Hello, and welcome to Nanoform audiocast for teleconference Q1 2022. For the first part of this call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Today, I'm pleased to present Henri von Haartman, Director of Investor Relations. Please begin the meeting.
Thank you, and good afternoon all, and a warm welcome to Nanoform's first quarter 2022 report presentation. Today, our CEO, Professor Edward Hæggström, CFO Albert Hæggström, and Chief Commercial Officer Christian Jones will present to you. Our Chief of Business Operations, Gonçalo de Andrade, is with us as well for the Q&A session. This presentation is webcasted through Financial Hearings, and there's also the possibility to call in and listen by phone. The presentation slides are shown through the webcast, and they can also be found on our webpage in the investor section. After the presentation, which will take about 30 minutes, we will hold a Q&A session, and it's possible to ask questions by calling in. You're welcome to ask several questions, but do please ask one question at a time.
We will start today with a short introduction to Nanoform and then move on to the CEO review, then commercial aspects, and then financial aspects. Operator, if I may ask you to move to slide four, please. With these words, our CEO, Edward Hæggström, please go ahead.
Thank you, Henri, and welcome to this also on my behalf. I want to start the way they do in the U.S by saying the momentum continues. We are on track for 2025. We have had a commercial record quarter in Q1. We have had some very interesting STARMAP® new use, and we have had a serious upgrade in the capacity to manage supercritical CO2, as we will also see. On slide four, you have a short abbreviation of what Nanoform is. A listed tech platform company that works on a big problem in the pharma industry. We are situated in Finland. We're approximately 130 people and approximately 3,000 square meters of manufacturing space.
Slide number five basically says too few new drugs coming out each year, even though a lot of money is being spent on trying to increase that number. This is part of where we try to make a difference. Slide number six basically continues the same story. On slide number seven, you can see that we address the biggest driver for this problem. How are there so few drugs? Poor bioavailability is the answer. That basically means that the drug that is in principle potent is not taken up by the body and therefore does not do what it's supposed to do. This big problem is growing. We are providing a solution to this problem. Slide number eight, please. There are basically three profit pools that we can dig into. We can give unsuccessful drug candidates a second chance. There is a lot of those.
We can improve existing drugs. There is also a lot of those. We can enable new drugs. There is a lot of those. A target-rich environment, one could say. I'm gonna use the word API a lot. That means active pharmaceutical ingredient, basically the stuff in the medicine that makes you better. On slide number nine, you can see what we do and why we do it. On the left-hand side, what we do is that we take coarse powder and make it very, very fine. By doing that, we make the powder much more soluble in the bodily fluids. On the right-hand side, you can see what actually happens when you take in milled or bulk, and then it comes out as nanoform. Much, much finer powder. The process we use is elegant.
It has a lot of steps, and here you can see it to the left. The first step where we dissolve the API, we're gonna talk a little bit about this later on. Then you can see steps two, three, and four, which are proprietary, and then step number five, where we collect what comes out. This is a patented technology, and we have nowadays been using it on a lot of APIs already. We know something about what it can do and what it can't do. We're gonna talk more about this also later. When we nanoform, we actually are able to increase the solubility, and from that follows a lot of good stuff.
We can increase the bioavailability, we can enable new drugs, we can reduce the dose, we can reduce the side effects, potentially, we can provide for patent expansion, we can reduce the production costs, we can have smaller factories, and by all this, we can also have a smaller impact on the environment. On slide number 12, I shift gears from small molecules, which is part of what we do, to biologics, which is the other part of what we do. In the biologic side, we have already worked on peptides and proteins in the size range of six to 150 kiloDalton. That's in a commercially important range. Slide number 13 tells a very, very simple way of how we operate. Our clients own the API. We get the API from them, we nanoform it, we send it back to them.
