Nanotechnology: Emerging Healthcare Applications & Markets

SUMMARY

1.1 SCOPE AND OBJECTIVES OF REPORT

The purpose of this Theta Report is to inform strategic planners and marketing executives of the commercialstatus and future of nanotechnology-related medical devices, diagnostics, and therapeutics, and the impactthat nanotechnology will have on the healthcare industry. Overall, this report covers:

• Types of medical devices, diagnostics, and therapeutics under development
• Types and uses of the few nanotechnology-based products currently on the market
• Information on the companies developing and marketing these products
• Information on the major academic research groups developing potential products and which mightrepresent opportunities for technology transfer to industry

Specific topics addressed in this report include:

• Status of clinical trials
• Target launch date of nanotechnology-based medical products
• Disease states targeted and their prevalence
• Market challenges
• Market estimates and predictions for the years 2003 2007
• Funding and commercialization issues
• Market and industry trends affecting developers including regulatory requirements and public perception
• Issues affecting developers, including technical concerns, manufacturing environment, intellectualproperty, and competition

This report also provides an in-depth analysis of five application segments:

• Clinical diagnostics and imaging
• Therapeutics and drug delivery
• Implants and biomaterials
• Biomedical research and drug discovery tools
• Future applications

Technologies under development worldwide and the instruments used in each application are discussed foreach market segment. Related technology tools necessary for the successful utilization of nanotechnology, suchas scanning probe microscopy and predictive computer software, are also discussed.

This report focuses on technologies with commercial potential predicted to impact the healthcare marketover the next 5 to 10 years. However, since there has been much hype about the future potential ofnanotechnology, this report also briefly addresses and critically examines forward-looking tools ofnanotechnology such as nanoassemblers and nanoscale robots. As these are not prospects that are expected toimpact the medical/healthcare market over the forecast period of this study, they will not be covered indepth. Neither will advances in cosmeceuticals be covered, although there have already been commercializednanoparticulate products in this area.

This report provides world market coverage and discusses both funding and development in the U.S., Europe,and Asia, with worldwide market forecasts over a 5-year forecast period. Market predictions are furtherincluded for the five major application segments mentioned above.

1.2 TARGET AUDIENCE

This report has been written to be of benefit to strategic planners and marketing managers at allpharmaceutical, medical device, diagnostic, life science, and biotechnology companies that might be interestedin advances in nanotechnology. More specifically, companies that will benefit from this report include:

• Pharmaceutical companies working in the area of drug delivery or drug discovery
• Diagnostics companies interested in advances in nanosensors or nanoarrays capable of rapid real-time andsingle molecule detection
• Microarray or biochip companies that will compete with medical diagnostic and device sectors
• Medical device or tissue engineering companies developing active or coated devices and scaffolds

This report may also benefit individuals and investors who track advances in the evolving nanotechnologymarket, including venture capitalists, healthcare equity analysts, or academic research and scientific staff.This report provides coverage of commercial work in medical nanotechnology.

1.3 REPORT METHODOLOGY

1.3.1 Interviews with Clinical, Technical, and Market Experts

In researching this report, first-hand interviews were conducted with business development personnel, chiefexecutive officers, and marketing executives from companies involved in the nanotechnology industry worldwide.In addition, relevant government personnel, business and health associations, and leading experts in thenanotechnology community were interviewed.

Nanotechnology companies contacted for this study included NanoInk, Angstrom Medica, NanospectraBiosciences, SkyePharma, Advion BioSciences, BioForce Nanosciences, Nanosys, and Invitrogen, among others.Company interviews included questions regarding nanotechnology products, strategic focus, technologies underdevelopment, diseases targeted, strategic alliances, barriers to expansion, time to technology introduction,sales data, and revenue projections. Expert interviews addressed technological and market limiters, keycompanies, and factors driving or limiting growth of nanotechnology markets. Thought leaders were also askedto assess the utility and shortcomings of nanotechnologies, estimate the importance of emerging techniques andinstruments, and discuss their expectations.

