Nanoform Finland Oyj (NANOFH) Q4 FY2025 Earnings Call Transcript & Summary

Welcome to the conference call. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead.

Good morning all, and a warm welcome to Nanoform's Fourth Quarter and Full Year 2025 Report Presentation. My name is Henri von Haartman. And today, our CEO, Edward Haeggstrom; CFO, Albert Haeggstrom; CCO, Christian Jones; and CDO, Peter Hanninen, will present to you. This presentation is webcasted through Investor Caller, and there is also the possibility to call in and listen by phone. The presentation slides shown here throughout the webcast can also be found at our web page in the Investor section. At the end, we will hold a Q&A and it's possible to ask questions if you call in. Today, we will start with strategy and key business highlights, then financials, then commercial, and we conclude with product kernels and biologics. With these words, our CEO and Founder, Edward Haeggstrom, please go ahead.

Thank you, Henri, and welcome also on my behalf. As said, much of the focus in this report will now be on 2025 in total. Next slide, please. I want to start with a photo. This is from our facility. This is from the Capital Markets Day held on December 15, 2025. And here, you can see Dr. Winfried Ness, who is a Director of IP. He speaks about our IP strategy for the next 5 years. And this is going to be very important for us because so far, it has been about building a plant. Now it will be really how to use that plant in a strategically smart way to do what our mission is, which is to make the nanoforming technology a globally dominant technology. Next slide, please. So the strategy that was revealed and launched back then is called a breakthrough strategy. We will be breaking the wall in 2 places, one for small molecules and one for large molecules. Next, please. Here, you can see an outline. Basically, for the small molecule side, we will have patients treated with Nanoform medicines within the next 5 years. For the biologics part, we will have commercially relevant clinical data to support what we need to do in the shift from IV to subcutaneous. This is a major technology shift in the industry, and we want to be part of that. Next slide, please. Here, you can see the midterm business targets revealed also at that same instance. Three Nanoform medicines, an income growth exceeding 50% CAGR and EBIT margin exceeding 30% by 2030. Next, please. A lot of stuff has happened during 2025. I would like to group them into 4 groups. We have generated new IP, and we have gotten our scale up to where we need to be commercially relevant on an industrial scale. We have also generated GMP batches on nanoenzalutamide and nanoapalutamide, and we are ready to do so on nanoencorafenib. Commercially, we have made deals with 5 countries, 4 in EU and 1 outside EU. This is the main commercial driver now for the kernels that is part of the strategy that we're now executing. We have also gotten an EU-wide license to commercially manufacture API. And we have gotten ourselves a distributor in South Korea, which strengthens our presence in Asia. In addition to this, we were granted a EUR 5 million loan from Business Finland to basically strengthen our kernel IP and that game. We have done change negotiations in order to shape our workforce. The last 5 years were about building. Now the next 5 years will be about cashing in. And last but not least, we have now gotten preclinical data on nanotratsuzumab, which is basically a first for us in the game of making the biologics offering important, both to us and to others. Next slide, please. Here, you can see the near-term business targets for this year. So really, the cash burn below EUR 10 million. Albert will talk to that. Then the application of the first marketing authorization, and this is, for me, a big, big thing because this is where the regulatory game now and the preparations for that start. And this is a preamble for our launch of the nanoenzalutamide. Then an increased number of non-GMP and GMP projects signed this year. And then finally, to sign, develop and license commercial supply agreements with several of the product kernels. This is really bringing the product kernel game forward in a commercial setting. Next slide, please. And this is where I hand over to Albert. Albert, please.

