Enzymatica develops and sells products that treat and relieve infections and symptoms in the upper respiratory tract. The products are based on the company's Penzymetechnology that contains marine enzymes. The best-selling product is ColdZyme, a mouth spray that relieves and shortens colds and cold-like symptoms in the upper respiratory tract. ColdZyme creates a protective barrier in the throat that deactivates the virus.
Gearing up for growth with scientific evidence
In the wake of the pandemic, Enzymatica has had relatively low international sales. In the first half of 2024, total sales for the company amounted to SEK 15,8 million, which corresponds to a decrease of 27 percent compared to the same period last year. The Swedish market, which is Enzymatica's main market, continued to grow. The lower sales are entirely explained by the lack of international sales.
Despite lower sales, the company has worked purposefully and prepared for growth and market expansion. Production capacity at the Iceland facility has been quadrupled, and major investments have been made to strengthen the regulatory and scientific documentation for ColdZyme and its barrier technology.
A study at University of Kent has shown that ColdZyme shortens upper respiratory tract infections, such as colds, by up to five days. Partial results from the study were presented at the International Olympic Committee conference earlier this year, which sparked interest and led to several Olympic teams using ColdZyme during the 2024 Paris Olympics and Paralympics.
In addition, the company has completed the certification process for ColdZyme under the MDR, the EU's new regulation for medical devices, which opened up commercial opportunities and strengthened marketing.
Looking for new partners and initiating new business model
In parallel, Enzymatica is working to find new partners in some of the most important cold markets. The company's largest partners, STADA and Sanofi, have not been able to retain their exclusive sales rights because order intake from both has been low in recent years. At the same time, Enzymatica is evaluating a new business model where the company plans to become a supplier of its enzyme formulation and allow partners to control the production stage to a greater extent. In this way, both parties' margins can be improved, while the shelf life can be extended by avoiding long transport times.
Updated financial targets
However, the new business model is likely to impact the financial targets, as it provides a higher EBIT margin but lower net sales than previously forecast. As a result, the company has decided to update the financial targets set in 2021, where the ambition was to reach net sales of at least SEK 600 million and an EBIT margin of at least 28 percent by 2026, which corresponds to approximately SEK 170 million in EBIT.
The company still aims to achieve the EBIT target of SEK 170 million, but expects lower sales. However, the new sales target has not yet been communicated.
Issuance to seize opportunities
At the end of June, the company's cash amounted to SEK 8,2 million, which means that additional capital is required to finance the ongoing investments. Therefore, Enzymatica is now conducting a rights issue that, if fully subscribed, will provide the company with approximately SEK 130 million before issue costs. In total, the issue is covered by subscription commitments and guarantee commitments to the tune of 90,27 percent.
BioStock contacted Enzymatica's CEO Claus Egstrand to learn more about the ongoing capital raising.
First of all, how will you use the proceeds from the issue in the most cost-effective way possible?
– The most important thing for us right now is to sign agreements with new partners who can help us reach the largest cold markets in the world. We are in a better position there than in a long time because the latest study results have aroused great international interest.
– Now, an independent study has once again shown that ColdZyme shortens colds, making the product relevant for consumers worldwide. We will use the proceeds from the issue for ongoing costs while we sign agreements, but also for expanded marketing. In addition, we are continuing our clinical studies together with the universities of Kent and Innsbruck.
You carried out a rights issue earlier this year. Why are you already in need of another capital raise?
– In connection with the previous issue, we made a number of assumptions, including how quickly it would be possible to sign new partner agreements. We can conclude that it took longer than we had expected, which is mainly due to the fact that most players wanted to wait for the final results from the clinical study. Now that they are in place, we will have a completely different momentum in the work of signing new agreements.
You are evaluating a new business model where you will offer partners to purchase the enzyme formulation and then handle the final production yourself. Could you tell us a little more about the benefits of that business model?
– Our business model has so far been based on us producing the enzyme formulation ourselves and then getting help from a contract manufacturer with filling and packaging. Several of the potential partners we have discussed with have their own capacity for filling and packaging and see that they get better profitability if they do this work themselves. In addition, the shelf life is extended because it is calculated from the time the package is filled. By filling and packaging locally, we thus get both product advantages and better profitability for both us and our partners.
You are also working on bringing in new distribution partners for ColdZyme. What requirements will you place on your new partners to ensure a stable order intake from them?
– First and foremost, they need to feel the same commitment to the product that we do. They must have an established distribution network and the financial muscle to launch a new product on the market. Of course, it makes it easier if they can also help us with regulatory approval if it is a market where we are not yet present. We are looking at the larger cold markets in the world, including the USA. For China and Japan, we already have established partnerships.
Here in Sweden, the government is conducting an evaluation of the scientific evidence for cold products. How strong is your scientific evidence, in your opinion?
– We already had a solid scientific basis, which the MDR certification in March is a confirmation of. With the Kent study, we get another independent, placebo-controlled and double-blind study that shows the good effect of ColdZyme. In our segment, we are the product that has the strongest scientific documentation and we look forward to the evaluation being published.
Additionally, the FDA in the US has concluded that there is a lack of scientific documentation for the ingredient phenylephrine in oral cold products. How does this create opportunities for ColdZyme in the US market?
– Everything indicates that phenylephrine will be removed from oral products in the US. If so, this will mean hundreds of cold products being removed from the market. When manufacturers need an alternative, our technology is extremely attractive because it has a solid scientific documentation, is easy for the consumer to understand and also offers good profitability for partners.
Finally, what do you look forward to Enzymatica achieving before 2024 is over?
– There are long lead times for negotiations and establishment in new markets, but I hope that by the end of the year we will have been able to tell you about new partnerships or new markets. I am also very much looking forward to the final report from the Kent study. We already know that it shows that ColdZyme shortens the duration of a cold, but we also believe that the study will show symptom relief. We have had a few tough years and have always continued to work according to our plan. Now I am looking forward to reaping the benefits of our hard work.
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This material has been prepared for marketing purposes and is not and should not be considered to constitute a prospectus under applicable laws and regulations. The full terms and conditions of the rights issue and further information about the company have been set out in a prospects which has been announced and published on the above-mentioned company's website.
