The 2011 NanoBusiness NYC Conference began with a reception Wednesday evening (April 6th) co-hosted with our friends from the New York Biotechnology Association

The technical sessions began the following morning at 9:00am with introductory remarks by NanoBCA Executive Director Vincent Caprio. Next, Dr. AJ Malshe, Founder, Executive Vice President and Chief Technology Officer of NanoMech, discussed his company’s philosophy and pipeline. NanoMech has received considerable media attention recently, due in part to a well-publicized visit by treasury Secretary Timothy Geithner. NanoMech is currently pursuing product lines based on 4 technologies, each of which is “making atoms work harder and smarter”. TuffTek is a cubic boron nitride (BN) coating which increases the life of machine tooling and saw blades. BN is extremely hard and long-wearing and, unlike diamond, is chemically compatible with steel. AJ showed data indicating that TuffTek-coated tool inserts last 10 times as long as conventional cutters, and at least twice as long as competitive titanium-aluminum-nitride-coated inserts, with which they are cost-competitive. Other NanoMech technologies include Nanoglide, a line of lubricant products which can save energy use in heavy machinery by reducing friction while enhancing durability; the polymer-based antibacterial Nguard line; and ElementX, a proprietary method for forming nanoparticles from evaporable elements or alloys. Nanoglide is being used in a major Department of Energy-sponsored wind turbine improvement program, as recently featured on the General Electric’s Edison Desk blog. ElementX technology was originally developed in Canada and recently acquired by NanoMech. AJ emphasized that NanoMech has not rushed to market but has built its product lines slowly and carefully. A key strategy has been developing materials and processes for integration with existing high-volume manufacturing equipment. He also gave substantial credit to support from local, Arkansas-based businesses and individuals, including his current CEO, James Phillips, who began as an investor.

Longtime nanotechnology advocate, NanoBCA co-founder, and Lux Capital Managing Partner, Josh Wolfe, described his investment philosophy and gave us an update on the Lux portfolio. Lux invests in core technologies with broad market applications, biomedical technologies, and materials for the energy market. In all three areas, it looks to differentiate itself by identifying special situations or identifying and investing in outstanding people. The company takes a contrarian perspective when they have a strong thesis suggesting that the herd is wrong—in energy, for example, Lux is staying out of the crowded solar field and sees biofuels as a regressive approach based on an outdated agrarian model. On the other hand, they have been looking carefully at nuclear energy for a decade. One of their portfolio companies, Kurion, has been developing technologies for safely handling nuclear waste and for cleaning up contaminated sites like Hanford, WA. Their technologies are now being evaluated for use at the earthquake-damaged Fukushima Daiichi plant in Japan. Another investment Lux recently unveiled, along with heavy hitters Google Ventures and Kleiner Perkins, is Transphorm. It is the latest company from UCSB Professor and serial entrepreneur Umesh Mishra. Transphorm technology uses gallium nitride semiconducting devices to increase the efficiency of voltage converters, with potential applications all along the electricity chain from power plants to wall warts. As our electric grid becomes ever more complex, the opportunities for employing this energy-conserving technology will only grow. Those of you who missed our recent interview with Josh can read it online for more information about Lux’s nanotech investments.

We then moved on to a series of presentations on nanomedicine, chaired by Livingston Securities’ health care guru Mostafa Analoui. First, Mostafa introduced Anil Diwan, Chairman and President of NanoViricides NanoViricides is a publicly traded company whose nanoparticle technology attacks a wide variety of virus particles. A distinguishing characteristic is a flexible component that spreads out on the lipid-based exterior of virus particles, disrupting their structure and ultimately causing them to fall apart. In laboratory tests, the current generation NanoViricides shows about an eightfold improvement in performance compared to its predecessor. In mouse studies of H1N1 influenza, for example, the occurrence of lung lesions was reduced 15 to 30 times compared to untreated subjects. While NanoViricides’ most promising results so far are with HIV and influenza viruses, the technology is also appropriate for fighting Ebola, rabies, and even Dengue fever. Dengue is particularly difficult to treat due to its unusual ability to be more virulent on a second exposure, a phenomenon known as antibody-dependent enhancement. Anil noted that pharmaceutical development costs remain a difficult obstacle, and reported that his company’s analysis indicated that it would be less expensive for them to proceed with private funding than to devote substantial resources to obtaining and managing grants.

