The sales for Q1 came in at SEK13.0m (SEK4.2m), 19% under our sales estimate of SEK16.2m. This corresponds to a YoY increase of 209% where we learned from the report that the negative effect of the pandemic has decreased and that the company has seen an apparent rise in demand. Moreover, the gross margin for the quarter was 61% (54%), which was higher than our estimate of 58%. Operating expenses amounted to SEK-22.3m (SEK-20.4m) compared to our OPEX estimate of SEK-19.1m (excluding amortization of SEK-1.6m), and EBIT came in at SEK-14.4m (SEK-18.1m), lower than our EBIT estimate of SEK-9.7m. The difference between our estimates and the actual numbers are mainly the sales, but also some underestimations in OPEX, primarily selling expenses (we estimated SEK-7.0m vs actual of SEK-9.8m).

The cash flow from operating activities was SEK-12.2m (SEK-10.2m), and by the end of the quarter, the cash and cash equivalents amounted to SEK38.4m. In our view, there is a risk that the current cash position will not be sufficient to cover future business activities. Therefore, we highlight the importance of rising sales during the rest of the year, and keeping expenses at reasonable levels.

Overall, the report came in a bit lower than our expectations. However, we are positive that the negative pandemic effect seems to decrease and that the company can start growing again.

As the report came in a bit lower than we expected, we have chosen to make some minor changes to our 2023 estimates. First, we slightly lower our sales estimates, lowering our Q3 sales estimate from SEK19.1m to SEK18.3m and our Q4 sales estimate from SEK28.2m to SEK25.3m. Moreover, we only make minor changes in our gross margin and OPEX estimates for Q3 and Q4, where we slightly increase the selling expenses during Q3, lower our R&D estimate for Q4, and increase the gross margin from 58% to 59%. As mentioned, we believe it is a risk that the current cash position will not be sufficient to cover the year's business activities. However, for now, we have not included an additional raising into our model.

Overall, the changes are minor as we still expect the second half of 2023 to be much stronger than the first (based on flu seasons and a gradually decreasing pandemic effect).

During 2022, Enzymatica was still affected by the much milder flu season in 2021, leading to lower sales by the company's distributors and a sufficient stock of ColdZyme. During the first quarter of 2023, it seems as if the company is back on track. Due to the lower demand for cold products during the second quarter (based on Enzymatica's historical numbers), we expect much lower sales during Q2 and a ramp-up during the second part of the year, resulting in full-year sales of SEK63.7m and an EBIT of SEK-55.4m. Moreover, we expect the company to enter new markets with its strong partners during the year, which could also act as a catalyst for the share.

The changes we have made does not result in an updated fair value range with a base case of SEK6.5, a bull case of SEK14, and a bear case of SEK1.5. The share price development during the past 6 months has been poor, mainly due to the weak Q4 2022. However, we still believe Enzymatica has long term potential where we highlight the partners of STADA and Sanofi which are highly important for the company and our investment case.

We estimate the Swedish market share increases during our forecast period, and we expect a 7% market share by 2030e. We are encouraged by the distribution partners; STADA and Sanofi are two large players with global networks. ColdZyme has been launched in most European countries, creating confidence in the distributors' ability to focus on ColdZyme under a new brand, implying large distributor investments and a longer time to establish in the market. We estimate ColdZyme will have a European market share of 1.8% by 2030e. We only include ColdZyme's definitively planned markets (80% of planned markets) in our base case.

We believe it will take longer for Enzymatica to establish ColdZyme in Asia, and we estimate a 1% market share there by 2030e. The American market only includes Mexico for now, with a plan to launch ColdZyme in Canada. In Africa, we only include South Africa and Algeria's planned launches. As these regions currently include few markets, we believe it will be easier to earn a larger market share there; we estimate market penetration of 2% in both regions by 2030e.

Finally, we expect sales to increase by 63% CAGR in 2022-2026e and by 43% in 2022-2030e, taking sales to SEK345m and SEK841m, respectively (sales CAGR of 25% for 2026-2030e). We expect the gross margin to decline during the forecast period to 54% by 2030e and operating expenses to increase slightly with sales owing to costs related to the Swedish market. We assume a terminal EBIT margin of 25%, which is in line with Enzymatica's financial target of 28%, and we apply terminal growth of 2%.

In our bull case scenario of SEK14, we assume a faster ramp-up in sales, reaching SEK574 by 2026e, which is fairly in line with the company's financial target of SEK600m. In this scenario, we expect more rapid regulatory processes and that Enzymatica's distributors have a higher focus on launching ColdZyme in markets, compared to our base case. We thus include 100% of all planned launches. Moreover, we expect market penetration of 9% in Sweden by 2030e, with European market penetration of 2.5%. In our bull case, we have higher expectations for the Asian market, estimating peak penetration of 1.5%, and we believe China, Japan and Vietnam will be important markets in the region. In both Africa and America, we estimate 3% market penetration by 2030e. We set our terminal EBIT margin at 30% and terminal growth at 2% (2036e).

In our bear case scenario of SEK1.5, we assume a slower ramp-up in sales, reaching SEK181m by 2026e. In this scenario, we expect slower regulatory processes and that Enzymatica's distributors have a lower focus on launching ColdZyme in markets compared to our base case. We thus include 50% of all planned launches in this scenario. Moreover, we expect market penetration of 5% in Sweden by 2030e, with European market penetration of 1%. In our bear case, we have low expectations for the Asian market, estimating peak penetration of 0.5%, and we believe regulatory processes will be time-consuming. In both Africa and America, we estimate 1.5% market penetration by 2030e. We set our terminal EBIT margin at 20% and terminal growth at 2% (2036e).

In addition to our DCF valuation, we offer a peer group analysis that compares Enzymatica with other medtech companies in the Nordic region. We consider EV/Sales to be the best measurement, as Enzymatica is not currently profitable.

When comparing Enzymatica to other medtech companies, we can observe that the Enzymatica share is currently trading at 8.6 times its 2022 sales. Compared to the selected peers, Enzymatica is currently undervalued when observing the 2022 EV/Sales multiple; however, relatively fairly valued for 2023 and 2024. We want to highlight the differences between the selected peers and believe the peer valuation should be viewed as a supplement, rather than a substitute, to our DCF valuation.