Nanoform Finland Oyj

OMXH:NANOFH

Earnings Call Transcript 2024-Q1

[Henri Von Haartman, executive]

Good afternoon, all, and a warm welcome to Nanoform's First Quarter 2024 Report Presentation.My name is Henri von Haartman, and I'm your Director of Investor Relations. Today, our CEO, Edward Haeggstrom; CFO, Albert Haeggstrom; and Chief Commercial Officer, Christian Jones 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 you can also find them at a webpage on the Investors 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 introduction to Nanoform, then an overview of our strategy, then financials, and we conclude with commercial.With these words, our CEO, Founder, Professor Edward Haeggstrom. Please go ahead.

[Edward Haeggstrom, executive]

Thank you, Henri, and welcome also on my behalf. Why are we here? We're here to make more medicines available. To do that, we need to address a big problem in the pharma industry, which is too few new medicines per year, even though a lot of money is being invested into R&D.Next, please. We do this by addressing the biggest hurdle for getting new medicines onto the market, which is something called poor bioavailability, which means that a drug that's otherwise potent is not taken up by the body. This problem is big, and it's growing.Next, please. How do we address this problem? We do it by taking in coarse grains and making these grains fine. Think powdered sugar instead of coarse sugar. To the left, you can see that if you can make really small particles of the active pharmaceutical ingredient, API, then you can increase the specific surface area. That's the physical way of getting bioavailability up.Next, please. By doing that, a cascade of good stuff happens. Basically, there can be new drugs. You can reduce less -- reduce the dose, you can potentially reduce the side effects. There is a patent game to be had. One doesn't have to produce so much, which means that the plants can be smaller, the logistics can be smaller, and the green footprint can be smaller.Next, we have 4 proprietary technology platforms. One for small molecules, think ibuprofen, one for large molecules, think insulin, one for formulation, that is when you really go from the active pharmaceutical ingredient to, for instance, the tablet, and then one AI, which is a digital twin, which allows us to pick the molecules that are amenable to nanoforming.Next, please. There are many different pools where we can be active. We can enable new drugs, we can improve existing drugs, and we can give unsuccessful drug candidates, a second chance.Next, our value chain or business model is very simple. We don't own the API. Our clients, large pharma, mid-sized and specialty pharma and biotechs, they own the API. We nanoform it. And by doing that, we can either get paid a service fee, we can get paid for making kilograms of material for clinical trials, or we can get paid milestones or royalty for providing an opportunity to have a drug on the market.Next, please. This is a slide, basically answering a question that we are asked many times, what are we and how do we do it? So we are a medicine performance-enhancing company. We do nanoparticle engineering, we do expert formulation and we do scalable GMP nano-API manufacturing. Basically, we reduce clinical attrition, we improve bioavailability, we modulate or improve drug delivery profiles, we drive differentiation in a commercial way, we improve patient adherence and we make possible the extension of lifecycle management for products.Next, please. Here we have collected a few things that we think are important. All APIs should be Starmapped. It's smart, it's cost efficient and it's green. We work with our customers. We enable novel and existing molecules. We provide unique formulated nano-drug products for small molecules, but also for biological assets. In parallel, to show the power of nanoforming, we work on product kernels. These are in the group of oral solids, think tablets. These are long acting injectables in health products and biologics. We do this in order to speed up the acceptance of our technology platform and the idea is that they will be partnered out during '24 to '26. We have been talking a lot about nanoenzalutamide and nanoapalutamide and these are the first 2 examples of these kinds of product kernels. We work both with the originator and with generics who are interested in these kernels.Next, please. ASDs stand for amorphous solid dispersions. This is a way to make medicine have better bioavailability. It's not crystalline, it's porous. There are 50 of these ASDs on the market and they sell for [ $50 billion ]. We can nanoform many of these, as you can see.Next slide. Out of this, we have now looked into which are the concrete examples of medicines that we can work on by nanoforming. You can see that there is more than 30 of those.Next, please. Out of these 31 ASD products, we have thoroughly analyzed from a technical, financial, commercial and IP perspective and identified 7 programs that we are now working on. The idea is to make partnering deals this year and several few years. Of course, at some point, we will be part of the product launches. Today, these launches are starting from 27.Next, please. Here we have collected highlights from this year. I think the biggest one actually happened in May. A big pharma, Takeda, was talking about nanoforming as a very, very important thing in the biologics domain. Seven years ago, then Chairman, Rabbe Klemets told me, Edward, you should really try to get one of the big companies to tell their problem and your solution. Now, it happened. Of course, it was important that we were able to raise money. This is for us now to make those kernels and to take the pharmaceutical development into GMP.I think it's also very important to see here that during the H1, there are many things that we have done. They all have to do something with the nanoformulation. They are many around enzalutamide, nanoenzalutamide, apalutamide, nanoapalutamide. And then you can see the CBC from Japan. They are actually coming here next week. And I'm going to be very happy to show not only what we can do in the plant, but also what Finland looks like this time of the year.Next slide, please. Here I can simply state, there are 3 targets. We will increase the number of non-GMP and GMP projects signed this year compared to last year. We will improve the operating free cash flow and we will sign 1 or several license or commercial agreements. We are on track on these for this year.Next please. This is where I hand over to Albert. Albert, please.

