Welcome to the conference call. For the first part of the conference call, the participants will be in listen only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.
Thank you, and good day all, and a warm welcome to Nanoform's first quarter 2026 report presentation. My name is Henri von Haartman, and I'm your Director of Investor Relations. Today, our CEO, Edward Hæggström, CFO Albert Hæggström, Chief Commercial Officer Christian Jones, and Chief Development Officer Peter Hänninen will present to you. This presentation is webcasted through Investor Call, and there's also the possibility to call in and listen by phone. The presentation slides are shown throughout the webcast, and they can also be found on our webpage in the investor section. After the presentation, we will hold a Q&A, and it's possible to ask questions by calling in. We will today start with a short introduction and key business highlights, then financials, then commercial, and we conclude with our product kernels and the biologics markets.
With these words, our CEO and Founder, Edward Hæggström, please go ahead.
Thank you, Henri, and welcome also on my behalf. Next slide, please. This is a slide basically laying out what we're doing. Our offering has four technology platforms, one on small molecules, one on biologics, one on formulation, and one on AI. All of these are active and have been commercially validated. Our customers come from global pharma, mid-size and specialty pharma and biotechs. We have also validated that in all these groups we are commercially relevant. For both the small molecules and the biologics, the task is really now to break the wall. I define breaking the wall as putting a product out on the market. That is something that gives confidence to everybody that what we do is commercially viable and it is good to work with us. Revenues to Nanoform comes in different flavors.
We get service fees, we get development and commercial milestones, we get paid for commercial GMP supply, and we get exclusivity fees, royalties, and profit shares. Today, we're gonna talk a lot about exclusivity fees, and especially on the biologic side, which we PRd on last week. The Nanoform's business targets for 2030 are reiterated here from our capital markets day last December 15th. Next, please. On the business highlights, it's important to understand that we had now a record first quarter revenue. We had a gross margin record, and we had a serious reduction in operating costs. This shows that we are starting to become more and more involved in getting this into cash flow positivity. Second, the exclusivity deal we signed around our biologics technology that we reported on last week was first for us.
It's very important because it establish the second bio platform in parallel with the first platform on small molecules. Christian and Peter will talk a lot about this. On the Nanoenzalutamide project, it's important to understand this is our lead program. On the small molecule side, it's also the program which is most mature in the company. Here we had scientific advice that we reported on, and now we have agreed on a multitrack strategy with our partners. All the partners are as engaged in this asset, which is a big one. On the Nanoapalutamide and Nanoencorafenib, the two other kernels, these progress according to plan, and they may have a little bit smaller role in this reporting. That doesn't mean that they are not moving forward, and it does not mean that they are not important to us.
The subcutaneously administered Nanotrastuzumab, which matched the performance of the Herceptin HYLECTA in a mini pig study, this is part of our biological trust] now. There is a physiological relevance and a commercial relevance that has been proven. The last two ones have really to do with cost savings, and they put us on a firm trajectory toward the cash burn target for 2026, which is to be below EUR 10 million, and we're on track for this. Next slide, please. Here I hand over to Albert. Please go ahead.
Thank you, Edward. Here you can see that we are now clearly above the level we were in 2022 when money was free, so we continue to gain more projects.
We signed clearly more projects in the first quarter than last year, and you can also see that the share of GMP projects have been increasing. If you look at the income, this was the second quarter in a row when the income was above EUR 1,500,000 , and the revenue clearly above a million. On the right-hand side, you can see that for the first time now we achieved for the trailing 12 months more than EUR 5 million in income, also clearly above the 2022 level when the money was free. The difference is also that at that time we worked more with early stage biotechs. Now we are working more with later stage, larger, mature companies. We are going in the right direction.
This can also be seen from this slide where we have the income for the first quarter. It has actually grown by 45% on average during the last six years, which I think is a decent achievement, and we expect this and target this to continue. As you remember, we have a above 50% CAGR growth target for 2025- 2030. We also had a gross margin of 94%, which was a new record, which is of course important because when you have a high gross margin, that means that any additional income you get flows down to the P&L very nicely. On the operating expenses side, now you are starting to see the difference in costs when you build a factory and when you maintain it.