We are paid either for Nanoforming or for producing material. We can also be paid royalty based on what we supply for commercial use to the market. With this, I move into my second section and let's go to slide number 15. Here, I have tried to put together a slide to convey to you what we have achieved and what I consider to be the most important achievements during the last 2.5 years. In 2020, there were a lot of contenders, and the one I pulled out was the first-ever nanoform dosing in humans. In 2021, I pulled out the two GMP contracts that we signed. In 2022, I pulled out the new quarterly record, eight signed projects with seven different customers.
The contenders were the upscaling by a factor of 1000, the STARMAP® Online launch as requested by our customers, and the announcement of new term business targets and the US manufacturing operation. On slide number 16, I think you can see the tank. This is an upscaling by a factor of 1000, and everybody who sees it is amazed. Our clients, our prospects, our employees, you name it. Basically, we move from sourcing 40-liter CO₂ bottles to having a 40 cubic meter tank of CO₂. It contains GMP-grade CO₂, which means that we can use it both on the GMP side and on the R&D side. Economically, this is quite okay now. Later on, there may be a different way to use this. This is the tank. It matters because it scales up the industrial parts of what we do.
On the next slide, I just wanna convey that we are on track on what we promised to do this year. Two new GMP lines, biologics pilot plants for GMP, at least 20 new customer non-GMP projects, and the toughest one, at least three new customer GMP projects. In the next slide, you can see our targets for 2025, and this is just the two milestone bit. We are well on our way to get 70 new APIs in per year. We're well on our way to having the lines that we need to process them. We are also taking the steps towards becoming cash flow positive, as Albert will show you in his part of the presentation. At this moment, I say thank you and hand over to Christian.
Thank you, Edward. If we can go to slide 20, please. As you can see, the global drug R&D pipeline is only growing in one direction. This last year, we've had confirmed that there are over 20,000 drugs in active development, as evidenced from Pharmaprojects. This is, you know, a big market to go after, and as we mentioned earlier, 70%-90% of all molecules have significant dissolution and bioavailability challenges with progressing forward. If we go to the next slide, on slide 21, there are now nearly 5,500 companies in active development for those molecules. A significant amount of potential partnerships that Nanoform can target and can support as they grow.
If we go to the next slide, 22. Here you see the take-home message from Q1. We signed eight new customer projects. It's a new quarterly record for us in this last quarter. With seven customers, four of those are new and three of those are repeats. Of these new clients, the majority of those are U.S-based. We've had fantastic traction in the U.S market. We have a strong commercial team, and that team have been there for the last 12-18 months and supporting our growth there. We're seeing continued momentum both in the U.S and in Europe. If we go to the next slide 23. Here you can see the spread of the partnerships that we have so far.
We're working with seven major pharma companies, including AstraZeneca and Boehringer Ingelheim. We have 16 mid-sized specialty pharma and biotech companies, including those disclosed publicly, such as Herantis and Takeda. We also have one co-development and three collaborations. A good spread of different types of client relationships, as you can see. If we go to the next slide, please, on slide 24. It's been a busy year. January to June, we have been present in many events, both in Europe and also in the U.S, and even in Israel. We've seen lots of traction, lots of interest to interact face to face, and an increased level of momentum in client discussions as a consequence of being back in person at these types of events.
If we fast-forward to the next half of the year on slide 25, we can see those events that we plan to be active at from July through to December. It's been a very busy time, and I think we found lots of opportunities when we've been talking to clients and even site visits that we've now conducted at our pharma partners' facilities. Clearly they're far more productive than the Teams meetings. If we move to the next slide 26. You may have seen, STARMAP® Online was launched on May the fourth this year. This has been well-received by the industry and by our partners.
We've had a significant amount of interest in access to the online platform for our partners to be able to access our AI engine on their desktops, in their laboratories, in their offices. They are able to implement a STARMAP® assessment for their pipeline of molecules without disclosing any confidential information to Nanoform. This is an attractive proposition, particularly for our larger pharma partners, where they can look at those molecules in the late stages of drug discovery, identify suitable candidates to put forward. They can look at those compounds in clinical development, see which ones could be further optimized by using our technology, and they can even look at the compounds that have been discontinued, or have failed for some reason, and maybe due to bioavailability. Perhaps there's potential to bring those candidates back to life.
