Welcome to our First Half twenty twenty one Report Presentation. Today, our CEO, Edward Hekstrom CFO, Albert Hekstrom 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 slides shown here today can also already be found on our webpage under the Investor section. After the presentation, we will hold a Q and A.
And it is possible to ask questions by calling in. On top of the presenters today, we also have our Chief of Business Operations, Gonzalo Andrade and CTO, Niklas Sandler, with us for the Q and A session. We will today start with a short introduction of Nanopharm and then move on to the market dynamics and then first report. Operator, if I may ask you to move to Slide 3, please. And with these words, I would like to introduce our CEO, Professor Edward Hekstrom, please go ahead.
Thank you, Henry. And this is Edward Hekstrom and I welcome also on my behalf to this. And it's my great pleasure to sort of briefly tell you a little bit about the company, and then we're going to go into what we have achieved. As you may or may not, I'm guide driven by action. So I would like to tell you that we have some intriguing news around the GMP.
And we have just gone through a week of very, very productive meetings with the commercial team, who flew in all over the world to meet us here together with the technical guys. I am now at Slide number 4. Nanoform is a platform technology platform company that helps the pharma industry and patients by creating small nanoparticles, which means that medicines can be taken up by the body. You can see here on Slide number 4 that we have produced clinical results let's validate our value proposition in the human body and that's something which I think is really, really important. We're located in Helsinki, Finland, approximately 3,000 square meter on manufacturing site, and we are approximately 110 employees, many of whom have a PhD degree and we are currently 25 nationalities.
I move to Slide 5. So what are we doing? Basically, we're taking on and solving one of the big issues in the pharma industry that's on low productivity. So a lot of money goes in to create new medicines and too few medicines come out. The reason why too few medicines come out is that the asset created a show for bioavailability.
What does it mean? It means that molecules which are in as such potent are not taken up by the body. We are addressing this big problem. And as you can see on the slide to the right, it's a problem that is growing worse over time. So we are very well positioned to help here in a significant way.
Next slide, please. We talk about 3 profit pools. Basically, we can give unsuccessful drug candidates a second chance, which means assets that held promise and have failed, by nanoforming them, they can get a second chance. There are a lot of those. The second profit pool is to improve already existing drugs.
There are many existing drugs where one know that they can be improved, either by reducing, for instance, side effects or by opening up new Diagnostic venues. And the 3rd profit pool is to enable entirely new drugs. And of course, this is something where we play put on focus because this represents sort of a new hope for Ameluz people. Right now, there are 18,000 drugs in development. So there is a lot of opportunities for us to help out both the current patients and the investor.
Next slide, please. This slide is a slide which goes to the core of what we do. I start from the right hand side. Basically, we take medicine powder that's coarse and we make it fine. Always when we do stuff like this, we are getting paid.
Why do we make it small? If you look on the left hand side, you can see that by going small, basically you increase the surface area of the particles. When you do that, you increased the bioavailability. Those of you who study mathematics see that this is a negative exponential, which means that there is a lot to gain by going small. So for instance, going from 1,000 nanometers down to 10 nanometers gives you an enormous amount of increase in surface area and hence much improved bioavailability.
Next slide, please. I'm going to spend a few minutes on this slide. I start up at 12 o'clock. By making the small nanoparticles, we increase the solubility of the drug substance. When we do that, we get increased bioavailability, which meant that the body can take up the drug.
When you have this ability to get potent molecules taken up by drug molecules, you can actually pave the way for new drugs. You can make all drugs, new drugs. And these 2 are very, very powerful ways to help. When you get improved uptake by the body, you don't have to dose so much extra, just in case, which means that you can reduce the dose, which results in smaller pills, which results in fewer side effects, which results in you having to make less of the stock, which means that you can have a small fraction. The cool part is also the fact that when you can make new drugs For improved old ones, you can play a patenting game, where you can prolong patents that exist will create entirely new ones.
This is very, very important for everybody in the industry, but ultimately also for the patients. The intriguing part of our supercritical carbon dioxide based process is that we can play will gain also in the increased environmental sustainability there. Cargo dioxide as such,
we use carbon dioxide that is recycled.
And this carbon dioxide can be a part of increasing the environmental sustainability by not having to produce so much drug and buying being part of something that can be recycled. So a lot of utility comes out from the effect that we can make this small particle. Now what we really are good at is making the small particles and tuning them into medicines that can help them. Chen's smallest priority. I'll move to the next slide, 9.
This is now about biologics. So biologics are biological pharmaceutical. Basically, the previous slides talked about chemicals, small chemical entities. Now we talk about larger molecules, which are called Biological Pharmacytica. Here are mentioned 6 potential ways to change the game of biologicals.
