Good afternoon, all, and a warm welcome to Nanoform's Fourth Quarter 2023 Report Presentation. My name is Henri von Haartman, and I'm your Director of Investor Relations. Today, our CEO, Edward Häggström, CFO, Albert Häggström, Chief Commercial Officer, Christian Jones, General Counsel, Peter Hänninen, and VP Strategic Insights, Jamie Unwin, will present to you. This presentation is webcasted through Financial Hearings , and there is also the possibility to call in and listen by phone. The presentation slides are shown throughout the webcast, and they can also be found in the investor section in our web page. After the presentation, we will hold a Q&A, and it's possible to call in and ask questions by calling in. Today, we will start with a short introduction to Nanoform, and then move on to 2023 highlights, then financials, then new blockbuster project news, and conclude with commercial.
With these words, our CEO, founder, Professor Edward Häggström, please go ahead.
Thank you, Henri, and welcome also on my behalf. Before we start flipping slides, let me give you a brief overview of where we are and where we are going. We have a strong momentum, which now starts to carry us towards launch preparations. We made another breakthrough, a drug called apalutamide, which is sold under the brand name ERLEADA. This here is together with the enzalutamide, sold under the brand name XTANDI, a clear indication that the three years of work, of work that we have put into nanoformulation starts to pay off. These two taken together, will make us able to start to address assets in the ASD group of medicines. This is a group of approximately 50 medicines, selling for approximately $50 billion per year. So how did we get there?
We created something which we call nanoformulation, and you will hear much more about this. This was something that also Business Finland, which is the governmental technology development center in Finland, very fast understood the value of. So they granted us a grant, and you will hear a little bit about that. So for 2024, it's really about putting the agreements in place that will put us in a good position for those pre-launch preparations and launch preparations. Next slide, please. So where are we? We are in the pharma industry. It has a big problem, and the problem is that even though a lot of money is invested in R&D, too few new medicines enter the market every year. Next. Here you can see one way of looking at Nanoform. So it's a company that's been around for a while.
We have the functions, we have a good ownership, and we have four platforms that are patent-protected. Next, please. This is another way of looking at Nanoform. So the four platforms that I was alluded to relates to small molecules, large molecules, formulation, and AI. Today, it's gonna be a lot about formulation. Next, please. So what do we do? We nanoform active pharmaceutical ingredients. Why do we do this? Because one of the biggest issues in the pharma industry is that even though you have potent medicines, potent active pharmaceutical ingredients, they are poorly bioavailable, which means that the body is not taking them up. This problem is a growing one. Next, please. So why does it pay to make those small granules? The answer is very simple. When you make them small, the specific surface area goes up.
Think instead of having coarse sugar, you have fine sugar, it dissolves better. Next, please. When we do this, a lot of good stuff happens. It derives from the increased bioavailability. We can enable new drugs, we can reduce the dose, we can potentially reduce side effects, we can play a patent game. When we don't have to make so much drug because it's taken up more effectively, we don't have to produce so much of it, and we can have a smaller plant, and the planet says thank you, because the environmental burden is smaller. Today, we are gonna talk a lot about the IP, and we are also gonna talk about how by nanoformulation we can play a new game. Keep apart the two words, nanoforming and nanoformulation. Next, please.
So here we can see that we work with new drugs, we enable them, we work with existing drugs, we improve them, and we give unsuccessful drug candidates a second chance. Next, please. So basically, our way of working is very simple. We work with both big pharma, mid-sized, and specialty pharma and biotechs. They own the API, they ship it to us, we nanoform it, and we nanoformulate it, and then we ship it back. This means that they pay for service, they pay for kilograms, and they also pay a royalty. Next, please. Now, I'm gonna talk briefly about the highlights for 2023. Next, please. As you can see, we have been busy. I wanna first talk about the upper half. This is gonna be about nano-enzalutamide and nano-apalutamide.
These are blockbuster drugs, they exist on the market, and we have been able to, by nano-formulating, make a very interesting value proposition. You will hear more about this. These two are part of ASDs, amorphous solid dispersions. These are drugs that have been produced by a certain technology in a certain way. You will hear a little bit more about that. This was the group with 50 medicines that sold for $50 billion each, and we have now, in rapid succession, shown that we can make a significant contribution onto two of them, and our intention is to copy-paste against the others. Last year, we also did a lot of the POC projects that we have been talking about earlier, and here you can see the Business Finland grant. This doesn't mean that we would not have been working on the POC machine. No, we have.
