Nanoform Finland Oyj: Nanoform Q3 2024 report: Record number of new projects signed

Company Announcement

Nanoform Finland Plc

November 18, 2024

08:10 a.m. Finnish time / 07:10 a.m. Swedish time

Nanoform Q3 2024 report: Record number of new projects signed

A record number of new non-GMP projects signed in the quarter, helped by a significantly increased interest in our Biologics offering. Revenue growth is back and is expected to accelerate in coming quarters and years. Most GMP Quality Control analytical activities insourced after receiving Fimea license in August. Manufacturing of GMP material for pivotal studies and registration batches in Project Nanoenzalutamide continues, pivotal studies to start in 1Q25, with first read-out in 2Q25. Further progress on dealmaking around our product kernels; half a dozen term sheets received, first letter of intent signed and several license/commercial supply agreements on multiple product kernels expected to be signed in coming quarters.

7-9/2024 key financials

• Revenue grew by 21% to EUR 0.8 million, compared with EUR 0.6 million in 3Q23.

• The gross profit almost doubled to EUR 0.6 million, as the gross margin jumped to 81% (EUR 0.3 million, 53%).

• Total operating costs* increased by 7% to EUR 5.4 million (EUR 5.0 million).

• The number of employees grew by 7% to 177 (165) compared with one year ago.

• EBITDA was flat at EUR -4.4 million (EUR -4.4 million).

• The operating free cash flow came in at EUR -5.0 million (EUR -4.9 million).

• Basic EPS was EUR -0.06 (EUR -0.05).

• Cash position** was 46.2 million on September 30, 2024 (EUR 51.8 million).
  

1-9/2024 key financials

• Revenue came in at EUR 2.0 million, stemming from 32 different customer projects (EUR 2.2 million, 32 projects in 1-9/2023).

• The gross profit was EUR 1.6 million, with a gross margin of 79% (EUR 1.4 million, 66%), still impacted by external GMP QC costs related to the nanoenzalutamide project.

• The number of employees grew to 177 (165).

• Total operating costs* increased by 11% to EUR 18.2 million (EUR 16.4 million).

• EBITDA came in at EUR -15.6 million (EUR -14.2 million).

• The operating loss was EUR -18.0 million (EUR -16.4 million).

• The operating free cash flow improved to EUR -16.7 million (-17.2 million).

• Basic EPS was EUR -0.21 (EUR -0.20).

(Numbers in brackets refer to the corresponding last year reporting period, unless otherwise mentioned.)

* Defined as materials & services expenses, employee benefit expenses, and other operating expenses.

** Including Treasury bills. Part of the cash has been invested in short-term government bond.

CEO's review

Nanoform continues to progress on many fronts. After six quarters of negative revenue growth - due mostly to macro related issues like quickly increased interest rates by central banks and hence significantly reduced spending among especially biotechs, but also large pharma companies on early stage projects - we are back in growth mode and expect this to accelerate in the coming quarters and years. The growth will be fuelled not only by a growing number of non-GMP projects and GMP projects - both in the small molecules and biologics - but also from development, exclusivity and milestone payments and later on from commercialization fees and royalties related to our own technology offerings and product kernels.

During 3Q we signed 12 new non-GMP projects - a new quarterly record. Here I am especially pleased by the fact that our Biologics technology offering after the presentation by Takeda at the DDF conference in Berlin in May 2024 is starting to get the attention it deserves. Another area where we see a lot of attention globally is around our product kernels. The deal negotiations around Nanoenzalutamide and Nanoapalutamide are progressing well, and we have already had 100+ meetings, received half a dozen term sheets, the first LOI has been signed and we expect to sign several license / commercial supply agreements on several products in the coming quarters.

Fimea approved our new GMP QC laboratory in August. This was an important milestone for Nanoform and we have already transferred most analytical activities from external partner laboratories into our own GMP QC lab. This will have a positive impact on our gross margin and will improve our flexibility, control, cost position and naturally also our service offering.

Manufacturing of GMP material in project nanoenzalutamide has continued in a two shift pattern. The scale-up from last year's campaign for the pilot study has generated a roughly 10x increase in the hourly and daily production rate in the ongoing manufacturing campaign for the upcoming pivotal studies and registration batches. What is even more exciting is that on the R&D side we have demonstrated a further 10x improvement in the production rate, which lays a path for nanoforming to become a cost leader compared with other technologies in the coming years.