Why are the biologicals important? Because they are a growing part of India. 1st, Potentially, we can improve the delivery route. We can improve the uptake. We can increase the drug loading capacity in formulations, which means that you can basically put more drug into the pill, for instance.
We can tailor release profile, which usually is very important for treating the patient. We can enable entirely new drug combinations potentially. And The final ball here is that we can potentially implement lighter infrastructures for Travel Logistics. A simple example is to say, maybe we don't need to put minus 80 centigrid freezers in Africa or in countries that don't have. These are 6 ways where we see that we potentially can create value by being able to then afford value.
Next slide, STARMAP. Storemap is an artificial intelligence. We use this to help our partners pick winners. Pick assets that are suitable for nanoforming where there is a high probability that we actually can add value by not informing them successfully. This also helps our partners by telling our engineers how to turn the knobs on the lines, which means that we can faster come to a process setting that is successful.
STERNMOC 2.0 is an artificial intelligence that basically learns how to nanoform assets. One could maybe say that this is a digital replica of the hardware world. I move to Slide 11. Storemap needs to do calculations. And basically, one can say that the more the better.
Starmap takes in APIs. Starmap does its trick and puts out estimates for how to nano form, what size particles Arde Kristolim and so forth. Here, you can see that we have already evolved Stora Map such that we can do 1,000 evolutions or evaluations per week, and it's clear that we are going to be able to increase this a lot going forward. More evaluations, more insight, hopefully more people who get help from this. With this, I conclude my part, and I hope I have painted you a picture of a platform technology company, which is unique in the way that it can enable joins the go to market by making very small granules out of them.
Thank you, and over to Alk.
Thank you, Edvard. So let's now have a look at the market before we then go into the first half results. If you move to Slide 13, please. So here you can see that we are in a very big market. So the total pharma market is more than $1,000,000,000,000 And what you can see on the right hand side is, if you have a successful drug, the sales from one drug can be enormous.
We of course all know that these numbers even look quite small when you compare to the present ongoing COVID and sales you can achieve from 1 drug in this situation. But generally speaking, a blockbuster drug has lots of potential for big business. If you then go to the next slide, please, Slide 14. As Edward said previously, Despite the fact that the pharma industry spends more than or roughly $200,000,000,000 a year on R and D, the output as new drugs is quite small. So not even 50 new drugs on average during the last 10 years.
And this is, of course, what we hope that we can help the pharma industry to bring new drugs to the market. Thanks, please. As you know and as we will show that our target for 2025 is to get more than 70 new APIs coming in every year. And here you can see that ambition, even though it's ambitious target, you can see that the pool of potential APIs is really big and it's growing every year. So only 5 years ago, it was slightly less than 5,000 smaller today.
And today it's more than 18,500 drugs separate drugs in the pipeline. On the following page, on Page 6, you can see that these 18,500 drugs on new drugs or drug candidates, they belong to more than 5,000 companies. So there are many, many companies out there with an API or several APIs that could become clients of Nanoform. If you go to Page 17, we have split up the drug development by phase. And here you can see that naturally the Lions share is in preclinical, so more than half of 18,500 drugs are in preclinical, then 14% In Phase 1, 15 in Phase 2 and 6 in Phase 3, and then you have the rest.
But basically, we can have projects and we can help clients in all these phases. And as we showed on the Capital Markets Day, So far, our split has been quite similar to the market situation. But going forward, when we have a bigger sample, it will, of When you go to Page 18, you see that all these growth continued all these phases or the number of drugs in the different phases grow. You can also see that the preclinical is the one that's growing the fastest, but also Phase 1 has grown really fast. Because there are many failures in Phase II, unfortunately, the Phase III number has not grown as fast as, for example, the preclinical.
But as I said, we can cater to projects in all phases. If we then go to Page 19, so you know that our strategy is to focus at the moment on the U. S. And Europe. But here you can see that of the 5,000 companies, the Lion part of them are in U.
S. And Europe. So there is a big pool on potential clients. When you go to Page 20, you can see an interesting dynamic. And that is the fact that many of the new APIs in the drug development pipeline, they are in sort of mid sized companies.
So it's not companies that are the really biggest one, because here you can see that the top 10 and top 25 global pharmas, their share of the total amount of APIs have come down, while the really small companies with 1 or 2 drugs have stayed roughly the same. So what you actually see is that it's the sort of mid sized from 3 upwards that has been growing the fastest. And this, of course, is will be interest to us. But generally speaking, we can work with really small companies that have 1 or 2 drugs. We can work with midsized and we can work with the largest, where we already work with several of the biggest pharmas in the world.
