
2021
31 December
2020
25.26p
9.24p
£418,002
£138,600
31 December
2021
£
31 December
2020
£
48,646
–
48,646
19,104
–
19,104
The total expense recognised for the year arising from share-based payments is as follows:
Group equity-settled share-based payment expense
31 December
2021
£
31 December
2020
£
181,822
149,364
9 0
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 18. CONVERTIBLE LOAN NOTES AND WARRANT INSTRUMENT
On 4 March 2021, the Company created one hundred £15,000 unsecured convertible loan notes (“Notes”). The
Notes attract an interest rate of 2% per annum payable annually following an initial interest-free period of 180
days. The noteholder shall be entitled, at any time within 36 months of the date of the instrument (“Maturity
Date”), to serve a conversion notice on the Company to convert all or some only of the outstanding Notes into
fully paid ordinary shares at a conversion price of £0.20 per share. To the extent the Notes are not converted
at the Maturity Date, the outstanding principal amount of the Notes, together with any accrued interest, is
redeemable.
In addition, 2,272,727 warrants (“Warrants”) were issued to the noteholder to subscribe to ordinary shares
exercisable within 48 months of issue at a conversion price of £0.22 taking the total number of warrants in
issue to 13,210,227. The warrants were valued using the Black-Scholes model.
The initial value of the debt component of the Notes was calculated as £1,184,227. The cash flows attached to
the Notes up to the Maturity Date were calculated and discounted at an appropriate venture debt rate of 10%.
The fair value of the Warrants was calculated at £118,864 and the residual value of the equity component of the
Notes was calculated as £196,909.
On 1 April 2021, the noteholder exercised the Warrants in full at an exercise price of £0.22 and was issued with
2,272,727 ordinary shares. On 15 April 2021, the noteholder converted the loan notes in full and was issued with
7,500,000 ordinary shares.
On 20 January 2020, Futura Medical plc issued a warrant instrument as part of a wider share issue to raise
funds under a subscription agreement. The Company issued 10,937,500 warrants at a ratio of one warrant for
every two Ordinary Shares subscribed in respect of the Subscription. The warrants are exercisable until the
fifth anniversary of their issue at a price of 40 pence per Ordinary Share. The warrants have been measured
using the relative fair value method and fair value has been calculated using the Black-Scholes method using
the following inputs:
Inputs to warrant pricing model
Grant date
Number of warrants
Share price as at date of grant
Warrant conversion price
Expected life of warrants
Expected volatility
Dividend yield: no dividends assumed
Risk-free rate
31
December
2021
31 December
2020
4 March
21 January
2,272,727
10,937,500
16.50 pence
12.75 pence
22 pence
40 pence
1 Year
105.8%
0%
5 years
81.56%
0%
0.41% p.a
0.44% p.a.
19. PENSION COSTS
The pension charge represents contributions payable by the Group to independently administered funds
which during the year ended 31 December 2021 amounted to £135,670 (2020: £128,161). Pension contributions
payable in arrears at 31 December 2021, included in accrued expenses at the relevant Consolidated Statement
of Financial Position date, totalled £32,299 (2020: £18,948).
9 1
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS 20. COMMITMENTS
At 31 December 2021 the Group had operating lease commitments in respect of property leases cancellable
on one month’s notice of £9,963 (2020: £9,802).
21. INVESTMENTS
During the year the Group entered into a collaboration agreement with Pride Century Ventures Limited
(“Pride”). A special purpose vehicle (“SPV”) was set up for the purpose of conducting the activities under the
collaboration agreement. On the basis that the Group was entitled to voting rights on a steering committee
which directs principally all of the relevant activities of the SPV, management have concluded the Group has
significant influence over the SPV. In line with the Group’s accounting policies and the requirements of IAS
28 Investments in Associates and Joint Ventures the SPV was initially recognised at cost. Management have
concluded that the initial cost of investment was £nil (Note 3.2).
22. 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.
9 2
Notes to the Consolidated Financial Statementsfor the year ended 31 December 2021 Independent Auditor’s Report
to the Members of Futura Medical plc (Parent Company)
OPINION
OUR OPINION ON THE PARENT COMPANY FINANCIAL STATEMENTS IS
UNMODIFIED
We have audited the parent company financial statements of Futura Medical Plc for the year ended
31 December 2021, which comprise 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 financial reporting framework that has been applied in their preparation is applicable law and
United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’ (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the parent company financial statements:
▶ give a true and fair view of the state of the parent company’s affairs as at 31 December 2021;
▶ have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
▶ 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 parent company
financial statements’ section of our report. We are
independent of the parent company in accordance
with the ethical requirements that are relevant to our
audit of the parent company financial statements
in the UK, including the FRC’s Ethical Standard as
applied to 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.
