Nanoform Q2 2023 – A record 11 new customer projects signed and targeting first license/commercial supply agreement in 2024

Company Announcement

Nanoform Finland Plc

August 24, 2023

08:10 a.m. Finnish time / 07:10 a.m. Swedish time

Nanoform Q2 2023 – A record 11 new customer projects signed and targeting first license/commercial supply agreement in 2024

A record (10+1) number of new projects signed in the second quarter. After receiving our “Multi-API” license in May, a further notification has been submitted to Fimea, including our new GMP lines, GMP QC laboratory and nanoforming of APIs to be used in products with a Marketing Authorization. The clinical manufacture for Project Blockbuster is being completed. Clinical trials are expected to commence in 4Q23 and the results are expected in 1Q24. If the results are positive, the targeted timeline for one or several license/commercial supply agreements is during 2024. Operative free cash flow continues to improve. While the revenue in 1H23 was impacted by low signings in 2H22 and the gross margin by costs related to Project Blockbuster, the strong order intake and customer momentum gives us confidence that our near term business targets will be reached and our long term growth journey is intact. The balance sheet remains solid with EUR 57m in cash and no debt.

(Numbers in brackets refer to the corresponding last year reporting period, unless otherwise mentioned.)

* Defined as materials & services expenses, employee benefit expenses, and other operating expenses

** Including Treasury bills. Part of the cash has been invested in short-term government bonds.

CEO’s review

The strong customer momentum continues. During the second quarter we signed a record number of ten new non-GMP projects and one new GMP project. Hence, during 1H23 we have signed sixteen non-GMP and one 1 GMP projects, which almost equals the number of projects signed during the entire 2022 (17+1). As the interest in our nanoforming services continues to grow, I expect the solid year-on-year growth in signings to continue during 2H23 and us reaching our 2023 business target of “increased number of non-GMP and GMP projects signed in 2023 vs 2022”.

Progress has also been made on the operating free cash flow, which saw an accelerating improvement in 2Q23 without help from the topline yet, which due to the lag between signings and revenues recognised was hampered by the temporary dip in signings in 2H22. We expect the improvement in operating free cash flow to continue during 2H23, despite the temporary increased costs from project Blockbuster. This is a clear testimony to the determination and teamwork of the Nanoformers. The swiftness with which we have been able to change focus from investing & building to improving productivity & cash flow while at the same time serving a growing number of customers has been impressive.

We have been busy on the regulatory side. In May, Nanoform’s Manufacturer’s Authorization and GMP Certificate were updated to include nanoforming of multiple APIs in the GMP facility. In June, we submitted a notification to Fimea to include our new production facilities and equipment (GMP2&3), our new GMP QC laboratory (this will help our gross margin return to the 90+ levels we target) and the nanoforming of APIs to be used in products with a Marketing Authorization. The ‘used in products with a Market Authorization’ is important from a strategic point of view and is related to our Blockbuster project. As a result of the June filing, a GMP inspection is expected to take place later this year.

From regulatory to manufacturing: I’m pleased to announce that the clinical manufacture related to project Blockbuster is being completed in August and the produced GMP-grade nanomaterial will after release be shipped for manufacture of the final drug product. This is a key milestone for the company on our journey to make nanoparticle medicines for patients. My special thanks go to the GMP Value Stream team from Manufacturing, Technical, Engineering, QA & QC, plus the PMO and R&D teams for all their contributions and teamwork to make this happen. Clinical trials are expected to commence in 4Q23 and the results are expected in 1Q24. If the results are positive, the targeted timeline for one or several license/commercial supply agreements is during 2024.

For Nanoform the last three years have been years of building a capable organization and making large investments. The coming years will be about productivity increases and improved operating free cash flow, working towards our 2025 midterm business target of becoming cash flow positive. The way to execute that is nontrivial but clear; to grow the topline and keep the operating costs and capital expenditure under control. In 2023 we see potential to progress on all three fronts. We’ve now reached a critical mass where we can serve dozens of clients in parallel on non-GMP projects, manufacture GMP material for several clinical trials annually, while helping our clients overcome their pharmaceutical development challenges. At the same time, we see significant potential to improve productivity and to increase the output of our quite impressive fleet of nanoforming lines and related capabilities. 

All in all, I look forward with confidence and excitement to the coming quarters and years. The problem with bioavailability is enormous, our brand recognition and service offering have continued to strengthen, the global pharma industry’s response to that has been growing, and our strong balance sheet is a positive aspect when partners evaluate us. We’ll continue to work relentlessly towards our 2025 mid-term business targets, while executing as fast as possible on our near-term targets. None of this can be done without our amazing employees and great partners. My sincere THANK YOU to you all for your continued dedication to Nanoform and for the inspiring and innovative work for which we’re known.

