I don’t want to get drawn too much on timings, because we haven’t as yet discussed the results with the regulatory authorities, but we have taken regulatory advice since the results came out and we think there is the possibility for an expedited review with, actually, a lower level of data

Ken James, Futura’s head of R&D

So, tell us about the company

Futura Medical PLC (LON:FUM) has created a technology called DermaSys that delivers active pharmaceuticals through the skin barrier rapidly and effectively.

In the case of its lead product, MED2005, the payload was glyceryl trinitrate (GTN), normally used to treat heart failure and high blood pressure. Futura combined the two to create a rapid onset gel that tackled erectile dysfunction.

Results from a phase III clinical trial of MED2005 surprised in a way not envisioned by researchers. However, as we’ll see below, rather than being a disappointment, the outturn could make it easier for Futura to get a product to market.

The company is also developing TPR100, which utilises DermaSys to deliver diclofenac, a painkiller and anti-inflammatory usually taken in pill form.

Phase III trial

The December 10 update delivered what can best be described as a set of nuanced results. For while MED2005 (DermaSys + GTN) showed strong efficacy, excellent safety, rapid speed of onset, the placebo had a “highly statistically significant” impact on the men in the control group of the experiment.

Normally, a placebo is a sugar pill, liquid or gel with no medical benefit whatsoever. However, in the Futura clinical assessment, researchers used DermaSys as the supposed inert substance. As Futura said the results from the control group were highly statistically significant, this would tend to rule out a small lift sometimes observed called the placebo effect.

The outcome meant that while MED2005 scored well on most trial elements (efficacy, safety, and speed of onset), it failed to meet its clinical endpoint of being statistically superior to the placebo gel.

That’s not to say the trial, or the technology was a failure. According to Futura, its regulatory submission has become simpler thanks to the rather odd outcome. For instead of submitting the MED2005 combination for scrutiny by the watchdogs, the firm intends to submit just the DermaSys part of the formulation for approval. In doing so, it will put DermaSys forward as a medical device rather than a pharmaceutical product.

WATCH: Ken James in conversation with Andrew Scott 

Why as a medical device? Well, the results from DermaSys-only cohort showed the men involved responded to a mechanical and physical effect rather than to the chemical substance GTN.

That mechanical and physical effect on the body means DermaSys conforms to the definition of a medical device rather than a drug.

“The device regulations, generally speaking, are less arduous than the drug regulations,” said Ken James, Futura’s head of R&D in a recent interview with Proactive’s Andrew Scott.

“It tends to be a faster time-frame to approval. I don’t want to get drawn too much on timings because we haven’t as yet discussed the results with the regulatory authorities, but we have taken regulatory advice since the results came out and we think there is the possibility for an expedited review with, actually, a lower level of data.”

City fundraiser

The med-tech group raised £3.25mln with backing from private and professional investors on December 23.

The Swiss bank Lombard Odier chipped in just over £2mln, acquiring shares at 8p, while users of the Primary Bid platform contributed the remainder in an oversubscribed share offer. Lombard, which received 9.4mln warrants vesting at 40p, will see its stake in Futura rise to 19.31% following the additional investment.

The cash injection will be used to bolster the company’s working capital requirements as it seeks regulatory for DermaSys.

Bringing in a decent slug of cash in the dying days of the year, traditionally a no-go period for City fundraisers, suggests Futura has more backing than the current share price would suggest. And the warrant attached to the Lombard shares – exercisable from 40p – implies both Futura and the Swiss bank see plenty of upside from current levels. Certainly, the mood on the day of the two-pronged share placing was more ebullient than had been with the shares surging 15% to go over 10p each.

What the broker says

Liberum reckons Futura now has sufficient cash for the next 12 months. “The board does not believe that significant costs will be incurred to pursue the European regulatory pathway and believes the same to be true of the US but cannot confirm this until after meeting with the FDA [Food & Drug Administration], something it expects to happen by the end of the first quarter of 2020,” it added.

While Liberum stuck its ‘buy’ rating and 60p price target under review, one suspects it has done so while it assesses the impact of the share dilution on the valuation of the business.