Posted on April 27th, 2012 in Uncategorized | No Comments »
This year’s Nanotech Commercialization Conference www.nanoevent.org, April 3rd-5th, was a great success, with over 300 participants converging in Durham, NC. A reception at the headquarters of the Center of Innovation for Nanobiotechnology (COIN) on Tuesday night, a reception featuring “The Art of the Small” exhibit at Bay 7 on Wednesday night and post-conference festivities at the nearby Durham Bulls Athletic Park completed 3 days of lively discussions and insightful presentations.
At Tuesday evening’s reception Congressman G.K. Butterfield spoke about the importance of nanotechnology for his district, the state of North Carolina, and the nation. Former Congressman George J. Hochbrueckner, who represented the First District of New York for four terms, also honored us with his presence and brief comments. The conference began in earnest on Wednesday, April 4th with three Executive Directors sharing the introductory remarks. Griff Kundahl from COIN and John Hardin from the Office of Science & Technology, NC Department of Commerce joined me in welcoming the participants and setting the stage for the speakers to come.
Sally Tinkle, Ph.D., Deputy Director at the National Nanotechnology Coordination Office (NNCO), gave the opening keynote address. Sally reviewed the overall structure of the National Nanotechnology Initiative (NNI) and noted that the 2011 NNI Strategic Plan introduced a major new component to the NNI’s commercialization efforts, the Signature Initiatives program. Sally gave us a glimpse of new Signature Initiatives now being developed, one in nanomedicine and another in nanosensors. She told us to expect further details on these soon; like the three existing initiatives (Nanoelectronics for 2020 and Beyond http://nano.gov/node/612, Nanotechnology for Solar Energy Collection and Conversion http://nano.gov/node/610, Sustainable Nanomanufacturing: Creating the Industries of the Future http://nano.gov/node/611) each will be organized around three to five thrust areas, and will have a heightened level of interagency cooperation and agreed-upon goals over a five year timeline. Sally also informed us of some staff changes at the NNCO. Dr. Robert Pohanka has recently come on board as Director, and several new policy analysts have also joined the team. I am sure you all join me in wishing to express our sincere thanks to Sally for her leadership efforts in the past year, when she served as Acting Director of the NNCO in addition to continuing as the NNI’s Environmental, Health and Safety (EHS) Coordinator. We look forward to further collaborations with Sally and her colleagues.
The second keynote speaker, National Reconnaissance Office (NRO) Chief Scientist Richard Ridgley, focused on the importance of nanotechnology for our national security. NRO is a government intelligence agency which designs, builds, and operates spy satellites. It also coordinates the analysis of imagery obtained by various intelligence and military agencies. Rich described the NRO’s ambitious program to develop nanomaterials and nanoscale devices for electronic and structural applications in satellites. The physical properties of these materials, such as extraordinary strength to weight ratios, immunity to radiation, and very high or low conductivity as desired, are extremely attractive for space applications. NRO sees them as disruptive, not evolutionary. Current nanotech projects include lightweight cabling harnesses and support for high-volume production of papers and yarns from carbon nanotubes. The challenge in many cases is not so much meeting technical specifications but bringing down the cost by more than an order of magnitude. Companies working with NRO must learn how to plug in to existing supply chains, with the goal of producing Commercially available Off-The-Shelf (COTS) products. Naturally this means non-defense systems will also benefit from their advances; civilian aircraft manufacturers, for example, are evaluating lightweight wiring harnesses for non-critical cabling such as in entertainment systems. The U.S. is not the only country looking at these opportunities, Rich reminded us. Japan, Russia, India and many others are interested. China is developing a full city, Nanopolis Suzhou, dedicated to accelerated commercialization of nanotechnology. In order to ensure that we develop competitive production capabilities domestically, NRO can fund suitable projects up to about Level 6 of the DOD’s nine Technology Readiness Levels.
We continued our Wednesday morning session with two plenary panel discussions. Ginger Rothrock from RTI moderated the first, “Risk vs Value: The Impact of Nanotechnology Environmental Health Safety (EHS) on Business Decisions”, with expert nanotoxicologists joining representatives of the insurance and legal communities to discuss how nanotech risk is assessed and accounted for in corporate and investor decision-making. Then Christopher Gergen from the Durham-based social entrepreneurship organization Bull City Forward led “Achieving Commercialization Success: How to Sell Your Product to Large Companies”, with panelists from companies large and small as well as the nanotech investment community.
