TIDMFUM
RNS Number : 6825V
Futura Medical PLC
10 April 2019
THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS DEEMED BY THE
COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER
ARTICLE 7 OF REGULATION (EU) NO 596/2014 OF THE MAR. UPON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION
SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC
DOMAIN
10 April 2019
Futura Medical plc
("Futura" or "the Company")
Preliminary Results for the year ended 31 December 2018
Sustained Progress made in 2018
Futura Medical plc (AIM: FUM), the pharmaceutical company
developing a portfolio of innovative products for sexual health and
pain, based on its proprietary, transdermal DermaSys(R) drug
delivery technology is pleased to announce its preliminary results
for the year ended 31 December 2018.
Highlights
Operational highlights
-- Following an extensive strategic review which was announced
in September 2018, Futura has focused on maximising value in its
development pipeline and product portfolio addressing two large
market categories, sexual health and pain. The lead priorities are
MED2005, its innovative topical treatment for erectile dysfunction
(ED), and its pain portfolio including TPR100, a topical
non-steroidal anti-inflammatory drug. Futura's core objectives are
to:
- complete the development of MED2005, currently in Phase 3 clinical trial, and
- further realise value from the pain portfolio.
-- In February 2018, Angela Hildreth joined Futura in the role
of Finance Director, Chief Operating Officer and Board
Director.
MED2005 - Topical glyceryl trinitrate (GTN) formulation for
erectile dysfunction
-- Publication of positive Phase 2a, "FM53" data, in
peer-reviewed Journal of Sexual Medicine in February 2018.
-- First Phase 3 study, "FM57", commenced in October 2018.
-- Positive results from pharmacokinetic ("PK") study presented
at the annual scientific meeting of the Sexual Medicine Society of
North America (SMSNA) in November 2018, demonstrating safety and
dose related absorption.
-- First advisory panel meeting held with US key opinion leaders
(KOLs) at the SMSNA meeting in November 2018. KOL reaction to the
therapeutic potential for MED2005 in erectile dysfunction and its
areas of differentiation as well as the ongoing clinical programme
was highly positive.
MED2005 - Post year end
-- Data presented at the European Society of Sexual Medicine
(ESSM) congress in February 2019, including:
- Positive Phase 2a and Pharmacokinetic data
- In vitro impedance testing (concluded late 2018) which further
supports the safety profile for male patients and their sexual
partners.
-- Second advisory panel held at ESSM in February 2019 with
prominent European KOLs to discuss data and the on-going
development and educational programme. As with US KOL peers,
physician reaction was very positive.
-- R&D event held in London in February 2019 including a
presentation from Professor David Ralph, a world leading expert in
erectile dysfunction and male infertility and Chair of the Futura
Medical European Advisory Panel.
TPR100 - Topical non-steroidal anti-inflammatory for the pain
and inflammation associated with sprains, strains and bruises and
soft tissue rheumatism
-- Marketing authorisation application by UK commercialisation
partner, Thornton & Ross (a subsidiary of STADA AG) submitted
to the UK Medicines and Healthcare products Regulatory Agency
(MHRA) in July 2018.
-- Ongoing commercial discussions with several potential
distribution partners for other territories. Any further licensing
deals are expected to be after UK regulatory approval.
TPR100 - Post year end
-- Supporting Thornton & Ross on responses to initial MHRA
feedback received in February 2019.
Financial highlights
-- GBP5.85 million raised in November 2018 to progress MED2005
through Phase 3 "FM57" study in erectile dysfunction.
-- GBP5.89 million net loss in the period (31 Dec 2017: net loss GBP3.90 million).
-- Cash resources of GBP9.16 million at 31 December 2018 (31 December 2017: GBP8.36 million).
James Barder, Chief Executive of Futura, commented: "2018 was a
significant year of progress for Futura, with the commencement of
enrolment of patients into our first Phase 3 trial with MED2005.
The trial is progressing as planned, and we look forward to Phase 3
headline data by end 2019. During the year, in parallel to the
clinical studies, our team has engaged with a number of eminent
experts in the field of erectile dysfunction in both Europe and the
US to discuss and gain valuable and positive feedback on the
on-going development and educational programme for MED2005.
The funding secured in 2018 ensures that Futura has sufficient
resources to complete and deliver the Phase 3 top line data by the
end of 2019 - which the Board believes will be a major value
inflection point for the Company."
Analyst meeting and webcast
The Executive Team will host a presentation at 10am (BST), 10
April 2019, for analysts at the office of N+1 Singer at 1
Bartholomew Lane, London EC2N 2AX.
Following the results meeting, a webcast of the presentation
will also be made available within the Investor Centre section of
the Futura company website at www.futuramedical.com.
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
Nominated Adviser and Broker:
N+1 Singer
Aubrey Powell/ Ben Farrow (Corporate Finance)
Mia Gardner / Tom Salvesen (Corporate Broking)
Tel: +44 (0) 20 7496 3000
For media enquiries please contact:
Optimum Strategic Communications
Mary Clark/ Hollie Vile/ Ellie Blackwell
Email: futuramedical@optimumcomms.com
Tel: +44 (0) 203 950 9144
Notes to Editors:
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) drug delivery technology.
These products are optimised for clinical efficacy, safety,
administration and patient convenience and 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.
Futura is based in Guildford, Surrey, and its shares trade on
the AIM market of the London Stock Exchange.
www.futuramedical.com
Chairman's Statement
2018 - a significant year for Futura Medical
Following an extensive strategic review which was announced in
September 2018, Futura's strategy as an innovative R&D company,
is to leverage its Dermasys(R) transdermal delivery technology to
bring innovative products to market in sexual health and pain,
bringing new treatment options to patients particularly in areas of
significant unmet need. Erectile dysfunction (ED) is one such
underserved area. It disrupts the lives of at least 1 in 5 men
globally, affecting the sexual and emotional health of around 27
million men and their partners in the USA alone. There has been
little innovation in ED treatments for over ten years and many
patients continue to suffer dissatisfaction from existing
treatments especially those looking for a fast acting treatment
that can form part of sexual foreplay or those patients that are
contraindicated from using existing therapies. Many patients do not
just suffer from ED itself. They also suffer the debilitating toll
it takes on quality of life, relationships and overall wellbeing
for both themselves and their partners. Futura is therefore excited
to be taking MED2005, its topical gel for ED through late stage
clinical trials in order to make a significant difference in
helping ED patients and their partners worldwide. With an
independently assessed market potential of over $1 billion as a
prescription treatment and subsequently over the counter (OTC)
treatment, MED2005 is Futura's lead asset and a key value creation
opportunity.
