Interim Report April - June 2023

Solid operating profit without Covid-19 tests, a continued growing pipeline and a new strategic key product

April - June 2023

• Consolidated sales during the first quarter, April to June amounted to SEK 56.2 (46.1) million. Adjusted for non-recurring sales the revenue amounted to 56.2 (43.0) MSEK, a decrease of 31%.
• Gross profit amounted to SEK 26.2 (23.7) million for the quarter, a decrease of 11%.
• EBIT amounted to SEK 7.9 (7.9) million, a decrease of 0,1%. The operating margin was 14% (17%).
• EBITDA margin was 18% - this margin is from now on reported separately as it is our new target figure for operational profitability in the long-term plan 2020/21-2024/25.
• Earnings per share were SEK 0:23 (0:25) for the quarter.
• Cash flow from operating activities amounted to SEK -12.0 (12.8) million for the quarter.
• Cash and cash equivalents were SEK 24.8 (46.6) million at the end of the quarter.

CEO’s comments

The first quarter, which kicks off the 2023/24 financial year, was an important quarter for EQL Pharma in several ways. Sales were in line with our expectations, however there were no sales of Covid-19 tests. This means that the entire operating profit, which amounted to SEK 7.9 (7.9) million, was generated by the core business. This shows that our core business is solid. Furthermore, we have entered into several potent collaborations, added products to the pipeline and launched one product. We also introduced Memprex, our latest strategic key product.

First quarter in summary

The first quarter's total sales in 2023/24 (no Covid-19 test sales in Q1), amounted to SEK 56.2 (43.0) million, an increase of 31%. Operating profit (EBIT) amounted to SEK 7.9 (7.9) million. The operating margin was 14% (17%). EBITDA margin was 18%.

Cash flow from operating activities during the quarter was negative SEK -12.0 (12.8) million. This is due to inventory build-up in connection with launches and strategic investments in existing products.

Financial goals and full-year forecast

Our long-term financial goals are fixed. So is the sales forecast for the full year 2023/24, where we see a growth of around 30%.

Strategic focus of EQL

• Launch the pipeline products as fast as possible
• Maximize the utility of our assets by launching products in more countries, by ourselves or through partnerships
• Continuously identify and sign new niche generics to be launched in the Nordics and elsewhere to secure long-term growth
• Outlicense and market our strategic key assets Mellozzan and Memprex
• Be cost-efficient in everything we do
• Continue to curiously explore new business models and potential revenue streams (e.g. as was done with the personal protective equipment (PPE) and the covid tests)

Products and market

During the quarter, we presented Memprex, our new strategic key product, through cooperation agreements signed for Germany and France. Discussions are ongoing for several other markets. In the same way as for Mellozzan, the idea is to establish Memprex as a brand with the help of local partners. These possess the expertise required to build and maintain a significant market share over a long period of time.

Two new cooperation agreements for Mellozzan have been signed with (1) Adalvo, covering 89 countries outside Europe and the USA and (2) a large Turkish company covering Turkey and Kazakhstan. Currently, over 100 markets are addressed globally for Mellozzan, which is of course both exciting and demanding for our team.

Five new niche generics for the Nordics have been added to our pipeline, which thus grows from 32 to 36 products (one product was launched in the quarter). We are working intensively to identify new products for our pipeline and will regularly update on progress.

Ampitar was launched during the quarter in one Swedish Region and more launches of the product are expected.

Sales of self-tests for Covid-19 have been non-existent during the quarter as a result of a low spread of infection. EQL is and will remain well positioned if demand for testing turns around.

Other

There is a shortage of penicillin in Europe as a result of the war in Ukraine. EQL has long been able to parry challenges in goods delivery, but is now also beginning to notice the effects. We estimate that our important antibiotics will be back in stock towards the end of autumn. At the same time, we can to some extent compensate the lower penicillin sales by selling more of other products where competitors have problems with stocks.