Nanoform Finland Oyj (NANOFH) Earnings Call Transcript & Summary

Welcome to the Nanoform Q2 2022 report. [Operator Instructions] I will now hand the floor to Henri von Haartman. Please begin.

Thank you, operator. Good afternoon all, and a warm welcome to Nanoform's Third Quarter 2022 Report Presentation. My name is Henri Von Haartman , and I'm your Director of Investor Relations. Today, our CEO, Professor Edward Haeggstrom; CFO; Albert Haeggstrom; and Chief Commercial Officer, Christian Jones, will present to you. This presentation is webcasted through financial hearings, and there is also the possibility to call in and listen by phone. The presentation slides are shown throughout the webcast and they can also be found on our web page in the Investors section. After the presentation, we will hold a Q&A and it's possible to ask questions by calling in. We will start today with a short introduction to Nanoform and then move on to CEO review and commercial aspects and then financial aspects after that. Operator, if I may ask you to move to Slide 3, please. And with these words, our CEO, Edward Haeggstrom, please go ahead.

Thank you, Henri, and welcome to all also on my behalf. We are now at Slide #3, and this is us. Next slide, please. Nanoform is a technology platform company with a proprietary technology. We're located in Helsinki, Finland and approximately 140 employees, third nationalities and a lot of people with PhD degrees. We use on the order of 3,000 to 4,000 square meters on manufacturing. We have a strong balance sheet, and we are listed on NASDAQ, Stockholm and Helsinki. Next slide, please. We work in the pharma industry and the problem is that there are too few new drugs, even though a lot of money is spent on R&D. Next slide, please. The industry is really big, and it continued to grow for many reasons. Next, please. We addressed the biggest problem in that industry, that of poor bioavailability, which means that the body can't take up otherwise potent medicines. This problem is large, and it's expected to continue to grow. Next slide, please. We have basically 3 profit pools, one where we gave on successful drug candidates, a second chance, one where we improve existing drugs and one where enable new drugs. If you do the math between the second and first, you can see that this is a problem that is really, really growing. Next slide, please. On Slide #9, you can see what we do. We get powder that is owned by our customers. We make that powder finer -- by doing that, we increase the specific surface area, which is a very straightforward way to increase the solubility of poorly soluble drugs. Next slide, please. The process we use is proprietary. It has several steps. We have covered it before, and this is what it looks like. Next slide, please. When we can make the drugs more easy to absorb by the body, a lot of good stuff happens. Basically, it happens because when you don't have to dose so much, you don't have to produce so much. The plants can be smaller and the boats and the airplanes can be smaller. It also means that the body excretes less of it and from this follows ESG stuff, we are both patient-centric and planet centric with this approach. So this kind of cascading effect is a very powerful thing we enable. Next slide, please. We work on both small molecules and large molecules. The small molecules are the ones we started with and the large molecules are the ones we are had a few years back. These are the things that we can help with on the large molecule side. Next slide, please. We use a very, very simplified business model and value chain. Basically, we work with different kinds of clients. They own the API, we nanoform it. We always get paid. And because we have a proprietary technology, it means that we're eligible to be part of a royalty game later on. I now turn over to Slide #14, the CEO will report review for Q3. Slide #15 highlights some numbers that depict growth since the IPO in June 2020. I have circled 2 of them, the size of the commercial team and a number of customer projects started. If you divide 9 by 5, you see that we have been able to become more effective in our commercial efforts. I think this is a very important thing that we have achieved. On the same way, we have also become more effective on the operational side, and Albert will talk about economic efficiency a little bit later. Next slide, please. This slide, I'm going to spend a few minutes on. Basically, the first box to the left, AstraZeneca concludes taking evaluation with positive outcomes. This is very important, and it's part of something we are very proud of. Then box #2 from the left, Nanoform partners with Pharmanovia. This is a play where we get access to a lot of 505(b)(2) opportunities. In the central box, highly promising in vivo data for glioblastoma were multi-format. This is potentially the most important thing we report today. This gives hope to people who have brain cancer, brain cancer where everybody does. In this thing that Christian will talk a little bit more about the details. The story is as follows: nanoforming has enabled a formulation that has had the outcome that the reps in the trial, all of them did not do. So we have been able to create the result based on our nanoforming where reps survived. Christian will also show you that in histopathological sections of the red brains of the survivors, there were no tumor cells. So Nano forming has now shown not only effect in biology, but potentially more. The fourth box on this slide talks about the new collaboration agreement with 3 partners for a blockbuster drug. Go-to-market commercial terms are agreed. These 2 boxes represent both affecting biology and way forward to a product. They entail commercial GMP manufacturer by Nanoform and these are things that truly underscore the fact that nano forming can enable and it can provide hope for patients. The fifth box to the right talks about what I colloquially call a multi-API license. This is basically a notification to FIMEA, which is the authorities in Finland about us starting to produce GMP on multiple lines and on each line, multiple APIs. We expect that FIMEA accounts and expect us according to their normal time lines. From this slide, the affecting biology and the provision of hope enabled by nanoforming are the key take homes. Next slide, please. This Slide #17 talks about our targets for '22. On the first one, GMP2-achieved, GMP3 on track. The biologics pilot GMP achieved and the non-GMP projects on trend. The last one, the GMP project is the GMP deal that is signed, this deal is stage-gated. Overall, we are pretty good on track for what we are supposed to get done this year. Next slide, please. This slide talks about the targets where we are going, where we need to be in 2025. Out of this, I now focus most on the cash flow positive, the right-down corner. This brings me to the end of my CEO presentation and review, and I'm happy to hand over to our Chief Commercial Christian Jones, for the commercial part. Christian, please?