We also have been using the STARMAP®® system to have active discussions with our partners about life cycle extension and life cycle management of their existing assets, identifying those molecules that would be a really good fit for our technology. Let's just recap. STARMAP®, in 2020, we had a throughput of approximately 10 molecules per week. The systems, the processes have improved. By 2021, we were processing 1,000 a week, and by this year, we were up to 10,000. We hope that by 2025, we'll be able to process one million compounds per week. STARMAP®'s that have been completed have gone from 50 up to 15,000 this year.
We've really been able to analyze, understand the molecules that are in development that have been publicly disclosed and those that are on the market that have been publicly disclosed and see where our technology fits. That's important for Nanoform to understand, if there are any patterns, if there's any, sort of, particular readout from that, how viable our technology is as a platform technology. It's also important so we can have the right conversations with our partners. If we move to the next slide 27, here you will see the results of our analysis. We've STARMAP®ped 15,000 of those molecules. Surprisingly, it's evenly distributed. There's some positive skew towards a positive propensity to crystallize. Only 2% of the molecules fall within what we would classify as a 1-1.
You see this solubility on the bottom in supercritical CO2. On the left is a one and on the right is a five. The same with the propensity to crystallize. On the bottom is a one and on the top is a five. Two percent in the 1-1, which would be unlikely candidates for us to progress forward. We'd probably discount those. We have only 13% if we take a two up and two across matrix box, which may not be ideal candidates to progress. The rest, 87% that could be Nanoformable. We have ways and means, even the challenging molecules, to progress if our clients wish to progress them.
This really gives a good flavor of the wide applicability of our technology, and certainly has helped to have some very constructive discussions with our partners. Now I'd like to hand over to Albert for the next part of this presentation.
Thank you, Christian. If we go to slide number 29. Here you can see the revenue drivers and industry attrition rates. As you know, we have only started the journey. We have won a lot of non-GMP projects, and now we are starting to move towards starting to see revenue also from the GMP projects. If we go to the next slide, number 30, as you know, the revenue you book over the lifetime of a project is EUR 50 thousand to EUR 500 thousand for a non-GMP project. The POC is at the lower end and the POP is at the sort of mid-range to upwards. This is of course one of the reasons why we believe that Nanoform can grow fast for many, many years.
Because first you add new clients, new projects, then you start to see more valuable projects. You move to GMP 1, the value can be EUR half a million or EUR one million. You move to phase II, it again doubles. Then when you go to phase III, it can again double, and the number of projects grow at the same time. Finally, of course, when you have a drug on the market or drugs on the market, you can have additional very fast growth. We feel very comfortable that we can have many years of really good growth ahead. If we go to page 31 and look at the last quarter, we added five people, and we think that this is a sort of a, excuse me, a good pace at the moment.
We have added lots of lines, lots of people in the last two years. Now we are seeing that, we are continuing at a sort of five per quarter or 20-30 per year, and we will still be on track towards the 2025 targets. We are now entering a phase where we will get more productivity, more efficiency out of our machine. This will of course mean that the costs will grow slower, in the coming years. If we go to page 32, you can see that. We've had a record quarter in the first quarter, eight new projects. It's been fluctuating quite a lot, but if you look at the right-hand side, you can see that on the rolling 12 months, we are already at 20 signed in the sort of rolling the last 12 months.
If we then go to potentially even more important number when it comes to number of projects, and that is the cumulative number of projects. Because as you remember from the probability slide, the probabilities are quite low if you have new chemical entities to get them all the way to the market, and that's why you need lots of projects. Here you can see that we have gone from six. In only two years, we have gone from six projects to 38 projects, and by the end of this year, we should be above 50 projects. If you look at the targets we have for the coming three years, that number will of course go up a lot more.