If we then go to Page 22 and look at our business model and value chain. So what Nanoform does is we get bulk API in. We Nanoform it first in the non GMP on the non GMP side. And then in the GMP side, we get paid for the work we do on both and then we ship it back to the clients where they then do the final product. On the following Slide 23, you can see the probabilities of the total industry.
And here you can see that on the small molecule side, Mobility taking a drug all the way from preclinical to the market is unfortunately only 2%. It's higher in Biologics. There it's 4%. And then it's much higher in the when you take a drug that's already in the market and do a will call 505(2) on that. But anyway, what this clearly shows is that our strategy where we want to take in many projects and work on many assets, is a strategy we really like.
Of course, if you work on hundreds of APIs, then the likelihood of some at least 1 or several of them going all the way to market is much better than if you only have 1 or 2 assets. You can also from here see the time lines. So the traditional thinking in the industry has been that it takes 10 years at least to bring a new drug to market, while the 505(2) is faster. But one good thing that the COVID has brought with it is that we have now seen proved that you can do it faster. So hopefully, the industry will become faster of bringing new drugs to the market.
And then, of course, we want to help them. When you go to Page 24, you see our revenue model. We get paid fixed fee projects on the non GMP side, €50,000 to €500,000 per project. And then when we move into G and P, we expect the fixed fee per project to be between €500,000 €10,000,000 And then finally, when the drugs are on the market, we target to get royalty on the sales. And again, here for us, it's not important to try to maximize the income from 1 single project.
We want to work with many clients and many projects and have a fair get our fair share of the value we create. We want to be a good citizen in that sense. And then we can go to the 1st year first half year report. And Edvard, please take the highlights on Page 26.
Thank you. And I'm now looking at Page number 26. And what I really want to single out from this is our movement on the GMP front. So for me, the focus has been on taking us to the next level by starting to prepare for producing in the GMP setting. So there are 2 dimensions to this.
1 is a commercial and 1 is a technical. And I have together with my directors been working real hard on this. And one of the tangible results that we can talk about is the L and I that came out. And it's also very important to say that I'm never betting on only one horse. So we are working here on a wide front.
And this is something which is important for us and which we're also very happy to hear and announce that we have made clear progress on this slide. So what it is, we are prepared to churn out Tensil Kilos once our partners won it. I expect it to happen Next year. And to me, it's also important to say that this game, of course, means that we have to take out all the power we have in the house. And this is, of course, very, very cool for ACO.
I don't want to belittle the fact that we have brought in new customers, and Christian is going to talk more about that. They teach us, we teach them and this is important for the industry. You can see here that there are as well new APIs, which is important as new projects, as new customers. And both are things that we work on, but my own focus have now been on sort of elevating is also the GMP part. If you take a look at this slide here, you can see that we clearly have advancement Also on the financial part that Albert will talk about, you can see that we have advancement on the, what I call, clinical part, which is really important in the end of the day, we want to help patients.
You can see that we have expanded our commercial effort, which is, of course, very important. If I were to choose 1 square from this, I think it would be top line center. I move then to the next slide. And here you have in a sense a list of what we have achieved. You can see we have achieved a lot, and I would like to focus on what we have done in June July.
And in June, I think the important part is that we have signed a letter of intent with a European Headquarter International Company for developing, manufacturing and commercialization of a nanoformed version of a current blockbuster. So manufacturing, developing, commercialization of a Nanoform improved version of a current blockbuster. In July, we signed another client. So while some people were vacating, we were not. I think this is also important for us.
And then maybe also the last on
the list, but absolutely not the least, a high quality company has placed their trust
in us, and they have signed a Master Services Agreement. The name of the company is Boehringer Ingelon.
Christian, please.
Thank you, Edward. If we look now at Slide 28, you can see our clients, collaborations and co developments over the past 3 years. As you will see, back in 2019, we had 3 partners. Then we had 5 additional new clients in 2020. And now we have 11 new relationships already established in 2021.
We're growing significantly in our networks with our partners and our relationships. And you can see here all different types of relationships as well. So we have our existing client base, the classical business development that we've been doing. We have 3 collaborations that we have added into this mix as well. And our latest is a co development, As Edward touched on, we're the European International Company.
We remain committed to supporting our Global Large Pharma Partners with our in financially stable organizations with broad pipelines of APIs, and we also focus on the midsized and the specialty pharma and the biotech companies with assets coming through into clinical developments. Our technology is still highly focused on enabling new products, addressing the solubility and bioavailability challenges and broadening and deepening our customer's pipelines. But what does this slide really tell? It tells the message that we have more chances of getting products to markets. And what is the second thing that it says?
