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RNS Number : 3721V
Futura Medical PLC
14 April 2021
Full Year Results for the year ended 31 December 2020
Futura Medical plc (AIM: FUM) ("Futura" or the "Company"), a
pharmaceutical company developing a portfolio of innovative
products based on its proprietary, transdermal DermaSys(R)
technology and currently focused on sexual health and pain, is
pleased to announce its audited results for the year ended 31
December 2020.
Key highlights
Operational highlights
MED3000 - Topical fast acting treatment for erectile dysfunction
("ED")
-- Significant progress made with recent recommendation by EU Notified Body1 for approval of MED3000 as a
breakthrough, fast acting, clinically proven treatment for erectile dysfunction:
-- In February 2020 formal proceedings commenced for approval as a medical device available throughout EU
without the need of a doctor's prescription ("OTC").
-- In July 2020, Futura submitted the Technical Dossier for MED3000 for marketing approval.
-- In August 2020 positive audit opinion received for Futura's Quality Management Systems ("QMS").
-- EU certificate expected before the end of May 2021 under Medical Device Regulation.
-- De Novo medical device status for MED3000 confirmed by US Food and Drug Administration ("FDA") in February 2020
pre-submission meeting.
-- Four pre-submission meetings held to determine design of small supplemental clinical trial (known as
"FM71") and Human Factors study required by FDA for OTC marketing approval in USA.
-- Detailed planning and preparatory activities for FM71 following receipt of final minutes from FDA.
-- Specialist corporate advisors retained in July 2020 to progress commercialisation of MED3000:
-- Joint collaboration agreement for China and South East Asia with 50/50 share of profits signed in March
2021 with expected additional R&D costs of up to GBP4 million being fully met by Asian partner.
-- Discussions progressing with a number of other parties for licensing rights for MED3000 in other
countries.
CBD100 - Futura's advanced proprietary transdermal technology,
DermaSys(R) for transdermal delivery of Cannabidiol
-- Initial laboratory and optimisation work on a cannabidiol gel under the joint venture collaboration agreement
with CBDerma Technology Limited completed in August 2020.
-- In vitro studies supporting a stable formulation with enhanced permeation through the skin of cannabidiol.
-- An intellectual property application filed in August 2020 covering a novel and inventive formulation with recent
progression to PCT2 patent application.
-- Advisors recently retained to explore commercial opportunities.
TPR100 - Futura's advanced proprietary transdermal technology,
DermaSys(R) for transdermal delivery of diclofenac for the pain and
inflammation associated with sprains, strains and bruises and soft
tissue rheumatism
-- Completion of additional laboratory work required by the UK Medicines and Healthcare Products Regulatory Agency
("MHRA") to support the UK submission made by partner Thornton & Ross supporting improved skin permeation of
TPR100 compared to market leading products.
-- Scientific advisory meeting held with MHRA confirming the need of a Phase 3 study to support the improved skin
permeation and potential potency of TPR100 including potential superior efficacy claims.
-- Futura is exploring the feasibility of a clinical study that would satisfy the Phase 3 requirements for both UK
and USA marketing approval.
Financial highlights
-- GBP2.41 million net loss in the period (2019: net loss GBP8.92 million).
-- R&D tax credit receipt for 2020 year of GBP0.52 million expected mid-2021.
-- Cash resources of GBP1.02 million at 31 December 2020 (2019: GBP2.51 million).
-- Futura received GBP1.50 million through the issuance of convertible loan notes to Atlantis via HT Riverwood Fund,
with a three year conversion period at a premium price of 20 pence.
-- Futura also received GBP0.50 million following the exercise of warrants by Atlantis via HT Riverwood Fund,
issuing 2,272,727 shares at an exercise price of 22 pence per warrant.
John Clarke, Chairman of Futura Medical, commented: " This year
against the backdrop of the turbulence and challenges posed by the
COVID-19 pandemic, the team at Futura has been resolutely focused
on gaining regulatory approval for MED3000 in Europe and the USA.
We look forward to receiving the EU certificate to enable MED3000
to be marketed as a breakthrough, fast acting, clinically proven
OTC treatment for ED shortly as well as commencing the remaining
clinical work we believe will also deliver a similar approval for
MED3000 in the USA."
James Barder, Chief Executive of Futura Medical, commented:
"Futura has achieved major milestones in terms of securing
partnering for the development and commercialisation of MED3000 in
China and South East Asia in a deal structured to capture
significant long-term value, as well as the EU Notified Body's
recommendation to certificate MED3000 for Class 2B approval as a
medical device for ED treatment under the European Medical Device
Regulations."
"The Company is well positioned to deliver further positive news
through 2021 especially around commercialisation of MED3000 and our
objective to deliver a long term and sustainable revenue for
shareholders."
Webcast
The Executive Team will host a webcast of the presentation which
will be available within the Investor Centre section of the Futura
company website at www.futuramedical.com at 10am BST on 14 April
2021.
1. Notified Bodies are organisations designated by EU countries
to oversee the approval of medical devices within the EU and the
UK.
2. Patent Cooperation Treaty.
For further information please contact:
Futura Medical plc
James Barder, Chief Executive
Angela Hildreth, Finance Director and COO
Email: Investor.relations@futuramedical.com
Tel: +44 (0) 1483 685 670
www.futuramedical.com
Nominated Adviser and Sole Broker:
Liberum
Richard Lindley/ Euan Brown/ Kane Collings
Tel: +44 (0) 20 3100 2000
For media enquiries please contact:
Optimum Strategic Communications
Mary Clark/ Eva Haas/ Hollie Vile
Email: futuramedical@optimumcomms.com
Tel: +44 (0) 203 922 0891
About Futura Medical plc
Futura Medical plc (AIM: FUM), is a pharmaceutical company
developing a portfolio of innovative products based on its
proprietary, transdermal DermaSys(R) technology. Each DermaSys(R)
formulation is separately patented and specifically tailored for
the selected indication and application, as well as being optimised
for clinical efficacy, safety, administration and patient
convenience. The products are developed for the prescription and
consumer healthcare markets as appropriate. Current therapeutic
areas are sexual health, including erectile dysfunction, and pain
relief. Development and commercialisation strategies are designed
to maximise product differentiation and value creation whilst
minimising risk.
MED3000 is Futura's topical gel formulation that is a
breakthrough treatment for erectile dysfunction (ED) through a
unique evaporative mode of action. Futura has conducted a Phase 3
study using MED3000 in ED, referred to as "FM57". This was a 1,000
patient, dose-ranging, multi-centre, randomised, double blind,
placebo-controlled, home use, parallel group study delivering
highly statistically significant results compared to pre-treatment
baseline, consistently meeting all co-primary endpoints of IIEF,
SEP2 and SEP3 (internationally accepted clinical trial endpoints in
ED) with over 60% of patients experiencing a clinically meaningful
improvement in their ED. MED3000 also begins to work immediately in
some patients, with 60% of patients seeing onset of their erection
within 10 minutes of application.
Futura is based in Guildford, Surrey, and its shares trade on
the AIM market of the London Stock Exchange.
www.futuramedical.com
Chairman and Chief Executive's Review
Futura is an innovative R&D company with a strategy to
develop a pipeline of late stage, novel products borne out of its
proprietary patented transdermal technology platform, DermaSys(R).
The Company is currently focused on sexual health and pain. It
seeks to develop products with high tolerability, safety and
convenience of administration that solve clinically meaningful
problems, including dissatisfaction with existing treatments, to
improve health, quality of life and well-being for patients
worldwide. Whilst we apply strict pharmaceutical principles and
discipline to both the R&D and manufacturing process to all our
product candidates, we also aim to ease access to our treatments
for patients, for example through the registration and ultimately
availability as over-the counter ("OTC"), non-prescription,
products.