CONCLUSIONS RELATING TO GOING
CONCERN
We are responsible for concluding on the
appropriateness of the directors’ use of the going
concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the parent company’s ability to
continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw
attention in our report to the related disclosures
in the financial statements or, if such disclosures
are inadequate, to modify the auditor’s opinion.
Our conclusions are based on the audit evidence
obtained up to the date of our report. However, future
events or conditions may cause the parent company
to cease to continue as a going concern.
Our evaluation of the directors’ assessment of the
parent company’s ability to continue to adopt the
going concern basis of accounting included obtaining
management’s going concern assessments covering
the period to 30 June 2023. The parent company is not
a trading company and is reliant on the support of the
group to be able to continue as a going concern. Our
assessment of the group’s ability to continue as a going
concern included performing the following procedures:
▶ obtaining an understanding of relevant controls
over management’s going concern models,
including those over the inputs and assumptions
used in the models;
▶ corroborating key assumptions, such as assessing
the feasibility of securing new revenue contracts
and the likely timing and quantum of outlay of
expenditure and challenging management where
necessary;
▶ assessing the impact of not achieving expected
revenue and evaluating the impact if no revenue
was generated. We considered whether the
assumptions are consistent with our understanding
of the business and other audit work undertaken;
▶ assessing the accuracy of management’s past
forecasting by comparing management’s future
forecasts modelled in the prior year to the actual
results for the current year and considering the
impact on the going concern models;
▶ evaluating events that occurred post balance sheet
date and challenging management as to whether
these have been correctly reflected in the forecasts
prepared; and
▶ assessing the adequacy of related disclosures
within the annual report and accounts.
9 3
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Independent Auditor’s Report
to the Members of Futura Medical plc (Parent Company)
In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the company’s
business model including effects arising from macro-economic uncertainties such as Brexit and Covid-19, we
assessed and challenged the reasonableness of estimates made by the directors and the related disclosures
and analysed how those risks might affect the company’s financial resources or ability to continue operations
over the going concern period.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the parent company’s ability to
continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
The responsibilities of the directors with respect to going concern are described in the ‘Responsibilities of
directors for the financial statements’ section of this report.
OUR APPROACH TO THE AUDIT
OVERVIEW OF OUR AUDIT APPROACH
Overall materiality: £229,000, which represents 0.3% of the parent
company’s total assets as at 31 December 2021.
Key audit matters were identified as:
▶ Treatment of convertible loan note and warrants (new); and
▶ Impairment of investment in the subsidiary (same as previous
year).
Our auditor’s report for the year ended 31 December 2020 included
one key audit matter that has not been reported as a key audit
matter in our current year’s report. This relates to the material
uncertainty in relation to going concern. This was not identified
as a key audit matter in the current year because the group had
significantly increased cash balances at the current year end
compared to the prior year.
100% of the results for the year ended 31 December 2021 and 100%
of the assets and liabilities as at 31 December 2021 were included
within full-scope audit procedures. This approach is the same as the
previous year.
Materiality
Key audit
matters
Scoping
9 4
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the parent
company 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 parent company financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
In the graph below, we have presented the key audit matters,
significant risks and other risks relevant to the audit.
Description
Audit response
KAM
Disclosures
Our results
High
t
c
a
p
m
i
t
n
e
m
e
t
a
t
s
Going
concern
Impairment of the
investment in
subsidiary
Treatment of
convertible loan
note and warrants
Management
override of controls
l
i
a
c
n
a
n
fi
l
a
i
t
n
e
t
o
P
Low
Low
Extent of management judgement
High
Key audit matter
Significant risk
Other risk
9 5
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS
Independent Auditor’s Report
to the Members of Futura Medical plc (Parent Company)
KEY AUDIT MATTER
HOW OUR SCOPE ADDRESSED THE MATTER
TREATMENT OF CONVERTIBLE LOAN NOTE
AND WARRANTS
We identified the treatment of convertible loan note
and warrants as one of the most significant assessed
risks of material misstatement due to error.
During the year a £1.5m convertible loan note and
warrants were issued and converted to equity, with
total proceeds received from the warrants exercised
of £0.5m.
