Futura Medical PLC (FUM.L) Futura Announces Investment & Joint Collaboration

Futura Medical Announces Investment and Joint Collaboration to Commercialise MED3000 in China and South East Asia

Futura Medical plc (AIM: FUM) (“Futura” or the “Company”), a pharmaceutical company developing a portfolio of innovative products based on its proprietary, transdermal DermaSys® drug delivery technology and currently focused on sexual health and pain, today announces it has entered into certain financing transactions with HT Riverwood Multi-Growth Fund (“Riverwood”), a fund managed by Atlantis Investment Management Limited (“Atlantis”), a leading asset manager, which provides the Company with up to £2 million in cash, £1.5 million of which has been received.

In addition, Futura has 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 Erectile Dysfunction (“ED”) treatment MED3000, in China and South East Asia. Co-High will provide funding currently estimated to be up to £4 million for development and regulatory approval of MED3000 in the region and Futura will be entitled to 50% of regional profits from the commercialisation of MED3000 (the “Joint Collaboration”).

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.

Commercial Highlights:

· Co-High is responsible for all regional MED3000 development and regulatory costs, which are estimated to be up to £4 million.

· The profits of the Joint Collaboration will be shared 50:50 between Futura and Co-High.

Funding Highlights:

· Futura has received £1.5 million through the issuance of convertible loan notes to Riverwood, with a 3-year conversion period at a premium price of 20p.

· Futura will also issue warrants to Riverwood which confer rights to purchase a total of 2,272,727 ordinary Shares in Futura with 4-year expiration from the date of issue and an exercise price of £0.22 per warrant. This would result in £0.5 million financing for Futura.

· Full exercise of the loan notes and warrants would result in issuance of 9,772,727 new ordinary shares to Riverwood.

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.

Co-High licensing agreement

Under the terms of the agreement, Futura and Co-High will work together to develop and commercialise MED3000 as a clinically proven treatment for ED available without the need for a doctor’s prescription (“OTC”) throughout South East Asia. This includes the People’s Republic of China (including for the avoidance of doubt, Hong Kong, Macau and Taiwan), and South-Eastern Asia including Brunei Darussalam, Cambodia, East Timor, Indonesia, Lao People’s Democratic Republic, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam (collectively “the Region”).

Co-High, along with its local partners, will be responsible for all costs related to the development, approval, (which are expected to be up to £4 million) and marketing of the product. This is expected to include a pivotal study in order to gain OTC regulatory approval within China, whereas Co-High believes the EU (inclusive of the UK) approval of MED3000, expected this year, will facilitate approval in the other countries within the Region without the need for further clinical development. Futura will provide reasonable ongoing technical support for OTC product development and commercialisation. Profits from the Joint Collaboration will be shared 50:50, including any profits derived from local partner agreements within the Region.

The global ED prescription market is estimated to be approximately US$5 billion1 amongst the leading 15 markets, with the USA ranked first and China ranked third in value terms. The prevalence of ED amongst adult males2 is estimated to be 340 million within these markets with China ranked first and USA ranked fourth. China and its neighbouring countries which are included in the Region represent a significant opportunity as the economies of these countries continue to outstrip the economic growth of many Western economies.

Financing

Futura has also secured near-term financing of £2 million: Riverwood has subscribed for a total of £1,500,000 3-year, convertible loan notes to be issued by the Company at a conversion price of £0.20, a 25% premium over the closing 30 day average share mid-price of 16p. Loan note interest payable is nil for 6 months, with a 2% coupon rate thereafter. In addition, the notes contain a mandatory conversion when Futura’s share price trades at or above 30p for one month and Futura has received European regulatory approval as a Class 2B medical device for MED3000. The loan note instrument contains certain events of default, including not being granted regulatory approval as a Class 2B medical device in the EU.

Futura will also issue to Riverwood warrants to purchase a total value of £500,000 ordinary shares in the Company, with an expiration of four years from the date of issue and an exercise price of £0.22 per such ordinary warrant share.

Regulatory update

Futura is seeking marketing approval for MED3000 in the EU and the USA for use as a non-prescription, clinically proven treatment of ED, with plans to file for regulatory approval in other regions in due course. As announced previously, Futura had submitted the technical file for MED3000 for treatment of ED under the European Medical Device Regulation for marketing approval as a Class 2B medical device. The EU approval process continues with significant progress in review of the MED3000 technical file by the regulator. Futura continues to expect an approval for MED3000 this year. With respect to the USA, Futura has had a constructive 4th meeting with the FDA to finalise the clinical trial protocol for the required small confirmatory study and is awaiting final meeting minutes.

James Barder, Chief Executive of Futura Medical commented: “We are excited to be entering into this collaboration with Co-High to expand MED3000’s market reach to China and South East Asia, a significant market for ED. We are very pleased to have a partner with Co-High’s experience, resource and strong pharmaceutical connections in the Region and look forward to working in close collaboration with their team. We remain confident that we will achieve EU and US approval for MED3000 as a clinically proven, fast-acting, topical and highly tolerable treatment for ED patients, without the need for a doctor’s prescription and look forward to updating the market in the coming months.”

Yang Liu, Chairperson and Chief Investment Officer of Atlantis commented: “Through Riverwood we are delighted to provide financial support to the regional healthcare industry in Greater China and South East Asia to drive successful development and optimal commercialisation of medical therapies in the region. We are proud to be in the vanguard of collaborative efforts to bring important and innovative new disease therapies to market in Asia in a way that that maximises and eases access for patients in such a large region where we anticipate strong demand.”

Alick Dong, Managing Director of Co-High commented: “We are pleased to initiate this joint collaboration with Futura and bring their clinically validated technology to China and Southeast Asia. We feel that MED3000 could significantly benefit individuals suffering from ED in these regions, generating significant value for Futura and Co-High in the process. We look forward to collaborating with Futura while bringing MED3000’s immense potential to fruition”.

1. Source: IQVIA IMS Health 2018

2. Source: Global Data Epidemiological Analysis 2020

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