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Enzymatica
Enzymatica - STADA collaboration expands in Germany (ABG Sundal Collier)
2019-11-28 19:24
New mouth spray set to hit the German market in ‘20e
Bridge financing in play
We raise our estimates to reflect German sales potential
New mouth spray, other regulations, same key ingredientsEnzymatica’s sales in Germany were halted in 2018 as the regional court put restrictions on the marketing of the mouth spray ViruProtect. Unlike ViruProtect, the new mouth spray will be marketed as a cosmetic product rather than a medical device. The new product is based on the same barrier technology as previous products from Enzymatica under a different brand, but the marketing potential in terms of ‘claims’ will be limited as the new product will be marketed under the cosmetics directive. Enzymatica’s German distributor STADA expects to launch the mouth spray in the beginning of 2020. We view this as a clever strategy to enter the German market, but we believe that this should not be seen as a clear cut re-opening of sales in Germany since marketing conditions are significantly more restricted. We still do not completely rule out a re-opening of sales in Germany for ViruProtect, until at least mid-2020.
In discussions regarding bridge financing
The board is having discussions regarding a bridge loan to overcome the liquidity gap to finance the expected liquidity shortfall. We note that the company does not guide for an equity raise after the bridge financing solution. Therefore, we model a bridge loan of SEK 20m in ‘20e, but note that a strong sales development could mitigate such financing needs.
We’re careful to extrapolate the full German potential
Following the new marketing and sales agreement, STADA has placed a first order amounting to SEK 2.3m, which constitutes our +4% sales and EBIT estimate revisions for ‘19e. We conservatively factor in 7% and 20% of what we believe is the German sales potential for ‘20e and ‘21e respectively, given the marketing limitations in place. This yields sales estimate revisions of +8.3% and +16.1% for ‘20e and ‘21e respectively. Given Enzymatic
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