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Nov. 6, 2002 — With Monday’s announcement of its third intellectual property licensing deal in just two weeks, Nanosys Inc. appears to have solidified its position as a leader in the ability to commercialize a range of nanotechnology-based products, analysts say.
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The deal with the Massachusetts Institute of Technology for the IP of Professor Moungi Bawendi gives the company control over more than 70 core patents from its seven scientific co-founders, who are also among the world’s leading researchers working with inorganic nanocrystals, such as nanowires and nanoparticles, said Stephen Empedocles, Nanosys’ director of business development.
“This puts us in a dominant position in terms of IP within this field,” he said. “Nanotechnology is really a materials science and having control of the materials and the expertise and the freedom to develop those materials is a huge part of nanotech.”
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Just since May, the company has finalized licensing deals for the IP portfolios of James Heath of UCLA, the nanowire-based laser patents of Peidong Yang at the University of California, Berkeley, and the IP portfolio of Paul Alivisatos of Lawrence Berkeley National Laboratory.
With so much IP under one roof, the company must not to fall victim to overconfidence by its management, said David Prend, a partner at Rockport Capital Partners, a $100 million venture capital fund.
“At this point, a lot of the nanotechnology game is an IP game,” he said. “The trick still is you’ve got to do something with all that IP. That’s going to be the ultimate key to their success.”
Of course, if a choice has to be made, having IP is always better than not, said Steve Cullen, director of semiconductor research for In-Stat/MDR. He said a slew of IP can become problematic — opening doors on too many areas with so many potential products, the company gets bogged down deciding which way to go. If management does not seize on the right opportunities at the right time it can easily falter — a common problem for any company, regardless of size.
Like Cullen, Ed Moran, director of Deloitte & Touche’s technology consulting practice, is always a little skeptical when companies claim early dominance in any market based purely on IP. The marketplace ultimately decides the success of any product or process. But in the case of Nanosys, Moran is willing to suspend this skepticism.
“If you look at what they’re doing, they’re not saying, ‘We’re going to make an optical switch that’s going to revolutionize the world.’ They’re saying they’re going to have this family of products,” he said. “Think about it — once you develop that family of core technologies all the different things you can produce. They’re a bunch of smart people, I’d place my bets on them.”
Another advantage Nanosys has is Larry Bock, the company’s co-founder and chief executive who has a track record of starting successful biotech firms, Prend said. Bock’s ability to draw together a talented team is one of the main reasons Rockport’s Prend said he would seriously consider investing in Nanosys if the opportunity presented itself.
“The important thing in a strategy like this is you really need some strong, deep-pocketed investors to pull it off because it’s not an inexpensive approach to the business,” he said. “Larry seems like the kind of guy that can pull off something like this.”
The “something” that the company is looking to pull off is to become the “Intel Inside” of the nano world — providing manufacturers with nano-enabled products they can use to add value to existing product lines, Empedocles said.
But that is down the road. Today, Nanosys is focused on getting a nanowire sensor-on-a-chip into the hands of manufacturing partners, and this is where having so many patents really pays off, Empedocles said.
“It’s important from a product development standpoint,” he said. “That’s a critical element; companies are usually not willing to put very much effort into building technology around IP they don’t have an exclusive right to because a competitor can come in and use their improvements and work in the field.”
Even with competitors in the sensor market, such as Molecular Nanosystems Inc. and Molecular Electronics Corp., Nanosys has a hold on nanowires and associated materials like nanodots and nanoparticles made from the same processes. That means competitors will have to develop their products using different technology. Empedocles said he is not too worried about that.
“Yes, it will prevent competition if that competition is infringing our technology,” he said. “It doesn’t mean there aren’t other ways to build chemical and biological sensors; but, to that extent, we believe (our) technology to be far superior to any other in this area.”