Thank you, Edward. Pleasure to talk to you today. If we go to Slide 20, we can see here that the number of drugs and the global drug R&D pipeline is only going in one direction, and that's up. There are over 20,000 drugs now in development. If we can go to the next slide, please. In the marketplace, for those 20,000 drugs, there are 5,500 companies. So a significant amount of companies. And if we recall that the stats that Edward mentioned earlier, 70% to 90% of all small molecules have solubility and bioavailability challenges. So there is a huge market potential for Nano form to support and to further improve those products for patients. If we go to Slide 22, we are very fortunate to have a stellar commercial team world-class in its makeup. We have people from experienced in the CDMO, in the particle engineering, in the formulation sectors. And we also have people with significant experience in major pharma companies as well that really together can be quite a powerful team to support our partners globally with their challenges. If we move to the next slide, Slide 23, we can see here that we're making great progress. We're still in the last quarter. It's ample time to deliver and hit our targets. And as you can see, the number of customer projects signed is only, again, going in one direction. If we can go to the next slide, please. This is a good overview of types of companies that we work with. We obviously have public relationships with 2 major pharma companies, AstraZeneca and BI, but we have 5 other major pharma companies that we work with as well. We have one co-development, 3 collaborations and the majority of our businesses with midsized specialty pharma and biotech companies, the likes of Pharmanovia, Herantis and TargTex. So a good mix of different partnerships that we have. We move to the next slide. Slide 25 is really an executive summary of the slides that I'm about to run through with you. So I won't spend too much time on this slide, but I'll take you through this information and you can refer back to this slide for your convenience. Slide 26. I'm going to talk to you about the project that we did with TargTex and that we still are working on very collaboratively with them. To those of you that are not familiar, glioblastoma is a horrendous disease, a cancer of the brain. And there's only been one FDA-approved drug in the last 20 years. Most often, it's diagnosed late. And when it is treated, the current state of treatment maybe provides patients with a few months additional life expectancy. So a real huge unmet medical need for this particular area. TargTex came to Nanoform, and they had already established data that a hydrogel that they had developed was effective against glioblastoma cells. And they had established this in mice, and this is the data that you can see on Slide 27. A single dose administration of this drug in a hydrogel formulation would actually abolish the primary glioblastoma with a safe histological profile. However, the challenge was the cancer came back and the mice all died. So -- they came to us, they realized there was a challenge around the formulation. As we move to Slide 28, we can see here the drug delivery challenge. So the first prototype hydrogel, it was effective for the primary tumor eradication but it did not prevent tumor recurrence. And the formulation also poses restrictions on the quantity of API and drug that they could dose for those animals. So TargTex wanted to achieve hydrogen optimization. They were looking to get a thermo responsive hydrogel, something that when the tumor was removed by the surgeon, this hydrogel could be picked up by the surgeon and placed in the resected tumor area. And then once it was in the area of the resected site, it could then mode itself into that area and then deliver the drug. They wanted a sterilizable nontoxic biocompatible and biodegradable hydrogel. the excipients, if there were any to be used needed to be FDA approved. There should be a controlled drug release and they really needed to increase the drug loading. If we move to the next slide, Slide #29. Prior to coming to Nanoform, they had done work trying to optimize the hydrogel using excipients as one method and approach and using Nano milling as another. The excipients had challenges around the solubility, the tuning of the release kinetics, the particle size control and the percentage of API that could be incorporated. Positively, there was a need for stabilizers, storage stability and GMP scale-up weren't necessarily challenges. Nano milling, however, because of the challenges around the excipients with the next approach that they took they realized that they can't get enough drug into the hydrogel just using excipients. So particle size and making a nanosuspension in this hydrogel was the way that they found to try to increase this drug loading. So what did Nano milling achieve? Well, overall, it gave a 40-fold, so 40-year old fold increase in the drug load in the hydrogel. Now this was very positive. However, it still wasn't enough, they didn't get the right effects from this formulation. And there was still a need for stabilizes and additives. It was unstable, the material, and there were issues on GMP scale up. So they came to Nanoform. And fortunately, for us and for them and for patients providing hope, we were able to really optimize this product. We were able to increase the drug load by 200-fold and this enabled a much better concentration of drug