NanoNovus

www.NanoNovus.com

2006-03-03T07:09:00.000-08:00

Effective March 1, 2006, my blog has been transferred to www.nanonovus.com.

The new site will focus primarily on investment-related activity and will serve as a compendium to my new book Investing in Nanotechnology: Think Small. Win Big.

The new site will require a quick registration and a passcode. Individuals who have purchased the book will find the code in the book.

If you have not purchased the book but would still like to access the site, I will be making the code available free-of-charge. If you are interested, simply email me at jack@nanoveritas.com and put the word "code" in the subject line. The code will be provided to you within 24 hours.

Jack Uldrich

Effective Immediately

2006-03-03T06:54:00.000-08:00

On March 1, I changed my blog to a new site to www.nanonovus.com. It can now be accessed:here .

The site requires a very quick registration and a passcode. Individuals who have purchased my latest book : Investing in Nanotechnology: Think Small. Win Big can find the code in the book.

Indivdiuals who have not purchased the book but would like to receive daily updates on the field can also receive a code. Simply email me at jack@nanoveritas.com and a code will be provided with 24 hours.

Uldrich Interview on Science & Society

2006-02-09T05:44:00.000-08:00

I was interviewed yesterday by David Lemberg on the radio program, Science & Society. The 20-minute interview is available here . The interview provides a quick overview of my new book, Investing in Nanotechnology: Think Small. Win Big.

Possible Nanotech IPO's

2006-02-09T05:27:00.000-08:00

If you're interested in reading about some nanotech companies that might go public in 2006, I encourage you to read this article of mine that appeared last week in The Motley Fool. It is entitled "Nanotech Baby Breakers on the Horizon?" and can be accesed: here .

Procter & Gamble: Less is More

2006-01-30T13:52:00.000-08:00

Based on a recent speech that Alan Lafley, CEO of Procter & Gamble, gave in Boston, it appears that P&G is poised to join the ranks of companies applying nanotechnology to its existing product line. I wrote a more in-depth article on the matter in today's Motley Fool. It is entitled "Procter & Gamble: Less is More" and can be accesed: here .

(Full disclosure: I do not own any stock in P&G).

Jack Uldrich

Why Intel Represents a Good Buy

2006-01-27T13:35:00.000-08:00

I think Intel (Nasdaq: INTC) represents an attractive buy at its current price. I explain in this article I wrote for The Motley Fool. It's entitled: Intel: Smaller is Better.

The company's stock price is now off almost 16% since the first of this year, but its long-term prospects for growth look promising. (Full disclosure: I own stock in Intel).

Nanotech Investing: A Primer

2006-01-24T11:55:00.000-08:00

In the months and years ahead, investors are likely to hear an increasing amount about the emerging field of nanotechnology. Much of the news will be exciting, fascinating and, potentially, quite profitable. Pundits and analysts alike will speak of nanotechnology’s ability to create everything from hundreds of cancer-curing drugs to materials a hundred times stronger than steel.

The press surrounding nanotechnology may, in fact, grow so great that some investors will be tempted to dismiss it as mere hype—akin to the second coming of the Internet boom/bust. That would be a mistake. The science behind nanotechnology is real and talk of it being the “next industrial revolution” is not off the mark.

To begin, however, it is useful to think of nanotechnology not as its own industry or commercial sector. Rather, it should be viewed it as a general purpose technology—like electricity or the Internet—that will change how business is done.

Therefore, investors looking to garner above average returns in the years ahead need to familiarize themselves with nanotechnology because it will impact almost every industrial sector including: chemicals and materials; equipment and instrumentation; electronics and semiconductors; energy, and the life sciences.

The Ultimate in Material Sciences

Nanotechnology is defined as the willful manipulation of atoms and molecules. One way to think of this is to consider a lump of coal and a diamond. Both are made of carbon atoms … but how those atoms are arranged matters greatly. The first is a cheap source of energy, while the other is suitable to be used as a wedding ring.

In the past, mankind simply had to accept materials as Mother Nature saw fit to produce them—be it in the form of bronze, iron, steel or silicon. What makes nanotechnology so unique is that researchers are now figuring out how to shift around atoms and molecules to make better or entirely new materials. Consider this, two private nanotechnology companies—Apollo Diamonds and Gemesis Corporation—are now manipulating carbon atoms to create two-carat diamonds for around $100.

A number of publicly-traded companies including Dow Chemical, Degussa, BASF and DuPont, as well as some small-cap companies, such as Nanophase and Oxonica, are also exploiting nanoscale materials on a more prosaic scale. Among some of the early products nanotechnology is enabling are: self-cleaning windows, stain-resistant pants, and scratch-resistant automobile frames.

These are hardly earth-shattering advances, but they are simply the tip of the proverbial iceberg. Researchers are also working to create shape-shifting materials and even self-healing materials.

From the perspective of the individual investor, it will be important to remember that while many of these nanomaterials are imbued with wonderful characteristics and properties, the benefits will generally accrue to the company incorporating the nanomaterials. Investors are, therefore, encouraged to focus less on who is making and supplying these materials and more of who is using them.

This is not to say that money won’t be made in this field, it is just that the profits are likely to go to those large producers who can achieve economies of scales in the production of these materials.

A few intriguing possibilities do exist but investors may have to wait a few years because some of the more interesting companies are privately-held. Carbon Nanotechnologies Inc. is manufacturing carbon nanotubes which are 100 times the strength of steel, but a fraction of the weight. Due to their extraordinary characteristics, they have a host of promising applications. Similarly, Aspen Aerogels is manufacturing a product called “frozen smoke” which is among the lightest known solids in the world and has magnificent thermal and acoustic properties. If both companies are successful in getting major manufacturers—such as plastic manufacturers or the home construction industry—to incorporate the nanomaterials into their products, the profits could be substantial.

The Early Winners

In 2006, it is estimated that more than $10 billion will be invested in nanotechnology research and development around the world. Much of this money will be spent on the equipment necessary to model, visualize and manipulate materials at the nanoscale.

Among the publicly-traded companies like to profit from this large scale investment are Symyx, Accelrys, FEI and Veeco. Symyx is a leader in the field of high throughput experimentation for the discovery of new materials. Essentially, the company’s technology speeds up the process for creating new materials for the chemical, electronics, and life sciences markets.

Accelrys, which like Symyx has licensing agreements with leading Fortune 100 corporations, is focused on the development of molecular modeling and software simulation. Specifically, its tools facilitate new product design and drug discovery for the life sciences industry.

In addition to creating tools to model the development of new materials, it will also be necessary to visualize and manipulate atoms and molecules. Among the companies making the equipment necessary to do this (i.e. scanning electron microscopes, atomic force microscopes, transmission electron microscopes, etc.), are FEI, Veeco and JEOL.

All of these companies are positioned for long-term growth because two huge industries—semiconductors and life sciences—are both scaling down to the molecular level. The semiconductor industry, which is already making circuits with transistors in the range of 65 nanometers, will continue to make tinier circuits and, as it does, it will be imperative that it has the equipment to operate at these ever-smaller levels.

The life sciences sector is experiencing much the same thing. The workings of the human body have long been known to operate at the nanoscale level (e.g. DNA, viruses, proteins, etc.) and if researchers are to fully understand and, ultimately, fix problems with the body, they will require tools and devices that can see and operate at this level. For instance, FEI’s 3-D electron microscope, because it can characterize and visualize viruses and DNA at the sub-atomic level, will be a useful tool in helping scientists understand the chemical basis for life and uncovering the mechanisms of disease.

A few private nanotechnology equipment companies bear close watching. On the semiconductor side, Molecular Imprints stands out because it has nanolithography technology that can help the semiconductor scale down to the 10 nanometer range. Arryx, a Chicago-based company, is developing something called holographic optical trapping technology that is capable of moving and manipulating cells, organelles, and molecules. And then there is NanoInk, also based in Chicago, which is perfecting a technique called Dip-Pen Nanolithography—a process that uses an atomic force microscope to write nanoscale patterns on substrates using atoms and molecules as the “ink.”

Small and Green: Nanotechnology & the Energy Sector

It has been estimated that within the next two decades the world’s energy needs will nearly triple. This pressure will cause the market to look at a variety of ways to improve existing energy supplies as well as look for new alternative energy sources. Which energy source(s) will win out in the commercial marketplace is difficult to predict. What is not difficult to predict, however, is whether nanotechnology will play a large role.

For example, the role catalysts play in the production of oil and natural gas has long been well understood. Less understood is how new nanoscale materials—because of their large surface-to-area ratio—can make for even more efficient catalysts. ChevronTexaco, ExxonMobil and Headwaters, Inc. are all investing heavily in nanotechnology to increase their yields. Specifically, Headwater is applying new nanocatalysts to the heavy oils in the tar sands of northern Canada in an effort to convert them into higher yield, environmentally-friendly, liquid fuels. Longer-term, one of its subsidiaries, NanoKinetic, is even exploring how nanotechnology can be exploited to liquefy coal.

Different nanomaterials may also be created to enhance the efficiency of fuel cell technology. One company working along these lines is NanoDynamics. The Buffalo, New York company has manufactured a new nanopowder that has been demonstrated to improve the efficiency of a solid oxide fuel cell. The device—about the size of a loaf of bread—can power everything from military gear on a battlefield to outdoor billboards.

It is even feasible that nanotechnology could change the energy equation by creating new nanomaterials manufactured to a standard high enough to safely store radioactive waste—thereby making nuclear power a more attractive option.

A fourth area where nanotechnology will play a large role is the development of solar cell technology. Konarka, a privately-held company located in Lowell, Massachusetts has developed titanium nanoparticles that can efficiently convert natural light and indoor light into electricity. When these nanoparticles are added to a flexible polymer, the possibilities are almost endless. By enabling the creation of thin, flexible solar cells that can be wrapped onto the roofs of homes and businesses all across the country, how America meets a large portion of its energy needs could be transformed. Konarka has publicly stated that it is pursuing this goal—as are two other nanotechnology companies: Nanosys and NanoSolar. The former is already partnering with Matsushita and expects to begin printing flexible solar cells as thin as wallpaper by 2007, while the latter is rapidly making progress with “self-assembling” solar cells. As fantastic as it sounds, these self-assembling nanoparticles might someday be able to be spray-painted directly onto walls.

With less than one percent of the world’s energy need being met by solar cells today, and the overall market for energy increasing, it is clear investors with an understanding of how nanotechnology can help meet this growing need can also profit handsomely in the process.

Keeping Moore’s Law Alive: Nanotechnology to the Rescue

For the past 40 years, the number of transistors crammed onto integrated circuits has doubled roughly every 18 months. In the world of semiconductors, this has come to be known as Moore’s Law—named after Gordon Moore, the founder of Intel, who famously forecast this phenomenon in 1965.

In recent years, a number of people have predicted the demise of the law as silicon—the basic building block of the computer revolution—has begun to run up against its physical limits. (As transistors are etched to ever-finer dimensions, they suffer “leak” as electrons migrate through the thinner material. The circuits, because they are more closely crammed together, also begin to run hotter—so hot, in fact, that they run the risk of eventually melting the silicon.)

It now appears that nanotechnology will keep Moore’s Law sailing along smoothly for at least the next 15 years. The semiconductor industry recently unveiled its updated International Technology Roadmap and announced that nanotechnology would be instrumental in its transition to a post-silicon era. New materials, heat sinks, carbon nanotubes and, eventually, molecular electronics are all likely to be part of the equation.

Initially, the winners are likely to be some pretty familiar names. IBM and Intel have announced startling progress in how new nanoscale materials can be manufactured to improve the flow the electrons in existing circuits. Both have also indicated that progress with carbon nanotubes is progressing to the stage where the one nanometer structures might be utilized as transistors. Perhaps the most exciting work, though, is being done by Hewlett-Packard in the field of molecular electronics. In 2005, the company announced that its researchers had successfully created electronic switches from single molecules—an advance that could lead to radically more powerful computers.

The field of nanoelectronics is host to a number of promising private start-ups, and a few of these are likely to go public within the next year or two. Molecular Imprints, Nanosys, NanoCoolers, and Nantero all bear watching.

What makes the above companies unique is that all are partnering with existing corporations. This is an important consideration because as fabulous as any nanotechnology company’s technology is, to be successful, they will need to partner with a major corporation to get their technology to the commercial marketplace.

To that end, Nanosys and NanoCoolers are partnering with Intel, in the field of nanowires and heat sinks; Molecular Imprints is supplying its equipment to Hewlett-Packard; while Nantero is working with LSI Logic to utilize its carbon nanotubes for a memory based product capable of storing massive amounts of data.

One other private company that bears close watching is Cambrios. This is because it is developing proteins that can bind to wide variety of different electronic, optical and magnetic materials. If successful, semiconductors, nanowires and scores of other small electrical and optical components won’t be manufactured in the traditional sense, they will be grown. The vast upside to such a disruptive technology is that the company won’t have to build a super expensive semiconductor fabrication plant (which today cost $3 billion) to build its product; it will simply grow them inexpensively in labs.

From Treatment to Prevention … to a Cure

As promising as such nanotechnology-enabled advances are, the field where it will ultimately have the greatest impact and the highest potential pay-off for individual investors is in the life sciences sector.

To get an indication of nanotechnology’s promise, consider that earlier this month, the Food and Drug Administration (FDA) fast-tracked for approval VivaGel, a topical microicide gel that can be applied as a preventative treatment against the sexual transmission of HIV. The gel is the first true application of a nanotechnology device in the biopharmaceutical field. Starpharma, the Australian company who is developing the product, is also focused on the development and application of other dendrimer nanotechnologies as drug delivery devices.

What makes dendrimers so unique is that they can be precisely manufactured with a number of different branches—each of which can be tailored to a specific size and be made to perform a different function. For instance, NanoBio, a private company in Ann Arbor, Michigan is working on creating dendrimers that can detect, diagnose and treat individual cancer cells.

While such nanoscale devices are still awaiting final approval, a number of other nanotechnology-enabled products have already reached the market. In January 2005, the FDA approved Abraxane. Made by American Pharmaceutical Products, the proprietary nanoparticle oncology drug binds to naturally occurring proteins and more effectively delivers the drug to its target. Because the nanoparticles are so small, they also have the benefit of being more solvent in the body. This means they require no toxic solvents and this, in turn, lessens the nasty side-effects often associated with cancer drugs.

A variety of other publicly-traded companies including Elan, Flamel, Novavax, Skyepharma, Nucryst and Immunicon are also developing nanoparticles to create new drugs and improve existing ones. With an estimated 60 percent of all blockbuster drugs expected to have their patents expire by the end of the decade, the possibility of employing such nanoparticles to help reformulate these drugs—and extend the patent—is of no small financial consequence.

The number of nanotechnology companies hitting the market is only going to grow in the years ahead. Last year, the U.S. government earmarked $144 million to develop nanotechnology applications to battle cancer. The director of the National Cancer Institute is so optimistic about nanotechnology’s potential that he has publicly stated nanotechnology has the potential to control a variety of cancers within a decade’s time.

By early indications, it appears that he may have been conservative in his projections. Nanosphere, a Chicago-based nanotech start-up, is developing a molecular testing system that is reported to be 1,000 times more sensitive than the systems on the market today. It is also easier to use, has a quicker turn-a-round time, and is capable of testing for more than one marker at a time. If successful, it will enable doctors (and maybe even patients themselves) to detect a variety of medical conditions at a very early stage.