We have run a lot of projects through our processing. We have used STARMAP, and we have also used our biologics lines. Biologics for antibodies, STARMAP to identify winners, and also we have licensed it to AstraZeneca. Here you can see the TargeTex project about glioblastoma also, which received funding and FDA Orphan Drug Designation. Next, please. With this, I say thank you at this moment, and I hand over to Albert. Albert, please.
Thank you, Edward. I will now go through some of the financial numbers. If we start with number of employees and number of lines, you can see that we added 15 people, so we're 165 at the end of the year. We feel this is a very strong number, and we don't plan to increase it very much, rather have it at that level in the coming year. We also added one line on the biologics side. Here, it's the same thing. Rather than adding capacity, we want to utilize it more efficiently, meaning doing more projects on the same number of lines. Here you can see on the right-hand side that it says that we have one GMP line. That is the one that is stamped by Fimea, approved by Fimea.
Then line number 2 and number 3, we expect Fimea to come and visit us, and hopefully give us the license for that also already before summer, so during the first half of the year. Then we would have 3 GMP lines. The first line we have already up and running, and which has been used, for example, for the enzalutamide case, that is also becoming more and more efficient as we develop the technology further. But we are very confident in our fleet. We are very proud of in our fleet of lines and people, and we feel that we have a lot of capacity, and we can do many projects in the coming years with this capacity.
If we then go and look at the number of projects before we look at the revenue, especially the Q4 revenue needs a little bit of explanation. The underlying trend has not changed that much. It's more of a coincidence of several factors. So here you can see that, on the left-hand side, in the fourth quarter, we signed 5 non-GMP. That was more than double what we signed in the fourth quarter last year, and that took us up to a rolling 12-month number, which was an all-time high of 22. So in 2023, we signed 22 new projects. That can be compared with 16 in the previous year. On the right-hand side, on the other hand, you can see that the number of projects generating revenue in the quarter fell.
It had been quite stable at more than 20, and now it fell to 15 in the fourth quarter. The reason for that was that in the second half of 2022, especially in the fourth quarter, we had a low income on new projects, and several of the projects that we also signed in the beginning of 2023, there were some delays in API and some other small factors, meaning that we hadn't started them yet in the fourth quarter, meaning that we had several projects that closed, and before you can start the new ones, we had a smaller amount of projects in the fourth quarter. We expect that to go up again to a normalized level in this year. The same thing can be seen here in the following slide.
So, you see the lag between signing projects and starting to revenue and recognizing revenue from them. So the low point in the black line, meaning the rolling 12 months number of projects signed, happened already at the end of 2022, early 2023, when it fell to 15. Now, you had the same number of projects generating revenue, 15 in the fourth quarter. But you can also see that the number of signed project, the black line, has already increased over the last 3, 4 quarters. So that what we say, that there is a lag between projects signed and the revenues recognized in the quarters. This is a way of looking at it from a quarterly point of view. Remember that when you look at it from a yearly point of view, the fluctuations are smaller.
So here on the right-hand side, that you can see that the total number of projects generating revenue, the fluctuations is smaller, so it was still 33 in 2023, which can be compared to 35 in 2022, so there was small parity. This is seeing a number of projects signed, so here you can see the fourth quarter, last four years. So fourth quarter of 2023 was a good quarter, and then you can see annual numbers. This is important that both year 2021 and 2023, 2022, were very difficult years for the, especially the biotech industry. So the biotech index peaked in first quarter of 2021, and then it started to go down, and the funding became tougher and tougher.
That meant that many companies, even CDMOs, especially those catering to biotechs, saw dramatic drops in number of projects. I read somewhere that the number of clinical trials globally also fell last year by 20% compared to the previous year. However, even in this declining market, we saw growth in number of projects. So in 2023, we had a significant growth on number of projects from 17 to 22, and that was, of course, driven more by large companies, while we, among smaller biotechs especially, saw sort of difficulties of getting funding and a smaller amount. But the underlying trend among the large companies and their interest in Nanoform increased, taking the full number up very clearly.
On the right-hand side, you can see that, cumulative we, we have already signed and started, almost 70 non-GMP projects, and of the, started projects, so far, 4 has moved to GMP. This proportion- proportion is, of course, the proportion we want to go up in the coming years. So when people get more confident in nanoforming, when we get more projects like enzalutamide and apalutamide, that shows the power of nanoforming, then we expect also the, the companies who own APIs, on the NCE side, the new chemical entity side, are- have the confidence of, of taking our projects from pre-clinic to clinic.
