Welcome to the Nanoform Q2 2022 report. For the first part of this call, all participants will be in listen-only mode. Afterwards, there will be a question-and-answer session. I will now hand the floor to Henri von Haartman. Please begin.
Thank you, operator. Good afternoon, all. A warm welcome to Nanoform's Q1 2022 report presentation. My name is Henri von Haartman, and I'm your Director of Investor Relations. Today, our CEO, Professor Edward Hæggström, CFO Albert Hæggström, and Chief Commercial Officer Christian Jones will present to you. This presentation is webcasted through FinancialHearings. There is also the possibility to call in and listen by phone. The presentation slides are shown throughout the webcast. They can also be found on our webpage in the investors section. After the presentation, we will hold a Q&A. It's possible to ask questions by calling in. We will start today with a short introduction to Nanoform and then move on to CEO review, then commercial aspects, and then financial aspects after that. Operator, if I may ask you to move to slide three, please. With these words, our CEO, Edward Hæggström , please go ahead.
Thank you, Henri. Welcome to all also on my behalf. We're now at slide number three, and this is us. Next slide, please. Nanoform is technology platform company with a proprietary technology. We're located in Helsinki, Finland, and approximately 140 employees, 30 nationalities, and a lot of people with PhD degrees. We use on the order of 3,000-4,000 square meters on manufacturing. We have a strong balance sheet, and we are listed on Nasdaq Stockholm and Helsinki. Next slide, please. We work in the pharma industry, and the problem is that there are too few new drugs, even though a lot of money is spent on R&D. Next slide, please. The industry is really big, and it's continued to grow for many reasons. Next, please.
We address the biggest problem in that industry, that of poor bioavailability, which means that the body can't take up otherwise potent medicines. This problem is large. It's expected to continue to grow. Next slide, please. We have basically three profit pools, one where we give unsuccessful drug candidates a second chance, one where we improve existing drugs, one where we enable new drugs. If you do the math between the second and first, you can see that this is a problem that is really growing. Next slide, please. On slide number nine, you can see what we do. We get powder that is owned by our customers. We make that powder finer. By doing that, we increase the specific surface area, which is a very straightforward way to increase the solubility of poorly soluble drugs. Next slide, please.
The process we use is proprietary. It has several steps. We have covered it before and, this is what it looks like. Next slide, please. When we can make the drugs, more easy to absorb by the body, a lot of good stuff happens. Basically, it happens because when you don't have to dose so much, you don't have to produce so much. The plants can be smaller, and the boats and the airplanes can be smaller. It also means that the body excretes less of it, and from this follows ESG stuff. We are both patient-centric and planet-centric with this approach. This kind of cascading effect is a very powerful thing we enable. Next slide, please. We work on both small molecules and large molecules.
The small molecules are, the ones we started with, and the large molecules are the ones we PR'd, a few years back. These are the things we can help with on the large molecule side. Next slide, please. We use a very, very simplified, business model and value chain. Basically, we work with different kinds of clients. They own the API, we nanoform it. We always get paid, and because we have a proprietary technology, it means that we're eligible to be part of a royalty game later on. I now turn over to slide number 14, the CEO report review, for Q3. Slide number 15 highlights, some numbers that depict growth since the IPO in June 2020. I have encircled two of them, the size of the commercial team and the number of customer projects started.
If you divide 9 by 5, you see that we have been able to become more effective in our commercial efforts. I think this is a very important thing that we have achieved. On the same way, we have also become more effective on the operational side, and Albert will talk about economic efficiency a little bit later. Next slide, please. This slide I'm gonna spend a few minutes on. Basically, the first box to the left, AstraZeneca concludes tech evaluation with positive outcome. This is very important and it's part of something we are very proud of. Box number two from the left, Nanoform partners with Pharmanovia. This is a play where we get access to a lot of 505(b)(2) opportunities. In the central box, highly promising in vivo data for glioblastoma multiforme.
This is potentially the most important thing we report today. This gives hope to people who have brain cancer. Brain cancer, where everybody dies. In this thing that Christian will talk a little bit more about the details, the story is as follows. Nanoforming has enabled a formulation that has had the outcome that the rats in the trial, all of them did not die. We have been able to create a result based on our Nanoforming where rats survived. Christian will also show you that in histopathological sections of the rat brains of these survivors, there were no tumor cells. Nanoforming has now shown not only effect in biology, but potentially more. The fourth box on this slide talks about the new collaboration agreement with three partners for a blockbuster drug. Go-to-market commercial terms are agreed.