Once detected, nanotechnology-based products and devices will then allow for more effective treatment. There is no shortage of promising nanotechnology-based products and companies. For instance, NanoSpectra Sciences is developing “nanoshell” particles capable of being absorbed by cancer cells. Once absorbed, these nanoparticles can then be treated with infrared light and heated to such a level that they will kill the cancer cell from the inside. Other companies like pSivida and iMedd are perfecting nanoscale devices that can release drug molecules at a slow, steady and sustained rate to targeted areas for extended periods of time.

Be it dendrimers, nanoshells, carbon nanotubes loaded with drug molecules, or some yet-to-be-developed nanotechnology-based treatment, the victory in the “war on cancer” is still a way off, but the road to victory is now becoming increasingly clear thanks to nanotechnology.

What’s an Individual Investor to Do?

The field of nanotechnology is so vast and is growing so quickly that keeping track of its advances—let alone trying to determine who is going to win—is an increasingly difficult endeavor.

The fact that a company has a promising nano-enabled technology or product will not be enough to guarantee success. At the end of the day which companies succeed will boil down to a number of other time-honored considerations like: good management, access to capital, key partnerships, and maybe even a little luck.

Sorting all of this out is a difficult, time-consuming and risky venture. There are three ways to approach this problem. The first is to find a fund dedicated to nanotechnology. As luck would have it, this past October, PowerShare unveiled the first Electronic-Traded Fund (EFT) for nanotechnology. PowerShare tracks an index of companies that are either developing nanotechnology-based solutions or, alternatively, utilize nanotechnology heavily in their end products. The fund is now up 10 percent since its inception but it may leave more aggressive investors searching for something more. That’s because it includes a number of large companies like IBM, Intel and GE—who due to their massive size—are unlikely to achieve extraordinary returns. More troublesome; is the fact that the fund also includes a few nanotechnology companies of questionable worth. They either lack solid management or don’t possess cutting-edge technology.

A second way to play the emerging nanotechnology market is to invest in either Harris & Harris or Arrowhead Research Corporation. Harris & Harris is a publicly-traded venture capital firm specializing in nanotechnology. To date, it has made sizeable investments in a number of nanotechnology’s most exciting private companies. Among the companies i which it has an equity stake include Molecular Imprints, Nanosys, Nantero, NanoMix, NanoOpto, Starfire Systems, Zia Lasers and NeoPhotonics.

Arrowhead Research has a different approach. It invests in promising nanotechnology research and development at university and federal laboratories, and then commercializes the most promising research. While much of this research is further away from the commercial marketplace than Harris & Harris’ investments, it does have the advantage of allowing Arrowhead to claim a larger (and often controlling) interest in the companies it starts.

At the present time, both would appear to be trading near their upper limits and investors are advised to tread carefully until additional news is forthcoming suggesting either company will be bringing products to the commercial marketplace in the near future.

A Final Word

That leaves investors with little option but to invest in individual nanotechnology companies. Luckily, there are literally dozens of well managed, publicly-traded companies working on exciting nanotechnology-based applications. The nanotechnology revolution is coming and the time to become familiar with the field and its leading players is now. Because whether it is the creation of diamond-like or self-healing materials; thin, flexible solar cells; self-assembling computer circuits; or nanoscale cancer-killing treatments, the modern industrial economy is slated for massive change due to nanotechnology and the individual investor with enough foresight to invest in the companies ushering in these advances stands to be well rewarded.

Jack Uldrich is a world renowned speaker on the topic of nanotechnology and the author of the forthcoming book, Investing in Nanotechnology: Think Small, Win Big (Adams Media), which is to be released in March and profiles over 100 leading nanotechnology companies. He is also the author of The Next Big Thing is Really Small: How Nanotechnology Will Change the Future of Your Business. He can be reached at jack@nanoveritas.com.

NanoNovus: January 13, 2006

2006-01-13T14:48:00.000-08:00

Today was a big day in the field of nanotech investing. Elan announced a licensing agreement with EntreMed that grants the company the right to utilize Elan's (NYSE: ELN) proprietary NanoCrystal technology. I have long been bullish on this technology and it is why I recommended Elan in this posting after it dropped to around $3 a share this past spring. (Today, it is trading around $15 and I think it'll continue to go higher in the year ahead).

In a separate item, Arrowhead Research, a company which I wrote about this fall in a Motley Fool article, announced it had sold over 5.5 million shares of its stock to York Capital Management and Knott Partners. The deal allowed the company to purchase shares of Arrowhead (Nasdaq: ARWR) for $3.50 -- a healthy discount of over 20% to today's current asking price of $4.52 a share. This tells me that the stock price will probably drop to near this level in the very near future. The deal also grants York and Knott warrants to pick up an aditional 1.4 milion for a little over $5 a share in the future. My personal opinion is that this offers little solace for current investors. I reiterate my view that ARWR's stock is inflated at today's price, and investors should wait until the price drops back down to around the $3-a-share level before considering an investment.

The third bit of news was that the QinetiQ Group -- which owns Qinetiq Nanomaterials -- is expected to go public on the London trading market next month. I am currently agnostic on whether Qinetiq is a good investment. From the perspective of a nanotechnology investment, however, I would encourage investors to stay away for the time being. Qinetiq Nanomaterials makes up only a small portion of the company's overall value and, as such, in good conscience I can't classify it as a legitimate nanotech investment. (Investors looking to diversify their portfolio's into both nanomaterials and foreign markets might, however, want to consider an investment in Oxonica.)

(Full disclosure: I own stock in Elan but none of the other companies mentioned in this article).

Jack Uldrich

Nanotech Investing Will Require Some Patience

2006-01-09T12:52:00.000-08:00

Nano Gets Fast Tracked

2006-01-08T18:22:00.000-08:00

I have long been very bullish on Starpharma's long-term prospects and today the company announced yet another round of good news that provided me yet another reason to remain bullish. Company officials announced it's investigational new drug, VivaGel, has been granted "Fast Track" status by the Food and Drug Administration.

In the press release the company explains the significance of this event. Essentially, it is a vote of confidence regarding the potential effectiveness of VivaGel, which is a dendrimer-based vaginal mirocibe gel drug designed to prevent the transmission of HIV. The net effect is that it could ultimately speed up the time it takes for the FDA to render final approval for the drug.

Be advised that the "Fast Track" stamp of approval doesn't guarantee that the treatment will necessarily receive final approval, but apparently the FDA sees enough promise in the treatment to give it this priority status.

This news, combined with the $20 million grant the company received from the National Institute of Health this past fall, is just another feather in the company's cap and why I think risk-tolerant investors should consider investing in Starpharma. (Full disclosure: I own stock in Starpharma.)

Related Links:
More News on pSivida & Starpharma
Dendritic Nanotechnologies
Still Bullish on pSivida
pSivida: Down Under Company has Big Upside Potential
Starpharma "Nano" star on the rise?

2005-12-22T14:16:00.000-08:00

Here's a link to my latest article in The Motley Fool. It's entitled: DuPont: The Truth Helps Nanotech. It reviews how DuPont is applying the painful lessons it learned from its recent run-in with the EPA regarding PFOC (i.e. the $16 million fine) to nanotechnology. It is just one of the reasons I'm bullish on DuPont's long-term prospects. (Full Disclosure: I don't own any DuPont stock at this time.)

A Response to Altair Criticisms

2005-12-21T15:00:00.000-08:00

In today's Motley Fool, I had an article entitled: Another Press Release from Altair.

In response, I have received a few emails criticizing me for being unduly harsh on Altair, bashing the stock for my own financial stake, or being just plain stupid.

Before, I address these criticisms individually, I encourage you to read the article and judge for yourself.

To begin, the reason I have been so negative on Altair is because I believe in the potential of nanotechnology. As a result, I am confident that a number of nanotechnology-related companies -- as well as investors -- are going to do quite well. As with the Dot.Com era, however, there is going to be a lot of hype surrounding the field. I am of the opinion that this hype is, in general, a bad thing. As such, when I feel companies are unnecessarily or unrealisticly touting nanotech's benefits to an unsuspecting public, I intend to call them on it. That is because I think such dubious companies have the potential to give the whole nanotech industry (such as it is) a black eye.

As to the second criticism, I want to make it crystal clear that I neither own Altair stock, nor do I short the stock.

As for the third and final criticism (i.e. my intelligence), I'll willfully admit that they may have a point ... but it has nothing to do with my position on Altair. In fact, one of my very first postings on this blog was a posting critical of an earlier article in The Motley Fool about Altair. I encourage you to read it here. If nothing else, I have been consistent in my criticism of Altair. And, more to the point, I will remain critical until the company actually produces a real product and signs up some real customers.

If and when they do that, I'll happily write an article to that effect.

Sincerely,

Jack Uldrich

Related Links:
Toshiba vs Altair
Altair: Fooling the Fools
Is Altair all Hot Air?

Nano Greases the Skids

2005-12-09T13:34:00.000-08:00

Here's a link to my latest article in The Motley Fool. It's entitled: Nano Greases the Skids for Intel. It reviews Intel's latest forays into the field of material science. I expect developments in this area to yield significant improvements in a variety of Intel's next generation products.

I don't mention this in the article but the company Intel is collaborating with in this field is Qinetiq. It is a company I profile in my forthcoming book,Investing in Nanotechnology: Think Small, Win Big, and one I encourage investors to put on their radar screens.

(Full disclosure: I own stock in Intel at this time but not Qinetiq.)

Jack Uldrich

The FDA's Softening Skin

2005-12-05T13:22:00.000-08:00

This past Friday, an FDA advisory panel determined that an experimental skin patch designed to treat children with attention deficit hyperactivity disorder (ADHD) was safe and effective. The ruling burned some investors because, the day before, a key FDA staffer publicly suggested said that the patch was too risky.

This type of hyper-activity leads me to wonder if perhaps the FDA shouldn’t conduct some further testing of the patch on its own staff.

In all seriousness, though, the FDA usually follows the advice of its advisory panels and the patch, which will deliver a generic version of Ritalin, will likely be formally approved toward the end of this month. This is good news for the manufacturer the patch, Noven Pharmaceutical (Nasdaq: NOVN) and Britain-based Shire Pharmaceuticals Group (L: SHP).

From a broader perspective, however, the ruling should serve as a warning sign to investors hoping to profit from the advancement of alternative drug delivery systems. Drug delivery is now one of the hottest areas in pharmaceutical research and development, and it has been estimated that the demand for new systems could grow 10% annually for the next few years.

Controlled-released pills will likely remain the dominant method for delivering drugs to their target for the foreseeable future, but, as someone who follows the advances in nanotechnology quite closely -- and understands its potential to make implants, patches and inhalers far more effective -- I am both pleased and unnerved at the FDA’s recent reversal.

I am pleased because the FDA is obviously open to the unique benefits that these new alternatives can provide. For instance, they give patients who dislike or find taking pills to be unpleasant a second option; or, as in the case of a patch, they allow the drug to be quickly removed if the drug’s adverse side-effects prove to be too discomforting.

Other nanoscale drug delivery systems will offer additional benefits. Unfortunately,
I am not confident the staff at the FDA understands enough about these new technologies to make informed decisions about the myriad of devices which are likely to require approval in the years ahead.

As a result, I think investors can expect to be jerked around by an FDA staff which is uncomfortable in its attempt to quantify the risks and benefits of these new systems.

Therefore, while the FDA has seemingly softened its skin with regard to ADHD patch, I advise investors to develop a thick skin and learn to control their emotions in response to future FDA decisions. My guess is that we will be seeing more -- and not fewer -- such reversals in the future.

Jack Uldrich

P.S. I don't own any stock in the companies mentioned in this article.

IBM: A Very Small Bright Light

2005-11-29T12:05:00.001-08:00

Here's my latest article in The Motley Fool. It's entitled: IBM: A Very Small Bright Light. It reviews IBM latest breakthrough in carbon nanotube technology. I expect the development to lead to a variety of new products for IBM in the areas of high performance computers, telecommunication devices and lighting.

(Full disclosure: I own stock in IBM.)

Jack Uldrich

Nanotechnology and the Kitchen & Bath of Tomorrow

2005-11-17T16:57:00.000-08:00

The following article was written by me for the National Kitchen and Bath Association in advance of its 2006 annual conference in 2006.

An article on how the emerging field of nanotechnology will affect the future of kitchen and bath design might lead a person to conjure up futuristic imagines of Jetson-like rooms where refrigerators communicate wirelessly with sensor-embedded milk cartons and then transmit that information to an all-knowing computer which determines if it is necessary to order another carton from the store that offers the lowest price.

Such a future is, in fact, technologically feasible. It is not, however, likely to occur anytime soon. The future of kitchens and baths is, perhaps unfortunately, going to be a little less sexy. This is not to say, however, that it will be any less exciting for those who make their living designing, supplying or building these rooms.

To begin, it is useful to think of nanotechnology not as a specific technology but rather as a broad-based enabling technology that will affect many things. In this way, nanotechnology is comparable to electricity or plastics. And just as electricity and plastics allowed the modern refrigerator to replace the bulky, old wooden ice-boxes of yesteryear, so too will nanotechnology lead to similar radical advances in tomorrow’s homes.

The first great wave of change—and one which is already well underway—is occurring in how nanotechnology is affecting the field of material sciences. Materials are a decidedly boring topic but because almost every item in a kitchen or bathroom is made out of a material that has been uniquely selected for an inherent characteristic—be it aesthetic or functionality—it is important to understand that nanotechnology will allow future designers to dispense with the age-old question of form versus function. In short, designers will figure out what they want a material to do first and will then build it to those desired specifications.
For instance, how would various items be redesigned if one could find an inexpensive material that had the durability, look and feel of a ceramic but wouldn’t chip or break? What if you wanted a sink or oven that was self-cleaning and heat resistant? Or what if you wanted a refrigerator with anti-bacterial properties or a shower that was resistant to mildew? Well, all of these materials are already on the market thanks, in large part, to nanotechnology.

These advances are, however, just the tip of the proverbial iceberg. Mid-term, a host of other nanomaterials will find their way to the commercial marketplace and lead to even more profound changes. Among these new nanomaterials are aerogels—super lightweight materials, also known as “frozen smoke”—that are able to reduce insulation thickness by 50-600 percent and will be used in appliances, windows and walls and will lead to significant new design opportunities.

Another nanotechnology-enabled market on the near-term horizon is solid-state refrigeration. One company working on this technology is NanoCoolers of Austin, Texas. Using a tiny electromagnetic pump that circulates a nontoxic liquid metal, it is developing a method to refrigerate devices without employing any mechanical moving parts. This advance is expected to lead to drastically smaller refrigerators and will free up a considerable amount of space in the kitchen of tomorrow.

Nanotechnology is also making serious inroads is in the area of water and pollution filtration. By taking advantage of the unique characteristics of nanoparticles, new materials are being developed to act as hyper-efficient catalysts to disinfect water. New nano-filters are also being developed to effectively filter out nearly 100 percent of the contaminants that affect even today’s most polluted water supplies. Both advances will affect how much water is used—and re-used—to power tomorrow’s bath and kitchen operations.

A third area where nanotechnology is slated to influence kitchens and baths is in the field of lighting. Specifically, new advances in nanotechnology portend the day of efficient, inexpensive light-emitting diodes. Such LEDs are already making their way to the market but what will make the next generation of nano-enabled LEDs so unique will be their ability to be incorporated into flexible plastics. Imagine how rooms and appliances can be redesigned if the end-user can place the precise amount of lighting exactly where ever he wants it.