If we then go to page 34, we had a new quarterly high in the revenue, and over the last two years, the rolling twelve months have gone from EUR 200,000 to EUR 2.44 million. This is basically on mostly POCs, a few PLPs, and a very small amount from one of the GMP contracts we signed in the fourth quarter. If you go to page 35, here you have the quarterly revenues and the growth. You see that we grew by 173% in the quarter versus last year's first quarter, and the revenue came from 23 projects. One of them were GMP, where we have recognized some planning work and paperwork we have done.
Most of the revenues will be booked when you do the manufacturing on the batches which will happen later in the year. Basically, we haven't seen the impact of the signed GMP contract yet. If we then go to page 36, rolling twelve-month gross margin has been rising, and now it was 92% again in the first quarter. Of course, when you put in a very big tank, the impact on that, on the gross margin will not be negative. Naturally, if you go from using lots and lots of 40-liter bottles versus using one tank of 40,000, it will have a positive impact. We are very happy with the situation. Of course, this means that we have already achieved our 2025 target.
If you look at the right-hand side, for us, it's very clear that we have seen several quarters where you have seen an increasingly negative EBITDA. Now we are starting to see that the revenue is growing clearly faster than the cost. In the last quarter, revenue grew by 173%, the number of employees by 49%, and the cost by 27%. Going forward, the cost will not grow so fast, and that means that we expect the EBITDA to start to be flat. Actually, sequentially from the fourth quarter to the first quarter, it was slightly down already. Then when the top line grows much faster than the costs, it should turn around and start to march towards being positive in the coming years.
On page 37, I want to point out that we have EUR 91.7 million in cash at the end of the quarter, so we are very well financed. On page 38, I just want to point out in the right-hand table that you can see that the IT expenses grew quite a lot from last year, and that is due to the fact that we are now rolling out our SAP ERP system. Next year, again, the IT expenses will not grow significantly at least, even if we focus on getting automation up and so forth. We are making a big effort now with implementing the SAP system.
If we go to page number 39, here are our selection of our institutional shareholders, and we are of course happy to see that there are some new names that participated in our last ABB. With that, I conclude, and we can go to Q&A.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad now. Our first question comes from the line of Christopher Udy from SEB. Please go ahead.
Thank you very much for taking my questions, Christopher Udy, here. I guess we'll start with the interesting success rate that you got predicted from STARMAP®. I guess most or many people on the call will remember that when you were preparing to list, you gave a guidance of 10%-90% success rate for being able to nanoform APIs. How does the actual success rate, your observed success rate compare to STARMAP®'s predictions then? Is it also close to 90%?
I wondered, in terms of STARMAP®'s prediction rate, and the fidelity, let's say, is the type one or type two error higher? Thanks.
Christopher Udy, now you already started to ask difficult questions. Let me see if I can give you answers, and then maybe the other can back me up. First of all, the STARMAP® piece that you saw there basically has an 80%-83% probability of predicting in what bin we fall when it comes to propensity to nanoform. So that's where we start. Then you asked what is the probability that we can in actual life do what it says, and that's a number that we haven't disclosed yet, but it falls within the guidance of what we put in the IPO. Then you asked a very technical question about the alpha-beta in the prediction.
I don't have the number in front of me, but suffice it to say that STARMAP® clearly is able to help us choose the assets that we can nanoform. It also, maybe even more importantly, allows us to go in a proactive manner and talk to the prospects and clients. These are your assets on the grid. These are the ones we propose that we should start the conversation with. The number for alpha and beta, I can't give it here on the spot, unfortunately. Anybody who wants to add something?
I can add. If you take a very big helicopter view, you could say like this. Now we have quite a sizable sample already. This is distributed well, so it's not, you know, one sort of API. It's very well distributed, both in the pipeline and on the market. Suffice it to say is that the number we achieved or we were very positively surprised how evenly it is spread, and of course, positively surprised that we have a very big chunk that can be Nanoformed based on this. If we put it like this, the likelihood of us ending at the lower end of the 10%-90% range is much, much, much smaller now than it did in the IPO.