These two boxes represents both effects in biology and a way forward to a product. They entail commercial GMP manufacture by Nanoform, and these are things that truly underscore the fact that Nanoforming can enable, and it can provide hope for patients. The fifth box to the right talks about what I colloquially call a multi-API license. This is basically a notification to Fimea, which is the authorities in Finland, about us starting to produce GMP on multiple lines and on each line, multiple APIs. We expect that Fimea comes and inspect us according to their normal timelines. From this slide, the effect in biology and the provision of hope enabled by Nanoforming are the key take homes. Next slide, please. This slide number 17 talks about our targets for 2022. On the first one, GMP 2 achieved, GMP 2 3 on track.
The biologics pilot GMP achieved and the non-GMP projects on track. The last one, the GMP project, is the GMP deal that is signed. This deal is stage-gated. Overall, we're pretty good on track for what we're supposed to get done this year. Next slide, please. This slide talks about the targets, where we are going, where we need to be in 2025. Out of this, I now focus most on the cash flow positive, the right down corner. This brings me to the end of my CEO presentation or review, I'm happy to hand over to our Chief Commercial, Christian Jones, for the commercial part. Christian, please.
Thank you, Edward. Pleasure to talk to you today. If we go to slide 20, we can see here that the number of drugs and the global drug R&D pipeline is only going in one direction, and that's up. There are over 20,000 drugs now in development. If we can go to the next slide, please. In the marketplace for those 20,000 drugs, there are 5,500 companies. A significant amount of companies. If we recall the stats that Edward mentioned earlier, 70%-90% of all small molecules have solubility and bioavailability challenges. There is a huge market potential for Nanoform to support and to further improve those products for patients.
If we go to slide 22, we are very fortunate to have a stellar commercial team, world-class in its makeup. We have people from experienced in the CDMO, in the particle engineering, in the formulation sectors. We also have people with significant experience in major pharma companies as well, that really, you know, together can be quite a powerful team to support our partners globally with their challenges. If we move to the next slide 23, we can see here that we're making great progress. We're still in the last quarter, so ample time to deliver and hit our targets. As you can see, the number of customer projects signed is only again, going in one direction. If we can go to the next slide, please.
This is a good overview of types of companies that we work with. We obviously have public relationships with two major pharma companies, AstraZeneca and BI. We have five other major pharma companies that we work with as well. We have one co-development, three collaborations. The majority of our business is with mid-size specialty pharma and biotech companies, the likes of Pharmanovia, Herantis, and TargTex. A good mix of different partnerships that we have. If we move to the next slide. Slide 25 is really an executive summary of the slides that I'm about to run through with you. I won't spend too much time on this slide. I'll take you through this information, and you can refer back to this slide for your convenience. Slide 26.
I'm gonna talk to you about the project that we did with TargTex and that we still are working on very collaboratively with them. For those of you that are not familiar, glioblastoma is a horrendous disease, a cancer of the brain, and there's only been one FDA-approved drug in the last 20 years. Most often it's diagnosed late, and when it is treated, the current state of treatment maybe provides patients with a few months additional life expectancy. A real huge unmet medical need for this particular area.
TargTex came to Nanoform, and they had already established data that a hydrogel that they had developed, was effective against glioblastoma cells, and they had established this in mice, and this is the data that you can see on slide 27. A single-dose administration of this drug in a hydrogel formulation, would actually abolish the primary glioblastoma, with a safe histological profile. However, the challenge was the cancer came back and the mice all died. They came to us, they realized there was a challenge around the formulation. If we move to slide 28, we can see here the drug delivery challenge. The first prototype hydrogel, it was effective for the primary tumor eradication, but it did not prevent tumor recurrence.
The formulation also posed restrictions on the quantity of API and drug that they could dose for those animals. TargTex wanted to achieve hydrogel optimization. They were looking to get a thermoresponsive hydrogel, something that when the tumor was removed by the surgeon, this hydrogel could be picked up by the surgeon and placed in the resected tumor area. Once it was in the area of the resected site, it could then mold itself into that area and then deliver the drug. They wanted a sterilizable, non-toxic, biocompatible, and biodegradable hydrogel. The excipient, if there were any to be used, needed to be FDA approved, there should be a controlled drug release, and they really needed to increase the drug loading. If we move to the next slide number 29.