1.3.2 Secondary Data Sources

Numerous secondary sources were consulted for this report, including company websites, U.S. Securities andExchange Commission (SEC) filings, annual reports, press releases, newsletters, databases, media articles,online nanotechnology discussion boards, and numerous publications in the scientific and trade literature,including those provided by associations, trade bodies, and medical conferences. Other sources of data oncompany revenues were consulted when not obtainable from private companies, including investment analystreports, to develop estimates of market revenues and historical growth. Sales were also calculated based onunit sales when available.

1.4 MARKET SUMMARY

In medical markets, nanotechnology has applications in a number of areas including therapeutics, devices,and diagnostics. Nanotechnology is defined as the fabrication of structures smaller than 100 nm (or 300 400atoms in diameter). Such structures are therefore similar in size to biologic molecules such as proteins andcould play a unique role in biomedical treatment, testing, and research developments. Nanoscale materials maybe capable of rapid absorption by the body, improved integration into tissue structures when used inorthopedics, and even the ability to interface with electronics to create novel biosensors.

Advances in nanotechnology may lead to the development of new biomaterials and implants; improve drugdelivery; endow therapeutics with improved solubility and more precise targeting of diseased tissue; makediagnostics less invasive, more rapid, and more informative; and enable more complex biomedical research.Researchers predict that nanotechnology will significantly improve treatment of a variety of diseases over thenext 5 to 10 years.

Within the past 3 years, nanotechnology has begun to take the shape of big business, with numerouscompanies spun off from academia, and worldwide government and private investment estimated at over $4billion. Although only a few nanotechnology-enabled products have yet been introduced in the healthcaresector, nanostructures capable of interacting with biological components at the molecular scale are the focusof much commercial and academic research and development and will likely remain so for the foreseeable future.In 5 years, Theta Reports estimates that the world market for medical nanotechnology will surpass $3 billion.

Over the near term, academic research, drug discovery, and drug delivery are most likely to be firstaffected by nanoengineering. Rather than the creation of complete nanotechnology-based systems, most drugdiscovery and research application will likely involve the addition of nanocomponents to existing biosensortechnologies, yielding nanoarrays, multiplexed nanoparticle assays, and other technologies requiring reducedsamples sizes and the like.

In diagnostics, Evidots and Qdots are available from Evident Technologies and Quantum Dot Corp.,respectively, for tagging. Nanoplex Technologies offers Nanobarcodes. For drug discovery applications,NanoInk's system for nanolithography, BioForce Nanosciences's NanoPro nanoarray printing system, and AdvionBioSciences's NanoMate 100 mass spectroscopy system are sold to the life sciences market. Manynanotechnology-based products and systems under development may be brought first to the life sciences marketand will later be adapted for commercial diagnostics applications.

Drug delivery applications are proving to be the first to market, with nanoparticulate versions of existingdrugs and novel nanoparticulate compounds being introduced. These possess improved solubility and reducedadverse event profiles and the ability to target cancers. In the pharmaceutical industry, Elan's Nanosystemsdivision and ALZA Pharmaceuticals currently have nanoparticulate drugs on the market.

Based on Theta Reports's analysis of market developments, nanotechnology is expected to make apharmaceutical market breakthrough in 2004 through 2005, when new nanoparticulate therapeutic compounds beginto slowly reach the market. This slow rate of commercializations is expected to continue through to 2008 and2009, when the numerous products currently in late discovery/early clinical phases may be brought to market.

By 2005, products that may reach the market include the first nanoparticulate drugs from SkyePharma(propofol), American Pharmaceutical Partners (abraxane), Nanobio (NanoHpx Herpes), NovaVax (Estrasorb), and adermatological product from C Sixty based on fullerenes. Additional research tools and components may also beintroduced in this period.