Thank you, Edward. And if we then go to a little bit of the numbers. If we start by -- on the left-hand side of the proposal sent, you can see here a clear shift upwards in the proposals sent compared to the last years. And I a little bit speculate here in the header that might this be a small change in the industry now. So we have had 4 very difficult years in the industry in the early-stage pipelines. Many of the big CDMOs have seen very few projects coming there. The big pharma has been focusing on late-stage projects. Investors have been focusing on it. But we all know that unless you fill the pipeline also in the early stage, at some point, you will run out of late-stage projects. I see that we have met several people during the last months and quarter where they have started to talk about that they want to focus more on early stage and they want to focus more on new technologies that can bring clear edge. So all in all, I would spin this a little bit positive saying that the fact that we also see a lot of requests for proposals sent is perhaps a sign that the industry is coming back also on the earlier stage. And that's, of course, good for us. On the number of projects signed, you can see right-hand side, we are roughly at the same levels as we have been for the last years. However, we have now done more GMP projects, and they are related to our project kernels. Remember here that in the CMD, we stated that our target for the coming 5 years is to increase the share of GMP projects from the previous 5% to the industry number of 25%. So this is an important development in the right direction. If we then go to the income and the EBITDA, on the left-hand side, you can see on the income side that 2025 saw a clear increase in income. We had a record level of revenue. We had a record level of other operating income. And we also, for the first time, had income from share of results of other associated companies. The good thing with Nanoform is that because we have a high gross margin, any increase in revenue or in income immediately impacts the profit and loss account. And that you can see on the right-hand side that the EBITDA improved clearly from last year because of the higher income. If we then go to the cash burn, the same thing can be seen there. And especially now after we have finished the change negotiations from which we will get EUR 5 million to EUR 6 million in reduced costs. That means that we feel very comfortable of us reaching the cash burn target of below EUR 10 million in 2026. And that, of course, means that as we had EUR 24 million in cash at the end of the year, we would have a very comfortable runway going forward until we are cash flow positive. One important thing to remember is that in the cash flow target for 2026, there are no significant milestones included. So when we sign deals on other kernels or when we get milestones from, for example, nanoenzalutamide or other that will have a positive -- additional positive impact on the cash flow. So we feel comfortable with the cash position and the fact that the cash burn will be significantly smaller again this year. And with that, I hand over to Christian.

Thank you, Albert. And I will cover the commercial section as we go to the next slide. As Albert mentioned, we've had a record year for proposals sent 96 that were sent out last year. I think that this is twofold, one, because potentially the market is returning. We've seen that the XBI index is at its highest point in the last 52 weeks. We've -- this is a 35% growth on last year. And the other aspect -- the other attribute is because of the kernels, the work that we've been doing there has certainly attracted a lot of attention to Nanoform's technology. And we've opened up a new market in Asia, and we're starting to see the real impact of that now from Japan and from South Korea. We've had laid good foundations in Europe and the U.S., and that's starting to pay dividends and also the biologics technology. So we've had some really good announcements last year around our biologics technology, which has drawn significant increase of interest into that and into Nanoform. So a lot of proposals that were sent. We are at a similar hit rate now than we've been previously. So we anticipate that this will be a very positive aspect for us moving forward. As Albert and Edward alluded to, we have signed 5 countries on nanoenzalutamide for commercialization, and there's many more to come. So we look forward to updating you when we have more information on that. Nanoencorafenib was out-licensed last year and a special company, BRAFMed was established in partnership with a private equity company and also A.forall. And this has enabled us to take forward a single product into an SPV type vehicle where we can then own a percentage of that company, be paid for the manufacturing that we do and the development and sharing the returns when this product is further out-licensed to pharma companies in the future. Asia expansion. So as I mentioned, we expanded into Japan with the support of CBC, who are our trading agent in Japan and into South Korea with the support of A&LS Pharma, who are our agents there. Our VP of Business Development in Asia is currently in Japan, having a very successful trip and will be in South Korea next week. It's a market that is showing a significant amount of interest in Nanoform's technology in the miniaturization capability of the technology. And I think particularly in South Korea, there's a lot of interest around the biologics technology and also our products and our kernels. All of this, I think, was really supported by the great work that was done on achieving a commercial manufacturing license. When we think about our large pharma innovator clients, it's all about managing risk as much as it is about recognizing value. And so being able to say that we're not just a clinical company, we are able to manufacture at commercial scale, and we have commercial regulatory approval for our facility is a big plus and will certainly help us as we move forward, both for the kernels and also for our innovator clients going ahead. And last but not least, the positive data that we achieved towards the end of last year on in-vivo biologics. This was very significant because we were able to show that with nanoformed particles in a nonaqueous suspension, we were able to get similar AUC, Cmax and Tmax to hyaluronidase-based formulation of the marketed product from Roche Genentech that's supported by Halozyme's technology. And separately, our customers have also reported very positive data around ultra-high concentration formulations of their monoclonal antibody products. We haven't said very much about that, but I think that's perhaps even more exciting. And we hope to be able to talk more about that later this year as those projects progress further. I just come to enzalutamide, which is really our lead product at the moment in our kernels. We have a target of reaching commercial launch in Europe in 2028. What we need to do to achieve that is to secure marketing authorization. It's to maximize the market value, and it's just to strategically plan. In the last year, we have been working diligently to make sure that our regulatory pathway is clear, that we can submit our dossier in a timely manner. And we've also, in parallel, been manufacturing materials and having commercial negotiations. As I mentioned, we've had several European countries already signed, and we anticipate launching this product in June 2028. And as we progress through the end of '27 into '28, '29, it will be about building up enough inventory and stock for that product launch. And now I'll hand over to Peter, who will take you through the kernels and biologics.