We expect nanoenzalutamide to be the first nanoformed medicine to reach the market - with a planned launch in 2027/28 in the US/EU - and to be a revenue driver for Nanoform already in the upcoming years. Nanoenzalutamide is expected to progress via the ANDA*/Hybrid generic pathway and as such will need to show bioequivalence vs the originator product, Xtandi®. In the eyes of the regulators, bioequivalence means 80% - 125% of the Cmax and AUC in a large cohort study in fed and fasted states with a 90% confidence interval. * ANDA=Abbreviated New Drug Application

The global annual sales of Xtandi® is presently USD 6bn and growing. We plan for nanoenzalutamide to take a meaningful share of this market through its highly patient centric product differentiation (1 tablet vs 4 tablets) and unique IP position (different technology, crystalline product, different excipients), while not forgetting its green attributes. We see the program to be attractive to value added medicine companies as a uniquely differentiated and high value supergeneric product that can enable a product launch before market entry by other generic products based on the ASD formulation, for which the originator currently holds patents in both Europe and the US (with expiry dates in 2033). For the originator company we believe that the nanocrystalline single tablet product offers a patient centric life cycle extension opportunity with compelling sustainability advantages that would be difficult for generic competitors to match. Avoiding the inherent stability challenges associated with amorphous materials is also a clear benefit for any company considering alternative formulation approaches.

Xtandi-tablets are formulated using a solubility-enhancement spray drying process to create an amorphous solid dispersion. The major challenge with spray drying is that the process often requires large amounts of undesirable and toxic organic solvents. Nanoform's CESS® process uses CO₂ of recycled origin, and is organic solvent-free, offering a greener alternative to medicine developers that seek to be both patient- and planet-centric. Nanoform continuously improves the CESS® technology, e.g. by planning to further recycle the CO₂ used by the process to become a carbon sink. This is an attractive proposition for the pharma industry to achieve its ambitious net zero goals. There are already concerns in the industry that industrial approaches with a heavy carbon footprint, e.g. spray drying, may lose their relevance in the future because of their environmental burden.

The timelines for the commercial launch of nanoenzalutamide are demanding, but achievable. First, we need to manufacture nanoformed GMP material for the registration batches and the pivotal bioequivalence studies. When positive, the submissions of the dossiers will follow, with the aimed product launch after the expiry of the enzalutamide substance patent in the respective territories (2027/28, US/EU).

During the past year we have worked on more than 30 different customer projects. These cover both small molecules and biologics, and range across multiple therapy areas and delivery methods, I remain encouraged by the diversity of our nanoparticles and nanoformulations. Not all customer projects progress - for a whole host of reasons - but the momentum I see in many of these projects makes me confident that we will also see some of these ongoing customer projects enter the clinic in the upcoming quarters and years. This also serves as testament to our strategy to work with many different companies and APIs, and not become dependent on any single project.

For Nanoform the last three years have been about making large investments and building a capable organization. The coming three will be about preparing to launch nanoformed products together with partners onto the global markets. We are ready for the challenge. I look forward with confidence and excitement to the coming years. None of this can be done without our amazing employees and great partners. My sincere THANK YOU to you all for your continued dedication to Nanoform and for the inspiring and innovative work for which we're known.

Best regards,

Prof. Edward Hæggström, CEO Nanoform

Nanoform's Q3 2024 report can be found at: https://nanoform.com/en/financial-reports-and-presentations/

Nanoform online presentation and conference call November 18, 2024, at 3:00 p.m. Helsinki time / 2:00 p.m. Stockholm time:

The company will hold an online presentation and conference call the same day at 3.00 p.m. Finnish time / 2.00 p.m. Swedish time. Nanoform will be represented by CEO Edward Hæggström, CFO Albert Hæggström and CCO Christian Jones. The presentation will be delivered in English.

The presentation will be broadcast live as a webcast available at:

https://ir.financialhearings.com/nanoform-q3-report-2024/register

Teleconference dial-in numbers:

Dial-in number to the teleconference will be received by registering via the link below. After the registration you will be provided phone numbers and a conference ID to access the conference. Questions can be presented by this dial-in function.

https://conference.financialhearings.com/teleconference/?id=50049783

Project Nanoenzalutamide, Nanoapalutamide and ASDs (amorphous solid dispersions)

Nanoenzalutamide and Nanoapalutamide are opportunities for us to show that small is a powerful ingredient in formulation. Due to the inherent poor solubility of the API, the current formulation of these blockbuster medicines - for treatment of prostate cancer - has been an amorphous solid dispersion ("ASD"). Amorphous API materials are unstable, and therefore require high amounts of polymers to stabilize the API - leading to a low drug load in the product and therefore, in the case of oral solid products, often to a high number of large tablets that need to be taken by the patient. This is a known problem, in particular for patient populations with challenges to swallow. The nanocrystalline formulations developed by Nanoform offer an attractive alternative with a substantially higher drug load in the final drug product and consequently a reduced tablet burden for the patient.

