By TOM HENDERSON
Small Times Senior Writer

ANN ARBOR, Mich., June 18, 2001 — Nader Najafi is a survivor of the Iran-Iraq war in the 1980s who came to America to get his Ph.D. In 1992 he landed a secure job at IBM, then quit it two years later to pursue his entrepreneurial dreams in small tech.

After six years of struggle, Najafi finally seems poised to the verge of economic success.

• Two new, major grants are funneling $4.75 million into his company, Integrated Sensing Systems Inc. (ISSYS).
• One of its pressure sensors is in beta testing for possible distribution by Millipore Corp., a Bedford, Mass.-based bio-giant that had revenues of $954 million in 2000.
• The company is doubling the size of its headquarters to 16,000 square feet and expects to increase staffing from 20 to 50 employees in the next 18 months.
• It hopes to be marketing and selling its own small tech products within nine months. The first product will be an industrial sensor for semiconductor manufacturers.

In addition, ISSYS continues assembly and prototype work on a contract basis for a variety of other MEMS and microsystems companies.

“Small companies are like hungry hunters. All meat is kosher,” says Najafi of ISSYS’ range of money-generating activities, from grants to contract work to being a supplier to original equipment manufacturers to selling its own devices.

There are 200-plus MEMS companies in the United States, and most of them are small, private firms like ISSYS, said Marlene Bourne, senior analyst for Cahners In-Stat Group, a high-tech market research firm.

The grants and improving business climate for ISSYS have given Najafi a rare comfort level after six mostly stressful years.

“The stress sometimes gets to where you say ‘I can’t take it anymore,’ but there was never a time I thought ISSYS was in great danger. It was always in danger, but never in great danger. It’s always been a roller coaster.”

THE GRANTS

ISSYS was awarded a three-year, $2.78 million grant in October through the Advanced Technology Program of the National Institute of Standards and Technology to develop wireless, batteryless pressure sensors that can be implanted in the body to monitor and help control fluidic pressures.

It was one of 54 grants approved from among more than 400 applications.

“Getting a NIST ATP grant is truly a difficult challenge. It’s far more difficult than getting other federal grants,” says Najafi. “It was a full body-contact competition.”

Two applications would be for patients suffering from hydrocephalus, an increase of spinal fluid inside the skull, which can cause atrophy of the brain, and those suffering from glaucoma, a disease associated with increased pressure inside the eyes.

Today, those with hydrocephalus have shunts put in place that release fluids when the pressure on the brain gets too high. A sensor the size of a grain of rice would better monitor fluid levels and alert the patient if the shunt was clogged. Similarly, sensors would monitor pressure inside the eye for glaucoma patients.

The devices would transmit data to a handheld external radio-frequency transceiver.

Under terms of the grant, the eye sensors will be evaluated by the Kellogg Eye Center at the University of Michigan, and the hydrocephalus sensors at the Cleveland Clinic Foundation.

“These products can bring a tremendous amount of relief to people with hydrocephalus [and] reduce unnecessary and expensive testing,” says Dr. Shuvo Roy of the BioMEMS Group at the Cleveland Clinic. “We are very excited to work with ISSYS to bring this technology out of the lab and into the clinical area.”

Other applications include patients suffering from heart or valve failure and urinary incontinence.

In March, the state of Michigan’s newly created Michigan Life Sciences Corridor project made a $2.75 million grant and equity investment in ISSYS for the development of fluidic sensors and control devices and so-called labs-on-a-chip. These devices can do a range of monitoring activities with microscopic volumes of fluid, including analyzing temperature, pressure, viscosity, density and mass flow.

The Life Sciences Corridor is a billion-dollar project intended to formally link activity at various state research institutions and companies and make the state a world leader in life sciences.

A series of grants over the years have helped keep the lights on while research proceeded on ISSYS’ own eventual line of sensing devices. The company received several U.S. Small Business Innovative Research grants for work on medical and environmental sensors and a multimillion-dollar grant that ended last July from the U.S. Defense Advanced Research Projects Agency.

The DARPA grant was for research into flexible manufacturing processes in small tech, whereby major parts of an assembly process would remain the same even though the end product changed.