It tells the message that we are moving further forward to getting GMV Manufacturing, and we are very close to this position. And that's all I have to say. Thank you. We move to the next slide over to Albert.
Thank you, Christian. So now if we look at the numbers, If we start to the left, so we have taken one logarithmic step during the last 18 months, 6 quarters. So when in the Q4, we had 15 revenue. Now we had 500 in revenue in 1 quarter. That of course means that if we take 2 more algorithmic steps, this will be a very nice business.
One thing I'm very proud of is the fact that we can now show the power of the business model and I also believe potentially the power of the technology from the gross margin. So when I look at all listed companies, gross margin is something that if you have a high gross margin, it enables you when you get more revenue to earn much faster also on the bottom line. And this is something that we have had when we set the target for the above 90% in the IPO, that felt very ambitious and I am positively surprised that we have this past come up to this high level. This is, of course, only 1 quarter. And if you look at the rolling 12 months, it's 85,000,000,000.
But if you look at the first half, it's 92,000,000. But this clearly shows the power of technology that basically the only input we have is the CO2, where we now actually is increasing also the capacity a lot by building the big tank instead of using bottles. But these numbers clearly show that we are in a good way to achieving our 2025 a target of having more than 90% in gross margin. Cash, we had SEK 88,000,000 at the end of the quarter, which is very strong and means that we have enough cash to all the way until we are cash flow positive. If you take a look at the right hand side, you see that we started we got one new non GMP Life aligned commission.
So we now have 12 lines. We had 8 at the end of the year. And we added 2 new non GMP projects. So we have now started 8M during this year. And we have started 20 from the beginning of the year.
Number of employees, 106. We have recruited rapidly. We are very fortunate that we have been able to get people from all over the world to even relocate to Finland to join us. They really see the cutting edge in the technology. Moving to the following slide on Page 30.
One thing which has also improved our gross margin, but also our Other operating expenses is the fact that in the beginning, we had a lot of functions outsourced, for example, in QC. But now when we have invested in internal capabilities, that means that we don't have to pay outside either for closing equipment or for the services of the employees. And both these have sort of helped us to be more cost conscious. So in many cases, if you have a very small organization, you need to use lots of consultants and outside help. And in many cases, this is not cheaper than having it in house.
So we have been fortunate of being able to hire red people internally and that is one of the reasons, for example, why the other operating expenses have been trending nicely in the last quarters. One comment on the financial expenses. There is a 300,000 that comes it's non cash from the fact that we repaid all our business Finland loans. So we now have no loans anymore. And we have SEK 88,000,000 in cash.
All in all, top line comes from 16 different projects. And remember that they are recognized over the lifetime of the project. So it's not upfront or so it's over the lifetime of the project. And we want to be conservative and prudent in our the way we account for revenue. If we then go to the next slide on Slide 31, you can see that we added 2 new projects in the Q2.
So we have now taken up started 20 new projects since Q4 of 2019. And this is, of course, why both Edvard and Christian have been talking about G and P is that statistically, when you look at the numbers for the industry, we are now entering a situation both from a time point of view, but also from a probability point of view where we are clearly will lean into a situation where we might, even in the coming year and years, have a situation where we not only have a capacity sort of some capacity constraints on the non GMP side, but we might even end up having that situation on the GMP side until we get enough lines to serve hopefully the lots of projects we will get. On the right hand side, you can see that we had the target of adding at least 3 non GMP lines for this year, we have already added 4. And of course, we want to add more. So we would have between 2021 28 non GMP lines by 2025, and that would enable us to take in more than 70 APIs every year.
And at €70,000,000 can of course be compared to €20,000,000 at the moment or €12,000,000 which is the target for this year for the 18,500 that are on the market. If we move to Page 32, The most important one here is, of course, the last one. So we have ordered now the main equipment for the GMP Lines 23, and we expect them to be up and running during next year sometimes. And that will, of course, triple our GMP capacity. And then on Page 33, and the sort of the new midterm business targets that we raised on June 2, we have now reiterated them, of course.
And here you can see, we want to take in more than 70 new APIs, have more than 35 or have 35 lines, have 200 to 250 employees, gross margin above 90%. And potentially, most importantly, we target to have cash flow that is positive by 2025. And then the final slide before we go into Q and A, selection of our owners, institutional shareholders. And I'm very happy to say see that also during the last quarter, some additional names have appeared on this list. So we are very proud have such an esteemed group of international institutional investors.