Additional benefits are predicted to be brought to the area of drug development through nanoparticleformulation services. The growing cost of drug development, now estimated at $500 million over 12 years ofdevelopment, or $800 million over 14 years, including postmarket testing, makes it increasingly important forcompanies to rapidly develop and commit to an ideal formulation of their compound. With an estimated 30% ofcompounds suffering from solubility issues, particularly peptide drugs, the possibility of rapidly creatingnanoparticle formulations for use in drug discovery offers the possibility of reducing drug development costssignificantly and increasing the number of base compounds for potential development.

The vote of confidence in nanotechnology protein delivery technologies has been strong, with majorcompanies, such as Merck, GlaxoSmithKline, Bristol-Myers Squibb, Wyeth, Amgen, Baxter, and Dow Chemical Co.,teaming up with nanotechnology drug delivery companies. Leading drug delivery companies developingnanotechnology-based products include Elan, Flamel, SkyePharma, iMEDD, and BioSante.

Perhaps the greatest near-term impact of nanotherapeutic compounds will come in the area of tumor targetingand cancer therapies. Numerous nanodelivery companies already compete in this area, as well as the market forchemotherapeutic agents that can pass the blood-brain barrier or reduce the severe adverse events associatedwith toxicity. Such compounds may rapidly come to market. Advectus, for instance, believes its Nanocure is alikely candidate for fast-track designation by the U.S. Food and Drug Administration (FDA), as existingoptions of surgery and radiation therapies have limited success and carry adverse event risks.

Another growing drug delivery segment that will likely be influenced by nanotechnology is that forintranasal and inhaled drug delivery products. Nanotherapeutics estimates the market for inhaled, topical, andintranasal drug delivery systems will exceed $36 billion by 2005, triple the current market.

However, only a few diagnostic, imaging and medical device applications are predicted to enter the marketby 2006 to 2007, and these will likely only appear after 2008 to 2009. Nanotechnology has already led to thedevelopment of a number of prototype diagnostic systems for use outside the body. These include diagnosticsensors and nanoarrays (lab-on-a-chip) techniques, which may eventually be capable of real-time singlemolecule detection.

Also in medical diagnostics, nanomaterials may be used as imaging agents to diagnose disease or to directdrugs to specific diseased areas of the body. For example, in a patient who has cancer, nanoscalechemotherapeutic agents tied to drug-shuttling magnetic nanoparticles or antibodies could potentially bedirected at cancerous cells only, sparing healthy ones, reducing adverse events and amplifying the effect ofthe drug.

Finally, new nanoscale biomaterials with unique and novel properties are being developed, which, ifcombined with devices, may add valuable properties, such as improved biointegration, ability to repair tissuestructures, prevention of adverse events caused by introduction of foreign materials, and safe use in magneticresonance imaging (MRI) environments.

Much attention in nanotechnology has been given to more futuristic applications focused on buildingnanoscale systems, or nanoassembly. Although current medical nanotechnology does not include in its catalogproducts built atom by atom, and nanobots are not yet being used in the human body, elements of such systemsare already being developed in academia. Examples of these, such as self-assembling systems, are highlightedin this report.

Medical nanoassembly may not be available for at least 10 to 15 years, and automated systems for thispurpose may not be commercially viable for well over 30 years. Some theorize a medical treatment future wheretiny nanosensors circulating in bloodstreams could continually gather medical information and monitor health;theoretical nanorobots would manipulate cells to allow for molecular-scale surgery, and artificial red bloodcells would be able to deliver over 200 times more oxygen than natural red blood cells.

Over the past several years, the industry has seen the publication of numerous roadmaps, and nationalanalyses of the nanotechnology market, as countries try to determine their strategic technological strengthsand interests. This has led to increased funding and funding distribution. As policymakers and relevant bodiesgain greater industrial awareness and understanding, there has been greater allocation of funds to build largeinfrastructure and institutions, as well as encouragement of spin-offs in other countries.