2018 was a busy year for execution. I would like to thank
Futura's shareholders for their support and Futura's employees for
their unstinting efforts in driving forward the progress of the
Company, particularly the extensive preclinical and clinical
development programme for MED2005, which requires an immense amount
of detailed science, logistical and regulatory work, together with
the outsourcing partners used as part of Futura's lean operating
model. Futura has had dialogue with and taken the advice of
industry stakeholders including potential licensing partners, US
and EU regulators and leading experts in the field of sexual
medicine, in designing the MED2005 clinical programme and we look
forward to headline clinical data from the first Phase 3 "FM57"
study by the end of 2019.
Finally, in February 2018, Derek Martin resigned from Futura and
Angela Hildreth joined the Company as Finance Director and Chief
Operating Officer. On behalf of the Board, I would like to
reiterate our thanks to Derek for his contribution to the
development of the Company during almost 10 years as Finance
Director and to welcome Angela.
Robust governance and strategy
Governance and compliance continues to be a key focus for the
Board. Board responsibilities, tasks and achievements for 2018 are
described in detail in the Corporate Governance report of the 2018
Annual Report. The Board is focused on optimising Futura's
strategies to capitalise on the Dermasys(R) transdermal technology
product portfolio in sexual health and pain, in particular the
opportunity for MED2005 in ED. The Board concentrates on ensuring
management has the right resources and capabilities to succeed both
now and in the future. Futura aims to be a source of new products
for the consumer-oriented pharmaceutical and medical industries, in
areas under-served by current treatment options and where
innovation has stagnated to date. We are confident that Futura will
sustain the entrepreneurial and innovative culture it has created,
as it moves its Dermasys(R) based products forward in development
and commercialisation.
John Clarke
Chairman
Chief Executive's Review
As an innovative, specialist, R&D company it is our strategy
to improve the lives of patients, particularly where they are
dissatisfied with existing treatments. Meeting this objective goes
hand in hand with value creation, which we seek to maximise by
partnering at key inflection points. Our current focus is on sexual
health and pain where we have found opportunities to leverage our
Dermasys(R) technology to develop new products that solve
clinically meaningful problems for patients.
This year has been an important 12 months of progress for
Futura. 2018 saw the Company undertake an extensive review of its
pipeline and product portfolio and it was determined by the Board
that a more concentrated R&D focus on MED2005, as well as its
pain relief gels, will best enable us to achieve our aims.
MED2005 - topical glyceryl trinitrate (GTN) formulation for
erectile dysfunction
Supportive pharmacokinetic clinical data
Throughout 2018, Futura has continued to generate additional,
positive results from pharmacokinetic ("PK") studies with MED2005.
Data, which was also presented in November at the annual scientific
meeting of the Sexual Medicine Society of North America (SMSNA),
give the Company confidence in the safety and potential efficacy of
MED2005, including at the higher doses now being studied in Phase
3. They will add to and strengthen the data packages Futura intends
to file with regulators when seeking approval.
In the recent PK study we demonstrated a dose related absorption
profile and good bioavailability of glyceryl trinitrate (GTN) when
administered at doses 0.2%, 0.4%, and 0.6% GTN. This supports the
Company's strong belief that higher doses of MED2005 should improve
efficacy. The acceptable tolerance profile of all dose forms of
MED2005 tested also allowed inclusion of these three higher doses
within the Phase 3 study.
MED2005 was shown to lead to a rapid rate of GTN absorption with
first detection in blood plasma in 4-5 minutes, reaching peak
levels in the bloodstream within 10-12 minutes for all doses. These
findings are consistent with a product that has shown a rapid onset
of action in the Phase 2a "FM53" study. It was shown that there is
a low GTN residue on the penis at 5 minutes even with a high, 0.6%
GTN MED2005 dose. This provides reassurance that there is likely to
be minimal risk in transference of GTN to the sexual partner during
intercourse, even at the higher doses. This finding also supports
the side effect profile seen in the Phase 2a "FM53" study where
only four, mild side effects were seen in sexual partners out of
1,003 sexual intercourse attempts.
In February 2018, a peer reviewed paper was published in the
Journal of Sexual Medicine detailing the Phase 2a, "FM53" study of
MED2005 in ED. The study achieved its primary clinical endpoint and
demonstrated efficacy, safety and a rapid speed of onset in a 0.2%
GTN dose with MED2005. Positive outcomes were particularly
promising in patients with mild and mild to moderate ED at this
lowest dose of MED2005. We have confidence that the higher doses of
0.4% and 0.6% being studied in addition to the 0.2% dose in the
first Phase 3 will show improved efficacy across patients with
mild, mild to moderate and moderate ED. This represents the large
majority of ED sufferers throughout the world and the largest
commercial opportunity. Severe ED patients, who often have the most
medical complications as well as being the oldest men, are a
difficult patient cohort to treat. This is further evidenced by the
limited success of the existing ED treatments. We therefore remain
cautious over the potential benefit MED2005 will bring to severe
patients. The first Phase 3 study will include patients of all ED
severities as was the case in the Phase 2a study FM53, the analysis
of the primary endpoints will pool data across mild, moderate and
severe ED. Therefore if reduced efficacy in severe ED patients
occurs, it is not expected to compromise the overall success of the
study.
The publication of the Phase 2a clinical data in the leading,
peer-reviewed scientific Journal of Sexual Medicine underlines the
robustness of our previously reported study and demonstrates the
level of scientific interest in MED2005.
MED2005 Phase 3 clinical programme underway
MED2005's first Phase 3 study, "FM57" commenced in October 2018.
The study protocol has incorporated the Company's learnings from
FM53, feedback received from potential commercial partners and also
US and European regulatory agencies to optimise the commercial
value as well as maximise the chances of clinical success and
thereby regulatory approval.
This 1,000 patient study for the treatment of mild, moderate or
severe ED includes approximately 60 centres across Central and
Eastern Europe to ensure patients are recruited as quickly and
efficiently as possible. Regulatory and ethics clearance to conduct
FM57 has been received across all nine countries and the target of
headline data by the end of 2019 remains on track.