The convertible loan note and warrants are
accounted for in accordance with International
Accounting Standards (IAS) 32 ‘Financial
instruments: Presentation’. The process for
determining the accounting treatment and
classification of these financial instruments is
complex and requires significant management
judgement to be applied including bifurcation
the total proceeds received from the transaction
between the separate financial instruments issued.
RELEVANT DISCLOSURES IN THE
ANNUAL REPORT AND ACCOUNTS 2021
▶ Financial statements: Note 2.3, Note 3 and Note 19
of the consolidated financial statements.
▶ Audit committee report.
In responding to the key audit matter, we performed
the following audit procedures:
▶ obtaining an understanding and assessing
the design and implementation of the group’s
processes and relevant controls relating to:
identification of related contracts and determining
the appropriate classification as debt or equity;
▶ obtaining an understanding of management’s
assessment of the most appropriate classification
and accounting treatment in accordance with the
requirements of IAS 32;
▶ comparing the accounting policy applied to the
requirements of IAS 32;
▶ assessing the key assumptions used by
management in determining the appropriate
classification, reading the agreements and
comparing the key assumptions to the clauses
included in the contracts;
▶ recalculating an expected value of the warrant
reserve, by using an appropriate option-pricing
model and comparing this to the amount
calculated by management;
▶ recalculating an expected value of the bifurcation of
the total proceeds received and comparing this to
the amount calculated by management; and
▶ examining the disclosures made in the financial
statements with respect to significant estimates
and judgements made around the conclusion of
the classification and valuation of the instruments
issued and agreeing these to the requirements of
IAS 32.
OUR RESULTS
Based on our audit work, we are satisfied that the
assumptions made in management’s assessment
of the accounting treatment is in accordance with
IAS 32 and that the disclosure given in Note 19 is in
accordance with the underlying transactions that
occurred during the year.
9 6
KEY AUDIT MATTER
HOW OUR SCOPE ADDRESSED THE MATTER
IMPAIRMENT OF THE INVESTMENT IN
THE SUBSIDIARY
We identified impairment of the investment in Futura
Medical Developments Limited as one of the most
significant assessed risks of material misstatement
due to error.
The carrying value of the investment as at
31 December 2021 was £58.4m. The assessment of
impairment of the investment is required when
there is an indication of impairment. An indicator
of impairment arises due to the uncertainty in the
market potential of the MED3000 medical device post
EU approval.
The assessment of any potential impairment requires
management to make significant assumptions and
judgements about the recoverability of the investment
in particular around the future cash flows of the
subsidiary.
In responding to the key audit matter, we performed
the following audit procedures:
▶ obtaining management’s impairment review and
comparing the recoverable amounts to the value of
the investment;
▶ assessing the accounting policy applied for
compliance with IAS 36 ‘Impairment of Assets’;
▶ inspecting in detail the key underlying assumptions
within management’s impairment review, assessing
each of the key assumptions against market data,
where relevant and available, and performing
sensitivity analysis on each of these assumptions.
In prior years an internal auditor expert was used to
assist in the impairment assessment. We confirmed
that in the current year there had been no
significant changes in the objectives of the group,
nor any significant changes in the target industry of
the MED3000 medical device. The key assumptions
included:
RELEVANT DISCLOSURES IN THE
ANNUAL REPORT AND ACCOUNTS 2021
▶ Financial statements: Note 2
▶ Audit committee report.
− the discount rate used in the calculation;
− the market potential for the underlying products
and the group’s ability to obtain a share of this
market.
▶ corroborating the key inputs used in support of the
key underlying assumptions to relevant supporting
documentation;
▶ calculating fair value less costs of disposal by
considering the group’s market capitalisation
and compared this to the carrying value of the
investment in subsidiary; and
▶ 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’ and IAS 36 ‘Impairment of
Assets’.
OUR RESULTS
Based on our work we concluded that management's
judgement that no impairment was required as at 31
December 2021 was reasonable.
9 7
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Independent Auditor’s Report
to the Members of Futura Medical plc (Parent Company)
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of
identified misstatements on the audit and of uncorrected misstatements, if any, on the financial statements
and in forming the opinion in the auditor’s report.
Materiality was determined as follows:
MATERIALITY MEASURE
PARENT COMPANY
MATERIALITY FOR
FINANCIAL STATEMENTS
AS A WHOLE
We define materiality as the magnitude of misstatement in the financial
statements that, individually or in the aggregate, could reasonably be expected to
influence the economic decisions of the users of these financial statements. We
use materiality in determining the nature, timing and extent of our audit work.