Prior to coming to Nanoform, they had done work trying to optimize the hydrogel using excipients, as one method and approach, and using nanomilling as another. The excipients had challenges around the solubility, the tuning of the release kinetics, the particle size control, and the percentage of API that could be incorporated. Positively, there was a need for stabilizers. Storage stability and GMP scale-up, weren't necessarily challenges. Nanomilling, however, because of the challenges around the excipients, was the next approach that they took. They realized that they can't get enough drug into the hydrogel just using excipients. Particle size and making a nanosuspension in this hydrogel was the way that they found to try to increase this drug loading. What did nanomilling achieve?
Overall, it gave a 40-fold, so 40-fold increase in the drug load, in the hydrogel. This was very positive, however, it still wasn't enough. They didn't get the right effects, from this formulation, and there was still a need for stabilizers and additives, it was unstable, the material, and there were issues on GMP scale-up. They came to Nanoform and fortunately, for us and for them and for patients, providing hope, we were able to really optimize this product. We were able to increase the drug load, by 200-fold, and this enabled a much better concentration of drug in the hydrogel, and positive across the board, from formulation development. If we move to slide 30.
You can see here an untreated rat brain on the left-hand side, and you see the red dot that is on the top right-hand side of that image, that is the glioblastoma tumor. In the next two images, the green and yellow represent the hydrogel and its penetration, deep drug penetration across the brain parenchyma, and that was only possible by using the nanoformed particles, and it enabled a deep drug diffusion across this area. This was critical to be able to mop up any of the remaining cancerous cells from where that resection of the tumor had taken place to increase the chance of survival. That takes us nicely onto slide 31. Slide 31 is the most important slide in this slide deck.
If you look at the left-hand side, you can see the red circle which says untreated and tumor, and the treated group, you can see here that the hydrogel is actually placed on top of the tumor, so no resection actually taking place in this particular model. Even though it's just placed on top, it still penetrates the tumor, completely removes it in 100% of all the animals. 40% of those animals have no further recurrence of the glioblastoma. In fact, after 160 days, these rats are still alive when they're expected in normal circumstances to have died a lot earlier. This is a fantastic result. In actual fact, this is with a very subtherapeutic dose.
We have the opportunity now to even increase this dose a lot further to improve the outcomes, for to further improve them and to have, hopefully, a lot more of the rats even surviving. At the time of sacrifice, when those animals, at 160 days, had to be sacrificed, the there were no microscopic tumor cells detected. This is absolutely fantastic, results. Our next steps are to increase the drug load and improve the percentage of survival and the long-term survival further. In terms of TargTex's product, it's a one-time, it's efficient treatment. It's local delivery, so it doesn't have to cross the BBB, which is one of the major challenges for pipeline drugs. Has a strong safety profile.
There is obviously a large addressable patient pool, high efficacy against challenging GBM cells. It has the potential to be fast-tracked for orphan drug designation. This is very important because our technology is really enabling this, and this helps Nanoform to be on path to market in a very fast and effective way as well. If we look to slide 33, you can see here what the relationship between TargTex and Nanoform has enabled. Number one, tumor eradication in rodents with only 44% of the maximum drug loading dose. Subtherapeutic dose, we're still getting complete tumor eradication. Deep brain penetration. PK data shows no systemic exposure. It's non-toxic at maximum loading concentration, and it's a GMP scalable formulation. We signed a GMP manufacturing agreement that we announced last year with Nanoform.
Together, we will explore this for other localized oncology treatments too, and I think this has great potential for other areas other than oncology as well. If we move to slide 34, we can see the roadmap for TargTex and their development plans. You can see that in early 2024, they have plans for a phase I/IIa clinical trial. That's the GMP manufacturing that we are supporting. Later, a phase IIb randomized clinical trial. Hopefully, access, shall we say, fast speed to market with orphan drug designation. I'd like to move and change gears now, looking at slide number 35. We work with a variety of different partners. This is a collaboration that we announced previously last year, where we announced one of our GMP contracts.