This year against the backdrop of the turbulence and challenges
posed by the COVID-19 pandemic across the world, the team at Futura
has been resolutely focused on execution, particularly the
regulatory submission for MED3000 in Europe (completed H2 2020) and
the USA (an ongoing iterative consultation and review process), as
well as advancing activities for its commercialisation. At the same
time, we also progressed additional pipeline product candidates,
such as our CBD100 cannabidiol formulation, that will address
attractive and substantial markets.
These efforts are now starting to bear fruit, most recently
culminating in the March 2021 recommendation for approval of
MED3000 from the EU Notified Body, a transformational milestone for
the Company. Once EU certification and the resultant CE mark is
granted, expected before the end of May 2021, Futura's
breakthrough, fast acting topical gel formulation MED3000, will
become the first clinically proven, pan-European topical OTC
treatment for erectile dysfunction ("ED") available without a
doctor's prescription (i.e. OTC).
Due to post-Brexit arrangements, the EU CE mark can be used to
market the product in Great Britain(1) until 30 June 2023 by which
time a specific UKCA mark has to be obtained. This will be a
streamlined process since it is understood the UK application can
bridge to the EU approval.
We look forward to further MED3000 marketing approvals in
multiple regions across the world, including the USA and Asia.
Expedited Medical Device Registrations may be possible in most
Middle East, Far East, African and Latin American countries based
on the EU CE mark and we will be targeting both further regulatory
approvals as well as commercial launch in a number of countries
.
Futura retained specialised corporate advisers in Q3 2020 to
facilitate active commercial discussions for MED3000 with potential
licensing and marketing partners. In early March 2021 we announced
a joint collaboration and investment to commercialise MED3000 in
China and South East Asia, a significant market for ED. Our new
partners have extensive experience, resource, and strong
pharmaceutical connections in the Asia Region which we are
confident will maximise the market reach and opportunities for
MED3000 in those geographies, creating significant long term value.
Key components of this partnership mean that Futura shares 50% of
MED3000 profits from the Region without further R&D spend (from
Futura). In addition, the Company has received GBP2 million cash
from partner investment in Futura. This partnership is an example
of Futura's strategy to maximise value creation by partnering or
out licensing its products at key inflection points with agreements
that look to capture long term and sustainable returns for the
Company.
As a small innovative company Futura is adaptable and nimble,
allowing us to take advantage of new opportunities and strategies
as those opportunities arise as well as evolve to meet challenges.
We would like to thank all Futura's employees for their tremendous
efforts and focus during the year and shareholders for their
ongoing support. We have been able to leverage the lean,
semi-virtual working processes at Futura to adapt to the pandemic
efficiently and safely, whilst making significant progress for our
products. Post-pandemic, Futura will be adopting a partly remote
working model moving forward.
Operational Review
DermaSys(R) - Our proprietary patented transdermal technology
platform
Futura's unique patented technology DermaSys(R) is designed to
deliver clinically proven effective medical treatments via the
skin.
DermaSys(R) is a versatile and bespoke technology. Each product
gel is uniquely formulated using the DermaSys(R) platform with
partition and diffusion 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.
A transformational year with EU recommendation for approval of
MED3000 - Topical gel for erectile dysfunction ("ED")
MED3000 is a formulation of the proprietary technology
DermaSys(R), developed specifically for the treatment of ED. Data
from a Phase 3 clinical study "FM57" has supported the regulatory
submission for MED3000 as a medical device in Europe with
clinically proven claims for the treatment of ED. The studies have
demonstrated that MED3000 has the potential to be a highly
differentiated product by addressing significant unmet needs,
across all patient severities in the $5.6 billion ED market(2) ,
thanks to its rapid 10 minute speed of onset enabling spontaneity
for both partners, significant clinical benefits alongside low side
effects and no interactions with alcohol or food, as well as
providing a potential treatment option for around 20% of ED(3)
patients contra-indicated from using existing ED therapies. Futura
also believe MED3000 data approaches the efficacy of current first
line therapy but with significantly lower adverse events and will
be of high interest to the medical community for those patients who
are seeking a treatment that provides them and their partners
spontaneity through MED3000's very rapid onset of action along with
a very low side-effect profile. Its excellent safety profile makes
it ideally suited to become a unique topical formulation available
without a doctor's prescription.
ED disrupts the lives of at least 1 in 5 men globally(4) ,
affecting the sexual and emotional health of around 23 million men
and their partners in the USA, and 20 million men in the UK,
France, Italy and Germany alone. The prevalence of ED amongst adult
males(5) is estimated to be 340 million worldwide, with China
ranked first and USA ranked fourth. Of note, the prevalence of ED
in young men is increasing; now as high as 30%(6) . There has been
little innovation in ED treatments for over ten years and many
patients continue to suffer dissatisfaction with existing
treatments, a statement frequently made by Key Opinion Leaders in
the field of sexual medicine.
FM57 Study
FM57, the Phase 3 study conducted with MED3000 was a
1,000-patient study including approximately 60 centres across nine
Central and Eastern European countries. FM57 was a dose ranging,
randomised, double blind, home use, parallel group clinical trial.
Patients being enrolled into FM57 for the initial four weeks had to
attempt intercourse on at least four occasions to establish the
severity of their ED, known as the pre-treatment 'baseline'.
FM57 Results - MED3000 shown to be an extremely effective
treatment for ED with an excellent safety profile
In study FM57 all three co-primary endpoints (IIEF-EF, SEP2 and
SEP3; internationally accepted clinical trial endpoints in ED) were
statistically significantly achieved against baseline
(pre-treatment) data in addition to important, supporting secondary
endpoints in terms of efficacy, speed of onset, duration of action
and clinically meaningful differences in patient benefit.
FM57 demonstrated that MED3000 has the potential to be a highly
effective, clinically proven, topical treatment for ED. MED3000 has
a unique evaporative mode of action which the Company believe
stimulates nerve endings in the glans penis to cause an
erection.
MED3000 results demonstrated a highly statistically significant
improvement (p<0.001) in erectile function across 'pooled'
patient severities (mild, moderate, and severe) as well as being
statistically significantly superior within the separate mild,
moderate and severe patient groups, compared to before treatment
baseline, along with an excellent safety profile.
Importantly, MED3000 had a significant clinically meaningful
effect in 60% of patients as calculated using the Rosen and Araujo
statistical method, a standard assessment technique for measuring
Patient Reported Outcomes recognised and accepted by leading ED
experts. Such Patient Reported Outcomes in ED are key evaluation
criteria for regulators as well as physicians and their patients.
MED3000 begins to work immediately in some patients, with 60% of
patients seeing onset of their erection within 10 minutes of
application, substantially faster than PDE5i's (oral tablets) with
significant benefits for spontaneous rather than pre-planned sexual
intercourse.
Overall, the level of efficacy was broadly equivalent to lower
doses of current oral ED treatments. Safety and tolerability data
were also highly positive, with no serious adverse events recorded
in any patient, or their female partners.
MED3000 - Medical device regulatory pathway
During 2020 the Company navigated the complex formal regulatory
proceedings for MED3000 in both Europe and the USA. Regulatory
procedures, timelines and approaches differ by region.
Europe: In March 2021, Futura announced that the EU Notified
Body had successfully completed its review of the Company's
Technical Dossier for MED3000 with a recommendation to approve
MED3000 for the medical device class and indication as applied for
in July 2020. A Class 2B approval is by definition an approval
allowing marketing of MED3000 as a non-prescription treatment
across the European Union. European approval for MED3000 will be
final upon issuance of a Medical Device Regulation certificate by
the panel, which is expected before the end of May 2021.
