Enzymatica - The not-so-common cold

Significant decrease in common cold markets Sales and EBIT could be below 2020 levels Set for a new ~SEK 60m rights issue Key cold markets down ~50% in Q1’21 due to COVID-19 The effects of the COVID-19 pandemic (with social distancing, improved hand hygiene and less social contacts) have resulted in fewer and milder common colds. This has led the common cold markets to decrease by some ~50% in Sweden and abroad during the first two months of 2021. The launch of ColdZyme in some new markets might therefore be postponed. Management remains optimistic about the long-term potential, but highlights that the current situation with the pandemic will postpone Enzymatica’s development for about 12-18 months.

In 2020 Enzymatica entered into a number of international agreements in about 50 markets. Today ColdZyme is sold in ~30 markets, and the company expects a number of launches in the remaining markets during 2021/2022. We reduce our sales estimate for ’21e by 47% Based on the board’s belief that the company’s sales and result in 2021 could be worse than in 2020, we trim our ’21e sales by 47%.

This implies a 6% y-o-y sales decline and an EBIT of SEK -21m (vs. SEK -12m in FY’20). Enzymatica believes that the common cold market will recover during H2’21, when the vaccination programs are estimated to be completed.

However, we believe that some of improved hygiene measures could remain beyond H2’21. Pressured financials triggers ~SEK 60m rights issue Considering the significant uncertainty of the market going forward, Enzymatica will propose a new rights issue of ~SEK 60m to secure the company’s long-term investments in areas such as geographical expansion, clinical studies, organisation and supply chain, and to meet the need for working capital for 2021. The new share issue will be guaranteed by the three largest shareholders, and its terms will be detailed in conjunction with the annual general meeting on 5 May.