Lastly, in the neat-term, nanotechnology is going to affect how future homes and appliances are powered. No less than three companies are now working on applying nanotechnology to the development of flexible solar cells. These solar cells are expected to be so thin they can be printed (and installed) like wallpaper, and be so efficient they operate off the ambient lighting in a room. The advent of these and other alternative energy technologies suggests that the era of distributed energy—energy that does not rely on today’s existing electrical grid—is just around the corner.

Beyond these advances are the development of “metal rubber,” which, as the name implies, combines the strength of metal with the flexibility of rubber. Other companies are working on materials that can change color on demand, and still others, including Boeing and Ford, are experimenting with shape-shifting materials.
And while even these advances may not give tomorrow’s kitchens and baths a Jetson-like feel quite yet, they will change how the kitchens and bathrooms of the future are designed, used and thought of. Moreover, they will pave the way for some the more futuristic technologies like pervasive computing, embedded sensors, “spray-on” solar cells and even self-healing materials.

Jack Uldrich is the author of The Next Big Thing is Really Small: How Nanotechnology Will Change the Future of Your Business. He will address these and many other advances in greater detail at the NKBA Annual conference in Chicago in March 2006.

The Next Big "Little" Market

2005-11-16T15:28:00.000-08:00

Here's my latest article in The Motley Fool. It's entitled: The Next Big "Little" Market. It reviews Accelrys' (Nasdaq: ACCL) progress -- a company I recommended six months ago. It has appreciated 40% since that time and I expect it to go even higher.

As always, however, do your own due diligence. (Full disclosure: I own stock in Accelrys.)

Jack Uldrich

Put Arrowhead Research on Your Nano Radar Screen

2005-10-14T16:48:00.000-07:00

Here's my latest article in The Motley Fool. It's entitled:A TINY Alternative in Nanotech. It reviews Arrowhead Research's business model and I think the company offers a viable investment alternative/addition for those investors who are also comfortable with Harris & Harris.

Jack Uldrich

Invitrogen's Future is "Nano"Crystal Clear

2005-10-12T14:51:00.000-07:00

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.

One Small Step for Ford & Boeing

2005-10-10T19:03:00.000-07:00

In today's Motley Fool I had an article published entitled: One Small Step for Ford and Boeing. It discusses the two companies plans -- in conjunction with Northwestern University -- to pursue nanotechnology research and development. It is my opinion that while the deal is fairly small (especially for two companies like Ford and Boeing), it is the kind of deal that can help keep the two automotive and aerospace giants competitive long into the future.

Jack Uldrich

More on pSivida and Starpharma

2005-10-04T14:56:00.000-07:00

In today's Motley Fool, I had an article published entitled: Innovation Down Under. I have long been bullish on both pSivida and Starpharma and encourage readers to read the article and see the related links section below. I especially encourage would-be investors to read the first link. Starpharma owns approximately 30 percent of Dendritic Nanotechnologies and the company is working on some very innovatiative things.

Jack Uldrich

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

Corporate partnerships are key, Part II

2005-09-27T10:28:00.000-07:00

In today's Motley Fool I had an article published entitled: A Ray of Hope for Flamel. Although I am a shareholder in Flamel, I am not overly optimistic about its future prospects for growth. About the only thing that will cause me to become more bullish is an announcement that a major pharmaceutical company has agreed to partner with Flamel in its use of Flamel's Medusa technology. The company's recent announcement that its technology has demonstrated positive results means very little.

My point -- and I can't stress this enough to would-be investors -- is that for the majority of nanotechnology companies partnerships are more important than technology. They are even more important than having a viable product.

Jack Uldrich

Related Links:
Corporate partnerships are key

Corporate partnerships are key

2005-09-22T11:27:00.000-07:00

In today's Motley Fool I had an article published entitled: TINY Magnifies its Hunt. It is primarily about Harris & Harris -- the publicly traded venture capital firm specializing in nanotechnology -- but it highlights two of its portfolio companies -- Molecular Imprints and Kereos.

In addition to their technology, what I like about both companies is the fact that they are already partnering with major corporations. In Molecular Imprints case, it is working with Hewlett-Packard and Motorola; and Keroes is working with Dow Chemical and Bristol-Myers Squibb.

I like such relationships because too many nanotech start-ups fall prey to the belief that their technology will be enough to gain them marketplace acceptance. Unfortunately, this is rarely the case. Establishing a foothold in the commercial marketplace is difficult even for established companies and it can be down-right nasty for small start-ups. One of the best ways to get around this reality is to establish relationships with those major corporations who are already working in the field.

Such partnerships won't necessarily guarantee profitably or success ... but it puts those companies that do have partnerships light years ahead of those that don't have any.

Jack Uldrich

Not sexy, but profitable

2005-09-12T13:56:00.000-07:00

In today's Motley Fool I had an article published entitled: Nanotech's Promise Hits the Pedal. It is primarily about Accelrys but it reiterates a point I have long been making--the first companies to make money in the field are not necessarily going to be those working on disruptive technologies, they are going to be those doing more more mundane things.

Improving glass, plastic and other materials might not sound very sexy but -- at least in the short run -- companies producing such advances will make for better investments.

Jack Uldrich

A Response to Liquid Lounge

2005-08-25T08:29:00.000-07:00

In yesterday's Motley Fool there was an excellent article entitled: Liquid Lounge that offered a thoughtful and well-reasoned critique rebutting my analysis of Harris & Harris.

Although, I disagree with the author's assessment, I encourage anyone considering an investment in Harris & Harris to read it!

What the author doesn't take into consideration in his analysis is the potential value of Molecular Imprints, Nanosys, Nantero, Starfire System, Cambrios Technology and Zia Laser. Of course this "potential" doesn't lend itself to the quantative analysis ... and this is precisely what makes Harris & Harris so hard to price.

At the present time, I don't own any shares of Harris and Harris but if it remains in the neighborhood of $11 a share I am considering buying some after the expiration of the mandated 10-day waiting period I must abide by when I write an article about a specific stock for the Motley Fool.

Jack Uldrich

Related Links:
Invest with the CIA
Is TINY Sinking or Diving for Pearls
TINY's Big Potential

"Spooked" about Nanotech ... Follow the CIA

2005-08-23T13:00:00.000-07:00

In today's Motley Fool I had an article published entitled: Invest with the CIA. It is primarily about Harris & Harris -- the publicly traded venture capital firm specializing in nanotechnology -- but in the article I point out that the CIA's own in-house venture group, In-Q-Tel, is backing one of Harris & Harris' portfolio companies: Nanosys.

In-Q-Tel has also invested in Fluidigm and Cambrios Technology -- two other very promising nanotech start-ups.

Jack Uldrich

GE: Bringing "Small" Things to Life

2005-08-19T14:13:00.000-07:00

Here is an article entitled, GE: Bringing "Small Things to Life", that I wrote for the Motley Fool today. It provides a good overview of how the company is employing nanotechnology to gain a competitive advantage in everything from semiconductors and telecommunications to alternative energy, aircraft and water.

Jack Uldrich

Important Correction Re: Elan

2005-08-10T19:19:00.000-07:00

In today's Motley Fool, I had an article discussing Elan. In the body of the article, I made one serious mistake (I have already asked TMF to issue a correction) and a second issue should have been elaborated on.

The mistake is regarding the number of patients who have died from Tysabri. I said the number was three, but it should have two ... and, quite possibly, even one.

The second PML case was diagnosed on a Crohn's patient, who already passed away but whose death was initially misdiagnosed and attributed to Tysabri. The person is now believed to have died of another illness.

In each case, it is also important to note that the PML was complicated by the fact that all 3 patients were either on AVONEX or some other immunosuppressive therapy. That is ... they were taking other drugs in addition to Tysabri.

When used as a monotherapy, the number of PML cases or deaths attributed to Tysabri is zero.

I still stand by stock recommendations ... but these facts could easily lead investors to a conclusion other that which I reached.

The second point I want clarify in the article relates to this sentence: "Yesterday's increase seems to reflect a more balanced and appropriate response. This is because if and when Tysabri receives new FDA approval, its use will be limited to those MS suffers who have no alternative treatment."

I should have said "its use will probably be limited." The comment was based on my belief that the FDA tends to be fairly conservative with drugs when there is a known alternative and, as such, will likely limit its use to those MS suffers for whom there is no other alternative.

It is important to note that this is my opinion and does not reflect a definitive statement ... although it reads like one ... and, for that, I apologize.

As always, I encourage my readers to do their own due diligence ... and this article aptly demonstrates why!

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

Jack Uldrich

Two Articles ...

2005-08-04T16:17:00.000-07:00

Today, I had two articles appear in The Motley Fool. The first was on 3M and the second was on Harris and Harris.

I also encourage you to check out the news coming out of Biophan. It's recent agreement with Boston Scientific is good news. I have been down on the company in the past because I have felt it has relied on dubious press releases (of little substance) at the expense of real news. The deal with Boston qualifies as real news. I hope to be writing a little more on Biophan soon.

Jack Uldrich

Temporary Break

2005-08-01T07:43:00.000-07:00

Dear Readers,

I am under contract to write a book about investing in nanotechnology and I am in the process of finishing it up. I will return to writing regular posts once the final manuscript is done. (The book, which is being published by Adams Media, is expected to be out in early 2006).

I appreciate your continued patience.

Sincerely,

Jack Uldrich

A Useful Analogy

2005-06-30T08:09:00.000-07:00

Mike Treder of the Center of Responsible Nanotechnology has a good post on his blog. He highlights a quote from the recently released Millenium Report which states: "Many people still do not appreciate how fast science and technology (S&T) will change over the next 25 years, and given this rapid development along several different fronts, the possibility of technology growing beyond human control must now be taken seriously ..."

The report is exactly right: few people have any idea how fast things are changing. One way, however, I have successfully gotten people to think about the future is to the cite a quote from the federal government's first report on nanotechnology. It stated: "Because of nanotechnology we will see more change in the next 25 years than we saw in the last 100 years." To make this point more relevant, I then take my listeners back to 1905. In 1905, I tell them:

-- There were only 144 miles of paved road in America;
-- Only 8000 automobiles;
-- 40% of the American population lived or worked on farms;
-- Less than 5% of the population had even a high school education; and
-- Life expectancy was only 47.

My point is that we have seen radical change in the last 100 years and now, due to nanotechnology -- and other technologies, we can expect to see a comparable amount of change in the next generation!

This means that by 2030, the world will be as different from today ... as today is from 1905! It is impossible to imagine what exactly our world will look like but I am confident it'll be a good one ... provided we have leaders with the foresight and wisdom to embrace technology appropriately.

Luckily the good folks at the Center for Responsible Nanotechnology and the Foresight Institute are helping to do exactly that. I encourage you to add their blogs and websites to the list of sites you regularly visit.

Jack Uldrich

More on IBM's Supercomputer

2005-06-20T09:31:00.000-07:00

Last Friday, I had an article on IBM's new supercomputer run in The Motley Fool. One reader questioned my choice of listing Affymetrix as a competitor. It was a fair question and I responded that because Affymetrix was involved in trying to establish genetic links to a variety of diseases for the purposes of drug discovery, I felt IBM's use of its new supercomputer to the same ends could adversely affect Affyxmetrix's business.

The reader responded with the following:

"Affy is all about enabling people to acquire genomic data. IBM's foray into life sciences is about enabling people to manage the huge data sets that come with biological analysis. We are similiar in that we both want to enable resolution of complex biological problems. However, we are steering clear of developing computing power for complex analysis. IBM is more of a technology enabler than a competitor to Affymetrix. The genomic information that our products yield can be fed into thier machines and software to help scientists come up with answers to complex questions."

It is important distinction and I thought it was worth sharing with my readers.

Nanotechnology Goes After the Food Industry

2005-06-17T12:13:00.000-07:00

Eighteen months ago, I wrote an article for the Food Marketing Institute’s monthly magazine, Advantage, about how nanotechnology was affecting the food industry. It was entitled “Now You See It” and it can be read here: http://www.fmi.org/advantage/issues/022004/pdfs/pub/nowyouseeit.pdf".

Since that time, a number of companies including Unilever, General Mills (whom I spoke to last summer and did some consulting work for) and Nestle have jumped into the field. I recently came across two articles that suggest nanotechnology is now poised to make even further inroads. The first article comes compliments of FoodProductionDaily.com can talks about next week’s Nano4food conference in the Netherlands. Interestingly, the article notes that now more than 200 food companies are involved in nanotechnology. The key point, however, is captured by this quote from one of the conference participants: “the food industry is … reluctant to adopt new technologies. We would like to show them what the possibilities are … [and] communicate that we are ready to help them.”

I am confident that they -- and others -- will be able to help them because of reports like the one in FoodNavigator.com that discusses how an innovative partnership between two companies is leading to the possibility of using nanotechnology to not only encapsulate flavors but control the release of flavor and protect it from oxidation.

Provided the environmental concerns surrounding nanotechnology can be satisfactorily addressed (this remains a big "if"), the food industry will be hearing more about -- and feeling the impacts of -- nanotechnology sooner rather than later.

Jack Uldrich

Hewlett-Packard: Embracing Failure

2005-06-10T11:50:00.000-07:00

Two articles from Nanotechnology Now recently caught my attention. The first was a short article from the EETimes talking about several futuristic technologies which might help solve the interconnect bottleneck in chip design. The article addressed carbon nanotubes, optical interconnects, spin-wave buses and molecular wires. It went on to say that the latter -- molecular wires -- would most likely represent the first "inter-connect" device of the nanotechnology era.

I think they are right. I say this because of even more recent developments coming out of Hewlett-Packard. According to this article, HP is seeking to change the paradigm of computer chip design. If it is successful, HP will have created an artchitecture that will work in the presence of defects. This is a huge develoment! As circuits continue to get smaller and smaller, it is becoming increasing difficult (and very, very expensive) for the semiconductor industry to build defect-free circuits. If HP's technology works, it will not only have designed a smaller, powerful circuit -- in the form of its "crossbar latch" technology -- it will have created a new design and manufacturing paradigm that doesn't need to worry about how manufacturing defects might disrupt the circuit because it will simply go around them.

In this sense, HP is not only embracing failure, it is enveloping failure -- and it could be a huge recipe for success.

Molecular Electronics: One Step Closer

2005-06-03T10:25:00.000-07:00

I recently came across this press release, from the University of Alberta. Its contents are quite startling and -- if true (and I have no reason to believe that they aren't) -- suggest that the field of molecular electronics has just taken another big step in the direction of replacing the traditional transistor.

To be sure, this won't happen anytime soon but a number of advances in the press release are worth noting. First, the researchers demonstrated that a single atom on a silicon surface can be controllably charged. Second, the process for controlling these atoms can take place at room temperature. And third, only one atom is needed to turn molecular conductivity on or off. To understand how significant the latter is consider that on a conventional transistor this gating action requires about one million electrons. The potential to reduce the amount of energy need to operate such a molecular device would be significantly less than today's state-of-the-art circuit.

The bottom-line is that this research provides further proof that molecular electronics continues to hold great promise for the development of better, faster and cheaper electronics.

In the interim, look for this research this to be incorporated into the work that Hewlett-Packard and others are doing in the field of molecular electronics and possibly lead to hybrid silicon/molecular devices by the end of the decade.

