A thorough look at nanotechnology is worth the investment.
Investing in nanotechnology startups is a good long-term play.
Nanotechnology is still in the forefront of new disrupting technology.
In the world of investing, we are conditioned to think Big on a daily basis, and for good reason: We expect companies we invest in to do Big things and provide Big returns. However, this expectation is not lost on companies exploiting nanotechnology for future gain. New technologies tend to open up investment opportunities, but not all continue to provide returns. What were once very hot and exciting technologies began to lose some of that new technology smell over time, but not so with nanotechnology. Some IPOs of nanotechnology companies have grabbed the attention of the mainstream media, generating an outburst of enthusiasm with investors who want to add long-term value to their portfolios, as was seen by BIND Therapeutics (NASDAQ:BIND) which is developing nano cancer destroyers, and recently Nano-Antibiotics (OTCPK:NNAB) which is developing nano superbug destroyers.
The term, nanotechnology, is said to have been popularized in the 1980s by K. Eric Drexler when he discussed creating machines on the scale of molecules. Nanotechnology is basically the engineering of functional systems at the molecular scale, in other words, technology at a level smaller than the width of a human hair - we're talking super tiny, smaller than "milli" or "micro." This technology has been very popular for the past ten years with government and corporate research dumping in over $20 billion in investments.
Here are five companies that though involved in tiny technology, could pay big for investors over the long term:
The technology to battle both lung and prostate cancer has led to the great success of BIND Therapeutics , including raising roughly $70.5 million with its IPO. The company, founded in 2006, has developed Accurins, which is targeted and programmable therapeutics. These Accurins target diseased cells, concentrating the therapeutic payload at the site of the disease doing minimal damage to the surrounding healthy tissues.
Last summer, the company announced that it had dosed the first patient in a Phase II clinical trial of BIND-014 as a second-line therapy in patients with non-small cell lung cancer. Additionally, as of March of this year, BIND has enrolled more than 80% of patients in the same Phase II clinical trial, and the company expects to advance two additional product candidates from the its proprietary Accurin pipeline toward clinical development.
According to the company's 2013 Full Year financial results, revenue for the fourth quarter of 2013 was $2.1 million, compared to $0.5 million for the fourth quarter of 2012. The year-over-year increase in revenue was primarily due to revenue associated with the Amgen, Pfizer and AstraZeneca collaborations.
BIND's pipeline of its proprietary drugs would make it an impressive enough company to invest in, but with its combined collaboration with three major players, I believe this is a company to buy now at its current price of around $9.41 and a 52-week range from $8.36 to $15.89.
Finding the smallest infractions and defects in semiconductor fabrication is crucial for the success of the final product. One sure way to locate anomalies is to use the nanotechnology science of optical metrology. A leader in this field, Nanometrics Incorporated (NANO), provides high-performance process control metrology and inspection systems used primarily in the fabrication of integrated circuits, high-brightness LEDs, discrete components, and data storage devices. Headquartered in Milpitas, Calif., the company was founded in 1975, and sells its metrology and inspection systems via original equipment manufacturer channels to semiconductor manufacturers and equipment suppliers, data storage devices, and producers of high-brightness-LEDs.
Nanometrics' relationships with Samsung, Intel, and Applied Materials as well as other winning bids has helped the company increase its revenues and exposure. The company also has significant capital on hand, roughly $92.9 million at the start of the year. And, according to the company's Full Year 2013 Financial Results, Nanometrics' management expects total revenues for the first quarter of 2014 to be in the range of $48 to $54 million, with GAAP gross margin in the range of 47% to 49%, and non-GAAP gross margin in the range of 48% to 50%. With a current stock price hovering around $17, and more of the big players seeking its services, I see this company as a good buy now.
The third in the list of five is Nanosphere Incorporated (NASDAQ:NSPH), a company that has jumped through the hoops of the FDA, opening the doors for more growth. Nanosphere has the ability to attach diagnostic molecules to gold nanospheres, allowing extremely sensitive fluorescent detection of both protein and nucleic acid targets. This means that diagnostic testing can be run by an unskilled technician, with no sample preparation with all tests performed on a single instrument. The company provides molecular diagnostic tests that can lead to earlier disease detection, optimal patient treatment, and enhanced healthcare economics.