in the hydrogel and positive across the board from formulation development. If we move to Slide 30. You can see here an untreated rat brain on the left-hand side, and you see the red dot that is on the top right-hand side of that image. That is the glioblastoma tumor. And in the next 2 images, the green and yellow represent the hydrogel and its penetration, deep drug penetration across the brain parenchyma, and that was only possible by using the nanoformed particles and it enables a deep drug diffusion across this area. And this was critical to be able to mop up any of the remaining cancerous cells from where that resection of the tumor had taken place to increase the chance of survival. That takes us nicely on to Slide 31. Slide 31 is the most important slide in this slide deck. If you look at the left-hand side, you can see the red circle, which says untreated and tumor. And the treated group, you can see here that the hydrogel is actually placed on top of the tumor. So no reception is actually taking place in this particular model. But even though it's just placed on top, it still penetrates the tumor, completely removes it in 100% of all the animals and 40% of those animals have no further recurrence of the glioblastoma. And in fact, after 160 days these rats are still alive when they're expected in normal circumstances to have died a lot earlier. And this is a fantastic result. And in actual fact, this is with a very a subtherapeutic dose. We have the opportunity now to even increase this dose a lot further to improve the outcomes for -- to further improve them and to have, hopefully, a lot more of the rats even surviving. But at the time of sacrifice, when those animals at 160 days had to be sacrificed, there were no microscopic tumor cells detected. And this is absolutely fantastic results. And so our next steps are to increase the drug load and improve the percentage survival and the long-time survival further. In terms of TargTex's product, it's a onetime, it's efficient treatment. It's local delivery. It doesn't have to cross the BBB, which is one of the major challenges for pipeline drugs, has a strong safety profile. There is obviously a large addressable patient pool, high efficacy against challenging GBM cells. And it has the potential to be fast tracked for orphan drug designation. And this is very, very important because our technology is really enabling this. And this helps Nanoform to be on path to market in a very fast and effective way as well. If we look to Slide 33, you can see here what the relationship between TargTex and Nanoform enabled. Number one, tumor eradication in rodents with only 44% of the maximum drug loading dose to a subtherapeutic dose, we're still getting complete tumor eradication. Deep brain penetration, PK data shows no systemic exposure. It's nontoxic at maximum loading concentration, and it's a GMP scalable formulation, and we signed a GMP manufacturing agreement that we announced last year with Nanoform. Together, we will explore this for other localized oncology treatments, too. And I think this has great potential for other areas other than oncology as well. If we move to Slide 34, we can see the road map for TargTex and their development plans. You can see that in early 2024, they have plans for a Phase I/IIa clinical trial. That's the GMP manufacturing that we are supporting and then later a Phase IIb randomized clinical trial and hopefully, access, shall we say, farther speed to market with orphan drug designation. I'd like to move and change gears now, looking at Slide #35. So we work with a variety of different partners. And this is a collaboration that we announced previously last year, where we announced one of our GMP contracts. And this was with the European headquartered international company Partner 1. More recently, we've just had Partner 2 and 3 come on board to support this blockbuster drug development with a fast part of the market for a more patient-centric version of this product. This is now becoming very serious. We have great results on the work that we're doing, which is encouraged a larger, should we say, group of parties to come on board for this project. We all bring different capabilities to this product development. But the really important thing here is we have commercial terms agreed for the product on the market. And that is that Nanoform will be paid for all development work that we do in alignment with our business model. And when this product goes to market, Nanoform will receive 25% share of the net income from the product. And this is a blockbuster drug, which currently has sales of over USD 1 billion. If we move to the next slide, I'd like to end the presentation from commercial on this slide, Slide #36. Ultimately, our goal is to provide hope for patients, but we also want to provide hope for our investors and our shareholders by showing how active we've been in this year. We've attended 30 events and conferences throughout the year. Face-to-face networking is back, which is fantastic, and we've had over 700 meetings with existing or potential clients. So very, very positive activity throughout the year. And I'm very confident that in the next few quarters and years, we will see the investment that we've placed into the commercial team doubling the size this year, paid huge dividends to our business. So with that, thank you for your interest, and I'll pass over to Albert to talk about the financials and the business model.