[Albert Haeggstrom, executive]

Thank you, Edward. If we then go to financials, the traditional slides here, you can see that the number of employees at the end of first quarter this year was 166, up 14 from last year. And you can see that we have not added any new lines during the last year, and we now have a very impressive fleet of nanoforming lines. And we now told the market also that the inspection date is now set, so Fimea will come and look at us on the 11th and 12th of June, and they will be inspecting the GMP lines 2 and 3, and also our GMP QC laboratory. And when we get the -- and when and if we get the positive outcome, then these will be -- lines will be commissioned and this QC GMP laboratory will also be commissioned and included in these numbers.If we then go to next slide, here you can see on the left-hand side, the proposals issued; 19 in the first quarter of last year, that was the same as last year. We feel that the momentum is increasing. We are getting more and more questions around the biologics side. And we feel that after a sort of plateauing on this 60 plus per year, we should be going upwards in the coming quarters.The same question goes from projects signed. We signed 1 in the first quarter, we have already signed several in the second quarter, and we feel comfortable that we will reach our target of signing more during this year than last year.If you can see historically to the right, so the green bars are the rolling 12 months. So if you look at the fourth quarter for each year, you see that we signed 10 in 2020, 16 in 2021, 17 in 2022, and 22 in 2023. Despite the fact that we have had fluctuation between 1 and 10 signed in a quarter, we feel that the trend is clear and we will do more signings this year than last year.If we then go and look at how many projects have been generating revenue, you can see on the left-hand side that we had a temporary dip in the fourth quarter because several projects ended and we hadn't put the new one started yet. But now you can see that we are back on the 20 plus in the quarter. And you can also see that the rolling 12 months is quite stable. So it was 33 at -- in the first quarter, number of projects generating revenue. With an increasing number of projects, we expect in the coming quarters and this year, this number should of course start to pick up.If you look at the revenue, then we had a dip in the fourth quarter last year, but now we came back sequentially. Still we are slightly down on the year-on-year number and the rolling 12 months, of course, follows that. But considering that we are targeting more projects and this number should start to turn north, also, of course, any milestone agreements we sign, any commercial agreements with milestone payments we sign in the second half of this year will have an impact on the revenue.One positive thing we have seen in the last 2 quarters is that despite the fact that our QC GMP laboratory is not yet stamped by Fimea, we have become more effective how we utilize external QC resources on the GMP side. So you can see that despite the fact that we have been doing the nanoenzalutamide project, we climbed above 80% already in the first quarter. And after the Fimea inspection, if we get the license for the QC laboratory, we expect the margin to go up above the 90% targeted. This is the gross margin.If we then on the following slide, look at the operating free cash flow, which is 1 of our 3 targets for this year, the positive trend continued. So the operating free cash flow was minus EUR6 million in the first quarter compared to EUR6.2 million the previous year. And you can also see that the rolling 12 months nudged up a little bit. We expect this trend to continue and operating free cash flow to move in the right direction.With these words, I let over to Christian. Please go ahead.

