Nanoform Finland Oyj (NANOFH) Earnings Call Transcript & Summary

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

Thank you, operator. Good day all, and a warm welcome to Nanoform's Second Quarter 2026 Report Presentation. My name is Henri von Haartman, and I'm your Director of Investor Relations. Today, our CEO, Edward Haeggstrom; CFO, Albert Haeggstrom; Chief Commercial Officer, Christian Jones; and Chief Development Officer, 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 are shown throughout the webcast and they can 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 today start with a short introduction, then key business highlights, then financials, then commercial, and we conclude with our product kernels and the Biologics market. With these words, our CEO and Founder, Edward Haeggstrom, please go ahead.

Thank you, Henri, and welcome also on my behalf. Today, we are going to talk about the U.K. response. We're going to talk about our reduced cash burn, and we're going to talk about the Bio GMP CDMO negotiations. Next slide, please. First of all, I think it's important to say that we're executing the strategy that was presented in the Capital Markets Day in December 2025. So that's really the framework. And we offer both services and development on small molecules, Biologics, formulation, and we have a strong AI platform to support us. Our customers are from global pharma, from midsized and specialty pharma as well as biotech. We have 2 technologies, and right now, they are in small molecules and Biologics. The revenues come to Nanoform from service fees, from developmental and commercial milestones from commercial GMP supply and then from exclusivity fees, royalties and profit shares. The midterm targets were presented for 2030 on the Capital Markets Day: 3 Nanoform medicines launched by 2030, an income growth larger than 50% CAGR and EBIT margin above 30% by 2030. Next, please. Here, we have 4 business highlights. First of all, we now got positive feedback from the scientific advice meeting in the U.K. This means that we're on track to submit our first market authorization application for nanoenzalutamide. We expect this to happen during 2026. We have shown a significantly improved cash flow, and this means that our target to have a cash burn below EUR 10 million is on track. Then we have been working diligently to increase our status on the Biologics side to GMP. And this means that we have now been negotiating with reputable CDMOs how to do exactly just this. Peter will talk more about the details. And then the coming years now is really about preparing to launch Nanoform products, first on the small molecule side and then on the large molecule side. This we will do together with our partners, and this will have a global impact. Next, please. And here, I hand over to Albert.

Thank you, Edward. If we then go to a little bit numbers. So here, you can see the number of projects signed. In the second quarter, we signed 3 GMPs and 3 non-GMPs. So first time, we had equal amounts of both. And on the right-hand side, you can see that according to our strategy, we have been able to increase the proportion of GMP projects and the signed ones are related to our kernels on the small molecule side. If we then go on the following page to income, you can see that in the first half, income grew. And here it's important to remember that the deal we made with the biopharmaceutical company listed on Nasdaq. Only a small proportion of that is booked in the P&L in the second quarter, while the whole amount we received $1 million got into the cash flow. So that's why cash flow is even a little bit better than the P&L. And we can also see on the right-hand side that the gross margin exceeded 90% again, which is, of course, our target level. If we then go to operating expenses, they came down by 33% in first half. And that is, of course, the reason from our focus on decreasing the cost structure. And you can also see that the fact that we were able to build the factory and after the factory has been built, we need less people and less costs. It's quite expensive to build a factory with all the systems and the different functions. And now you can start to see the impact from the fact that we now have built basically the factory ready on the small molecule side. So the trend has been very good so far this year. This, of course, impacts the EBITDA directly, which you can see on the right-hand side. As I said, the cash flow was even better than the P&L, and we actually burned only EUR 1.5 million in the second quarter. meaning that the half year cash burn in this year was EUR 5 million, and that means that we are on track to meet our cash burn target for the full year, which is below EUR 10 million in cash burn. The EUR 1.5 million cash burn in second quarter also meant that our cash was EUR 19 million at the end of the quarter compared to EUR 20.5 million at the end of first quarter. So I think we have done a really good job on reducing the cash burn, and we believe that the cash pile is enough until we are cash flow positive. Here, you have the cash -- sorry, the near-term business targets for this year, cash burn below EUR 10 million. We are on track on that. First marketing authorization application for Nanoform medicine submitted. And now after the positive feedback from the scientific advice in the U.K., we are on track on that also. Increased number of non-GMP and GMP projects signed in '26, we are on track there also. And we are working hard to also achieve the fourth midterm -- I'm sorry, near-term business target, meaning to sign development and license commercial supply agreements on several product kernels during this year. And just as a reminder, here are our business targets for 2030. 3 Nanoformed medicines on the market, income growth more than 50% on average during the 5 years period and EBITDA margin above 30% by 2030. And with that, I give over to Christian. Please, Christian.