With that, thank you, Albert. Thank you, operator, we are ready for the Q and A, if you wants to start picking them 1 by 1, please.
Thank you. Is now to enter the queue. Once your name has been announced, you can ask your question. If you find your question has been answered before it's your turn speak you can dial 02 to cancel. Our first question comes from the line of Christopher Yudy of SEB.
Please go ahead. Your line is open.
Hi, there. Thanks for taking my questions. So my first question is I guess, has a few parts. Up to the end of Q2, you completed 8 proof of concept projects. Now if we assume that you get one proof of process project out of that group as your 2021 target implies, That corresponds to implied 12.5% success rate at proof of concept to proof of process phase transition, if not nanoforming itself.
How does your success rate compare with industry averages for the leading particle size reduction technologies? And what could trigger you to update the Nanoforming success rate guidance from the current 10% to 90% range, given how important it is to modeling output. What's your confidence Versus Q2, how is it versus Q2 on hitting your target of starting a proof of process in 2021? And would you say that I mean, you're making measurable progress at a rate consistent with that sentiment? Or is it more based on the tone of negotiations overall?
That's my question. Thanks.
So if I start and then hand over to Albert and maybe also Christian wants to chip in. As far as I understand, we are executing according to the plan. So I think that right now, I can confidently say that what we are good test targets, we are on the lay line to achieve them. Albert, would you like to take it from there?
Yes. So first of all, remember that we have not said that we have closed 8 projects. So we start the project when the purchase order is or the deal is signed. And then you have then the client has sort of the right to use the line when you start the project. And then you have also remember that we do a final report.
We go through the report with the client and so forth. So before you have the final closing meeting over the project, the project has not ended. So you cannot sort of completely draw the conclusion that we have ended because you take 20 minuteus 12 and you get 8. So that is one thing. We can also start the project, and that means that there is a lag between the start of the project and Wendy actually start the Nanoform on the line, because first you do the on boarding of the project, on boarding of the API, All the talks and screening and all these sort of phases before you start to form it physically on the line.
So I would say that it's too early to calculate the number like you did. But we have previously said that we have closed 4 projects so far, and we have not changed that sort of officially. Then when it comes to the probability of nanoforming on a general level, I would put it like this that the industry number for success forgoing from preclinical to clinical is 25. And the projects we have got so far are both projects where we have the clients have had a real need and a problem. And then the other one is the one where we have got sort of more from a technological evaluation point of view.
So in some cases, we have got sort of normal model compounds. In some cases, we have got compounds that are notoriously difficult, that nobody has ever been able to do anything smart with them. Our star map is, of course, something that we foresee can improve the probability of success for us. So if we screen 1,000 compounds and give 3 of them has a suggestion to clients that these are the ones we should, for example, put through our lines. Then the probability of success will be totally different in that kind of scenario when compared to when clients send us their 3 most notoriously difficult compounds.
So I would say that we speak to our sort of thinking that at this moment, we are talking we are showing you the industry numbers. And then when the number of projects increases, it goes up. And then finally on the POP and GMP. So remember, we can sign a GMP deal while the POP is ongoing, so it doesn't have to be that you can sort of have to wait for the POP to be ended at any When you see in the POP that the tech transfer is going well, then you can already sign the GMP contract with the client. And so that means that it's not the sort of always that you have to take step 2 and then before taking step 3.
Some clients wants will sort of do it more like in one go. And then potentially finally on that, so as Edward said and as we said that we have been working started to work on Twentum. We have talked with several clients on potential GMP contracts where we now have signed the first letter of intent. So all these together make the when you look at all this together, our answer is that we feel comfortable with our near term target of having the first GMP deal in 2021.
Okay, great. That's super helpful. Thanks for a Very thorough answer. My next question is, so most of the APIs you see are preclinical stage or at least that's the largest group. So do you expect to be producing GMP grade material for them once you move beyond proof of process?
Why wouldn't they be non GMP if they're not to be put in demand during that stage of the project?
Okay. So thanks for the question. And the short answer is, every pharma company develops assets for use in man. That's where the money is. So I don't think that assets are perhaps ever developed for not being put into manner maybe in veterinary cases.
So every preclinical asset has been chosen with the target of getting a commercially viable product. And therefore, we are absolutely happy to work on all phases from preclinical to P4 are on the assets. And we have also so far shown ability to work on all these phases. Okay, great. Thanks.
And if I may take to work on assets in all these spaces. And
remember also that if you work on a preclinical asset, it might be that it's going to go to clinic. The timetable to go into clinic is, let's say, in the coming 4 quarters. So but it can also be that it's in the coming 8 quarters. Can be in the coming 2 quarters.