Planning for a second, confirmatory Phase 3 study for MED2005
has been undertaken, again after extensive dialogue with regulators
and our KOLs in the field of ED. This study will incorporate a US
patient cohort which is expected to enable regulatory filing in the
USA. This study is expected to be informed by the first Phase 3 and
therefore start after end of the first Phase 3 study. We believe
MED2005 has the required efficacy, speed of onset and favourable
safety profile consistent with use as a prescription therapy as
well as the potential to be an over-the-counter therapy as
well.
Discussions continue with a number of interested commercial
partners for the out-licensing of MED2005 although the Company's
main focus is to deliver Phase 3 headline data by the end of 2019
to facilitate these ongoing discussions.
MED2005 safety profile in female partners
At the European Society of Sexual Medicine (ESSM) congress in
Slovenia, 14-16 February 2019, Futura presented data which
indicates that MED2005 will have a favourable safety profile in
female partners. These data included observational data from the
Phase 2a study where only four adverse events were noted in females
out of over 1,000 intercourse events; penile swabbing data obtained
from the PK Study which indicated that very low amounts of MED2005
remain on the penis after five minutes; and supporting evidence
regarding the topical safety of MED2005, based on in vitro
impedance testing concluded in late 2018. Results from the latter
showed no significant difference in impedance between MED2005 and
two commercially available lubricants used for sexual intercourse.
These data is strongly suggestive that there is likely to be no
increased risk of sexually transmitted infections being transferred
to sexual partners, as a result of disruption to local tissue, when
using MED2005 compared to the two lubricants also tested.
Education and outreach on erectile dysfunction and MED2005
Futura held its first advisory panel meeting with US experts at
the SMSNA meeting in November 2018. The advisory panel were
unanimous in their view that there has been little recent credible
innovation in the treatment of ED and were therefore excited by the
PK and Phase 2a "FM53" findings presented, which demonstrate the
potential of MED2005 as both a topical and fast-acting erectile
dysfunction treatment, key differentiators to other ED products on
the market.
On 11 February 2019, Futura held a Research & Development
Day in London for analysts and institutional investors. The event
was well received with positive feedback and provided an
opportunity to hear first-hand from Professor David Ralph, a
prominent world leading expert in erectile dysfunction and male
infertility and Chair of the Futura Medical European advisory
panel, on the significant negative effect ED has on the quality of
life, relationships and overall wellbeing of ED patients and their
partners. The event also provided an opportunity for the Futura
team to describe the Company's R&D strategy with a focus on its
DermaSys(R) drug delivery technology and lead product MED2005's
robust and extensive development programme. A webcast of the event
is available on the Futura website.
Following the successful US advisory panel meeting at SMSNA in
November 2018, a second advisory panel was held at ESSM in February
2019 to discuss MED2005 data and the on-going development and
educational programme for MED2005 with prominent European KOLs. We
were delighted that the feedback of this second EU advisory meeting
very much echoed the sentiment and excitement seen at the first US
advisory meeting. Further meetings are planned to update and
increase awareness of the potential innovation that MED2005 brings
within the treatment arena of ED.
TPR100 - topical non-steroidal anti-inflammatory for the pain
and inflammation associated with sprains, strains and bruises and
soft tissue rheumatism
In July 2018, Thornton & Ross, a subsidiary of STADA AG,
Futura's UK commercialisation partner for TPR100, filed a marketing
authorisation application for the product with the UK Medicines and
Healthcare products Regulatory Agency (MHRA). In February 2019, the
MHRA responded with some questions requiring some additional
laboratory studies which are in the process of being conducted in
order to address the MHRA's questions and allow the submission to
progress and complete the review process. Futura has ongoing
commercial discussions with several potential distribution partners
for territories outside of the UK. Finalisation of such regional
licensing deals is expected to be after UK regulatory approval.
CSD500 - condom containing the erectogenic Zanifil(R) gel
In September 2018, Futura received approval for a two-year shelf
life for CSD500 for its European contract condom manufacturer. This
milestone provides the company with an opportunity to focus its
R&D resource fully on the far greater potential of its leading
asset, MED2005.
As an innovative specialist R&D company, Futura does not
have the marketing or regulatory medical device resource available
to support the day-to-day requirements in a growing
compliance-driven market and is in discussions with potential
partners to assume these obligations. Futura expects to still
benefit from the Intellectual Property of CSD500 through potential
royalties, but the immediate potential for substantial royalties is
low in the absence of a large global brand 'carrier' to take the
product forward as previously advised. The Company will continue to
explore national, multi-territory and regional agreements where the
opportunities arise. The Company is expected to benefit from annual
cost savings of approximately GBP400k in the event that it no
longer maintains regulatory clearance itself for CSD500 as a
medical device.
Corporate & Financial
In February 2018, Angela Hildreth joined Futura in the role of
Finance Director, Chief Operating Officer and Board Director adding
further experience to the executive team gained in financial,
operational and strategic roles in healthcare and other industries
and including the AIM market and development-stage companies.
The GBP5.85 million fundraising in November provided a new
foundation to deliver additional value to our shareholders by
progressing the development of MED2005 through the first Phase 3
study, maximising the commercial opportunity.
Outlook
Futura is now in a position to build value by progressing the
development of MED2005 through its planned Phase 3 studies and we
look forward to headline data towards the end of 2019 after which
we will examine the possibility of an accelerated European filing
strategy depending on the strength of the data, including at the
higher GTN doses for MED2005. We are excited to be moving closer to
bringing an innovative, highly differentiated ED product to market
that could help the many ED patients whose needs are not met by
current treatments.
James Barder
Chief Executive
Financial Review
As outlined in the Chief Executive Officer's Statement, during
the year, we continued to focus our financial resources on the
development programme for our lead asset MED2005. Spend on research
and development activities continued to grow with other central and
administration costs remaining broadly the same as the prior year.
November 2018 also saw gross funds raised of GBP5.85 million
through the combination of subscription for shares through
PrimaryBid and the Open Offer; and institutional placing.
Research and development expenditure
In July 2018 we commenced the first MED2005 "FM57" Phase 3 study
across approximately 60 centres in Central and Eastern Europe with
patients commencing recruitment in October 2018. FM57 costs
together with additional costs relating to completion of the FM58
PK Study earlier in the year, and expected manufacturing stability
and validation activities resulted in research and development
expenses increasing by GBP1.9 million to GBP6.0 million for 2018
(2017: GBP4.1 million) which were in line with expectations.
Following the strategic review in the year, there has also been
a focus on the reduction in costs relating to CSD500, an
erectogenic condom, with limited costs relating to CSD500 expected
in 2019.
There was no capitalisation of any Research and Development
costs in 2018.
