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Continued: It's tough to make big bucks with tiny technology

  • Article by: THOMAS LEE , Star Tribune
  • Last update: June 28, 2009 - 1:28 PM

If Minnesota is ever to embrace nanotechnology, the state's top research university would seem like a good place to start.

The University of Minnesota boasts lots of impressive-sounding programs: Center for Nanostructure Applications, NanoBiotechnology Initiative, Nanofabrication Center, and Nano & Microsystems Applications Center.

Will any of this stuff translate into an economic windfall for Minnesota? So far, the U has licensed nanotechnology to three companies, two of them local, with mixed results.

Nanocopoeia Inc. of St. Paul is trying to divest its original medical device coating business to focus on pharmaceuticals. Rushford Hypersonic next month will open the world's first hypersonic plasma particle disposition plant in southeastern Minnesota. Innovalight Inc., formerly based in St. Paul, has since moved to Sunnyvale, Calif. The company, which originally focused on light bulbs, is now making solar cells.

Nanotechnology "is definitely something that we are interested in," said Jay Schrankler, executive director of the university's Office of Technology Commercialization. But "it's relatively new. We have a number of dockets in our pipeline. Not all of them will make it to market."

The U's uneven experience with nanoscience mirrors corporate America's teasing and often frustrating flirtation with a technology that's failed, so far, to match hype with reality. Despite millions of dollars in government research money and venture capital, making big bucks off nanotechnology remains an elusive dream.

"Many products incorporating nanotechnology will only be marginally profitable," said Michael Holman, research director at Lux Research, a consulting firm based in Boston.

Broadly defined, nanotechnology is the science of manipulating matter less than 100 nanometers. Such tiny matter exhibits unique properties, including larger surface areas and greater flexibility. Nanotechnology is not confined to one market, but, rather, is a tool that allows companies across different industries to build better products.

However, some industries face greater challenges to commercialization. Take biomedicine. Medical devices and drugs already require millions of dollars in venture capital to win approval from federal regulators and insurance companies. Throw in nanotechnology -- a relatively new science that regulators, environmentalists and scientists don't yet fully understand -- and suddenly the road to approval gets even longer.

Nanotechnology "has the potential to change health care," said Peter Bianco, director of life science business development at Halleland Health Consulting in Minneapolis. "But how do you get nanostructured products to the marketplace? Regulators have not kept pace."

Medical application

Founded in 2001, Nanocopoeia developed a way to "spray" the surface of medical devices like stents with nanoformulated drugs. But the technology never delivered the payday the company had hoped, said Karen Arnold, chief financial officer.

"We could never figure out how to make money," Arnold said, though the business generated enough revenue to cover costs. "Perhaps we were a little naive. I really didn't think it would take a long time [to generate profits] ... There's a lot of hype (in nanotechnology) but not a lot of proof."

Part of the problem was that medical device makers didn't trust the new technology enough to outsource drug coating, she said. Today, Nanocopoeia is looking to license the spray to medical device companies. It now wants to focus on reformulating generic drugs from pills and liquids to patches and creams.

Manufacturing application

Rushford Hypersonic, however, can start producing immediate results.

Using a technique developed at the U's Institute of Technology called hypersonic plasma particle deposition, Rushford hopes to produce coatings that make industrial tools like valves and shafts harder, denser and less likely to crack. The company, formed in 2007, has built a 2,500-square-foot facility in Rushford that will open in mid-July.

Rushford may have an easier time with its products. Among products incorporating nanotech, manufacturing and materials generated $158 billion in 2008 compared to $24 billion for health care and life sciences, according to Lux Research. Rushford can also get faster to market because it does not face the high regulatory hurdles that biomedical devices have to clear, Schrankler said.

Still, U scientists are working on some intriguing biomedical applications, including nanoparticles that can help doctors diagnose breast cancer and produce higher quality MRI scans. Nanotechnology could boost the school's already deep expertise in imaging and diagnostics, Bianco said.

"I'm absolutely certain there is groundbreaking nanotechnology going on at the U," he said. "That's where you start."

Thomas Lee • 612-673-7744

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