Materiality threshold
£229,000, which represents 0.3% of total assets.
Significant judgements
made by auditor in
determining materiality
In determining materiality, we made the following significant judgements:
▶ The company’s total assets are considered the most appropriate benchmark
because its principal activity is that of a holding company, with the largest
financial statement line items being investments.
▶ This has been restricted to be lower than group materiality as it is a component
of the group.
Materiality for the current year is higher than the level that we determined for the
year ended 31 December 2020 to reflect the increase in group materiality.
PERFORMANCE
MATERIALITY USED TO
DRIVE THE EXTENT OF
OUR TESTING
We set performance materiality at an amount less than materiality for the
financial statements as a whole to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole.
Performance materiality
threshold
Significant judgements
made by auditor in
determining performance
materiality
£160,300, which is 70% of financial statement materiality.
In determining performance materiality, we made the following significant
judgements:
▶ our experience with auditing the financial statements in previous years
including the number of misstatements identified; and
▶ our risk assessment and consideration of the company’s control environment.
SPECIFIC MATERIALITY We determine specific materiality for one or more particular classes of
transactions, account balances or disclosures for which misstatements of
lesser amounts than materiality for the financial statements as a whole could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Specific materiality
We determined a lower level of specific materiality for the following areas:
▶ directors’ remuneration; and
▶ related party transactions.
COMMUNICATION OF
MISSTATEMENTS TO THE
AUDIT COMMITTEE
We determine a threshold for reporting unadjusted differences to the audit
committee.
Threshold for
communication
£11,500 and misstatements below that threshold that, in our view, warrant
reporting on qualitative grounds.
9 8
The graph below illustrates how performance materiality interacts with our overall materiality and the
tolerance for potential uncorrected misstatements.
OVERALL MATERIALITY
Total assets
£67,211,396
FSM
£229,000
3%
PM
£160,300
70%
TFPUM
£68,700
30%
FSM: Financial statements materiality
PM: Performance materiality
TFPUM: Tolerance for potential uncorrected
misstatements
OTHER INFORMATION
The directors are responsible for the other
information. The other information comprises the
information included in the annual report, 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 parent company
financial statements, our responsibility is to read the
other information and, in doing so, consider whether
the other information is materially inconsistent
with the parent company 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
parent company 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.
AN OVERVIEW OF THE SCOPE OF
OUR AUDIT
We performed a risk-based audit that requires an
understanding of the parent company’s business and
in particular matters related to:
UNDERSTANDING THE PARENT COMPANY, ITS
ENVIRONMENT, INCLUDING CONTROLS
▶ Evaluating the parent company’s internal control
environment, documenting controls relevant to
the audit and performing process walkthroughs
and documenting, and assessing, the relevant
controls covering the Key Audit Matters and
certain other risks in the financial reporting system
identified as part of our risk assessment.
WORK TO BE PERFORMED ON FINANCIAL
INFORMATION OF PARENT (INCLUDING HOW IT
ADDRESSED THE KEY AUDIT MATTERS)
▶ We identified the treatment of convertible loan
note and warrants and impairment of investment
in the subsidiary as key audit matters relating
to the parent company, and the procedures
performed in respect of this has been included in
the key audit matters section of our report.
PERFORMANCE OF OUR AUDIT
▶ The year-end audit was conducted remotely
due to Covid-19 restrictions and social distancing
requirements. This was supported through the use
of software collaboration platforms for the secure
and timely delivery of requested audit evidence.
CHANGES IN APPROACH FROM PREVIOUS PERIOD
▶ There are no changes in the scope of the current
year audit from the scope of that of the prior year.
9 9
Lorem ipsum
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Independent Auditor’s Report
to the Members of Futura Medical plc (Parent Company)
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 parent company financial statements are prepared is consistent with the parent company 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 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.
statements, the directors are responsible for
assessing 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 parent company or to
cease operations, or have no realistic alternative but
to do so.
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.
RESPONSIBILITIES OF DIRECTORS
FOR THE FINANCIAL STATEMENTS
As explained more fully in the statement of directors’
responsibilities, the directors are responsible for
the preparation of the parent company 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 parent company financial statements
that are free from material misstatement, whether
due to fraud or error.