Administrative expenses
General and administration expenses increased slightly to
GBP1.23 million (2017: GBP1.12 million). This reflects the
continued focus on tight control of central costs with research and
development activities out-sourced when required.
Revenue
No revenue was recorded in the year. The Company resolved to
focus its financial and human resources on late stage clinical
development of its lead asset MED2005 to accelerate progress
towards achieving a significant, continuous revenue stream within a
few years.
Tax
It is expected that an R&D Tax Credit of GBP1.36 million
will be claimed in respect of 2018 and the cash refund is expected
to be received in the second half of 2019 from HMRC.
Loss per share
The basic loss per share for 2018 was GBP4.46 (2017: GBP3.23).
Details of the loss per share calculations are provided in Note 11
to the accounts.
Cash Balance
Cash balance at the end of 2018 was GBP9.16 million (2017:
GBP8.36 million). Cash burn during the year was GBP5.63 million
(2017: GBP5.02 million) primarily in relation to MED2005 research
and development activities. Net funding of GBP5.48 million was
raised in the year, resulting in a net cash inflow of GBP0.80
million. Futura is fully funded to deliver the top line data from
the first Phase 3 study and will manage its funding strategy
appropriately to what is expected to be a material inflection point
for the Company.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2018
Year ended Year ended
31 December 31 December
2018 2017
Notes GBP GBP
Revenue 2,5 - 362,727
Research and development costs (6,038,941) (4,100,453)
Administrative costs (1,227,547) (1,118,218)
Operating loss 6 (7,266,488) (4,855,944)
Finance income 9 27,576 19,316
Loss before tax (7,238,912) (4,836,628)
Taxation recoverable 10 1,358,336 936,344
--------------------------------------------- ------- ---------------------- ----------------------
Loss for the year being total comprehensive
loss attributable to owners of the
parent company (5,880,576) (3,900,284)
--------------------------------------------- ------- ---------------------- ----------------------
Basic and diluted loss per share (pence) 11 (4.46 pence) (3.23 pence)
--------------------------------------------- ------- ---------------------- ----------------------
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
Share Share Merger Retained Total
Capital Premium Reserve Losses Equity
Notes GBP GBP GBP GBP GBP
-------------- -----
At 1 January
2017 240,290 44,451,745 1,152,165 (33,260,172) 12,584,028
-------------- ----- ------------------ ---------------------- ----------------- -------------------- -------------------
Total
comprehensive
loss for the
year - - - (3,900,284) (3,900,284)
Share-based
payment 19 - - - 201,261 201,261
Shares issued
during
the year 18 1,102 219,651 - - 220,753
At 31 December
2017 241,392 44,671,396 1,152,165 (36,959,195) 9,105,758
-------------- ----- ------------------ ---------------------- ----------------- -------------------- -------------------
Total
comprehensive
loss for the
year - - - (5,880,576) (5,880,576)
Share-based
payment 19 - - - 146,833 146,833
Shares issued
during
the year 18 167,775 5,312,464 - - 5,480,239
At 31 December
2018 409,167 49,983,860 1,152,165 (42,692,938) 8,852,254
-------------- ----- ------------------ ---------------------- ----------------- -------------------- -------------------
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.
Consolidated Statement of Financial Position
As at 31 December 2018
As at As at
31 December 31 December
2018 2017
Notes GBP GBP
Assets
Non-current assets
Plant and equipment 12 47,473 63,517
Total non-current assets 47,473 63,517
------------------------------------- ----- ---------------- ----------------
Current assets
Inventories 13 7,780 70,413
Trade and other receivables 15 306,408 181,076
Taxation Recoverable 10 1,358,192 927,247
Cash and cash equivalents 16 9,157,916 8,362,646
------------------------------------- ----- ---------------- ----------------
Total current assets 10,830,296 9,541,382
------------------------------------- ----- ---------------- ----------------
Liabilities
Current liabilities
Trade and other payables 17 (2,025,515) (499,141)
------------------------------------- ----- ---------------- ----------------
Total liabilities (2,025,515) (499,141)
------------------------------------- ----- ---------------- ----------------
Total net assets/(liabilities) 8,852,254 9,105,758
------------------------------------- ----- ---------------- ----------------
Capital and reserves attributable to
owners of the parent company
Share capital 18 409,167 241,392
Share premium 49,983,860 44,671,396
Merger reserve 1,152,165 1,152,165
Retained losses (42,692,938) (36,959,195)
------------------------------------- ----- ---------------- ----------------
Total equity 8,852,254 9,105,758
------------------------------------- ----- ---------------- ----------------
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
Notes Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
Cash flows from operating activities
Loss before tax (7,238,912) (4,836,628)
Adjustments for:
Depreciation 12 19,850 13,428
Loss on disposal of fixed assets 703 -
Finance income 9 (27,576) (19,316)
Share-based payment charge 19 146,833 201,261
----------------------------------------------------- ------ ------------------ -------------------
Cash flows from operating activities before changes
in working capital (7,099,102) (4,641,255)
----------------------------------------------------- ------ ------------------ -------------------
Decrease in inventories 13 62,633 13,228
(Increase) / decrease in trade and other receivables (125,332) (42,087)
(Decrease) / increase in trade and other payables 17 1,526,375 (356,036)
----------------------------------------------------- ------ ------------------ -------------------
Cash used in operations (5,635,426) (5,026,150)
----------------------------------------------------- ------ ------------------ -------------------
Income tax received 927,391 851,343
----------------------------------------------------- ------ ------------------ -------------------
Net cash used in operating activities (4,708,035) (4,174,807)
----------------------------------------------------- ------ ------------------ -------------------
Cash flows from investing activities
Purchase of plant and equipment 12 (4,510) (55,594)
Interest received 27,576 19,316
Cash generated by/(used in) investing activities 23,066 (36,278)
----------------------------------------------------- ------ ------------------ -------------------
Cash flows from financing activities
Issue of ordinary shares 18 5,943,421 220,753
Expenses paid in connection with share issue (463,182) -
Cash generated by financing activities 5,480,239 220,753
----------------------------------------------------- ------ ------------------ -------------------
(Decrease) / increase in cash and cash equivalents 795,270 (3,990,332)
Cash and cash equivalents at beginning of year 8,362,646 12,352,978
----------------------------------------------------- ------ ------------------ -------------------
Cash and cash equivalents at end of year 16 9,157,916 8,362,646
----------------------------------------------------- ------ ------------------ -------------------
Notes (continued)
For the year ended 31 December 2018
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 2018.