This was with the European-headquartered international company, partner one. More recently, we've just had partner two and three come on board to support this blockbuster drug development with a fast path to market for a more patient-centric version of this product. This is now becoming very serious. We have great results on the work that we're doing, which has encouraged a larger, shall we say, group of parties to come on board for this project. We all bring different capabilities to this product development. The really important thing here is we have commercial terms agreed for the product on the market, and that is that Nanoform will be paid for all development work that we do in alignment with our business model.
When this product goes to market, Nanoform will receive 25% share of the net income from the product. This is a blockbuster drug which currently has sales of over $1 billion. If we move to the next slide, I'd like to end the presentation from commercial on this slide number 36. Ultimately, our goal is to provide hope for patients, but we also want to provide hope for our investors and our shareholders by showing how active we've been in this year. We've attended 30 events and conferences throughout the year. Face-to-face networking is back, which is fantastic. We've had over 700 meetings with existing or potential clients. So very, very positive activity throughout the year.
I'm very confident that in the next few quarters and years, we will see the investment that we've placed into the commercial team, doubling the size this year, pay huge dividends to our business. With that, I'll thank you for your interest, and I'll pass over to Albert to talk about the financials and the business model.
Thank you, Christian. If you go to page number 38. When you move very fast, it's always good also to have a little bit of perspective going back. Here you can see that we are now at the end of the quarter, 143 people, and that is compared to 34 only three years ago. At the same time, the number of lines have increased to 17 from only four. When I think about Nanoform in the coming couple of years, I see that we have already reached a critical mass in a sense, and that means that we will now get more economies of scale and efficiency out of the machine, out of Nanoform, without increasing the number of employees as much as previously and still building new lines.
It's also about automation, better processes, and so forth, that we will get much more out of Nanoform. I look really forward to the coming years. If you go on to page 39, here you can see the signed projects. Again, since only two years ago when we had cumulatively nine projects signed, we are now at 45. When you look at projects generating revenue on the right-hand side, the rolling 12 months, you can see that it has been steadily increasing. This also shows the fact that we can handle many projects in parallel now, a thing we could not do three, four years ago. We are becoming more and more effective. If you go to page 40, you can see two important efficiency metrics or numbers.
One is perhaps the most important at the moment, and that is how many projects can we do per line per year. When we did the IPO, we did one per year, and now we have already reached above two. Here, our target is that we could reach even five projects per line in a few years' time. This is our sort of internal target. One thing where you have still not seen the sort of the efficiencies on the total number of employees, including everything from top management to HR to QA, QC, and so forth, because we have been building the mass in a way. When you add more lines, you also need to add people. We have added HR, we have added QC, and so forth.
Also in this metrics, in this number, I believe that going forward, when we increase the automation, when we already have certain functions in place, this number will start to go down also. That means that Nanoform will be more efficient. If we then go to page 41 and look at revenue, in the Q3 , we had revenue of EUR 8.85 million, almost up 100% from last year's quarter. Remember that in the Q3 , there is some impact from the fact that we have summer holidays in the Q3 . When people are on holiday, they don't no revenue is recognized because they don't work any hours. If you look at the right-hand side, you see that the rolling 12 months revenue has been increasing nicely.
We are now about EUR 3 million in the past four quarters combined. Page 42, another trend which has been positive and which has been surprisingly fast reached our 2025 target, and that is to have the gross margin above 90%. Actually, we had a new all-time high of 96% in the Q3 . You can see that on the rolling 12 months, we have reached 93%. I think that one thing which has One example of where we can impact this and how you can do it is the fact that previously we were using bottles where you had 35 kilo of CO2. Now we have a huge tank, and that means that the cost for the CO2, for example, goes down by a factor of more than 100.
This, of course, is a positive thing, going forward. Another thing which has impacted the gross margin is that we have, previously a few years ago, we used a lot of consultants and outside help. We sent some samples outside, GMP, QC, and so forth, XRPD. Now we have the capability of doing it in-house. I think that the trend has been very good and we have reached a very nice level. On the following page, you can see that despite the fact that the volumes have been growing, we have been able to keep the material costs at, basically the same level as the year before.
You go to page 44, when you look at it from a quarterly point of view or rolling 12 months point of view, there is one line that has been increasing a lot during the last couple of quarters or four quarters, that is the IT expenses. Here the reason is that we have been implementing a new ERP system, so we have decided to start to use SAP. This has of course, been a huge project for us, we are very happy with the progress. After doing our full-year financials in a few months' time, we will go live with SAP and plan to report the Q1 report next year by using the new system. That of course also mean that the IT expenses, where we book everything over the P&L.
