Investing in Nanotechnology Stocks and Companies

TABLE OF CONTENTS

“Top Gun” was the highest-grossing film of the year, “Rock Me Amadeus” by Falco was the #1 single of the year, “The Cosby Show” was the top television show, and the Chicago Bears won the Superbowl. It was 1986, the same year a much lesser-known event took place. An American engineer named Eric Drexler published a book titled Engines of Creation: The Coming Era of Nanotechnology.” It was because of that book that we began researching how to invest in nanotechnology stocks way back in 2003.

(Disclaimer: A lot of articles we’ll be linking to in this piece are very old. Back then, many of us were writing and producing research while attending full-time MBA programs. Consequently, some of it is riddled with typos, poor grammar, and the occasional cuss word. Nowadays, we employ professional writers to ensure that our research team writes prose as well as they can research. That was the idea anyways.)

What is Nanotechnology?

The textbook description of nanotechnology is simply the study of anything that measures less than 100 nanometers. When you start to examine objects at a molecular scale, everything starts to change as quantum effects create unique properties in materials. For example, silver nanoparticles can act as antimicrobial agents that are effective in killing multi-drug resistant bacteria.

When you consider that the majority of biological processes occur at the nanoscale, it’s easy to see how broadly the term can be used:

Nanotechnology as defined by size is naturally very broad, including fields of science as diverse as surface science, organic chemistry, molecular biology, semiconductor physics, energy storage, microfabrication, molecular engineering, etc.

Credit: Wikipedia

The term “molecular engineering” falls under nanotechnology, and under that you have things like synthetic biology and gene editing, the latter of which is perhaps the most exciting emerging technology we’ve ever covered. Before we tell you why that is, we’re going to talk a bit about the evolution of nanotechnology over time.

How Nanotechnology Has Evolved

Scientists from around the world successfully finished sequencing about 99% of the human genome, and ‘Murica tried to piss off The Frogs by renaming “french fries” to “freedom fries”. It was 2003, the same year that George Dubyah Bush signed the Nanotechnology Research and Development Act. We had just started Nanalyze as a forum to discuss investing in nanotechnology, and within months we were being read by analysts from every investment bank out there. Exciting startups like Nanosys and Molecular Imprints were expected to transform the electronics industry. There seemed to be many stocks for investing in nano – Flamel and Skyepharma were doing nano-drug delivery, NVE Corporation was bringing us carbon nanotube RAM, and Altair Technologies was supposed to provide us all with the nanomaterials we needed to change the world. FEI Corporation and Veeco Instruments were supposed to be pick-and-shovel investments for microscopes that let us view things at the nano level. My, how things have changed.

Nanotechnology Penny Stocks

Through the years that followed, we saw a proliferation of over-the-counter stocks trying to take advantage of naive retail investors, some of whom had never made an investment before in their lives. What followed was a series of battles with some of the more popular OTC companies. We would publish content debunking whatever B.S. they were selling, and they would fire back at us with cease-and-desists and sometimes even physical threats. We were invited to participate in a real boiler room in hopes we could be bribed. We wrote about that too.

It’s difficult to describe just how badly investors were duped, even accredited investors who were sophisticated enough to see through scams. Countless penny stocks started to go under as the pump-and-dumps finished their last leg. Some tried to paint a picture of a technology that didn’t live up to its promises, or a management team that couldn’t quite get investors to believe in their grand visions. For the investors who lost all their money in nanotechnology penny stocks, did the real reason even matter?

In reading about companies that have failed, we can better understand how to find those that will succeed. Here are just a few examples of “nanotechnology companies” that never quite followed through on their promises:

