Interim Report Q3

Interim Report Q3

January-September 2021

Enzymatica AB is a life science company that develops and sells health products mainly to treat upper respiratory diseases and symptoms. The products are based on a barrier technology that includes marine enzymes with unique properties. The company's first product is the medical device product ColdZyme®, a mouth spray for colds. The product has been launched in about 30 markets on three continents. The strategy is to continue to grow by developing more health products, strengthening the company's position in existing markets and expanding into new geographic markets through established partners. The company is headquartered in Lund and is listed on Nasdaq First North Growth Market. For more information, please visit www.enzymatica.se.

Enzymatica AB (publ)

Interim Report Q3 January-September 2021

Q3		January-September
• Net sales reached SEK 15.4 (28.3) million.		• Net sales reached SEK 38.5 (69.0) million.
• The result for the period was SEK -6.1 million (-1.9).		• The result for the period was SEK -34.6 million (-12.9).
• Earnings per share, basic and diluted, were SEK -0.04		• Earnings per share, basic and diluted, were SEK -0.24
(-0.01).		(-0.09).
• Cash flow from operating activities for the period		• Cash flow from operating activities for the period
totaled SEK -16.2 (3.4) million.		totaled SEK -29.3(-2.4) million.
		• Net debt totaled SEK -35.7(-18.8) million.
Key figures
(SEK MILLION)	Q3	Q3	Jan.-Sept.	Jan.-Sept.	Full year
2021	2020	2021	2020	2020

"The long-term plan remains in challenging times"

Claus Egstrand, CEO

Net sales

15.4

28.3 38.5 69.0 111.2

Gross margin, %

Operating profit/loss

Cash flow from operating activities Net debt

Average number of employees

64

-6.0

-16.2

24

74	54
-2.2	-34.7
3.4	-29.3
	-35.7
18	24

72	68
-13.9	-12.1
-2.4	-10.7
-18.8	-9.2
18	18

2 ⏐Enzymatica Interim Report Q3 - January-September 2021

Enzymatica AB (publ)

Interim Report Q3 January-September 2021

Significant events in Q3	Significant events after the quarter
•	The Chinese and US patent offices gave advance notice of	•	The Extraordinary General Meeting on 18 October 2021
	their intention to grant patents for China and the US,		resolved to approve an incentive program for CEO Claus
	respectively, for the cod enzyme that is one of the key		Egstrand through an employee option plan, a directed issue
	components of ColdZyme.		of warrants and a transfer of warrants.
•	Claus Egstrand assumed his role as CEO on 9 September	•	On 2 November 2021, the Board of Directors decided on
	2021, about three months earlier than planned, after he was		financial targets for the company. Net sales should in 2026
	able to end prior commitments ahead of time. Therese		amount to at least 600 million SEK with an EBIT margin of at
	Filmersson returned to her previous role as CFO and was		least 28 %.
	simultaneously appointed to serve as Deputy CEO.

Impact of the coronavirus pandemic

The coronavirus pandemic has had a major impact on Enzymatica's sales and earnings over the past 18 months, since social distancing and a focus on reducing the spread of the virus resulted in a dramatic reduction of colds all over the world.

In the first quarter of 2021, the markets were cut in half compared with previous year. With the current easing of national restrictions, Enzymatica estimates that the cold remedy markets continue to recover in Q4/2021 and Q1/2022 (see also under the section on Sales and market). Sales from Enzymatica to the company's distributors will be impacted over the next six months since many distributors have large inventories of the company's products as a result of low sales to consumers during the pandemic.

The coronavirus pandemic has had no impact on product development or ongoing clinical trials, where work is proceeding according to plan. However, delays in the regulatory approval process are being experienced in several markets, as a result of local authorities being affected by lockdowns and other external circumstances.

3 ⏐Enzymatica Interim Report Q3 - January-September 2021

CEO Claus Egstrand:

The long-term plan remains in challenging times

One of the few certainties in life is change. The past 18 months have seen us all experience unprecedented changes that have touched many aspects of our lives. For Enzymatica, these changes came at the worst possible time. With the signing of the agreements with Sanofi for Italy and France, and the expansion of markets with STADA, we were ready for global take-off, looking optimistically at the coming years, even though we were aware of the rapid spread of the new coronavirus. Like most companies at the time, we could not possibly have anticipated the impact of the pandemic.

ColdZyme was re-certified to qualify as a class III product under the MDD early 2020, which attracted interest from leading consumer healthcare companies. The extended agreement with STADA and our new partnership with Sanofi were signed in May and October, respectively, sales soared as our products were launched in new markets and our partners placed orders to build distribution. Then came the lockdowns, effectively stopping consumers from buying the products that had been stocked on pharmacy shelves.