Thank you, Christian. If you go then to Page #38. So when you move very fast, it's always good also to have a little bit of perspective going back. So here, you can see that we are now at the end of the quarter, people, and that is compared to 34 only 3 years ago. At the same time, the number of lines have increased to 17 from only 4 and when I think about Nano form in the coming couple of years, I see that we have already reached a critical mass in a sense, and that means that we will now get more economies of scale and efficiency out of the machine out of Nanoform without increasing the number of employees as much as previously and still building new lines, but it's also about automation, better processes and so forth that we will get much more out of Nanoform. So I look really forward to the coming years. If you then go on to Page 39. Here, you can see the signed projects. Again, since only 2 years ago when we had cumulatively 9 projects signed, we are now at EUR 45 million -- and when you look at projects generating revenue on the right-hand side, the rolling 12 months, you can see that it has been steadily increasing. And this also shows the fact that we can handle many projects in parallel now, I think we could not do 3, 4 years ago. But we are becoming more and more effective. If you go to Page 40, you can see 2 important efficiency metrics or numbers and one is perhaps the most important at the moment, and that is how many projects can we do per line per year. And when we did the IPO, we did one per year, and now we have already reached above 2%. Here, our target is that we could reach the even 5 projects per line in a few years' time. This is our sort of internal target. One thing where you have still not seen the sort of the efficiencies on the total number of employees, including everything from top management to HR to QA, QC and so forth because we have been building the mass in a way. So you can see that on the rolling 12 months, we have reached 93%. I think that one thing which has one example of where we can impact this and how you can do it is the fact that previously, we were using bottles where you had 35 kilos of CO2. Now we have a huge tank, and that means that the cost for the CO2, for example, goes down by a factor of more than 100 and this, of course, is a positive thing going forward. Another thing which has impacted the gross margin is that we have previously a few years ago, we used a lot of consultants and outside help, we send some samples outside GMP QC and so forth, ex RPD. But now we have the capability of doing it in-house. So I think that the trend has been very good, and we have reached a very nice level. On the following page, you can see that despite the fact that the volumes have been growing, we have been able to keep the material costs that are basically the same level as the year before. If you then go to Page 44 and when you look at it from a quarterly point of our rolling 12 months point of view, there is one line that has been increasing a lot during the last couple of quarters or 4 quarters, and that is the IT expenses. And here, the reason is that we have been implementing a new ERP system. So we are going -- we have decided to start to use SAP. And this has, of course, been a huge project for us, and we are very happy with the progress. And after doing our full year financials in a few months' time, we will go live with SAP and plan to report the first quarter report next year by using the new system. That, of course, also means that the IT expenses where we book everything over the P&L. So we don't activate anything we book it over the P&L, then they will start to come down to a more normal level in -- later in next year.. All in all, when you look at the development last quarter or the previous quarter, the second quarter of '22, we had some sort of not regular costs, but now we are back to the trend, which I personally think changed already in the fourth quarter last year. So you can see that the EBITDA loss has been diminishing. And actually, in the last quarter, in the third quarter, we had the smallest EBITDA loss since the first quarter of 2021. And I'm very happy with that because we want to be on a trajectory towards becoming first EBITDA positive and then cash flow positive by 2025. on the right-hand side, you can see that -- and this is where the efficiency and economies of scale show up. We have been able to keep the costs flat during the last year in the third quarter. And that means that as the revenue growth rapidly means that the EBITDA goes down. Of course, we still have a clearly higher cost and revenues. But if this trend continues, we should be on our good trajectory towards our 2025 target. Remember also that so far on the revenue side, we have booked very little GMP revenues. We want to be conservative in our bookings. And that means that what you see is more than 90% of that is from non-GMP. So the impact from the GMP projects are yet to come. If we then as a final couple of slides show the business model is just a reminder, a non-GMP project that is nonclinical preclinical, the fee there is between $50,000 and $500,000 per project. When you then go to clinics, everything becomes a 10x bigger. So of course, the impact on the P&L will be much more significant when you go into GMP. And then finally, we should get the royalties when the drugs are on the market in the range of 1% to 20%. Now Christian mentioned that we had 25% agreed on in this latest collaboration. And of the net income, there is some difference between net income and royalty, but the reason is also that when we take share some of the risk, some of the risks, then that means that you get a higher proportion of the income. And then finally, if you look at Page 47, just a reminder, our strategy is to work on many APIs because the probability of success is low, so only 2% to 4% of new chemical and biological entities in each market. And that's why it's important that our business model is such that we get paid for all the work we do. And we want to work on many APIs because that increase is the likelihood that we will get -- help get drugs also all the way to market. And then finally, a reminder our business targets for 2025, where Edward mentioned already that as we have reached above 90% gross margin, and we know we can build lines. The cash flow positive is the main target we are really focusing our energy on at the moment. Then you have a few tables on the coming 3 slides with the numbers. I won't go through them, but let's go to Q&A now. Thank you.