In Project Nanoenzalutamide, the manufacturing of the nanoformed drug substance for the pivotal study is ongoing, and we expect the clinical study to start in 1Q25, with first read-out in 2Q2025. Project Nanoapalutamide is also progressing to plan. We were pleased with the positive results from a recent in vivo study comparing Nanoform's tablet prototypes with the currently marketed product.

The results provide confidence in our choice of the lead tablet prototypes and are expected to further accelerate interest among potential partners. Based on earlier experience with Nanoenzalutamide, we expect that following further optimization of the formulation, the next major development milestone for this project is a pilot PK study in humans during 2H2025.

We are encouraged by the broad interest shown for these patient centric reformulations in key markets (among them US, Europe, and Japan). We are in ongoing discussions for both projects with multiple potential partners, have already received half a dozen term sheets with expressions of interest to take these products to the market, and look forward to signing several license/supply agreements around these product opportunities during the coming quarters.

In addition to the patient benefit, we can with our proprietary technology offer opportunities to extend IP protection for the reformulated and improved product, expecting that in many cases our innovative formulations will be patentable. Importantly, current ASD based medicines are often protected by secondary patents that claim aspects of the ASD formulation. These secondary patents, such as in the case of the product in Project Nanoenzalutamide, often extend by several years the expiration of the primary patent claiming the API. In the case of Project Nanoenzalutamide, we believe that our nanocrystalline formulation is not in the scope of the patents claiming the ASD formulation. This should potentially enable entry earlier into the market, in the jurisdictions where the ASD formulation patents remain active, compared to ASD based generic formulations.

ASDs remain a leading formulation strategy for poorly soluble APIs, particularly for oral solid dosage forms. There are currently some 50 marketed medicines that are ASDs and these sell in aggregate for some USD 50bn annually in the world. Following the success with nanoenzalutamide, we have started development work on several other APIs that are currently formulated as ASDs to offer a nanocrystalline alternative for these products. In addition, we continue to actively look at several other opportunities in this field from products both in the market and in the global drug development pipeline. According to STARMAP®, almost 80 per cent of the 46 ASDs we so far have starmapped may be well suited to be nanoformed by CESS®.

Significant events during 1-9/2024

• On January 5, 2024, Nanoform announced it had completed the First Subject First Visit (FSFV) in a trial to evaluate the relative bioavailability of its nanocrystalline enabled alternative to an amorphous solid dispersion (ASD); formulation of nanoenzalutamide and Xtandi®^[1], the number one prescribed androgen receptor inhibitor first approved by the FDA in 2012 to treat prostate cancer. The single-dose, randomized, comparative bioavailability study, performed by a contract research organization in North America, compared enzalutamide 160 mg film-coated tablets (Bluepharma Farmacêutica S.A.) and Xtandi 4x40 mg film-coated tablets (Astellas Pharma Europe B.V.).

• On January 26, 2024, Nanoform announced that the relative bioavailability study of nanoenzalutamide had received promising clinical results. The nanoenzalutamide tablet formulation was developed in a partnership with the ONConcept® Consortium (Bluepharma, Helm, and Welding) whereby Nanoform's proprietary controlled expansion of supercritical solutions (CESS®) technology provides the opportunity for an improved and differentiated finished product. Tablet burden and dysphagia are well-documented challenges for prostate cancer patients, and the development of a 160mg, single tablet per day regimen may be preferable for patients in need of reducing their total number of daily pills. A patent application for the nanoenzalutamide formulation has already been jointly filed by Helm and Nanoform. The partners aim for product launch after the expiry of the enzalutamide substance patent in the respective territories. For the United States this patent expiry is expected in 2027, and in Europe in 2028. The unique IP position may allow the nanoenzalutamide product to enter the market prior to other generic competition based on the ASD formulation, which is currently patent protected in the US and Europe until 2033. [1] Xtandi is a registered trademark of Astellas Pharma Inc. [2] Source: xtandi.com

• On February 15, 2024, Nanoform announced that it has won a grant of up to 4.3 million euros from Business Finland, the Finnish government organization for innovation funding and trade. The grant represents 50% of the costs associated with Nanoform's research and development project for nanoparticle-enabled formulation platforms for oral, inhaled, long-acting injectable, and high-concentration subcutaneous injectable drug delivery technologies for next generation medicines. The work is expected to take place during 2024 and 2025.

