Futura Medical is rapidly approaching a major inflection point as the results of a pivotal Phase III study (FM57) for its lead compound, MED2005, are due to read out in December. MED2005 is a fast-acting glyceryl trinitrate gel that addresses erectile dysfunction (ED). The FM57 data is expected to be positive and will influence the design of the remaining Phase III trial (FM59) required for US approval (and possibly Europe too). This data will also fuel licensing discussions with potential partners. The commercial opportunity in ED is sizeable, although addressing the various elements of the market segments and different geographies optimally will, in our view, be critical. Our DCF-based model employs conservative assumptions and currently values Futura Medical at £127m, equivalent to 62p a share.
Top-line results from the pivotal FM57 Phase III study for MED2005 in erectile dysfunction (ED) are expected in December. The nature and structure of the trial, placebo and three active doses (0.2%, 0.4%, and 0.6%) and three patient groups (Mild-, Moderate-, and Severe-ED) means that a conclusive headline result is, in our view, unlikely. We do expect significantly positive outcomes, especially at the higher doses, in the Mild- and Moderate-ED groups; Severe-ED tends to be associated with more complicated health issues.
FDA requires a smaller confirmatory Phase III study (FM59) to be performed for US approval. In Europe, a filing may be potentially acceptable if FM57 results are highly compelling; however, we model conservatively on the basis that supportive FM59 data will be needed for approval. FM59 preparations are underway, with clinical sites identified including in the US, although it requires funding to be in place ahead of recruitment starting in 2020.
Partnering discussions are ongoing and are expected to expand and advance once FM57 data is known. We believe the ED market is evolving, especially in the US, and a single, global partner is unlikely to be able to optimise MED2005’s potential income. We would expect European, and possibly select Asian, regions to be partnered first (markets that are relatively conventional), with a US deal later.
We value Futura Medical using a riskadjusted DCF model and use conservative assumptions throughout. We expect to revisit these assumptions as Phase III data becomes available and visibility of the commercialisation strategies improves. Our current valuation is £127m (62p/share).