TABLE OF CONTENTS

1 Executive Summary

• 1.1 Scope and Objectives of Report
• 1.2 Target Audience
• 1.3 Report Methodology
  • 1.3.1 Interviews with Clinical, Technical, and Market Experts
  • 1.3.2 Secondary Data Sources
• 1.4 Market Summary

2 Introduction to Nanotechnology

• 2.1 Perspective on Nanotechnology
  • 2.1.1 Definition(s) of Nanotechnology
• 2.2 Drivers of Medical Nanotechnology
  • 2.2.1 Microscopy
  • 2.2.2 Nucleic Acid Diagnostics/Molecular Diagnostic Assays
  • 2.2.3 Point-Of-Care Testing
  • 2.2.4 Genomics, Proteomics, DNA Biochips, and Microarrays
  • 2.2.5 Self-Assembly
  • 2.2.6 Tissue Engineering and Regenerative Medicine
• 2.3 Limiters of Medical Nanotechnology
• 2.4 The Healthcare Environment
  • 2.4.1 Funding and Commercialization
  • 2.4.2 U.S. Government Funding
  • 2.4.3 European and Asian Government Funding
  • 2.4.4 Venture Capital
  • 2.4.5 Market Structure
  • 2.4.6 Regulatory Environment
  • 2.4.7 Marketing
• 2.5 Notable Nanotechnology Materials
  • 2.5.1 Dendrimers
  • 2.5.2 Carbon Nanotubes
  • 2.5.3 Fullerenes

3 Clinical Diagnostics and Imaging

• 3.1 Role of Nanotechnology
  • 3.1.1 Objectives and Advantages
• 3.2 Nanoparticle Tagging and Nanoparticle Probes
  • 3.2.1 Qdots and Eviprobes: Quantum Dot Nanocrystals
  • 3.2.2 Nanobarcodes: Striped Metallic Nanoparticles (Nanoplex Technologies)
  • 3.2.3 Resonant Light Scattering Nanoparticles (Invitrogen)
  • 3.2.4 Gold Nanoparticle Probes (Nanosphere)
  • 3.2.5 Bioconjugated Nanoparticles (University of Florida)
• 3.3 Sensors
  • 3.3.1 Nanoparticle Tagging Systems
  • 3.3.2 Electronic Sensors
  • 3.3.3 Nanotube and Nanowire Sensors
  • 3.3.4 Single Molecule Detection
  • 3.3.5 Piezoelectric Acoustic Assays/Rupture Event Scanning (Akubio)
  • 3.3.6 Enzymatic Electrochemical Detection (GeneFluidics)
  • 3.3.7 Single-Molecule Sequencing and Analysis (Nanofluidics)
  • 3.3.8 Lab-on-a-Tape (Biotrove)
  • 3.3.9 Nanoarrays (BioForce Nanosciences, NanoInk)
  • 3.3.10 Dip Pen Nanolithography (NanoInk)
  • 3.3.11 Nano Mass Spectrometry (Advion BioSciences)
  • 3.3.12 NanoBreath (Nanotherapeutics)
  • 3.3.13 NanoGrid (Biogenon)
• 3.4 Imaging
  • 3.4.1 Quantum Dots
  • 3.4.2 Nano-Trimetaspheres (Luna Innovations)
  • 3.4.3 Dendrimers
  • 3.4.4 Tumor-Specific Nanoparticles (Kereos, Nanospectra Biosciences)
• 3.5 Instruments
• 3.6 Market Analysis