  • Liquid Metal Stock – We first started watching them in 2003, then in 2013 when that whole Apple thing fell through. We’re still waiting for them to start generating meaningful revenues from their amorphous alloys.
  • Industrial Nanotech Stock – Remember how Nansulate was supposed to make everyone rich? Didn’t happen. Stock trades at one-fifth of a penny giving them a current-day market cap of less than $5 million.
  • Quantum Materials Corp Stock – We said they needed cash badly and their fanboys screamed bloody murder. Today, this “quantum dot stock” continues its long downwards slide.
Credit: Google Finance
  • Nano Labs Stock – This ceramics-turned-nano company claimed to have “replaced 40% of gasoline with water and nanotechnology”. Today, shares trade at 0.0002 cents which means your average house in California is worth more than this disaster of a company.
  • Tauriga Sciences – What do you get when you combine crowdfunding with penny stocks? Absolutely nothing. That’s about what shares of this company are worth today.
  • Manhattan Sciences Stock – We were promised nanometal dental implants and cancer detection. What we got was a share price that sunk like the Titanic once all the promotional activities stopped.
  • Quantum Sphere – In 2015, they said “our FeNIX nanocatalyst is just the first of many disruptive products we plan to bring to market.” In 2017, they filed for bankruptcy.
  • Nanoantibiotics – Even the SEC questioned the validity of this “nano antibiotics” company. They’ve since disappeared from the face of this earth, and not even Google searches can unearth their sordid past.
  • California Nanotechnologies – Traded in Canada as well, this nanomaterials stock claimed to have all kinds of high-profile customers. Today, they have a market cap of about $1.6 million.

When we moved to a publishing format in 2013, we again found the need to continue warning investors about the dangers of investing in OTC stocks or penny stocks. (Just don’t do it, no matter what promises you’re being told.) We also found that the same companies that were promising us nanomaterial breakthroughs in 2004 were still making those same promises nine years later. Anyone remember Startpharma and VivaGel?

Investing in penny stocks is just one of many mistakes the first-time investors often make. If you are relatively new to investing, we recommend that you read our Complete Guide to Buying Stocks for Beginners before continuing. Even advanced degrees in finance don’t cover the many pitfalls out there that can befall first-time investors.

What Happened to Nanomaterials?

Meaningful revenues are commercial validation for your technology, not grants. With the exception of some biotech firms, we just can’t take companies seriously that continue to promise revenues and never deliver on them. Over the years, many promising nanomaterials have been on the cusp of commercialization but never seem to really quite get there. Remember carbon nanotubes?

What Happened to Carbon Nanotubes?

Carbon nanotubes are tiny cylindrical structures made from carbon with superior properties found in no other material like strength and conductivity. They were expected to bring us space elevators and carbon nanotube random access memory (RAM) – what Nantero labeled NRAM. What we got were some specialty products and carbon nanotube materials but nothing to write home about. The world’s biggest nanotechnology company – at least it was, back in 2014 – is a Russian firm that sells their TUBALL line of carbon nanotube additives.

People quickly forgot about how the carbon nanotube was expected to change the world when it was replaced by another promising nanostructure called graphene.

Investing in Graphene Stocks

Graphene is a sheet of atoms that you can pick up. That’s how strong it is. Take a sheet of cellophane made out of graphene and spread it out. Under the sheet, stick a pencil pointing upward (pencils BTW are made with graphite, not graphene). You can place the weight of an elephant on that sheet and the pencil won’t poke through it.

In addition to strength, graphene has numerous magical properties that made investors line up with open checkbooks. The story of graphene – disappointing as it is – requires a lot more than just a few paragraphs. For the sake of brevity, we’ll say that there are plenty of graphene stocks out there but few that are showing any meaningful revenues from successfully commercializing graphene. As for private companies, there are also some success stories like Skeleton Technologies which uses a proprietary material they refer to as “curved graphene” which is the basis for the competitive advantage their ultracapacitor cells possess – primarily on price and power density.

There are quite a few publicly traded graphene stocks out there, any number of which should probably be avoided. That’s why we put together A Guide to Investing in Graphene Stocks for our premium subscribers.

In addition to carbon nanotubes and graphene, a number of other carbon-based nanomaterials cropped up like fullerenes – which also had superior properties that were supposed to generate exponential value for investors. One such class of nanomaterials were quantum dots.

The Promise of Quantum Dots

According to MilliporeSigma (used to be Sigma-Aldrich before being acquired by Merck) quantum dots are “tiny particles or nanocrystals of a semiconducting material with diameters in the range of 2-10 nanometers.” Applications that were initially targeted included displays like television. A startup called QD-Vision was selling quantum dots that where used in Sony televisions (they were later acquired by Samsung). Another quantum dot startup called QD Light was targeting the LED market. Israeli startup StoreDot is developing quantum dots which are organic and metal free for use in batteries and displays (they’ve since sold their battery tech to BP). Researchers keep talking about all the great things they can do with quantum dots but commercialized applications seem far and few between.