Compared to last year in the first quarter, the operating expenses fell by 31%, and we are actually on the same level as we were five years ago. Again, when we announced our target for 2030 of having cost growth by less than 5% for the coming five years, many people were a little bit surprised, but now you can see there is a big difference if you build and try to get new licenses and use a lot of external help compared to when you maintain a factory and you just improve it slightly per every year. When you increase your top line and you decrease your cost, the impact on cash flow and EBITDA is seen immediately, and you can see it here.
Remember also that the effects from the personnel reductions were still small in the first quarter. They will grow in second quarter and have the full effect in the third quarter. Here you can see the underlying EBITDA, which has improved even more. Here the difference between the reported and underlying is that this does not include options costs with our non-cash and also associated companies, this is BRAFMed, that has no cash impact. Here you can see that, on an annualized 4x the last quarter, we are actually already below EUR 10 million in EBITDA negative. With the CapEx going forward being quite small, the underlying EBITDA is starting to be very close to the cash flow.
We then look at the near-term business targets for this year, we are clearly on track on the first one. The second one, we thought when the year started that this would be an easy one to achieve. Now it's a little bit harder, but we are working hard on it on multiple fronts together with our partners, both in the consortium and outside. The third one, increased number of non-GMP and GMP projects. We clearly grew in the first quarter, we are on track on this one. The final fourth one, to sign deals. Here we had a very nice deal on the biologics side. We expect more to come, we expect also to sign deals on the small molecule side. Just a reminder, our 2030 business target, Edward talked about them.
Three products on the market, income growth continue to grow at roughly the same level that this has historically. When you have a business like this where you can get royalties and exclusivity fees and otherwise also nice margins, we target a EBIT margin above 30% by 2030. As a final slide for me, this is a reminder from our Capital Markets Day in December. There are many pockets from where we can get income because we have a broad technology platform base, and we have very different areas there. We can get, we believe, more than EUR 5 million each from non-GMP projects, both on the small molecule and the biologics. These are the proof of concept, proof of process projects. You have the clinical GMP supply.
For the small molecules, we have already done this, started the first ones. Here we believe we can get up to about EUR 10 million. On the biologics side, we are now targeting to, as fast as possible, get GMP supply also from biologics. That could add another more than EUR 10 million. You have the different kind of milestones, both on the small molecule and the biologics. Here we have announced already deals, for example, on Nanoenzalutamide, what kind of milestones can be, we can get there, and also now on the biologics side, you saw the potential. You have the commercial GMP supply once the products are on the market. If we have three products on the market by 2030, we could get nice revenue also from supplying commercially.
Then you have, of course, the commercial milestones and all the exclusivity, royalty, and profit shares after the product's on the market. Continuing to grow by this, 40%, 50%, or even more in the coming years is clearly achievable from these, low levels where we are today. The opportunity is very, very significant. With that, I hand over to Christian and Peter, please.
Thank you, Albert . I'm pleased to introduce the commercial highlights from this quarter, and what a quarter it has been. We have continued to commercialize our technologies for both small and biologics at full speed. We've been developing our product kernels with partners and taking the three leading assets to market by 2030. We've been executing innovator pharma customer projects and signing new ones. We've been generating preclinical and clinical data and been progressing winning assets. To top all of that off. We've also been signing development, commercial, and exclusivity deals. It has been a very busy quarter, and I am sure it's gonna maintain that level of business for the rest of the year ahead.
Talking about our lead program, Nanoenzalutamide, this project continues with a multi-track strategy and with confidence from all the parties involved, and I include the ONConcept® Consortium and other parties that we are working with. We have a three-pronged strategy to de-risk the development and commercialization of this product and ensure that it hits the market. The first, based on the feedback we received from the EU regulatory authority, is to evaluate selected national submissions in European markets that may accept the current data package that we have. The second is to continue in advancing further formulation work to ensure that we meet the remaining Cmax requirements. The third is to assess a non-generic pathway for the current product profile, which we continue to believe remains scientifically and commercially compelling given its benefits and its convenience for patients.
It's important to highlight that these alternatives will require some small additional spending on the formulation work, but they're not gonna have a material impact on the cash flow, and because we're gonna be paid for all the work that we perform. Over the coming months and quarters, we will continue to update the markets and as we get greater visibility through the discussions with the national authorities in Europe, feedback from the FDA, and as we progress our own formulation and preclinical/clinical work. It's also important to note that we all see a very meaningful global opportunity for this product and its unique non-infringing formulation.