In order to obtain pre-marketing clearance within the EU under
the new Medical Device Regulations, two requirements have to be
met: Submission of Technical Documentation which includes
sufficient efficacy, safety and quality data and demonstration that
the Company can operate to a high standard of quality through a
Quality Management System ("QMS").
In July 2020, Futura submitted the Technical Dossier for MED3000
for treatment of ED under the European Medical Device Regulation
for marketing approval in Europe by an EU Notified Body as a Class
2B medical device. The Technical Dossier included data in support
of quality, safety and efficacy of MED3000.
Once EU certification and the resultant CE mark is granted,
MED3000 will become the first pan-European topical OTC treatment
for ED. This paves the way for approval in many countries around
the world, including in the Middle East, Africa, the Far East and
Latin American regions which allow "fast-track" review based on
recognition of the EU CE mark. The CE mark will also be recognised
in Great Britain until 30 June 2023 and in the period leading up to
this Futura will secure the new post-Brexit UKCA mark. This will be
a streamlined process since it is understood the UK application can
bridge to the EU approval.
USA: FDA's guidance documents indicate that their preference is
to adopt an interactive and iterative approach to data requirements
through pre-submission meetings with sponsors. According to FDA,
careful considerations of their feedback may improve the quality of
subsequent submissions, shorten total review times and facilitate
the development process for new devices. Thus, our productive and
positive pre-submission meetings were held during 2020 and early
2021 to discuss existing FM57 Phase 3 clinical data, pathway to OTC
status and any additional clinical and non-clinical
requirements.
Summarising activity to date: it has been established that an
application may be made for MED3000 as a medical device for ED
treatment, with a De Novo Classification. FDA requires an
additional 6-month confirmatory clinical study, known as "FM71",
with MED3000 taking a "least burdensome approach" with detailed
design now agreed. A short, non-clinical, Human Factors Study,
testing ease of patient understanding of an OTC label and product
administration and use is also requested to support the regulatory
submission and facilitate OTC status as well as a finalised OTC
product label.
A 5th pre-submission meeting with FDA is planned for H2 2021 to
define and confirm the detail of the work required for OTC
application and Futura is targeting completion of the FM71 study
and Human Factors study for Q2 2022.
US confirmatory clinical study, FM71
FM71 is a confirmatory clinical study with MED3000 designed to
provide supplementary 6-month efficacy data with a "least
burdensome" approach and modest cost.
FM71 will be of a 6-month duration (24 weeks) versus three month
duration for FM57 to reassure the FDA that efficacy does not
diminish over a longer period of time, although it is Futura's
belief that this is unlikely as in the FM57 study efficacy improved
from the first to third month of patient use.
Approximately 100 patients in total will be recruited including
a mix of mild, moderate and severe ED sufferers. Recruited patient
population will include 20 African American patients (from a
leading US medical centre) and 80 patients recruited from Eastern
Europe where sites include some of the same centres used in the
FM57 trial. No placebo is required hence the study is relatively
small in size compared to FM57 where the Company recruited in
excess of 1000 patients. The primary endpoints are a significant
change from baseline and exceeding a minimal clinically important
difference calculated using the Rosen et al statistical method, a
standard assessment technique for measuring Patient Reported
Outcomes. Both endpoints were previously met for MED3000 over the
12-week duration of study FM57. Additional statistical study design
has been agreed to support a fast speed of onset claim of 5, 10 or
15 minutes (10 minutes was achieved in FM57).
A Tadalafil 5mg (the active in Cialis(R)) comparator arm is
included for informational purposes only to assess relative safety,
speed of onset and overall efficacy; non-inferiority of MED3000
against Tadalafil is not required to be shown. This will more
accurately enable FDA to determine the relative benefit/risk ratio
of MED3000 versus a commercially available comparator.
MED3000 commercialisation plans
As regulatory processes continue Futura has been working with
retained specialised corporate advisers on active commercial
discussions with potential licensing and marketing partners in line
with an agreed process being managed by the advisers.
Futura announced in late-October 2020 that it had given priority
to certain negotiations for one specific region for the exclusive
marketing rights for MED3000, with certain parties. These
discussions were formalised in early March 2021 with the
announcement of investment and joint collaboration with Co-High
Investment Management and certain subsidiaries of Atlantis Group to
commercialise MED3000 in China and South East Asia.
Futura is making steady progress on commercial discussions for
MED3000 marketing rights in multiple other regions. Partnering
discussions generally follow the path of interested parties
submitting a non-binding offer which is followed by an invitation
for due diligence of full MED3000-related data under a Confidential
Disclosure Agreement and thereafter a formal offer which if
accepted contractually by Futura would be binding. Currently a
number of interested parties have made submissions at the
non-binding offer stage with further offers expected although there
can be no guarantee of deal completion at this stage. The Company
look forward to providing further updates in the coming months.
Futura is committed to prioritising commercial deals that will
deliver long term and sustainable value to the Company allowing a
long-lasting growth franchise to be built around the pipeline of
DermaSys(R) formulated products and in particular MED3000.
An initial UK patent was filed in December 2019 around MED3000's
clinically significant and novel findings shown in FM57. This was
supplemented with a further UK patent filing in August 2020
following a complete analysis of all the data sets provided by FM57
and a head-to-toe strategic review conducted by independent
pharmaceutical patent specialists retained by Futura. An initial
examination report conducted by the UK patent office, requested at
the time of the first UK filing by the Company, supports the
patentability of the application which is an important first step
in the patent approval process. In October 2020 further patent
filings were made and in particular a Patent Cooperation Treaty
("PCT") application taking priority from the two earlier UK
applications. The PCT currently has 153 contracting countries where
the Company can seek patent protection claiming priority from an
original application made in any one of the countries that are
signatories to the PCT, such as the UK. In Q2 2022 national
applications will need to be made and the Company, in consultation
with its commercial partners, will decide those countries in which
to file applications and considered necessary to protect the
commercial interests of MED3000. If national applications are
successful this will provide patent protection until 2040.
Co-High licensing agreement - China and South East Asia
In March 2021 Futura entered into GBP1.5 million convertible
debt and GBP0.5 million of warrants financing transactions with HT
Riverwood Multi-Growth Fund ("Riverwood"), a fund managed by
Atlantis Investment Management Limited ("Atlantis"), a leading
asset manager, which has provided the Company with GBP2 million in
cash.
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.
Additionally, Futura entered into a licensing agreement with
Pride Century Ventures, a special purpose vehicle owned by Co-High
Investment Management Limited ("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.
Co-High will provide funding currently estimated to be up to GBP4
million for the expected remaining R&D work required to gain
approval of MED3000 throughout the region. Futura will be entitled
to 50% of regional profits from the commercialisation of MED3000
(the "Joint Collaboration") including any profits derived from
local partner agreements within the Region.
Atlantis is a leading international asset management company
with a focus in the Greater China Region and South East Asia.
Co-High is a specialist private equity company in the Greater China
region and invests into 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.
TPR100 - Futura's advanced proprietary transdermal technology,
DermaSys(R) for transdermal delivery of diclofenac for the pain and
inflammation associated with sprains, strains and bruises and soft
tissue rheumatism
TPR100 is a proprietary DermaSys(R) product formulation
engineered to achieve targeted and controlled permeation of
diclofenac through the skin for local relief of pain and
inflammation associated with soft tissue damage caused by sprains,
strains, bruises and rheumatism. It is partnered for manufacturing
and distribution in the UK with Thornton & Ross, one of the
UK's largest consumer healthcare companies and a subsidiary of
STADA AG.