[Operator Instructions] Our first question comes from the line of Christopher Uhde of SEB.

So in the broader biopharma sector, obviously, we've seen a disconnect between sort of suiters willingness to pay up for M&A since valuations came down and targets expectations of deal values on the other side. Now this quarter, Nanoform broke its pattern of every other quarter being a strong one in terms of new API projects signed and the rolling 12-month new API count fell as well. Would you please tell us about how you balance the need to bring in new business with the desire to secure obviously, premium pricing for your services? And I guess how do you manage your own expectations basically for what you should be getting per project? And then to what extent does price elasticity play a role in the speed at which you signed or win contracts?

So Christopher, thanks for the question, and there were actually many questions there. If I first give you a sort of a few pointers and Albert can give you sort of more of the financial details on it. I think that the important part is that the focus now is really to bring the GMP projects forward to win them and to bring them forward. We know that we can do in POCs. We know that we can execute on the POCs. And of course, from month to month and quarter to quarter, there can be a slight fluctuation in the exact number of POCs that are signed. But the real deal is really to get those trajectory towards products towards GMP manufacturer. Then you asked about price elasticity. And I think that it's fair to say that we are working on a price premium. It's clear that people value what we do. And now the PODD conference, together with TargTex was the one, which follows the pattern that I really like. Customers states a problem, we state the solution. And together, we can potentially help patients. Albert, would you like to add to the financial aspect of Christopher's question, please.

