Our first speaker, Sally Tinkle, Acting Director of the National Nanotechnology Coordination Office (NNCO), gave us an overview of the Federal perspective on this journey. The National Nanotechnology Initiative (NNI) is a key component of the Obama Administration’s Strategy for American Innovation, since it will continue to “catalyze breakthroughs for national priorities” in many fields of commerce. It is also closely linked to other programs that are part of the innovation strategy such as the Advanced Manufacturing Partnership and the Materials Genome Initiative.
The NNI enters its second decade having shepherded a collective investment of $14B through FY 2011, with an additional $2.1B requested for the current fiscal year. It continues to be guided by the four goals first articulated in 2004 – advancing world-class nanotechnology research and development; fostering the transfer of new technologies into products for commercial and public benefit; developing and sustaining educational resources, a skilled workforce and the supporting infrastructure and tools to advance nanotechnology; and supporting the responsible development of nanotechnology. Sally told us to expect a gradual shift in emphasis among those goals as the field continues to mature. Agencies are increasing the focus on technology transfer and nanomanufacturing focus in order to smooth out the innovation pipeline. Workforce training and the development of tools and infrastructure are also getting a priority bump. The guiding principles for these activities are laid out in the Strategic Plan released last year. Nanomanufacturing research funding is scheduled to double over five years, with much of the increase featured in the NNI’s first three Signature Initiatives (Nanoelectronics for 2020 and Beyond, Sustainable Nanomanufacturing – Creating the Industries of the Future, and Nanotechnology for Solar Energy Collection and Conversion). Sally promised there will be more outreach to the business community, such as opportunities to participate in new public-private partnerships and contribute to the development of topics for new signature initiatives. Sally also introduced Dr. James Kadtke, who was recently hired into NNCO as a liaison with state and industry groups.
The other hat that Dr. Tinkle wears at NNCO says Environmental, Health, and Safety Coordinator. She put it on to promise us that the eagerly awaited update to the NNI’s EHS strategy would appear before the end of October. This promise has since been fulfilled with the October 20th publication of the NNI 2011 Environmental, Health, and Safety Research Strategy along with a very helpful summary brochure. As Sally previewed at our conference, refinements added since the publication of its predecessor include the addition of an integrated ethical, legal, and social issues package, a new section on nanoinformatics, and an integrated approach to assessing the risk of a product spanning all life cycle stages. The NNI agencies understand that our community would like them to work at a speed compatible with the product development lifecycle. They are trying to meet this need by prioritizing materials for study and by investing in the establishment of standards for measurement, terminology and nomenclature, and assays which facilitate EHS studies of a wide variety of materials. Efforts to develop nanoinformatics and predictive modeling techniques are also highlighted – by allowing sensible categorization of data these tools can reduce the materials-specific data needed to, for example, implement control banding procedures that ensure worker safety.
The Monday Keynotes continued with a presentation from NanoBCA’s longtime friend George Thompson. George, who assesses technologies and develops technology strategies for Intel, continued with the theme that the nanotechnology community is entering a new era. He characterizes the transition as a shift from technology innovation to revolution. Many people think of nano now in terms of large-scale utilization of previously developed concepts. (In fact, many of us point to George’s industry as leaders in that area.) But he does not think the revolution is over. Echoing Winston Churchill’s prediction after Montgomery’s Eighth Army forced Rommel to retreat from Egypt in 1942, George told us “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” In our case, it is the end of the first phase of development for the nanotechnology industry. Since the Stone Age, humankind’s eras have been defined by the materials we learn to control and the technology society develops with that control. The semiconductor industry shipped nearly 1,020 transistors last year, enabling the ubiquitous computing environment in which we now live. But silicon – the material that defines our current age – has been pushed close to its ultimate limits. The nanotechnology that the semiconductor industry has incorporated so far will bring the age of the silicon transistor to a close. The industry is counting on revolutionary nanotechnology to usher in the next era, which may be built on graphene and three-dimensional chip architectures or on some other scalable nanomaterial. Intel invests together with its major competitors in programs like the Nanoelectronics Research Initiative (NRI) to develop new devices and computing paradigms that can continue “the magic of Moore” for decades to come. George got us all thinking about what we can learn from semi’s perspective at the point of the nanotech spear. What is it that makes Moore’s magic work, allowing each successive generation of transistor to be not just smaller but also less expensive and better performing? What materials systems other than silicon technology can support multiple generations of scaled fabrication? Can other industries support the kind of collaborative pre-competitive roadmapping and development that helped semiconductor technology get to where it is today? He noted the important roles that first government (DOD) customers and then niche consumer markets (hearing aids) played in the commercialization of the transistor, along with the early leadership of Bell Laboratories, which at the time was a near-monopoly operating a highly regulated business. He praised the operation of universities, consortia, suppliers, and national laboratories as an open innovation system for early stage research and pointed out the importance of strong intellectual property policies designed to allow a smooth transition into proprietary development work. Through the Semiconductor Research Organization, the industry spends upwards of $100M per year on highly structured public-private partnerships. The NRI research consortium is looking for the successor to the silicon switch, while other SRC programs include the Global Research Collaboration (international programs in several areas, including nanomanufacturing science), the Focus Center Research Program (multi-university projects working on technologies needed to reach the end of the CMOS roadmap), the Education Alliance (providing scholarship and fellowship support along with mentoring to attract the brightest undergraduate and graduate students to industry-relevant research), and several smaller topical research collaborations. Another important point that George said industry groups should keep in mind, if they are thinking about emulating this model, is the need to simultaneously optimize the interests of companies, agencies, students, and universities, and clarity about the time frame for the investment.
