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Tuesday, May 24, 2005

Dendritic NanoTechnologies: A Nanotech Rule Breaker

Last week, privately-held Dendritic NanoTechnologies Inc. (DNT) announced that it had developed a new family of scalable, precision dendrimer nanostructures. The technology is called Priostar ™ and it could radically change the economics of nanotechnology.

The news is not only important for the emerging nanotech industry, it is especially good news for Dow Chemical (NYSE: DOW) and Starpharma (Nasdaq: SPHRY) -- both of whom own 30% of DNT apiece. (Starpharma is now traded as an American Depository Receipt on the Nasdaq.)

Dendrimers are nanostructures that can be synthetically made with specific, precise and predictable properties. This “tailorability” implies a variety of commercial applications.

Over the past few years, 6000 research papers have written about dendrimers and there has been no shortage of ideas of how they might be employed. To date, however, applications have been limited to a handful of biotech and pharma uses. The limiting factor has been price. The previous top-of-the-line dendrimer took over 30 days to manufacture and cost about $2000 a gram.

Priostar dendrimers are so potentially disruptive because they can be made 2 or 3 days for about $10 a gram. As an added benefit, the new dendrimers are more thermally stable up to 350 Celsius. (The old ones were stable only to 130 Celsius).

The price reduction radically alters the economics of dendrimers and warrants DNT consideration as a possible rule breaker. This is because at $10 a gram, the list of uses for dendrimers suddenly mushrooms well beyond niche applications in the pharmaceutical arena to everything from water filtration to nutraceuticals.

To understand why these new applications become feasible, readers must understand that the branches of tiny devices can now be quickly and inexpensively tailored in such a way as to either hold or capture individual molecules. For instance, pharmaceutical firms could use the new dendrimers to deliver drug molecules to their exact intended destination or, alternatively, a new Priostar dendrimer could be produced to store a vast amount of hydrogen atoms -- thereby making fuel cell technology more economical.

Because the process is repeatable, scalable and precise, not only is FDA is likely to look favorably upon these new dendrimers so are a host of commercial users who can now expect to receive quality dendrimers in amounts suitable for industrial applications. Be it pharmaceuticals, coatings, batteries, catalysts or advanced materials, these new dendrimers have the prospect of adding a significant amount of value to a host of existing products as well as create a variety of new ones.

Lux Research, one of nanotech’s top research firms, recently predicted that nanotechnology will account for 15% of manufacturing output -- or $2.6. trillion -- by 2014. If this aggressive figure is achieved, these new dendrimers could be responsible for a large portion of that output.

Moving forward, investors are encouraged to put DNT on their radar screens. If the company’s technology is as good and as economical as it claims, there should be no shortage of companies knocking at its doors.

In the meantime, investors looking to make a play on this advance might consider an investment in either of the two publicly-traded stakeholders of DNT. Dow Chemical is definitely the more conservative approach as its 30% stake represents but a small fraction of its overall value. The more aggressive strategy is Starpharma. Its 30% stake in DNT represents a significantly greater portion of its overall value. Investors, however, must remember Starpharma is a tiny stock with a market cap of only $50 million and is subject to great volatility. Great caution is advised and limit orders are advisable. (Full Disclosure: I own stock in Starpharma).

The changing economics of nanotech

This past week witnessed two rather startling developments which I believe fundamentally alter the economics of nanotechnology and could lead to significant commercial growth. The first revolves around Dendritic NanoTechnologies (DNT) announcement that it has developed a new type of dendrmer -- the Priostar. What makes the Priostar so important is that it can be produced in just a few days at a cost of less than $10 a gram. This is a radical improvement over DNT's PAMAM dendrimer which took almost 30 days to produce and cost $2000 a gram.

This is important because at this lower price dendrimers suddenly become practical to use in everything from coatings and catalysts to water filtration and nutraceuticals. In short, Priostar dendrimers could begin adding a great deal of value to a host of different products.

The second advances comes compliments of Cornell University which claims to have developed new nanoparticles (quantum dots) that are more chemically inert and less inexpensive to manufacture than today's quantum dots. Like the Priostar dendrimer, this development could lead to the new nanoparticles (which have been dubbed "Cornell dots") being used in a variety of new applications.

It is advances like these that will continue to push nanotech ever closer to wide scale commercial acceptance. I encourage investors to concentrate not so much on which companies are manufacturing these new materials but rather which ones are employing these new materials to make their existing products better -- because that is where the real value will be.

Monday, May 23, 2005

Still Bullish on pSivida

Today, I had a short article in The Motley Fool about pSivida's recent turn-a-round.

It has been painful to watch pSivida's slide since it was listed on Nasdaq in Februrary but as I said in an earlier posting, I thought the price decline would be temporary because, in part, it wasn't being driven by any particular news. This is not the case with its reversal -- which is being driven by positive news. (I list the three recent positive developments which are contributing to the rebound in the Motley Fool article.)

As I have said all along, the thing that will really move this stock forward will be news that one of "the top 5 global pharma companies" has decided to move forward with product development using pSivida's BilSilicon technology. Such a development would serve as big validation of its technology. Moreover, if this occurs, the Big Pharma company will not only pay for product development and testing, it is likely to pay pSivida some healthy milestone payments.