Here Comes the Sun

2005-06-03T05:40:00.000-07:00

In yesterday's Wall Street Journal there was an informative article entitled "Solar Power Heats Up." It talked about how solar cells have not only become more efficient over the past fews years but, when combined with lower installation costs and a variety of tax breaks and rebates, the economics of solar cells have shifted in a way that favors consumers.

I don't really think this is news but I do think it is important to stay tuned to the work that Nanosys, Konarka, NanoSolar, Cypress and GE (and others) are doing in this field. I sincerely believe the economics will continue to shift -- perhaps radically -- in a way that continues to favor the consumer.

Nanosys continues to publicly state that it will be producing (along with Matsushita) a flexible solar cell sometime in 2007; Konarka continues to work with the U.S. Army to manufacture solar fabrics; and as Jeffrey Immelt says in this article, GE is now investing $1.5 billion in clean energy technology research and development.

Now, not all of this research is in the area of solar cell technology but it should cause investors to seriously consider how much of the future demand in energy will be met by coal and nuclear power and how much will be met by "clean technologies."

I continue to be more bullish on the latter, in large part, because of how advances in nanotechnology will continue to enable cheaper and more efficient solar cells.

Altair: Time to Put Up ... or Shut Up

2005-06-01T14:49:00.000-07:00

Yesterday there was an excellent article on Altair in The Motley Fool written by Seth Jayson. It says many of the same things that I have been saying about Altair for months -- namely: Stay away from this stock! -- but I still encourage anyone thinking about investing in Altair to read it. The bottom-line is that it is time for Altair to stop with all the press releases and focus on delivering results. In short, it is time for them to "put up or shut up."

While I think it unlikely that they'll listen to my advice, now that it appears the investment communty has caught on the fact that Altair is "all talk and no action," look for the stock to continue to drop in price.

Related Links:
Toshiba vs Altair
Altair: Fooling the Fools
Is Altair all Hot Air?

Dendritic NanoTechnologies: A Nanotech Rule Breaker

2005-05-24T12:12:00.000-07:00

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

2005-05-24T09:03:00.000-07:00

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.

Still Bullish on pSivida

2005-05-23T13:25:00.000-07:00

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?

Accelrys Article: SciTegic not SciTech

2005-05-16T13:10:00.000-07:00

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

More on TINY's Potential

2005-05-13T12:12:00.000-07:00
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

Carbon Nanotubes: A Fool's Gold?

2005-05-12T10:42:00.000-07:00
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.

A Billion Here ... A Billion There

2005-05-11T16:23:00.000-07:00
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

Carbon Nanotubes: Love 'em or Hate 'em?

2005-05-10T08:23:00.000-07:00
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.

More on Intel's Strategy

2005-05-02T12:24:00.000-07:00
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.

Intel & AMD Look to New Materials

2005-04-28T09:43:00.000-07:00
This past week I was in Ottawa where I gave a talk to a group of chip designers about nanotechnology. While much of my talk focused on the future applications of carbon nanotubes, nanowires, quantum dots and nanolithography, I also urged them not to lose focus on how materials science can be employed to improve their existing products.

As two recent examples, I cited Intel and AMD. Last month, Intel announced that it partnered with Qinetiq to produce a new nanomaterial called indium antimonide that company officials claimed could increase transistor speed three-fold with no corresponding increase in the use of power! An Intel official then went on to say that the material is just "one example of several new materials that Intel will continue to investigate in order to ensure Moore's Law extends well beyond the next decade."

And just last week, in a remarkably candid interview, Tom Sonderman, an executive at AMD, said "For a long time the industry just focused on making things smaller. But the new thrust is adding more and more exotic materials to extend the life of semiconductors ... in the end it's all about moving electrons faster and by adding different materials you can accomplish similar things without necessarily having to make them smaller."

These are important developments for investors to consider because they suggest that the two companies can continue to improve performance (which customers expect) without having to invest the billions of dollars necessary to build next generation fabrication facilities.

Quantum Wires: From Space to the Plains?

2005-04-25T08:28:00.000-07:00
Earlier today it was announced that Rice University was slated to receive an $11 million grant from NASA to produce a one-meter long prototype "quantum wire" power cable for the space agency by 2009. NASA is interested in such a device because not only can quantum wires conduct electricity 10 times faster than cooper; more importantly -- at least from NASA's perspective -- is that they weigh about one-sixth as much.

The reason this is important is because today it costs approximately $10,000 to launch one pound of material into space. And with cooper wires expected to contribute close to 25% of the weight of the space craft in the future, the development of a low-weight alternative has the potential to save NASA a lot of money.

The announcement, however, is interesting for another reason. One of the companies Rice University will be partnering with is Houston-based Carbon Nanotechnologies. This is the company that was founded by Nobel-Prize winning chemist, Richard Smalley.

In the past, Smalley has spoken of the long-term potential of "quantum wires." These wires -- which would be constructed out of carbon nanotubes and be only abut one centimeter in diameter -- can theoretically transmit 1 terawatt of energy. More specifically, Smalley has spoken publicly of how these "quantum wires" might someday replace the wires that line today's archaic and inefficient electrical utility transmission system.

Obviously, 2009 is still a few years off and it is a stretch to go from producing a one-meter "quantum wire" to a quantum wire that stretches from, say, a massive solar farm in the American southwest to towns and cities all across America ... but it is not an impossibility.

The bottom-line is that this is an exciting grant because it has both mid-term potential for NASA, as well as long-term potential for transforming the energy industry.

Jack Uldrich

On Wisconsin!

2005-04-22T08:34:00.000-07:00
As a resident of Minnesota, I have a natural aversion to most things coming out of Wisconsin--notably Green Bay Packer fans. (I make a big exception, however, for cheese and beer--especially the latter.) I also make an exception for the extraordinary leadership state leaders--especially Bill Ihlenfeldt, president of the Chippewa Valley Technical College (CVTC)--have demonstrated on pushing the topic of nanotechnology to the forefront of the state's educational and economic development agenda.

In January of 2004, I gave a talk on nanotechnology at CVTC. Within a month, Bill had hired me to take look at the economic development opportunities for the state in nanotechnology. In the meantime, he was also organizing the creation of a two-year degree program at CVTC. Less than 8 months later the program was up and operational! In the educational world, where change often occurs at a glacial pace, the accomplishment was notable for its speed alone. Today, less than a year after connocting the idea, the program already has a waiting list of students and appears poised to grow bigger and better in the years ahead.

Yesterday, Bill met with the Governor of Wisconsin, Jim Doyle. He is now pushing an even larger nanotech initiative. I have every reason to believe he'll be successful and, as a Minnesotan, I'll admit I'm jealous. I have tried to capture the attention of MInnesota's state leaders to little effect.

Bill's actions demonstrate that what is needed are champions. If you feel your state is lagging behind in nanotech, don't wait for someone else to lead the charge--just pick up the mantle like Bill Ilhenfeldt did. It's amazing what can get done when people do.

(Note: Today, I had an article published in Small Times talking about the need for states to focus on nanotechnology education. I encourage you to read it here).

Jack Uldrich

Related Links:
Nanotechnology as an Economic Development Tool

IBM Motley Fool Article

2005-04-21T13:40:00.000-07:00
Dear Readers,

I had another article published in today's Motley Fool. You can read it here. I still intend to blog regularly but on days when I have articles published elsewhere I intend to post them here .... hope you understand.

All the best,

Jack

More on FEI

2005-04-20T14:49:00.000-07:00
Today, the Motley Fool recently published a piece I wrote about FEI. I encourage you to read it here. One of the competitors I didn't mention in the article was Imago. To understand more about this company, I courage to review the piece I did on them a few weeks ago.

Jack Uldrich

Related Links:
Imago Scientific

Altair offers a little -- but not enough

2005-04-19T08:32:00.000-07:00
Altair's stock is up nearly 15% on news that it shipped the initial shipment of battery electrode nanomaterials to Advance Battery Technologies. Not surprisingly, Altair does not offer any specifics on the shipment size.

I'll admit that this release is more newsworthy than most Altair press releases, but I don't believe it warrants a 15% increase in its stock price. Now, if ABT actually begins using Altair's nanomaterials in its lithium-ion batteries that WILL be noteworthy.

Forgive, however, if I don't trust Altair; but I feel compelled to remind investors that just two or three years ago the company was making similiar rosy-sounding projections about its NanoCheck technology. To date, nothing has come of the technology. Nor has anything yet been forthcoming from its RenaZorb technology.

I remind my readers: Buyer Beware! (Disclosure: I do not own stock in either Altair or ABT).

Jack Uldrich

Related Links:
Toshiba vs Altair
Altair: Fooling the Fools
Is Altair all Hot Air?

pSivida Requires Some Patience

2005-04-16T05:51:00.000-07:00
Lately, I have received a few emails questioning pSivida's recent poor stock performance. They are excellent questions and I'll admit that I, too, have been surprised by pSivida's 35 percent dive over the past two months.

It is my estimate that some of this is the result of momentum investors who were hoping to make a quick profit after the company was profiled in the Forbes/Wolfe "Nanosphere" and then subsequently added to the Merrill Lynch Nanotech Index; but are now selling because the stock hasn't gained any traction. (I believe this might also account for a portion of StarPharma's poor performance). As for why the stock hasn't increased in price, I believe that many investors, particularly some of the larger institutional investors in the U.S., are taking a completely rational wait-and-see approach. Specifically, they are waiting for pSivida to demonstrate more definitive results from the Phase II trials of its BrachySil.

If the results are favorable or, alternatively, if the company can publicly disclose the "top 5" global pharmaceutical company it is working with, I believe the stock will rapidly appreciate. The stock's appreciation will be even greater if pSivida can announce that it has either met some important milestones for that "top 5" global pharmaceutical company or if it can enter into new partnerships with some other large drug companies. (Full disclose: I own stock in pSivida).

I intend to hold all of my stock in pSivida for the present time and will accumulate more once I see the company has begun to meet some of the above mentioned milestones.

Jack Uldrich

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

Nanotechnology and the Future of the Telecommunications Industry

2005-04-14T13:51:00.000-07:00
Yesterday, the IEEE’s Committee on Communications and Infrastructure Policy released a white paper claiming that the development of “Gigabit Networks” should be a national priority. “Failure to act,” the report continued, will “relegate the U.S. telecommunications infrastructure to an inferior competitive position.”

I wholeheartedly agree with this conclusion (along with the committee’s calls for regulatory flexibility) and believe this warning should be heeded not just by national lawmakers but by the nanotechnology community as well. This is for three separate and distinct reasons.

First, as the fields of biotechnology, semiconductor/computer technology, material sciences, chemistry, physics and a host of medical-related market segments all continue to delve further into the nano-sciences, it is obvious that the scientific and technological advances this research will generate will also yield ever vaster amounts of voice, data, image and video information. In turn, this information will need to be converted into bit streams in order to be shared as widely as possible with fellow researchers. Today’s networks (far too many of which still remain at the megabyte-level) are simply too slow to handle this avalanche of information.

Beyond this admittedly parochial concern, the second reason the nanotech community needs to get behind this initiative is because a Gigabyte Network will allow consumers to take advantage of the myriad of promising developments nanotechnology is enabling. For instance, new powerful atomic force microscopes are helping material sciences understand new materials down to the atomic level. To take advantage of these startling developments, new powerful software tools are being developed. However, these software models are so large that only gigabyte networks can transmit them efficiently and effectively. In still other fields, quantum dots are leading to highly detailed medical images, carbon nanotubes are being utilized to produce data storage devices orders of magnitude more powerful than anything on the market; and, of course, carbon nanotubes and nanowires hold great potential for developing ever smaller computers and nanosensors.

These developments are all fine and well but they will only be able to meet their full potential if they can be shared with—and wirelessly connected to—the end user. Only a radically more powerful network can do this. Moreover, bandwidth 5,000 times faster than today’s current bandwidth will unleash a variety of new products and open as-yet-untold markets. (To understand this, just consider how improvements in data storage led to the development of the Ipod and its concomitant markets. Now imagine how continued advances in data storage and super-powerful computers—when coupled with equally powerful advances in bandwidth—will lead to similar new products and markets).

Lastly, leaders in the field of nanotechnology—especially executives at companies like NanoOpto and NeoPhotonics—must step forward and explain how their advances in creating optical components capable of manipulating light via nanoscale structures can not only increase bandwidth and break cost-performance barriers for next-generation fiber optic networks, but also address the FTTP (fiber-to-the-premise) product market. The bottom-line is that the telecommunications executives need to better understand how nanotechnology can help their industry solve some of its most vexing problems.

If the nanotechnology community can do these three things, it will not only create new markets for its own nanotech-enabled products, it will facilitate even more rapid advances in the nanosciences. This, in turn, is likely to continue to fuel advances in the telecommunication industry. It’s a classic win-win situation and it is why the nanotech community should be promoting a Gigabyte Network.

Jack Uldrich

A Nanotech Mismatch: Toshiba vs Altair

2005-04-12T12:43:00.000-07:00
Last week, Altair announced that Advanced Battery Technologies had licensed the company's nanomaterials for its lithium-ion battery product line. The news resulted in a 15 percent increase in Altair's stock price and an astounding 278 percent increase in Advanced Battery Technologies' stock. (Full disclosure: I do not own stock in either company). The MotleyFool ran an excellent article on this topic (which I strongly encourage my readers to read for themselves) but I'd also like to add my two cents on this news.

As readers of this blog know, I have never been high on Altair -- for reasons which are covered in the related links section below. To summarize, however, I believe the company's only demonstrated proficiency has been in delivering press releases that offer the promise of future benefit without actually delivering anything of real substance. As proof, I would remind my readers that the company has no revenues and it has yet to sell one of its products.

Recently, the company has found some success (which I define here as articifically inflating its stock price) in hyping its lithium ion battery nanomaterials--which company offcials claim will lead to rapid recharge rates and longer shelf lifes for batteries. This might be true but I would like to bring to investor's attention this article about Toshiba's "Nanobattery."

Here's the bottom-line: Toshiba's battery recharges to full capacity in just a few minutes, it has a high-level of storage efficiency, can be recharged up to 1000 times, operates in extreme temperatures, and is effective enough to be used in hybrid automobiles. More improtantly, Toshiba has stated it will be using its new battery in commercial products by 2006.

Investors of Altair must ask themselves this question: Is the company's lithium ion technology so superior to Toshiba's "nanobattery" that it can effectively overcome Toshiba's excellent reputation, its well-known brand name, as well as its marketing and distribution strength?

In my opinion the answer is no and I think this reality will be reflected in a serious drop in Altair's stock price--which today stands at $3.58 a share--in the months ahead.

Jack Uldrich

Related Links:
Altair: Fooling the Fools
Is Altair all Hot Air?

Nanotech’s More Prosaic Pursuits: Processing, Packaging & Paint

2005-04-11T09:47:00.000-07:00
Two of my favorite nanotech companies—Konarka and Evident—recently announced an alliance to develop novel nanomaterials. It is the type of announcement that can easily be overlooked in the daily avalanche of press releases streaming forth from nanotech companies. It is my opinion, however, that this one has some legs and should be heeded by company executives in the plastics and food packaging industries.

Konarka is a leading developer of flexible polymer photovoltaic products and Evident is a leading producer of quantum dots. By employing Evident’s new quantum dots, which can reportedly harvest photons outside the visible light spectrum more efficiently, Konarka believes it will be able to develop even more efficient plastic solar cells. And if Konarka can develop plastic packaging that can harvest the ambient light from, say, grocery store lighting, it could enable packaging to power itself on the shelf. This, in turn, could lead to packaging that keeps products fresher a much longer time.