[Christian Jones, executive]

Thank you very much, Albert, and good morning, good afternoon and good evening, wherever you're tuning in from.So, first of all, I'd like to cover our business model. For those that are not familiar with our business, we operate as a standard operating model where we have fee-for-service arrangements with our partners. We operate with that in terms of feasibility studies, doing proof of concept, understanding where the value is for the technology. Then we move into clinical supply where we manufacture GMP grade clinical materials. And that's pretty much from Phase I all the way through to Phase III and making registration batches for filing. And then we move into a commercial supply again in GMP commercial business model. And at that point, we operate with a value that then comes back to Nanoform in form of a milestone or a royalty model.We also have been talking more recently about product kernels, and these are product concepts and candidates that Nanoform has developed to take up to a certain point at which we could then partner out either to the originator for lifecycle management or to value-added medicine companies. And again, they've come with milestones or royalties.So if we move forward, just to give an idea of the business that we have today, we have a very nice mix of major pharma partners, mid-sized pharma, specialty and smaller biotech companies. We are very proud to work with 10 of the top 20 pharma companies globally, and we have built up a strong brand reputation as a business and our technologies are now adopted by many and not few.Moving forward, I'd like to cover and explain where that value is seen by our partners. So we have made substantial progress in nanoforming solutions with both in vitro, in vivo and now clinical study results.In oncology, we have replaced amorphous solid dispersion formulations with nanocrystalline high drug load formulations that match the bioequivalence for enzalutamide and apalutamide, where the lifecycle opportunities are there to reduce tablet burden to single, smaller and easier to swallow tablets. We're also working in oncology and many other projects. One such project we can mention is aprepitant in partnership with PlusVitech, and that's for lung cancer. And the idea there again is to develop a regimen with substantially fewer tablets. So high drug load in oncology.In inhalation, we have been engineering nanoformulations of both small and large molecules with excellent performance and fine particle dose and fine particle fraction in comparison to other technologies. In the biologics space, we've shown fine particle fractions of more than 95% compared with 50% seen with spray drying. Again, an emphasis on delivering high drug load, but this time to the lungs. In the biologics space, we demonstrated in partnership with Takeda and with other companies, other major pharma organizations as well, that we can develop ultra-high concentrations for subcutaneous drug delivery with acceptable viscosity and force of injection. And Takeda nicely presented that at the DDF Summit last week in Berlin, again, high drug load.In ophthalmics, we've worked on multiple projects where nanoparticles have shown improved delivery, high drug load to the eye, enabling smaller implants with no requirement for mesh membranes, eye drop suspensions and also ophthalmic inserts.And in hydrogels, with the project we have with TargTex, for glioblastoma, we have shown high drug load applications 5x more than nanomilling itself can achieve for post surgical glioblastoma drug delivery and deep brain penetration across the brain parenchyma, enabling non-recurrence of glioblastoma where other formulations have failed. And to support all of this, we are -- our foundation of the technologies and the innovation is in the intellectual property that we have. We have novel technologies, we have novel processes and we have novel formulations that can enable market opportunities, they can enable lifecycle management and, very importantly, can enable strong launch strategies for our innovator partners.As we've expanded our reach across Europe and U.S., building strong and strategic relationships with our major pharma partners and our smaller biotechs, we also want to make sure that our technology reaches the patients that need it. And so for that reason, we have expanded our reach into Japan by partnering with CBC. CBC is a very large trading company in Japan that has a long history of working with innovator and generic pharma companies in the region, supporting innovations into Japan and exports from Japan. And for that reason, we're delighted to be working with them to help expand our reach into this very important market.So I'd like to show you now a picture that says a 1,000 words. On the left hand side are particles made with our Nanoform biotechnology, and these are particles of a biologic. And the same biologic is spray dried in the middle and lyophilized on the right-hand side. And these are the 2 technologies or approaches that the industry currently uses to dry biological materials. But they have their challenges.Spray dried material often creates these resin like structures, and lyophilized creates a very, very unflowable material. Both of these have their challenges. Spray drying is very hot. A hot process, typically operating in temperatures of 100 degrees to 120 degrees celsius. And that can denature proteins and peptides. Lyophilization operates in very cold temperatures, typically minus 60 degrees, minus 70 degrees. And those temperatures can also be challenging for proteins. But with our technology, we operate in a very, very gentle drying conditions of typically 30 degrees to 50 degrees celsius. And as such, the particles that we make, the activity, the structure of the particles, they are retained. And in fact, we have, in many cases, no signs of dimerization or aggregation. And we have very, very free flowing powders.And our pharma -- this is a slide from one of our pharma partners that compared our technology to the other technologies available. And they were amazed by the flowability of this material. In fact, they passed the vial around their colleagues in the lab and said, this is a powder, but it looks like milk. Have you ever seen this before? So, really powerful reflection here on the value that our technology can deliver for the biologic industry.And with that, I move on to a presentation that was given last week at the Drug Delivery & Formulation conference in Berlin by one of our colleagues, Dr. Andreas Liebminger from Takeda. He presented on Nanoform's technology, where we nanoformed an IgG. We made material that was of the same quality as the input material, where other technologies have struggled to produce quality material, we were able to do so. And it was stable, and it gave a very high drug load. And they were able to make a 40% IgG suspension in either benzyl benzoate or MCT oil, which is Miglyol.It was confirmed to be injectable, and it had an injection force of between 8 to 9 newtons, which is well within the acceptable limits for injection, with the upper limit being 15 newtons. This was delivered with a 25 gauge needle. And this showed very, very promising application of Nanoform's technology for plasma-derived therapies, but equally so for other biologics. It's very, very difficult to make high concentration biologics. Most products that are on the market are around 100 milligrams per ml and some as high as 200 milligrams per ml. But that's the limit of all the products on the market. Our technology, we can achieve 400 milligrams, 500 milligrams, and possibly even 600 milligrams per ml. And this is a game changer, and this could be highly relevant for many companies. And indeed, as a consequence of this presentation, we had a lot of interest last week with major pharma and other companies at our booth.Moving forward, it wasn't just Takeda that were talking about Nanoform. Celanese, a Fortune 500 specialty chemicals company, were also presenting, and in their presentation they highlighted Nanoform's technology and the value that our technology can deliver for long acting implants for CNS disorders. This is data that we've published a while ago now, but Celanese felt it was still relevant to show at this conference. And it's one thing when Nanoform stands up and presents, it's another thing when our partners and our peers also present on our technology and the value that it can contribute at the world's premier Drug Delivery and Formulation conference, DDF.If you would like to meet with us, we would be delighted and we are present at many upcoming events in the remainder of this year. ASCO, we will be there this week in Chicago and over the weekend at Bio International next week in San Diego, and we will also be present in Tokyo very shortly in June, and many other investor and pharmaceutical conferences throughout the year.Thank you very much for your time.