As the morning drew to a close, Griff and I welcomed Forsyth Technical Community College’s Kevin Conley, Ph.D., and NanoProfessor’s Jason Fromer to the stage to present the NanoBusiness and COIN Leadership Award, a $2,500 scholarship for next fall, awarded to a student at Forsyth Technical Community College. Kevin and Jason, as key contributors to nanotech workforce development efforts, are going to be busy.
After a networking lunch, we resumed with the panel discussion format under the direction of Chris William (Wells Fargo Private Client Group and Carolina Business Review). “How to Create 54 New Liquidias” was the topic, with a recap of the Liquidia story and the role universities, private investors, and strong support from the state’s Office of Science and Technology played in growing Liquidia and more broadly in the development of the Research Triangle. Many of these players are now asking whether resources should be reallocated from bio to nano. This discussion is not about picking winners and losers but about identifying and supporting job-creating industries that mesh with local strengths.
At the conclusion of the Liquidia panel we were honored to present Charles E. Hamner, D.V.M., Ph.D. as the NanoBusiness and COIN Pioneer Awardee. Dr. Hamner, widely recognized as a leader in the development of North Carolina’s biotechnology industry, told us that he expects nanotechnology to be even bigger than biotech.
The next two panels were “State of the Union – Nanotechnology Environmental Health Safety (EHS) 2012”, led by session chair Lynn L. Bergeson (Bergeson & Campbell, P.C.) and moderator A. Neil Jones (Kryosphere) and “Nano Energy Solutions: Perspectives on Solar, Wind and Batteries”, moderated by Johnny Rodrigues (Xemerge). First our EHS gurus filled us in on state, national and international regulatory issues. They reminded us that there are many opportunities to participate in partnerships or collaborations which facilitate responsible development of nanotechnology and help reduce uncertainty in the regulatory process. These efforts should assure investors and consumers alike. At the federal level, regulators are reaching consensus on how to treat nanotechnology under existing regulatory authorities at the same time that the overall regulatory structure is being reassessed. If, for example, efforts to reform the Toxic Substances Control Act (TSCA) move forward, proactive work will be required from our community to make sure nano is addressed in a comprehensive fashion. Meanwhile we are seeing regulatory activity for several important nanomaterials (nanosilver, CNTs, nanoclays) under either TSCA or FIFRA (the Federal Insecticide, Fungicide, and Rodenticide Act), with final decisions and rulemaking expected soon. But many states think federal regulation has not been adequate and are considering their own actions. California, notably, has required data submissions in preparation for developing rules for several classes of nanomaterials. Internationally, the French have instituted a mandatory reporting scheme for any material made or imported into France including nanomaterials. The EC may try to preempt this rule but there is precedent for it. If the final rule takes effect as expected in 2013, many will find the reporting requirements onerous.
From the energy panel, we continued to hear how nanotechnology is a key enabler in the drive to re-invent our energy production, delivery, and storage infrastructure. With the energy picture changing rapidly due to the economic situation in the key European market, aggressive manufacturing subsidies from China, and an unexpected plethora of inexpensive natural gas, our speakers emphasized technologies that can be near-term contributors to improving the efficiency of current products and reducing their manufacturing costs over more speculative disruptive technologies that will need longer development times.
NanoBCA’s good friends, Scott Livingston and Scott Rickert, closed out day one of the conference. Scott Livingston, Chairman & CEO of Livingston Securities is thrilled with the provisions of the recent Jobs Act legislation, which reduce the compliance burden that has been hindering smaller companies since the introduction of Sarbannes-Oxley. This fits right in with his agenda to help nanotech companies raise $30-40 million in funding to scale up production and fill early orders, ultimately by bringing back the small Initial Public Offering. Meanwhile, Livingston Securities is finding its way into the underwriting syndicate for promising IPOs that are managing to come to market even in today’s distorted conditions, with a restricted group of hedge funds buying 90% of the shares no matter who leads the offering. Scott reminded us that both words are important in the term “public financing”. Properly done deals provide financing for new companies and public opportunities for wealth creation. Scott thinks the Jobs Act may be the death knell for business as usual on Wall Street. He has seen a tenfold increase in companies that want to talk about IPOs in last 2 months, and thinks a new Wall Street model is coming with a greater role for a large number of smaller investors.