Also, an improvement in the funding situation, and here we already see now, in the beginning of the year and end of last year, we see clearly better funding situation, for example, in the U.S., where money is starting to flow again and, and then large pharma are starting to do acquisitions and so forth. So we feel comfortable about this year and, and the coming year. Also, when it comes to the NCE and the POC projects and the conversion to GMP projects. If we then go to the quarterly revenue number, and here you can see the, the numbers are still small, so we are talking about differences of hundreds of thousands of EUR.
But here you can see that the fourth quarter was not, of course, a good quarter from a top-line point of view, but as I explained, there were some reasons for that. One reason is also that we had a few projects where they were booked negative revenue. So if you go above the budgeted number of hours, we always work a lot. So if we have a situation where we can have a successful outcome of the project, even though it takes more hours, we will do the extra work for the clients. We have done it several times, and it's been successful strategy, but that of course, will mean that from time to time, you will have impacts on the quarterly numbers from projects where you book negative revenue then.
On the rolling twelve months to the right-hand side, you see smaller, changes. There you can see that the full year number was 2.6 versus 3.5, and of course, in the coming years, we need to get that number up significantly. One thing that we have also talked about is the, gross margin and the materials costs, and especially around the, the project enzalutamide. And here you can see that we have already got, that turned around, so the materials and services costs stemming from the, QC, GMP QC laboratory, that we have not yet up and running, or we have it up and running, but we have not the necessary stamps, which we expect to get before summer.
But you can see it already here that now in the project is we have produced the batches, we have produced the material, we have done the clinical studies, so the materials costs have come down, and we expect to be more efficient also on this side in 2024 compared to 2023. If you exclude the costs from the GMP QC side, our underlying gross margin was about 90%. And final slide on the finance side, which I'm most happy about, is the fact that every quarter or during the year, on a quarterly basis, the cash has continued to improve. In last quarter, the cash burn was EUR 4.3 million, compared to EUR 7.6 million one year earlier. And that means, of course, that we are on a right trajectory.
You can see it on the right-hand side, on rolling twelve months, operating free cash flow. We expect this trend to continue in the coming year and years. And here, of course, the fact that we have a very strong balance sheet of EUR 47.5 million in cash and short-term government bonds puts us in a very strong position, and we have no debt. With this, I will turn give the word over to Peter and talk about the very interesting data we now have already on ASDs and on ASDs in general. Peter, please.
Thank you, Albert. So to start off, just by way of introduction, my name is Peter Hänninen, and in my role, among other responsibilities, I oversee all IP-related matters at Nanoform. I've worked with IP-driven transactions for the past 10+ years and with a particular focus always on the life sciences, and in that, also with Nanoform since the founding of the company. First with Nanoform as a client when I was in private practice, and since 2020, now full time. Then if we jump into the actual topic. So amorphous solid dispersions, or ASDs, as they are commonly known, is really the technology that has enabled a past generation of poorly soluble drugs. So this is a group of approximately 50 products on the market, selling for an estimated $50 billion annually, and with hundreds estimated to be in development.
Amorphous materials are notoriously unstable, so requiring a high amount of polymers to stabilize the drug product. This means that in some cases, less than 10% of the content in a pill or a tablet is actually the drug substance that makes the patient better, and the rest, polymers and other excipients. For the patient, this means large or many tablets may need to be taken. Our nanocrystalline formulation platform enables significantly higher drug loads in the product. For the patient, this means smaller pills and a reduced pill burden. My colleague Jamie will next describe what this has meant for the two prostate cancer drugs that we have recently provided updates on. If we now turn to a commercial and IP perspective, with our nanocrystalline formulation platform, we can provide a really attractive opportunity for both originators and value-added medicine companies.
For the originator, we can create an attractive lifecycle management opportunity, at the same time providing an improved product for patients and extending the IP protection. We expect that several aspects of our novel nanocrystalline formulations will be patentable. In addition, of course, the application of our proprietary nanoparticle manufacturing technology provides a strong additional layer of protection to the product. From the perspective of the generic market, many of the ASD-based drugs are protected by patents that claim aspects of the amorphous formulation. These secondary patents often extend several years beyond the expiry of the drug substance patent that covers the API molecule itself. In the case of enzalutamide, just as an example, in the U.S. and Europe, this difference is up to 5-6 years.