We believe that this product can still reach the market potentially as early as 2028, clearly before 2030, and still many years before the end of the originator product's secondary formulation patents run out. A great opportunity to create value and a great opportunity to make a difference for patients with this product, we continue with confidence. Now as we change gears, I'm delighted to provide an update on news that came out last week on our first exclusivity agreement that's been signed with a U.S. biopharmaceutical company. What does this agreement say? It basically puts Nanoform front and center on the map of exclusivity deals for ultra-high concentration biologics. We are no longer a curiosity, we are a commercial reality.
This exclusivity agreement is basically structured in such a way that we're paid $1 million for the first 12 months to secure exclusivity for a clinically and commercially validated target receptor, then with the right to extend again for a further 12 months against an additional non-refundable payment of $1 million. Subject to progression of the project and moving into the license, we've agreed aggregate milestones that can be up to high tens of millions of US dollars. We've agreed tiered royalties from low to mid-single digits for sales of any successfully commercialized product. On top of all of that, Nanoform will separately be paid for all of the services and supply of Nanoform product throughout the development and commercialization.
I am currently at the DDF conference in Berlin, and we have received a huge amount of interest around our technology as a result of this news coming out. All of the major pharma and biotechs are aware. They're coming up to us and congratulating us on the news, and we're really looking forward to signing many more exclusivity deals like this for this technology. I'm gonna hand over now to Peter, who will walk us through our product kernels and also give a bit of more background to the biologics market. Peter, over to you.
Thanks, Christian. We have continued to actively manage and progress the kernel pipeline, and as Christian said, have a clear plan with maintained momentum on Nanoenzalutamide as well. We have also continued according to plan to progress both Nanoapalutamide and Nanoencorafenib as the most advanced kernels in addition to Nanoenzalutamide. Turning now to biologics. We see a large market forming in subcutaneous delivery of monoclonal antibodies as well as other biologic medicines, and we expect this to continue to be a major theme over the coming years. The deal announced last week, as Christian explained, only furthers and strengthens this conviction. There are three key points on this slide. First, we believe subcutaneous delivery will become the dominant standard for new and marketed biologics.
Second, to enable that shift at scale from IV to subcutaneous delivery, suspension formulations will be important because they can enable high drug concentrations, which in turn means lower injection volumes. Lower injection volumes, again, can enable avoiding complex formulations and devices. This is why we believe the suspension-based approaches will become a preferred choice of technology for subcutaneous delivery. Finally, and crucially for Nanoform, particle properties are critical for the performance of these suspensions, including their robustness, injectability, and of course, the ability to achieve meaningful concentration levels in the product. Because particle properties matter so much for performance, we're confident that Nanoform's technology can and has the possibility to become a technology of choice in enabling subcutaneous delivery. There is an established market and business model for drug delivery technologies that can enable subcutaneous delivery for biologics.
This slide from December that we showed in our capital markets day shows what the situation for exclusivity deals in this space looked like at that time. Looking at what has happened since with an update now from May, we can see that there has been clear maintained momentum here. The slide really highlights why so many biologics developers are actively looking for alternative technologies. For higher dose biologics that really require an enabling technology, the only available alternative so far has largely been using Halozyme's hyaluronidase enzyme to break down the tissue to enable high volumes to be injected. Over the past 10 years, Halozyme has effectively created this market for subcutaneous delivery of biologics by crafting this therapeutic target-based exclusive deals.
This has, of course, as we've noted also in the capital markets, they've been extremely profitable. It has also left for each target a number of companies thirsty for alternative technologies. It's worth highlighting here that the list of target receptors there on the left-hand side is only a fraction of the therapeutic targets that has a product on market or that are in active clinical development. Our assessment is that there are hundreds of these types of therapeutic targets out there.
I think implicit in this slide, as we've said, is also that the first 10 years has only really been the start, that the next decade will really see a substantial part of the rest of the product developers wanting to introduce also subcutaneous alternatives to the market. From our perspective, this dynamic is, of course, super important. We're happy to work with customers, many of whom we've already worked with also on the small molecule side, to enable more competition in subcutaneous delivery.
