CEO Comment Q4 2022

FOCUS ON PRODUCTION

A continued focus on production has characterized both the fourth quarter and the beginning of the new year. At the same time, our view of the market needs for additional suppliers of high-quality silica for preparative chromatography was strengthened.

During the fourth quarter, our main focus has continued to be on production. We manufacture silica on a large scale and as we previously have described, we are satisfied with our product, but we have a lot to improve in our process. In the last steps of the production process we have parallel flows, one of which has shown some deviations. The silica we produce has been approved chromatographically, but since we want to be certain that the silica has the highest quality over time, we will verify the material further before delivering the larger orders we have received. The larger deliveries are therefore delayed somewhat further. It is regrettable that these deliveries are delayed, but at this point we believe that it is better for our future business that we are completely satisfied with the product we deliver to customers who invest in evaluating the product at full scale. We want to create the best possible conditions for the product in these evaluations to show all the characteristics of the high-quality product we have produced.

In the fourth quarter, we received another order for the evaluation of our silica, from a customer in the North American market. We feel strengthened by the fact that orders continue to come in before we have even made our first larger deliveries. This clearly shows the interest in our product, confidence in our production ability and the need for additional suppliers of silica media for preparative chromatography.

Recently, several GLP-1 analogues have been launched, partly for the treatment of diabetes and partly for the treatment of obesity. In the manufacture of these molecules, as in insulin manufacturing, pharmaceutical manufacturers rely on preparative chromatography for purification. The fact that GLP-1 analogues such as semaglutide have  been approved for the treatment of obesity opens up a new large market segment for us that we have not previously included in our calculations. We assess that this will lead to a sharp increase in the market for  preparative silica –  a market that is already suffering from capacity problems – and, above all, an increased demand for the type of high-quality silica that Nanologica manufactures.

I am frustrated that it has taken a long time for us to reach the first deliveries of silica in larger volumes. We have recently been forced to say no to larger short-term deals. None of us at Nanologica are pleased with this, but I am convinced that we will be able to handle also the remaining challenges and that preparative chromatography will generate significant profitability for Nanologica for many years to come.

Södertälje in February

/Andreas Bhagwani, CEO