Futura has completed additional laboratory formulation
adjustment and work specifically around the skin permeation
characteristics of TPR100 in response to the UK MHRA's questions
after Thornton & Ross' initial filing of a UK marketing
authorisation application.
At a recent scientific advisory meeting with 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.
Since Voltaren(R) 1% has recently gained OTC status in the USA a
new and attractive potential market opportunity has arisen in that
geography for TPR100. Futura is therefore exploring designs, funds
permitting, for a clinical study to achieve approval for a superior
product without a prescription in the USA as well as fulfilling
data requirements for UK and EU regulatory submissions as a topical
pain relief and anti-inflammatory treatment.
Commercial discussions with several potential distribution
partners for other countries continue however any further licensing
deals are expected to be after a regulatory approval is
achieved.
CBD100 - Futura's advanced proprietary transdermal technology,
DermaSys(R) for the delivery of Cannabidiol
CBD100 is part of Futura's joint venture collaboration with
CBDerma Technology Limited to explore the application of Futura's
advanced proprietary transdermal technology, DermaSys(R) for the
delivery of Cannabidiol.
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 advisors have
extensive knowledge, expertise and investments in plant derived
product manufacturing.
Completion of initial laboratory and optimisation work on CBD100
was announced in August 2020.
As part of a robust formulation process using strict
pharmaceutical development principles, Futura carried out extensive
DermaSys(R) cannabidiol formulation work and initial in vitro tests
on human epidermis during 2020. The studies 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 used in gels and other topically applied forms. CBD100
was specifically formulated to minimise this issue and has shown
encouraging early stability work, which is expected to ensure
potency is retained during shelf-life.
The Futura R&D team's development work on CBD100 is further
evidence of the broad utility and power of the DermaSys(R) system
for effective and controlled transdermal delivery of a wide range
of active pharmaceutical ingredients.
An intellectual property application was made in August 2020
covering various unique aspects of the CBD100 gel formulation.
Initial patent office examination has suggested that CBD100 is a
novel and inventive formulation and the patent application is
expected to progress into the international Patent Cooperation
Treaty (PCT) stage in Summer 2021.
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 c annabidiol
products is growing rapidly. A report by Reports and Data estimates
that the market for c annabidiol products is forecast to grow from
$1bn in 2018 to $16bn by 2026, at a CAGR of 27.7%, during the
forecast period. The market is primarily driven by the increase in
the usage of c annabidiol in medical applications, supplements,
beverages and skin care.
In conjunction with its joint venture partner Futura is
exploring the potential of CBD100 from both a development and
commercial standpoint. External advisors with a strong commercial
track record, experience and credentials in the cannabis-derived
active ingredients market have been appointed. A structured process
is ongoing for validating and understanding CBD100's market
potential, where the best commercial opportunity lies and then
development requirements prior to planning and execution of further
work. The finalisation of plans will be defined by ongoing
regulatory changes that are occurring with respect to marketing
authorisation requirements for cannabidiol. For example, the EU is
set to provide a regulatory update for cannabidiol use in cosmetics
during Q1 2021. Futura plans to update shareholders in due
course.
In light of increasing regulation, a gel that has been
formulated using strict pharmaceutical development principles with
strong delivery characteristics, stability and high quality could
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 however it is likely
that a " cosmeceutical " will be developed first.
The route to an approved cosmetic product is expected to be
fastest where there is a large existing market opportunity but with
lower barriers to entry where quality and differentiated brand
attributes are important. Whilst a pharmaceutical development route
for an effective cannabidiol gel remains of significant potential,
it also involves higher risk and cost until the clinically proven
benefits of cannabidiol and specific indications to which it is
applicable are better understood.
Financial Review
The GBP2 million cash investment arising from the MED3000
collaboration agreement for China and South East Asia post year end
in March and April 2021, in addition to a year end cash balance of
GBP1.02 million and usual refund of R&D tax credits of GBP0.5
million, will fund the Company's working capital through to Q1
2022, with a focus on formalising further MED3000 partnering and
license agreements in additional regions, particularly where
marketing approval is near-to-medium term.
Outlook
Futura has achieved major milestones in terms of securing
partnering for the development and commercialisation of MED3000 in
China and South East Asia in a deal structured to capture
significant long-term value, as well as the EU Notified Body's
recommendation to certificate MED3000 for Class 2B approval as a
medical device for ED treatment under the European Medical Device
Regulations.
The Company is well positioned to deliver further positive news
through 2021. Futura expect the final certificate of EU CE mark
approval for MED3000 by the end of May and the team is focused on
preparation and execution of the confirmatory clinical study and
non-clinical studies to finalise an OTC label for the regulatory
submission for MED3000 in the USA which the Company aims to achieve
in 2022. Furthermore, given the potential for expedited Medical
Device Registrations possible in most Middle East, Far East,
African and Latin American countries based on EU CE Mark Futura
look forward to achieving additional progress in a worldwide roll
out of registrations followed by commercialisation of MED3000 as a
fast-acting topical ED treatment without the need for a physician
prescription. The rapidly solidifying potential of MED3000's value
also means that the Company look forward to being able to update
shareholders on the progress of commercial licensing discussions in
the coming months.
John Clarke James Barder
Chairman Chief Executive
References
1. Under Brexit terms Northern Ireland is exempt.
2. Manufacturers' Selling Prices 2018: Data available for 75
countries, IQVIA IMS Health.
3. Cello Health Consulting research conducted in the US, France
and Germany, commissioned by Futura Medical.
4. EMA, Withdrawal assessment report for Viagra, 2008.
5. Global Data Epidemiological Analysis 2020
6. Nguyen Sex Med Rev. 2017 Oct, vol 5, 508-520
Financial Review
As outlined in the Chairman and Chief Executive's Review, during
the year Futura focused its financial resources towards approval
and commercialisation of its fast-acting topical treatment for ED.
As the FM57 study was concluded, activities shifted toward
Regulatory and Manufacturing. With the majority of the work
conducted or overseen by in-house personnel already in place,
external 3rd party costs were significantly lower than in the prior
year.
A fundraise was completed in January 2020 resulting in gross
funds of GBP3.25 million through the combination of subscription
for shares through PrimaryBid and institutional placing to allow
the Company to proceed with MED3000 regulatory approval as a
medical device in the EU and US.
In March 2021 the Company was notified that MED3000 had been
recommended for approval as a Class 2B medical device in Europe and
the FDA confirmed that a further, smaller, supplementary study was
required for approval in the USA.
In addition, in March 2021, the Company concluded a further
funding transaction which resulted in GBP1.5 million received upon
the issuance of convertible loan notes and in April 2021 the
Company received an additional GBP0.5 million following the
exercise of warrants by HT Riverwood Fund.
Revenue
The Company continued to focus its financial and human resources
on late stage clinical development of its fast-acting topical
treatment for ED and accelerate progress towards achieving a
significant, continuous revenue stream within a few years. No
revenue was recognised in the period.
Research and Development Costs
Research and Development costs for the period ended 31 December
2020 were GBP1.93 million, compared to GBP10.05 million for the
period ended 31 December 2019. The decrease of GBP8.12 million is
reflective of the focus towards regulatory and manufacturing
activities, which were conducted in-house by existing personnel and
significantly reducing the cost of external 3rd party providers.
There was no capitalisation of R&D costs in 2020.
Administrative Costs
Administrative costs were GBP1 million for the period ended 31
December 2020 compared to GBP1.14 million for the period ended 31
December 2019 and were reflective of the Company's strategy to keep
central costs lean and focus cash resources on delivering the
R&D programme.