[Operator]

[Operator Instructions] The next question comes from Christian Glennie from Stifel.

[Christian Glennie, analyst]

First question, I guess, it's obviously pretty -- key focus here around partnering nanoenzalutamide, just to give us a bit more of a sense, if you can, in terms of kind of the probably the nature of that partnership and what that deal might look like from your perspective, and to confirm that that's still -- you'd still be sharing on whatever economics come with the other party. So effectively you get a quarter of the economics?

[Edward Haeggstrom, executive]

Sure. So if I take the non-economic side, and then Albert will take the economic side. On the [ nanoenzas ], we have stated before, of course, both the originator is of interest to us and interesting in what we do. And then also from the -- on consortium, we are talking to generics companies on this. These are 2 different processes. They are driven in parallel. And as stated before, our preference is always to work with the originator. And these 2 processes are active and ongoing. Albert?

[Albert Haeggstrom, executive]

Yes. So what we say is that we expect to sign 1 or several agreements during this year around nanoenzalutamide and nanoapalutamide. And when we sign agreements, we expect to give you more indications on the financial terms around it.

[Christian Glennie, analyst]

But it would be -- assumption would be obviously the 25% split is that or maybe not?

[Albert Haeggstrom, executive]

Yes. So nothing has changed there. So we -- the idea is that we have a 25% ownership of the nanoenzalutamide, but we have 100% ownership of the nanoapalutamide at this moment.

[Christian Glennie, analyst]

Okay. And then, I guess, the move in here in terms of obviously trying to accelerate the proof of the technology through advancing some of these product kernels, obviously to get some sort of proof of concept, but then partnering still relatively early on, but sort of accelerating that process, I guess, coming back to the -- the other proposal here around, because mostly those are right, you've identified on market products and the potential follow on benefits of a different formulation or whatever it may be. As it relates to fixing novel API that may have struggled in early -- early preclinical clinic data, I guess, just an update in terms of when we might see some of those sort of partnerships and programs progressing on that basis as well?

[Edward Haeggstrom, executive]

That's a very convoluted question, but let me see if I could sort of answer it in 2 different ways. The list you saw here was from the ASDs, and the ASD was the first group that we have been working on now where we had the oral solids, we had the long acting injectables, the biologics, and one which I can't recall right now.Then when you asked, are we working on new entities which have not appeared on the market yet, the answer is yes. Then you asked whether there is a timeline for that, and that timeline we don't have because, of course, that's something that the originator in that case would control.Albert, do you want to add something?