The consolidated financial statements of the Company and the
Group for the year ended 31 December 2018 were authorised for issue
by the Board of Directors on 09 April 2019.
The Group is principally engaged in the development of
pharmaceutical and healthcare products.
2. Accounting policies
2.1 Basis of preparation
The Group's statutory accounts have been audited for the year
ended 31 December 2018 and though the audit opinion was unmodified
the auditor drew attention to a material uncertainty related to
going concern. This material uncertainty was in relation to the
Group's ability to access additional sources of finance which may
be dependent upon the outcome of the MED2005 trial.
The consolidated financial statements have been prepared on a
going concern basis and under the historical cost convention and
have been prepared and approved by the Directors in accordance with
International Financial Reporting Standards ("IFRSs") as adopted by
the European Union. The principal accounting policies applied in
the preparation of the consolidated financial information are set
out below. These policies have been consistently applied to all
years presented, unless otherwise stated.
The consolidated financial statements are presented in
sterling.
2.2 Going Concern
The financial statements have been prepared on a going concern
basis after considering the year end cash position and reviewing
budgets and cash flow forecasts for the foreseeable future which
covers a period of at least 12 months from the date of approval of
these financial statements. The Group has reported a loss after tax
for the year of GBP5,880,576 (2017: GBP3,900.284). The Group has
net current assets at 31 December 2018 of GBP8,804,780 (2017:
GBP9,042,241).
The Directors have prepared a detailed forecast for a period of
three years from 31 December 2018 based on current plans. The
forecast assumes both committed costs and future planned
discretionary
2. Accounting policies (continued)
spend and the Directors consider that they will have sufficient
cash resources to settle all committed costs and discretionary
costs for at least 12 months from the date of approval of these
financial statements. The forecasts also assume that the group will
be able to raise additional sources of finance to fund future
expenditure if the results of the MED2005 trial are positive.
It should be noted that the forecasts do not include any cash
receipts from future MED2005 out-licensing agreements or other
forms of funding that the Directors are actively considering, and
which the Directors believe, from previous and ongoing discussions
will result in material cashflow into the business during the
detailed forecast period of three years from 31 December 2018.
The Directors continue to monitor the levels of discretionary
spend and have the ability to delay certain costs, such as Research
and Development expenditure, in the event of unforeseen cash
constraints or delayed cash receipts.
The Directors have also considered a scenario where the phase 3
results of the MED2005 trial are not successful, although this
scenario is considered to be highly unlikely. In this scenario the
Directors will have sufficient cash to meet and settle all the
committed expenditure and have sufficient cash to re-align their
business strategy and continue investment in other products within
their pipeline. The cash balances will be sufficient to cover at
least 12 months from the date of signing the financial
statements.
The Directors, having reviewed the Group's and Company's budgets
and plans, taking account of reasonably possible changes in trading
performance, have a reasonable expectation that the Group and the
Company have adequate resources to continue in operational
existence for the foreseeable future (being at least 12 months from
the date of approval of these financial statements) and that it is
therefore appropriate to continue to adopt the going concern basis
in preparing the financial statements.
Based on the above, the Directors believe that it remains
appropriate to prepare the financial statements on a going concern
basis. However, they acknowledge there exists a material
uncertainty over the Group's ability to access additional sources
of finance which may be dependent upon the outcome of the MED2005
trial - that may cast significant doubt on the Group's and
Company's ability to continue as a going concern and, therefore, to
continue realising its assets and discharging its liabilities in
the normal course of business. The financial statements do not
include any adjustments that would result from the basis of
preparation being inappropriate.
2.3 Standards, amendments and interpretation to existing
standards
The Directors have considered all new standards, amendments to
standards and interpretations which are mandatory for the first
time for the financial year beginning 1 January 2018. From 1
January 2018 the Group adopted IFRS 15 Revenue from Contracts with
Customers. The Group has also adopted
2. Accounting policies (continued)
IFRS 9 Financial Instruments. There are no other new or amended
standards which impact the Group in the period.
The Group is continuing to assess the impact of IFRS 16 Leases.
The Group has currently only engaged in short term leases which are
outside the scope of IFRS 16 and therefore the Directors do not
expect the adoption of IFRS 16 to have a material impact on the
Group's consolidated statements.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 Revenue from contracts with customers deals with revenue
recognition and establishes principles for reporting useful
information to users of financial statements. The standard replaces
IAS 18 Revenue.
Given the limited revenue in the periods prior to the transition
and therefore minimal impact on the adoption of the standard on the
accounts and, therefore on the users of the financial statements,
the Group has elected to use the cumulative method meaning if
applicable, comparative prior years would not be restated rather
the cumulative effect of applying the new standard prior to periods
to 31 December 2017 is recognised in the opening balance of
retained earnings as at 1 January 2018. No adjustments have been
required as a consequence of these standards' adoption, as the
impact is immaterial.
IFRS 9 Financial Instruments
In the current period the Group has applied IFRS 9 Financial
Instruments and no adjustments have been required as a consequence
of these standards' adoption, as the impact is immaterial.
2.4 Revenue
IFRS 15 had no material impact on the financial statements of
the group in the period as no revenue was generated. In the prior
year, revenue was generated from non-refundable milestone payments
and royalty income.
Non-refundable milestone payments from right-to-use licences is
usually recognised at the point in time that the performance
condition is satisfied which is when the licence agreement is
signed by both parties as this is the date the customer can begin
to use and benefit from the licence unless there is an expectation
that the IP licensed requires further substantial work and whether
the customer would benefit from and have access to such further
work. If the licence allows the customer to be provided with access
to IP which is expected to change over time, this implies control
is transferred over time and therefore revenue would be recognised
over time. If the IP is not expected to significantly change then
control is transferred at a point in time and revenue will be
recognised at the point the IP is transferred to the customer. The
milestone payments received in the prior year were recognised when
the licence was signed by both parties as there were no further
performance conditions to satisfy and the IP was not expected to
change.
2. Accounting policies (continued)
Royalty income relating to the sale by a licencee of licenced
product is recognised in revenue when the title of goods is
transferred to the licencee.
2.5 Leased assets
Leases, which contain terms whereby the Group does not assume
substantially all the risks and rewards incidental to ownership of
the leased item are classified as operating leases. Operating lease
rentals are charged to the Consolidated Statement of Comprehensive
Income on a straight-line basis over the lease term. The Group does
not hold any assets under finance leases.