Many thanks, Christian. And I think I'll start sort of where you ended off, so talking about the kernels and maybe with a reminder of why we've been building this product kernels pipeline in parallel with the customer projects. And the core idea there has been very simple. To further accelerate the adoption of our technology offering by the industry, we wanted to initiate the development of nanoparticle-enabled formulations to show in practice what the technology can enable for product. And also, of course, as we've seen now to create potential for commercially attractive partnering opportunities. And in this quarter, we were, of course, very happy to execute, as Christian mentioned, the out-licensing development and commercialization agreement and investment into nanoencorafenib by A.forall and IMGA. And in many ways, this was an important milestone for the progression of the specific product kernel to the clinic, but also showcase the broader opportunity around the product kernel pipeline. And just as a reminder on nanoencorafenib, Nanoform remains a major shareholder in BRAFMed and BRAFMed will, going forward, be paying Nanoform service fees and low single million development milestones in addition to up to mid-single-digit tiered royalties following commercialization. And we have, of course, also continued to progress on the development of the other kernels. And in December, as mentioned, we manufactured the first GMP batches of nanoapalutamide. Turning now to biologics, which is becoming increasingly interesting, as Christian also alluded to. We really see a large market forming in subcutaneous delivery of monoclonal antibodies. And we expect this to be a major theme in the market overall, but also for Nanoform over the coming years. And there's 3 key points on this slide. First, we believe that subcutaneous delivery will become the dominant standard for new and marketed biologics. And this will be a major shift from what has now been a predominantly IV market. Secondly, to enable this shift at scale, suspension formulations will be important because they can enable high drug concentrations, which in turn mean lower injection volumes. And lower injection volumes can enable avoiding complex formulations and the use of devices. And this is also why we believe that suspensions will become the preferred choice of technology in subcutaneous delivery in the future. Third, and I think crucially for Nanoform, particle properties are really critical for suspension performance, including for robustness, injectability and the ability to achieve meaningful concentration levels. And because these particle properties matter so much, we're confident that Nanoform's technology can become a technology of choice in enabling subcutaneous delivery. And if we go then to the concrete example that Christian also mentioned, this slide covers the preclinical results comparing nanotrastuzumab, a hyaluronidase-free, nonaqueous nanoparticle suspension of trastuzumab against Herceptin Hylecta, which is the commercial product with hyaluronidase in the formulation. And in this 21-day Gottingen minipig study, nanotrastuzumab's area under the curve, Cmax and Tmax closely mirrored the reference product by Genentech and Roche. And in addition, nanotrastuzumab was also well tolerated as supported by pathological, clinical and immunological readouts. For us at Nanoform, the reason this is important is not just that this is a strong data point from this specific study. But together with the data our customers are generating, it supports the broader thesis that suspension-based particle-enabled approaches can really be a compelling way to enable subcutaneous delivery and including in this specific case also without relying on hyaluronidase. It also shows that formulation and particle engineering can really translate into clinically relevant performance for biological medicines. And I still want to highlight the strategic statement also on the slide on the back of that because I think it captures the commercial opportunity here very well. Most pharmaceutical and biotech companies that are developing antibody product are currently without a technology that can enable subcutaneous versions of those product. And we see a tremendous opportunity here to work together with those drug developers to enable subcutaneous versions of their product. And as we know, subcutaneous delivery has clear advantages in terms of convenience, patient experience and healthcare system efficiency if you avoid having to visit the hospital, for example, for an IV infusion. And any innovator or biosimilar developer that can offer a subcutaneous version of their product, we believe, has really a valuable differentiator in the market. And now to put it into this market structure context, and this was also a slide we showed at the Capital Markets Day we had some month back. This highlights why many biologics developers are actively looking for alternatives at the moment. As the slide shows, for higher dose biologics, the only available technology so far really for all purposes has been using Halozyme's hyaluronidase enzyme to break down the subcutaneous tissue in order to enable a higher volume to be injected. And over the past decade, Halozyme has effectively created this market for subcutaneous delivery of biologics by crafting this target-based exclusive deals. This has been extremely, extremely profitable for them. But at the same time, it's also led for each of these targets, multiple companies that haven't been able to access that technology and therefore, have been thirst to find an alternative to enable a subcutaneous version of the product. And I would say that implicit in this slide is also that these first 10 years has only been the start. The next decade will see a substantial part of the rest of the product developers wanting to also introduce their own subcutaneous alternatives. And from our perspective, of course, this dynamic is very important. Working with our customers and many of whom we already work with either on small molecules, biologics or both, we want to be part of enabling this competition in the subcutaneous space and of course, ultimately to provide alternatives for patients, physicians and the healthcare systems. So when you take and combine this macro trend of subcutaneous becoming the dominant standard with the practical requirements of high concentrations and low injection volumes and the current market structure that is driving toward alternative technologies, we believe the conditions are increasingly supportive for our approach at Nanoform and for partners to engage with us on suspension-enabled subcutaneous biologics. And this is, I think, what Christian also alluded to talking about the interactions in the market. And with that, I would turn over to Henri.