The company's Verigene System platform allows clinicians to identify and treat the bacteria and viruses for deadly infectious diseases. The system facilitates a low cost, precise sensitive genomic and protein testing on a easy to use platform. This system works for a wide diversity of microbial and viral pathogens through a series of test cartridges with the ability to detect specific pathogens. This is basically a solution for the problem physicians face when treating patients presenting symptoms of a microbial or viral infection when many pathogens can present a broad spectrum of symptoms. Additionally, many diagnostic testing like bacterial cultures, often take up to 72 hours to yield results, which get in the way of physicians coming up with a reliable and effective course of treatment. Nanosphere's Verigene System is highly automated and can usually produce results within 24 hours.
Fourth-quarter results for the company revealed revenues for the fourth quarter and full year 2013 of $3.4 million and $10.0 million, respectively, compared to $1.6 million and $5.1 million in the fourth quarter and full year 2012. Much of this growth is attributed to the embracing of the Verigene System by several microbiology laboratories. Cash increased $8.3 million in 2013 and cash on hand at December 2013 was $41.5 million.
Nanosphere is an attractive company doing some amazing work. The stock price has a 52-week range of $1.68 to $4.49. Currently trading at $1.74, I believe Nanosphere to be a good play now and one to hold onto for the long term.
Batteries are the key to our future affecting tools we need for multiple aspects of our lives, including cell phones, cars, computers, and medical equipment. That is why underrated Altair Nanotechnologies Inc. (NASDAQ:ALTI) is such a good find. Founded in 1973 and headquartered in Reno, Nev., Altair Nanotechnologies develops, manufactures, and sells nano lithium titanate batteries and energy storage systems. The company offers nano lithium titanate battery cells, modules, packs, and turn-key energy storage systems, including 24V, 36V, and 48V industrial and transportation systems. In addition, the company provides a configurable industrial PowerRack system and as well as systems for the electric grid.
Altair has seen some changes recently in management which isn't always helpful for the stock as well as some issues with some SEC filing requirements. However, the company operates as a subsidiary in China called Energy Storage Technology Group Limited, and the prospects are considered high there. The company's stock is currently trading at its mid 52-week range of $2.02 to $8.00, and I see the recent changes as management's attempts to right the ship. I would buy now, as the demand for nano batteries is expected to increase with the advancement of nanotechnology products.
The last of the five nanotechnology companies is NanoString Technologies, Inc. (NASDAQ:NSTG) which has developed tools that can extract genetic information from minute amounts of tissue, enabling researchers to detect cancer within minutes. The company develops, manufactures, and sells life science tools for translational research and molecular diagnostic products. NanoString's platform product is the nCounter Analysis System that uses bar code technology to multiplex hundreds of gene targets in a single reaction. It is essentially cancer biology that signals pathways with multiplex capability for more than 800 targets for each reaction.
NanoString recently announced that it has launched nCounter PanCancer Pathways Panel, that offers a unique way for translational researchers to investigate cancer biology across all major cancer pathways within 15 minutes and from a single test tube.
NanoString revealed in its 2013 Financial Results a strong Q4 2013 revenue growth of 56% year-over-year with total revenue of $10.1 million. Revenue for 2013 rose 37% to $31.4 million, from $23.0 million for 2012. The company's outlook for 2014 includes a total revenue in the range of $45 to $50 million, representing an approximate increase of 43% to 59% over 2013; gross margin in the range of 55% to 58%; operating expenses in the range of $70 to $75 million; and net operating loss in the range of $40 to $50 million.
Last month, NanoString entered into a loan agreement with Capital Royalty Partners for a loan of $45 million adding to NanoString's research and development coffers. The company is on solid footing with sales growth potential of broad applications for life science research and diagnostics in both oncology and immunology, as well as with a compelling business model with its new platform technology. Trading now at $16.34, I see NanoString as one to buy now and hold on to.
We as investors look for businesses that grow to satisfy our requirements for big profits and big returns. Today, smart investors know that getting in on the ground floor of a hot nanotechnology company can pay big over the long term. This list of five scratches the surface of what is available and what is soon to come. While some companies such as Nano-Antibiotics are working on the next generation of antibiotic treatments against deadly superbugs, I would consider it a speculative stock with plenty of reward accompanied by plenty of risk. Therefore, as with any investment, study all options before making a decision.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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