Equity Research Nosa Plugs: New orders and distributor agreements

Carlsquare Equity Research is positive regarding the recent news flow as new distribution agreements, orders and sales launches have been announced. Judging by the announcements, the commercial focus is bearing fruit. Carlsquare Equity Research is eager to see the results of the new partnerships and rollouts.

New geographies and further penetration of existing markets

Since our research update on 17 May, Nosa Plugs has been busy with the ongoing commercialisation efforts. Specifically, four separate announcements have been made regarding new or expanded partnerships with distributors as well as the continued launch of Smell Training. This is in line with what was communicated in the Q1 update, namely, that the focus for 2024 will be to work towards profitability.

• On 27 May, it was announced that Smell Training would be launched in Swedish pharmacies. Through long-term partner Oriola, which is based in Finland but has most of its sales in Sweden, NOSA will gradually introduce Smell Training through pharmacies during 2024. The pharmacies in question are Apoteket AB, Kronans apotek, Doz apotek, Apotea and Apohem. First out of the gate will be Kronans apotek and Apohem, who will launch virtually through their respective e-commerce platforms. The launch is also expected to be boosted by the completion of the ongoing study, the results of which are expected towards the end of June.
• On 31 May, NOSA could announce an expansion of their partnership with Lyreco, specifically through adding Lyreco Finland for the Finnish market. Already working together for the Swedish and Dutch markets, Lyreco Finland will now start distribution of NOSA products for the Finnish market, putting in an order in conjunction with the deal. One of Europe’s biggest distributors, Lyreco globally employs 12,000 employees, of which 190 operate out of Finland.
• On 19 June, Mediq, already a partner in the UK and Benelux countries, was announced as a new distributor for the Nordics and Baltics. To be exact, the deal covers Odor control, smell training and microbial control plugs. Geographically, Mediq will sell Odor control plugs in Latvia, Lithuania and Iceland. Smell training and microbial control will be sold in Sweden, Norway, Denmark, Finland, Estonia, Latvia, Lithuania and Iceland. For NOSA, the deal is the biggest so far in terms of number of launches in new markets.
• Today, on 20 June, NOSA announced an order and exclusive distribution agreement for Australia and New Zeeland with the distributor Clifford Hallam Healthcare, also known as CH2. The order, the biggest received yet, was in the amount of SEK 0.7 million and covers the Odor control plugs for launch in August. The wider deal, also covering the products classified as medical devices, necessitates a TGA-registration before a launch of the latter. The order associated with these products is expected for Q4 2024. Worth noting here is that NOSA’s previous distributor for Australia, Safety and Mobility, will henceforth order products through CH2.

Strong progress with the ongoing commercialisation lays foundation for growth

As mentioned previously, Carlsquare Equity Research is pleased to see that NOSA is picking up steam. Given the growth and profitability targets announced earlier this year, this news flow inspires confidence in getting there. Furthermore, the order size for Odor control plugs alone, for Australia and New Zeeland, went far beyond our expectations, as we had estimated closer to SEK 0.2 million in revenues coming from the region during FY2024. Better penetration in the Nordics and Baltics is also extra attractive given the geographical proximity to the factory, packing and HQ. On the other hand, there has been no update regarding progress with the NHS in the UK. As a big market with a lot of potential, a listing on NHS frameworks would have been a nice addition to the recent news flow. We eagerly await the results of these recent announcements in terms of revenues and are especially excited to see the rollout of smell training in Swedish pharmacies. As was highlighted in a recent article in ‘The New York Times’, smell training can not only improve one’s sense of smell but appears to have further benefits associated with cognition and mental health. We recommend reading the article found here. In terms of revenue, our estimates for the coming quarters are SEK 4.4 million in Q2, 3.6 million in Q3 and 5.3 million in Q4. With the recent headlines, confidence is growing in NOSA reaching these targets.

Read our latest update (17 May) covering Q1 here.

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