2.6 Intangible assets
Research and development ("R&D")
Expenditure incurred on the development of internally generated
products is capitalised if it can be demonstrated that:
-- it is technically feasible to develop the product for it to be sold;
-- adequate resources are available to complete the development;
-- there is an intention to complete and sell the product;
-- the Group is able to out-license or sell the product;
-- sale of the product will generate future economic benefits; and
-- expenditure on the project can be measured reliably.
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 CSD500 as the product
has not yet commercially launched in at least one major market
therefore commercial feasibility of the product is not yet certain.
Currently no other products in development have been approved.
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. Accounting policies (continued)
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 cashflows.
2.9 Inventories
Inventories are consumable materials to be used in development
and are initially recognised at cost, and subsequently at the lower
of cost and net realisable value. Cost includes materials, related
contract manufacturing costs and other direct costs. Cost is
calculated using the first in, first out method. Net realisable
value is based on estimated selling price, less further costs
expected to be incurred to completion and disposal.
A provision is recognised immediately in the Consolidated
Statement of Comprehensive Income in respect of obsolete or
defective items, where appropriate.
2.10 Financial instruments
IFRS 9 sets out requirements for measuring and recognising
financial assets, financial liabilities and some contracts to buy
or sell non-financial items. This standard replaces IAS 39
Financial Instruments and Measurement and has not had a material
impact on the consolidated financial statements. Financial
instruments comprise trade and other receivables, cash at bank and
in hand, restricted cash, loans and borrowings, and trade and other
payables.
Trade and Other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any
impairment losses.
2. Accounting policies (continued)
Trade payables, other payables and other liabilities
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised
cost using the effective interest method, less any impairment
losses. The Group de-recognises financial liabilities when the
Group's obligations are discharged, cancelled or expired.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances in the bank and
short-term money market fund deposits.
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
2. Accounting policies (continued)
-- 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.
2. Accounting policies (continued)
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 can exercise
discretion in settling any award in equity or in cash.
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 GBP146,833 (2017: GBP201,261), 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 19.
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.
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 cashflow can be judged with reasonable certainty. There
were no open forward contracts as at 31 December 2018 or at 31
December 2017 and the Group did not enter into any such contracts
during 2018 nor 2017.
At 31 December 2018 the Group had trade payables denominated in
a foreign currency totalling GBP931,532 (31 December 2017:
GBP11,582).
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
2018 2017
GBP GBP
Cash at bank and in hand 5,706,519 168,825
Sterling short-term money market funds 3,451,397 8,193,821
9,157,916 8,362,646
--------------------------------------- ---------------- ----------------
The Directors consider the Group's exposure to credit risk to be
acceptable and normal for a similar entity at its stage in
development.
4. Financial Risk (continued)
(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 GBP9,158,000 of cash and fixed term
deposits as at 31 December 2018 (2017: GBP8,363,000)
5. Revenue reporting
The Group is organised and operates as one segment. The Group's
revenue analysed by geographical location of the Group's customers
is:
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
Middle East / ROW - 12,727
United States of America - -
Europe - 350,000
- 362,727
--------------------------------------------------- ------------------------
6. Operating loss
Year ended Year ended
31 December 31 December
2018 2017
Operating loss is stated after charging: GBP GBP
Depreciation of plant and equipment (note
12) 19,850 13,248
Loss on disposal of plant and equipment 703 -
Inventories consumed in R&D 62,633 22,978
Operating lease costs: property 114,142 116,076
Loss on foreign exchange 12,606 9,701
6. Operating loss (continued)
The fees of the Group's auditor KPMG LLP for services provided
are analysed below:
Year ended Year ended
31 December 31 December
2018 2017
Audit services GBP GBP
Parent company 33,000 26,000
Subsidiaries 9,000 7,500
Tax services
Parent company 4,000 2,500
Subsidiaries - 1,000
Total fees 46,000 37,000
--------------- ------------------------ -------------
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
2018 2017
R&D staff 10 8
Finance and Administration staff 2 3
Executive Directors 3 3
15 14
----------------------------------- ---------------- ----------------
The aggregate payroll costs of these persons were as
follows:
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
Wages and salaries 1,603,513 1,584,122
Social security costs 172,805 200,623
Other pension and insurance benefits
costs 182,282 168,131
Total cash-settled emoluments 1,958,600 1,952,876
Share-based payment remuneration charge 146,833 201,261
---------------------------------------- ----------------------- ----------------------
Total emoluments 2,105,433 2,154,137
---------------------------------------- ----------------------- ----------------------
All employees of the Group are employed by Futura Medical
Developments Limited.
8. Directors' emoluments
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
Aggregate emoluments 929,608 698,837
Other pension and insurance benefit costs 19,748 21,875
Subtotal per remuneration report 949,356 720,712
Share-based payment remuneration charge 74,647 97,967
Employer's national insurance charge 86,991 96,038
Total emoluments 1,110,994 914,717
------------------------------------------ ------------- --------------------
In 2018 one Director exercised share options under the Group
share option schemes and realised a gain of GBP6,000 (2017:
GBP28,768). In respect of the highest paid Director the realised
gain was GBPnil (2017: GBP14,263).
In 2018 there were no Directors (2017: one Director) who
participated in a private money purchase defined contribution
pension scheme. Emoluments for individual Directors are disclosed
within the Remuneration Report.
Emoluments above include the following amounts in respect of the
highest paid Director:
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
Aggregate emoluments 273,855 235,002
Employer pension contributions - -
Subtotal per remuneration report 273,855 235,002
Share-based payment remuneration charge 28,711 40,608
Employer's national insurance charge 36,284 32,176
Total emoluments 338,850 307,786
---------------------------------------- -------- ----------------------
9. Finance income
Interest receivable in 2018 on treasury funds was GBP27,576
(2017: GBP19,316).
