Lower sales due to the pandemic but new rights issue secures continued international expansion

Regulatory information

First quarter                 

  • Net sales reached SEK 17.0 (26.8) million.
  • Result after tax came in at SEK -8.9 (0.7) million.
  • Earnings per share, basic and diluted, were SEK -0.06 (0.01).
  • Cash and cash equivalents were SEK 21.4 (33.9) million.

Significant events in Q1

  • Enzymatica’s sales during the quarter declined compared with the corresponding period in 2020 due to the effects of the pandemic, which essentially reduced the cold remedy market by 50 percent, both in Sweden and in other markets.
     
  • Enzymatica announced on March 22 that sales for 2021 could be lower than sales for 2020, which totaled SEK 111 million, because of the impact of the pandemic on the cold remedy market. The Board of Directors has therefore decided to raise SEK 59 million through a rights issue to fund the company’s long-term initiatives and to meet working capital needs for the next 12 months.
     
  • Enzymatica recruited two strategic hires, Malin Richter as the new Director Operations and Kristoffer Ahlerup as the new Director Commercial, both of whom have extensive experience from the international life science industry.

Impact of the coronavirus pandemic

  • As a result of the coronavirus pandemic, with social distancing, improved hand hygiene and fewer social contacts, the cold remedy market in Sweden and internationally was reduced by 50 percent during the quarter. As with other cold products, ColdZyme sales were negatively impacted by the decline. The company does not see any direct effects of COVID-19 on the business with respect to production, logistics, sickness absence, etc. Enzymatica believes that cold remedy markets could recover in the second half of 2021, once countries complete their vaccination campaigns.

Key figures for group

(SEK million) Jan-Mar
    2021
  Jan-Mar
    2020
Full year
2020
Net sales 17.0 26.8 111.2
Gross margin, % 54 78 68
Operating profit/loss -8.7 0.2 -12.1
Cash flow from operating activities 1.3 -4.5 -10.7
Average number of employees 23 17 18
 

From the chairman: Pandemic delays our development by 12-18 months
During the first quarter, the common cold markets in Sweden and other countries were reduced by 50% due to the effects of the pandemic. As a result of social distancing, improved hand hygiene and significantly fewer social contacts, the common cold viruses are spreading to a much lesser extent than usual. Consequently ColdZyme sales, like other cold products on the market, decreased sharply. The decline was cushioned by sales from the launch of ColdZyme in markets such as France and Italy, where the product was well received by consumers. During the second quarter, ColdZyme will be launched in additional new markets, such as the Netherlands and Poland. The planned rights issue to raise SEK 59 million, which is guaranteed by the company’s three largest owners, will provide sufficient resources for us to be able to continue our aggressive expansion strategy, conduct clinical trials, build up the organization and supply chain, and meet working capital needs for the next 12 months.

Enzymatica’s sales during the first quarter totaled SEK 17.0 million, compared with about SEK 26.8 million the corresponding period in 2020. Sales primarily come through orders from STADA and Sanofi and apply to Italy, France, the Netherlands, the Czech Republic, Romania, Austria, Portugal, Poland and Hungary. The lower sales compared with the corresponding period in 2020 can be attributed in part to high comparative figures from the sharp increase in sales during the first quarter of 2020 through orders for the Swedish, British and Danish markets. The increase in sales in 2020 was driven by the outbreak of the pandemic, with consumers purchasing ColdZyme to reduce and prevent cold symptoms given the coronavirus situation at that time. At the same time, sales in Q1 2021 exceeded first-quarter sales in both 2019 and 2018, which totaled just over SEK 13 million and SEK 15 million, respectively.
The decline in gross margin from 78% in Q1 2020 to 54% in Q1 2021 follows plan and is due to a large shift from sales in the company’s own markets last year to distributor markets this year. In these markets the distributors will assume responsibility for market investments and sales costs, which means that these costs will not be carried by Enzymatica. Thus, this enables a less capital intensive and thereby faster international expansion, as well as a more scalable business model. Since we are expecting that the share of sales generated by distributors will grow and dominate our business in the future we will, going forward, focus more on the EBIT margin.