Right. Okay. Thanks. So would you please comment on the evolution of your pricing power to date.
Yes. So if I start and then it goes To Albert and if Christian wants to stop off. As we grow more now in the industry, it is clear that this has a positive effect on the conversations that we are having. People start to talk to us as a peer rather than as to somebody who has just appeared on the block. Pricing power is always about showing utility and value in human biology at the end of the day.
And we see that as we get more data on the nanoforming and as we get more data biological data, this allows us to put forth strong arguments for the utility. And this, of course, helps us take a very positive sort of our position in these evaluations and discussions about how to price. But in the end of the day, pressing power comes from shown or expected value and utility in human biology. And we are becoming more established, which means that this discussion is more balanced.
Okay. Thanks. I mean, at what point in negotiations do you aim generally to agree a royalty rate or equivalent? I'm pretty sure I've asked you that the past, but I just wanted to see if your thinking has changed over time.
So here, we are very customer centric in the way that some customers want to talk about it immediately after the NDA is signed and other customers clearly want to talk about it later. We are happy to do either way from a sort of commercial game theoretical point of view, there are advantages both to talk about it early and late.
Okay, great. Thanks.
Christian, do you want to comment on that a little bit? I mean, usually, and the vendor. Chris, yes. I mean, it very much depends on
the customer. We've had discussions with some customers, as Edward pointed out. Early on, before The evaluation takes place. They would like to almost lock in a range of what the royalties could look like. And then we've had other customers that don't want to have those discussions until they see the value of the technology delivers.
[SPEAKER AND AS EDWARD POINTED OUT, THERE'S PROS AND COMS TO BOTH SIDES OF THE NEGOTIANATED FABER. [SPEAKER AND FOR THE MODERATOR:] Edward Hechtram. [SPEAKER EDWARD HEKSTROM:]
Edward Hechtram:] And as Edward pointed out, there's pros and cons to
both sides of the negotiating table. And for the similar intent to the dynamics, yes.
Great. Thanks. And I'd like to ask a Couple of quick ones. So have proof of concept lead times improved over the quarter or over the half? And Can you also comment on how many APIs you're working with that are biologics?
I mean, is it fair to say that potential customers will want to see more evidence of your capability before trying it? Thank you. That's all my questions.
So there were many questions. And I see if I can give a general answer and then Maybe Albert and Christian can take up the slides. So first of all, every month we are getting better. The reason why we're getting better is that we put in more long hours, so our execution becomes better. So that's part of the answer to your first question.
Then the lead time is, of course, also a function of where the asset happens to be in the development, it's a function of where in the organization we sort of start the discussions. And it's a function of what happens in the customer organization. Then you asked something about the fraction of the biologicals. I would say that a little bit tongue in cheek. Last year, we had much fewer discussions on about Biologics often this year.
So since we have opened a Biologics shop, the response and the interest in our offering has been clear and present and going up strongly. Albert Christian, do you want to answer?
Yes. I could just add that, it's not that many months ago, a couple of months ago, we said that showed you that we had started we had already worked on 140 kilodalton. And then we also said that we are now ready take on antibodies. So we have increased the size of the from what it was when we originally or when we 1 year ago saw 10 months ago launched the technology to and now we have already said that we are ready to start to work on antibodies. So I know that you are very demanding, but let's give us a little bit more time before
So but the interest, of
course, you know as well as we do that today, the holy grail in the industry is potentially on the biologic side, everybody is really interested in these antibodies.
So Christian,
do you want to add something?
Yes. I would just say that we see a significant interest in both areas, both on the small molecules and on the biologics. And we're engaged in discussions with partners in those areas. The beauty of our having both technologies is we can have existing partners where we've been working on the small molecules, but also have Biologicals. And now that we have that technology capability in place, we can open up both discussions than we are doing so with our partners.
Maybe I could add one aspect, which I think is very important. So COVID has shown that whilst 10 years used to be the norm, 1 year can be possible. 2 years ago, everybody would have said 1 year is not possible. This sort of faster timeline that has been proven to get drugs to the market, through its Nanoform very, very well, because we have always wanted to be a company that helps shortening the timeline, because shortening the timeline is a way to make a process more effective. And I think that the COVID vaccines have shown that it is possible in a safe way to do this time line shrinking.
And this is something that goes into when you said that can we shrink and are we interested in shrinking? Yes, very much so. And are we able to do it, I like to think.
All right. Thank you so much.
Thank you. Our next question comes from the line of Lars Hedrick of Danske Cust. Please go ahead. Your line is open.