Social distancing and other restrictions substantially limited the spread of common cold viruses. The loss of one and a half cold seasons impacted Enzymatica sales in Sweden and in our other key partner markets, such as Italy and France, where Sanofi was off to a strong start before the pandemic hit.

Confidence in our business

With this as a backdrop, let me explain why I am excited about my appointment to CEO, and the great confidence I have in the business. First, I am hoping that we can now speak of the pandemic in the past tense. With the easing of restrictions, we now see the incidence of colds and the flu returning to pre-pandemic levels or even higher. In Sweden, as in other markets, sales of cold/flu remedies to consumers are showing growth compared with 2020 and are returning to 2019 levels.

Having said that, we need to cautiously assume that Enzymatica's sales to our partners will lag behind sales to consumers by up to 6 months, since our partners still hold high inventory levels. They too have missed one and a half cold seasons after having placed large orders prior to their launches, which were then impacted by the pandemic.

Every fantastic business starts with a product that works and that consumers want to buy. We know that consumers who have tried ColdZyme feel that the product makes a difference to their quality of life. In fact, our own market research (Truth, July 2021) shows 8 out of 10 consumers bought the product again within the past 12 months and 2 out of 3 are satisfied with its efficacy. These are extraordinary numbers that I never seen the equivalent to in my long tenure in consumer healthcare

Strong strategic plan

In the past six months, we have clarified ColdZyme's core offer. We have crystalized the relevant consumer messages in the changed world we now live in, a world where "upper-respiratory self- protection" now means many things to different people. This will optimize consumer trials in Sweden and in all our international markets. The result is a bold and ambitious strategic plan for Enzymatica, fully aligned with the changed consumer marketplace.

Although the times have been challenging for Enzymatica, we look optimistically into the future. We have a fantastic product, strong and experienced partners, and we are convinced that protection against viruses is of great interest to consumers following the pandemic.

Market recovery

As expected, sales were substantially lower in Q3/2021 than in the same quarter last year, where we had extraordinary sales because of new market launches and the publication of an in-vitro study showing that ColdZyme deactivates SARS-CoV-2 coronavirus by 98.3 %.

As for the overall development in Q3 2021, we saw the incidence of colds and the flu returning towards normal levels, along with promising sales trends in new markets such as Poland and Romania.

However, as mentioned above, there will be a lag of up to 6 months in our sales to partners.

There are many positive signs, and we expect that the cold/flu market will continue to recover in Q4/2021 and Q1/2022. It is always hard to know what the future holds, but we are cautiously optimistic that we will see good growth in our sales in 2022, compared with 2021.

Financial targets

We are still optimistic about the future development, despite all the market challenges during the last two years. This is manifested by the long-term financial targets decided by The Board of Directors, where net sales should amount to at least 600 million SEK by 2026, with an EBIT margin of at least 28 %.

Enzymatica was hard hit by the pandemic, but by tirelessly continuing to refine our operations in terms of costs and processes, we have kept the company on track through trying times. Enzymatica is now more closely aligned than ever to realizing its full potential, and as CEO, I relish this opportunity to lead Enzymatica to that growth future.

Claus Egstrand, CEO

4 ⏐Enzymatica Interim Report Q3 - January-September 2021

Enzymatica at a glance

Enzymatica's business concept is to develop self-care products, based on the company's barrier technology platform. The company was founded in 2007, has its head office in Lund, Sweden, and has been listed on the Nasdaq First North Growth Market since 2015.

Enzymatica has developed ColdZyme, a unique mouth spray for colds. It has been launched on about 30 markets, with distributor agreements in place for about 30 more. The launch in the remaining markets is expected mainly in the period 2021-2022. There is a risk of delay until 2023 in some markets, mainly due to slower processing of regulatory approvals as an effect of the pandemic.

Our own sales organization is responsible for sales in Sweden, while a contract organization handles sales in the UK; in other markets, agreements are in place with leading distributors such as French Sanofi and German STADA. The distributors usually sell the product under their own brands, such as ViruProtect (STADA) and Zerinol (Sanofi). In addition to ColdZyme, in Germany, since early 2020 STADA has sold a spray for improved oral health, StadaProtect, which was developed by Enzymatica based on the same barrier technology platform.

Enzymatica's development work is currently focused on products related to upper respiratory tract infections. Research and development is led from Lund, in close collaboration with the production facility in Iceland.

Seasonal variations

Cold products usually have a seasonal peak in the winter in the northern hemisphere, while sales level out in the summer months. During the coronavirus pandemic, sales

have been slow even during the winter months, as a result of social distancing, which has led to a lower spread of common cold viruses.

Product launched

Launch planned within the next few years

5 ⏐Enzymatica Interim Report Q3 - January-September 2021