After the first quarter of 2021, we can conclude that the decline in our established markets was much larger than expected and that launches of ColdZyme in some new markets may be delayed due to the effects of the pandemic. Due to the pandemic the cold remedy markets were halfed, which also impacted ColdZyme sales. Given this situation, we believe that sales for 2021 could be lower than sales for 2020, which totaled SEK 111 million. Our assessment is that the pandemic will delay Enzymatica’s expected development by up to 12–18 months.
Given the considerable uncertainty in the market trend
moving forward, the Board of Directors has decided that the company will raise SEK 59 million through a rights issue. These funds will enable us to focus on strategic issues, such as continuing with our international initiatives, conducting clinical trials, strengthening the organization and supply chain, meeting working capital needs and maintain momentum in the operations. The issue will entail dilution of 3.3% and is covered by the mandate from the previous Annual General Meeting, which authorized the Board to issue of a maximum of 10% of the company’s total number of shares.

During the quarter we continued to strengthen our organization, in part by hiring Malin Richter as Director Operations and Kristoffer Ahlerup as Director Commercial. Both of our new colleagues have extensive experience from international life science companies.

After the first quarter we commissioned parts of the upgraded facility in Reykjavik for production of trypsin, which is one of the key components in ColdZyme. In 2020 and 2021, we are investing heavily in the Icelandic facility, to upgrade the operation to streamline production, and to scale up production to meet the growing demand resulting from the many new distributor agreements that we signed in 2020.

We believe that the cold remedy market could recover in the second half of 2021 once countries complete their vaccination campaigns. Market data shows that the cold remedy market in Australia already has begun to recover during their winter and has now reached about the same level as 2019, before the outbreak of the pandemic.

Our focus for Q2 is to continue to support our partners in their ambitious and long-term efforts to launch and sell ColdZyme in new markets, to continue working on securing additional distributor agreements for more geographic markets, and continue working on clinical trials and regulatory work to prepare for the MDR, the upcoming regulatory framework for medical devices, when it comes into force in 2024 for ColdZyme. Despite the challenges of the effects of the pandemic, we continue to be optimistic with respect to Enzymatica’s long-term development – we will continue to build a business with a strong international presence, albeit with a temporary delay.

Bengt Baron, Executive Chairman of the Board

Enzymatica at a glance
Enzymatica AB is a life science company whose business concept is to develop products, based on the company’s barrier technology and marine enzymes, for self-care in major market segments. The company developed ColdZyme, a unique mouth spray for fighting colds, launched the product on about thirty markets and since the launch in 2013 reached a position as one of the most-sold brands in Swedish pharmacies measured in SEK. Enzymatica has its own sales organization in Scandinavia and collaborates with a contract sales organization in the UK, as well as through distributors in other international markets. Enzymatica’s collaboration partners are experienced international brand builders and they carry out comprehensive market investments in relation to registration and launch of ColdZyme in a new market. In addition to ColdZyme, the company’s partner STADA has sold a spray for improved oral health in Germany since early 2020.

Development work is currently focused on products related to upper respiratory tract infections. An enzyme extracted from deep-sea cod is a key sub-component in product development.

Enzymatica was founded in 2007, has its head office in Lund, Sweden, and has been listed on the Nasdaq First North Growth Market since 2015.

For questions about this report, please contact:
Bengt Baron, Executive Chairman of the Board, Enzymatica AB
Tel: +46 (0)708- 59 30 09 | Email: bengt.baron@outlook.com

Therese Filmersson, CFO, acting CEO, Enzymatica AB
Tel: +46 (0)708- 40 72 24 | Email: therese.filmersson@enzymatica.com

Publication
This information is information that Enzymatica is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 8:30 a.m. CET on Thursday, April 29, 2021.

Street address
Enzymatica AB (publ) Corporate identity no.: 556719-9244
Mailing address: Ideon Science Park, 223 70 LUND
Street address: Scheelevägen 19, Ideon, Lund
Tel: +46 (0)46-286 31 00 | info@enzymatica.se | www.enzymatica.se

Enzymatica is listed on the Nasdaq First North Growth Market. The company is traded under the ticker symbol ENZY and ISIN code SE0003943620.

Enzymatica’s certified advisor is Erik Penser Bank. Tel: +46 (0)8-463 83 00 Email: certifiedadviser@penser.se

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