A little over a year ago Shares highlighted a small company with only 12 employees punching way above its weight after it created the first significant innovation in the ED (erectile dysfunction) market in more than 20 years.
If anything the momentum has accelerated since then, and this month (October) sees specialist sexual health company Futura Medical (FUM:AIM) officially launch its proprietary ED product Eroxon into the US market through exclusive US distribution partner Haleon (HLN).
It marks a potential breakthrough point for both revenue growth and importantly, profit and cash generation. The earlier than expected launch also demonstrates the execution capability and laser-like commercial focus of the management team.
There are always extra risks to consider when investing in smaller companies operating with a single product, but we believe that for investors with the appetite and patience, an investment in Futura Medical could pay off handsomely.
A LARGE UNDER-SERVED MARKET
There are around four million men in the US who have been diagnosed with ED and take prescription medicines such as Viagra or Ciallis, equivalent to 500 million doses a year. But this only tells a small part of the wider investment case.
There are roughly 20 million men aged 22 to 75 in the US who suffer from ED but are not on treatment. This is the target market for Futura and its partner Haleon. Eroxon possesses unique selling points and advantages over current treatments.
Crucially, it is available without prescription or a consultation with a healthcare professional. It works in 10 minutes which introduces more spontaneity compared with existing treatments. Eroxon is the first topical gel clinically proven to treat ED.
The heavy marketing done in relation to existing ED products means the awareness of the issue among the general population is already high.
A 2022 Ipsos study on the market potential for Eroxon commissioned by Futura suggests peak annual sales of $350 million in year five, based on 7% uptake, 50 tubes purchased a year at a retail price of $5 per tube.
EUROPE AND REST OF THE WORLD
In Europe there are an estimated 20 million men affected by ED across the top five countries. Futura has partnered with Cooper Consumer Health, a leading European Union healthcare company which launched the product in the UK and Belgium in 2023, after receiving regulatory approvals in 2021.
The EU has granted patent protection until 2040. Analysts at Stifel highlight home studies conducted by Futura’s distribution partners covering more than 600 users which confirms the product has a greater than 60% success rate, in line with data from clinical trials.
Just as encouraging, says Stifel is data showing signs of repeat purchases in the UK market, running at between 15% and 20%. This is important because the UK is a comparatively tough market where competing products like Viagra are also available ‘over the counter’, in contrast to European and US markets.
The company has launched Eroxon in more than 10 countries including the US, UK, France, Italy, and Spain with more expected. One notable one being Mexico where Futura’s Latin America partner M8 has confirmed a launch.
In the rest of the world there are an estimated 194 million men affected by ED and Futura has signed up distribution partners in Korea and the Middle East and Gulf regions.
HOW DO THE FINANCIALS LOOK?
At the first-half results (10 September) the business delivered a 300% increase in revenue to £7 million and a maiden profit after tax of £1 million. The board said it expected 2024 full year revenue and profit to be ‘significantly’ ahead of market expectations.
These were believed to be revenue of £9.5 million and a loss after tax of £2.63 million. Consensus forecasts have since moved higher and now call for revenue of £13.5 million and a small £410,000 profit in the year to 31 December.
Analysts are forecasting a ‘step-change’ in 2025 profit to £7 million.
Including the $5 million launch milestone payment recently received from Haleon, the company has a cash position of roughly £8 million. All promotional and advertising costs are borne by the company’s distribution partners.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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