4 Therapeutics and Drug Delivery

• 4.1 Role of Nanotechnology
  • 4.1.1 Objectives and Advantages
• 4.2 Sustained Release
  • 4.2.1 Medusa System (Flamel)
  • 4.2.2 NanoGATE (iMEDD)
  • 4.2.3 Nanodry, Nanocoat (Nanotherapeutics)
  • 4.2.4 Fleximer (Nanopharma)
• 4.3 Solubility and Reformulation
  • 4.3.1 IDD, DissoCubes, SLN (SkyePharma)
  • 4.3.2 NanoEdge (Baxter)
  • 4.3.3 NanoCrystal (Elan Nanosystems)
  • 4.3.4 Precipitation With Compressed Antisolvent (CritiTech)
  • 4.3.5 Evaporative Precipitation Into Aqueous Solution (Dow Chemical Co.)
  • 4.3.6 High-Pressure Homogenization (PharmaSol)
  • 4.3.7 Controlled Flow Cavitation (Five Star Technologies)
  • 4.3.8 Transdermal Micellar Nanoparticles (Novavax and NanoCarrier)
  • 4.3.9 Bioral Technology (BioDelivery Sciences)
  • 4.3.10 PEGylated Nanoparticle Liposomes (ALZA)
  • 4.3.11 Polyvalent Liposome Nanoparticles (LigoCyte)
  • 4.3.12 BioVant Vaccine Adjuvant (BioSante)
• 4.4 Cancer Drugs With Modulated Targeting
  • 4.4.1 NanoShells (Nanospectra Biosciences)
  • 4.4.2 Magnetic Nanoparticles (Triton Biosystems vs. Nanobiotix)
• 4.5 Targeted Cancer Drugs Without Modulation
  • 4.5.1 Colloidal Gold TNF Nanoparticles (CytImmune Sciences)
  • 4.5.2 Atomic Nanogenerators (Dow Chemical Co., Sloan-Kettering)
  • 4.5.3 Micellar Nanoparticles (NanoCarrier, GlaxoSmithKline, Kirin, CTT)
  • 4.5.4 Lymph Node Drug Delivery (Nanopharma)
  • 4.5.5 Nanocrystallization (Ntera)
• 4.6 CNS Delivery: Crossing the Blood-Brain Barrier
  • 4.6.1 Nanocure (Advectus Life Sciences)
  • 4.6.2 NANODEL (NanoPharm)
• 4.7 General Targeting
  • 4.7.1 Dendrimers (Starpharma Pooled Development Fund)
  • 4.7.2 Targesome
  • 4.7.3 Poly Functional Nanoparticles (Alnis BioSciences)
• 4.8 Drug Delivery Implants
• 4.9 Nanomaterial Drugs
  • 4.9.1 Antioxidant and Anti-HIV Fullerenes (C Sixty)
  • 4.9.2 Antimicrobial Nanoemulsions (NanoBio)
  • 4.9.3 Rx Nanocrystals (NUCRYST Pharmaceuticals)
  • 4.9.4 RenaZorb (Altair Nanotechnologies)
  • 4.9.5 Nanotube Drug Research
• 4.10 Market Analysis

5 Biomedical Implants and Biomaterials

• 5.1 Role of Nanotechnology
  • 5.1.1 Objectives and Advantages
• 5.2 Surface Modification
• 5.3 Device Coatings
  • 5.3.1 Bandages
  • 5.3.2 Protective Coatings
  • 5.3.3 Stents
• 5.4 Tissue Engineering and Orthopedics
  • 5.4.1 NanoOss/Angstrom Medica
  • 5.4.2 Nanobone and Bone Cement
  • 5.4.3 Self-assembled Collagen Nanofibers
  • 5.4.4 Tissue and Organ Regeneration
  • 5.4.5 Wound Healing and Tissue Glues
  • 5.4.6 Bioactive Scaffolds
  • 5.4.7 Patterning and Nerve Growth
• 5.5 Other Devices
  • 5.5.1 Novel Organ-assisting Devices
  • 5.5.2 Brachytherapy
• 5.6 Market Analysis

6 Biomedical Research and Drug Discovery Tools

• 6.1 Role of Nanotechnology
  • 6.1.1 Objectives and Advantages
• 6.2 Drug Discovery Tools
  • 6.2.1 NanoMassSpectrometry
  • 6.2.2 Nanoarrays
  • 6.2.3 Nanolithography Arrays
  • 6.2.4 Living Chip (BioTrove)
  • 6.2.5 Congruent Force Intermolecular Test (Nanotype)
  • 6.2.6 Computer-Assisted Drug Discovery
• 6.3 Biological Research
• 6.4 Liquid Handling
• 6.5 Separation and Filtration
  • 6.5.1 Nanopore Sequencing and Separations
• 6.6 Market Analysis