Thank you, Albert. And as you can see on this slide, we're going to talk about the recent positive feedback from the MHRA, the U.K.'s regulatory agency. This was around our nanoenzalutamide product. And it's very, very positive for many different reasons. First is the product and its regulatory approval status. This means we're moving in the right direction. It doesn't mean that we will have an approval, but it means that scientifically, the FDA believes that our rationale for taking the product forward makes sense. And it's on this that we will be filing an application with the U.K. regulatory authorities this year. It's positive for other applications that we may want to put forward because the U.K. authorities are viewed very positively by other authorities. It's certainly in Europe and around the globe. And also both for our customers in the generic space, but also in the innovative space, it's very positive to see that our technology has been received positively by the regulatory authorities. There's been no questions around the technology itself, and we're very pleased to see this feedback. So yes, all in all, a very, very positive situation. If we move to the next slide. When we look at the performance in H2, we've had obviously, the feedback from the MHRA, which was, I would say, key and quite a milestone. Then we had very positive news earlier this year with regards to our bio deal that we did with a U.S. Nasdaq-listed company, and that's around our Biologics technology. So this has been really, I guess, a key milestone for us as a company as we progress the Biologics technology forward. It's really helped to raise the profile of Nanoform in this space for ultra-high concentration subcutaneous injections. And we've seen great momentum from this and also further endorsement of the technology and an approach to be active in this space and to create value for patients. Third point is we've had 6 new customer projects signed in Q2, 3 new -- 3 non-GMP and 3 GMP projects. which is great. And of course, that helps us be on track to deliver more projects this year than last year. And as I mentioned, the momentum has really accelerated around the Biologics technology. So we have multiple major pharma and biotech feasibility projects underway at this point in time. And of course, the key thing is to be able to give all of our partners confidence that our technology is not just a laboratory-based approach, but we actually have a viable GMP manufacturing process to deliver clinical material to start generating value in clinical development and then ultimately into commercial manufacturing. And so we'll talk more about that in the next couple of slides when Peter talks. But we have advanced negotiations underway now to secure a strategic GMP partnership for our Biologics technology with multiple different CDMOs. So we will make an announcement on that when we feel it is appropriate. And I'll hand over now to Peter to take us through our product development strategy.

