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Enzymatica AB: Strong growth and international breakthrough in 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||
By: Nasdaq / GlobeNewswire - 14 Feb 2018 | Back to overview list |
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Q4
Significant events in Q4
Full year
CEO statement: We achieved several important milestones in 2017 Enzymatica achieved several important milestones in 2017. Our major international breakthrough came from the agreement with the pharmaceutical company STADA, a market leader in the cold segment in a number of major markets, including Germany and the UK. Our sales growth was strong at 63% during the year and ended at SEK 59.4 million, which can be compared with SEK 36.5 million for 2016. In addition, we substantially reduced the loss to SEK 30.2 million (loss: SEK 46.1 million). The fourth quarter was the 16th consecutive quarter that we demonstrated sales growth compared with the previous years. Sales in the Swedish market shows uninterrupted double-digit growth over the full year, with a rolling 12-month market share in value for ColdZyme of more than 5% in the cold segment. Enzymatica also presented a number of clinical studies and market studies with exciting results, and we filled several key positions following strategic hiring campaigns. Sales in Sweden, Denmark and Germany in particular contributed to the increased sales during the quarter and the full year. The continuous sales growth of ColdZyme on our home markets indicates that our consumers experience clear benefit from the product. ColdZyme was the brand, among the top ten products in the cold segment in the Swedish market, that had the fastest growth in value over the past year. ColdZyme passed Nezeril in sales value as a brand. Sales in Denmark also surged after our advertising campaigns and efforts of our own sales force. Our agreement with the German pharmaceutical company STADA is the result of years of work aimed at becoming an attractive partner for international pharmaceutical companies. We have upgraded our internal processes such as our quality management and regulatory systems, and production. In addition, enzyme production at our Icelandic subsidiary Zymetech was upgraded during the year to be able to meet the demands of continued sales growth and quality demand. Zymetech was acquired in 2016 to gain control of the enzyme patents and production, as well as to strengthen our research expertise. In summary, we have become a much more attractive partner that can offer patent protection for enzyme-based products, and therefore exclusivity for our partners, at the same time that advanced enzyme production and unique know-how have created a technical platform that allows expansion within new product areas. Signing a distribution agreement with a major international pharmaceutical company is a stamp of quality for our product and business, acknowledging the results of our strategic efforts. STADA's market investments during the second half of the year produced results and the company is extremely satisfied with the sales trend for ViruProtect®, which is STADA's co-brand for ColdZyme. Since its launch last fall, ViruProtect has achieved a market share on a level with Esberitox - a known cold product that has been on the German market for many years. The sales trend was also positive in Belgium and Austria, which are also covered by our agreement with STADA. We strengthened the documentation about ColdZyme during the year. We published several clinical studies on preschool staff and elite athletes. We announced several market and customer surveys, and also presented the complete article for the COLDPREV I study as well as an in-vitro study of ColdZyme. The results of these studies show an unequivocal picture of ColdZyme's beneficial effect on colds. The in-vitro study in particular was important since it demonstrates ColdZyme's capacity to deactivate four of our most common cold viruses by reducing the ability of the virus to invade the cells. In 2017 we also filled several key positions including our Chief Commercial Officer, Chief Operating Officer and Chief Financial Officer. The significant international experience that they contribute is valuable and crucial for both our continued expansion and in negotiations with international partners. The trend in the fourth quarter followed the pattern from previous quarters with continued growth at a very strong 70%. STADA's follow-up order contributed to the robust growth during the quarter. I am also satisfied that we had a positive cash flow for the fourth quarter. As I summarize the year, I would also like to thank all of our employees and partners for their outstanding efforts, which have taken our business to a new level. I have great expectations for 2018. We will continue to focus on sales, strengthened documentation of ColdZyme and geographic expansion. Our goal is to increase sales and to enter into at least one new distribution agreement for a key market and continue our growth in "mature" markets like Sweden and Denmark. Fredrik Lindberg, CEO Enzymatica at a glance Our development focuses on products for upper respiratory infections, dermatology and oral health. An enzyme extracted from deep-sea cod is a key sub-component in product development. Enzymatica was founded in 2007, has its head office in Lund and has been listed on the Nasdaq First North since June 15, 2015. ColdZyme is sold both in-house and via distributors and partners in Sweden, Denmark, Norway, Finland, the