Other Nanomaterials and Applications

There is no shortage of interesting nanomaterials out there including nanowires, nanofibers, nanocellulose, metal mesh, nano inks, nano films, nanocomposites, and aerogels, one of the world’s most exotic nanomaterials. Most of the opportunity appears to surround nanotechnology startups that are still taking in funding from venture capital firms. Landa Group is reinventing digital printing with nano ink. Nanotronics is rethinking what a microscope should look like. Vaxxas is working on needle-free vaccinations.

At least seven startups are applying nanotechnology to clothing. Companies like Modumetal and NanoSteel are working on nano-enabled metals. A handful of startups are trying to commercialize metamaterials. Europlasma, HZO, and P2i are all developing methods to waterproof electronics using nanotechnology. NanoTouch is working on self-cleaning surfaces.

There are also applications for nano that can help heal the planet. NanoH2O is desalinating sea water while Diamond Foundry is manufacturing synthetic diamonds. Startup 24M Technologies uses nanoparticles to create a black goo-powered battery for grid energy storage. Nexeon is using silicon nanowires to create a better anode, and so is Amprius. There are a lot of exciting things happening in the world of nanotechnology, so let’s see how retail investors might be able to get some exposure to nano stocks.

Investing in Nanotechnology Stocks

Nanotechnology ETFs

You’ll be disappointed to hear that there are no nanotechnology ETFs right now, but that hasn’t always been the case. When nanotechnology was popular among investors, there was actually an index of nano companies called the Merrill Lynch Nanotech Index. That index was discontinued, probably because it under-performed and interest in nanotechnology dried up. Below is a list of stocks that used to be in that index.

Source: Merrill Lynch

There was also the Lux Nanotech Index which didn’t perform very well and was also discontinued, though a handful of constituents did manage to beat the broader market, nanotechnology or not.

Nanotechnology Companies That Stagnated

We’ve talked about how prolific nano penny stocks were, but we haven’t talked about more legitimate companies with revenues that haven’t been able to quite take off yet. We’ve been watching Nanophase for over half a decade now and the $17 million company still hasn’t been able to do much. Who wants to park their money in some company that’s supposed to be seeing disruptive growth but instead has falling revenues and rising costs?

Then there’s Nanosphere. We first wrote about their gold nanoparticle technology back in 2013 noting that the company’s shares had fallen over 90% since their 2007 IPO giving them a market cap of $110 million. They were apparently still overpriced. Three years later, Nanosphere was acquired by Luminex for $83 million. If you’d been in it for the long haul, you would have lost a lot of money.

Then you have companies, not in the Merrill Lynch list, like quantum dot developer Nanoco which finally has the numbers going in the right direction after punishing investors for years with the promise of quantum dots and quantum dot televisions, and little to show for it.

Nanoco has their numbers trending in the right direction. Credit: Yahoo Finance

Another popular nanotechnology company among investors was Altair Nanotechnologies which nano pundit Josh Wolfe characterized as a “nano pretender” stating that Altair “had changed names more often than Oprah’s clothes.” When we last checked, the company’s flagship product was the Altairnano Energy Storage System which was expected to target the renewable energy industry. After their CEO resigned and the company appeared to be having financial difficulties, the company continued to air their dirty laundry until finally they voluntarily delisted their stock.

Another popular stock in the nano hype days was Harris & Harris Group which was a publicly traded venture capital firm which dabbled in nano. They’ve since changed their name to 180 Degree Capital and pivoted into other investment areas as their share price continues to languish.

Going forward, we can break down the nanotechnology opportunity into three major themes: nanomaterials including graphene, nano-drug delivery, and synthetic biology including gene editing.

Investing in Nanomaterials and Graphene

What investors need to remember is that companies which use nanomaterials for a competitive advantage won’t necessarily be telling the world about it. Many large-cap companies use nanotechnology in their products. One of our favorite dividend growth investing stocks, 3M, has been using nanotechnology in their products for decades. In the late 1990s, 3M revolutionized dental care with a superior filling based on nanotechnology. We’re not saying 3M is a nanomaterials stock – they’re actually a conglomerate – but we’re simply saying that much of the progress being made with nanomaterials will be outside of public eyes.