Yes, Christopher. I think it's important to remember that the fluctuations between the quarters, how many POCs. So if you look historically over the last 2.5 years, we have signed anything between 1 and 8 POCs in 1 single quarter. So now we signed 2 in the third quarter. And last year, again, we signed 6, but we -- so it can be a very big fluctuations between the quarter. So I think it's more important to think of it from a sort of 4 quarters, 6 quarters, 24 months perspective. What we see is that if you look at, for example, the underlying the underlying proposals that we send out and proposals, meaning that we talk with clients, they have a clear problem and then they ask us to send a proposal. And these are proposals where we have very high success rates. We have not seen any change in this. On the contrary, we have seen that productivity after the summer has been very, very high. Christian talked about it, lots of meetings, extreme in many meetings, so many conferences in the autumn. So I think it's more like quarterly fluctuations and we have not seen either any sort of changes in the price elasticity. So already from start, we decided that we will go for a premium pricing. We don't give any freebies. And what actually has happened during the last year is that as the CDMO industry in general has raised the prices quite a lot due to inflation and higher salaries, especially in the U.S., but also in Europe. And at the same time, you have seen a much stronger dollar, meaning that as our cost base and as our pricing has remained flat in Europe in euros during the last year 2 years. So actually, Christian, can correct me, but I would say that we almost get less complaints about the pricing than 2 years ago. And one reason for that is, of course, also that as our -- as our brand value and as people start to know us more as we are able to come up -- come out and talk about these kinds of successes as, for example, with TargTex, the pricing discussion is smaller. But Christian, also from your point of your comments on the 2 signed POCs in the quarter and the pricing discussions with clients.

Thank you, Albert. And yes, Chris. So with respect to this, I agree with Edward and Albert's comments about quarterly fluctuations. Obviously, some things can land just at the end of one quarter and not go into the next quarter and some things can sort of land in the following quarter. We have a lot of activity ongoing more than we've ever had. And I be confident that going forward, we would have strong, very strong quarters. And it's just, I think, a fluctuation, if anything. And not -- I wouldn't say anything to draw too many conclusions from. With the price elasticity, we have lost some proposals on price because we've been too expensive in the past, but not the majority of them. And to be honest, if we weren't losing some on price, then we'll be charging too cheaply for our services. So I think it's very important that we have strong price integrity to everything that we offer. It is a premium service, and it's premium because we deliver value for our clients. So I think providing we can show that value and explain it in the right way, which I believe we can, then I think there's no issue in the current market. People are still developing drugs, and they still have problems that they need to solve...

Very helpful. And I guess, if I could ask one more question. It would be about the GMP project revenues. And because it seems, I guess, just to be kind of clear about we -- I guess, on the street have sometimes not necessarily appreciated the time that it takes to get things up and running. And that let's say, with the concept projects, and that was seems to be the case here with the GMP. But it also -- I also get the sense that perhaps on this occasion, you might also have yes, I thought it would happen sooner, getting -- in terms of being able to recognize revenue from the GMP projects. Could you comment on the time line and yes, your thoughts on that?

Sure. Let me first give you an overview and then Albert can give you the financial -- so it's clear that there is -- there are 2 clocks here. One is the nano form clock of being able to ramp up so that we can be comfortable to sign the papers that we can deliver on them and also to build the confidence of the customer. What we are talking about now is commercial GMP manufacturer, something that's actually going to go via the clinical studies into products. And that's why the 2 green boxes, I spend a little bit time talking about earlier are so important. I think that generally speaking, if you look at how we have progressed, there has been steady progress both in intensity, that's parallelity but also in speed. And I see no reason why this should not continue. Take a simple example. We went from 1 to 3 GMP lines. And since the newer GMP line 2 and 3 are upgrades on the first one, the total activity that we can support is actually more than 3x and these similar kinds of sort of super linear relations exist elsewhere. So I think that everything takes more time than people, ourselves included, wish, but I still think we have been able to maintain a good momentum that is increasing. When it comes to revenues, Albert is always a very, very careful CFO. So maybe he wants to say a few sentences on that.

Yes. I think we need to be honest in that sense also that we are doing all these things for the first time. So -- we are now having a lot of experience already on the PLC side and the booking of that. On the GMP side, we are still sort of early on. And that means that we would rather err on the cautious side and being too optimistic. There are certain industries where you can book revenues aggressively in projects, and then you come out and say that sorry, that now we need to take back and the cost went up. We don't -- we don't want to be in that situation. And usually, in the pharma space, it's not that common. There are certain industries where it can happen. But I think, in general, is faster. But just an example, so we have booked 10% or less of the GMP agreement we have signed. And that is, of course, means that if things then go faster than expected when it comes to GMP manufacturer, that means that we will then book the rest when we know that the project has not gone according to that time schedule. But early on, it's better to err on the cautious side.