This is also why the dynamic that Christian talked to on the back of the deal we announced last week, is not only expected from our side, this was what we were hoping for, but also super important and we look forward to now accelerate momentum also in the biologics business. With that, I turn it back to Henri.
Thank you, Peter. I will start the Q&A session. Hold on one second.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Christian Glennie from Stifel. Please go ahead.
Hi. Good morning, guys. Thanks for taking the question. Let's start on the biologics and the deal last week, obviously, and congratulations on that. I guess one obvious sort of starter is, you know, some as much as you can say around ultimately, yeah, the reasons, the rationale perhaps why this partner has gone with your technology, you know, versus obviously those incumbents that are out there in the market. Related to that, you've got this initial exclusivity. What has to happen between, you know, the next effectively 12 months on your side?
What are you required to deliver, or demonstrate such that, the option to roll over for further, 12 months with another EUR 1 million fee, is enabled? Thanks.
Christian , thanks for the question, and there are two parts to it. One is the reasons for why they went with us. If I give a sort of slightly tongue-in-cheek answer, it's because they liked what we had to offer. I'm sure Peter will give you a little bit more details. About the next steps. This is really about now together making sure that we get into clinic with this asset as fast as possible, and that will then unlock parts of what the deal contains. Maybe Peter and/or Christian, you want to give some more flavor.
Maybe I can start then, Christian, then if you sort of build upon that. I think the first thing, of course, is the obvious advantages of subcutaneous delivery over IV.
I think the second thing I would highlight, and as we said last week as well, is the great data they got from advanced preclinical studies with our tech materials. I think that's really sort of like the key things. Christian, maybe you want to give him even more flavor.
Yeah. I won't talk specifically about this company. Obviously they want to remain undisclosed at this point for competitive reasons. You know, the target as well is undisclosed. Suffice it to say that companies are looking at our technology because it offers many advantages to the other technologies that are available. Scalability has been cited as a significant advantage. We're already at a scale where we can produce 10 kilos a week. For many products, that's already commercial scale in the biologic space. You know, the other, one of the other really clear examples of benefits from a formulation perspective is significantly enhanced suspension stability. We have suspension stability now of over 12 months at room temperature with fantastic performance, low sedimentation.
You know, these are just a couple of the reasons, but it's also about relationship. You know, we're a trusted partner. We've established a technology into the pharmaceutical industry, a proprietary technology for our small molecule platform. We have achieved clinical and commercial licenses for that technology. We know how to take technologies to market. We have a very strong engineering group behind our company at the core of our company. People, when they see that, they believe in us. They believe that we are the right partner to help take their products to market with another proprietary technology. That's what we're gonna do.
Okay. Thanks. A follow-up, if I can, around this. I'm just trying to think. Obviously, you are flagging, obviously, good first deal that sparks further interest and therefore potential a bit of a sort of snowball effect here. You're talking confidently around some further deals and interest. Does that have any implications on the sort of investments, I guess, ultimately you need to put behind that to support that level? You know, if that interest is growing, obviously, you have had that sort of reduction on the sort of headcount previously that rebases things in the business. You know, is there some incremental investments maybe that's, you know, would clearly be justified to support the biologics opportunity?
More broadly, you know, thinking about how you fund the sort of GMP capabilities as well in the business, is that largely gonna be sort of partner-funded led, or how else are you thinking about funding that capability? Thanks.
If I take it on a high level first, it's clear that this deal validates what we have and should and will have any positive impact in how we are gonna fund this necessary investment. Albert, do you wanna give a little bit more flavor on how you think about this?
Yes. What we have said before is that on the small molecule side, we built on our own dime, the factory. We will not do it on the biologics. Here we are looking for external partners, for the funding. This means that we are not expecting any CapEx from the GMP build-out of any significance.
Okay. Thank you. Thanks, guys.
Thanks.
The next question comes from Christopher from SEB. Please go ahead.
Hi there. Thanks for taking my questions. Chris Uhde from SEB. I guess the first one I was wondering about was just the time to GMP on the biologics platform. What can you tell us about that?