Tax
It is expected that an R&D Tax Credit of GBP0.52 million
will be claimed in respect of 2020 and the cash refund is expected
to be received mid-2021 from HMRC.
Loss Per Share
The basic loss per share for 2020 was 0.99p (2019: 4.36p).
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 2020 was GBP1.02 million (2019:
GBP2.51 million). Gross proceeds of GBP3.25 million were received
in January 2020 and the usual refund of R&D tax credits of
GBP2.22 million was also received in May 2020. Cash burn during the
year was GBP6.77 million (2019: GBP8.01 million) primarily in
relation to the concluding FM57 clinical study and, regulatory and
manufacturing activities associated with MED3000. Cash burn in
relation to R&D activities for 2021 is expected to increase as
clinical study costs relating to FM71 are incurred during H2
2021.
Post Period Events
The Company concluded funding of GBP2 million in March and April
2021. The COVID-19 pandemic has continued through 2021 and Futura
expect the pandemic to have continued limited impact on operations
in 2021. Further information in relation to COVID-19 is available
in the Risks and mitigation section of the 2020 Annual Report.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020
Year ended Year ended
31 December 31 December
2020 2019
Notes GBP GBP
============================================== ======= ====================== ======================
Revenue 2.4 - 31,778
Research and development costs (1,927,658) (10,051,148)
Administrative costs (1,000,736) (1,144,397)
Operating loss 6 (2,928,394) (11,163,767)
Finance income 8 924 22,283
Loss before tax (2,927,470) (11,141,484)
Taxation recoverable 9 519,093 2,222,194
Loss for the year being total comprehensive
loss attributable to owners of the
Parent Company (2,408,377) (8,919,290)
Basic and diluted loss per share (pence) 10 (0.99) (4.36 pence)
============================================== ======= ====================== ======================
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
Share Merger Warrant Retained Total
Capital Share Premium Reserve Reserve Losses Equity
Notes GBP GBP GBP GBP GBP GBP
================ ======= ==================== ======================== =================== ================== ====================== ===================
At 1 January
2019 409,167 49,983,860 1,152,165 - (42,692,938) 8,852,254
================ ======= ==================== ======================== =================== ================== ====================== ===================
Total
comprehensive
loss for the
year - - - - (8,919,290) (8,919,290)
Share-based
payment 18 - - - - 101,404 101,404
Shares issued
during the
year 17 154 19,130 - - - 19,284
================ ======= ==================== ======================== =================== ================== ====================== ===================
Transactions
with owners 154 19,130 - - 101,404 120,688
================ ======= ==================== ======================== =================== ================== ====================== ===================
At 31 December
2019 409,321 50,002,990 1,152,165 - - (51,510,824) 53,652
================ ======= ==================== ======================== =================== ================== ====================== ===================
Total
comprehensive
loss for the
year - - - - (2,408,377) (2,408,377)
Share-based
payment 18 - - - - 149,364 149,364
Shares issued
during the
year 17 81,933 2,811,100 - 165,868 - 3,058,901
================ ======= ==================== ======================== =================== ================== ====================== ===================
Transactions
with owners 81,933 2,811,100 - 165,868 149,364 3,208,265
================ ======= ==================== ======================== =================== ================== ====================== ===================
At 31 December
2020 491,254 52,814,090 1,152,165 165,868 (53,769,837) 853,540
================ ======= ==================== ======================== =================== ================== ====================== ===================
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's treated as distributable
profit from the point of issue.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2020
As at As at
31 December 31 December
2020 2019
Notes GBP GBP
Assets
Non-current assets
Plant and equipment 11 42,869 59,505
======================================= ======= ===================== =====================
Total non-current assets 42,869 59,505
======================================= ======= ===================== =====================
Current assets
Inventories 12 - 7,780
Trade and other receivables 14 39,790 101,192
Taxation recoverable 9 518,805 2,222,194
Cash and cash equivalents 15 1,018,601 2,510,501
======================================= ======= ===================== =====================
Total current assets 1,577,196 4,841,667
======================================= ======= ===================== =====================
Liabilities
Current liabilities
Trade and other payables 16 (766,525) (4,847,520)
======================================= ======= ===================== =====================
Total liabilities (766,525) (4,847,520)
======================================= ======= ===================== =====================
Total net assets 853,540 53,652
======================================= ======= ===================== =====================
Capital and reserves attributable to
owners of the Parent Company
Share capital 17 491,254 409,321
Share premium 52,814,090 50,002,990
Merger reserve 1,152,165 1,152,165
Warrant Reserve 165,868 -
Retained losses (53,769,837) (51,510,824)
======================================= ======= ===================== =====================
Total equity 853,540 53,652
======================================= ======= ===================== =====================
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2020
Year ended Year ended
31 December 31 December
Notes 2020 2019
GBP GBP
Cash flows from operating activities
Loss before tax (2,927,470) (11,141,484)
Adjustments for:
Depreciation 11 25,008 20,704
Finance income 8 (924) (22,283)
Share-based payment charge 18 149,364 101,404
=============================================== ========= ============================= =========================
Cash flows used in operating activities
before
changes in working capital (2,754,022) (11,041,659)
=============================================== ========= ============================= =========================
Decrease in inventories 12 7,780 -
Decrease in trade and other receivables 61,401 204,928
(Decrease) / increase in trade and other
payables 16 (4,080,996) 2,822,004
=============================================== ========= ============================= =========================
Cash used in operations (6,765,837) (8,014,727)
=============================================== ========= ============================= =========================
Income tax received 2,222,482 1,358,480
=============================================== ========= ============================= =========================
Net cash used in operating activities (4,543,355) (6,656,247)
=============================================== ========= ============================= =========================
Cash flows from investing activities
Purchase of plant and equipment 11 (8,371) (32,736)
Interest received 924 22,283
=============================================== ========= ============================= =========================
Cash used in investing activities (7,447) (10,453)
=============================================== ========= ============================= =========================
Cash flows from financing activities
Issue of ordinary shares 17 3,270,534 19,284
Expenses paid in connection with share issue (211,632) -
=============================================== ========= ============================= =========================
Cash generated by financing activities 3,058,902 19,284
=============================================== ========= ============================= =========================
Decrease in cash and cash equivalents (1,491,900) (6,647,415)
Cash and cash equivalents at beginning of
year 2,510,501 9,157,916
=============================================== ========= ============================= =========================
Cash and cash equivalents at end of year 15 1,018,601 2,510,501
=============================================== ========= ============================= =========================
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2020
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 2020.
The consolidated financial statements of the Company and the
Group for the year ended 31 December 2020 were authorised for issue
by the Board of Directors on 13 April 2021.
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
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
For the year ended 31 December 2020, the Group made an operating
loss of GBP2.92 million. Cash and cash equivalents at 31 December
2020 were GBP1.02 million. The Board has considered the
applicability of the going concern basis in the preparation of the
financial statements. This included the review of internal budgets
and financial results and a review of cash flow forecasts for the
12 months' period following the date of signing the financial
statements. Under current business plans, the Group's cash
resources will extend to Q1 2022. Based on this, additional funding
is expected to be required to support the Group's and the Company's
going concern status. Dependent upon the funds raised and the level
of income generated from licensing activities, further funding may
be required to reach profitability. The Group completed a GBP2.0
million fundraise which comprised of GBP1.5 million convertible
loan notes, GBP0.5 million warrants and a Collaboration Agreement
to commercialise MED3000 in Chia and SE Asia, GBP1.5 million was
received in March 2021 and GBP0.5 million in April 2021. The
Directors have a reasonable expectation that the Group will be able
to raise further financing, which could come from a variety of
dilutive and non-dilutive sources, to support its ongoing
activities, following the anticipated granting of the CE Mark for
MED3000 in Europe, expected in May 2021 following a recommendation
in March 2021. The Directors also have a reasonable expectation
that the Group will be able to generate significant funding through
entering into strategic collaborations for the commercialisation of
MED3000 and its other products in the US and Europe.