Thank you, Christian. So my colleagues already commented on the recent positive MHRA feedback that we and our partners received and this was, of course, also what we were hoping for as well. And without repeating everything that was already said, I would just want to maybe highlight from my side also the shared legislative background of Europe and the U.K. in this time. And that this shows really that different regulators may have different views on the interpretation of the regulatory pathways, but that there is really a good support for the view that we have adopted together with our partners since the start. And of course, importantly, that there is a clear pathway forward to meet a first marketing application for Nanoform medicine this year. We have, of course, also continued the focused execution on the rest of the kernel pipeline as well and in particular, the most advanced programs. You can see that we've also added a line here as we now have received a 9% ownership share in PlusVitech. This is a customer that we mentioned before as well that is repurposing an anti-nausea medication for oncology indications. And this new use that PlusVitech is pioneering for this medication requires a substantially higher dose, and they are looking to, therefore, an enabling nanoformulation for the product with our particles. Moving then forward towards Biologics. And as has been mentioned, just before summer, we shared this news that we have signed the first exclusivity deal for our Biologics technology and that we are progressing or looking to progress towards clinic without delay. And we've identified that the fastest and most efficient way to do this is to partner with a CDMO that has a long experience from aseptic manufacturing, something that our small molecule technology doesn't require. And these discussions have progressed fast over the summer, and we are, of course, pleased to have received now concrete feasible options from potential partners. And we believe that combining on one hand, Nanoform's leading particle engineering capability with a leader in aseptic biologic manufacturing will be a competitive offering for customers considering clinical trials and help accelerate the commercialization of this technology. This is a slide we've now been showing for a few quarters. And what we want to highlight with it is that there is an established market and business model for drug delivery technologies that can enable subcutaneous delivery for Biologics. And the slide really highlights why many Biologics developers are actively looking for alternatives as the business model that has been adopted is based on signing these exclusive deals on a target-by-target basis. And during the second quarter, the current market leader as well as ourselves have been signing deals. And we believe that the Biologics subcu delivery market will only continue to grow from here and potentially in an accelerated pace. And with that, I will turn it back over to Henri.

[Operator Instructions] The next question comes from Christopher from SEB.

Christopher Uhde from SEB. I guess what I'm wondering about is the revenue implications of the bio process outsourcing to a CDMO. So if we, let's say, for instance, take a 5% royalty as a midpoint on an average royalty and you're using a CDMO, how should we think about -- and I appreciate it's a discussion ongoing, but how should we think about the impact to that royalty level?

Albert, would you like to take that?

Yes. So -- as you know, most CDMOs, they are sort of -- the business model in the CDMO world is very much about fee-for-service and potentially less around royalties. And that is the sort of the norm if you have mature available technologies. Our thinking is different. Our thinking is more like the proprietary technology provider that has something unique. And therefore, you can enable a situation where the clients are actually prepared to pay milestones and royalties for that. We are, of course, negotiating with several now, and this is a discussion. But if I put it like this, that it seems that this is not a hot topic in that sense that we have clearly different strategic and tactical thinking around this in the sense that they are fine with thinking about the fee-for-service part and we can think about the sort of the milestones and royalties. But -- so I would say that at this point, I don't think of it like there would be changes to our strategy. However, of course, this is a negotiation still ongoing, but that's what I would like to say.

Okay. So maybe I could ask a clarifying question just from a -- so from a cash flow perspective, should we view this as something that I mean, is there any kind of guidance at all you can give to what kind of impact it would have proportionally?

I think that this would have an absolute positive impact on the cash flow and the revenue for Nanoform and exactly how the share goes when it comes to the -- so think about it like this. We do nanoforming. They have other services in their facilities. And then the exact share of those are, of course, different. But on an absolute level, we believe this will be very positive for our cash flow and top line. And as I said that we are unique in that sense that we have a unique technology, and they recognize that.

The next question comes from Christian Glennie from Stifel.

Maybe just on the U.K. process. Obviously, you've had different outcomes here now from going to EMA and then U.K. What do you think has been the reasons for the acceptance on the U.K. part versus the EMA? And is there any prospect that this may have an influence back on the EMA process or that's probably a bit of a stretch at this point?

Thank you. So first of all, if I may speculate a little bit, I think that the objective thing that differ between our first interaction that we reported in the previous call and this one is that there is something called ICH M15, which is a document that was in existence but was not ratified during our first interaction, and it was now ratified. So one proposed explanation could be just this. Of course, every single authority have as prerogative their ability to interpret the situation the way they see fit. Then your final part of the question, which is there a feedback loop, which means that if there are positive outcomes in country 1, 2, 3, can it affect other countries that we either have or have not interacted with. Of course, speculative again, but I would presume that this is the case.

Yes. Okay. And then in terms of potential partnerships for the U.K. market, at least? What status of any discussions may be ongoing or interest level that this has sparked? And is it -- what do you think is the optimum timing around a commercial deal as you're thinking about regulatory filings as well?