Do you have anything to add from a purely commercial perspective, Christian?

No, I was going to say exactly the same as Albert, with respect to doing this for the first and associated with some of these activities from both the customer side and from us. But we have a lot of projects that we're working on and have worked on. So we should see a flow of GMP projects coming forward.

Our next question comes from the line of Lars Hevreng of Danske Bank.

Now we have 2 other companies. Can you say something about what kind of data you will have before this product enters development.

Edward, should I take that...

Yes, please.

So Lars, sure, we are obviously doing everything that you would expect a company would do in formulation in development, making sure that we can develop a product that meets the needs of its target product profile. And we've been working with our parties on that. And we've got some great data, and I think I bridged obviously the further partners to join. And we would plan to go in to prove that data in humans next year. Does that answer your question, Lars?

Yes. Yes, it does. And the that first trial that will not be on -- that will be a standard PK trial. It will not be on patients.

Hello, we are making GMP material for U.S. and human beings...

All right. And these 2 other -- is it too early to say that if the originator company is involved in the collaboration...

We haven't stated that. And that's not something that we have disclosed.

All right. And typically, at what stage of the development would drive results to be published. percent in any way?

Well, that's a great question because typically, those results are confidential if it's an actual program that's live and in development. So it may be that we don't publish those results, but we will keep you updated and everything we can share with you, we will do.

And Lars, this is important. So from Nano forms perspective, it is valuable to publish results as we have stated in earlier calls. And we will absolutely drive that. We think it's very important for patients to know about advancements in order to be able to actively advocate for improved health care. It is also clear that we serve both our customers and collaborators. And therefore, there may be reasons why results are published at a certain specific time point. And we are, of course, balancing these 2 things against each other. Here also, we want to take a careful and cautious approach where we rather are a little bit slow than [ too fast ].

And then if I may add to that. Of course, also remember that we are always thinking about these as potential platforms. So both when it comes to the TargTex hydrogel for brain cancer and when we are talking about this collaboration agreement if there are other areas, other indications, other APIs where you can see similar advantages as we get from the great results. Of course, that's something that we are sort of very eager to move forward with either with the partners, clearly or if there are other companies that have similar programs, then that could also -- because in the end, the more projects we have, the more potential there is for the patients in the end to get drugs that work on the market.

Okay. And in terms of the collaboration with TargTex, it sounds like you will do more dose finding prior to the first clinical trial. Was that correct?

So I think that it's fair to say that we will carry out a dosing study together with them. And it's, of course, very important because it's one of the many key data that people are looking at when they start to prepare for positioning in the market base of a product.

And your partner, have they already at this stage, a good input from regulators regarding the design of the first clinical stage trial.

So if you think about glioblastoma is such a thing that there is a huge drive from the patient population. So I think it will be possible to recruit patients. I also see no reason why this could be a candidate for a fast tracking. And the senior people in TargTex, they have been around in the industry for long enough to have vast networks...

Our next question comes from the line of Christian Glennie of Stifel.

Just starting off then, I just wondered about the just to understand a bit better the call out of the sort of funding environment obviously they're wider macro headwinds. But obviously, as we know, biotech companies, particularly finding a tougher funding environment for them, albeit that they have been relatively well funded in the sort of boom in the last couple of years. Just whether that's had an -- is that having an impact? Or is that just something you're sort of referencing to people to be aware of? Or is that something that is shifting in terms of decision-making at some of your customers, obviously, given that 2/3 of your customers, at least by number or more in that sort of small to medium-sized businesses.

