Tiny Steps, Giant Bounds

Michigan nanotechnology companies are hard at work developing some potentially revolutionary new medical products they hope will soon hit the marketplace
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Photograph courtesy of istockphoto.com

Metro Detroit might still be stuck in the industrial age, but the region has the potential to leapfrog the information age that blossomed along the coasts — think Silicon Valley in California, Route 128 in Boston, and the Research Triangle in North Carolina — into the nano age. Based on a relatively new science, nano, or nanotechnology, utilizes and manipulates materials smaller than cells to create new products and processes.

Already, nanoscale materials have been integrated into medical devices and drugs that treat diseases more rapidly than conventional treatments. Other uses include cleaner and less-expensive energy, inexpensive water filters, sensors that detect harmful chemicals, and more efficient batteries and fuel cells for power tools and vehicles. Indeed, in 2010, General Motors Corp. and its suppliers plan to introduce the revolutionary Chevrolet Volt, a nifty coupe that runs on batteries that utilize nanoscale materials.

Southeast Michigan has a number of scientists, researchers, and engineers working in the nano field. Consider NanoBio Corp., of Ann Arbor. Clinical trials on the company’s nano-related treatments for various infections and diseases have proved to be well-tolerated by patients, with few of the side-effects associated with some drugs on the market. The nano drugs have proved fast and effective at killing the bacterial, viral, and fungal culprits behind a number of common infections, with little risk of the resistance that occurs with antibiotics. The results are so promising that NanoBio’s investors say they will support larger-scale testing to determine if the emulsions help patients enough to win approval from the U.S. Food and Drug Administration.

“It’s a pretty sure bet that it will be on the market one day,” says David Peralta, COO of NanoBio, referring to the company’s most advanced product, a topical salve for herpes simplex, the virus that causes cold sores.

NanoBio, founded in 2000 by U-M immunologist and inventor James Baker, is developing nanoemulsion-based therapies and vaccines for a variety of infections and diseases. Its emulsions are specially treated nanoscale oil and water droplets that can penetrate through pores or hair shafts on the skin to reach pathogens that cause conditions such as cold sores, genital herpes, shingles, and nail fungi. The droplets, which range in size of 150 to 400 nanometers, are engineered to hold a high degree of surface energy. When the droplets come in contact with lipid-containing organisms such as nail fungi, their high-energy surface tugs at the organism’s outer membrane, forcing it to fuse with the droplet and — well, spill its guts. It works on spores, as well as on fungi, viruses, and bacteria, as long as they have the vulnerable lipid component. While the droplets are small enough to seep into pores, they’re too large to traverse sub-dermal channels into blood or tissue.

“It’s a platform technology that’s innovative and seems to be effective,” says Norman Selby, senior managing director with private-equity firm Perseus LLC. Based in Washington, D.C., Perseus committed $30 million to NanoBio in 2006 to fund clinical trials for the cold sore and nail fungus lotions, as well as animal studies on vaccines using nanoemulsions that are administered as a nasal spray. “This is a low-risk, very simple technology,” he says. “It’s very novel but also very simple.”

In March, NanoBio announced that it received its third tranche of $10 million from Perseus after preliminary analyses of trials involving hundreds of patients validated that nanoemulsions were safe and effective. The company, which through its executive chairman and chief scientific officer, Baker, still has ties to U-M, expects to release complete reports on its progress after the results go through peer review and publication. In general, Peralta says the lotions healed infections faster than competitors’ products, and since they’re lotions rather than pills, they had none of the side-effects, such as liver toxicity or adverse interactions with other drugs.

The company, which had raised $31 million in federal, state, and angel funding prior to closing the 2006 deal with Perseus, expects to finalize its Round B in 2008. Selby says the deep-pocketed Perseus is likely to be the sole investor. The funding will allow NanoBio to progress to large-scale, final-phase trials on its cold-sore treatment in the first half of 2009, and on its nail fungi treatment near the end of 2009. If the lotions meet federal standards, NanoBio could have an over-the-counter product out by 2011 in a nearly $1-billion market for cold sore and nail fungi treatments, Peralta says.

Robert Berry is equally confident in the future of another Michigan-based nano company, Dendritic Nanotechnologies. Based in Mount Pleasant, Dendritic successfully used a hush-hush project for the Department of Defense to work out kinks in the chemistry of dendrimers, a nanomaterial discovered in Michigan about three decades ago. The end-result is a strong patent portfolio covering additives that the company can market to industries as diverse as cosmetics and water remediation. Currently, the company is negotiating with potential customers on a handful of agreements that would require its material, says Berry, president of Dendritic. “We expect aggressive growth this fiscal year.”

Neither NanoBio nor Dendritic are overnight successes, though. By working in the nano world, they chose novelty over knowledge, eschewing well-trampled technical terra firma for what is still an unfolding field in science. Nanotechnology is not a single technology, but rather technologies at a very tiny scale — much smaller than what is visible to the eye. A nanometer is a billionth of a meter, or about seven hydrogen atoms placed in a row. Below about 100 nanometers, matter starts behaving in new and sometimes strange ways. Companies that manage to navigate nano’s scientific Twilight Zone — often a technically challenging, time-consuming, and capital-intensive endeavor — can potentially cash in with powerful new products that promise to outperform today’s market leaders.

“I’ve always felt that a real competitive advantage is gained by doing something that’s hard to do and is not easily repeated,” Peralta says. “What we’re doing is very novel in a world where novel drugs aren’t as frequent as they once were.”