In these cases, our nanocrystalline formulations may provide an opportunity to enter the market already at the expiry of the drug substance patent, meaning significantly earlier than what would otherwise be possible with an ASD-based formulation. This creates a very attractive IP-based commercial opportunity, on top of which, of course, the possibility to have an improved product as well. This slide highlights how we've been able to apply our AI tool, STARMAP®, to identify that almost 80% of the 46 ASD drugs that we've assessed sit in the sweet spot for nanoforming, which is. We've now communicated news around two drugs in this group, but we are, of course, already actively looking at the next ones of those 80%. And now I turn it over to my colleague, Jamie Unwin, please.
Thank you, Peter. I'm Jamie Unwin. I'm the VP Strategic Insights at Nanoform, just by way of introduction, a PhD molecular biologist by training, and before joining Nanoform 3 years ago, I spent 23 years on the big pharma side, including leadership roles at GSK and J&J Oncology. I've informed and participated in the commercial launch of 23 new medicines, including 2 blockbuster prostate cancer medicines, namely Zytiga, abiraterone, and ERLEADA, apalutamide. I'm hugely excited to be here today to talk to you about the very recent developments we've made in the prostate cancer space, namely our nano-enzalutamide and nano-apalutamide programs. Our decision to progress both of these programs is grounded in 1 common insight. That is, that prostate cancer patients struggle to comply with their medicines because they have problems swallowing their daily pills, simply because there are too many or they're too large.
Our most advanced program, nano-enzalutamide, or Project Blockbuster, as we've referred to it recently, is developing a single tablet version of the Astellas Pfizer blockbuster medicine, Xtandi. Now, our Nanoforming technology, and as Peter's just described, our unique intellectual property, has developed a very high drug load formulation that means we can offer the whole 160 milligram daily dose in a single tablet, rather than the two or four pills that patients currently need to take. We've done this as part of the On Concept consortium, with four equal owners, and the project represents value either for an originator to develop a novel product, and as Peter described, to use our IP to extend the brand patent runway, or for a value-added medicine company to launch a novel product before the formulation patent expires.
Basically, we're not going to stop until we get this great innovation in the hands of patients, and we're exploring every possible avenue to find the best commercial partner or partners for it. Very excitingly, back in January, we were able to communicate the top-line results from a human comparative bioequivalence study for Nano-enzalutamide. In this study, we compared our single tablet with four capsules of XTANDI. The study gave us sufficient confidence to initiate the manufacture of registration batches and move to conduct a pivotal bioequivalence study with a readout in 2025. We aim to launch Nano-enzalutamide at the earliest possible opportunity, which represents 2027 in the U.S. and 2028 in the E.U., and the consortium is actively seeking commercial partners to achieve this.
We were delighted this morning to communicate positive data on our second program in prostate cancer, Nano-apalutamide, a more patient-centric version of Johnson & Johnson's ERLEADA. Now, Johnson & Johnson, encouragingly, have already made advances in reducing tablet burden, and this year they launched their own single tablet regimen. But we're going even further. Our novel nanocrystal formulation can offer a much higher drug load, and as such, offers the possibility to make a smaller single tablet, which should be easier to swallow. So this morning, we reported the positive outcome of an animal study, and we were very excited to see we can achieve a high Cmax, a fast Tmax, and very similar bioavailabilities to the originator product. So in the coming months, we'll, of course, conduct additional studies to investigate just how small a tablet we can make and hopefully progress this as a clinical candidate.
As with enzalutamide or Nano-enzalutamide, we seek commercial partners to help get this innovation to patients, be that the originator or any value-added medicine company or companies willing to partner with us on this journey. Peter, back to you.
Thanks, Jamie. So, as Edward mentioned, we were pleased to communicate two weeks back that Business Finland also saw the opportunity to apply CESS as an ingredient in formulation and award us, awarded us with EUR 4.3 million in matching funding to create nanoformulation platforms across four key delivery areas: oral, in which we already communicated promising results with two blockbuster products, so the nano-apalutamide and nano-enzalutamide that were discussed today; long-acting injectables, inhaled, and high-concentration subcutaneous injections of biologics. We're already hard at work with this and look forward to communicate results as the programs progress. With that, I would turn it over to our Chief Commercial Officer, Christian Jones. Please, Christian.
