In one of the assay it was found that nanoformulations were giving lower value means potent cytoxicity on HEK normal cells as compared to powdered form. Does that mean that nanoformulation is not suitable for normal cells?
That would depend on if the nanoparticles without the drug/active compound are toxic. If the particles alone are not toxic but the loaded ones exhibit greater toxicity, that would imply the particles present a more effective drug delivery mechanism than administering the free in solution. For example, if the IC50 of a drug is 10 uM in solution but is decreased to 5 uM (say for instance 0.5 nM particle concentration containing 10,000 drugs/particle) when loaded on a particle (take care that drug concentration is being compared not drug-particle concentration as many drug molecules will be loaded on each particle) AND the bare particle (same formulation/surface except without the drug) does not exhibit toxicity at the treated concentration, that would imply that you are improving the drug potency or delivery efficiency by loading it the nanoparticle. Other experiments can be done to confirm whether it is due to increased uptake of the drug molecules when on the particle or whether they are just more active, but in many cases this would be desirable as you are achieving the same level of toxicity while using less of the drug compound.
whils the unblocked surfaces of nanoparticles tend to be reactive you should also make sure that your control particles have followed the same number of washing steps as the coated particles to exclude any toxicity from additives in the microparticle solution