Yes, if I can add a little bit sort of qualitatively on the alpha and beta. I'm not, sort of doing a very simple fast integral in my head now. I would say that they are close to each other. There is not a big skew in either way.
Okay. Thank you very much.
That's a qualitative one. Yeah.
I guess I was wondering, the U.S has been a little bit behind. Obviously, you started in Europe before, but would you say that it is harder to break into the U.S than Europe in any way? Also I noticed the revenue was quite a lot higher in the U.S this quarter. Can you make any comments on that? Thanks.
If I can start, and then maybe Christian can go second. I believe that it's hard to win every project, and I believe that the BD team is doing a tremendous job both in Europe and in the U.S It's clear that the U.S has a dynamic market, and when you exceed a certain level, it is effective to do business there. What you can see is partly also that the BD team has sort of gotten out of the starting blocks. Maybe, Christian, you wanna give more flavor.
Yeah. Thanks, Edward. I would say that, you know, when we first started out in sort of 2019 and looking back, we certainly had a much larger amount of activity in Europe and we were visiting the U.S fairly frequently, but we weren't on the ground. Now that we have, you know, a permanent U.S commercial team that are actively calling on clients, you know, on a daily and weekly basis, we're seeing a lot more activity in the U.S compared to where we were a few years ago. I think rather than being more of an 80-20 split as it was, you know, a while ago, we're moving to more of an equal activity level between both U.S and Europe.
Will that continue and go the other way? I'm not sure, because we're seeing a significant amount of interest in Europe as well, and we're increasing our commercial presence in Europe to support, you know, all the relevant territories and businesses and activities here as well.
I can comment on the revenue. Remember that the quarterly fluctuation can be quite significant. Actually one of the very significant factors behind that is that if you have a project that is with a client that has a tight time schedule and where you have a fast success of Nanoforming, then you can book the revenues very fast. In an optimal case, you could book most of the revenues you can book in a very short period of time, compared to if you have a client where you are doing very broad work and you are exploring things, and the molecule might be very difficult. You are doing much more work and it takes longer, and that means that you are not booking the revenue as fast.
The difference between quarters and so can be quite big. However, now when we are having more than 20 projects, that gives us revenue on a quarterly basis already. The fluctuations are, of course, gonna start to lower. However, again, when we start to book revenues more from the GMP side, there could again be more fluctuations quarter to quarter. I think it's smarter to look at it from a 12-month rolling than a single quarter. I think that the trend is clear that U.S is a very big market, and in the long run we would probably have half of the revenues from Europe and half from the U.S, so that's a very good guess.
Gonçalo, can we say anything qualitatively about the dynamics, the swiftness of getting to signature and getting the projects done with American versus European projects? Just qualitatively, do you have a picture in your mind?
Yes. Well, I mean, in general, on average, they will be the same turnaround in terms of from execution to start. We've seen that most of our fastest projects to start have been U.S We have also seen that, given some supply chain constraints with some of our U.S partners that rely on Chinese suppliers, those have also been the longest from signature to start because of constraints from shipping the material from China into Helsinki. On average, they basically go hand in hand. We have seen that, when they have the API available in their facility, they will move faster than European counterpart.
Thanks. That's very interesting. My third question before I get back in the queue is, will you announce if a GMP stage API is not progressed? If so, whether it is due to formulation or to other factors? Thanks.
Here, basically, we will follow the guidelines given by the code, and maybe Albert wants to add some details to this.
I think that if it happens when we have only one or so projects, then it's fine. We of course want to be in a situation where we have many GMP contracts and many projects going on. I think it will be part of the business. If you look at the failure rate in phase one, it's still three out of four fails in phase one. We are not gonna announce every project that fails, because that's the part of the industry. The most important thing is that we will tell you how many projects we sign, and then you will see the revenue. I don't think that there is any sort of wisdom in.