Scott Rickert, President, Co-Founder & CEO of NanoFilm, shared his strategic thinking on intellectual property protection, team building, location of facilities, and niche-finding. Nanofilm’s IPR strategy relies heavily on trade secrets. Like Coca-Cola, Scott believes in secret sauces. They fine-tune their products for specific markets and even individual customers and manufacture in just a few locations (currently in the U.S. and India). Most of you know that NanoFilm has had great success with their coatings for eyewear. They continue to innovate in this market, with major new products about to appear from leading optical firms. Scott is also justly proud of the company’s coatings for high-end commercial dinnerware used in many fine restaurants. This product reduces scuffing and scratchmarks from silverware, and cleans easily with low-phosphate, environmentally friendly detergents. Plus it is made from plant-derived materials with excellent safety profiles. Scott’s remarks on company staffing also got the audience’s attention. He noted that a company’s needs change as it matures, so leadership needs to be changed every 5 years or so. In his case, he has been able to “fire and rehire” himself as CEO several times, re-inventing the role and adjusting the supporting staff as necessary. But whether or not the names at the top of the letterhead change, the leadership team must be ready to adapt.
Day two of the conference began with Doug Jamison’s review of Harris & Harris Group’s activities over the last year. As Chairman and CEO, Doug learned much about patient investing in 2007-2010, with no exits among the H&H portfolio. H&H had a very successful year in 2011 with 5 liquidity events. They are the following:
1. Solazyme (IPO) http://solazyme.com/
2. NeoPhotonics (IPO) http://www.neophotonics.com/
3. BioVex (acquired by Amgen) http://www.biovex.com/
4. Innovalight (acquired by DuPont) http://www2.dupont.com/Photovoltaics/en_US/products_services/silicon_inks/silicon_inks.html
5. Crystal IS (acquired but not publicly disclosed) http://www.crystal-is.com/
Harris & Harris expects to see 12-15 more portfolio exits in the next three years. Doug had an interesting perspective from H&H’s analysis of venture capital-funded nanotech companies – they seem to be about two years behind comparable microcap companies in their development. VC companies are slower than public markets in resetting their valuations, but it’s coming. Alternatively, VC’s need to justify current valuations by doing more to build company value. Doug pointed out that the investors and bankers who stick with new public markets are almost always specialists, not representatives of the big firms. On the product side, he counseled nanotech companies to think of the Dows and Duponts of the world as customers, not competitors.
Nanomech founder and Chief Technology Officer Ajay Malshe followed Doug with another keynote address. Ajay’s mantra is less is more – NanoMech’s products use less natural resources while giving the customer more functionality. The company draws on local and regional strengths, supplementing research and entrepreneurship skills with a focus on identifying great people and then finding the positions where they are best utilized. This goes for business talent as well as science and engineering talent. In terms of product areas, NanoMech has stayed out of popular areas like solar and batteries not for a lack of new ideas but to avoid the crowd – they prefer to find market sectors where they can be the first actor, secure strong intellectual property protection, and then deliver their technology in the form the customer wants. This approach led to four successful product lines so far -TuffTek, NanoGlide, nGuard, and ElementX.
We moved back to the regulatory world with the next keynote from Dr. Frank Torti of Wake Forest University’s Comprehensive Cancer Center. Previously, Dr. Torti served as Chief Scientist for the Food and Drug Administration, and his talk, “FDA Regulation and Innovation: Reflections without Mirrors” focused on ideas for improving the regulatory process. One change driver is the question of how existing regulatory policy applies to innovative technologies such as nano, individually or as components of a combination drug or device. A second driver is the enormous shift in production of drugs, devices, and food from domestic to offshore manufacturers in recent years.
