Enzymatica AB: Strong sales in the fourth quarter, but lower sales for full-year 2018 driven by restrictions in Germany

2019-02-19

                                                                                      
Interim report for
Enzymatica AB (publ)
                                                                                                                                                                      JANUARY- DECEMBER 2018
Strong sales in the fourth quarter, but lower sales for full-year 2018 driven by restrictions in Germany


Q4                               

  • Net sales reached SEK 18.9 (19.1) million.
  • Result after tax came in at SEK -7.4 (-5.6) million.
  • Earnings per share, basic and diluted, were SEK -0.07 (-0.06).
  • Cash and cash equivalents were SEK 70.3 (10.9) million.

Significant events in Q4  

  • Enzymatica signed a contract with a major Japanese pharmaceutical company for sales and marketing of ColdZyme® on the Japanese market - one of the largest healthcare markets in the world.
     
  • Enzymatica signed a contract with Evergreen Health for sales and marketing of ColdZyme in Hong Kong & Macau.
     
  • Enzymatica presented preliminary results from a large multicenter study in Germany that evaluated different cold scales and demonstrated significant positive effects offered by ColdZyme.
     
  • Interim results from a British study at the University of Kent in which endurance athletes used ColdZyme showed significantly shorter duration of colds compared with endurance athletes in the untreated group.

             
  

Full year        

  • Net sales reached SEK 52.6 (59.4) million.
  • Result after tax came in at SEK -42.6 (-31.4) million.
  • Earnings per share, basic and diluted, were SEK -0.45 (-0.35).  
  • Enzymatica raised SEK 98.7 million before issue costs in a rights issue with preferential rights for the Company's shareholders. The capital injection will primarily be used for the company's clinical research program and for continued international expansion, as well as repayment of a bridge loan.

Significant events after the quarter  

  • Enzymatica presented the final results from the German multicentre study for assessment of ColdZyme during the 2018 cold season. The convincing results strengthen and broaden ColdZyme's product claims.
     
  • Enzymatica has initiated a double-blind, placebo-controlled study to evaluate the effects of ColdZyme on the common cold. The extensive study will include 600 patients and is being conducted at 10 study centres in Germany. The first patients were enrolled in January.
Key figures for group        
(SEK million) Oct-Dec
2018
Oct-Dec
2017
Full year
2018
Full year
2017
Net sales 18.9 19.1 52.6 59.4
Gross margin, % 75 72 70 61
Operating profit/loss -6.8 -4.7 -40.6 -30.2
Cash flow from operating activities 1.8 1.9 -28.8 -22.5
Average number of employees 22 21 21 21

CEO statement: 2018 - a successful year with strategic distributor agreements, strong study results and continued strong growth in Sweden


In many ways, 2018 was a successful year for
Enzymatica. We signed three important distributor agreements for South Africa, Hong Kong & Macau and, in particular, the Japanese market. We conducted several clinical studies on ColdZyme with successful results. In addition, we ensured our long-term funding through an issuance of shares at the end of the year that generated a capital injection of SEK 98.7 million before issue costs. Sales were lower than the previous year, SEK 52.6 million, compared with about SEK 59 million, due to the loss of sales in Germany because of a decision in a regional court to restrict marketing and thus sales of ViruProtect on the German market. Meanwhile, the trend on the Swedish market continued to be very strong.

Enzymatica has a clear growth strategy and therefore it was rewarding that we were able to sign three important distributor agreements during the year. South Africa will be the first market to even out ColdZyme's current seasonal variation in sales, since the cold season in the southern hemisphere lasts from April to September. With the agreement for Hong Kong & Macau, ColdZyme will be launched on the first Asian market. Finally, as a result of the agreement with one of the leading healthcare companies in Japan, we will have access to one of the largest and most important markets for healthcare products in the world. Our ambition is to launch ColdZyme towards the end of 2020. It is a stamp of quality recognizing that we met the extremely stringent partnering requirements of this counterpart. A presence in both Hong Kong and Japan should also pave the way for agreements in other Asian markets, while at the same time there is strong interest in Enzymatica and ColdZyme from additional markets around the world.

In 2018 we conducted a multicenter study on ColdZyme in Germany that produced very promising results. Along with a reduction in the duration of the cold, the study showed clear relief of symptoms and a pronounced improvement in quality of life for those patients who were treated with ColdZyme compared with an untreated control group. All outcomes demonstrated strong statistical significance. To follow up on the convincing results in January 2019 we started a double-blind placebo-controlled study at about 10 centers in Germany with a total of 600 patients. The study is expected to be completed during the second half of 2019.

In the fourth quarter Enzymatica raised SEK 98.7 million before issue expenses in a rights issue with preferential rights for the company's shareholders. I am pleased that we have secured long-term funding so that we can carry out in-depth studies on the efficacy of ColdZyme and continue with the international expansion. The successful issuance also shows that our principle shareholders have a long-term perspective on the operation and strong confidence in the future of the company.

After a robust sales trend in the first quarter, sales declined during the spring because of the restrictions on marketing and sales of ViruProtect® in Germany imposed by the German court. But through an extremely strong final quarter we recovered some of the loss in sales. In Q4 we achieved about the same level of sales as in the last quarter of 2017, about SEK 19 million, despite the loss of almost SEK 6 million in sales from Germany in Q4 2017. In particular, sales in Sweden surged 56% compared with the fourth quarter in 2017 achieving an all-time high market share. Both an overall increased marketing because of more stakeholders in the cold segment, and our own extensive marketing campaign contributed to the strong growth in sales.

During the year we also dedicated considerable time and resources to upgrading production and quality management systems to meet the requirements of the new EU regulatory framework for medical devices (MDR), which will begin to be applied in May 2020. As a result our new facility for production of enzymes in Iceland was certified to ISO 9001 standards at the end of the year. The facility already worked in accordance with Good Manufacturing Practices (GMP). The quality management system was also certified to EN ISO 13485:2016 during the year.

In 2018 we adopted a long-term strategy that focuses on colds and cold products, as well as international expansion. The cold segment is an area in which there is a great need for improved treatment. With ColdZyme's successes, our strong expertise in the field and great interest from international pharmaceutical companies and other distributors, we have every prospect of establishing a leading position in selected markets.

Our focus for 2019 is to complete more in-dept clinical studies for ColdZyme, relaunch ViruProtect in Germany during the cold season 2019/2020, launch ColdZyme in South Africa and Hong Kong & Macau, and enter into additional distributor agreements. We are carefully evaluating the right partners who have financial muscle, a broad distribution network, are leaders in their market and who have a long-term perspective and commitment to ColdZyme. I believe that we have outstanding prospects for 2019 to become yet another successful year for Enzymatica.

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 08:00 CET on Tuesday, February 19, 2019.
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 advisor is Erik Penser Bank. Tel: +46 (0)8-463 83 00, Email: certifiedadviser@penser.se