In preparing the parent company financial
AUDITOR’S RESPONSIBILITIES
FOR THE AUDIT OF THE PARENT
COMPANY FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance
about whether the parent company 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 parent company financial statements.
A further description of our responsibilities for the
audit of the parent company 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.
EXPLANATION AS TO WHAT EXTENT THE AUDIT
WAS CONSIDERED CAPABLE OF DETECTING
IRREGULARITIES, INCLUDING FRAUD
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our responsibilities,
outlined above, to detect material misstatements
in respect of irregularities, including fraud. Owing
to the inherent limitations of an audit, there is an
unavoidable risk that material misstatements in
the financial statements may not be detected, even
1 0 0
though the audit is properly planned and performed
in accordance with ISAs (UK).
The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed
below:
▶ We obtained an understanding of the legal and
regulatory frameworks that are applicable to
the parent company and determined that the
most significant which are directly relevant to
the financial statements are those related to the
reporting framework, being the Companies Act
2006 and United Kingdom Generally Accepted
Accounting Practice, together with the QCA
Corporate Governance Code and the AIM Rules
for Companies. We obtained an understanding
of how the Futura Medical Plc is complying with
those legal and regulatory frameworks by making
enquiries of management. We corroborated our
enquiries through our review of board minutes
and correspondence received from regulatory
bodies.
▶ We assessed the susceptibility of the parent
company’s financial statements to material
misstatement, including how fraud might occur,
by making enquiries of management and those
charged with governance. We utilised internal
and external information to corroborate these
enquiries and to perform a fraud risk assessment.
We considered the risk of fraud to be highest
through the potential for management override of
controls. Our audit procedures involved:
− evaluation of the design and implementation
of controls that management has in place to
prevent and detect fraud;
− journal entry testing, with a focus on material
manual journals, including those posted
directly to cash and those impacting areas of
estimation uncertainty; and
− challenging assumptions and judgements
made by management in its significant
accounting estimates.
▶ In addition, we completed audit procedures to
conclude on the compliance of disclosures in
the annual report and accounts with applicable
financial reporting requirements.
▶ These audit procedures were designed to
provide reasonable assurance that the financial
statements were free from fraud or error. The
risk of not detecting a material misstatement
due to fraud is higher than the risk of not
detecting one resulting from error and detecting
irregularities that result from fraud is inherently
more difficult than detecting those that result
from error, as fraud may involve collusion,
deliberate concealment, forgery, or intentional
misrepresentations. Also, the further removed
non-compliance with laws and regulations is from
events and transactions reflected in the financial
statements, the less likely we would become aware
of it;
▶ We assessed the appropriateness of the collective
competence and capabilities of the engagement
team, including consideration of the engagement
team’s:
− understanding of, and practical experience
with, audit engagements of a similar nature
and complexity, through appropriate training
and participation;
− knowledge of the industry in which the parent
company operate; and
− understanding of the legal and regulatory
requirements specific to the parent company.
OTHER MATTER
We have reported separately on the group financial
statements of Futura Medical Plc for the year ended
31 December 2021. That report includes details of the
group key audit matters; how we applied the concept
of materiality in planning and performing our audit;
and an overview of the scope of our audit.
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.
JONATHAN OAKEY FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Crawley
25 April 2022
1 0 1
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Parent Company Balance Sheet
As at 31 December 2021
Company No. 04206001
Fixed assets
Investment
Current assets
Debtors – due within 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
Warrant reserve
Profit and loss account
Shareholders’ funds
As at
31 December
2021
£
As at
31 December
2020
£
Notes
2
58,427,010
53,616,120
3
10,764
10,764
8,773,622
8,784,386
9,934
9,934
410,417
420,351
4
(210,934)
8,573,452
(123,127)
297,224
67,000,462
53,913,344
5
574,302
491,254
66,378,003
52,814,090
165,868
(117,711)
165,868
442,132
67,000,462
53,913,344
The loss in respect of the Company for the year was £741,665 (2020: £385,969). The Parent Company financial
statements were approved and authorised for issue by the Board on 25 April 2022.
The Notes on pages 104 to 106 form part of these Parent Company financial statements.