At this early stage or at the later stage focus on those that are not progressing. Because as you know, 49 or 50 projects don't go all the way to market. We want to focus on the ones that are successful.
Thanks so much.
Christopher, a cumulative number is probably what we are gonna focus on.
Great. Thanks.
The next question comes from the line of Jon Berglund from Kepler Cheuvreux, p lease go ahead.
Hello. Thanks for taking my questions. You said that one of the GMP projects had some revenue contribution in Q1 now from planning work. I was wondering if you could give some more detailed projection for the revenue booking of manufacturing batches later in the year. Also if you could elaborate a little bit on the next steps in the delivery of these two GMP projects that you signed in Q4, please. Thanks.
Okay. You basically asked two questions. One is revenue projections, and I will ask Albert to give you the details on that. You asked a second question, which had to do with how do we bring on these projects. They follow a very classical approach where you do the design of experiment windows first on the R&D side, then you do a tech transfer, and then you bring it into the line. Right now we have one active GMP line, which means that we need to be careful in how we balance the slots there. As we then bring on GMP two and three, that gives us a little bit of freedom. Basically nothing very different than what people in a similar situation do. DOE tech transfer and then bring them onto the line.
Of course, the paperwork needs to be filed with some Fimea. What's gonna happen this year is that we're gonna go from a dedicated facility to a multipurpose facility. That means, of course, that the regulatory body will be very keen on looking at not having the mix-ups, not having the crossovers and not having the cleaning issues. This is all a part of our everyday work and reality today. Albert, would you like to take the projections?
Yes. We plan to have the number two and number three online this year. Related to the GMP projects, we should start to see some revenues booked from the manufacturing side also later in the year. Whether it will fall into late Q2 or early Q3. That we will see. It depends on many factors, and of course, it's the client in the end who always have the final say. But later in the year, we should see more revenue from the GMP.
Okay. Thank you.
We, of course, also want to be conservative in the revenue recognition. That's actually one thing we measure internally is that we always want to have a situation where we don't wanna have a situation where revenues booked are above client payments. We like it to be the other way around, that client payments are above the revenue booked. Because then you know that you haven't booked too much.
The next question comes from the line of Christian Glennie from Stifel. Please go ahead.
Hi, guys. Thanks for taking the questions. The first one is just to get a bit more detail or color, as they say in the U.S, in terms of those new customers that you signed up this year, those new programs. In terms of the sort of size and scale of those. Are they, you know, a range of single products or potentially multiple products? Related to that, the sort of types of projects that you're working on. Obviously, you've laid out the three categories of new or early stage and/or on market or programs in clinical trial. Anything related to that that you can provide in terms of the balance of those compounds you're working on and the types of customers recently signed up?
Okay. If I first give a general overview and then let Albert give a few details, and then Christian can give you the sort of final touch of the master. When it comes to the kind of customer spectrum that we have, that spectrum hasn't really changed. When it comes to the spectrum of the projects that we're working on, that spectrum has not really changed either. It's really the number and amount that we're working on. I don't know if we foresee swift changes in the spectra. I think that when we go deeper into the GMP, there may be changes, what kind of projects, what kind of customers, what kind of assets. Right now, I don't really foresee that. Albert, do you want to give something in addition?
Yeah. When it comes to number of clients, the number of APIs per client, it's of course clear that we had eight projects and seven clients. That means that one client signed two in the quarter and the rest were one. I think it varies. We have seen a range already in the last two years where you know a client could have signed several in a quarter. By several I mean three, four. It's clear that majority of the clients give you one API at a time. Usually or they give you one first and then the second one. Especially the smaller companies usually don't have that many APIs that they work on.
When it comes to the split, I think it's clear that two years ago, when we did the IPO, the 505 discussion had started already in the financial community. It's clear that during the last two years, it has intensified also in the pharma community. I think in the coming two to five years, we will see more focus also on the 505 part in the pharma sector.
Okay. Christian, that's helpful.