Then you have nanomaterials that people can’t stop talking about, like graphene. That’s why we put together A Guide to Investing in Graphene Stocks. Once you’ve read that – or not – let’s move onto the really exciting stuff.

Investing in Synthetic Biology and Gene Editing

If we had to pick the single most exciting disruptive technology there is, that would have to be synthetic biology. The most efficient manufacturing known to man would have to be nature. Just think about the process of growing food using nothing but sunlight, water, and soil. Many futurist-minded people are thinking that soon we’ll just grow everything we need using tools like gene editing. From what we’ve seen lately from companies like Ginkgo Bioworks, we’re off to a very good start.

There’s so much exciting stuff to talk about here that we put together a separate Guide to Investing in Synthetic Biology and A Guide to Investing in Gene Editing Stocks which looks at some areas of disruptive technology which we think will transform society more than even computing did.

Investing in Nanomedicine

The applications for nanotechnology in the healthcare sector are many. It’s not progressed to biobots in your bloodstream yet, but it’s getting closer with many nano-drug delivery mechanisms being commercialized.

Investing in Nano Drug Delivery

Today, many companies are using nano-drug delivery technologies. Some, like Bind Therapeutics, showed great potential, yet failed spectacularly. Nowadays, companies don’t make a big deal about mentioning the use of nanotechnology, and many drug companies actively use nanoparticles to deliver drugs more efficiently. Here are some nano-drug delivery companies we’ve looked at over the years, all of which happen to be publicly traded companies.

  • Liquidia (LQDA) – Uses lithographic techniques borrowed from the semiconductor industry to create molds that can produce precisely calibrated nanoparticles of virtually any size, shape, and chemistry. Had an IPO and is developing drugs in-house using their platform.
  • Selecta Biosciences (SELB) – their ImmTOR platform uses nanoparticles to induce immune tolerance which could help improve existing gene therapies and reduce side effects. Had an IPO in 2016.
  • Oasmia (OASM:SS) – Swedish company developing nano-sized particle formulations of active pharmaceutical ingredients.
  • Kala Pharmaceuticals (KALA) – Developed a nano-drug delivery method to penetrate the barrier of mucous membranes.
  • MagForce (MF6:GR) – Injects iron oxide nanoparticles directly into tumors. The particles generate heat within the tumor tissue, killing cancer cells.
  • Nanobiotix (NANO:FP) – Developed nanoparticles that interact with X-rays and maximize the effect of radiotherapy within tumor cells
  • Menlo Therapeutics (MNLO) – Previously known as Foamix, they’re targeting the dermatology industry with nano-emulsion foams.
  • NanoViricides (NNVC) – Develops “nanoviricides” that are designed to work by binding to and eliminating virus particles from the bloodstream, just as antibodies do, only potentially much better. We were skeptics then, and we’re skeptics now.

Other nano-drug delivery companies like Cerulean Pharma didn’t fare too well as they had to wind down their business after their lead drug – a nanoparticle formulation that targeted cancer tumors – failed in Phase 2 clinical trials. Ology Bioservices (previously known as Nanotherapeutics) was developing nanoparticles to make existing drugs more effective but has since pivoted into biomanufacturing.

From rejuvenating your skin to helping you quit smoking, nanotechnology has many uses in healthcare aside from just drug delivery. Venture capitalists continue to fund nanotechnology healthcare startups in all areas of healthcare. A recent example would be Nanox, a startup that is reinventing medical imaging with a new x-ray machine powered by “a ‘chip’ of nano-scale structures – created using proprietary nanofabrication techniques.” (Update 08/21/2020: Nanox filed for an IPO.) Another exciting startup to watch is Berkeley Lights and their nanofluidics platform that lets researchers quickly manipulate and measure cells at scale.

While the term nanotechnology has changed over the years, the promises it holds haven’t. Many companies are using nanotechnology, they’re just not shouting it from the rooftops. If you want to stay on top of what stocks to invest in based on the new definition of nanotechnology, we can help.

Pure-play disruptive tech stocks are not only hard to find, but investing in them is risky business. That's why we created “The Nanalyze Disruptive Tech Portfolio Report,” which lists 20 disruptive tech stocks we love so much we’ve invested in them ourselves. Find out which tech stocks we love, like, and avoid in this special report, now available for all Nanalyze Premium annual subscribers.