By order of the Board
JAMES BARDER
Chief Executive
1 0 2
Parent Company Statement
of Changes in Equity
For the year ended 31 December 2021
Share
Capital
£
Share
Premium
£
Other
Reserves
£
Retained
Losses
£
Total
Equity
£
Note
At 1 January 2020
Total comprehensive loss for the year
Share-based payment
Shares issued during the year
5
Transactions with owners
At 31 December 2020
409,321 50,002,990
–
–
–
–
–
–
–
678,737 51,091,048
(385,969)
(385,969)
149,364
149,364
81,933
81,933
2,811,100
2,811,100
165,868
165,868
–
3,058,901
149,364
3,208,265
491,254 52,814,090
165,868
(442,132) 53,913,344
Total comprehensive loss for the year
Share-based payment
–
–
–
–
Shares issued during the year
5
63,503
11,661,978
–
–
–
(741,665)
(741,665)
181,822
181,822
–
11,725,481
Convertible loan notes and warrants
–
–
118,864
196,909
315,773
Convertible loan note conversion and
warrant exercise
Transactions with owners
At 31 December 2021
19,545
1,901,935
(118,864)
(196,909)
1,605,707
83,048
13,563,913
–
181,822
13,828,783
574,302 66,378,003
165,868
(117,711) 67,000,462
Share premium represents amounts subscribed for share capital in excess of nominal value, less the related
costs of share issues.
Warrants issued are held as a separate “warrant reserve” within equity. The warrant reserve will be transferred
to retained earnings on exercise or lapse, as it is treated as distributable profit from the point of issue.
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 104 to 106 form part of these Parent Company financial statements.
1 0 3
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Notes to the Parent Company
Financial Statements
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
£741,665 (2020: £385,969). 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.
1 0 4
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. 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 in the US is rejected, this could result in material impairment.
At 1 January 2020
Additions in the year
At 31 December 2020
Additions in the year
At 31 December 2021
£
50,178,526
3,437,594
53,616,120
4,810,890
58,427,010
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
31 December
2021
£
31 December
2020
£
10,764
9,934
1 0 5
Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS Notes to the Parent Company
Financial Statements
4. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Accruals
31 December
2021
£
31 December
2020
£
95,200
115,734
210,934
66,212
56,915
123,127
5. CALLED UP SHARE CAPITAL
Authorised
31 December
2021
Number
31 December
2020
Number
31 December
2021
£
31 December
2020
£
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
31 December
2021
Number
31 December
2020
Number
31 December
2021
£
31 December
2020
£
Ordinary shares of 0.2 pence each
287,150,971
245,626,926
574,302
491,254
Details of shares issued by the Company in the year and details of share options outstanding are given in
Notes 16 and 17 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.
1 0 6
Company Information
COMPANY NUMBER
04206001
DIRECTORS
John Clarke
James Barder
Angela Hildreth
Ken James
Jeff Needham
Jonathan Freeman
Non-Executive Chairman
Chief Executive Officer
Finance Director and Chief Operating Officer
Executive Director
Non-Executive Director1
Non-Executive Director2
COMMITTEE MEMBERS SERVING THROUGHOUT THE YEAR WERE:
REMUNERATION
COMMITTEE
Jonathan Freeman
John Clarke
Jeff Needham
AUDITOR
Grant Thornton UK LLP
First Floor
20 Valpy Street
Reading
Berkshire
RG1 1AR
PATENT ATTORNEY
Withers & Rogers LLP
2 London Bridge Road
London
SE1 9RA
NOMINATIONS
COMMITTEE
John Clarke
Jonathan Freeman
REGISTRAR
Link Group
Unit 10
Central Square
29 Wellington Street
Leeds
LS1 4DL
PUBLIC RELATIONS
ADVISER
Optimum Strategic
Communications
8 Devonshire Square
Spitalfields
London
EC2M 4PL
AUDIT COMMITTEE
Jonathan Freeman
John Clarke
SECRETARY AND
REGISTERED OFFICE
Angela Hildreth
Futura Medical plc
Surrey Technology Centre
40 Occam Road
Guildford
Surrey
GU2 7YG
NOMINATED ADVISER
AND BROKER
Liberum Capital Limited
25 Ropemaker Street
London
EC2Y 9LY
PRINCIPAL BANKER
HSBC Bank
12A North Street
Guildford
GU1 4AF
1. Appointed 8 October 2021
2. Appointment ended 31 December 2021
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Futura Medical plc Annual Report 2021FINANCIAL STATEMENTS F
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Futura Medical plc
Surrey Technology Centre
40 Occam Road
Guildford
Surrey
GU2 7YG
Tel: +44 (0) 1483 685 670
Fax: +44 (0) 1483 685 671
Email: info@futuramedical.com
Web: www.futuramedical.com