Ross Kozarsky from the Lux Research Applied Materials Team closed out the morning Keynote session. Lux continues to look at a three-part value chain consisting of nanomaterials, intermediates, and end-user products. He discussed Arkema-Zyvex-Easton as the prototypical chain. Arkema makes carbon nanotubes, Zyvex disperses the tubes in prepreg mixtures, and Easton incorporates the prepregs into molded sporting goods. Lux sees intermediates as the sweet spot right now, with the highest profit margins. Although final product producers have higher revenues. Some companies produce nanomaterials and incorporate them into intermediates themselves – graphene producer Vorbeck, for example, will only sell intermediates, not raw materials. Manufacturers of sporting goods and large products like airplanes are typical first adopters for nanotechnology. Neither of these markets use high volumes of materials. Automotive uses dominate the market for multi-wall carbon nanotubes according to a recent Lux market study, a trend they expect to continue. MWNT production capacity currently exceeds demand and will continue to do so for 5 years, he continued. This may well cut the price (currently averaging $100/kg) in half. Next Ross turned to the solar industry, another subject of a recent Lux study. They looked at several thin film technology vendors, including Solexant, Nanosolar, and ISET. All are working with ink-based roll-to-roll manufacturing techniques in an effort to reduce beat conventional PV production costs while reducing panel weight. Nanosolar and ISET use Copper Indium Gallium Selenide (CIGS)-bearing inks, while Solexant uses Cadmium Telluride (CdTe). Nanosolar has maintained a low profile since former RAMBUS head Geoff Tate replaced founding CEO Martin Roscheisen in March 2010. Solexant, which has raised $84M since 2006, delayed plans to locate manufacturing in Oregon and may abandon a $25M loan. They have also been through a CEO change, with Silicon Valley veteran Brad Mattson replacing founder Damoder Reddy in June. While these companies, trying to bring nanotechnology and other new ideas into the solar field, struggle with startup problems, First Solar and other crystalline Silicon (c-Si) manufacturers continue to drive down the cost of the conventional competition. One of the few recent nanotech bright spots in the solar field is Innovalight. They, too, set out to make thin film PV panels, but switched to a different path when they sized up the marketplace. The firm, acquired by Dupont in July 2011, decided to make just nanocrystal silicon ink, which existing panel makers use to improve the efficiency of their products.
Ross did discuss the failure of Solyndra, stating that they got the engineering scaling issues right but not the economic and business scaling issues. As you undoubtedly know the Solyndra bankruptcy, which could wipe out most of a $500M loan guaranteed by the Department of Energy, has been a contentious topic in Washington. Ross pointed out that other ambitious plans to reshape the solar market, such as Applied Materials’ attempt to produce ready-to-go cell manufacturing plants, had also failed on a similar scale. Applied’s 2010 Materials shut down of its SunFab business, with a $425 million restructuring charge, drew far less attention.
The morning continued with two parallel sessions moderated by attorneys with long and strong track records in nanotech. The first session (hosted by our EHS subcommittee chair Lynn Bergeson of Bergeson and Campbell) featured a lively discussion of the status of environmental, health, and safety issues, while the second (hosted by Foley and Lardner’s Steven Rutt) started with an panel on recent changes in patent law and continued with reports by James Watkins and Ahmed Busnaina on technologies now emerging from the NSF Nanomanufacturing centers they lead at the University of Massachusetts-Amherst and Northeastern University, respectively. If you are interested in more details you can download EHS presentations from Nanocomp’s Mark Banash http://www.ctnanobusiness.org/NanoBCA/wp-content/uploads/2011/10/Banash-..., NIOSH’s Chuck Geraci, along with Jim Watkins’ report from the Center for Hierarchical Manufacturing, from the web.
Peter Antoinette of Nanocomp opened the Monday afternoon session with the first of our CEO Keynotes. Peter continued the theme of nanotech’s second act, using Nanocomp’s progress to illustrate how promising nanomaterials are finding early applications. Peter told us how Nanocomp is scaling up its production of yarns and sheets which bring the extraordinary mechanical and electrical properties of carbon nanotubes to the macroscale. Melding CNT production methods with traditional wire spinning and braiding machinery, they are now producing cables, sheets, and tapes in a newly renovated facility in Manchester, NH on two shifts, six days a week. Peter reminded us that the patent situation for carbon nanotubes is a bit murky at the moment. The two key composition of matter patents – IBM’s for single-wall tubes, and NEC’s for multiwalls, both of which have been widely licensed – are nearing expiration. It remains to be seen if other IPR related to CNT production will end up in one or more patent pools, or whether “someone will declare war”. But Nanocomp and others are building their own product and IPR portfolios, which Peter asserted are beginning to be recognized as enablers of strategically important advanced materials. NASA’s recently launched Juno mission will rely on Nanocomp’s conductive sheets to protect critical components from electrostatic discharge when the spacecraft passes through Jupiter’s radiation belts. As they often do, Nanocomp collaborated with a major prime contractor – in this case, Lockheed-Martin – to bring this project to fruition. Peter reminded us that our industry still has a ways to go in scaleup – a typical specialty chemical from a company like Toray or Dupont has production volume of tens of thousands of tonnes per year. To put it another way, he said that as proud as he is of the company’s new facility, his Dupont colleagues reminded him that in their terminology it is still two steps short of a pilot plant.