[Albert Haeggstrom, executive]

Yes. So, just as a reminder, our main business is to get in new APIs from clients. Last year, we got in 22 new APIs, new projects, and the idea there is to take them to clinic and to the market as products. However, in parallel, we have decided to show the conservative industry the power of nanoforming. So in parallel to all these projects that we are doing, remember that we were -- in the last quarter, we had 22 projects that were generating revenue.In parallel to these, we are doing these own kernel -- product kernels, where the idea is that we take them through animal studies, potentially pilot PK, and then we partner them out. But we are not a product company in that sense, that we -- the idea is all the time that this is just to get the technology out there in many, many products. And so it's a way of speeding up the -- how fast the industry will adopt and start to use nanoforming.When the partner projects or when the other projects move into GMP, that is, of course, every single project, and we know that we have had 4 projects that have already gone to GMP. Some of them have already started, and some of them have not yet started. And the one that has gone the furthest is, of course, the nanoenzalutamide.

[Christian Glennie, analyst]

Okay. And then -- and the final one, I guess, would be around what you're seeing on the pipeline, on the partnerships. Obviously, a lot of companies on the sort of service side talking about a bit more of a positive funding environment, clearly, for biotechs that's coming into play more. And whether you're seeing a similar theme on your side?

[Edward Haeggstrom, executive]

This question, may be, Christian, you can take it on a very general level. We have more by frequency and larger by sort of strategic depth conversations now, clearly, than just a short while ago. But please, Christian, you have been out touring the market, so you have a very, very good understanding of the vibes there.

[Christian Jones, executive]

Yes, I think, it's been really interesting. Obviously, the market has been challenging over the last 18 months or so. We quickly reacted to that and started to try to develop potentially deeper and wider relationships with major pharma companies as a result of that. And we're seeing the fruits of that coming through now in the relationships that we are building. So I think that will be something that you'll see in the future going forward with nanoform. But at the same time, we've maintained our contacts with the smaller biotechs, and a lot of them have been waiting for funding before they can move forward with some of the proposals that we've had. And now some of those are starting to get the funding that they've been looking for, which is a very positive sign and so will also be positive for us going forward.

[Operator]

The next question comes from Sami Sarkamies from Danske Bank.

[Sami Sarkamies, analyst]

Okay. Yes, I wanted to touch 3 topics still, and we'll take this one by one. Starting from Project Blockbuster, can you please elaborate on how this will be proceeding this year from your perspective when it comes to manufacturing clinical programs and then commercial discussions?

[Edward Haeggstrom, executive]

Yes, I'm happy to take that. We are now, as we speak, manufacturing GMP material for the registrational batches, and that will also go into the pivotal study. And this manufacturing is going well. And then when it comes to the conversations, of course, these conversations have been ongoing now for many months already. And as stated earlier, we try to close 1 or 2 deals this year. And of course, it's our target to have one of them on the enzalutamide, apalutamide axis. Albert, do you want to add something?

[Albert Haeggstrom, executive]

No, I think so, the manufacturing is ongoing and the clinical, the pivotal clinical trial starts in the fourth quarter. And then we get the readouts in the first quarter. And our plan is to sign the agreements before the readouts, meaning during this year. And this goes for nanoenzalutamide, which is what you call -- which we earlier called Project Blockbuster, before we mentioned the active pharmaceutical ingredient enzalutamide.

[Sami Sarkamies, analyst]

Okay. And then moving on to collect the ASDs, broadly speaking, you disclosed today that you have planned to work with a total of 7 ASDs. Can you please explain why 7 and how you have arrived to these kind of chosen molecules? And will you be progressing the undisclosed 5 during this year? Or are they going to be, like, on hold before you get results with the first 2?

[Edward Haeggstrom, executive]

Yes. So there were 3 questions there. One was basically, how did we arrive at 7, then why these 7, and then are we going to talk about the 5? So the 5 is -- basically the reason why we don't talk about them is before we have the IP secured, it's not smart to talk to them, talk about them because it may mean that we don't get the IP protection we need. Then 5 plus 2 is 7, and of course, the 2 are nanoenzalutamide and nanoapalutamide. And the way we arrived at them was basically, we checked all the ASDs. We checked which one can we nanoform based on STARMAP.Then we made a thorough technical analysis of them, then we made a commercial analysis of them, then we made an IP analysis of them, and then we overlaid all these matrices and that was the way we were able to rank them. Then the number 7 or 2 plus 5, basically we looked at where is the balance between how many we want to work on in order to speed up the acceleration of taking up the platform. What is the bandwidth we have and what is the price tag associated with doing this? Albert, do you want to add something?