Yeah. I mean, I don't think I have anything really to add to what Edward or Albert has said. We don't disclose or we haven't disclosed the types of clients that within this quarterly report. And we haven't disclosed the nature of those projects, so I can't really say anything else to that effect.
Gonçalo, do you have something to?
No, nothing to add on my part.
Okay.
That's helpful. Thank you. I guess you mentioned, as you know, one of the tougher targets for this year are the three GMP projects to start. I guess. Okay. Thank you.
I think I would add there that signing two in the fourth quarter last year was, from a sort of a mental point of view, I think.
A bigger target in a sense. We targeted one, and then we signed two in the quarter. Now we know already that we can sign two in the quarter. Let's see how this year goes.
Okay, thank you. Then just finally maybe on the plans for the US facility, obviously the raise that you did earlier this year, are there any updates there, particularly in terms of that search for facilities is going or the progress there?
Absolutely. This is something that Gonçalo has been working a lot on, so maybe he wants to take the question. Generally speaking, we have been reaching out to the various states that we are interested in. They are mainly located on the East Coast. We have had a good response from the state outreach offices. They like Nanoform, they like what we could contribute to their local economy. They think we are high-tech, they think we are high margin, and they have good, clearly very good people to talk with us. Basically discussion is very simple. Okay, what can they do for us if we choose their state? I think we are very early in the process, but it has started strong.
Maybe Gonçalo, you wanna bring some added color to this?
Sure. I can gladly do so. We've had exploratory calls with most of the target states that we were looking into. We have had very positive feedback from the states that we discussed, and some of them have already provided a list of putative sites and locations that could be available to us should we decide to and select their particular state. Now, the plans for the site selection are not yet finalized. At the same time, we started looking at blueprints of what we want to build so that we can dimension what we are looking into properly.
Basically the one and the other go hand in hand, what we want to put into the facility and the size of the site that we will need to achieve. I would say that in the upcoming quarters, we will have a lot more information to provide and we will have also updates to provide then. Everything until now is looking very positive and we are greeted with a lot of enthusiasm from the other side. Yes. I think it's worth us to stress that this effort has really started upon these two sort of processes. One is the site and one is the technical solution.
Basically, the idea is that we would like to bring something modular there, which means that we don't have to to sort of figure out there how to do things. We can figure it out here. We can bring something over there that actually works. Those of you have done stuff like this knows that all of a sudden you need to see how do you do inch threads and millimeter threads and this is also part that we do. Both on a very big scale, but then on an integrated scale in order to make it smooth when we go there. I reiterate that the aim is to produce GMP material on American soil in December 2025.
Okay. Thanks, guys. Helpful.
The next question comes from the line of Lars-Henrik from DNB Bank. Please go ahead.
Yes, thanks. What can you say about the biologics pilot line? When will you be able to start engaging that with client activities?
Thanks for the question. The bio pilot GMP line is also moving very well forward. We're on track with that. According to our guidance, we should have it in place towards the end of this year. Exactly where we fall on the timeline when we have signed the first and sort of put the first project on the line is a little bit early to say, but maybe Albert first and Gonçalo, if you wanna update some details on this. I think that you know, the interest has been significant on the bio side, and we are talking to many companies about the biotechnology. We will come back when we have more details on the signed projects for the pilot GMP line on the bio side.
Regarding the timelines for having the bio pilot line ready, Lars, we are, as Edward Hæggström says, on track to complete the robustness improvements to the design and making it a pilot GMP line. A pilot line that would be suitable for transitioning into a GMP environment. Edward Hæggström's plan to Q4 this year. That's where we are. We're still on track. Lars, a question that you didn't ask, but maybe which could be of interest also. The GMP particles we'll make in December 2025 on American soil will they be small molecule or biologics? If you take a look at the graphs that show how the center of gravity is moving, I think that's a very intriguing question.
We're preparing so that we could basically do either. I don't think we can do both, but we're trying our best, I must say, to sort of prepare in such a way that we can commercialize, we can do the one that is faster. Of course, the biologics footprint is much smaller than the footprint on the GMP side. That's also something which is intriguing to think about.