Next we returned to the breakout rooms. Mostafa Analoui, Head of Healthcare and Life Sciences at Livingston Securities, led our nanomedicine panel featuring Paul Ashton, CEO of pSivida; NCI Alliance for Nanotechnology in Cancer Director Piotr Grodzinski; Omid Farokhzad of Harvard Medical School, Bind Biosciences and Selecta Biosciences; Subhas Malghan from FDA’s Center for Devices and Radiological Health (CDRH); Harris & Harris Managing Director Misti Ushio; and Anil Diwan, Chairman of Nanoviricides. Meanwhile, ONAMI Executive Director Skip Rung led a session focusing on Oregon’s green nanotechnology efforts. This session also featured Judy Giordan of ecosVC, who is assisting ONAMI-affiliated companies with innovation and commercialization strategy, also participated.
Then we returned to the plenary session for two Keynote speakers from the investment community – Scott Livingston and Doug Jamison.
Scott Livingston, Chairman & CEO of Livingston Securities, spoke about the health of U.S. innovation and investment communities. Scott reports that the USA innovation machine is alive and well, but Wall St. is not well nor is the international finance picture. The Euro bank outlook is poor and there are widespread worries about China. Scott first came to the Street in the heydays of biotech and the internet, revolutions that were funded via access to NASDAQ through small IPOs. The current Wall St. environment has killed the small IPO and is killing venture capitalists. Currently the big investment firms are essentially just marketing IPOs to a small cartel, 120 hedge funds that show up for all the IPO roadshows. Last year Scott predicted a surge in IPOs, while wondering if Wall Street could deal with it. While activity picked up for a while, it has slowed down to a trickle. Many companies have filed for IPOs, with nanotech players including insulation pioneer Aspen Aerogels and concentrated solar player BrightSource Energy recently joining the backlog. So the final months of the year, Scott explained, will either bring some aggressively priced IPOs or end with a lot of unhappy, bonus-deprived investment bankers. Scott’s vision of the future includes a healthier investment scene featuring the return of the smaller IPO. He is among the few people actively trying to bring that about, with what he calls the friends and family of nanotechnology. This group is now almost 2,500 strong. Ultimately he would like to have 5,000 people across all 50 states. So far Livingston Securities has been able to offer these clients participation in seven IPOs. All their share prices were up at 1 week and 1 month, though since then they have suffered somewhat with the rest of the market. At some point Scott would like to be able to raise, say, $10M from his network and lead IPO syndicates.
Doug, as CEO & Managing Director of Harris & Harris Group, heads up a team that has been focused on nano and micro for 9 years now. With nanotechnology as a cross-cutting theme, their investments are divided among three main application areas: cleantech, healthcare, and electronics. H&H has produced gross returns of $156M on $82M initial investments, and their portfolio companies have raised $160M on public markets. There have been four exits this year – BioVex was acquired by Amgen; Solazyme and Neophotonics completed initial public offerings; and Dupont bought silicon inkmaker Innovalight. The value of their portfolio companies has grown from $198M in 2007 to $380M at the end of 2010. Several of these companies now have products appearing in the consumer marketplace. Cambrios’ nanowire conductive films are starting to appear on cell phone screens. Algenist sold $3M in products in Q1 of 2011, through the Sephora cosmetic stores. Contour Energy Systems has begun to sell long-life coin cells through several national retailers, while Bridgelux LEDs are appearing in Cooper Lighting products at Home Depot. But this forward motion has not been unhindered. There are significant short term challenges including the IPO investment issues Scott mentioned and reductions in both state and federal budgets. The market now seems to be driven by traders, not long-term investors. The companies that succeeded with IPOs have seen their share prices decline significantly in the last few months, as has Harris & Harris itself. This is part of a worldwide downward trend in asset values, with small companies especially vulnerable. It is reflected in an acceleration of competitive pressures in many industries, notably solar. Solazyme might have been a viable public company at a valuation of $1B but could not survive in the solar market at half that size. But Doug holds firm to his belief in long-range planning, and H&H is maintaining its focus on early stage opportunities – 68% of their investments have been as the first institutional investor or part of the first syndicate, with the remainder in follow-on funding.
Day 2 of the conference will be sent under separate cover.
Regards,
Vincent Caprio “Serving the Nanotechnology Community for Over a Decade”
Executive Director
NanoBusiness Commercialization Association
203-733-1949
vincent@nanobca.org
www.nanobca.org