UK, Greece and Spain, and from fall 2017 under the ViruProtect® brand in Belgium, Germany and Austria. An equivalent product under the PreCold brand is sold in Iceland by the acquired company Zymetech. Q4 performance Robust sales growth in the Danish market also continued during the fourth quarter. ColdZyme had a market share in value of 3.75% during the fourth quarter and on an annual basis the market share is 2.5%, which follows the trend previously seen in Sweden. For 2017 ColdZyme sales increased by about 9% compared with growth in the cold segment as a whole, which essentially stood still at +0.5% for the full year in Denmark. Sales to consumers in the Spanish market have begun to move, demonstrating strong growth at +90% during the fourth quarter, albeit from previously modest levels. Contacts with pharmacists and a digital and social media campaign targeting consumers are important factors underlying the increase in sales. Sales on other markets progressed according to plan. Sales, earnings and investments The gross margin during the quarter was 72% (56%). Enzymatica has experienced fluctuations in its gross margins between individual quarters as a result of the distribution of sales via its own organization or distributors, the product mix and exchange rates. Total operating expenses for the quarter amounted to SEK 21.4 (25.2) million. The decrease in operating expenses compared with Q4 2016 is primarily due to lower research and development costs, consultant fees and marketing costs. No expenses for development projects were capitalized during the year SEK 0 (0.8) million. The consolidated operating loss was SEK -4.7 (-18.5) million. Seasonal variations Year-end report 2017 The gross margin for the period was 61% (61%). Total operating expenses for the period were SEK 71 (69.7) million. Beginning with the Q3 report the entry for capitalized development projects is included as part of research and development costs. All comparative figures have been restated in accordance with the above. Enzymatica had no capitalized expenses for development projects during the quarter - SEK 0 (7.6) million. The consolidated operating loss was SEK -30.2 (-46.2) million. Research and development In addition, work is progressing according to plan to certify the company to ISO standard 13485, the quality management system standard for medical devices. Barrier technology with enzyme from deep-sea fish Significant events during the quarter Enzymatica published the results of a study of preschool personnel showing that use of ColdZyme reduced the average absence due to illness by almost half, (45%), from 7.4 to 4.1 days. Enzymatica published a complete article reporting the results of the COLDPREV I study, which showed a 99% reduction in viral load and a reduction in the number of days absent due to sickness by more than half, 54%. A new market survey showed that ColdZyme Mouth Spray is the most recommended cold product at Swedish pharmacies. In a customer survey, 40% of customers stated that they use ColdZyme preventively, and if they should catch a cold anyway, almost 80% state that they experience milder cold symptoms or shorter duration. An extraordinary general meeting resolved on October 25 to authorize the Board of Directors to implement Employee Warrant Plan II and to carry out a directed issue of warrants, as well as to approve the transfer of warrants. Funding In conjunction with Enzymatica's 2016 acquisition of Zymetech, a partial payment in the form of the issuance of options for Zymetech's principal shareholders to acquire 4,000,000 shares in Enzymatica at a subscription price of SEK 5 was included in the agreement. The options mature on April 1, 2018. If the option is exercised Enzymatica will have an injection of capital of approximately SEK 20 million. If the financial development will require capital in excess of the above the company's management and board have planned measures, which will ensure the financing for the coming 12 months. Cash flow from operating activities for the year totaled SEK -22.7 (-38.4) million. Cash flow from operating activities for Q4 came in at SEK 1.7 (-4.2) million. Total cash flow for the year amounted to SEK -24.7 (27.2) million. Parent company Parent company sales for Q4 came in at SEK 19.5 (9.7) million. Profit/loss before tax came in at SEK -72.7 (-14.7) million. The parent company's investments in property, plant & equipment and intangible assets for the period totaled SEK 0 (10.7) million and cash flow was SEK -21.3 (24.1) million. In the parent company, there is a write-down of shares in subsidiaries of SEK 60 million. This is the result of transfer of intellectual properties (patent and capitalized development costs) from the subsidiary Zymetech to the parent company Enzymatica. Since it is an internal transaction it has no effect on the Group's balance sheet or income statement nor cash flow. Please see the consolidated figures for more information. Staff Employee Warrant Plan and directed issue of warrants The 2017/2023 Employee Warrant Plan II includes 1,390,000 employee warrants. Each warrant entitles the holder to acquire a new share in the company at an exercise price of SEK 4.22. In order to enable the Company to deliver shares under the proposal for issuance of warrants to Company employees and to ensure coverage of costs associated with the warrants, primarily social security contributions, the Extraordinary General Meeting resolved to carry out a directed issue of a maximum of 1,826,738 warrants