Yes. Thank you. First, Justin, can I ask you mentioned regarding this letter of intent that it will cover an improved version of a Nordholm product? Does that mean it relates it does not relate to a generic? Or will it relate to a generic product?
Albert, can you take that question, please? I think the answer is both.
I would say that it can be both. Okay. So it's not says today that it could be more than one formulations, I'd say. So
the way the law is crafted, it can be both.
Okay. And then when you on that note, when you will start the ship meant related to this compound. Do you then need a specific license for the supply by the regulator?
Yes. So we have a GMP license to manufacture in Nanoform. And of course, this license needs to be upgraded to every time you take in the new So I would add to that, Lars, I would add to that, that for any new API, we would need to informed and requested an authorization from the CMEA to up to date our license to include additional API. And as this number increases, the requirements for the filing decreases and has a function as well.
In the severity.
Yes. So Lars, if I can add to that. Even for an existing API, if you change its diagnostic, you will need to have to inform Humira about
Okay. And since you call since you characterize these collaborations as a co Development collaboration, does that mean that and typically you refer to your collaborations as clients rather, does it mean that this the revenue model in terms of the project fees of €500,000 up to €10,000,000 as I said, for him for supply to Syndicate drugs. Is that still the model for this collaboration or is it should we characterize differently?
So if I can give a Short answer and Albert can provide some meat on the bones. We are still executing according to the business model that we just showed half an hour ago. And Albert, would you like to add some to the box?
Yes. So as it said there that this is a letter of intent. So we are, of course, is negotiating the final outcome for the agreement. And but the other thing is, of course, that because we call it co development, there might be some cost sharing involved in this co development. And then, of course, everything is impacting everything.
So there is a sort of a correlation between non GMP have fee GMP fee and royalties potential royalties. But what is very important is that we our business model is very clear that we do not invest large amounts in clinical trials. Okay. So any cost sharing component for you will not be that significant numbers? Yes, yes.
Okay. And anything about the timing for Perko concept base regarding this collaboration? Could you say anything about that?
Always as possible.
Okay. Yes. So remember that the GMP deal can be signed before a proof of process is finalized. That's one thing to remember. And then remember that the project starts officially when the deal is signed.
And of course, the time line, as we all know, is getting tighter related to the will we sign a GMP deal before year end. But remember also that this is not the only project where we could start the POP and sign a G and G deal before year end. Okay.
Lars, I think generally speaking, it is in both parties' interest To move as swiftly as one can, there is seldom value to be created by waiting.
So would you say that this announcement of a letter of intent, would you say that, that in itself may well trigger other countries to sign similar letter of intent with you.
Yes. But Lars, I think that if we enter the realm of speculation, it's clear that this LOI is a testament that people believe in us. And the more people believe in us, the more people will feel it easier to believe in us.
Okay. I got it. And then just another question regarding the you mentioned you have now have 16 revenue generating projects and we have started 20 since the launch of the company. I guess, what's Anything to say about the 4 that has now been concluded or whatever? Anything about the experiences from these projects?
So this relates also to Christoffer's question. So we have as we in the first half have recognized revenues from 2016, that means that we had closed 4. And the feedback on those is, of course, a discussion with the client. And 1 or several of those force could be projects where we also talk about the extensions. All right.
Got it. And then finally on you talked a bit in the past of your own development projects and I guess you did significant work on the Peroxycom formulation and other From Les Cheung Volks, in terms of your capacity today, how much of that is being used for internal Projects, so to say, and how much is being used to related to client projects. Do you have you say anything about that? If I start, we will make a comment and Gonzalo can chip in a little bit. So as you know, we are expanding our capacity as fast as we can.
We have been and are, to some extent, capacity constrained. And this is also one of the reasons. So remember that we have 3 collaborations. Those collaborations can be on 1 or several APIs. We do not disclose these collaborations in the number of projects in our tables.
But of course, these also take flying capacity. And the reason why we don't put them there is that we don't want to we want to be very clear that the projects where the client projects at the moment brings in top line. Those projects are the ones that we report in the table. If we do co development our collaboration. And we don't recognize revenue from our collaboration, because we test the technology together, we don't show that, but of course, it takes line capacity.
Then on the question of how big proportion of the total line capacity are we using for these collaborations? We have not disclosed that. And that is, of course, something that as a business and from a strategical point of view, we want to give some capacity to these collaborations, but we don't want it to be more than half or too big part of the capacity. But some capacity is given also to these collaborations because we really believe that they can add value as well.