7 Total World Market Summary

8 Future Applications: Nanoassembly and Beyond

• 8.1 Overview
• 8.2 Self-Assembly
• 8.3 Nanoassemblers
• 8.4 Cellular Interface and Implants
• 8.5 Nanobots

9 Company Briefs

• 9.1 Advion BioSciences Inc.
• 9.2 Angstrom Medica Inc.
• 9.3 BioForce Nanosciences, Inc.
• 9.4 Biophan Technologies, Inc.
• 9.5 C Sixty Inc.
• 9.6 Elan Nanosystems
• 9.7 Flamel Technologies S.A.
• 9.8 Invitrogen Corp.
• 9.9 NanoInk, Inc.
• 9.10 Nanoplex Technologies, Inc.
• 9.11 Nanospectra Biosciences, Inc.
• 9.12 NUCRYST Pharmaceuticals

10 Company Directory

List of Tables

• Table 2-1 Notable Nanotechnology Funding Requests by U.S. Institution/Department 2004
• Table 2-2 Nanotechnology Government Funding Estimates by Country 2003, 2004
• Table 3-1 Nanotechnology-based Products for Clinical Diagnostics and Imaging
• Table 3-2 Projected Commercialization of Nanotechnology-based Clinical Diagnostics and Imaging 2004-2008
• Table 3-3 World Market Size and Growth for Nanotechnology-based Diagnostics 2005-2007
• Table 4-1 Nanotechnology-based Products for Therapeutics and Drug Delivery
• Table 4-2 Projected Commercialization of Nanotechnology-based Therapeutics and Drug Delivery 2003-2011
• Table 4-3 World Market Size and Growth for Nanotechnology-based Therapeutics and Drug Delivery 2002-2007
• Table 4-4 World Market Size and Growth for Nanotechnology-based Drug Therapeutics 2002-2007
• Table 4-5 World Market Size and Growth for Nanotechnology-based Drug Delivery Services 2002-2007
• Table 4-6 Projected Sales of Nanotechnology-based Therapeutics and Drug Delivery by Product 2004-2007
• Table 5-1 Nanotechnology-based Products for Biomedical Implants and Biomaterials
• Table 5-2 Projected Commercialization of Nanotechnology-based Biomedical Implants and Biomaterials2004-2008
• Table 5-3 World Market Size and Growth for Nanotechnology-based Biomedical Implants and Biomaterials2002-2007
• Table 5-4 Projected Sales of Nanotechnology-based Biomedical Implants and Biomaterials by Product2004-2007
• Table 6-1 Nanotechnology-based Biomedical Research and Drug Discovery Tools
• Table 6-2 Projected Commercialization of Nanotechnology-based Biomedical Research/Drug Discovery Tools2004-2006
• Table 6-3 World Market Size and Growth for Nanotechnology-based Biomedical Research/Drug Discovery Tools2002 2007
• Table 7-1 Total World Market Size and Growth for Biomedical Nanotechnology 2002-2007
• Table 8-1 Future Nanotechnology Applications

List of Figures

• Figure 3-1 World Market Size for Nanotechnology-based Diagnostics 2005-2007
• Figure 4-1 World Market Size for Nanotechnology-based Therapeutics and Drug Delivery 2002-2007
• Figure 4-2 World Market Size for Nanotechnology-based Drug Therapeutics 2002-2007
• Figure 4-3 World Market Size for Nanotechnology-based Drug Delivery Services 2002-2007
• Figure 5-1 World Market Size for Nanotechnology-based Biomedical Implants and Biomaterials 2002-2007
• Figure 6-1 World Market Size for Nanotechnology-based Biomedical Research/Drug Discovery Tools 2002-2007
• Figure 7-1 Total World Market Size for Biomedical Nanotechnology 2002-2007