Thank you, Peter, and a pleasure to talk to those on the call today. Further demonstration of value for apalutamide, enzalutamide, and ASDs in general is a hugely exciting one. We have seen great success in increasing drug load in not only oral drug products, but also in hydrogels, as demonstrated by our relationship with TargeTex, where we showed we could get up to 200 x the drug load in a hydrogel formulation. We've also demonstrated this in the work conducted with Celanese, a Fortune 500 company, on long-acting implants. Most recently, we've shown great promise in the field of monoclonal antibodies, where we can maximize high drug load per unit volume for subcutaneous delivery. Now, we have the opportunity with nano-enzalutamide to have our technology in a product on the market by 2027.
This is sooner than we expected and nicely reflects the opportunity for fast-tracking our technology to add value for patients, payers, practitioners, and our partners. Here you can see we had a record number of project signings in 2023, despite the challenging market conditions. This is a very positive sign as the market starts to pick up and our relationships are further strengthened with major pharma. I'm delighted to share that not only have we been able to increase our projects significantly, we have also seen strong customer increase. Of course, our customers with a number of 41 don't match our project numbers of 71, which means we are now developing deeper and trusted relationships, where some of our partners provide many more than just one molecule to us.
As you can see, we have a diversified customer base across small biotechs to major pharma, and we have relationships with 10 of the top 20 pharma companies. We have matured as a company, and we have now reached a point where some major pharma are happy to show publicly that they work with Nanoform and we have great relationships with other special organizations like Bill and Melinda Gates Foundation, where we look to create value for those in the developing world. This slide represents the depth and the breadth of the partnerships we have and the diversity of therapeutic areas we work in. As you can clearly see, we have the greatest proportion of projects in preclinical, which is what we expect, as this is where most drugs struggle with bioavailability, and our partners are clearly looking for solutions prior to moving into phase I clinical studies.
However, you will also see we are highly active in lifecycle management and potential 505(b)(2) deals. And finally, not only have we demonstrated a super exciting hotspot in prostate cancer, as evidenced by our news in Nano-enzalutamide and Nano-apalutamide, we also see similar hotspots in the fields of CNS, as seen here in the neurodegenerative space, and also the HIV area represents a great opportunity for improving existing projects. Of course, these are just highlights and by no means represent the entire universe of the possible for Nanoforming. We can create value across most marketed products, irrespective of therapeutic area, and most importantly, we can add significant value to preclinical and clinical assets to either improve them or, in some cases, actually enable them to progress forward towards the market and to create value for the most important people, the patients.
With that, let's move to Q&A.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Christopher Uhde from SEB. Please go ahead.
Hi there. Thanks for taking my questions. Christopher Uhde from SEB. So, my first question is on project flow. So, H2 2023, the new projects are low, similarly to last year. Yes, a little bit higher, but still down compared to H1. Last year, you talked a lot about the shock from the Ukraine war. What's going on with H2 overall this year? And what does that say about the outlook for H1? I noticed that you didn't show the number of proposals sent out in this presentation. Is that at all a signal that the numbers might be down still in H1? That's my first question. Thanks.
Christopher, thanks for the question, and I think what you really see in H2 last year is the fact that we had a lot of biotechs and their funding situation is getting tougher and tougher, so fewer get more money. That's what you have seen there. Then related to the outlook for H1, Christian can give you the details on that, but my take is we are clearly seeing light at the horizon. Christian, please. If I may say that we don't give outlooks for half years. What we have said is that we expect more projects this year, but on a general level, what we are seeing is that the interest from the big pharma has continued to increase, and now we are seeing some pickup among the biotechs also.
You see deals and you see more, more placement, and you see more deals from the, from the big pharmas. So we expect the positive trend to continue and the trend with higher number of, of, both non-GMP and GMP projects during 2024 compared to 2023. If you want to talk generally, Christian, about the, the interaction with clients and, and, the response to the news both around enzalutamide and apalutamide, and what kind of power they have for also signing on the NCE side, please go ahead.
Of course. Last year was, I think, a difficult year for most companies trying to raise money in the biotech area, and we certainly saw that reflected in some of the engagements we had, where we may have had proposals outstanding, but they were just waiting for finance to close. And sometimes that didn't actually come. But we still managed to get a record number of signings last year, despite those conditions. And I think that's a good reflection on where we've matured as a company and the relationships we've developed with major pharma that are perhaps more financially stable, as well. And those relationships are further developing and broadening, which is great.
