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Wednesday, October 12, 2005

Invitrogen's Future is "Nano"Crystal Clear

Invitrogen (Nasdaq: IVGN) announced last week that it was acquiring Quantum Dot Corporation and BioPixels. The two deals, whose terms have yet to be disclosed, should work together to strengthen the company’s position as a leader in the field of advanced labeling and detection technologies for the life sciences and pave the way for further strategic alliances with companies like Agilent (NYSE:A) and Applera (NYSE:ABI).

Invitrogen is already a major player in the drug discovery product market and the two deals will facilitate the creation of new innovative products that allow researchers to better visualize and understand cellular processes. For instance, quantum dots -- semiconductoring nanocrystals -- could permit the “bar-coding” of both DNA strands and cellular structures and help researchers monitor the reactions of cells to certain drugs or viruses.

Together with BioPixels’ technology, which provides novel coatings for semi-conducting nanocrystals, these quantum dots could help Invitrogen create smaller, brighter and lower toxicity products. This, in turn, would allow detection technologies to remain in the body significantly longer than today’s state-of-the-art technology. Such improvements portend earlier detection from everything from heart disease and diabetes to cancer.

In the same press release, it was announced that Invitrogen had also signed an exclusive licensing agreement with the Georgia Tech Research Center to commercialize the university’s novel “nanocluster” technology. It has been suggested that this technology may someday permit single molecule detection. If true, that would make it a very valuable tool for the global war on terrorism and open up another sizeable market to Invitrogen.

The combination of this agreement, together with its two new acquisitions, warrants Invitrogen’s classification as a nanotechnology company. Moreover, the strength of Quantum Dots Corporation’s intellectual property -- which has long been considered to have one of the nanotechnology sectors more impressive IP portfolio’s -- suggests that the company is well positioned for future growth.

In 2003, Invitrogen bought another promising nanotechnology company -- Genicon Sciences -- on the cheap and used its nanoscale particles to bolster its gene expression business line. I suspect that while the terms of the Quantum Dot Corporation and BioPixels deals may end up being much more costly, Invitrogen will be able to similarly leverage the two companies’ technology into a competitive advantage.

Invitrogen has had a nice run since 2003 and with acquisitions like Quantum Dot and BioPixels, its future remains “nano” crystal clear.