We don't activate anything, we book it over the P&L. Then they will start to come down to a more normal level later in next year. All in all, when you look at the development last quarter or the previous quarter, the Q2 of 2022, we had some sort of not regular costs, but now we are back to the trend, which I personally think changed already in the Q4 last year. You can see that the EBITDA loss has been diminishing. And actually in the last quarter, in the Q3 , we had the smallest EBITDA loss since the Q1 of 2021. And I'm very happy with that because we want to be on a trajectory towards becoming first EBITDA positive and then cash flow positive by 2025.
On the right-hand side, you can see that this is where the efficiency and economies of scale show up. We have been able to keep the costs flat during the last year in the Q3 . That means that as the revenue grows rapidly, means that the EBITDA goes down. Of course, we still have clearly higher costs than revenues, if this trend continues, we should be on our good trajectory towards our 2025 target. Remember also that so far on the revenue side, we have booked very little GMP revenues. We want to be conservative in our bookings, that means that what you see is more than 90% of that is from non-GMP. The impact from the GMP projects are yet to come.
If we then, as a final couple of slides, show the business model, just a reminder, a non-GMP project that is non-clinical, pre-clinical, the fee there is between EUR 50,000 and EUR 500,000 per project. When you then go to clinics, everything becomes 10 times bigger. Of course, the impact on the P&L will be much more significant when you go into GMP. Finally, we should get the royalties when the drugs are on the market, in the range of 1%-20%. Now Christian mentioned that we had 25% agreed on in this latest collaboration.
Of the net income, there is some difference between net income and royalty, but the reason is also that when we share some of the risks, then that means that you get a higher proportion of the income. Then finally, if you look at page 47, just a reminder, our strategy is to work on many APIs because the probability of success is low. Only 2%-4% of new chemical and biological entities reach market. That's why it's important that our business model is such that we get paid for all the work we do. We want to work on many APIs because that increases the likelihood that we will get help get drugs also all the way to market.
Finally, a reminder, our business targets for 2025, where Edwin mentioned already that, as we have reached above 90% gross margin and we know we can build lines, cash flow positive is the main target we are really focusing our energy on at the moment. You have a few tables on the coming three slides with the numbers. I won't go through them, but let's go to Q&A now. Thank you.
Thank you. If you have a question for our speakers, please press 01 on your telephone keypads. Our first question comes from the line of Christopher Uhde of SEB. Please go ahead.
Hi there. thanks for taking my questions. In the broader biopharma sector, obviously, we've seen a disconnect between sort of suitors' willingness to pay up for M&A since valuations came down and targets expectations of deal values on the other side. Now, this quarter, Nanoform broke its pattern of every other quarter being a strong one in terms of new API projects signed. you know, the rolling 1 month new API count fell as well. Would you please tell us about how you balance the need to bring in new business with the desire to secure obviously premium pricing for your services? I guess how do you manage your own expectations basically for what you should be getting per project? To what extent does price elasticity play a role in the speed at which you sign or win contracts? Thanks.
Christopher, thanks for the question. There were actually many questions there. If I first give you a sort of few pointers and then Albert can give you sort of more the financial details on it. I think that the important part is that the focus now is really to bring the GMP projects forward, to win them and to bring them forward. We know that we can win POCs. We know that we can execute on the POCs. Of course, from month to month and quarter to quarter, there can be slight fluctuation in the exact number of POCs that are signed. The real deal is really to get those trajectory towards products, towards a GMP manufacture.
You asked about price elasticity, and I think that it's fair to say that we are working on a price premium. It's clear that people value what we do. Now the PODD conference, together with TargTex, was the one which follows the pattern that I really like.
Customer states a problem, we state the solution, and together we can potentially help patients. Albert, would you like to add to the financial aspect of Christopher's question, please?
Yes, Christopher. I think it's important to remember that the fluctuations between the quarters, how many POCs. If you look historically over the last 2.5 Years, we have signed anything between one and eight POCs in one single quarter. Now we signed two in the Q3 , and the last year again, we signed six. It can be very big fluctuations between the quarters. I think it's more important to think of it from a sort of, four quarter, six quarter, 24 months perspective.