10. Taxation
10.1 Current tax
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
UK corporation tax credit on loss on
ordinary activities 1,358,336 936,344
------------------------------------- ------------------------- -----------------------
The tax assessed for the year was lower than the UK corporation
tax rate (2017: higher). The differences are explained below:
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
Loss on ordinary activities before tax 7,238,912 4,836,628
------------------------------------------ ------------ --------------------
Loss on ordinary activities at an average
standard rate of corporation tax in the
UK of 19.00% (2017: 19.25%) 1,375,393 931,051
Expenses not deductible for tax purposes (215) (249)
Unrecognised deferred tax (29,578) (30,523)
Unutilised tax losses (581,892) (381,446)
Share scheme deduction 5,529 11,235
R&D expenditure credit (3,296) -
Loss surrendered for refund (417,236) -
Additional relief for R&D claims 995,722 381,880
------------------------------------------ ------------ --------------------
UK corporation tax credit 1,344,427 911,948
Adjustment to tax charge relating to
prior period (144) -
R&D expenditure credit re 2016 9,098
R&D expenditure credit re 2017 15,298
R&D expenditure credit re 2018 14,053 -
------------------------------------------ ------------ --------------------
UK corporation tax credit reported in
the
Consolidated Statement of Comprehensive
Income 1,358,336 936,344
------------------------------------------ ------------ --------------------
The Group has tax losses of approximately GBP26,834,483 (2017:
GBP24,300,530) available for offset against future taxable
profits.
The corporation tax credit for the year represents research and
development tax credits of GBP1,344,427, arising from the surrender
of losses (rather than carrying forward to future years) of
GBP9,271,916 at 14.5%, under HMRC's small and medium size
enterprise scheme. The taxable loss for the year is in excess of
the accounting loss for various reasons, principally the additional
deductions given for tax purposes on research and development
expenditure.
10. Taxation (continued)
In addition a small claim under the large company Research and
Development Expenditure Credit (RDEC) scheme resulted in a refund
of GBP14,053.
10.2 Deferred tax
Deferred tax assets amounting to GBP4,881,640 (2017:
GBP4,133,675) 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) and to 18% (effective from 1 April 2020) were substantively
enacted on 26 October 2015, and an additional reduction to 17%
(effective from 1 April 2020) was substantively enacted on 6
September 2016. The unrecognised deferred tax asset at 31 December
2018 has been calculated assuming a prevailing tax rate when the
timing differences reverse of 17% (2017: 17%) and comprises:
Year ended Year ended
31 December 31 December
2018 2017
GBP GBP
Depreciation differential versus capital
allowances 2,108 (348)
Other short-term timing differences 317,670 2,932
Unutilised tax losses 4,561,862 4,131,091
----------------------------------------- ------------------------ ------------------------
4,881,640 4,133,675
----------------------------------------- ------------------------ ------------------------
11. Loss per share
The calculation of basic and diluted earnings per share ("EPS")
is based on the following data:
2018 2017
Earnings for the purposes of basic EPS
and diluted EPS (GBP) 5,880,576 3,900,284
Weighted average of ordinary shares for
purposes of basic and diluted EPS (number) 131,936,761 120,631,242
Loss per share basic and diluted (pence) 4.46 3.23
-------------------------------------------- ------------- -------------
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 5,700,000 (2017: 6,507,000).
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.
12. Plant and equipment
Computer Equipment Furniture
and Fittings Total
Cost GBP GBP GBP
At 1 January 2018 91,243 63,285 154,528
Additions 4,510 - 4,510
Disposals (9,151) - (9,151)
At 31 December 2018 86,602 63,285 149,887
------------------------- ----------------------- ------------------- -------------------
Depreciation
At 1 January 2018 37,915 53,096 91,011
Eliminated on disposals (8,447) - (8,447)
Charge for year 18,027 1,823 19,850
At 31 December 2018 47,495 54,919 102,414
------------------------- ----------------------- ------------------- -------------------
Net book value
At 31 December 2018 39,107 8,366 47,473
------------------------- ----------------------- ------------------- -------------------
At 31 December 2017 53,328 10,189 63,517
------------------------- ----------------------- ------------------- -------------------
Computer Equipment Furniture
and Fittings Total
Cost GBP GBP GBP
At 1 January 2017 49.694 60,787 110,481
Additions 51,345 4,249 55,594
Disposals (9,796) (1,751) (11,547)
At 31 December 2017 91,243 63,285 154,528
------------------------- ------------------------ -------------------- --------------------
Depreciation
At 1 January 2017 35,970 53,160 89,130
Eliminated on disposals (9,796) (1,751) (11,547)
Charge for year 11,741 1,687 13,428
At 31 December 2017 37,915 53,096 91,011
------------------------- ------------------------ -------------------- --------------------
Net book value
At 31 December 2017 53,328 10,189 63,517
------------------------- ------------------------ -------------------- --------------------
At 31 December 2016 13,724 7,627 21,351
------------------------- ------------------------ -------------------- --------------------
All fixed assets of the Group are held in Futura Medical
Developments Limited.
13. Inventories
31 December 31 December
2018 2017
GBP GBP
Consumable materials used for development 7,780 70,413
------------------------------------------ ---------------- ----------------
14. 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 2018 2017
Loans and receivables at amortised cost GBP GBP
Trade and other receivables (note 15) 248,426 39,520
Cash and cash equivalents (note 16) 9,157,916 8,362,646
Total receivables 9,406,342 8,402,166
-------------------------------------------------- ----------------------- -----------------------
31 December 31 December
2018 2017
Liabilities as per Consolidated Statement GBP GBP
of Financial Position at amortised cost
Trade and other payables (note 17) 1,246,247 131,430
Total Payables 1,246,247 131,430
------------------------------------------ ------------------------ ------------------------
The Directors consider that there is no material difference
between the carrying values of financial assets and liabilities,
and their fair value.
15. Trade and other receivables
31 December 31 December
2018 2017
Amounts receivable within one year: GBP GBP
Trade receivables 627 6,299
Other receivables 247,799 33,221
------------------------------------ ---------------- ----------------
Financial assets (note 14) 248,426 39,520
Prepayments 57,982 141,556
306,408 181,076
------------------------------------ ---------------- ----------------
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.
16. Cash and cash equivalents
31 December 31 December
2018 2017
GBP GBP
Cash at bank and in hand 5,706,519 168,825
Sterling short-term money market funds 3,451,397 8,193,821
9,157,916 8,362,646
--------------------------------------- ---------------- ----------------
17. Trade and other payables
31 December 31 December
2018 2017
GBP GBP
Trade payables 1,246,247 131,430
-------------------------------- ---------------- ----------------
Social security and other taxes 42,684 131,771
Deferred Income - 12,503
Accrued expenses 736,584 223,437
-------------------------------- ---------------- ----------------
2,025,515 499,141
-------------------------------- ---------------- ----------------
The increase in payables is reflective of the increase in
research and development activities relating to the Phase 3 study
commencement in the year.