[Albert Haeggstrom, executive]

I would add also that the 5 that we now have already, we have already identified them and worked on them, sort of from these different aspects that Edward mentioned. And these are the obvious candidates. When we, through our lenses, with our knowledge, look at the list, we will, of course, now, when we have published the list and we talk with lots of people, and we have already talked with lots of people, both originators and value-added companies, value-added medicine companies, they might come up with other ideas when they look at the list and when they look at our technology, because they come from the API and from the product side while we come from the tech side.So it might be that we call this the first wave, and there might be a second wave where there would be added a few products based on what the partners want to do. But the idea is that this group of 7 is part of the larger group where we said, when we raised the money, we said that roughly 2/3 of that EUR10 million would go into roughly up to a dozen product kernels within the 4 groups: ASD alternatives, long acting, inhaled and biologics. And now we have taken 7 out of the roughly 12. But of course, if clients, if partners want to work on other names, of course, we are open to that. And we can do it both with a sort of initial partial stake, or we can do it as pure fee-for-service as a service provider.

[Sami Sarkamies, analyst]

Okay. And maybe a follow-up question, just, it's clear where you are with regards to those 5 undisclosed ASDs. Is it similar readiness than with apalutamide, where, I mean, you have manufactured some sort of a dispatch, and I think you have also conducted some animal trials?

[Edward Haeggstrom, executive]

So in some cases, we have already started to do some work. And in other cases, we are sort of -- have done the technical evaluation and the financial, and we are waiting for the API, but we have already started to do the work. And we will disclose them not once, all at once, but probably at a suitable rate, also depending on when we sign partnering agreements or when we partner them out. So as we said, we target to get partner deals for 2 of them, meaning nanoenzalutamide and nanoapalutamide already this year. And then of course, we are ambitious, so we would target to do the rest during next year. But potentially, it might be that it -- some of them goes into '26. So that's why we now said that up to a dozen product kernels we are targeting to partner them out in the coming 2.5 years.

[Sami Sarkamies, analyst]

Okay. And then final topic would be, can you provide guidance on your cost base kind of CapEx plans into next year? I'm just trying to understand how your efforts around biologics will be visible in your financials going forward.

[Edward Haeggstrom, executive]

Albert, please.

[Albert Haeggstrom, executive]

The good thing with both the small molecule technology CESS and with the biologics technology is that the CapEx, once you have built the clean rooms and once you have built the -- we have put in the QMS system, we have SAP running, the physical lines in themselves are not that expensive. And that means that, we have also realized that we now have 5 plus 14, 5 on the biologic side, 14 non-GMP lines on the CESS side. And that means that we have said earlier that we can target to do, let's say, 5 projects per year on the line. That means that we have a lot of capacity already, so we can do many, many more projects than we have done, even without increasing the number of lines.One question, which we are already getting now from large pharma is around when do you have GMP for biologics? And there we say that this is a discussion that we are happy to have with them, and of course, that is coming at some point. But that is also not a very large investment, because for those of you who have seen the lines, you know that the biologics lines, they don't take up much space and we can build a clean room around it. So the investment should not be very large.So think of it that the big investments are done. If we have a few million per year in investment in the coming years, if a large pharma or somebody else want to have bigger facilities and more lines for big products, then of course they will participate in the costs. But don't expect a huge uptick in the CapEx.Then on the operating cost, it's the same there that we don't need to hire a lot of more people. We are becoming more and more efficient. So 1 example is the GMP line 2 and 3, where we can actually reduce the number of operator per line significantly compared to the first GMP. So think rather 1 person per line than 5 persons per line because they are fully automated, they work on recipes and so forth. So our automation level has increased. And that means that the number of employees don't need to go up that much. We will a little bit increase on the formulation side, a little bit increase on the biologics side, but we can probably find efficiency measures on other places. So don't expect the costs to go up very much in the coming years. What we want to see is to see a situation where the costs are well contained, but we see the top line increase significantly and therefore we get an impact on the bottom line.

[Sami Sarkamies, analyst]

Okay. I don't have any further questions.

[Operator]

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Henri Von Haartman, executive]

Thank you, operator. On behalf of Nanoform, I would like to thank all participants for today. Thank you, Christian and Sami, for the questions. And if you others have any more questions, you are most welcome to contact us, and you will find our details on the web. We wish everybody a great Thursday afternoon and evening, and thank you and goodbye.