What we see is that, if you look at, for example, the underlying, the underlying proposals that we send out, proposals mean that we talk with clients, they have a clear problem, then they ask us to send a proposal. These are proposals where we have very high success rates. We have not seen any change in this. On the contrary, we have seen that the activity after the summer has been very high. Christian talked about it, lots of meetings, extremely many meetings or many conferences in the autumn. I think it's more like quarterly fluctuations. We have not seen either any sort of changes in the price elasticity. Already from start, we decided that we will go for a premium pricing. We don't give any freebies.
What actually has happened during the last year is that as the CDMO industry in general has raised the prices quite a lot due to inflation and higher salaries, especially in the U.S., but also in Europe. At the same time, you have seen a much stronger dollar, meaning that as our cost base and as our pricing has remained flat in Europe, in euros during the last years, two years. Actually, Christian can correct me up, but I would say that we almost get less complaints about the pricing than two years ago.
One reason for that is, of course, also that as our brand value and as people start to know us more, as we are able to come out and talk about these kinds of successes, as, for example, with TargTex, the pricing discussion is smaller. Christian, also from your point of view, comments on the two signed POCs in the quarter and the pricing discussions with clients.
Thank you, Albert. Yes. Hi, Chris. With respect to this, I agree, with Edward and Albert's comments about quarterly fluctuations. Obviously, some things can land just at the end of one quarter and not go into the next quarter, and some things can sort of land in the, in the following quarter. We have a lot of activity ongoing, more than we've ever had. I would be confident that, you know, going forward, we would have, you know, strong, very strong quarters. It's just a, I think a fluctuation, if anything. Not I wouldn't say anything to draw too many conclusions from.
With the price elasticity, we have lost some proposals on price because we've been too expensive in the past, but not the majority of them. To be honest, if we weren't losing some on price, then we'd be charging too cheaply for our services. I think it's very important that we have strong price integrity to everything that we offer. It is a premium service, and it's premium because we deliver value for our clients. I think providing we can show that value and explain it in the right way, which I believe we can, then I think there's no issue in the current market. People are still developing drugs, and they still have problems that they need to solve.
Thanks very much. Very helpful. I guess if I could ask one more question, it would be about the GMP project revenues. Because it seems, I guess, just to be kind of clear about... We, I guess, on the street have sometimes not necessarily appreciated the time that it takes to get things up and running, and that, you know, let's say with the proof of concept projects, and that was seems to be the case here with the GMP, but I also get the sense that perhaps on this occasion, you might also have, yeah, then thought it would happen sooner, getting in terms of being able to recognize revenue from the GMP projects. Could you comment on the timeline and, yeah, your thoughts on that?
Sure. Let me first give you an overview, and then Albert can give you the financial. It's clear that there are two clocks here. One is the Nanoform's clock of being able to ramp up so t hat we can be comfortable to sign the papers that we can deliver on them, also to build the confidence of the customer. What we are talking about now is commercial GMP manufacture, something that's actually gonna go via the clinical studies into products. That's why the two green boxes I spend a little bit time talking about earlier are so important. I think that generally speaking, if you look at how we have progressed, there has been steady progress both in intensity, that's parallelity, but also in speed. I see no reason why this should not continue. Take a simple example.
We went from one to three GMP lines, since the newer GMP lines two and three are upgrades on the first one, the total activity that we can support is actually more than 3x. These similar kinds of sort of super linear relations exist elsewhere. I think that everything takes more time than people, ourselves included, wish, but I still think we have been able to maintain a good momentum that is increasing. When it comes to revenues, Albert is always a very careful CFO, so maybe he wants to say a few sentences on that.
Yeah. I think we need to be honest in that sense also that we are doing all these things for the first time. We are now having a lot of experience already on the POC side and the booking of that. On the GMP side, we are still sort of early on, that means that we would rather err on the cautious side than being too optimistic. There are certain industries where you can book revenues aggressively in projects, then you come out and say that, "Sorry that now we need to take back and the cost went up." We don't want. We don't wanna be in that situation. Usually in the pharma space, it's not that common. There are certain industries where it can happen.
I think in general level that you are right in that sense that it might have been that we hoped for it to be recognized faster. Just an example, so we have booked, you know, 10% or less of the GMP agreements we have signed. That is, of course, means that if things then go faster than expected when it comes to GMP manufacture, that means that we will then book the rest when we know that the project has gone according to that time schedule. Early on, it's better to err on the cautious side.