However, there can be no guarantee that the Group will be able
to raise sufficient funding from existing and new investors, nor
that the Group will be able to secure further strategic
collaborations for its product pipeline. In the event that the
Group does not successfully raise new financing, the Directors
consider that the Group would be able to reduce expenditure,
potentially extending the Group's cash resources to more than 12
months from the date of signing the financial statements.
Based on the above factors the Directors believe that it remains
appropriate to prepare the financial statements on a going concern
basis. However, the above factors give rise to a material
uncertainty which may cast significant doubt on the Group's and the
Company's ability to continue as a going concern and, therefore, to
continue realising its assets and discharging its liabilities in
the normal course of business. The financial statements do not
include any adjustments that would result from the basis of
preparation being inappropriate.
2.3 Standards, amendments and interpretation to existing
standards
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
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.
Revenue recognised in the prior year related to a collaboration
agreement. 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, no revenue
was recognised.
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 assess
whether it has the right to direct "how and for what purpose" the asset is used throughout the period of use.
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 months' notice. Lease terms for IT equipment
have lease terms of 3 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
Fixtures and fittings 3 - 10 years straight line
The assets' residual values and useful lives are determined by
the Directors and reviewed and adjusted, if appropriate, at each
Consolidated Statement of Financial Position date.
2.8 Impairment of non-financial assets
An impairment review is carried out for assets being amortised
or depreciated when a change in market conditions and other
circumstances indicate that the carrying value may not be
recoverable. The recoverable amount is the higher of an asset's
fair value less costs to sell and value-in-use. For the purpose of
assessing impairment, assets are grouped at the lowest levels for
which they are separately identifiable cash flows.
2.9 Inventories
Inventories are consumable materials to be used in development
and are initially recognised at cost, and subsequently at the lower
of cost and net realisable value. Cost includes materials, related
contract manufacturing costs and other direct costs. Cost is
calculated using the first in, first out method. Net realisable
value is based on estimated selling price, less further costs
expected to be incurred to completion and disposal.
A provision is recognised immediately in the Consolidated
Statement of Comprehensive Income in respect of obsolete or
defective items, where appropriate.
2.10 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
2.11 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 (2019: GBPnil). 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.
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 (2019: GBPnil).
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.
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.
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 GBP149,364 (2019: GBP101,404), the volatility methodology used
is not expected to have a material impact on these financial
statements. Details of the fair value calculation for options
granted during the year, including other inputs into the
Black-Scholes model, are disclosed in Note 18.
3.2 Judgements
Deferred tax recognition
The determination of probable future profits, against which the
Group's deferred tax profits can be offset, requires judgement. To
date no deferred tax assets have been recognised.
R&D tax credits
The current tax receivable as disclosed in Note 9, represents an
R&D tax credit based on an advance claim with HMRC. The final
receivable is subject to the correct application of complex R&D
rules and HMRC approval. Historically, claims have been successful
and the Group expects the current year to be successful too.
R&D costs
Management are required to make a judgement about certainty of
commercial success of their products. No Research and Development
costs have been capitalised in the current or prior period and
further details can be found in Note 2.6.
Fair value of derivative instruments
Where the fair value of derivative instruments recorded in the
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 judgments 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
19
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 2020 or at
31 December 2019.
At 31 December 2020 the Group had trade payables denominated in
a foreign currency totalling GBP34,217 (31 December 2019:
GBP101,899).
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:
31 December 31 December
2020 2019
GBP GBP
Cash at bank and in hand 644,729 2,137,599
Sterling short-term money market funds 373,872 372,902
========================================= ================== ==================
1,018,601 2,510,501
========================================= ================== ==================
The Directors consider the Group's exposure to credit risk to be
acceptable and normal for a similar entity at its stage in
development.
(iii) Liquidity risk
The Group's approach to managing liquidity is to ensure that, as
far as possible, it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed
conditions, without incurring losses or risking damage to the
Group's reputation.
The Group manages all of its external bank accounts centrally
and in accordance with defined treasury policies. The policies
include a minimum acceptable credit rating of relationship bank
accounts and financial transaction authority limits. Any material
change to the Group's principal bank facility requires Board
approval.
4.2 Capital risk management
The Group's policy is to maintain a strong capital base. The
Group does not yet have significant recurring revenues and has
mainly financed its operations through the issue of new shares and
management of working capital. The Group's capital resources are
managed to ensure it has resources available to invest in
operational activities designed to generate future income. These
resources were represented by GBP1,018,601 of cash and fixed-term
deposits as at 31 December 2020 (31 December 2019:
GBP2,510,501).
5. Segment Reporting
The Group is focussed on the development and commercialisation
of MED3000 and therefore operates as one segment.
6. Operating loss
Year ended Year ended
31 December 31 December
2020 2019
Operating loss is stated after charging: GBP GBP
Depreciation of plant and equipment (Note
11) 25,008 20,704
Loss on disposal of plant and equipment - -
Inventories consumed in R&D - -
Short-term leases: property 116,714 117,275
Gain/(loss) on foreign exchange 18,840 8,468
The fees of the Group's Auditor Grant Thornton UK LLP for
services provided are analysed below:
Year ended Year ended
31 December 31 December
2020 2019
Audit services GBP GBP
Parent Company 43,500 35,000
Subsidiaries 7,500 7,000
Tax Services
Parent company - -
Subsidiaries - -
Other Non-audit services
iXBRL Tagging 1,000 1,000
Total fees 52,000 43,000
=========================== =============== ===============
7. Staff numbers and costs
The average number of persons (including all Executive and
excluding Non-Executive Directors) employed by the Group during the
year, analysed by category, was as follows:
Year ended Year ended
31 December 31 December
2020 2019
R&D staff 8 8
Finance and Administration staff 2 2
Executive Directors 3 3
=================================== ================== ==================
13 13
=================================== ================== ==================
The aggregate payroll costs of these persons were as
follows:
Year ended Year ended
31 December 31 December
2020 2019
GBP GBP
Wages and salaries 1,598,473 1,315,760
Social security costs 154,829 181,544
Other pension and insurance benefits costs 163,910 180,342
============================================= ========================= ========================
Total cash-settled emoluments 1,917,212 1,677,646
Share-based payment remuneration charge 149,364 101,404
============================================= ========================= ========================
Total emoluments 2,066,576 1,779,050
============================================= ========================= ========================
All employees of the Group are employed by Futura Medical
Developments Limited.
Directors' emoluments
Year ended Year ended
31 December 31 December
2020 2019
GBP GBP
Aggregate emoluments 912,209 693,353
Other pension and other benefit costs 22,968 22,506
========================================== =============== ===============
Subtotal per remuneration report 935,177 715,859
Share-based payment remuneration charge 47,866 47,866
Employer's national insurance charge 77,222 73,811
========================================== =============== ===============
Total emoluments 1,060,265 837,536
========================================== =============== ===============
In 2020 there were no Directors whose share options were
exercised under the Group share option schemes and no gain was
realised (2019: GBPnil). In respect of the highest paid Director
the realised gain was GBPnil (2019: GBPnil).
In 2020 there were no Directors (2019: no Directors) who
participated in a private money purchase defined contribution
pension scheme. Emoluments for individual Directors are disclosed
within the Remuneration Committee Report.
The Directors consider that there are no Key Management
Personnel other than the Directors.