Next, Edith Mathiowitz of Perosphere and Brown University discussed her work with polymers that are engineered to adhere to tissue. By increasing bioadhesion and decreasing particle size, Edith noted that the long-standing quest to deliver more medications orally has often been frustrated by a simple fact: the human body is designed to absorb only certain biologic compounds, and to reject most others. By dispersing biologics in sticky biopolymers and taking advantage of the high surface area of nanoparticles, Perosphere believes they can overcome this obstacle. Preliminary results for orally administered insulin are promising.

Frank Bedu-Addo of PDS Biotechnology described Versamune, a nano-based immunotherapy technology. Immunotherapies, which fight disease by activating the body’s own defender T cells, are only now starting to deliver on their promise; Dendreon’s Provenge received the industry’s first FDA approval last year. Most immunotherapies exhibit low potency, so adjuvants have traditionally been used to enhance their effectiveness. But available adjuvants have poor safety profiles, and the added complexity approaches with separate adjuvants increases cost. In contrast, Versamune safely acts as an adjutant activator itself, has higher potency, and is a simpler system. They have completed preliminary animal trials incorporating a protein which targets human papilloma virus. These trials showed striking remission of HPV-associated head and neck tumors. PDS plans to enter clinical trials with this drug candidate within a year, followed by a related compound targeting melanoma in 2013. They have raised $11M in capital to date with minimal dilution, and have received $5M in-kind service contributions from NIH.

We shifted from therapeutic drugs to diagnostic testing with Moritz Beckmann, CEO of XinRay Systems XinRay, a joint venture of UNC-spinout Xintek and diagnostic powerhouse Siemens, uses carbon nanotubes to build X-ray emitters. The compact, rugged CNT-based sources allow XinRay to build imaging systems that are not practical with traditional X-ray generators, which Beckmann compared to incandescent light bulbs in their sophistication and fragility. XinRay designs use an array of emitters, so the X-ray beam can be steered electrically instead of swinging a single source mechanically. Medical applications in development range from mammography to image-guided radiotherapy (in which rapid 3-D imaging is used to help surgeons place radioactive implants precisely in diseased tissue). Future possibilities include dental imaging systems. This 3-D imaging approach, called tomosynthesis, is a variant of computer-aided tomographic (CT) scanning. It trades off some resolution for speed, reduced X-ray exposure, and low cost. Non-medical applications include airport baggage screening (in development) and non-destructive testing of structural materials (future).

Joel Friedman described his work building a nanobiotechnology center at Albert Einstein Medical College. They are striving to create the kind of open, collaborative research environment that once thrived at Bell Laboratories, with a “bench to bedside and back” mission – start with basic research on nanoparticles, develop technologies to deliver diagnostics or therapies based on these particles, and apply them in focused healthcare situations. Then take the results right back to the basic research and iterate. They presently have two technology thrusts, each with multiple healthcare applications. The first is hybrid materials combining hydrogels with glassy nanoparticle; the second is gadolinium oxide nanoparticles and techniques for coating them with various substances.

Tony Green, Director of The Nanotechnology Institute, closed out the nanomedicine panel with a description of NTI’s relationship with Ben Franklin Technology Partners. As one of four independent regional entities in the Ben Franklin model, NTI has been a leader in developing multi-institutional IP agreements and moving university-developed IP into companies. They work with many partner companies in Southeastern Pennsylvania and beyond, with restrictions in place to keep most of the money in state. In the past few years the State has shifted more emphasis to funding clean energy, following a very similar model, while cutting back somewhat on their nanobio and other life science investments.

We rejoined our NanoBCA colleagues for lunch, which included a keynote presentation from PhARMA CEO John Castellani. The nano track continued afterward with Jeff Rosedale of Woodcock Washburn surveying the nanomedicine intellectual property landscape. To get a big picture of the situation, Jeff compared the U.S. Patent and Trademark Office’s Nanotechnology Cross-reference Class (Class 977) with the A1 international class for medical patents. He came up with 2,900 patents, 2,300 of them independent, in both classes. Three out of four describe compositions of nanomaterials or methods for making them. Diagnostic devices, imaging devices, bandages, and stents were also common. The largest patenters, not surprisingly, are big corporations – Proctor and Gamble, L’Oreal, and Elan. The University of California is fourth. Jeff used a few just-issued patents to illustrate the true state of the art. Last Tuesday’s new announcement included the following:

7,919,699 Nanotubes as mitochondrial uncouplers$.CCLS.&OS=CCL/977/$&RS=CCL/977/$ and

7,919,113 Dispersible concentrate lipospheres for delivery of active agents

from the University of Kentucky and Hebrew University respectively. The UK patent is a variation on an 80-year-old idea for altering metabolism, with applications from weight loss to healing brain injuries. While the basic mechanism is demonstrated, it has been very difficult to control. As in many other similar applications, the inventors believe nanotechnology will give them the ability to fine-tune the process safely. Jeff continued that major pharma manufacturers do have nano patent portfolios, including AstraZeneca’s supercritical process for dispersing protein particles; Bristol-Myers Squibb’s conjugated MRI contrast agents; Ethicon’s fluorescent markers to aid surgeons; and Abbott’s stent which eludes nanoparticles that are both bioactive and contrast-enhancing, so standard imaging techniques can see when the medicine has all eluted. GE, as might be expected, has many nano patents throughout the biomedical imaging field. But with all this activity only one set of patents has made it into the FDA orange book, which lists patents of composition or method that are generally recognized as safe and effective. That’s Elan’s TriCor portfolio, which is based on ball milling- far from a modern technology! Moving on to patenting strategies, Jeff suggested that inventors should generally focus more on “what” and less on “how”, since competitors can often find a different way to make something. Claim what they need to take (steal) from you. And claim something that is verifiable – i.e., that you can measure. Rosedale reminded us that trademarks, trade secrets, and agreements can be just as important as patents. Small companies in particular should be very sure that employees and consultants have proper agreements assigning rights to the company. One good basic strategy for balancing these components is to patent your basic compositions, consumables, devices, and tests, while keeping non-critical details and improvements as trade secrets. When conflicting or overlapping IP claims appear, what should a company do? A good way to start is by asking a patent attorney for a freedom to operate study. Their recommendations may range from licensing to requesting re-examination of patents based on new-found prior art to seeking a declaratory judgment invalidating a patent to, as a last (and expensive) resort, doing battle in court.

Our good friend Scott Livingston followed Jeff with an update on the investment outlook. Scott had just been in Boston for the annual meeting of the National Venture Capital Association, which he said was the hottest in several years. He met with leading partners from 20 major VC firms – they are all looking to get their money working again in companies, and IPOs are regaining favor. The political landscape is also promising. Scott noted President Obama’s emphasis on innovation in the State of the Union address, Secretary Geithner’s recent travels to high tech companies including NanoMech, and plenty of interest in innovation on the other side of the aisle – he reminded us that the re-emergent Newt Gingrich has a long history as a champion of innovation (and friend of the NanoBCA). Livingston Securities expects to continue to be in upcoming quality IPO deals, hoping to following on recent successes like Neophotonics and Gevo. But business as usual on Wall Street is a risk. The big investment firms are not focused on the needs of high tech companies and are pushing them too hard. It is especially bad in healthcare. Biotech deals are getting canceled or requiring companies to give up too many shares at too low a price, leaving them underfunded and unhealthy. He described Tesla’s much talked about 2010 offering as a different model. Sentiment was strong and highly mixed. By offering “friends and family” deals to owners of their first generation Roadster or people on the waiting list, they had 1/3 of their deal done, with engaged investors, before going to the big banks. Scott sees small investment banks like Livingston Securities as playing a similar role for nanotech companies. About 2,500 people are participating in Scott’s investor network. He is looking for more, and more active, members who will add to the group’s collective smarts, proselytize for innovation, and increase its attractiveness to IPO dealmakers. Scott has been hosting state-level webinars around the country, pushing regional connections. Eventually, he would like to move his company up from being the #3,4, or 5 firm on $100M dollar deals to leading $30M deals. Governors, senators, and Presidential hopefuls will be cutting ribbons around the country for the next 18 months, so Scott says get in now.