Christian, do you have-
Thank you so much.
Do you have anything to add from a purely commercial perspective, Christian?
I was gonna say exactly the same as Albert with respect to, you know, doing this for the first time. Obviously we're gaining experience and sort of understanding better the timelines associated with some of these activities from both the customer side and from ours. We have a lot of projects that we're working on and have worked on. We should see a flow of GMP projects coming forward.
Our next question comes from the line of Lars Hevreng of Danske Bank. Please go ahead.
Yes, thanks. Could you say in terms of this collaborations on the blockbuster products, First, you had this collaboration with the European head for the pharma, as you said. Now you have two other companies. Can you say something about what kind of data you will have before this product enters development?
Edward, should I take that?
Yes, please.
Lars, sure. We've, we're obviously doing everything that you would expect a company would do in formulation, in development, making sure that we can develop a product that meets the needs of its target product profile. And we've been working with our parties on that, and we've got some great data, and that's encouraged obviously the further partners to join. And we would plan to go in to prove that data in humans next year. Does that answer your question, Lars?
Yeah. Yep. Yes. Yes, it does. That first trial, that will not be on. That will be a PK, standard PK trial. It will not be on patients.
No.
It will be on patients.
Yeah.
We are making a GMP material for use in human beings.
All right. These two other. It's... Is it too early to say that if the originator company is involved in the collaboration?
We haven't stated that. That's not something that we have disclosed.
All right. typically, at what stage or of the development would trial results be published or presented?
Um-
in any way?
That's a great question because, typically those results are confidential, if it's an actual program that's live and in development. It may be that we don't publish those results, but we will keep you updated and everything we can share with you, we will do.
Lars, this is important. From Nanoform's perspective, it is valuable to publish results as we have stated in earlier calls, and we will absolutely drive that. We think it's very important for patients to know about advancements in order to be able to actively advocate for improved health care. It is also clear that we serve both our customers and collaborators, and therefore, there may be reasons why results are published at a certain specific time point. We are, of course, balancing these two things against each other. Here also, we want to take a careful, cautious approach where we rather are a little bit slow than too fast.
If I may add to that, of course, also remember that we are always thinking about these as potential platforms. Both when it comes to the TargTex hydrogel for brain cancer and when we are talking about this collaboration agreement. If there are other areas, other indications, other APIs there where you can see similar advantages as we get from the great results, of course, that's something that we are sort of very eager to move forward with. Either with the partners clearly, or if there are other companies that have similar programs, that could also. In the end, the more projects we have, the more potential there is for the patients in the end to get drugs that work on the market.
Okay. Thank you. In terms of the collaboration with TargTex, it sounds like you will do more dose finding prior to the first clinical trial. Was that correct?
I think that it's fair to say that we will carry out a dosing study together with them. It's of course, very important because it's one of the many key data that people are looking at when they start to prepare for positioning in the marketplace of a product.
Your partner, have they already at this stage a good input from regulators on regarding the design of a first clinical stage trial?
If you think about it, glioblastoma is such a thing that there is a huge drive from the patient population. I think it will be possible to recruit patients. I also see no reason why this couldn't be a candidate for fast-tracking. The senior people in TargTex, they have been around in the industry for long enough to have vast networks.
All right. Thank you.
Our next question comes from the line of Christian Glennie of Stifel. Please go ahead.
Hi. Good afternoon. Thanks for taking the questions. Just starting off then, I just wondered about the, just to understand a bit better, the call-out of the sort of funding environment. Obviously, there are wider macro headwinds, but obviously, as we know, biotech companies particularly finding, you know, a tougher funding environment for them, albeit that they have been relatively well-funded in the sort of boom in the last couple of years. You know, is that having an impact or is that just something you're sort of referencing, you know, to, for people to be aware of, or is that something that is shifting in terms of decision-making at some of your customers? Obviously, given that, you know, two-thirds of your customers, at least by number, are more in that sort of small to medium-sized businesses.
If I start and then over to Albert and Christian to give their viewpoints too. This is something which we follow very, very keenly. I sit in on the commercial meetings weekly and basically try to see if there are indications of this. To the best of our understanding, it has not yet impacted us and it may or may not do so in the future. When it comes to certain areas, we have clearly seen that there are changes, and basically, we see it as a number of proposals where they want to discuss with us whether to do development programs together.