We certainly see a pickup and an increased level of interest given the most recent news we've had on enzalutamide, and we expect to see further interest given the news that came out today on apalutamide. It's validation of the technology, and ultimately, our customers are always looking for that. The pharmaceutical industry, by its very nature, is highly conservative, and so, you know, likes to see data points that reference the technology has been proven, and then, you know, not many want to be first to adopt technology, many want to follow. So, I do believe that we will have a positive year this year, as a function of the great results that we've demonstrated so far.
Thanks very much. And so my second question, and maybe I'll throw in the third one there just now. The second question is, how much of Q4 revenue, well, let's say the miss was negative revenue, when should we expect that effect to sort of diminish and then eventually wash out? And then just on the timing of the Fimea inspection, have they confirmed that they will inspect each of the QC, the new lines, and the sort of, well, the multi-API facility kind of aspects, to get the license all at the same inspection? And can you give any more clarity on the sort of timing of that beyond just H1, earlier or later?
Sure.
Thanks.
So, Christopher, if I take the latter part of the question, and Albert then take the earlier part of the question. So Fimea basically has the right to do whatever they want, and they don't give promises. In practice, they are, however, bound by the fact that they need to make sure that the pharma sector in Finland grows. Our job is to make sure that everything is inspection-ready, and I can confirm that GMP one, two, three, and GMP QC lab are inspection-ready. So, what they're gonna do or not gonna do, we cannot know, but we are inspection-ready.
Okay, it's helpful. Thanks.
Yeah, and if I answer the other one, just to comment, so we got the multi-API license already last year. So what they now just need to do is to look at the QC lab, GMP lab, and then look at the line two and three. We already have the multi-API for the facility. But if we then look at the Q4, so we have not said exactly how, what the impact was, but because the revenue numbers are so small still, if you have a project that is more than EUR 1 million and it becomes 10% or 20% longer in time and cost, of course, that has an impact on the revenue recognition, especially if it happens in one quarter.
But we expect the impact from that kind of impacts to be behind us now in the fourth quarter, and during the coming quarters, we should not have them. But of course, there can always be impacts. And remember, our strategy is always to go the extra mile, even if that means that quarterly numbers fluctuate a little bit more. On an annual level, they do not impact.
Okay. And then I think, like, a maybe a bit more fun question. So R&D costs, so how much of that is for, like, the specific API projects, sort of blockbuster projects? Just trying to figure out how many you could do. Should we expect more to come? Can you, sort of, can, can you take advantage of periods of spare capacity, like, maybe arising now in, in the non-GMP to do, you know, a bit more of this kind of work in those lull periods?
Christopher, your question is interesting and intricate. I'll try to give you a very clear answer. The most important project we work on now is, of course, the enzalutamide project, as you can imagine. The formulation work which enabled that project was the most important R&D effort and breakthrough that we did. The Fimea grant and also the co-funding that we provide means that we're gonna put on the order of EUR 9-10 million into developing those formulation capabilities, as stated earlier. We play every week, almost on day-to-day accuracy, a balancing game, where we develop the technology, we serve the clients, and we develop our ability to fast shift from one project to the other. It's really like serving, building, and developing at the same time.
The exact numbers for R&D cost, Albert can maybe give you some kind of numbers for that, but in practice, what we now do is we scale up, we become more cost effective as we do, and we become better at doing nano formulations.
Yeah, just a clarification. So the grant, of course, came from Business Finland, not Fimea.
Oh, sorry.
But when it comes to the R&D, so think of it, you know, you know us, we don't sit and wait, we always do stuff. When you have a couple of years when you had a few lines and lots of projects, then you didn't have time to do so much internal work. If you then have a month or two or three, where you have more sort of slack in the situation because of waiting for APIs or fewer signings than expected, of course, we utilize that to do internal work then.
What you see now is also part of that, that we always want to do internal work, push this technology as fast as possible forward, and that is, of course, why we are so happy that, again, Nanoform succeeded on the first try. So we succeeded in the enzalutamide, and now we also succeeded on the apalutamide on the first try. Got great results and, you can certainly expect us to have more news in the coming quarters and years, based on the fact that we are now looking into finding much more of these examples within the ASDs and also within inhaled injectables and in biologics. So, so this is actually, from time to time, it's a good thing that you have a little bit more time to do internal work and, and so it's a good thing.
Great. Thanks so much. Thanks.
The next question comes from Christian Glennie from Stifel. Please go ahead.
