Enzymatica AB: Breakthrough agreement for Japan and lower sales in Q3 due to restrictions in Germany

2018-10-31

                                                                                      
Interim report for
Enzymatica AB (publ)
JANUARY-SEPTEMBER 2018
                                                                                                                                                                     
Breakthrough agreement for Japan and lower sales in Q3 due to restrictions in Germany


Q3          

  • Net sales reached SEK 13.2 (24.8) million.
  • Net profit after tax came in at SEK -9.6 (-3.6) million.
  • Earnings per share, basic and diluted, were SEK -0.11 (-0.04).
  • Cash and cash equivalents were SEK 9.5 (9.5) million.

Significant events in Q3

  • Enzymatica signed a contract with ABEX Pharmaceuticals for sales and marketing of ColdZyme® Mouth Spray in South Africa.
     
  • ColdZyme continued to capture market share in the Swedish market in terms of both value and volume.
     
  • The regional court of Frankfurt imposed restrictions on the marketing of the cold spray ViruProtect® in Germany. Enzymatica's partner in Germany has appealed the ruling.
     
  • As a result of the situation in Germany, Enzymatica estimates that annual sales will decline by 15% to 20% compared with sales of SEK 59 million in 2017. The previous estimate from July suggested a decline of 10%.

First nine months                                                                                                                                                         

  • Net sales totaled SEK 33.6 (40.3) million.
  • Net profit after tax came in at SEK -35.2 (-25.8) million.
  • Earnings per share, basic and diluted, were SEK -0.39 (-0.28).

Significant events after the quarter

  • Enzymatica presented preliminary results from a large multicenter study in Germany that evaluated four different cold scales and demonstrated significant advantages offered by ColdZyme.
  • Enzymatica signed a contract with a major Japanese pharmaceutical company for sales and marketing of ColdZyme on the Japanese market - one of the largest health care markets in the world.
  • Enzymatica's Board of Directors proposed a rights issue with preferential rights for the company's shareholders of a total of about SEK 98.7 million. The capital injection will primarily be used for Enzymatica's clinical research program and for continued international expansion, as well as repayment of a bridge loan of SEK 30 million.            
Key figures          
(SEK THOUSAND) Q3
2018
Q3
2017
Jan-Sep
2018
Jan-Sep
2017
Full year
2017
Net sales 13.2 24.8 33.6 40.3 59.4
Gross margin, % 70 56 67 56 61
Operating profit/loss -9.2 -2.2 -33.8 -25.5 -30.2
Cash flow from operating activities -12.2 -8.1 -30.6

 
-24.4 -22.5
Average number of employees 21 21 21 21 21

         CEO statement: Strong data from German multicenter study


The most important event for Enzymatica since the last interim report was the report on the preliminary results from the multicenter study in Germany, which we presented on October 1. In this explorative study we investigated the ability of four different cold scales to detect the positive effects of ColdZyme compared with a group that was not treated with our product. Although the results are preliminary, I can conclude that these data showing the positive effects of ColdZyme are extremely strong. All four symptom scales were able to show a significant better effect when using ColdZyme than without treatment. In addition, the use of medicines for symptomatic relief of colds was significantly lower among those who used ColdZyme. The consistently positive results strongly indicates that ColdZyme reduces both the intensity of symptoms and the duration of colds.

Third-quarter sales were lower than the corresponding quarter last year. This decline is mainly due to two factors: the warm summer and the ruling in Germany regarding marketing of ViruProtect, which is the brand under which ColdZyme is sold in Germany. The warm summer throughout Europe resulted in fewer colds and a general decline in sales of cold products, which also affected our sales, though to a lesser extent than in the market as a whole.

As a result of the court ruling in Germany, which we have announced earlier, restrictions have been imposed on our partner regarding the marketing of ViruProtect. Although German pharmacies may continue to sell the existing product stock, inventories may not be restocked as long as the ruling is in effect. Consequently, our German partner will not be able to place any new orders for the German market until further notice. The ruling applies only to Germany, but not to ViruProtect sales in Austria and Belgium. The background is that German legislation on product claims of medical device products is stricter than in the rest of the EU. Our partner has appealed the ruling and we are also working on strengthening the documentation for ColdZyme in order to be able to resume sales of the product in Germany.

We are pleased to report that ColdZyme continues to capture market share in Sweden. During the third quarter, the total cold remedy market declined by 2.4% in volume, while sales of ColdZyme rose by 7%. On a rolling 12-month basis our market share (7 and 20 ml combined) increased from 4.9% to 5.3% compared with the same period the previous year. Moreover, ColdZyme thereby passed Nezeril and is now the fifth largest cold brand in Sweden.

Strong efforts are underway to sign distributor agreements for new markets. During the quarter we signed a contract with ABEX Pharmaceuticals for sales and marketing of ColdZyme for the South African market. This well-established pharmaceutical company has strong distribution channels and the launch of ColdZyme is planned for the 2019 winter season. With sales in the southern hemisphere, where the cold season extends from March through August, we will see some leveling of the current seasonal variation in sales.

After the close of the reporting period we signed a contract with one of the largest Japanese pharmaceutical companies regarding registration, marketing, distribution and sales of ColdZyme. The contract is a milestone in Enzymatica's development and provides us with access to one of the world's largest health care markets with a population of about 127 million, as well as a cold remedy market with annual sales of almost SEK 10 billion. This is the second really large partner, in addition to STADA, with which we have signed a contract and we have thus once again received confirmation of our barrier technology.

To ensure our long-term financing the Board of Directors proposed in October that Enzymatica should float a rights issue of about SEK 98.7 million. The injection of capital will primarily be used to accelerate our clinical research program and for our continued international expansion, as well as repayment of a bridge loan from June. The Board of Directors intends to secure the rights issue to 100 percent through subscription commitments and underwriting agreements.

With the results from the German multicenter study and the agreement for the Japanese market I have an even stronger positive view of Enzymatica's future. We are now continuing our efforts in a high pace for further studies to scientifically support ColdZyme's positive effects and to sign distributor agreements for additional markets.

Fredrik Lindberg, CEO

For questions about this report, please contact:
Fredrik Lindberg, CEO, Enzymatica AB
Tel: +46 (0)708-86 53 70 | Email: fredrik.lindberg@enzymatica.com

Therese Filmersson, CFO, 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 October 31, 2018.

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. The Company is traded under the ticker symbol ENZY and ISIN code SE0003943620.
Enzymatica's certified adviser is Erik Penser Bank.