Nanotechnology gained prominence in 2000 when the Clinton administration created the National Nanotechnology Initiative, a nearly half-billion dollar program to promote nanotech research. President Bush furthered the cause in 2004 with the signing of the 21st Century Nanotechnology Research and Development Act, which authorized Congress to provide more than $3 billion over a four-year period for nanotechnology efforts. The Bush administration earmarked $1.5 billion for the Initiative for fiscal year 2009.

The influx of money in the early 2000s also sparked speculation and hype, with investment gurus calling nanotech the next hot must-buy, and futurists predicting grandiose advancements like nanoscale robots (or “nanobots”) that could do everything from assemble cars (one atom at a time) to roam the body and repair diseased tissue. Neither the blockbuster nor the “bot” have materialized, except in fiction. Instead, small companies such as NanoBio and Dendritic and large corporations such as IBM and GE have been slogging away at not-as-sexy but achievable technologies.

“Nanotechnology is not in its infancy anymore,” says Clayton Teague, director of the National Nanotechnology Coordination Office, a federal team that assists the National Nanotechnology Initiative. “But it’s still in its early stages.”

Michigan lags behind states such as California and Massachusetts as a hotbed for nanotech research and commercialization. California and Massachusetts each have more than a half dozen federal-, state-, and privately funded nanotech research facilities, many based at universities such as Harvard, the Massachusetts Institute of Technology, the Berkeley and Los Angeles campuses of the University of California, and Caltech. The University of Michigan holds two prominent nanotech centers, one geared toward medicine and the other toward fabrication, and most of Michigan’s other state universities have ongoing nanotechnology programs.

University involvement is a key to establishing and growing a nanotech presence, says Jurron Bradley, a senior analyst with Lux Research in New York. The company provides advisory services for businesses, including nanotechnology research. Universities often provide the state-of-the-art labs and equipment, as well as the researchers and highly trained support staff needed to nurture a nanotech invention from conception to early-stage development. Collaborations among universities, government, startups, and corporations help move inventions toward marketability. “We’ve made the point, time and time again, that partnerships will be critical,” Bradley says. “Universities are the best places to come up with innovations, but not necessarily to commercialize technology.”

U-M has spun out a number of companies with nanotech pedigrees. NanoBio’s James Baker launched a second Ann Arbor-based biotech company, Avidimer Therapeutics, in 2003, using dendrimers to develop anti-cancer drugs and other targeted therapies. Baker is also the director of the university’s nano center, the Michigan Nanotechnology Institute for Medicine and Biological Sciences. T/J Technologies, co-founded in 1991 in Ann Arbor by U-M chemical engineering professor Levi Thompson, developed nano and other advanced materials for portable batteries and fuel cells that are part of the arsenal of A123Systems, battery supplier to GM for the Chevy Volt. T/J is now a wholly owned subsidiary of A123Systems.

Resources like U-M’s Lurie Nanofabrication Facility, which completed a $40-million, 37,500-square-foot renovation and expansion this year, are expected to foster more business development locally and attract companies from other states. Even before its renovation, the facility helped lure Stephen Forrest away from his position as a distinguished professor and prolific entrepreneur at Princeton University to become U-M’s vice president for research in 2006. He says he now is working on getting some of the companies where he’s played a founding role to move to Ann Arbor.

“It was a huge attraction,” says Forrest, who brought with him equipment and a lab group specializing in optics and electronics. “I’ve now worked at three universities and, by far, this is the best facility.”

Teague also sees the nanofab, which builds off U-M’s engineering strength in microsystems, as an asset for Michigan as companies struggle to integrate smaller-than-small nanoscale components into normal-scale devices. “The expertise to couple things, to go from the nano to the micro to the macro, will be needed to make real products for the marketplace,” he says. And Teague considers Michigan’s status as the birthplace of dendrimers an advantage, as well. “Many people see dendrimers as being one of the core materials for nanotechnology. It’s a fundamental building-block in nanotechnology, and Michigan is excelling in that area.”

Dendrimers’ size and structure offer an array of applications, from sophisticated “smart drugs” that target only diseased cells to simple inks and coatings. The drug being developed by Avidimer, for instance, uses a dendrimer whose size and shape is roughly akin to hemoglobin, which means it’s readily accepted in the body and taken in by cells. The branch-like scaffolding offers numerous portals to tuck in anti-cancer drugs, as well as perimeter sites to attach molecules that bind to cancer cells. The result is a drug-delivering device that targets cancer cells while sparing healthy ones. Avidimer, though, is at the early stage of development.

To be a commercial success, dendrimers need to be made quickly, consistently, and at affordable prices with a marketable shelf life. To that end, Dendritic embarked on a project for the Department of Defense three years ago that changed the economics of dendrimer manufacturing and use, Berry says. Although the project remains in stealth, a year and a half ago the government lifted security on the outcome: a new generation of dendrimers that can be made in a day, with a longer shelf life, with room-temperature storage, and that offer multifunctional attributes for industry. And it’s all patented with “clear, unencumbered intellectual property,” Berry says.

But neither Dendritic nor NanoBio are completely out of the nanotech Twilight Zone yet. Among the great unknowns in nanotechnology is how various nanomaterials may affect people’s health or the environment once they’re introduced into products and waste streams. The dendrimers Dendritic designed for the cosmetic industry have passed in-house safety and toxicity tests, Berry says. And NanoBio’s decision to use well-known and common ingredients to make droplets that are biodegradable ensure its products are benign, Peralta says. “But until there are concrete regulations, there still will be that big if,” Bradley says. “It’s on everyone’s mind.”

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