18. Share capital
31 December 31 December 31 December 31 December
Authorised 2018 2017 2018 2017
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 2018 2017 2018 2017
Number Number GBP GBP
Ordinary shares of 0.2
pence each 204,583,439 120,696,002 409,167 241,392
------------------------ ----------- ----------- ---------------- ----------------
The number of issued ordinary shares as at 1 January 2017 was
120,144,950. During the year ended 31 December 2017, the Company
issued shares of 0.2 pence each as follows:
Shares
Gross Consideration Issued
Month Reason for issue GBP Number
Non-Executive Director award at 28.45
January 2017 pence per share 28,669 100,770
Option exercise at 40.50 pence per
January 2017 share 155,100 382,962
Option exercise at 51.75 pence per
May 2017 share 15,525 30,000
Non-Executive Director award at 57.50
December 2017 pence per share 21,459 37,320
-------------- -------------------------------------- ------------------- ------------
18. Share capital (continued)
The number of issued ordinary shares as at 1 January 2018 was
120,696,002. During the year ended 31 December 2018, the Company
issued shares of 0.2 pence with each ordinary share carrying the
right to one vote as follows:
Shares
Month Reason for issue Gross Consideration Issued
GBP Number
Option exercise at 30.00 pence
January 2018 per share 24,000 80,000
Option exercise at 30.00 pence
January 2018 per share 24,000 80,000
Option exercise at 30.00 pence
May 2018 per share 45,000 150,000
Share placing at 7.00 pence
November 2018 per share 5,600,000 80,000,000
Open Offer placing at 7.00
November 2018 pence per share 250,421 3,577,437
-------------- ---------------------------------- ------------------- ------------------
5,943,421 83,887,437
---------------- ------------------------------- ------------------- ------------------
Net proceeds received were GBP5,480,239 after costs of
GBP463,182 were settled.
19. Share options
At 31 December 2018, 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 December
per Share 2018 Exercised Lapsed Granted 2018
Pence Number Number Number Number Number
Exercise Period
1 October 2013 - 30 September
2018 56.50 627,500 - (627,500) - -
1 October 2014 - 30 September
2019 61.50 660,000 - (350,000) - 310,000
1 October 2015 - 30 September
2020 71.50 750,000 - (130,000) - 620,000
1 October 2016 - 30 September
2021 51.75 710,000 - (130,000) - 580,000
1 October 2017 - 30 September
2022 30.00 1,060,000 (310,000) - - 750,000
1 October 2018 - 30 September
2023 57.50 1,260,000 - (300,000) - 960,000
1 October 2019 - 30 September
2024 30.50 1,440,000 - (300,000) - 1,140,000
1 October 2020 - 30 September
2025 7.50 - - - 1,340,000 1,340,000
------------------------------ ---------- --------- ------------- ----------- ------------- --------------
6,507,500 (310,000) (1,837,500) 1,340,000 5,700,000
------------------------------ ---------- --------- ------------- ----------- ------------- --------------
On 19 November 2018 share options over 1,340,000 new ordinary
shares were granted to employees (including Executive Directors) at
a price of 7.50. The options have a 2 year vesting period and the
exercise period for these options is 1 October 2020 to 30 September
2025.
19. Share options (continued)
The share options outstanding at 31 December 2018 represented
2.78% of the issued share capital as at that date (2017: 5.39%) and
would generate additional funds of GBP2,159,300 (2017:
GBP3,145,813) if fully exercised. The weighted average remaining
life of the share options outstanding at 31 December 2018 was 52
months (2017: 52 months) with a weighted average remaining exercise
price of 50.26 pence (2017: 48.34 pence).
The share options exercisable at 31 December 2018 totalled
3,220,200 (2017: 3,707,500) with an average exercise price of 51.28
pence (2017: 51.53 pence) and would have generated additional funds
of GBP2,318,200 (2017: GBP1,910,613) if fully exercised.
The Group's share option scheme rules apply to 5,320,000 of the
share options outstanding at 31 December 2018 (31 December 2017:
6,027,500) 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 advisors under the
unapproved scheme. Such options generally vest immediately and are
exercisable between one and two years after grant, there were
380,000 share options outstanding to advisors at 31 December 2018
(31 December 2017: 480,000).
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.
19. Share options (continued)
Share based payments
31 December 31 December 31 December
Inputs to share option pricing model 2018 2017 2017
Grant date 19 November 12 September 13 January
Number of shares under option 1,340,000 1,440,000 1,260,000
Share price as at date of grant 6.95 pence 30.50 pence 57.50 pence
Option exercise price 7.50 pence 30.50 pence 57.50 pence
Expected life of options: based on previous
exercise history 3 years 3 years 3 years
Expected volatility: based on median fluctuations
over 3 years 82.70% 67.82% 65.74%
Dividend yield: no dividends assumed 0% 0% 0%
Risk-free rate: yield on 3 year treasury
stock as at date of grant 0.84% p.a. 0.31% p.a. 0.30% p.a.
-------------------------------------------------- ------------------ ------------------ ------------------
Outputs generated from share option pricing 31 December 31 December 31 December
model 2018 2017 2017
Fair value per share under option 3.57p 11.55p 20.37p
Total expected charge over the vesting GBP47,838 GBP166,320 GBP256,662
period
-------------------------------------------- --------------- --------------- ----------------
Recognised in Consolidated Statement 31 December 31 December 31 December
of Comprehensive Income 2018 2017 2017
GBP GBP GBP
The share-based remuneration charge comprises:
Share-based payments - employees 3,016 24,648 144,731
Share-based payments - consultants - - -
----------------------------------------------- ---------------------- ---------------------- ---------------------
Share-based payments 3,016 24,648 144,731
----------------------------------------------- ---------------------- ---------------------- ---------------------
The total expense recognised for the year arising from
share-based payments is as follows:
31 December 2018 31 December 2017
GBP GBP
Group equity-settled share based payment expense 146,833 201,261
------------------------------------------------------ ------------------ ------------------
20. Pension costs
The pension charge represents contributions payable by the Group
to independently administered funds which during the year ended 31
December 2018 amounted to GBP86,990 (2017: GBP141,992). Pension
contributions payable in arrears at 31 December 2018, included in
accrued expenses at the relevant Consolidated Statement of
Financial Position date, totalled GBP6,183 (2017: GBP4,300).
21. Commitments
At 31 December 2018 the Group had operating lease commitments in
respect of property leases cancellable on one month's notice of
GBP9,767 (2017: GBP9,767).
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 8 and within
the Remuneration Report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UGUAACUPBGQB
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April 10, 2019 02:00 ET (06:00 GMT)
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