Best Regards,

Prof. Edward Hæggström, CEO Nanoform

Nanoform’s Q2 2023 interim report can be found at: https://nanoform.com/en/financial-reports-and-presentations/

Nanoform online presentation and conference call August 24, 2023, at 3:00 p.m. Helsinki time / 2:00 p.m. Stockholm time

Nanoform will publish its Q2 2023 interim report on August 24, 2023, at 8.10 a.m. Finnish time / 7.10 a.m. Swedish time.

The company will hold an online presentation and conference call the same day at 3.00 p.m. Finnish time / 2.00 p.m. Swedish time. Nanoform will be represented by CEO Edward Hæggström, CFO Albert Hæggström and CCO Christian Jones. The presentation will be delivered in English.

The presentation will be broadcast live as a webcast available at:

https://ir.financialhearings.com/nanoform-q2-2023

Teleconference dial-in numbers:

Dial-in number to the teleconference will be received by registering on the link below. After the registration you will be provided phone numbers and a conference ID to access the conference.

https://conference.financialhearings.com/teleconference/?id=2001153

• As of January 1, 2023, Antonio da Silva was appointed CBO and a member of the management team.
• Nanoform established a new subsidiary in the UK, Nanoform U.K. Ltd on January 3, 2023.
• On January 10, 2023, the Board of Directors approved share subscriptions based on stock option programs 3/2019, 5/2019 and 1/2020. A total of 29,000 Nanoform Finland Plc new shares were subscribed and the entire subscription price for subscriptions made with the stock options of EUR 34 thousand was entered in the Company’s reserve for invested unrestricted equity.
• On February 28, Nanoform announced two new near-term business targets for 2023: “Increased number of non-GMP and GMP projects signed in 2023 vs 2022” and “Improved operating free cash flow in 2023 vs 2022”.
• Nanoform’s Annual General Meeting (the “AGM”) was held on April 12, 2023. The AGM approved the financial statements and discharged the Board of Directors and the CEO of the Company from liability for the financial year 2022. The Meeting decided that no dividend will be paid for the financial year that ended on December 31, 2022. The AGM further resolved the number of members of the Board of Directors to be four and the AGM re-elected Miguel Calado (Chairperson), Mads Laustsen, Albert Hæggström and Jeanne Thoma as ordinary members of the Board of Directors for the next term of office.
• On April 12, 2023, the Board of Directors approved share subscriptions based on stock option programs 2-3/2019 and 1/2020. A total of 37,000 Nanoform Finland Plc new shares were subscribed and the entire subscription price for subscriptions made with the stock options of EUR 41 thousand was entered in the Company’s reserve for invested unrestricted equity.
• In April, Nanoform won a new grant from the Bill & Melinda Gates Foundation to work on several of the foundation’s drug development projects.
• In May Nanoform’s Manufacturer’s Authorization and GMP Certificate were updated to include nanoforming of multiple APIs in the GMP facility.
• In June, Nanoform submitted a notification to the Finnish Medicines Agency (Fimea) to update our Manufacturer’s Authorization (MIA). The objective of this notification was to include the following in our MIA: Our new production facilities and equipment (GMP2&3), our new Quality Control laboratory (GMP QC) and Nanoforming of APIs to be used in products with a Marketing Authorization. Due to this notification, a GMP inspection is expected to take place later this year.
• Nanoform previously disclosed on November 15, 2021, that it has signed an agreement to manufacture nanoformed GMP material for a European headquartered international company. Following 12 months of preclinical development work, two privately held European pharmaceutical development and manufacturing organizations decided to join Nanoform and the European headquartered international company in funding the development and commercialization of this more patient centric version of a current blockbuster drug. For this purpose, the parties entered into a collaboration agreement on November 17, 2022. Under the terms of the agreement, Nanoform and the three other parties will fund in equal shares the completion of this development program. In the event that the commercialization is successful, Nanoform expects to retain a 25 % share of the net-income received by the parties. In May 2023, after Fimea renewed Nanoform’s GMP Certificate, Nanoform commenced the clinical manufacture related to this project.
• In June, Nanoform and Celanese Corporation, a global specialty materials company, provided an update on their collaboration to evaluate the synergies between their respective technologies in the field of nanoparticle-enabled drug delivery. The result, presented at the Biotech Outsourcing Strategies Conference in Basel on July 3, 2023, demonstrated significant reduction in the initial burst effect seen commonly in high drug load implants by combining Nanoform’s CESS® particles with Celanese’s Celanese VitalDose® EVA copolymer delivery technology for drug-eluting implants. Notably they also demonstrated that nanoformed particles can enable longer sustained release properties for long-acting drug products and smaller implants. This opens up many possibilities for drug developers.
• During 1-6/2023 sixteen new non-GMP projects and one GMP project were signed, both with new and repeat customers, both US and Europe based. We also signed our first major pharma customer from Japan.
• During 1-6/2023 one new non-GMP line was commissioned, taking the total number of lines to 19 non-GMP lines and one GMP line. GMP lines 2&3 will be commissioned after they are inspected and approved by Fimea.