I can give you a very short answer. As fast as possible is what we will achieve. There are basically either a scenario where we do it in Viikki in Finland, and then we're also looking into whether we can do it faster by having it outside Viikki. Right now, the jury is still out on this. I don't wanna give you exact dates because it's hard to know it, the exact dates, but as fast as possible is what we're aiming for.
If I could just-
Albert or Peter, do you wanna add something to this? Did you have a follow-up question, Chris?
Well, just on that, if I could try to narrow it a little bit. Would you think that, you know, within two years is reasonably likely, or not prepared to say at this point?
Faster than that is what we aim for. We were able to do it on the small molecule, faster than that, and that is clearly what we're aiming for in this biologics case.
Okay. I guess my next question was in terms of the capability of the technology and your differentiation. Obviously now you've shown that from a PK perspective, there doesn't seem to be a terribly large difference between the high hyaluronidase platforms and yours, which is obviously tremendously beneficial for you when it comes to trying to bring sort of a second player into the subcutaneous space, getting around exclusivities and so on that Halozyme might have. Would it make sense then, I mean, is there a scope to change the PK profile further, for instance, by combining what you do with a high hyaluronidase approach? Is this something that you are actively considering?
That's a complicated question. Peter, do you have anything that you would like to say on that?
It's, of course, a good question and rest assured that we are evaluating all kinds of different alternatives from an R&D perspective. I think the key for us at this moment in time is that for most of the products out there, we can achieve so high concentrations in the suspensions as it looks like now, that it's hard to see a need for combining it with hyaluronidase, to be honest. Of course, that might be something that in certain specific products would make sense.
Okay. In terms of just kind of getting a sense of the scope, or if there are data points you can share around what you said, Christian, on stability. Have you looked, do you have lactate dehydrogenase stability data that you can share at room temperature? Is that?
I'm sorry, Christopher, you're breaking up a little bit. I don't know if you could repeat that question.
Sorry. Hopefully it'll come through. Lactate dehydrogenase, I remember you had shown reformulation of that, and so I was wondering if you have you know, specific numbers you can share on the stability of that at room temperature. Could you hear that?
Stability for hyaluronidase? No.
No, lactate dehydrogenase.
I'd need to check, Christopher, on that one. I mean, we're most focused on when, you know, we use some enzymes at the beginning because they're, you know, off the shelf, and they're easy to use when we're trying to demonstrate data. Then we did insulin. We've got, you know, over a year and a half shelf life stability of insulin at room temperature as a dry powder.
Okay. No, that's very helpful. I was just trying to get some benchmark. Yeah.
Yeah. Yes. It's not just the trastuzumab, where we've got a year's worth of suspension stability, but it's many other materials as well. It's across the board. I think the key thing is the technology is independent of molecule. It's able to create very stable particles that are highly active after processing with unique particle properties that give benefits to formulations that have enhanced stability and formulation performance. And that stability is, we believe, and from feedback from our innovative partners, something they haven't seen with other technology.
Great. That's great. I guess I was wondering on the Nanoenzalutamide, just a clarification question, I guess. To meet the Cmax requirement, would it be enough simply to play with the parameters of the CESS process, so I guess particle size alone, or are there other DS aspects you need to bring into it?
This starts to become very technical. In principle, you can engineer either via the CESS parameters or via the nano and sub-formulation parameters. This is what the guys are now looking into, which route is faster and easier to achieve what we want and need to achieve.
Okay, thanks. If I could just ask one last question. 2026 phasing, you had quite a strong start to the year, and from what I gather, the first quarter probably exceeded expectations a little bit on the cash burn, bringing down the cash burn. Should we think that look at this in terms of revenue and so on from a sort of front-end loaded perspective, or what can you say about phasing? Thanks.
Albert, do you wanna take that?
No, I think that what we expect is that we will continue to see good income growth, and we expect to see good reduction in the operating expenses. What we have actually said on the operating expenses side is that we didn't see much of the impact from the cost cuts yet in the first quarter. They will grow in the second quarter. The full impact will be seen in the third quarter. I think that this year has started well, but we expect it to continue on the trend of improvement.
Thank you very much, and a very big congratulations on the licensing deal.
Thank you.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Thank you, operator. On behalf of Nanoform, I would like to thank you all for participating today. If you have more questions, just reach out to us. We wish everybody a great Tuesday afternoon and evening, and thank you and goodbye.