So if I start and then over to Albert and Christian to give their viewpoints to -- this is something which we follow very, very keenly ICT on the commercial meetings weekly and basically try to see if there are indications of this. To the best of our understanding, it has not yet impacted us, and it may or may not do so in the future. Then when it comes to certain areas, we have clearly seen that there are changes. And basically, we see it as a number of proposals where they want to discuss with us whether to do development programs together. And then, of course, the bigger the companies we work with, the more different the dynamics look where basically it's clear that certain assets have become much, much cheaper. And that is basically a kernel for a very different kind of discussion. But maybe with this sort of general remarks, Albert and Christian, do you want to add something?

Yes. I think that this is more prudent, I think, again, that we all know that the financial conditions have gone much tighter. And you could expect some impact. But strength or interestingly enough, there has been very, very little impact yet and whether it will come or not is another question. As you can see from the slides showing the number of companies and the number of APIs in the pipeline, interestingly enough, during the financial crisis of 809, both the number of companies and the number of APIs in the pipeline do each year. So it might be that this industry is truly sort of recession-proof if such a recession comes next year. But I would say, again, that this was just for prudency. It is a fact that some of the really small biotechs in a few certain countries are having difficulties of finding funding. We are getting more questions whether we would be like to in-license or participate with funding and so forth. But we have so far been very, very sort of restrictive. We want to not give free this, and we also want to work on with partners that are strong. But I think this might also give us some great opportunities in the coming year, whether if such a recession with us. What we have also seen is that a few couple of years for the last couple of years, there has been a talk among the big pharmas that other assets are very expensive. And now they are starting to activate a little bit. We have seen some acquisitions when the valuations have come down. If you get a recession, then you will certainly have a stronger trend there again. But that is, of course, a big if. What we know for sure is that the amount of funds raised by biotech, especially in the U.S. but also in Europe during the last 3 years and also funds raised by VCs and private equity in this industry has been enormous. And as you know, our strategy has been from start to focus on Europe and U.S., both when it comes to clients, but also when it comes to equipment where we buy our equipment. And therefore, we don't have exposure to certain countries in Asia where there might have been more cops.

Yes. Maybe just to add to that. I spent about 2 weeks in the Boston, Massachusetts area in the last month or 6 weeks period. And there are a huge number of companies that are incredibly well funded that raise money during the COVID period and are well funded for the next 4 or 5 years. And it's these companies that we are interested in supporting. Obviously, we want to try and support everybody, but we have to be smart and focus on where people can, I guess, pay for our services or where we can work together. -- companies now that are perhaps coming to us with challenges, but are also struggling to raise money. We have to be a lot more selective about. But there's 5,500 companies developing products and there's a good proportion of them that are well funded and still have got problems that need to be solved. So I don't see that impacting us in any way at the moment.

Great. That's helpful context insight there. I guess a question on target. Obviously, you talked about the... The one collaboration where you with the European pharma and other partners and now those economics have been agreed. How's the TargTex sort of collaboration structured on the economic side. Is that one that's yet still obviously dependent on development yet to be agreed? Or is there already a sort of economic framework there that based on sort of the sort of potential royalties on sales sort of thing? Or is that to be decided?

This is something we have not really spoken about. I think that right now, we are focusing on the great results in the biology. And then when we have more to say, we will talk about those parts.

Okay. Yes. Fine fair enough. And then on AstraZeneca, I guess, obviously, not in your control, but in terms of where they go from here, and obviously, you talked about them having done the validation, expanding the relationship. But what could you say maybe more about what should we expect maybe over the next couple of years that might come out of that collaboration, for example?

So on a general level, it's clear that we are very, very happy to collaborate with AstraZeneca, and we are also, of course, very grateful that they lend us our sort of common credit for the work we do. Looking forward, it's, of course, always very, very hard. But to give you a generic answer, I would really like to put a product on market together with them.

Okay. Good. Yes, that would be nice. Okay. That's all my questions.

[Operator Instructions] And there are no further questions at this time. Please go ahead, speakers.

Yes. Thank you Yes.

Thank you, Edward, Christian Albert, for the presentation, and thank you, operator, for hosting this, and thank you for guests who have called in and viewed us through the webcast. If you have more questions, you are more than welcome to contact us after this, and we do wish everybody a great Tuesday afternoon and evening. Thank you and goodbye.

Thank you very much.

This now concludes our presentation. Thank you all for attending. You may now disconnect.