• The clinical manufacture related to project Blockbuster is being completed in August and the produced nanomaterial will be released and shipped for manufacture of the final drug product. Clinical trials are expected to commence in 4Q23 and the results are expected in 1Q24. If the results are positive, the targeted timeline for one or several license/commercial supply agreements is during 2024.

• Quality Director and Accountable Director Johanna Kause will become a member of Nanoform’s management team as of September 1st, 2023. Johanna Kause, who is responsible for all matters related to quality, has been with the company since January 2021.
• During the quarter we received notice of allowance from the United States Patent and Trademark Office (USPTO) for our US patent application (US17947490) directed at the process we have developed to nanoform biological molecules. We are encouraged by this positive response that reflects our innovative work also in the field of large molecules. We have filed several patent applications directed at the biologics nanoforming technology in other jurisdictions that are currently pending. Following granted patents in the United States, Japan, and Canada, we in August also received notification from the European Patent Office (EPO) of their intention to grant our corresponding European patent application (EP15793857.2) directed at the CESS technology for manufacture of our small molecule nanoparticles.
• We have conducted promising initial in vitro trials with two major pharma companies looking at monoclonal antibodies (mAb’s). These results further strengthen our proposition that nanoparticles are relevant for improved product development and more patient centric commercial products in the field of mAb’s and we look forward to advancing these developments with our pharma clients.

• Increased number of non-GMP and GMP projects signed in 2023 vs 2022
• Improved operating free cash flow in 2023 vs 2022

Company mid-term business targets 2025 (reiterated)

• To nanoform at least 70 new Active Pharmaceutical Ingredients (API) annually
• To have in place 35 operating production lines of which 7 to 14 are expected to be GMP production lines
• Over 90 percent gross margin
• To have 200–250 employees
• To be cash flow positive

For further information, please contact:

Albert Hæggström, CFO

albert.haeggstrom@nanoform.com / +358 29 370 0150

For investor relations queries, please contact:

Henri von Haartman, Director of Investor Relations

hvh@nanoform.com / +46 7686 650 11

About Nanoform

Nanoform is an innovative nanoparticle medicine enabling company. Nanoform works together with pharma and biotech partners globally to provide hope for patients in developing new and improved medicines utilizing Nanoform’s platform technologies. The company focuses on reducing clinical attrition and on enhancing drug molecules’ performance through its Nanoforming technologies and formulation services. Nanoform’s capabilities include GMP manufacturing, and its services span the small to large molecule development space with a focus on solving key issues in drug solubility and bioavailability and on enabling novel drug delivery applications. Nanoform’s shares are listed on the Premier-segment of Nasdaq First North Growth Market in Helsinki (ticker: NANOFH) and Stockholm (ticker: NANOFS). Certified Adviser: Danske Bank A/S, Finland Branch, +358 40 744 1900. For more information, please visit www.nanoform.com.

Forward-Looking Statements

This press release contains forward-looking statements, including, without limitation, statements regarding Nanoform’s strategy, business plans and focus. The words may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any forward-looking statements in this press release are based on management’s current expectations and beliefs and are subject to a number of risks, uncertainties and important factors that may cause actual events or results to differ materially from those expressed or implied by any forward-looking statements contained in this press release, including, without limitation, any related to Nanoform’s business, operations, clinical trials, supply chain, strategy, goals and anticipated timelines, competition from other companies, and other risks described in the Report of the Board of Directors and Financial Statements for the year ended December 31, 2022 as well as our other past disclosures. Nanoform cautions you not to place undue reliance on any forward-looking statements, which speak only as of the date they are made. Nanoform disclaims any obligation to publicly update or revise any such statements to reflect any change in expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements. Any forward-looking statements contained in this press release represent Nanoform’s views only as of the date hereof and should not be relied upon as representing its views as of any subsequent date.