Granted, it might not be the sexiest use of nanotechnology, but it is the kind that could significantly improve a food company’s profits—especially if the technology is coupled with “intelligent” packaging (i.e. packaging that monitors or displays the freshness of food).

I recently came across a somewhat similar press release about a company called, Ecology Coatings, which has developed a “liquid solid” paint that can be applied to protective coatings on everything from automobiles to electronic components. The beauty of the company’s “liquid solids” is that they dry almost immediately and contain no solvents. Again, this might not sound like a thing deal, but it is. First, the coating industry is estimated to be a $20 billion a year industry and because Ecology Coating’s “liquid solids” can paint the same area with only 20 to 30 percent of the amount of regular paint, it suggests that it could lead to very large cost savings. More significantly, because the product contains no solvents, it gives off no hazardous fumes and thus exempts users of the product from some EPA regulations.

If these benefits aren’t enough to make a believer out of you, perhaps the fact that DuPont is licensing the technology from Ecology Coatings will.

The bottom-line is that while these nanotech developments may appear to be prosaic, they will also be quite profitable … and are precisely the type of developments that even executives and managers who have only a short-term focus should be heeding.

Jack Uldrich

Related Links:
Nanotech has arrived
Nanotech and the future of the energy industry
Nanotechnology & the Dow Index of 2025

Elan: Nanotech Investors Keep Your Eye on the Prize

2005-03-31T10:05:00.000-08:00
On March 2, after Elan dropped 70 percent in one day, I encouraged nanotech investors that it was a good time to look at Elan for its NanoCrystal technology. Today, after the company’s stock dropped another 50 percent, I still believe the company’s NanoCrystal technology—while not yet a substantial portion of the company’s revenues—offers substantial long term promise. (Full disclosure: I own Elan stock).

While it is clear that Tysabri will now represent a significantly smaller share of the company’s overall future revenues, the company still has some other attractive products in its pipeline.

As I said on March 2—and I repeat now--do your own due diligence … but that’s my two cents.

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

Using History to Better Understand the Future of Nanotechnology

2005-03-30T10:28:00.000-08:00
In yesterday’s Financial Times there was an excellent article by Richard Water called “Why nanotechnology is the next big thing.” I say this not simply because the title of the article closely matches the title of my own book but because I sincerely believe it.

The article discusses Steve Jurvetson’s vision of nanotechnology and in it Jurvetson hits on an important theme. Today’s business leaders, he states, must take seriously “the embarrassing and futuristic.” He is absolutely right. Unfortunately, embracing the future is easier said than done.

In my numerous talks around the country, I have found that one of the most effective ways to get people to embrace “embarrassing and futuristic” scenarios is to simply get them to consider history.

Let me give you just two examples which I believe illustrate this point. The first involves the world’s first computer, ENIAC. When it was built in 1946, at a cost of $400,000, it was a technological marvel. It consisted of over 19,000 vacuum tubes, occupied 1500 square feet and was capable of performing 300 calculations a second. Now imagine going back in time to the year 1946 and telling the scientists and technicians who designed and built ENIAC that in the future we would be able to produce a computer millions of time more powerful than ENIAC and that it would fit on your thumbnail and cost less than a penny. My guess it that they would have laughed you out of the room. But, as all of us know, this is precisely what happened.

Therefore, when experts in the field of nanotechnology tell us that in the not-so-distant future we may be able to grow computers (that is get nanoscopic components to self assemble themselves into a functioning device) which are a million times more powerful than today’s state-of-the-art technology, it doesn’t sound as preposterous--with the benefit of some historical perspective.

Another useful example is that of Lee DeForest. In 1913, DeForest was prosecuted by government officials in the United States because they alleged he was defrauding individual investors. His crime? He was telling people he needed their money to develop a device capable of transmitting the human voice over the Atlantic Ocean. To the vast majority of people of that era, his claim sounded crazy. Of course, just three years later DeForest started RCA and had developed the technology to do exactly that.

The emerging field of nanotechnology portends a radically different future. Companies and individuals are working on solar cells that might be painted on walls, self-healing materials, and clothes that can change colors and properties according to the needs of the individual user. Still others speak of the possibility of building an elevator to space and extending life expectancy 30 or more years.

All these things may sound outrageous but are they any more outlandish than a computer orders of magnitude smaller, faster and cheaper than ENIAC, a device that can transmit the human voice over an ocean or extending life expectancy another 30 years--as we did in the 20th century?

The bottom-line is this: True leaders, as Jurvetson urges, must not simply take seriously such futuristic visions; they must courageously facilitate and embrace these visions. For if they do not, someone else will—and it will be those people who actually create our future.

Related Links:
Nanotech has Arrived
Nanotech and the Future of Energy

Nanotech has Arrived

2005-03-28T09:39:00.000-08:00
I sincerely appreciate the work of analysts and writers who strive to provide a balanced assessment of nanotechnology’s future potential. As reader’s of this newsletter will appreciate, I’m among the first to call “bullshit” on companies that I think are over-hyping their technology—and often their stock’s—potential.

On the other hand, too many articles now seem to be going the other way and are minimizing the extraordinary progress the field of nanotechnology has already made. This approach is just as unhealthy as is undue “hype.” As examples, I cite two recent articles. The first comes compliments of “The Street”—an investment-related news source. Overall, the article provides a fair and balanced assessment of nanotechnology but, near the end, it states that “[t]urning these new properties into new products will take some time.” The statement is fair enough—in that there are still a great many new nanotech-related products on the horizon. But it is unfair in the sense that it seems to imply that there are few products yet on the market.

The second article, entitled Where are all the New Products is far less thoughtful and bemoans “the lack of nanoproduct commercialization in the United States.” (I would argue that commercialization in today’s global society is largely irrelevant … but that is a topic for a separate article.)

The fact is that there are a great number of “nanoproducts”—even in the U.S. For instance, American Pharmaceutical Partner’s new cancer treatment, Abraxane, employs nanoparticles. Quantum Dot’s nanocrystals are being used by Roche Diagnostics and GlaxoSmithKline. 3M’s is manufacturing nanocomposite tooth filler. General Motor’s is using nanocomposites in its 2005 Chevy Impala. Apollo Diamond is rearranging carbon atoms to manufacture synthetic diamonds. ChevronTexaco has spun-off a new nanotech company called Molecular Diamonds. Hybrid Plastics has been employing its POSS ™ technology to improve the characteristics in a number of plastics for quite some time. Inframat’s nanocoatings have been employed on the hulls of U.S Navy ships and on the engines of Air Force jets. NanoFilm has been making nanocoatings for windows, sunglasses and a variety of other products . Hyperion Catalysis’s FIBRILs ™ are being used in electroconductive polymers and Nanoscale Material’s FAST-ACT, which being used to neutralize hazardous chemical and biological agents, is already on the market.

The list of nanoproducts could go on and on. My point is that just as it is dangerous to over-hype nanotech, it is equally foolish to downplay its potential. The bottom-line is that nanotechnology is here today and it is only going to grow more prevalent in the not-to-distant future. Those investors who take a realistic assessment of nanotechnology will be the ones who profit.

Jack Uldrich

Related Links:
Nano-based Drug Delivery
Nanotechnology & the Dow Index of 2025

Bright Future for Obducat & Molecular Imprints

2005-03-25T11:42:00.000-08:00
Today’s news brought to my attention two interesting—and related—news items. The first was an article entitled Life beyond CMOS that noted that companies like Intel, Infineon, STMicroelectronics and Philips are developing CMOS chips with 65nm size features and, longer term, must move to the 45nm range—a development which will require a new fabrication method. The second article announced that sixteen chip makers have now joined the “elite $1 billion capital spending club.”

These two developments should be of great interest to nanotech investors because as those sixteen companies continue to manufacture ever smaller integrated circuits they will need new nanoscale equipment.

This brings me to two companies that I believe have great long-term potential. The first one, Obducat, is a publicly-traded company on the Swedish stock exchange; while the other company, Molecular Imprints, is still private. (Full disclosure: I have not yet invested in Obducat but am in the process of doing more research).

Obducat is an international leader in the emerging field of nanoimprint lithography. According to the International Technology Roadmap for Semiconductors, the future production of electronic devices will require new lithography solutions and Obducat is an early leader in nanoimprint lithography (NIL)—having already sold dozens of its NIL presses to companies such as General Electric as well as major academic institutions.

To date, Obducat has not experienced an increase in sales and its small size and relative dearth of capital leave it at the mercy of large competitors with deeper pockets, but I believe it is worth keeping an eye on--especially if it can sell some of its equipment to a large chip manufacturer like Intel or IBM.

The second company is Molecular Imprints, a world-leading manufacturer of step-and-flash imprint lithography (S-FIL). S-FIL is a stamping lithography technique that is capable of delivering resolution to 20nm and below at a high speed and low cost (estimated to be 10 times less expensive than today’s state-of-the-art).

Many in the semiconductor industry are convinced that progress must continue along the lines of Moore’s Law—-which succinctly states that the number of circuits capable of being placed on a chip doubles every 12-18 months. This means that semiconductors will move from 90nm to 65nm and, soon, to 45nm resolution. Molecular Imprint has the ability to potentially jump the fabrication process down to the 20nm level. Furthermore, its S-FIL technology is well-positioned to deliver a low-cost, low complexity alternative to today’s optical lithography tools because it can operate at lower temperatures and pressures than the technology of some of its leading competitors (like NanoNex).

Furthermore, Molecular Imprints has an extremely strong intellectual property portfolio and has already lined some key partners and customers--including Hewlett-Packard. It also has a $36 million grant from the National Institute of Standards and Technology (along with KLA-Tencor and Motorola) to develop nano-imprint lithography infrastructure for low cost, high-throughput replication at the 65 nm node and below.

If Molecular Imprints goes public in 2005, I would strongly encourage investors to consider an investment. In the interim, publicly-traded Harris & Harris (TINY) offers an indirect way for the individual investor to gain at least a small equity stake in the company.

Jack Uldrich

Related Links:
Obducat
Molecular Imprints

Imago: On the Cutting Edge of Nanotech

2005-03-24T12:59:00.000-08:00
I just finished reading a wonderful article in Space Daily (thanks to Rocky Rawstern at Nanotechnology Now for bringing it to my attention) which discussed researchers ability to develop a new “high-security” steel that would be resistant to possible terrorist attacks.

The technology that is making this development possible is a new advanced microscope called the Local-Electrode Atom Probe (LEAP). This amazing piece of equipment can literally pluck atoms off a material’s surface one at a time and then, layer-by-layer; analyze the chemical composition of that material. Even more amazingly, it does this at a rate 720 times faster than today’s state-of-the-art SEMs and TEMs. (It can collect 72 million atoms an hour as opposed to 100,000 atoms).

For some reason, however, the article, while touting LEAPs technology, failed to mention who makes this equipment. The company is Imago Scientific Instruments and they are a small, private start-up located in Madison, Wisconsin. If investors of FEI, Veeco or Hitachi have not yet heard of this company, I suggest that you now put it on your radar screen because it has a very promising technology which has the potential to take significant market share away from those companies. Not only can Imago’s equipment be used to test materials like steel, it can also be used to study semiconductors, conductive polymers and, quite possibly, biological materials. This suggests that, at a minimum, Imago could avail itself to two huge potential markets. The first is chip manufacturers—who are always interested in analyzing and quickly detecting defects in their chips. In fact, Seagate is already reportedly using Imago’s LEAP equipment. The second market is for biotech companies who are interested in viewing nanoscale samples in 3-D and might find the equipment helpful in facilitating drug discovery.

The bottom-line is that because Imago’s LEAP can do these things 720 times faster than traditional scanning electron microscopes (SEMs) or TEMs, and can do it in 3-D; it makes Imago a company to watch.

Jack Uldrich

Related Links:
Imago Scientific

QinetiQ: A Future Nanotech Investment?

2005-03-23T13:23:00.000-08:00
While reading a recent report about pSivida, the Australian-based biotechnology company focused on biomedical applications of nanotechnology, I was reminded that QinetiQ, the United Kingdom-based defense laboratory, may go public in late 2005 (QinetiQ owns approximately 11 percent of pSivida). If it does, I would encourage investors of not only pSivida to take notice but investors of Altair and Nanophase as well. The reason is because the IPO would allow the latter investors the opportunity to invest in QinetiQ’s subsidiary, Qinetiq Nanomaterials—which is Europe’s leading manufacturer and supplier of nanopowders—and thus diversify their portfolios. (Full disclosure: I do not own any stock in either Altair or Nanophase, nor am I recommending that my readers invest in QinetiQ should it goes public).

QinetiQ's nanomaterials have potential applications in batteries, fuel cells, ceramics, composites, electronics, energetics, sensors, magnetics and the material sciences. More importantly, the company is capable of both bulk production and more specialized projects suggesting it can get its products to the market quickly and in quantities that can make a difference. (Something that Nanophase has demonstrated but which Altair has not.)

As a subsidiary of Qinetiq, the company can also draw on the knowledge and expertise of its 9,000 person staff. Moreover, it can piggy-back upon QinetiQ’s existing relationships in the marine, energy, telecommunications, automotive, electronics and defense industries. As a former spin-out from Great Britain’s Defense Evaluation Research Agency (the equivalent of the U.S’ DARPA), the company has good access to the United Kingdom’s defense market.

Again, I am not recommending the stock in the event it goes public—and that is for two reasons. One, at the present time, Qinetiq Nanomaterials only comprises a small portion of the parent company’s overall value and thus makes it hard to classify QinetiQ as a nanotech company. Secondly, as a general rule, I am pessimistic about nanomaterials companies’ future prospects. I think that nanomaterials will soon become commodities and only small niche players and very big chemical giants (e.g. Dow Chemical, BASF, Degussa, etc) will be able to survive.

Moving forward, for investors who have a different outlook than me or wish to diversify their nanotech portfolio, they should watch to determine if the company can crack the U.S. market. QinetiQ’s recent acquisitions of U.S.-based Foster-Miller and Westar Aerospace & Defense Group gives it a good start, and the fact that the U.S.-based Carlyle Group (a huge players in the U.S. defense market) has a 34% equity stake in Qinetiq, also works in its favor.

Related Links:
pSivida: Down-under Company Has Big Upside Potential
Is Altair All Hot Air?

Accelrys: A Solid Nanotech Investment

2005-03-22T13:45:00.000-08:00
Last week, I advised my readers to stay away from two nanotechnology stocks that I consider wildly overvalued—Altair and Biophan. This week, I would like to highlight one that I consider undervalued and worthy of an investment—Accelrys (ACCL), which is trading at $5.12 a share. (Full disclosure: I own stock in Accelrys).

Accelrys develops and licenses molecular modeling and simulation software to the chemical and life sciences industries. Its software is used by biologists, chemists and material scientists for product design, as well as for drug discovery and development. In 2004, the company spun-off from Pharmacopeia in order to focus exclusively on this area.

I am bullish on the company for the following reasons:

 Accelrys currently counts some of the world’s leading chemical and pharmaceutical firms among its customers, including: DuPont, Dow Chemical, BP, Eli Lilly, Pfizer, Amgen, and Genencor.