Harris and Harris Chairman and CEO Doug Jamison gave us the VC perspective on the investment landscape. While Doug continues to see some disarray in the community, he is optimistic about the direction in which things are moving. H&H believes that, as a publicly traded VC firm, it offers investors a unique combination of liquidity, transparency, and multi-industry exposure. There are now 32 companies in the portfolio, principally in cleantech, electronics, and healthcare. H&H is able to be more patient than traditional firms since it has permanent capital; some exits are pushing 8, 9, and even 10 years. But the successes are starting to come. BioVex was recently acquired by Amgen for $425M plus up to $575 in future performance payments. Neophotonics completed a successful IPO in February. A third exit is expected soon. Harris and Harris’ portfolio has pipelines of early, middle, and late stage companies, so this is just the beginning. Doug agrees with Scott that smaller IPOs make sense for a lot of companies, though in some fields (healthcare, for example) there is the opposite problem – the current median size for mergers and acquisitions, < 100M, is not sufficient. But he is not sure the NVCA really understands this or has a clue what to do about it. H&H’s attitude is that you want to know who you are selling to – when they make a Series A investment, they already know who they would like to have involved in Series B. Finally, Doug reminded us that nanotechnology is succeeding, with lots of product wins and plenty of interest in the business press. Two examples Doug highlighted which you can buy now are Contour long life lithium carbon fluoride batteries and Sephora’s Algenist skin cream utilizing alguronic acid from biofuel innovator Solazyme. Algenist sold out in 8 minutes in its debut on QVC.

Sam Brauer of Nanotech Plus brought the meeting in to the home stretch with his talk on the state of cancer diagnostics. Sam pointed out that diagnostics are less than successful in today’s approach to cancer, nor are therapies successful for many cancers. In fact, the major advance against cancer in the last 50 years has been prevention, most notably by reducing smoking. Consider four of the most highly used screening diagnostics – the pap smear, mammogram, prostate-specific antigen test, and colonoscopy. Too often, Pap smears come back negative when diseased cells are present. Skilled clinicians seem to have lower false negative rates, but this variability is a major problem. PSA tests have the opposite problem – antigen levels are often elevated even though no cancer is present. Mammography also has a high false positive rate. Among these common tests, only colonoscopy is generally considered to have good accuracy and sensitivity – but it is expensive and invasive. Testing overall is about a $4.3B market. We spend almost 10 times that much on chemotherapy drugs. And about 80% if cancer deaths are from metastases, which are not really addressed by the major diagnostic screens. Can we do better by using targeted molecular diagnostics instead of broad screens? The science supporting this approach has been developing for more than 30 years, but may still be inadequate. Over 400 genes are already known to be involved in malignancy, and many researchers believe that all cancer-related genes will be identified within 10 years. But the pattern of gene expression in individual cancers is highly variable – Dr. James Heath, for example, found nearly as many expression patterns as he had patients in a study of the brain tumor known as glioblastoma. Heath’s conclusion is that we need protein screens rather than gene screens. But this is a much less developed area. In colon cancer, for example, only 3 proteins have been identified and none of them seems to be a driving force in the development of the disease. There are particular areas where the path forward seems a little clearer, such as leukemia, where Sam cited a recent paper on resistance to the drug Gleevec that many researchers think provides a roadmap to understanding how the disease progresses. But overall, the field faces scientific obstacles and a challenging business environment. Pharmaceutical companies show little interest in diagnostics, which they see as less profitable than therapeutics. They are also skeptical about providing diagnostics when appropriate companion therapies are not available. While GE’s Jeffrey Immelt foresees a shift of $250B from treatment to diagnosis over the next decade, he seems to be in the minority among healthcare experts. To make real progress, business issues such as research for funding and payment models must be addressed along with technology issues such as the identification of reliable DNA-based (genetic) or protein-based disease markers and the development of inexpensive, robust instruments for measuring them.

Our session closed with a summary dialogue between NanoBCA board members Steve Waite and Philip Lippel. Steve reminded us that nanotechnology is built on scientific discoveries dating back to the early twentieth century, with individual scientists and investors playing critical roles in turning research into innovative products. Phil noted that some of the hype (both positive and negative) around nanotechnology seems to be in decline. He expressed the hope that we are entering a phase where all stakeholders acknowledge that new technology development involves both benefits and risks and attempt to assess both realistically.

Thanks to all of our speakers and attendees for another successful event. Our 10th Annual NanoBusiness Conference will be held at the Seaport World Trade Center in Boston, MA on September 25-27th. Our 2011 Annual Conference will be organized with our strategic partner The National Nanomanufacturing Network and it will be a must attend event. For speaking opportunities, please send me your proposals and abstracts to


Vincent Caprio “Serving the Nanotechnology Community for Over a Decade”
Executive Director
NanoBusiness Commercialization Association