THE ENTREPRENEUR

In 1994, one would have thought Najafi had it made. He was an immigrant who had survived eight years of tough civilian life during the Iran-Iraq war in Tehran. He was a young Ph.D. with a nice salary at a major corporation, IBM, which was known then for providing lifelong job security. It was a lot, but it wasn’t enough.

“Leaving IBM and starting ISSYS was the scariest thing I’ve ever done. And I’ve lived through a war,” says Najafi, who did his undergrad work at Tehran University.

“Leaving a company with a good reputation and a stable salary is very scary. I thought about it a lot, but I decided in a day. I had my coffee and gave my notice.

“I’m sure the coffee had something to do with it. It’s like putting your toes in the water. You keep feeling it and it’s cold. At some point, you have to jump.”

That was in November of 1994 and he was working at an IBM facility in Burlington, Vt. By January, he had founded ISSYS in Ann Arbor, where he had earned his master’s and doctorate in electrical engineering from the University of Michigan.

His co-founders were his older brother, Khalil, a professor at U-M; and one of his former professors, Kensall Wise. Both are on ISSYS’ board of directors and serve as technical consultants.

“Being at a big company and trying to do something different is like being a lion in a cage and looking at a meadow. I wanted to make products and sell them. I wanted to bring MEMS from something gathering dust on papers on the shelf to real products that affect society.

“The day I arrived in Ann Arbor, I knew I was successful, no matter what ISSYS would be. Because I’d pursued a dream . . . If I wasn’t successful, at least I wouldn’t have always wondered what would have happened if I had started one.”

ISSYS’ core intellectual property is based on U-M research, and the company used the university’s labs and clean rooms until moving into its own space three years ago. Today, the company holds licenses on eight U-M patents, five of them exclusively. It also has applied for 12 of its own patents and been granted one, so far, in packaging.

PAYING THE BILLS

During the long “roller-coaster” ride involved in getting sensor products into the marketplace, ISSYS did a wide range of contract work for others in its laboratory and manufacturing space. Of the 6,000 square feet, 1,000 are clean-room space.

That work ranged from helping other start-ups solve coating problems to providing such services as etching and wafer dicing for MEMS manufacturers, to building prototypes for other entrepreneurs who were seeking grants or equity partners and needed something to show them.

Essen Instruments Inc. is an Ann Arbor-based start-up that makes MEMS devices it hopes to market to pharmaceutical companies for drug discovery. It has been using ISSYS as a contractor for its prototypes for almost two years.

“We’ve been very satisfied,” says company co-founder Brad Neagle. “They were quite responsive. They did all the work we sent to them on a pretty quick turnaround, and they did a good job with it.”

Essen, which is partially owned by Molecular Devices Corp., a large maker of medical devices based in Sunnyvale, Calif., plans to have its products – Neagle declined to discuss them or their applications in specifics – in large-scale development early in 2002. Neagle says that he has been impressed enough with ISSYS that should he decide to subcontract out the production, ISSYS would be invited to bid.

Motorola Inc. recently hired ISSYS to do some reactive ion etching of silicon until it could buy the equipment to do it in-house.

“I can’t go into details except to say it was for a new application we are investigating in the field of microelectronics,” says Motorola engineer Don Nessen. “ISSYS met this processing need for us for several months and did an excellent job.

“I would not hesitate to go to ISSYS again in the future. ISSYS did exactly what they said they would do for us . . . and I would highly recommend them to anyone in need of outsource work.”

The contract work has helped Najafi find funding for what he calls “the rule of 10. For very dollar spent on an R&D prototype, expect to spend $10 on a pre-manufacturing prototype. And for every $1 spent on a pre-manufacturing prototype, expect to spend $10 on a manufactured product,” he says.

That 10-times-10 process is about done, says Najafi. By first quarter of 2002, ISSYS will, he says, be selling the first of its industrial and medical sensors.

But Najafi, ever the entrepreneur, won’t be satisfied with that. “We want to be a dominant company, not just a player.”

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CONTACT THE AUTHOR:
Tom Henderson at [email protected] or call 734-994-1106, ext. 233.