[Operator Instructions] The next question comes from Sami Sarkamies from Danske Bank Markets.

I have 3 questions. Will be taking these one by one. Firstly, on income growth outlook, you're targeting more than 50% CAGR until 2030. Just wanted to understand whether you think this target can be met also this year? Or should one assume more back-end loaded top line progression?

If I take that one, Sami, great question. And as you know, we don't give financial guidance for the year more than that we say that the cash burn will be below EUR 10 million. Related to the top line growth, I think like this. In the beginning, let's say, this year, next year and so forth, the numbers are smaller. So it's, of course, relatively speaking, easier to have a higher percentage growth than compared at the end of the period where you have bigger numbers. So the absolute growth would be then higher needed to reach the CAGR of 50%. So I would -- but then, of course, you will have products on the market, making it easier. So I think it's -- what we are internally thinking is that from a percentage point of view, we are targeting average 50% over the period or more than 50% over the period.

Okay. Then the second question is related to the milestone outlook. You're targeting EUR 10 million burn rate without milestones, but if we think about those potential milestones, what kind of milestones could you possibly record this year? And would this be related to existing programs or totally new projects?

Yes. So that's an excellent question. And milestones can come from smaller milestones related to single kernels that where you would have one event that would trigger some milestone, let's say, for example, a market approval or something like that. They could also be milestones related to kernels that we signed, for example, at Signature if we sign kernels. And these milestones, of course, are then multiplied by the percentage of the milestone we own. So in apalutamide, we own 100% and in some other, we own 100%. And in enzalutamide, we own 25% of the project. They could also -- they could be both from kernels that we have talked about, but they could also be from kernels that we have not mentioned sort of more publicly. They could be from new ones. But let's see. The time lines are always difficult to estimate. But fair to say that we are targeting to have several signings during this year and then the milestones could still be significant from this. But we have not included them in our target of less than EUR 10 million in cash burn.

Okay. And then the final question is regarding the BioLine platform. When do you think you'll be ready for first human trials with BioLine?

So if I start with that, right now, we have a line which technically is where it needs to be for that. We need to get GMP stamps. And in order to get them, we need to get somebody to invest in that line because as per our strategy, on the CESS side, we use build and they will come. But now on the BioLine, we want to have a situation where we have other people to pay for the upgrades needed to get the stamps. So it's hard to say, but we are working on it right now. And of course, where I want to go is as soon as possible because the market evolution is not waiting for us.

But any guidance, are we talking about 1 year delay, 3 years, 5 years? What could it be?

I don't think there is a delay. I think we have used the previous years to sort of develop the technology, and that is now from a tech spec point of view where we need it to be on an industrial scale. Then the other part, maybe, Albert, you want to talk to the financial aspects of it.

Yes. I think this is, of course, we are talking to many people, and this is also about the overall dynamics in the industry, how fast can we do it. But our target is, of course, to do it already this year. And one of the persons who are very much involved also in this is Peter. So would you like to comment on it?

Yes, happy to. So I think this is a lot about aligning now the customers we have on the biologics side, the fact that they are getting good animal data of their own projects with our particles, of course, is very encouraging, and we're actively sort of looking together towards -- moving towards clinic. And as Edward said, that will require a GMP facility for the technology or having the technology, GMP stamped. And our best estimate is that from pulling the trigger on putting something like that in place ourselves together with partners or a combination of these wherever it then lands, it will probably take something like 24 months to be able to actually provide clinical material. So ASAP is the answer. But at the same time, everybody knows that you can't go in 1 day to GMP. It will require some work and time to have that in place. But there is a lot of, I would say, positive momentum building behind it. And we are very actively now looking at -- together with our customers and partners, how to get this to clinic.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you, operator. And on behalf of Nanoform, I would like to thank all participants for today. If you have more questions, then you just reach out to us. You can find us on our homepage with numbers and e-mail addresses. And we wish everybody a great Thursday afternoon and evening. Thank you, and goodbye.