Emoluments above include the following amounts in respect of the
highest paid Director:
Year ended Year ended
31 December 31 December
2020 2019
GBP GBP
Aggregate emoluments 306,658 235,593
Employer pension contributions and other 2,652 -
benefits
=========================================== ========= =================
Subtotal per remuneration report 309,310 235,593
Share-based payment remuneration charge 18,410 18,410
Employer's national insurance charge 32,266 31,680
=========================================== ========= =================
Total emoluments 359,986 285,683
=========================================== ========= =================
8. Finance income
Interest receivable in 2020 on treasury funds was GBP924 (2019:
GBP22,283).
9. Taxation
9.1 Current tax
Year ended Year ended
31 December 31 December
2020 2019
GBP GBP
UK corporation tax credit on loss on ordinary
activities 519,093 2,222,194
================================================ =========================== ===========================
The tax assessed for the year was lower than the UK corporation
tax rate (2019: lower). The differences are explained below:
Year ended Year ended
31 December 31 December
2020 2019
GBP GBP
Loss on ordinary activities before tax 2,927,470 11,141,484
============================================== ============== =========================
Loss on ordinary activities at an average
standard rate of corporation tax in the
UK of 19% (2019: 19%) 556,220 2,116,882
Expenses not deductible for tax purposes (6) (304)
Unrecognised deferred tax (37,213) (15,701)
Unutilised tax losses (224,744) (841,959)
R&D expenditure credit (1,036) (4,969)
Loss surrendered for refund (159,728) (683,072)
Additional relief for R&D claims 381,186 1,630,136
============================================== ============== =========================
UK corporation tax credit 514,679 2,201,013
Adjustment to tax charge relating to (288) -
prior period
R&D expenditure credit re 2019 - 21,181
R&D expenditure credit re 2020 4,414 -
============================================== ============== =========================
UK corporation tax credit reported in
the
Consolidated Statement of Comprehensive
Income 518,805 2,222,194
============================================== ============== =========================
The Group has tax losses of approximately GBP32,448,687 (2019:
GBP31,265,826) available for offset against future taxable
profits.
The corporation tax credit for the year represents research and
development tax credits of GBP514,679 (2019: GBP2,201,012), arising
from the surrender of losses (rather than carrying forward to
future years) of GBP3,549,507 (2019: GBP15,179,395) at 14.5%, under
HMRC's small and medium size enterprise scheme. The taxable loss
for the year is in excess of the accounting loss for various
reasons, principally the additional deductions given for tax
purposes on research and development expenditure.
In addition, a small claim under the large company Research and
Development Expenditure Credit (RDEC) scheme resulted in a refund
of GBP4,414 (2019: GBP21,181).
9.2 Deferred tax
Deferred tax assets amounting to GBP6,575,569 (2019:
GBP5,649,021) have not been recognised due to it not being probable
that taxable profits will be available, against which these
deductible temporary differences can be utilised. Reductions in the
UK corporation tax rate from 20% to 19% (effective from 1 April
2017) were substantively enacted on 26 October 2015. The
unrecognised deferred tax asset at 31 December 2020 has been
calculated assuming a prevailing tax rate when the timing
differences reverse of 19% (2019: 17%) and comprises:
Year ended Year ended
31 December 31 December
2020 2019
GBP GBP
Depreciation differential versus capital
allowances (496) (1,770)
Other short-term timing differences 410,814 335,600
Unutilised tax losses 6,165,251 5,315,191
=========================================== ========================== ==========================
6,575,569 5,649,021
=========================================== ========================== ==========================
The UK corporation tax rate is expected to increase from 19% to
25% from 1 April 2023. The legislation containing this provision
has not yet been substantively enacted. The unrecognised deferred
tax asset at 31 December 2020 has been calculated at the rate
substantively enacted at the time of preparation of the financial
statements.
10. Loss per share
The calculation of basic and diluted earnings per share ("EPS")
is based on the following data:
2020 2019
Loss for the purposes of basic EPS and
diluted EPS (GBP) 2,408,376 8,919,290
Weighted average of ordinary shares for
purposes of basic and diluted EPS (number) 243,721,303 204,657,741
Loss per share basic and diluted (pence) 0.99 4.36
============================================= ============= ========================
Diluted EPS is calculated in the same way as basic EPS but also
with reference to reflect the dilutive effect of share options in
existence at the year-end which were 7,295,000 (2019: 7,255,000).
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.
11. Plant and equipment
Computer Equipment Furniture
and Fittings Total
Cost GBP GBP GBP
At 1 January 2020 119,338 63,285 182,623
Additions 8,371 - 8,371
At 31 December 2020 127,709 63,285 190,994
====================== ======================= ==================== ====================
Depreciation
At 1 January 2020 66,745 56,373 123,118
Charge for year 23,594 1,414 25,008
====================== ======================= ==================== ====================
At 31 December 2020 90,339 57,787 148,126
====================== ======================= ==================== ====================
Net book value
At 31 December 2020 37,370 5,498 42,868
====================== ======================= ==================== ====================
At 31 December 2019 52,593 6,912 59,505
====================== ======================= ==================== ====================
Computer Equipment Furniture
and Fittings Total
Cost GBP GBP GBP
At 1 January 2019 86,602 63,285 149,887
Additions 32,736 - 32,736
At 31 December 2019 119,338 63,285 182,623
====================== ======================== ==================== ====================
Depreciation
At 1 January 2019 47,495 54,919 102,414
Charge for year 19,250 1,454 20,704
====================== ======================== ==================== ====================
At 31 December 2019 66,745 56,373 123,118
====================== ======================== ==================== ====================
Net book value
At 31 December 2019 52,593 6,912 59,505
====================== ======================== ==================== ====================
At 31 December 2018 39,107 8,366 47,473
====================== ======================== ==================== ====================
All fixed assets of the Group are held in Futura Medical
Developments Limited.
12. Inventories
31 December 31 December
2020 2019
GBP GBP
Consumable materials used for development - 7,780
============================================ =================== ==================
13. 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 31 December 31 December
Position 2020 2019
Loans and receivables at amortised cost GBP GBP
Trade and other receivables (Note 14) 16,067 59,968
Cash and cash equivalents (Note 15) 1,018,601 2,510,501
==================================================== ========================= =========================
Total receivables 1,034,668 2,570,469
==================================================== ========================= =========================
31 December 31 December
2020 2019
Liabilities as per Consolidated Statement GBP GBP
of Financial Position at amortised cost
Trade and other payables (Note 16) 766,525 4,847,520
============================================ ========================== ==========================
Total payables 766,525 4,847,520
============================================ ========================== ==========================
The Directors consider that there is no material difference
between the carrying values of financial assets and liabilities,
and their fair value.
14. Trade and other receivables
31 December 31 December
2020 2019
Amounts receivable within one year : GBP GBP
Trade receivables 5,627 5,627
Other receivables 10,440 54,341
======================================= ================== ==================
Financial assets (Note 13) 16,067 59,968
Prepayments 23,723 41,224
======================================= ================== ==================
39,790 101,192
======================================= ================== ==================
Trade and other receivables do not contain any impaired assets.
The Group does not hold any collateral as security and the maximum
exposure to credit risk at the Consolidated Statement of Financial
Position date is the fair value of each class of receivable.
15. Cash and cash equivalents
31 December 31 December
2020 2019
GBP GBP
Cash at bank and in hand 644,729 2,137,599
Sterling short-term money market funds 373,872 372,902
========================================= ================== ==================
1,018,601 2,510,501
========================================= ================== ==================
16. Trade and other payables
31 December 31 December
2020 2019
GBP GBP
Trade payables 182,900 2,625,359
================================== ================== ==================
Social security and other taxes 64,092 39,970
Deferred Income - 218,222
Accrued expenses 519,533 1,963,969
================================== ================== ==================
766,525 4,847,520
================================== ================== ==================
The decrease in payables is reflective of the reduced activity
relating to research and development activities in comparison to
the prior year. Deferred income relating to the prior year was
re-classified in the period as accrued expenses and released to the
P&L as costs were recognised.