Hi, good afternoon. A few questions then, please. I'm just thinking about the, you know, the number of lines, and then the projects. You know, last couple of years it's been largely flat number of lines. One more additional last year. So thinking more on the non-GMP side. And then, but then you've also had a sort of largely flat number of projects that are running through those lines over the last couple of years as well, if you sort of overlay the two charts. Whereas before, you know, as you were increasing the lines, you're also getting increasing number of projects.
So just to clarify—just to get a sense for, you know, this comment around, you know, you're happy with the number of lines you got, you just need a, you know, you're confident you'll get more projects per line. Just to point to the evidence of that and what we should expect over the next couple of years.
Sure. So if I first go back to the data points, maybe a year back when we showed that we can run five POC projects on a line in a year, I think that's a good number to remember. Then it's also very important to understand that the lines are used to do POC projects, to do POP projects, to do tech transfer projects, and to do development projects. So when you see here a certain number of commercial projects, that's only part of the work we do on the lines. Did this answer your question?
Okay. So you currently have work to around about sort of five POCs per line at the moment-
No, what we said is that we showed already in 2022 that we could do on one line, 5 POCs, and that we see no reasons why we could not do that on all the lines, if necessary. So what we are saying is that we have a very impressive fleet of nanoforming lines, and we can do many more projects with the existing fleet before we need to add lines. However, of course, for example, if another innovator would like to have a facility next to theirs with lines in it, then of course, we would be happy to participate in a project like that.
Using our POC.
Yeah. Okay, thank you. And then thinking about the slide on your, you know, your customer pipeline or sort of projects at stage of development. I know, I know you're making the point it's not, not necessarily the stage that your project is. But say, say, if you look at the clinical candidates that are there, you know, what's the mix there in terms of candidates that may already be in the clinic, that, that may still have some sort of solubility issue, or, or is it just looking at new formulations, new, new routes of delivery? What's, what's the mix in terms of the programs there? Maybe just get a bit of a flavor for those, certainly for those clinical ones, I guess.
So, I don't have a number for you. I think it's a good question, and we can certainly look into that. Generally speaking, think about it like this, since IPO, we are 3 years into the game a little bit more, and in the beginning, we were not putting that much effort into the formulation because we were focusing on the Nanoforming part. That means that many of the projects that we have taken in has, of course, come in under those stars, where we mainly by Nanoforming. Now, later on, I would say that almost every proposal that goes out has a Nanoformulation part to it, and then, the latest proposal have, of course, this nanocrystallization, which is sort of the latest breakthrough that we have in the Nanoformulation part.
But I don't have a number to give you from the top of my head.
Maybe I can comment as to the projects. So most of these projects, phase I or phase II, on that slide, are projects that have issues. They have some kind of problem that the customers, our partners need solving, and hence they've come to us to try to solve them. We do have projects that are looking at drug reformulations or second-generation products for existing pipeline assets. But the majority of the programs are where there is a significant problem, and they're hoping that our technology may be able to help it.
And Chris, Christian, or going forward, to me, it's fairly clear that, there will be a formulation part in the work we do. Based on what we have learned so far, the formulation of nanoparticles is not a simple thing to do, and, I almost dare to say that we are starting to become really good at it.
Thanks. And then my final one would be, I know you don't, you don't typically give sort of specific guidance here, but maybe a bit of a feel for it. Obviously, you kind of said you're at where you are in terms of, you know, headcount and things like that, the largely cost, that cost base is now kind of largely set, no expectations for significant increases this year particularly. But then how should we think about sort of, you know, the evolution of the revenues during 2024, maybe as it relates to expectations around, you know, some GMP projects and things like that, that might come through? Just a bit of a sense for how you see revenues this year.
Albert, would you like to take that?
So our thinking is that we expect to sign more non-GMP projects, and we expect to sign more GMP projects, and both of them, of course, will have an impact on the top line. And of course, when we sign licensing agreements, if there are down payments related to those, re-signing of those deals, those will also have an impact on the revenue. One additional thing that will have an impact on the, most likely booked under other income, is of course the grant from the Business Finland, which means that that will also have a positive impact to some extent on the cash flow, as we already have the people and the resources to do much of the work in that project.
There is some external work in that, but a big part of it is still people who are we already have employed that will do part of the work. So all these factors, more projects and the grant and also potential fees related to signing licensing agreements should have an impact on the cash flow and of course on the top line.
Okay, thank you.
Thank you.