• On February 29, 2024, Nanoform announced it had received positive results from its own preclinical, in vivo study of a nanocrystalline-enabled apalutamide oral formulation, which shows potential to enable a much smaller tablet than Erleada®^[3], a nonsteroidal antiandrogen (NSAA) blockbuster amorphous solid dispersion (ASD) medicine used to treat prostate cancer.

[3] Erleada is a registered trademark for Apalutamide owned by Johnson & Johnson / Janssen Biotech Inc.

• The Board of Directors has approved to issue stock option rights on January 10, 2024 and on March 25, 2024. On March 12, 2024, The Board of Directors approved share subscriptions based on stock option programs 2/2019 and 1/2020.

• On April 8, 2024, Nanoform announced that effective April 10, 2024, onwards, the Certified Adviser to Nanoform Finland Plc is Carnegie Investment Bank AB (publ). The Certified Adviser to Nanoform Finland Plc until April 9, 2024, was Danske Bank A/S, Finland Branch.

• On April 9, 2024, Nanoform announced a collaboration with PlusVitech, a biotechnology company developing treatments for cancer, to use Nanoform's state-of-the-art nanomedicine technology to repurpose the anti-nausea medicine aprepitant as a treatment for lung cancer. The development program will include nanoforming the current active ingredient into crystalline nanoparticles and formulating a simplified dose regimen with fewer and smaller pills. The partnership is expected to include API supply for late-stage clinical programs and eventual product launch. Following PlusVitech's positive first time in human studies, a Phase 2 study with 24 patients has commenced, investigating the efficacy of high dose aprepitant in a non-small cell lung cancer (NSCLC) population that is refractory to standard treatment. The current formulation carries a high pill burden of potentially dozens of capsules per day, with a complicated regimen for patients that are most often frail and have trouble swallowing (dysphagia). The new formulation by Nanoform is designed to deliver substantially higher drug load with better bioavailability, which simplifies the dose regimen and improves patient convenience and compliance. Re-purposing an existing drug offers a potentially faster, risk-reduced and cost-effective development path to new treatments for high medical need indications like NSCLC.

• On April 11, 2024, Nanoform announced a strategic partnership whereby CBC Co., Ltd. ("CBC"), will utilize its extensive experience in the Japanese pharmaceutical industry to identify opportunities for Nanoform's cutting-edge nanomedicine engineering technologies.

• Nanoform's Annual General Meeting (the "AGM") was held on April 16, 2024. 46 shareholders representing more than 60 per cent of all outstanding shares and votes were represented at the meeting. The Annual General Meeting supported all the Board of Directors' proposals. The AGM approved the financial statements and discharged the Board of Directors and the CEO of the Company from liability for the financial year 2023. The AGM further resolved the number of members of the Board of Directors to be four and the AGM re-elected Miguel Calado (Chairperson), Mads Laustsen, Albert Hæggström and Jeanne Thoma as ordinary members of the Board of Directors for the next term of office.

• On April 24, 2024, Nanoform announced that it had successfully completed a new share issue raising EUR 15.4m by issuing 7m new shares (8.9% dilution) at EUR 2.20 (SEK 25.60) per share in order to invest in the commercialization of nanoparticle enabled formulations for next generation medicines. The placing attracted a considerable number of leading Nordic and international investors. The proceeds will be used to build a GMP level formulation facility to produce solid oral dosage forms for clinical trials, to development of up to a dozen preclinical nanocrystalline alternatives to ASD medicines ready for partnering in clinical trials and to co-fund several projects to be taken by Nanoform and its partners into clinical trials in the EU and the US, and ultimately through to the market.

• On May 22, 2024, at the 15th Global Drug Delivery & Formulation Summit in Berlin, Andreas Liebminger, Ph.D., Global Head of Plasma-derived Therapies Pharmaceutical Sciences, Takeda, presented data obtained in a proof of concept study, conducted in collaboration with Nanoform. Controlling the viscosity and aggregation of protein-based solutions is important for pharmaceutical formulators. Because injection volume is limited by the device, therapeutic protein formulations which are to be delivered via intramuscular or intravenous injection need to be highly concentrated. At protein concentrations greater than 200 mg*mL-1 however, viscosity increases to significantly higher than 20 cP (centipoise) to quickly exceed the maximum 40 cP viscosity deemed acceptable for a conventional subcutaneous injection. The data support the potential of Nanoform's patented biologics platform to achieve high protein concentrations in suspension formulations that are suitable for subcutaneous injection, as shown by results of syringeability and injectability studies.