 It has started two strategic partnerships. One is with IBM to develop modeling and simulation tools for the Linux operating systems and is expected to provide pharmaceutical companies more flexibility and increased capabilities; the second is with Sigma-Aldrich to integrate its chemical compound catalogs into Accelrys’ database. The latter agreement will save chemists a great deal of time by freeing them from having to search multiple suppliers’ catalogs for the right compounds.

 The company has excellent working relationships with academic institutions, including the University of Cambridge and Harvard; as well as the top nanotechnology government research laboratories such as Argonne, Brookhaven and Los Alamos.

 Recently, it has initiated the Accelrys Nanotechnology Consortium—a program designed to accelerate the development of software tools that enable the design of nanomaterials and nanodevices. Current members include Corning, Fujitsu, e2v Technologies, Imperial College, Uppsala University (Sweden), Franhofer and the Japan Advanced Institute of Science and Technology.

 It currently has over $50 million in cash (meaning that almost 35% of its market capitalization is comprised of cash) and little debt.

Although I’m personally bullish there are, as always, reasons to be bearish. These include:

 In 2004, the company reported a loss of $29 million on revenues of just over $84 million.

 An accounting change (the company went from booking the majority of sales up front to spread those sales out over 12 months) initiated in mid-2004 has made quarter-to-quarter comparisons. (Although this problem should soon resolve itself).

 It faces strong competition in the pharmaceutical arena from Tripos (TRPS), whose customers include, AstraZenaca, Pfizer, Bayer, Hewlett-Packard and IBM Life Sciences; and from NanoTitan, a small nanotech software modeling firm located in Mclean, Virginia.

From my perspective, software tools are going to be essential for nanotechnology research—be it at the academic or corporate level—and the need to view, characterize and understand materials at the nanoscale will only increase in the future as the need to perform calculations increases from hundreds to thousands and, ultimately, millions and billions of atoms. Provided Accelrys stays at the cutting edge of these advances, the company should be well positioned for future growth.

Moving forward, investors should watch for Accelrys to line up additional large corporate customers. If it does, it’ll obviously be a bullish sign. If, however, leading life sciences firms begin switching to the software of Tripos or a private start-up such as Apex Nanotechnologies or NanoTitan, it would be wise to review holdings in Accelrys.

Jack Uldrich

Related Links:
Biophan: Less Talk, More Action
Is Altair All Hot Air?

Nano-based Drug Delivery Devices: A Larger Market than $1.7 Billion

2005-03-21T11:12:00.000-08:00
Earlier today, an independent consulting firm announced that it had just issued a new report stating that the "nano-enabled drug delivery market was expected to pass $1.7 billion in 2009." At an asking price of $500, I won't be paying for the report and would encourage my readers to think long and hard before popping down so much money for the report.

From my perspective, the figure of $1.7 billion is too low and it leads me to question the methodology the consultants used in putting together their report. I cite the following evidence as why I believe the figure is too low:

1. Earlier this year, American Pharmaceutical Partners received FDA approval for its new nano-based Abraxane. The market for this breast-cancer treating product alone is expected to be between $125-$250 million in 2006.

2. Elan Corp's nanocrystal technology is already being used by Johnson & Johnson to treat Schizophrenia, and the company now has a partnership with Roche which could lead to additional revenues.

3. Starpharma's VivaGel--a dendrimer-based topical microbicide being tested for HIV--is in Phase II FDA trials and I believe it has a good chance of being fast-tracked. Longer term, the technology could also potentially be used to treat Herpes and Chlamydia.

4. pSivida's BrachySil technology--used to treat liver cancer--is also in late stage FDA trials. The company is working with at least two other "Top Five" global pharma companies and has plans to expand its technology platform to the treatment of pancreatic, ovarian and bladder cancer.

5. SkyePharma is capable of reformulating a number of off-patent drugs using its IDD-D platform--much as it has already done with Propofol.

6. Flamel, although it's stock has taken a plummeling lately, is still working on its Medusa technology which could lead to the more effective delivery of insulin. If it is successful, it could also lead to signficant sales.

7. Pfizer, Bristol-Myers Squibb, Merck and a host of other major pharmaceutical firms are also working on various nano-based delivery systems--many of which are likely to lead to real products before 2009.

I would also argue that the consultants projections that the nano-based delivery market will only grow to $4.8 billion by 2012 underestimates the potential of a number of very promising nanotech start-ups such as NanoBio and NanoSpectra (among others)--whom are likely to be starting their own FDA trials in the next year or so.

Jack Uldrich

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

Response from Motley

2005-03-19T09:11:00.000-08:00
Dear Readers:

For some reason, neither Carl Wherrett--or myself for that matter--have been able to post a response to my article yesterday about Altair. I have therefore taken the liberty of posting Carl's response in full. Below is the full text:

Dear Jack:

Regarding your comments on our Altair article I would urge your readers to
read the full article. Our by line was we are not buying , holding or shorting Altair. We are watching them carefully, which is the same advice you gave in your article i.e. be very cautious. Imo it is the only sensible advice anyone should give about this company.

Our mention of Spectrum was to highlight they have finally got a commercial
partner after years of trying but we are well aware meaningful revenues are
years away. What might be nearer term is the battery technology and at this
stage I nor anyone else can say for sure it is a bogus claim. Their
statements are very factual and will invite a class action suit if their
claims are proven to be totally without merit. Had these types of claims
been made by the previous management then I would dismiss them as it is
repeating previous broken promises. The fact that they have a new CEO & now President means I cut them a little more slack, after all it is under this
CEO that have signed Spectrum and raised $20m at a price of $4.05, an
unheard of level under their previous managers. Are the two things linked,
well right now only in conspiracy theorists minds. Dr. Gotcher has not lied
to his investors yet, if and when he does you can be sure I for one will be
crawling all over him.

For these reasons we ended with the remark , IF they announce a deal with a
major battery manufacturer then we would look seriously at them.

Regards
Carl Wherrett

Altair: Fooling the Fools?

2005-03-18T04:20:00.000-08:00
Yesterday, The Motley Fool ran an article on Altair--which I profiled last week. The authors, Carl Wherett and John Yelovich, saw fit to "consider [Altair] ... a rule breaker." To their credit, they didn't recommend the stock but I think they did their readers a real disservice by suggesting that Altair has had some "stunning breakthroughs" in the past few months.

Specifically, the authors suggested that Altair's licensing of RenaZorb to Spectrum Pharmaceuticals was one such breakthrough. I respectfully disagree. I simply remind my readers that RenaZorb is still years away from FDA approval and that Spectrum Pharmaceuticals is hardly a world-class company--it doesn't yet have any revenues.

Secondly, the Motley Fool writers seemed to be far more impresed with Altair's lithium-ion technology than I am. I would argue that Matsushita, given the size of its marketing and distribution network, is far better positioned to be the first to get its lithium-ion technology into the commercial marketplace. This is not to say Altair can't find another major battery manufacturer to license its technology--it's just that the company's previous track record on successfully introducing its products into the commercial marketplace (e.g. NanoCheck) offers little reason to be confident.

In conclusion, I would simply remind my readers of this fact: Altair had only $1.2 million in revenues in 2004, while piling up $7 million in losses. It is impossible for me to justify a market capitalization of $200 million for a company with such miniscule reveneus, no real product yet, and an unproven management team. (Full Disclsoure: I own no stock in Altair.)

Related Links:
Is Altair all Hot Air?

Starpharma: A “Nano” Star on the Rise

2005-03-17T06:15:00.000-08:00
On Monday, Starpharma—an Australian-based biopharmaceutical company focused on the development and application of dendrimer-based nanotechnologies—announced it was launching a new company, Dimerix Bioscience, to develop technology for the new field of receptor coupling. The overall size of the deal is pretty small—about AUD$200,000—and Starpharma will only have a 30% equity stake in the company, but it is yet another indication of Starpharma’s growing sophistication in leveraging its impressive intellectual property position in the area of dendrimer-based nanotechnologies. (Full disclosure: I own Starpharma stock).

To understand the long-term potential of dendrimers—which are tiny (approximately 50 nanometers) synthetic, nanoscale structures that can be tailored for a variety of applications—one need look no further than yesterday’s press release coming out of Central Michigan University (a world leader in the development of dendrimers). The release succinctly addresses how dendrimers may someday be used to treat breast cancer and osteoporosis.

More exciting than these developments, however, was the news last month that Starpharma, in exchange for giving Dow Chemical a 31 percent equity stake in another company it owns—Dendritic Nanotechnologies—received 196 dendrimer patents from the chemical giant. This gives Dendritic Nanotechnologies (of which Starpharma is still the biggest equity holder at 33%) the largest portfolio of intellectual property in the field. It also alleviates the future threat of costly and time consuming litigation.

Beyond these developments, I am bullish on Starpharma for the following reasons:

 The company is developing VivaGel—a dendrimers-based topical microbicide gel that has been developed for women as a preventative against the sexual transmission of HIV. The gel has been proven 100 percent effective in animal trials and, in 2004, received clearance from the FDA for human clinical trials. In early trials, VivaGel appears to be safe (it is still too early to know about its efficacy) but if it is approved it will, arguably, be the first truly nanoscale platform technology approved by the FDA. Longer-term, it is quite possible that the technology will also be tested for effectiveness against other sexually transmitted diseases like Herpes and Chlamydia (an estimated 15 million women in the U.S. contract sexually transmitted diseases every year).

 As stated earlier, Starpharma owns 33 percent, Dendritic Nanotechnologies, which is one of the few companies to be accepted as a partner in MIT’s prestigious Institute of Soldiering Nanotechnologies. (It is likely that the Army is exploring the company’s dendrimers as a possible platform for detecting treating various chemical and biological agents).

 In late 2004, a consortium lead by Starpharma was awarded a $5 million from the National Institute of Health to develop a second generation microbicide for the prevention of HIV and other STD’s.

 And, earlier this year, Starpharma began trading as an ADR on NASDAQ under the symbol: SPHRY. One ADR is equal to 10 shares of the company’s stock on the Australian market.

As always, there is another side to the story and Starpharma is not without some risk. At the present time, the company is not profitable and has few revenues. It also faces some competition from a private start-up out of the University of Michigan, NanoBio Corporation. And, of course, in almost every area it is working—from HIV to osteoporosis—it faces stiff competition from not just the major pharmaceutical companies but hundreds of other promising start-ups as well.

In all, however, I believe Starpharma is an excellent investment for those investors with a strong penchant for risk. VivaGel’s effectiveness in animal studies, coupled with the company’s impressive IP platform and its large stake in Dendritic Nanotechnologies, provide great potential upside—especially in the area of treating various cancers.

Moving forward, investors should look for a major pharmaceutical company to license Starpharma’s technology. If such a development occurs, investors should consider it a very positive development. Of course, the most significant milestone will be if the FDA approves VivaGel. Such an act would serve as a major validation of Starpharma’s technology.

Jack Uldrich

For more information:

Starpharma Pooled Development Ltd.
SPHRY (NASDAQ) and SPL.AX
Address: Level 6, Baker Heart Research Building
Commercial Road
Melbourne, Victoria
Australia
Phone: 61.3.9510.5955
CEO: Dr. John Raff
Web: www.starpharma.com

Fuel Cell Technology: Connecting the "Nano" Dots

2005-03-16T05:38:00.000-08:00
My favorite nanotechnology resource is the website Nanotechnology Now. On a daily—-sometimes an hourly basis--its editor, Rocky Rawstern, gleans from the Internet an ever growing list of articles and press releases dealing with emerging field of nanotechnology. The articles often stand on their own merit but on some days the “connection” between various developments lingers just below the surface. Yesterday was just such a day.

First, there was an interesting article in Small Times (another excellent news sources on nanotechnology) by David Forman talking about Plug Power’s work to develop a fuel cell home energy station. The gist of the article was that the technology is real and potentially disruptive (the station could not only produce hydrogen for a fuel cell car, it could also allow the user to generate some of his or her own electricity), but this development is a long way off.

While I appreciate the effort not to “hype” fuel cell technology, I often think that many professionals in the field fail to appreciate how fast things are moving in their own backyard. To wit, I offer a press release coming out of Brookhaven National Laboratory. The release reports that researchers are honing in on creating the conditions for the “optimal operation” of new catalysts for generating hydrogen. Essentially this means that in the near future fuel cells will be able to operate at even higher levels of efficiency.

The third item was a short article talking about Accelrys (NASDAQ: ACCL) (Full disclosure: I own Accelrys stock) adding five new members to its Nanotechnology Consortium. The addition of these specific individuals may—or may not—be important. What is important is that Accelrys is committed to accelerating the development of new software tools that will enable the design of new nanomaterials and nanoparticles.

This brings me back to the fuel cell technology. I am confident Accelrys (as well as other companies) will speed up the commercial development of not only new nanocatalysts but also new nanomaterials which will allow for the safer and more effective storage of hydrogen.

These two developments, in turn, takes me back to Plug Power’s experimental home energy stations which, I would argue, will be here sooner than later because of these new advances.

And, if this is the case, the implications are significant. Not only should investors look at stocks like Plug Power and Accelrys in a new light, they should also revisit their assumptions about the long-term value of automobile and energy stocks because fuel cell technology has the potential to “disrupt” those industries.

Biophan: Less Talk, More Action Needed

2005-03-15T05:19:00.000-08:00
Last week, Biophan, a nanotech start-up based in West Henrietta, New York, reached a 12-month high at 2.09 a share. The company’s stock is now up over 300 percent since August. The question is: will it continue to increase? I am doubtful unless the company soon announces a deal of real substance. (Full Disclosure: I do not own any Biophan stock. I sold all my shares in December at $1.50). The announcement in February that it had acquired Amris GmbH was of some importance because it strengthened the company’s position as a leading manufacturer of MRI-compatible medical devices. However, a cursory review of the company’s numerous other press releases over the past few months are more troubling and that is because they appear to have only one thing in common: they aren’t really news. The fact that Biophan has been mentioned in an article or that its CEO is speaking at a conference may give some investors the perception of action and movement but I would prefer if the company stuck to the old fashioned notion that press releases should be saved for real news.

This is not to say Biophan is not without some merit. The company is developing a proprietary thin-film nanomagnetic particle coating to make biomedical devices MRI (Magnetic Resonance Imaging) safe and image compatible. And, if successful, the technology would represent a significant market (by some estimates approximately $5 billion).

Today, many medical devices—particularly pacemakers and neurostimulators—cannot be used with MRI because the resulting magnetic fields cause the devices to heat up and thereby cause tissue damage. Biophan’s technology allegedly alleviates this problem.

Unfortunately, to date, no major medical manufacturer has agreed to employ its technology. Biophan does have a relationship with Boston Scientific (BSX); however, no news on this front has been forthcoming for months. The company also has a partnership with NASA to create a biothermal battery that converts the body’s natural heat into usable electrical energy (Such batteries could extend the life of cardiac pacemakers and require fewer surgical replacements) but, again, nothing of substance has yet been developed from this relationship.

Similarly, the recent news that Biophan was commencing animals of MRI-visible Vena Cava filter bears watching but should be treated with great caution by investors until the results of these trials are known.

The bottom-line is that Biophan does have promising intellectual property and its relationships with Boston Scientific and NASA are noteworthy, but until a major medical device manufacturer actually starts licensing—and employing—its technology, it is simply another promising nanotech company with an unproven technology.

For a company with no revenues in 2004 and little cash on hand, it is hard—in my mind—to justify a market capitalization of $140 million at this time.

As always, due your own due diligence … but that’s my two cents.