17. Share capital
31 December 31 December 31 December 31 December
Authorised 2020 2019 2020 2019
Number Number GBP GBP
Ordinary shares of 0.2
pence each 500,000,000 500,000,000 1,000,000 1,000,000
========================= ============= ============= ================== ==============
Allotted, called up and 31 December 31 December 31 December 31 December
fully paid 2020 2019 2020 2019
Number Number GBP GBP
Ordinary shares of 0.2
pence each 245,626,926 204,660,267 491,254 409,321
========================== ============= ============= ================== ==================
The number of issued ordinary shares as at 1 January 2019 was
204,583,439. During the year ended 31 December 2019, the Company
issued shares of 0.2 pence with each ordinary share carrying the
right to one vote as follows:
Shares
Month Reason for issue Gross Consideration Issued
GBP Number
Non-Executive Director Share
January 2019 Award 19,284 76,828
=============== ================================== ===================== ===========
19,284 76,828
================= =============================== ===================== ===========
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:
Shares
Month Reason for issue Gross Consideration Issued
GBP Number
Non-Executive Director Share
January 2020 Award 20,534 341,659
=============== ================================== ===================== ============
Subscription and Primary bid
January 2020 Offer 3,250,000 40,625,000
=============== ================================== ===================== ============
3,270,534 40,966,659
================= =============================== ===================== ============
18. Share options
At 31 December 2020, 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 At 1
Price January Options Options Options At 31
per Share 2020 Exercised Lapsed Granted December2020
Exercise Pence Number Number Number Number Number
Period
1 October
2015 - 30
September
2020 71.50 620,000 - (620,000) - -
1 October
2016 - 30
September
2021 51.75 580,000 - (100,000) - 480,000
1 October
2017 - 30
September
2022 30.00 750,000 - (150,000) - 600,000
1 October
2018 - 30
September
2023 57.50 960,000 - (150,000) - 810,000
1 October
2019 - 30
September
2024 30.50 1,140,000 - (150,000) - 990,000
1 October
2020 - 30
September
2025 7.50 1,390,000 - (150,000) - 1,240,000
7 January
2020 - 6
January
2029 7.20 212,500 - - - 212,500
31 August
2020 - 6
January
2029 7.20 212,500 - - - 212,500
1 October
2021 - 30
September
2026 31.00 1,400,000 - (150,000) - 1,250,000
1 October
2022 - 30
September
2027 15.5 - - - 1,500,000 1,500,000
7,265.000 - (1,470,000) 1,500,000 7,295,000
============= ============ =========== ================ ======================== ================ ==============
On 21 September 2020 share options over 1,500,000 new ordinary
shares were granted to employees (including Executive Directors) at
a price of 15.5p. The options have a two-year vesting period and
the exercise period for these options is 1 October 2022 to 30
September 2027.
The share options outstanding at 31 December 2020 represented
2.97% of the issued share capital as at that date (2019: 3.54%) and
would generate additional funds of GBP1,939,700 (2019:
GBP2,433,900) if fully exercised. The weighted average remaining
life of the share options outstanding at 31 December 2020 was 56
months (2019: 51 months) with a weighted average remaining exercise
price of 29.04 pence (2019: 33.55 pence).
The share options exercisable at 31 December 2020 totalled
4,545,000 (2019: 3,850,000) with an average exercise price of 26.04
pence (2019: 48.48 pence) and would have generated additional funds
of GBP1,319,700 (2019: GBP1,766,650) if fully exercised.
The Group's share option scheme rules apply to 6,720,000 of the
share options outstanding at 31 December 2020 (31 December 2019:
6,550,000) 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
575,000 share options outstanding to advisers at 31 December 2020
(31 December 2019: 705,000).
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.
Share-based payments
31 December 31 December
Inputs to share option pricing model 2020 2019
Grant date 21 September 17 September
Number of shares under option 1,500,000 1,390,000
Share price as at date of grant 14.72 pence 30.70 pence
Option exercise price 15.5 pence 31.00 pence
Expected life of options: based on previous
exercise history 3 years 3 years
Expected volatility: based on median fluctuations
over 3 years 104.96% 82.70%
Dividend yield: no dividends assumed 0% 0%
Risk-free rate: yield on 3 year treasury
stock as at date of grant 0.05% p.a. 0.48% p.a.
==================================================== ==================== ====================
Outputs generated from share option pricing 31 December 31 December
model 2020 2019
Fair value per share under option 9.24 p 16.19p
Total expected charge over the vesting GBP138,600 GBP225,041
period
============================================== ================== ===================
Recognised in Consolidated Statement 31 December 31 December
of Comprehensive Income 2020 2019
GBP GBP
The share-based remuneration charge comprises:
Share-based payments - employees 19,104 32,019
Share-based payments - consultants - -
================================================= ======================== ======================
Share-based payments 19,104 32,019
================================================= ======================== ======================
The total expense recognised for the year arising from
share-based payments is as follows:
31 December 2020 31 December 2019
GBP GBP
Group equity-settled share-based payment expense 149,364 101,404
====================================================== ================== ==================
19. Warrant Instrument
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:
31 December 31 December
Inputs to warrant pricing model 2020 2019
Grant date 21 January -
Number of warrants 10,937,500 -
Share price as at date of grant 12.75 pence -
Warrant conversion price 40 pence -
Expected life of warrants: 5 years -
Expected volatility: based on median
fluctuations over 3 years 81.56% -
Dividend yield: no dividends assumed 0% -
Risk-free rate: yield on 3 year treasury
stock as at date of grant 0.44% p.a. -
========================================== ==================== =============
20. Pension costs
The pension charge represents contributions payable by the Group
to independently administered funds which during the year ended 31
December 2020 amounted to GBP128,161 (2019: GBP164,458). Pension
contributions payable in arrears at 31 December 2020, included in
accrued expenses at the relevant Consolidated Statement of
Financial Position date, totalled GBP18,948.36 (2019:
GBP10,225).
21. Commitments
At 31 December 2020 the Group had operating lease commitments in
respect of property leases cancellable on one month's notice of
GBP9,802 (2019: GBP9,802).
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.
23. Post period events
The group concluded a funding transaction in March 2021. The
transaction comprised of GBP1.5 million of convertible loan notes
priced at 20 pence per ordinary share, GBP0.5 million of warrants
with an exercise price of 22 pence and the Group entered also into
a Collaboration Agreement to develop and commercialise MED3000 in
China and South East Asia.
Convertible Loan Notes
GBP1.5 million cash was received in March 2021 relating to
convertible loan notes which expire after 3 years but a mandatory
conversion will trigger once EU Approval has been granted and
Futura Medical Plc share price remains
at 30 pence or above for at least one month. Conversion of the
loan notes will result in 7,500,000 ordinary shares issued upon
conversion.
Warrants
Futura issued warrants to purchase GBP0.5 million of Futura
Medical Plc ordinary shares. The warrants expire after 4 years from
date of issue and they have an exercise price of 22 pence. The
warrants were exercised in April 2021 and 2,272,727 ordinary shares
will be issued
Collaboration Agreement
The Group also entered into a Collaboration Agreement to develop
and commercialise MED3000 in China and SE Asia. Futura has granted
a licence to MED3000 IP and the counter-party will fund the costs
of development. Futura will retain a 50% profit share.
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