to Enzymatica's wholly owned subsidiary Enzymatica Care AB. If all warrants related to the two outstanding personnel option programs that have been issued are exercised, a total of 4,915,108 shares will be issued, corresponding to a dilution of approximately 5 percent of the Company's share capital and votes after full dilution calculated on the number of shares that will be added upon full exercise of all outstanding and proposed warrants. Upon full exercise of the warrants for subscription of new shares in Program 2017/2023 II, the share capital will increase by SEK 73,069.55, and upon full exercise of the warrants for subscription of new shares in Program 2017/2023 I, the share capital will increase by SEK 123,534,85. If all warrants are utilized for subscription in both Personnel Option Program 2017/2023 I & II, the share capital will increase by a total of SEK 196 604,40. A total of 3,088,370 warrants have been issued in connection with Personnel Option Program 2017/2023 I and a total of 1,826,738 warrants have been issued in connection with Personnel Option Program 2017/2023 II. The total number of personnel options allocated in Personnel Option Program 2017/2023 I is 2,350,000. In Personnel Option Program 2017/2023 II the total number of personnel options amounts to 1,390,000. This means that a total of 3,740,000 of personnel options have been granted in the two personnel option programs. All personnel options granted in programs 2017/2023 I & II have been allocated and accepted by employees as of December 31, 2017. For more information about the Employee Warrant Plan and issuance and transfer of warrants, please see Enzymatica's website under Investors/Corporate Governance/Annual General Meeting/Extraordinary General Meeting. Issuance of new shares Significant events after the end of the period Nomination Committee appointed The four largest owners (appointed representative in the Nomination Committee in parentheses) as of October 31, 2017, were Abanico Invest AB (Håkan Roos), Protenus Ltd (Gudmundur Palmason), Gadice ehf. (Ágústa Gudmundsdottir) and Roosgruppen AB (Björn Algkvist), who together with the chairman of the board, Bengt Baron, constitute the nomination committee for the 2018 Annual General Meeting. Håkan Roos has been appointed Chairman of the Nomination Committee. Other information In December 2017 intellectual properties, mainly patent and capitalized development costs, were transferred from the subsidiary Zymetech to the parent company Enzymatica. Accounting policies New and amended standards applied from January 1, 2018 As of January 1, 2018, Enzymatica applies IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers. IFRS 9 regulates classification, measurement and recognition of financial assets and liabilities. This standard replaces IAS 39 Financial Instruments that regulates the classification and measurement of financial instruments. A project was conducted within Enzymatica on the basis of the parts of IFRS 9 deemed to be able to have an impact: classification, measurement and documentation of financial liabilities and assets, as well as analysis of the effects of the transition to a new model for recognition of anticipated credit losses, known as the "expected loss model." Based on this evaluation, the new standard will not have any material impact on the Enzymatica Group's reporting. Given the immaterial effects of the new standard, previous periods will not be restated. As of January 1, 2018, Enzymatica will apply IFRS 15 Revenue from Contracts with Customers, which comes into force from that date. Enzymatica has elected to use the full retrospective approach as transition method for implementation of IFRS 15. The new standard includes a principle-based five-step model for revenue recognition relating to customer contracts. The basic principle is that revenue recognition should reflect anticipated compensation in connection with performance of the various promises in the contract with the customer. Revenue must therefore reflect fulfillment of contractual obligations and correspond with the compensation to which Enzymatica is entitled at the time that control of goods and services is transferred to the counterparty. In 2017 Enzymatica evaluated the effects of the new standard by identifying and analyzing the most significant revenue streams within the Group. The outcome of the analysis is that revenues will essentially be recognized at the same time as under the current standard and application. Enzymatica has therefore concluded that implementation of the IFRS will not have any material impact on the Group's financial statements. Segment reporting Information about risks and uncertainties Audit 2018 AGM Upcoming financial information The interim reports and annual report are available on Enzymatica's website www.enzymatica.se. The Board of Directors and CEO hereby confirm that this interim report provides a true and fair view of the parent company's and group's business, financial position and results of operations, and describes material risks and uncertainties faced by the parent company and group companies. Lund, Wednesday, February 14, 2018
Fredrik Lindberg, CEO For questions about this report, please contact: Therese Filmersson, CFO, Enzymatica AB Publication Enzymatica is listed on the Nasdaq First North. The Company is traded under the ticker symbol ENZY and ISIN code SE0003943620. http://www.globenewswire.com/NewsRoom/AttachmentNg/8db8121d-b243-46c6-a40e-dc916ae16e57 |
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