Dr. Torti recited a list of ten commandments which could help the FDA develop a preemptive, forward-looking strategy for dealing with these sea changes:
1. Build innovation into the mission and mindset of the FDA
2. Speed approvals of drugs and devices
3. Clarify the path to decisions
4. Make the approval process consistent regardless of reviewer or review group
5. Implement a review of FDA performance
6. Update (atrocious) FDA information systems
7. Mandate collaboration, not competition, between the FDA and other Federal Agencies
8. Overhaul approval processes for devices (when is a premarket notification sufficient (510K) and when is premarket approval needed).
9. Direct Congressional funding to the Agency overall. Currently each individual FDA Center is a line item.
10.Encourage the FDA to partner with those who can help.
Our last plenary panel, moderated by J. Robert Tyler III, Partner of Poyner Spruill, described “The Current State of Investing in the Nanotechnology Community”. This lively discussion featuring angel investors and VCs got the attention of the local press, so check out the coverage by Med City News http://www.medcitynews.com/2012/04/investing-in-nanotechnology-what-vcs-angels-and-strategic-investors-look-for/ to learn more about it.
We then broke into parallel tracks for the rest of the morning. FBI Supervisory Special Agent James Gaylord gave a presentation on the case of Chi Mak, an engineer and naturalized citizen who conspired to export sensitive defense technology to China. This was the first of three sessions on the growing threats of industrial espionage. Meanwhile, entrepreneurs had the opportunity to pitch new ideas to potential investors, collaborators, and some of their more experienced colleagues in one-on-one pitch sessions. As the industrial espionage group moved into discussion mode, the second track moved on to a group of presentations highlighting some of the leading edge nanotech research now underway at North Carolina’s outstanding universities.
We reconvened the plenary session for a lunchtime talk, “Nanobiotechnology: Fitting safe and effective technologies to clinically relevant biology at the nanoscale”, by Dr. David F. Williams, Ph.D., Professor and Director of International Affairs Wake Forest Institute for Regenerative Medicine. With that title and appointments on five continents, you will not be surprised to hear that Dr. Williams emphasized the globalization of nanobiotechnology. Researchers at universities, hospitals, and pharmaceutical companies around the world are using nanoscale engineering to develop drug, gene, vaccine, and biomolecule delivery systems; single or multifunctional imaging systems; tissue replacements; and templates for cell therapy, often personalizing their approach to individual patients or small subgroups of the patient population. Dr. Williams illustrated these approaches with beautiful examples from his own work and that of his Wake Forest colleagues. But he cautioned that to realize the promise of bionanotechnology, we need to be careful to match rhetoric to science and marketing to reality. This includes thoughtful engagement with regulators and the public worldwide, not just here in the U.S.
Following Dr. Williams’ presentation, we broke into parallel sessions again for the rest of the day. First Steve Waite of SoundView Advisory moderated a panel discussing nanomanufacturing while Travis Reese of Mandiant Corporation discussed CyberSecurity. Then Roger Cubicciotti, Ph.D., (CEO of NanoMedica and Chair of COIN’s Board of Directors) led a nanomedicine panel (with special thanks to Sam Brauer, Ph.D., for ably filling in for Anil Diwan on short notice) while Counterintelligence Advisor Michael A. Donner (U.S. Department of Energy) extended our discussion of security and intelligence threats and methods to protect your business.
At the end of a highly successful conference, many of us enjoyed the short walk across the American Tobacco Campus to the Athletic Park, where we watched the AAA Durham Bulls win their season opener. This was NanoBCA’s first major collaboration with COIN and the Office of Science & Technology, NC Department of Commerce. We are looking forward to continuing our relationship in 2013.
State and regional efforts to support nanotechnology R&D are becoming even more important as our community’s commercial impact grows – a topic I hope many of you will join me in discussing at the upcoming 2012 Regional, State, and Local Initiatives in Nanotechnology Workshop http://www.nano.gov/node/732 in Portland, Oregon on May 1st and 2nd, under the sponsorship of the Oregon Nanoscience and Microtechnologies Institute (ONAMI) and the National Nanotechnology Initiative.
We would like to thank all the attendees, speakers and sponsors of the Nanotech Commercialization Conference for making this a very successful event. We have begun planning our conference for next year and are looking forward to your participation in 2013.
Vincent Caprio “Serving the Nanotechnology Community for Over a Decade”
NanoBusiness Commercialization Association