Jack Uldrich

For more information:

Company: Biophan Technologies, Inc.
Symbol: BIPH
Trading Market: OTCBB
Address: 150 Lucius Gordon Drive
Suite 215
West Henrietta, NY 14586
Phone: 585-214-2441
CEO: Michael Weiner
Web: www.biophan.com

Nanotechnology & the Dow Index of 2025

2005-03-11T07:33:00.000-08:00
In his book, Quantum Investing, Stephen Waite suggests that by 2025 at least half of the companies comprising today’s Dow Jones Index will have been replaced. He bases this prediction on his understanding of quantum physics which, he notes, is the under-lying science behind 30 percent of today’s Gross National Product. He further suggests that the influence of quantum physics will only grow more pervasive by 2025 and, in doing so, fundamentally alter the make-up of Dow.

It is a thoughtful proposition—and one which I agree—but it begs the question: Which companies will survive and which are fated to go the way of Tennessee Coal & Iron and, more recently, International Paper and AT&T?

Waite offers the first clue when he writes in his book that “The mother of all quantum revolutions—the nanotechnology revolution—has the potential to be the twenty-first century what microelectronics was to the twentieth century.” A second clue can be found in the research of the Lux Research—the country’s preeminent nanotechnology research firm—which reported last year that nearly half of the 30 companies listed on the Dow mentioned nanotechnology on their web sites.

While it is not my intention to suggest that the mere mentioning of nanotechnology on one’s web site holds the key to retaining a position on the Dow Index, a company’s involvement in the field does offer an attractive first screen for discerning which companies will survive in the future because it implies, at a minimum, that those companies are at least sensitive to how nanotechnology and quantum physics could change the economic and competitive landscape of the first part of the 21st century.

Among the companies mentioning nanotechnology are 3M, Boeing, Proctor & Gamble, Microsoft, United Technologies, SBC Communications, DuPont, Exxon-Mobil, GE, General Motors, Hewlett-Packard, Honeywell, IBM, Intel, Johnson & Johnson, Merck and Pfizer. A cursory review of these companies involvement in nanotechnology suggests that most of them are approaching the emerging science in a very pragmatic way. They understand nanotechnology has practical applications which can make their existing products better today, while simultaneously possessing the ability to transform their business tomorrow.

It is this balanced approach of applying near-term nanotechnology applications to improve the company’s next quarterly financial statement, together with a long-term commitment to nanotechnology research and development that just might allow these companies to successfully navigate the uncharted waters of the future.

For instance, 3M has developed a new nanocomposite for tooth filler that is stronger, more durable and keeps its polish longer. Hardly sexy, but such advances are the stuff that sustained annual growth is made of. Longer term, 3M is looking at developing nanocomposites for bone regeneration and nanomembranes for water filtration. If the company can master these techniques, it will have gained entry to two new, large and potentially high-margin areas—the type that might allow it stay on the Dow for another two decades.

General Motors and DuPont are following similar strategies. GM is employing nanocomposites to make a number of its newer vehicles more resilient and fuel efficient —including the Chevy Impala and Hummer H2. Down the road, it is looking to nanotechnology to improve both hybrid battery technology and fuel cell technology. Both advances might help the company survive the end of the century-long reign of the internal combustion engine.

DuPont, on the other hand, recently signed a licensing agreement with a very promising nanotechnology start-up, Nanomix, to manufacture flat panel displays using carbon nanotubes. The displays will be flatter and more energy-efficient than today’s state-of-the-art displays and offer to make DuPont more competitive in this lucrative market. The company, however, is also investing millions into the U.S. Army’s Institute of Soldiering Nanotechnologies. Why? Because it knows the Army is interested in producing clothing that can monitor the health condition of its soldiers, change thermal properties, produce its own energy, and maybe even change colors on demand. If DuPont can stay abreast of such developments, it will have a leg up on developing the next great material science advances which could very well revolutionize the textile industry.

Hewlett-Packard, Intel and IBM are also investing millions in nanotechnology, and it is why all three have entered into partnerships with some of today’s most promising private nanotechnology start-ups. They understand that nanotechnology can not only improve the performance of computer chips today, it could well be instrumental in ushering in the era of either carbon- nanotube-based chips or molecular electronics.

The pharmaceutical industry is no different. Johnson and Johnson, Merck and Pfizer all recognize that in the near future a number of their most lucrative patents will expire and that proprietary nanoparticles could help extend those patents. Longer term, they realize that a variety of nanoscale devices might make for more effective new drug delivery platforms, and if they want to survive they need to be developing these nanoscale platforms today.

The very size and diversity of these large companies makes it unrealistic—and imprudent—to evaluate these companies short-term stock performance solely on the basis of their involvement in nanotechnology, but for investors who are interested in positioning themselves for long-term growth, a company’s involvement in nanotechnology today is one practical way of gauging whether they, at least, understand the forces which will allow them to still be in existence in 2025.

-------------------------------------------------------------------------------------
Jack Uldrich is the author of the The Next Big Thing is Really Small: How Nanotechnology Will Change the Future of Your Business and the editor of NanoNovus.com. His forthcoming book, Investing in Nanotechnology: Think Small. Win Big is due out later this summer.

Is Altair all Hot Air?

2005-03-10T15:29:00.000-08:00
Earlier today, Altair (NASDAQ:ALTI) announced the termination of its former president, Rudi E. Moerck. This follows on the heels of yesterday’s release of its 10-K statement. While I’m not suggesting that the two events are related, the news offers a good time to look at one of nanotechnology’s most volatile stocks: ALTI.

Altair describes itself as a manufacturer of unique nanocrystalline materials, and it states that its proprietary nanomaterials have a variety of applications in everything from solar cells and fuel cell technology to drug delivery products and advanced batteries. It also reports that it has two potential products in the pipeline—RenaZorb and NanoCheck.

After reviewing the literature and talking with Doug Ellsworth, president of Altair Nanomaterials, I am quite negative on the company’s future prospects. (Full Disclosure: I do not own any Altair stock and have not taken a position to short the company’s stock). The only positives I see coming out of the company—besides its penchant for a well-timed news release—is that it has been able to successfully land some modest grants from the U.S. government. Specifically, Altair is involved (as a subcontractor) with a $400,000 grant to develop a hydrogen refilling station in Las Vegas and is also sharing a $1 million grant with the Western Michigan University to conduct research aimed at developing nanosensors for chemical and biological detection.

A company—especially a publicly-traded company—cannot, however, survive on grant money alone. And reviewing the company’s recent 10-K, Altair only received $1.15 million in revenues in FY2004 and the majority of it came from grant money.

To make matters worse, the company reported a loss of nearly $7 million for the fiscal year. For a company whose share price closed at $4.09 today—and has a market capitalization of slightly over $200 million—these figures would suggest that the stock is dangerously overpriced. (To be fair, the company does have close to $30 million cash-on-hand which gives it 4 years at its present burn rate).

The only thing, from my perspective, that would justify a price this high is if Altair could demonstrate it has a viable commercial product coming to market very soon. Based on my research, there is, however, no visible evidence of any such development.

I base my analysis on the following:

 RenaZorb, which is a nanotechnology-based drug candidate for phosphate binding in early stage Renal disease, has not even started the FDA approval process. Even if Altair can start the process this year (a big if), it’ll be years before the product winds its way through the regulatory process. And, of course, at any stage the FDA can terminate the drug. Therefore, at best, RenaZorb is a long-term question mark.

 Another product Altair has been touting is NanoCheck—a nano-structured compound to remove phosphate from water. Going back to old news articles and releases from Altair, the company has been talking for at least two years about the potential of this technology to capture a sizeable share of the market for spa and pool cleaning products (NanoCheck reportedly helps prevent algae growth). As of today, there is no indication that a product will be forthcoming any time soon and company executives couldn’t provide a timeframe for when it might reasonably be expected.

 Earlier this week, Altair announced that it had been granted a European patent which it claims will improve the performance of Li-ion batteries (it reportedly coats the anode surface with lithium titanate nanocrystals). It is possible that this technology, like RenaZorb and NanoCheck, will eventually materialize into a real product, but investors should beware that Matsushita, the giant Japanese conglomerate, announced this week that it was rolling out a similar product. Given Matsushita’s marketing and distribution strength, it is difficult to imagine how Altair will compete in the highly competitive battery market unless it also announces a partnership with a major battery manufacturer soon.

 Altair’s work in the area of solar cell and fuel cell technology is not without some merit. The problem is that a number of other companies like Nanosys, Nanosolar and Konarka—many of whom have already licensing and distribution partnership agreements—appear much better positioned.

 Lastly, Altair also claims to be developing nanomaterials for everything from better dental fillings to stronger, lighter and cheaper titanium. While I have no reason to question its work in these areas, investors need to understand that much bigger companies like Lockheed and 3M are doing work in the same area. Unless Altair’s nanomaterials are so superior, it will be difficult for them to be competitive.

In conclusion, I would suggest that investors treat this stock great caution. Altair’s management team appears to lack strategic focus. It is unrealistic, given the present state of competition in nanomaterials, pharmaceuticals and solar cells, that it can concentrate in all those areas. More importantly, until Altair actually has some commercial products—and real revenues—it is hard to price its stock much above the $30 million that it has in cash. (Such a valuation would peg the stock at around .60 cents—a far cry from its present price of $4.09).

Moving forward, investors should not be persuaded by press releases announcing new patents or news that it has been awarded modest government grants. Only announcements that demonstrate the company is actually receiving real revenue should be accorded any significance.

Always, do your due diligence … but that’s my two cents.

Jack Uldrich

Contact Information

Altair Nanotechnologies, Inc.
204 Edison Way
Reno, NV 89502
Phone: 775-858-2500
CEO: Dr. Alan Gotcher
Web: www.altairnano.com
Symbol: ALTI

Nanotechnology and the Entrepreneurial Mind

2005-03-09T05:34:00.000-08:00
Last evening, I had the opportunity to serve on a panel at a forum on nanotechnology held by the Minnesota Entrepreneurs Inc. In my short time before the group, which had just been bombarded with a series of short lectures on the technical and futuristic aspects of nanotechnology, I tried to convey the immense opportunity entrepreneurs can help play in bringing nanotechnology to the commercial marketplace.

It is conventional wisdom that the emerging field of nanotechnology is complex and the field will not suffer from the rash of start-ups that the Dot.com era witnessed. While this is true, I noted that there was no reason to be intimidated by the field—or write it off just because you don’t have a PhD in physics, biology or the material sciences. There will be no shortage of entrepreneurial opportunities for those who understand how nanotechnology-enabled advances in the materials sciences, data storage, energy devices and a myriad of other products might soon be utilized by the masses.

My point was that tomorrow’s most successful entrepreneurs will not just be those people who actually start nanotechnology companies (my guess is that this number will be relatively small and will be limited to those with a deep base of scientific knowledge and/or access to a deep reservoir of financial capital which will be necessary to bring their product(s) to market), it will also be open to those individuals who understand how nanotech-enabled advances can be used to improve people’s everyday lives and enhance business operations.

Let me provide a few examples. Nanotechnology is driving a revolution in material sciences. Nano-Tex’s stain-resistant pants are often held up as a model example for how nanotechnology can revive an industry—the textile industry—that was long given up as outdated and uncompetitive. The question the entrepreneur has to ask is this: Are there new business opportunities that could emerge from this revolution? For instance, if cloths are now lasting longer—and staying cleaner—are there additional business opportunities to rent clothing—or other products—coated with nanofibers? Similarly, as other nanotech companies manufacture lighter, stronger, and more dent and scratch resistant materials, what new opportunities could emerge? If self-cleaning or energy-enhanced windows become more prevalent, how can the engaging entrepreneur harness these properties to improve a company’s—and thus his or her own—bottom line.

The advances nanotechnology is enabling in data storage arena offer similar entrepreneurial opportunities. To illustrate my point, I offer the example of Reed Hastings, the founder of NetFlix. He didn’t invent DVD technology. He was simply among the first to recognize that eventually DVD technology would get so inexpensive that he reproduce and send out DVDs in the mail and allow customers to keep them for an indefinite period of time. In so doing, he successfully challenged the entire video rental industry.

Will similar opportunities emerge in the future? Yes, and it is going to be the entrepreneur—not necessarily the developer of the technology—who gets rich in the process.

Another area, I am personally excited about are the advances being made in flexible solar cell technology. Konarka is reportedly working with the U.S. Army to embed solar fabrics directly into the uniforms of our soldiers. The purpose is to help our fighting men and women reduce the number—and weight—of batteries they must carry. Solar fabric, by allowing them to essentially recharge their computers and other electronic equipment from their clothing, will do this. The technology will undoubtedly be beneficial for our soldiers, but is there also a successful business lurking in the technology? Yes. I don’t necessarily know what that business will be, but if people can recharge their cell phones, laptops, and IPods from their clothing, my guess is that the entrepreneurial mind can think of some exciting possibilities.

To do so, however, the entrepreneur must first understand where nanotechnology is pushing a variety of technologies. By doing so, they can get out ahead of the herd and capture these opportunities before they become obvious to everyone else.

Jack Uldrich

Nantero: One Step Closer from Lab to Fab

2005-03-08T14:10:00.000-08:00
For the second consecutive day, one of nanotechnology’s most promising companies has announced a very sizeable funding round. Today, Nantero, announced that it received a third round (Series C) investment totaling $15.5 million. (Institutional investors include Draper Fisher Jurvetson, Harris & Harris, Stata Venture Partners, Charles River Ventures and Globespan Capital Partners.) The news suggests that Nantero is yet one step closer to a commercial product.

The Woburn, MA-based company is working with carbon nanotubes to develop non-volatile random access memory (NRAM)—a portable memory chip with low power consumption, high storage density and high speed to compete with the other forms of memory (Static RAM, Dynamic RAM and flash memory).

Nantero has already successfully demonstrated that it can properly align over 10 billion CNTs on a single wafer. It is also claims that its technology has been incorporated into a standard semiconductor production line; which, if true, would mean that major chip manufacturers would not have to alter their production processes—a big plus. If the company’s technology is successful (LSI Logic is reportedly testing it), it could replace all existing forms of memory and lead to more capable laptops, cell phones and other electronic devices, as well as “instant-on” computers. The market for such a technology could be substantial—some estimates range as high as $100 billion.

Nantero executives have stated that the company will have a product by mid-2005. If its tests with LSI Logic prove successful, look for other major semiconductor manufacturers like IBM, Motorola and Infineon to enter into licensing agreements with Nantero. Recently, the company also announced a partnership with BAE System, a major aerospace manufacturer. The partnership could signal Nantero’s move into a new field—that of employing CNT to combat the effects of radiation.

Although it is a private corporation, nanotech investors should definitely put the company on their radar screen.

Jack Uldrich

Contact Information

Nantero, Inc.
25-D Olympia Avenue
Woburn, MA 01801
Phone: 203-656-0833
CEO: Greg Schmergel
Web: www.nantero.com

Nanomix appears to have Right Mix

2005-03-07T13:04:00.000-08:00
Earlier today, Nanomix, a leader in the development of carbon nanotube-based nanoelectronics sensors announced the close of a $16 million round of funding. The development should be heeded by nanotech investors because it suggests that the company is one step closer to a commercial product—and, possibly, an IPO.

The company is reportedly preparing to launch devices that harness the features of nanoelectronics. While company executives aren’t discussing what the device will do, my guess is that its first commercial product will be some type of chemical or gas sensor.