Lars, I think I would add to Albert's comment that especially here on the collaboration. When we're looking at the collaborations, we're looking at the combination of technology that can be reaper better value as a group To the patient and to the product that they are being used at Bosch. But one another note, We also as a growing company and technology enabling company, we still and we will continue always to improve our sales technology and continue to develop it further in not only in exploring the limits of the operating balance of operating position. And for that, we need to distribute and allocate capacity for doing just that. So we need to explore beyond what we had explored before to further support better our partners and execute as well against the expectation of basically delivering better value and Hi, Paul.
So Lars, I can help you by saying that the mix between what line time we use for improving our ability to serve, what line time we use to serve and what line time we use to grow, it's something that is changing all the time and it's one of the most important things that Gonzalo and I do within sort of the operations realm.
Okay. I got it. Many thanks for that. Thank you.
Thank you. And we have one further person in the queue. That's Max Hemmerlein of Stifel. Please go ahead. Your line is open.
Great. Thanks for taking my questions. And congratulations on the return of intent. Just had two questions, if I may. Firstly, we're seeing quite an acceleration of the The partnering activity that you've been doing this year compared with last year and obviously there was a step up last year on the Previous year.
Are you starting to get more people coming to you rather than perhaps you reaching out to others, he's trying to see changing the dynamics, trying to understand whether there is now have a more acceptance of Nanoform as a route to Pascal Size Engineering, Solving Pascal Size Problems. That's the first question. Then I wanted to get a bit of a better understanding of Capacity constraint and sounds like you've got 16 projects ongoing with other The non collaborations, let's say, and you've got you talked about 3 collaborations, both about 19 programs ongoing. And then you've already reached your sort of target for non GMP aligns in this year, but sounds like you need to
put more in. Just wanted
to get some color on where you are on capacity.
So Max, thanks for 2 excellent questions and the short answers to both questions is yes. So if we start first by the second question, which was, are we hitting the capacity? And is there sort of a fight between putting resources to grow, To put resources to serve and to put resources to Polish. It's clear that it's there. I love to be in a situation where sort of the increasing amount of inbound traffic puts pressure on us to grow our capacity to serve.
And Internally, we use the expression that we need to take more power out of the engine. And I think of it a little bit like a core where you need to become better. And this Grow Polish and Serve is something which is very much on my table. It's sort of Perhaps the most important thing, I do, together with the GMP focus, because this is really about to choose the trajectory with which we'll go forward. This is, of course, a positive problem.
Like we have a capacity constraint because people want to use us, people want to work with us. Then when you asked a little bit about the collaboration, to me, there is always There has always been 2 markets, one where you help the APIs and the other one where you help technologies that are associated with April. And I think both are equally valid when it comes to creating value for patients. And of course, we look at them carefully. If you start to ask very intricate questions It's about whether their dynamics are very different, then we need to defer to a later moment.
But like in a general setting, I see that we can create value in both these streams, and it's something that we really want to explore. And to us, it's important to work with like partners that are good at what they are doing, because that allows us to be fast. And this is
something we do. So the short answer to both your questions is yes.
Great. Thanks. And what about in terms of the GMP? Just follow-up question, which is, Obviously, you've announced now that you've ordered the equipment, the key equipment that's needed for getting the 2 with GMP line up and running for next year. What sort of timing do you need Obviously, the COVID causing some supply constraints on things.
When do you
need to have those delivered for you to be able to be in a position to apply for the line to be approved or the line to be approved by the regulator.
So there are two answers to your questions. The first answer is, when would Edward like We have everything here. That's yesterday. And then what is sort of needed to have a strong accelerating growth, which is under control. And the answer to that question is, we are going as fast as we can, and I still think we are exactly on what we have set out in the guidance.
So this is really my answer to your question. I could add that if I may add that there was when we
talk about capacity constraints on the non GMP side, of course, we have 12 lines there and only 1 on GMP. So our focus very much is So to add the capacity on the GMP side and hence the number 2 and number 3 that we want to have up and running next year. There is one big difference when you build additional non GMP and GMP lines. And that is
the fact that when you buy and build GMP lines, the
cost is, of course, higher, but you get lots of outside help as well. So you have lots of people delivering the materials and the components and building the clean rooms and so forth. So you are not only relying on your own 100 plus employees. So in a sense, it's a good situation on the GMP side that you can have also outside help. And that, of course, helps you to will speed up the process.
Great. Thank you.
Thank you. As there are no further questions in the queue, I'll hand back to our speakers for the closing comments.
Thank you, operator. On behalf of all non formers, I would like to thank you for all participants today. If someone has more additional questions, you're most welcome to contact us and you'll find our details on the web page. And I wish everybody a great Thursday evening. Thank you, and goodbye.