Then, of course, the bigger the companies we work with, the more different the dynamics, look where basically it's clear that certain assets have become much, much cheaper. That is basically a kernel for a very different kind of discussion. Maybe with this sort of general remarks, Albert and Christian, do you want to add something?
I think that this is more a prudency thing again that we all know that the financial conditions have gone much tighter, and you could expect some impact. Strangely or interestingly enough, there has been very little impact yet. Whether it will come or not is another question. As you can see from the slides showing the number of companies and the number of APIs in the pipeline, interestingly enough, during the financial crisis, 2008 and 2009, both the number of companies and the number of APIs in the pipeline grew each year. It might be that this industry is truly sort of recession-proof if such recession comes next year. I would say again that this was just for prudence.
It is a fact that some of the really small biotechs in a few certain countries, are having difficulties of finding funding. We are getting more questions whether we would be like to in license or participate with funding and so forth. We have so far been very sort of restrictive. We want to not give freebies, and we also want to work on with partners that are strong. I think this might also give us some great opportunities, in the coming year, whether if such a recession hits us.
What we have also seen is that, a couple of years—for the last couple of years, there has been a talk among the big pharmas that although assets are very expensive, now they are starting to activate a little bit. We have seen some acquisitions when the valuations have come down. If you get a recession, then you will certainly have a stronger trend there again, but that is, of course, a big if. What we know for sure is that the amount of funds raised by biotechs, especially in the U.S. but also in Europe, during the last two years, and also funds raised by VCs and private equity in this industry has been enormous.
As you know, our strategy has been from start to focus on Europe and U.S., both when it comes to clients but also when it comes to equipment, where we buy our equipment. Therefore, we don't have exposure to certain countries in Asia, where there might have been more hiccups.
Yeah. Maybe I just add to that. I spent about two weeks in the Boston, Massachusetts area, in the last month or six weeks period. There are a huge number of companies that are incredibly well-funded, that raised money during the COVID period, and are well-funded for the next four or five years. It's these companies that we are interested in supporting. Obviously, we want to try and support everybody, but we have to be smart and focus on where people can, I guess, pay for our services or where we can work together. Companies now that are perhaps coming to us with challenges, but are also struggling to raise money, we have to be a lot more selective about.
There's 5,500 companies, developing products, and there's a good proportion of them that are well-funded and still have got problems that need to be solved. I don't see that, as impacting us, in any way at the moment.
Great. That's helpful context insight there. Thank you. I guess a question on TargTex. Obviously, you talked about the one collaboration where you with the European pharma and other partners, and now its economics are being agreed. How is the TargTex sort of collaboration structured on the economic side? Is that, is that one that's yet still, you know, obviously dependent on development yet to be agreed, or is it already a sort of economic framework there that based on sort of potential royalties on sales sort of thing, or is that to be decided?
This is something I've not really, spoken about. I think that right now we are focusing on the great results in the biology. When we have more to say, we will talk about those parts.
Okay. Yeah. Fine. Fair enough. Then, on AstraZeneca, I guess obviously, you know, not in your control, but, in terms of the, you know, the where they go from here, and obviously you talked about them having, you know, done the validation, expanding the relationship. What could you say maybe more about what should we expect maybe over the next couple of years that might come out of that collaboration, for example?
On a general level, it's clear that we are very happy to collaborate with AstraZeneca, and we are also, of course, very grateful that they lend us our sort of common credit for the work we do. Looking forward is, of course, always very hard but to give you a generic answer, I would really like to put a product on market together with them.
Okay. Good. Yeah. That'll be nice. Okay. That's all my questions. Thank you.
Thank you.
Just to remind everyone, if you have a question, please press 01 on your telephone keypads. There are no further questions at this time. Please go ahead, speakers.
Thank you.
Yes. Thank you. Yes. Thank you, Edward, Christian, Albert for the presentation. Thank you operator for hosting this. Thank you for guests who have called in and viewed us through the webcast. If you have more questions, you are more than welcome to contact us after this. We do wish everybody a great Tuesday afternoon and evening. Thank you and goodbye.
Thank you very much.
Thank you.
This now concludes our presentation. Thank you all for attending. You may now disconnect.