July 21, 2006 — Formerly known as Nanotechnologies Inc., an Austin, Texas-based manufacturer of high-performance nanomaterials is renaming itself NovaCentrix and shifting from nano-based powder production to market-ready products.

While some firms have been able to integrate new materials into products, a handful of smaller outfits, including NovaCentrix, are coming to the conclusion that they are best suited to seeing their materials through to products themselves. By shifting their focus, they are attracting more financial support and, they say, taking the critical next steps toward commercialization.

NovaCentrix CEO Steve Leach, who took the helm of Nanotechnologies Inc. last September and ran with the company’s plans to shift from powders to products, recalled a recent industry discussion that focused on the increasing importance of looking beyond nanomaterials themselves.

“Everyone in the room was saying that making a material alone is really not interesting,” he said. “It’s what are the markets and applications that are going to drive adoption of this materials science.”

“We’re out of research. We’re done with research,” Leach added regarding his company’s shift. “We’re into development and execution.”

Much of the impetus for the change to NovaCentrix — which will now aim the company’s foundation in nanomaterials-based powder synthesis at electronics circuit printing with special inks, energetic materials, and life sciences applications such as bacteria and virus-killing bandages — comes from impatience with customers and other organizations that had high hopes for the powders, but never took them much further toward products, according to Leach.

“It was this forever sample process,” he explained, referring to hundreds of samples going out to various researchers. “If we envision nanopowders can be formulated into inks, why don’t we give them the inks.”

The company further learned that its own research and development teams, which were split into too many different directions previously, were nonetheless often further along toward real products or applications, which are now the basis of the new company, Leach said.

“We were letting customers rework problems we had solved because we’re the most knowledgeable,” he said, referring to dispersion and formulation of the nanomaterials that had always been a part of the company.

Leach, a former Dell Computer executive with a self-described “product planning background,” said the NovaCentrix move highlights the need and the struggle for the industry to come up with live, concrete applications.

He said his company will now be looking at the next step for its nanomaterials, and it will move away from more common nanometals toward strictly exotic ones.

“These are hard to do and we have a very unique process that makes them well,” he said. “What we were doing wasn’t working. It was taking too long. It was a matter of what are we going to do to shake things up.”

While Leach said his company’s re-focus was reminiscent of similar moves by nanomaterials manufacturer NanoDynamics of Buffalo, N.Y., there are a number of companies making the move away from strictly materials and toward market applications, according to JoAnne Feeney, managing director and senior research analyst for FTN Midwest Securities. She said NovaCentrix, ceramics polymer producer Starfire Systems of Malta, N.Y., nanoscale textile enhancement maker Nano-Tex of Emeryville, Calif., and Nanofilm of Valley View, Ohio, were all examples of the trend.

“There was a hope that if they created these materials, someone would find a way to use it,” Feeney said. “People realized it’s very difficult to build a company based solely on material.”

At the same time, it is possible to make a go of it. Nanophase Technologies of Romeoville, Ill., makes a variety of nanomaterials for applications that span everything from marine coatings to sunscreen to semiconductor polishing. It announced second quarter revenue Thursday night of $2.4 million, and counts as customers both BASF and Rodel, a division of Rohm and Haas Co. However, Nanophase is at a different stage than the smaller startups. It went public in 1997 whereas the others are still privately-held and many are backed by venture capitalists.

Feeney believes some of the disappointment around nanomaterials was caused by inadequate investment in the nanomaterials companies, which did not have the capital to take their materials all the way to the product stage, including development of a working prototype, placement in a product, and demonstration of its advantages.

“Imagine all the money required to do all that,” Feeney said.

Nevertheless, the analyst added the shift among nanomaterials companies is being accompanied by a shift among investors, who are now realizing the value is not in the material, but in a market for it.

“Materials companies have to be application companies to be viable,” Feeney said. “They’re not just selling the material. They’re selling the material and knowledge, the material and technology. Hopefully investors are starting to see that.”