Okay, thanks. Will you sign clients prior to the completion of that line?
Yes, I will. To me, when somebody signs, I like to bring on the pressure to the organization to fulfill a signed contract. That's the best position to be in my opinion, for a business.
Okay. Thank you.
If I add only one small sentence to what I just said, the pilot line gives us the possibility to do the process development, further process development activities and prepare for a GMP manufacturing environment as well. As a result, it will be necessary to sign customers before the pilot line being ready. Because it will first be a proof of concept, then the PoP stage, and then afterwards the GMP manufacturing line. It's only natural that we can sign additional projects before. Lars, just to make sure that I conveyed the picture right. Nanoform is a bold company. We will of course try to put in both the CESS®, the Nanoforming and the bio line in U.S.
To me it's like, the commercial pressure, the first signed contract will be the one that we tries to fulfill first. It's not either or, it's both if there are two, signed contracts. If there is one signed contract for the U.S, then we go with the first signed contract first.
All right. Thanks a lot for that.
The next question comes from the line of Max Cameau from Stifel. Please go ahead.
Great. Thanks for taking my question. It was just obviously great to see you sign so many new and repeat customers this quarter. I just wanted to get a little bit more detail on the three repeat customers. Obviously, you've mentioned previously tend to be, multiple drugs tend to be with larger companies. I wondered if you could give us a bit more detail in terms of what were the drivers to those repeat customer. Clearly a very positive sign.
Yes. Repeat customers is of course the way to increase the probabilities of having POC, POP and GMP. Maybe Albert, if you want to give some details from your perspective and then to Christian.
I think I could say that it's both big and small companies. As I said, there are some smaller companies also have more than one API. It's not only big companies. I think it's fair to say that people have several APIs and they want either because the previous project have been successful or they still believe that, you know, Nanoforming is smart, even if the previous project wasn't successful. Always remember that the clients at this stage are also evaluating Nanoform and the technology on a bigger scale, and whether this can be a tech platform for the pharma industry. Of course for us then repeat clients are very important. We don't give more detail than that.
Yeah. Regardless of size and Christian.
Yeah. I would just say, not only a reflection of the technology that clients want to do more work with us, it's also a reflection of the relationships that we build with them. We've had some incredibly positive responses from a good majority of our clients in this respect. I think clients really value partners that can work in true partnership as an extension to their teams. That's what we are, we work very hard to do at Nanoform.
Great. Thanks very much.
We have a follow-up question from the line of Christopher Udy from SEB. Please go ahead.
Yeah, thanks. Just a quick question on other costs in other OpEx. Should we then assume that that's set to grow sharply as your U.S presence is expanded? Thanks.
Albert, please.
I guess. Oh, sorry. Just to add that also voluntary personnel related expenses, I guess since that's a lot of healthcare. Yep. Thanks.
The voluntary is it's related to healthcare and it's related to lunch coupons, and it's related also to we use headhunters in some instances to find new people. I would say that, you know, as a proportion of the employee cost, it shouldn't go up. It should be going down. When it comes to other costs, a big part of that is also part of the, when we build new lines and we put in a new small stuff that is not activated on the balance sheet, then we book it as cost. I don't think it's gonna be growing that fast even if we go to the U.S. I think that the business model we see now is gonna be fine in the U.S. as well.
I think generally speaking, we are booking everything we can as cost, so we don't activate any R&D costs or anything. We want to be very sort of conservative in that sense that we book everything we can as cost, and to keep the balance sheet very clean as you can see that we have.
Okay, thank you so much.
As there are no further audio questions, I'll hand it back to the speakers.
Thank you, operator. On behalf of all Nanoformers, I would like to thank all participants today. If someone has some additional questions, then you are most welcome to contact us after this event. We wish everybody a great Tuesday afternoon and evening. Thank you and goodbye.
This concludes our conference call. Thank you all for attending. You may now disconnect your lines.