The next question comes from Sami Sarkamies from Danske Bank. Please go ahead.
Hi, I have a couple of questions. We'll take this one by one. Starting from Project Blockbuster. You're expecting to sign commercial deals on Blockbuster before initiating the pivotal study. Just wanted to check if you're still targeting a deal with the originator as counterparty.
The first part of your question is, do we intend to try to sign the deal before the pivotal study? We will try to do so, yes. It is in our strategy that we always will try to accommodate if originator want to come and work with us, and we see that as possible. This year, we will work on getting the deals and agreements signed in order to move this project forward as effectively as possible.
Okay, and then, you're expecting milestones from signing of this agreement on Blockbuster this year. Any, any sort of guidance on what sort of levels we could be talking about? Just curious if you're planning to retain a material upside in this program going forward, or are you, are you sort of just looking to cover costs from the pivotal study?
Albert, if you would like to take the cost part. On a strategic level, what is really important from this is that it's an opportunity to place a drug on the market that is better than what's there, and that means that we establish Nanoform as a company with a drug on the market. Albert, monitor please.
On a general level, all the partners in the consortium want to sign agreements already this year before the pivotal studies start. And if you sign a deal with value-added medicine companies, usually the royalty levels are higher and the milestones are lower. If you sign a deal with originators, usually it can be the other way around, that the milestones are bigger and the royalty levels are lower. The consortium plan to keep part of the upside, of course, depending on with who you make the deals. And the good thing is, of course, is that the cost of these pivotal studies and these products and projects are not that high.
So if you think between EUR 5 million-EUR 10 million in total, and there are four parties involved, that means that Nanoform's part of the costs is not that high. It's EUR 1 million-EUR 2 million. You can think of it like that. And then, of course, when you do deals, the milestones can be divided between, for example, something when you sign, something when you have done the manufacturing and the registration batches, potentially something when you get the dossiers ready and then when you launch. We don't have anything out of the ordinary in these negotiations. This is just industry standards, industry practice so w e will do the way the industry does it. It's not like we have a new business model.
This is exactly the way the industry does it, and it depends very much on who you are dealing with, when you do the deal, and then the product and the project. And what we know is that this project is very interesting for many potential counterparties, and the consortium is very happy about the project.
Okay, thanks. And then moving on .
Then, sorry, I will follow up.
A little bit on that. Also relate the difference now, potentially we're asking about the apalutamide. There, the situation is a little bit different. So in apalutamide, this is a project that is completely owned by Nanoform at this stage. Of course, there are also both, of course, originator, but also other ones, but it's a similar situation. We want to make deals or deal in order to make sure that the product goes to the market. We get somebody to fund part of the development, but also somebody who has the knowledge to take products to the market. So there, there's a difference that there we are the full owner of the rights.
Yeah. And maybe a follow-up regarding the apalutamide project. Do you see a role in that for any of the members in Project Blockbuster, or will that be sort of handled totally separately?
So at this point in time, this has been a Nanoform project. The consortium is aware of it, and as you saw, the results were pretty recent. So, we haven't had time to deliberate a lot on how to exactly move forward in a tactical fashion now. But we will come back to that, and, and we are open to play with entities that are effective in bringing this forward. Because remember, the little bit bigger game is we want to build a large bridgehead in the ASD group, and that means that we will need to have many of these, and we will need to have a way to deal with many of these assets.
And, of course, we don't want to pay everything. We want to have co-payers with us in order to be able to move faster forward and having more of these ASD assets that we work with. And we, of course, have been very happy with working with the consortium, so of course, we will talk with them also. We will talk with lots of people around apalutamide also.
Okay, and then I have a final detail question for Albert. Can you still explain, explain the reason for negative revenue? I mean, for example, if you incur too much cost, should it be visible on the cost line and not sort of impact the revenue line?
Because, if you, for example, expect something to have 100 units of cost, and then you realize that it's cost and you have booked 80% of that, and then you realize that it's gonna be 120 in the coming quarters, then you need to correct that revenue booked also, and that's when you get the negative revenue number. Of course, it also shows up on the cost side.
But this is the percentage of completion. But don't overestimate the impact from that on the cost side.
Okay, thanks. I don't have any further questions.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you, operator. On behalf of Nanoform, I would like to thank all participants for today, and including the questions. If you have more questions, then please do reach out to us. You'll find our details on the webpage if you don't have them handy already. We wish everybody a great Thursday afternoon and evening. Thank you, and goodbye.