The market for chemical and gas sensors is estimated to a multi-billion market and Nanomix’s sensors would appear to have a wealth of industrial applications in these markets. For instance, the gas and oil industry could employ its sensors throughout a refinery for industrial process control or to help monitor gas leaks and air-quality. Other potential applications, however, include pollution or pathogen detection, chemical detection in drinking water, and indoor air-quality sensing in schools.

Nanomix has also already successfully produced a medical capnography sensor (a small, inexpensive, easy-to-use device that can quickly and accurately detect if carbon dioxide is present). Such a device could have a variety of applications in the health care arena where medical personnel must monitor carbon dioxide. It has also successfully licensed field-emitting thick film materials containing carbon nanotubes to DuPont Electronic technologies. This technology could lead to high-quality, affordable flat panel televisions.

Nanomix’s sensors appear to have superior price/performance compared to traditional technologies, and its intellectual property portfolio, strong management and scientific teams all suggest that it well positioned for future growth. The company has not yet received any significant revenue from its licensing agreement with DuPont, nor has its medical capnography sensor yet been widely commercialized but this latest round of funding may help address some of these shortcomings.

The fact that Harris & Harris has joined existing investors, including: Seven Rosen Funds, EnerTech, Alta Partners and Apax Partners, provides another indication that the company is to track to commercialize its technology and become one of the first true nanotech companies to go public.

Moving forward, investors should watch for Nanomix to successfully create a hydrogen storage system. If it can it would represent a very significant long-term market—especially if fuel cell technology becomes prevalent in automobiles. Another area where Nanomix may be able to make some inroads is in the field of chemical and biological detection. Longer term, investors should watch if the company is able to develop system that can mimic the human sensory system, including an artificial nose and tongue.

Jack Uldrich

For investors interested in doing more research:

Nanomix, Inc.
5980 Horton Street
Emeryville, CA 94608
510-428-5300
David Macdonald
www.nano.com

Nanotechnology as an Economic Development Opportunity

2005-03-04T14:00:00.000-08:00
This past week, I had the opportunity to give the opening presentation at the North Dakota Chamber of Commerce’s Annual meeting in Bismarck. Given that North Dakota was recently ranked 44th among the 50 states in a nationwide study reviewing state’s effectiveness in leveraging nanotechnology for economic development opportunities, it might be assumed that there was little interest and even less opportunity for North Dakota in exploring the field.

Nothing could be further from the truth. To begin, although North Dakota has a small population and is still highly reliant on agriculture, there are some very exciting opportunities for the state in the field of nanotechnology, as well as a surprisingly strong foundation upon which to build.

For starters, the coal, oil and gas industry is the second largest industrial sector in the state and nanotechnology could play a significant role in making the industry an even larger, stronger and, more environmentally-friendly, component of North Dakota’s economy. For instance, new nanocatalysts have the potential to make coal cleaner by reducing nitrogen oxide emissions, while the University of North Dakota—the recipient of a $2.3 million grant to explore how nanotechnology might help remove mercury from coal fired power plants—could help alleviate the serious environmental issue of mercury contamination.

Nanotechnology may also play a significant role in bring fuel cell technology to the commercial marketplace. U.S. Senator Bryon Dorgan has long been a leading advocate of fuel cell technology (and has channeled some valuable research money the state’s way). If he and other federal, state and local leaders can use their influence to steer additional nanotechnology research and development resources to North Dakota State University’s Center for Nanoscale Science and Engineering, the result could be better more effective, efficient and safer fuel cells. More importantly, the state could really begin to position itself as a leader in this new, exciting and growing area.

The potential of the Center of Nanoscale Science and Engineering goes well beyond fuel cell technology and could facilitate advances in fields as diverse as agriculture, materials sciences and semiconductors. In fact, the Center of Nanoscale Science and Engineering has already proven itself beneficial by helping land Alien Technology—the largest manufacturer of radio frequency identification tags (RFIDs) in the world—to Fargo. Provided the Center stays on the forefront of nanotechnology, there is every reason to believe it could continue to keep Alien competitive, as well as lure other high tech North companies to the state. The obvious indirect beneficiary of this growth will be the citizens of North Dakota who stand to benefit from the creation of even better and higher paying jobs.

The most exciting opportunity North Dakota has, however, lies in Wahpeton. This is because it is there at the North Dakota State College of Science where educational leaders are leveraging a $200,000 federal grant to begin developing a nanoscience technician curriculum. In the not-too-distant future, business and government leaders are estimating that the U.S. will need upwards of 2 million new workers trained in the nanosciences. Many of these workers will require only a two-year degree and, to the extent, which the state can be among the first states to develop a skill and trained workforce, the new nanotechnology businesses of the future may be forced to go to where the trained workforce is—even Wahpeton.

Obviously, the education and training of students should begin well before the post-secondary-level and K-12 educational leaders in North Dakota are encouraged to begin exploring how they might be able to incorporate nanotechnology curriculum into their school. Above all, however, for North Dakota—or any other state for that matter—to really leverage the full potential of nanotechnology, it must act soon! Just last week, North Dakota’s neighboring state of Minnesota passed a $1.4 million program to develop a nanotechnology training institute, while the state of Ohio convened a group of 500 business, academic and political leaders to explore nanotechnology’s importance to the future economic development.

The bottom line is that nanotechnology may deal with the very small, its economic development potential is huge—even for North Dakota—but time is growing short.

Jack Uldrich

Elan: Good News for Nanotech Investors?

2005-03-02T15:12:00.000-08:00
On Monday, Elan's (ELN) stock price dropped 70 percent on news that the company was pulling its highly touted and promising new treatment for multiple sclerosis, Tysabri, because two patients using the treatment had developed a rare nervous-system disorder. In the ensuing panic, the company lost billions in market capitalization and was downgraded by a few investment houses.

The drop may represent a real opportunity for investors who have a long-term perspective and understand the company's Nanocrystal technology. (Note: The author does not own any Elan stock at the present time but intends to purchase some on March 2, 2005.) The Nanocrystal technology takes advantage of the unique properties of nanoparticles to help improve the bioavailability of drugs. This is an important characteristic because a large number of drugs produced by Big Pharma either fail or are abandoned due to poor water-solubility. Nanocrystal technology could, therefore, rescue a percentage of these chemical compounds and turn them into profitable drugs. Earlier this year, Roche began testing the Nanocrystal technology; and it is already being used by Johnson & Johnson in a Phase III clinical trial on a injectible treatment for patients with Schizophrenia.

At the present time--and for the near future--these products will make up only a small portion of Elan's overall business, but if the FDA approves J&J's Schizophrenia treatment and/or Elan begins to meet Roche's development milestones, the Nanocrystal technology could become an increasingly profitable component of Elan's overall business.

I am also bullish on the stock because I believe Elan management, the FDA and the broader investment community overreacted to the news about Tysabri. In the wake of Vioxx, everyone has become too cautious. The FDA even stated in its release about the potential link between Tysabri and the nervous-system disorder that it "continues to believe Tysabri offers great hope to MS patients." (The emphasis is mine). My bet is that Tysabri will be re-released toward the end of this year and while it won't command as much of the market for MS treatments as was expected when it was first approved, it will still capture a sizeable share.

As always, do your own due diligence ... but that's my two-cents.

Nanotechnology and the Future of the Energy Industry

2005-03-02T09:21:00.000-08:00
Yesterday, two separate news items highlighted the growing importance of nanotechnology to the energy industry. The first was a short news item announcing that Nanosys and signed an agreement with Sharp to use its proprietary nanostructure technology in fuel cell technology for portable consumer electronic devices like laptops and cell phones. The second item was an article discussing Nanosolar’s use of nanotechnology to produce light, flexible, durable and highly efficient solar cells.

It is not my contention to state that Nanosys’ agreement with Sharp guarantees that Sharp’s fuel cell technology will win in the marketplace. In fact, NEC is scheduled to soon release its own nanotechnology-enabled fuel cell technology. Rather, it is to point out to the manufacturers of laptop and cell phone batteries that the development should be heeded by their industry because if either Sharp, NEC or some other as-yet-unidentified competitor can design, manufacture and distribute a fuel cell that will allow electronic devices to operate for a longer period of time and be more easily recharged (actually refueled), the battery industry could be seriously imperiled.

Similarly, while Nanosolar’s announcement that it “might” be able to produce electricity in the range of five cents per kilowatt needs to be viewed with some caution (today’s best solar cells can generate a kilowatt for between 20 and 30 cents), what should not be dismissed by the energy industry—particularly the electrical utility industry—is the relevance of nanotechnology-enabled solar cells.

Solar energy currently makes up for about only one percent of the world’s energy needs. The market for solar power is, however, growing at 40 percent a year and Nanosolar’s claim that it’ll be able to “paint” self-assembling nanomaterials directly onto cars, buses and even rooftops (a development which would allow individuals and businesses to essentially generate their own power free of the existing electrical grid), could throw this figure into hyper drive.

If Nanosolar can’t produce on its promise to deliver solar cell at a competitive price (coal can produce a kilowatt for between 7-10 cents), my guess is that either Nanosys or Konarka—two other companies working on flexible solar cell technology—will.

For those who are doubtful, Nanosys has an agreement with Matsushita to begin producing its flexible solar cells in 2007, while Konarka has received funding from both ChevronTexaco and France’s largest electricity producer—Electricite de France—to develop its own nano-enabled solar cells. Both companies have also received sizeable grants (in excess of $10 million) from the U.S. government to develop their respective technologies.

It is possible—indeed even likely—that the precise timing of when these cheap, flexible solar cells will reach the market may off by a few years; I do believe the electrical utility industry will be adversely affected by nano-enabled flexible solar cells unless they begin, today, in assessing how they might be able to be incorporate the technology into their existing mix of energy-producing sources.

pSivida: Down-Under Company has Big Upside Potential

2005-03-01T10:24:00.000-08:00
(Editors note: On Friday, February 26, NanoNovus editor Jack Uldrich had an opportunity sit down with pSivida’s Managing Director, Gavin Rezos to discuss pSivida’s business).

pSivida is not listed on either the Merrill Lynch or Punk Ziegel Nanotech Index, and the Forbes Wolfe Nanotech newsletter recently profiled the company but chose not to recommend it. The company, however, has a great deal going for it and is worthy of consideration by any individual investor hoping to profit from nanotechnology. (Full Disclosure: The author is an investor in pSivida and encourages all readers to do their due diligence, as well as consider multiple independent sources before investing in any company).

pSivida is an Australian-based biotechnology company committed to the biomedical applications of nanotechnology. Specifically, the company is developing and commercializing BioSilicon™—a biocompatible and biodegradable nanostructured porous silicon—that has multiple potential applications, including: controlled drug delivery, brachytherapy and tissue engineering.

Below is a list of reason to be bullish on the company:

 pSivida’s BrachySil technology (a radioactive biochip that “locks” on cancer cells and releases predetermined doses of radioactive molecules to kill the cell) has demonstrated effectiveness in reducing the number of malignant cells in a small sample of patients with inoperable liver cancer. By reducing the tumor, the device may help prolong a patient’s life long enough to receive a life-saving transplant. In preliminary trials the technology was found to be 100 percent effective in killing smaller tumors and 56 percent effect in killing larger tumors and reported no adverse side-effects. If it can continue to demonstrate effectiveness in Phase IIb trials, pSivida could be poised to capture a sizeable portion of the $1 billion dollar brachytherapy market.

 To date, one U.S.-based “Top 5 Global pharmaceutical firm” is testing pSivida’s BioSilicon technology and pSivida hopes to report with a few months that a second “Top 5 Global pharma,” along with a major vaccine company, will also begin testing its technology. From an investor’s perspective, these relationships are important because the pharmaceutical firms will fund the direct cost of testing the technology. More importantly, the agreements could lead to significant future milestone payments.

 The company’s BioSilicon—which is silicon manufactured with nanopores that can be loaded with drugs, genes, proteins and other therapeutics or vaccines—is another promising technology. It can be manufactured to release it contents over a defined period of time. Such a technology could free patients from having to take regular dosages of pills and could thus prove helpful for Alzheimer’s patients who may forget to take their drugs.

 BioSilicon is also being investigated by Singapore General Hospital as a scaffold to assist in the growth of tissue cells and, just today, the company announced that it had signed an agreement with PureTech Development to evaluate out-licensing opportunities for BioSilicon in tissue engineering, wound management and orthopedics.

 The company has another agreement with Itochu, one of Japan’s largest life science companies, to help identify, develop and commercialize products for its BioSilicon technology platform in Asia. Itochu is also reportedly interested in developing BioSilicon for food-related applications. BioSilicon is an attractive delivery vehicle because it safely dissolves into silicic acid—which is found in beer, rice and wine—and could expose pSivida to a variety of large commercial opportunity in the field of nutraceuticals.

 The Qinetiq Group, Europe’s largest science and technology company, owns 17 percent of pSivida (and the Carlyle Group, one of the world’s largest private companies, owns 34 percent of Qinetiq). pSivida may be able to leverage these relationships into future business opportunities.

 Lastly, the company has a strong family of intellectual property with over 24 patents and has enough cash on hand ($20 million) to operate until at least 2007.

Like every investment, pSivida is not without some risk. Among the reasons to be bearish are:

 Its BrachySil technology has only been tested on a small sample of patients and needs to be demonstrated to be safe and effective on a much larger sample of patients.

 The company is not currently profitable (it lost approximately $3 million in 2004) and will most likely not be cash-flow positive until 2008.

 Its BioSilicon and BrachySil technology face competition from a host of other drug delivery devices and cancer-fighting drugs (most notably in the treatment of liver cancer from SirTex).

 Finally, the company’s success is obviously dependent on regulatory approval of its products. The company believes the FDA will regulate its technology as a medical device but there is the possibility it will instead be regulated as a drug—which, if it occurs--could greatly slow down product development and adversely affect the company’s timeline to profitably.

Having said this, pSivida appears to be a good, long-term investment for investor’s with a higher threshold of risk. The company’s stock is now traded is the U.S. as an ADR (American Depositary Receipt) under the symbol: PSDV (each U.S. share is worth 10 Australian shares); and on the Australian (PSD.AX) and German stock markets. And although its two leading technologies have not yet received final approval from American, European or Asian regulators, both technologies look very promising. Furthermore, the BioSilicon platform technology holds the potential to be used for a variety of other oncology applications, including pancreatic, ovarian and bladder cancer. The technology could also potentially help Big Pharma reformulate some it’s most profitable drug patents (many of which are set to expire it the next three to four years); and, longer-term, might find applications in the areas diagnostics, nutraceuticals, and tissue engineering.

The challenge for management will be to maintain strategic focus. Company executives, however, appear to be well aware of this problem and are dedicated to bringing BrachySil technology to the market first for the treatment of liver cancer, and then pancreatic cancer.

Moving forward, investors should watch for additional news relating to agreements with major pharmaceutical companies. If additional agreements are announced it’ll be a bullish sign. By the end of the year, investors should also look for pSivida to be receiving milestone payments from at least one of its partnerships. The company’s success will ultimately be driven by regulatory approval—and effectiveness-- of its technology and that is what individual investors should most focus on.

For investors wishing to do more research:

pSivida Limited
PSDV (NASDAQ); PSD (PSD.AX)
Level 12, BGC Centre
28 The Esplanade
Perth WA 6000
Australia
61.8.9226.5099
Gavin Rezos (Managing Partner)
www.psivida.com