I remain bullish on pSivida and encourage investors to stay patient. (Full Disclosure: I own pSivida stock).

Related Links:
pSivida: Down Under Company has Big Upside Potential
Starpharma "Nano" star on the rise?
Elan Good News for Nanotech Investors?

Monday, May 16, 2005

Accelrys Article: SciTegic not SciTech

In yesterday's Motley Fool article on Accelrys, I incorrectly identified the company Accelrys acquired. It's name is SciTegic, not SciTech. I apologize for the error. For investors interested in learning more about SciTegic, you can access their web site here.

You can access the full article below.

"What Drives Accelrys"
by Jack Uldrich, The Motley Fool, May 16, 2005

Friday, May 13, 2005

More on TINY's Potential

Today, I had a short article in The Motley Fool about Harris & Harris' "Big Potential." The article focused primarily on Nanomix's recent announcement that it now had a new hydrogen sensor. I correctly surmised that this might be Nanomix's first product a few weeks ago in this article.

I am increasingly bullish on Harris and Harris and if you have not yet done so I encourage you to re-read the posts I have done on two of Harris & Harris's other portfolio companies: Molecular Imprints and Nantero. The posts can be accessed below.

As the Motley Fool article states, I do not currently own any TINY shares--and cannot buy any until 10 trading days after my article appears--but I think this is a good time to consider an investment.

Related Links:
Bright Future for ... Molecular Imprints
Nantero One Step Closer

Thursday, May 12, 2005

Carbon Nanotubes: A Fool's Gold?

In today's Motley Fool, I had an article published about the potential risks of carbon nanotubes. You can read it here. What I failed to mention in the article is that I personally remain very bullish on carbon nanotubes. I stand by my notion that they carry a significant downside risk, but I also believe that scientists and researchers will be able to address certain issues, avoid others, and/or develop new variations which don't have the negative charcteristics.

Wednesday, May 11, 2005

A Billion Here ... A Billion There

Yesterday, The Freedonia Group issued a press release stating that the health care market for nanotechnology related products will be $6.5 billion by 2009. If this sounds a little familiar perhaps it is because last month another organization released a similar press release explaining that nanotechnology will account for only $1.7 billion in nano-related health products by 2009.

Who are you to believe?

As I explained in my March 21 post which you can read here, I listed all the reasons why I felt $1.7 billion was too low. Freedonia's figures may be closer to the mark but I would urge my readers to think twice before shilling out $4,200 for the report.

The fact is that the field is moving so fast and so many of the big drug companies are now involved in nanotechnology that almost anything happen. Furthermore, regulatory issues are almost certain to play a larger and more integral role in the development field -- and, as most people know, the regulatory process is incredibly difficult to predict.

To be fair, I have not--and don't intend to--purchase Freedonia's Report but my gut instinct tells me that you can get almost all of the same information from my favorite nanotechnology news source: Nanotechnology Now. Bottom-line: Save your money and just keep doing your own due diligence.

Related Links:
Starpharma "Nano" star on the rise?
Elan Good News for Nanotech Investors?
pSivida: Down Under Comapny has Big Upside Potential

Tuesday, May 10, 2005

Carbon Nanotubes: Love 'em or Hate 'em?

Today's edition of Ray Kurzweil's always fascinating website on "accelerating intelligence" has three separate articles on carbon nanotubes. The first two point to the long-term potential of carbon nanotubes, while the third raises a very troubling issue which, if left unaddressed (or, alternatively, not handled properly), could severely damage the emerging field.

The first article talks about Motorola's work in developing a new color display using carbon nanotubes. If successful, the material could lead to thinner, less expensive, and more vivid flat panel displays. The second positive development comes out of Carnegie Mellon University. Researchers there claim to have developed a method for producing polymer films with "highly ordered nanocarbon arrays." Among the many things such an advance could lead to is the creation of high density data storage devices.

As positive as these developments are, however, researchers at Rice University have found that buckyballs dissolve in water and, as such, might have a negative impact on the environment. Now to be fair, the press releases goes on to make clear that carbon nanotubes have also have many positive attributes (such as acting as an anti-bacterial agent) but, at a minimum, the research should serve as yet another warning sign that until the environmental and health effects of carbon nanotubes are better understood any company dealing with these materials is exposed to some potentially serious liability issues.

I remain bullish on the extraordinary potential of carbon nanotubes but this enthusiam will remain tempered until researchers and industry leaders do a better job of minimizing the very legitimate concerns that researchers at Rice University--and others--are raising.

Monday, May 02, 2005

More on Intel's Strategy

In today's edition of The Motley Fool, I had an article discussing Intel's nanotechnology strategy. You can read it here.

I also, however, came across an excellent article, written by Michael Kanellos, entitled "New life for Moore's Law." The article discusses many of the technologies I have talked about in the past. More importantly, it reiterates my belief that investor's need to put Molecular Imprints and NanoNex on their radar screens. I believe nanolithography imprint technology will be one of the key enabling technologies that helps the semiconductor industry continue to push down to the 45,32,22 and sub-10 nanomter range--and Molecular Imprints and NanoNex could very well have the technology that allows everyone in the industry to construct those ever-smaller circuits.