• Nanoform has a multi-API license for clinical trials. On June 11-12th, 2024 we had a pre-approval inspection from Fimea to upgrade our license to include new GMP lines, GMP Quality Control laboratory, and the nanoforming of APIs to be used in products with a Marketing Authorization. The last part is a significant step, as our pharmaceutical manufacturing facility would then be allowed to manufacture for clinical and commercial use. Based on the pre-approval inspection, FIMEA suggested that Nanoform split the single filing into two independent filings: one for QC GMP and the other for the new GMP lines and commercial manufacturing, allowing for faster progression. We followed Fimea's suggestion and submitted the new QC GMP application.

• On June 14, 2024, a total of 85,072 new shares were subscribed for by the members of the Board of Directors. The shares were issued as part of remuneration of the members of the Board of Directors in accordance with the resolution by the AGM.

• On August 15, 2024 Nanoform announced that it has entered into a preclinical development agreement with the Plasma-derived Therapies Business Unit of Takeda Pharma-ceuticals, Inc., the R&D-driven biopharmaceutical company headquartered in Japan, to develop innovative plasma-derived therapy formulations for the treatment of rare conditions. Following the completion of in vitro proof of concept studies of a novel plasma-derived therapy formulation, Nanoform will provide non-GMP nanomaterial to Takeda for in vivo studies. The first results of these studies are expected in early 2025.

• On August 19, 2024 Fimea informed us that they had approved our new GMP QC laboratory. As a result we will start to transfer analytical activities from external laboratories into our own lab as soon as possible. This will have a positive impact on our gross margin and will improve our flexibility, control and cost position.

• In August, a new global major pharma customer was signed.

• On September 5, 2024 Nanoform announced an expansion of their collaboration with Celanese to cover biologic drug delivery. The companies will combine Nanoform's Biologics platform with the Celanese VitalDose® Drug Delivery platform to further optimize controlled release of biologics from long-acting, therapeutic implants. The collaboration will also include the further development of a long-acting, patient-centric implant for Multiple Sclerosis treatment.

Company near-term business targets for 2024

• Increased number of non-GMP and GMP projects signed in 2024 vs 2023
• Improved operating free cash flow in 2024 vs 2023
• To sign one or several license/commercial supply agreements during 2024

Company mid-term business targets 2025

• To nanoform at least 70 new Active Pharmaceutical Ingredients (API) annually
• To have in place 35 operating production lines of which 7 to 14 are expected to be GMP production lines
• Over 90 percent gross margin
• To have 200-250 employees
• To be cash flow positive

For further information, please contact:

Albert Hæggström, CFO

[e-mail] / [phone]

For investor relations queries, please contact:

Henri von Haartman, Director of Investor Relations

[e-mail] / [phone]

About Nanoform

Nanoform is the medicine performance-enhancing company that leverages best-in-class innovative nanoparticle engineering technologies, expert formulation, and scalable GMP API manufacturing to enable superior medicines for patients. The company focuses on reducing clinical attrition and on enhancing drug molecules' performance through its nanoforming technologies and formulation services, from pre-formulation to commercial scale. Nanoform will help improve bioavailability and drug delivery profiles, drive differentiation, patient adherence and extend the lifecycle potential of products. Nanoform's shares are listed on the Premier-segment of Nasdaq First North Growth Market in Helsinki (ticker: NANOFH) and Stockholm (ticker: NANOFS). Certified Adviser: Carnegie Investment Bank AB (publ), [phone]. For more information, please visit www.nanoform.com.

Forward-Looking Statements

This press release contains forward-looking statements, including, without limitation, statements regarding Nanoform's strategy, business plans and focus. The words "may", "will", "could", "would", "should", "expect", "plan", "anticipate", "intend", believe", "estimate", "predict", "project", "potential", "continue", "target" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any forward-looking statements in this press release are based on management's current expectations and beliefs and are subject to a number of risks, uncertainties and important factors that may cause actual events or results to differ materially from those expressed or implied by any forward-looking statements contained in this press release, including, without limitation, any related to Nanoform's business, operations, clinical trials, supply chain, strategy, goals and anticipated timelines, competition from other companies, and other risks described in the Report of the Board of Directors and Financial Statements for the year ended December 31, 2023 as well as our other past disclosures. Nanoform cautions you not to place undue reliance on any forward-looking statements, which speak only as of the date they are made. Nanoform disclaims any obligation to publicly update or revise any such statements to reflect any change in expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements. Any forward-looking statements contained in this press release represent Nanoform's views only as of the date hereof and should not be relied upon as representing its views as of any subsequent date.