Enzymatica - A tough start to the year

Sales -37% y-o-y for EBIT of SEK -9m Sights set on recovery in common cold market in H2 ’21 Pandemic delays development by 12-18 months Q1: Sales & EBIT 31% & 50% below ABGSCe, respectively According to Enzymatica, the common cold markets in Sweden and other countries were reduced by 50% in Q1’21 due to pandemic restrictions. Sales came in at SEK 17m (-31% vs. ABGSCe at SEK 25m), primarily through orders from partners STADA and Sanofi for sales in European markets (e. g.

Italy, France and the Netherlands). The high contribution from distributor markets led to a gross margin of 54% (-10pp vs. ABGSCe of 64%).

Solid cost control did not offset lower volumes and gross margin, with EBIT coming in at SEK -9m (vs. ABGSCe at SEK -6m). Enzymatica ended the quarter with a cash position of SEK 21m and the company has planned a 100% guaranteed rights issue of SEK 59m.

Pandemic causes delays – management focuses on recovery Enzymatica and its distribution partners continue its global roll-out, albeit hampered by the pandemic. We note that its partners will handle market investments and sales costs, which enables a less capital intensive and faster international expansion. Management believes that the cold remedy market could recover in H2 ’21, once countries complete their vaccination roll-outs.

We note that Enzymatica is investing heavily in its Icelandic facility, and aims to upgrade operations and expand production. EV/sales of 15-6x in ‘21e-‘23e for a 25% sales CAGR ’20-‘23e We lower our sales and EBIT estimates for ‘21-’23 on the back of the 12-18-month commercialisation delays caused by the pandemic. We believe the market for common cold remedies will recover gradually going into H2 ’21 and beyond.

According to Enzymatica, the SEK 59m rights issue will secure the long-term financing of operations.