Member Info for Nanonano

You know I thought exactly the same thing.

"Samsung are not a charity supporting British PI’s".

Nanoco investors have been a charity supporting Samsung's vast profits in QD display.

I would expect some news of a contract with STMicro very soon if it's going to happen at all. Originally I anticipated this month, and we're only a third of the way in, but that really was based on what I think is the first commercial application for the sensors with Nanoco and STMicro being a link in a long chain.

Hopefully not another bump in the road at the eleventh hour and further disappointment for Nanoco investors.

Two thirds of his holding, best part of a million quids worth, right after some very positive interims too. Yeah that stank to the heavens. Chairman and CTO were in that sell off too, although to a much lesser degree.

I think that coupled with the fact the share price tanked to levels well below what the II's held at sealed his fate as CEO.

Historically Nanoco board has not been kind to PI's. Investors who've been in for a while will remember the 2017 fundraise, where PI's were locked out only LOAM were permitted to buy at a significant discount. PI's meanwhile watched their holding halve, and it wasn't until a long time later that they had an opportunity to average down, at a time of significant risk for the companies future.

I think many investors had hoped those days were behind us when BT took the hot seat.

Few UK companies are attracting inward investment and not a good time for anyone to hand out the begging bowl. AGM were finished off because no one wanted to put any money in on a cash raise, Haydale are equally vulnerable IMO. They have a lot more income, and they're growing faster than AGM managed, but they are a more expensive company to run, and they still burn through a lot of cash.

Although in fairness this seems to align with other analyst timelines.

https://www.macrumors.com/2023/03/09/under-display-face-id-2025-ross-young/

Where I see risk-

1. Key patents on molecular seeding only have a few years left before expiry. First in 2025, just two years.
2. Potential revenue from display market likely to be small going forward. Legal action, protecting IP may drain resources from R&D.
3. Sensor IR materials. First materials likely to market e.g. lead sulphide not exclusive to Nanoco, but expertise at producing at scale and some exclusive trade secrets, but all untested in the market. Will new partners be trustworthy, or a repeat of Samsung.
4. Quantum materials Ltd. operating in the same arena. Company formed from senior ex nanoco scientists.

Would appreciate it if things were kept civil, otherwise the board descends into a slanging match.

I think very few were pleased with the settlement amount, and perhaps most importantly it has cast a shadow of doubt over the future value of its technology. The share value would be much stronger if it was to the contrary.

It's impossible for investors to get any sense of what the future value of the business is because we have no metric to guide us, e.g. the cost per sensor in revenue to Nanoco. Quoting manufacturing capacity is of little value, Dow had the capacity to supply dots for hundreds of millions of TV's per year, but its facility never turned a cog.

I believe it's obvious that IR sensing will be a very large addressable market in next two to three years. However we do not know how much of that business Nanoco will win.

Edison are a waste of time IMO, might as well bring in Hans Christian Anderson to write up something.

"a product line of say 3 products and utilise 60-70% of its production capacity. At that rate the share price would be around 55p mark."

Production capacity is in excess of £100m per year, if we say production utilised 70% of that, then consider 60% of that figure for earnings, that leaves over £40m per annum. 55p a share gives a company valuation of around £177m, seems a tad low?

https://www.patentlyapple.com/2023/03/apple-wins-a-touch-id-under-display-patent-focused-on-an-optical-imaging-system-that-operates-in-the-shortwave-infrared-ban.html

https://www.patentlyapple.com/2023/03/new-apple-granted-patents-cover-a-beats-flex-design-patent-multiple-project-titan-inventions-like-nighttime-vision-climate.html

"Well my plan was and still is to hold for 5 years yet."

That was my plan too, seven years ago. Four pence a share down at present.

Nanosys are masters of spin though.

Would seem a strange choice to consider getting dots manufactured in the US- quite expensive labour rates compared with Korea I would think.

Nanosys seem to have been keeping a lower profile in recent months.

"II-VI group of elements includes cadmium. Intriguing."

I believe the same molecular seeding process can be applied to cadmium, and it's reportedly far more efficient than the hot injection process. Some may recall that Nanosys took Nanoco to task over production of cadmium based materials some years back, ironically for infringing their IP.

https://www.nanocotechnologies.com/media/nanoco-settles-patent-infringement-lawsuit-with-nanosys-inc-for-quantum-dot-technology/

Far too simplistic to take 10% of the Samsung settlement.

The Samsung settlement represents several years of production, whereas other companies have been marketing cad free for a lot less time. Until very recently Samsung had a lot more than 95% of the global market for QD display, be it cad or cad free.

I doubt very much it would be close to $15m, more like $1.5m. If you start adding in legal costs....

Can't see the company engaging in legal action for a few million here or there, not worth their while.

More likely it will be polite but firm correspondence to both the company making the dots and the companies/OEM's using them in their products.

Interesting that ME was unaware of third party funding. Also interesting of no mention of sensing materials in this article, instead they mention life sciences- an area of the company which has been cut back to almost nothing. Strange choice.

As well as providing Nanoco with the ability to assert its rights, the agreement with GLS and the legal advisors allowed the company to embark on litigation with no upfront investment. “We did not have to put anything in, except for a small retainer for local counsel in Texas,” Tenner confirms. “Of the millions of dollars spent on advisors’ fees etc., effectively our contribution was zero.”

More litigation on the horizon

Tenner believes that other companies are liable to pay for use of Nanoco’s rights. “We believe that our core patents are so fundamental that it is impossible to make cadmium-free quantum dots without infringing our IP. We have patented the process for making them,” he explains. “Our view is that anyone using quantum dots in a display is probably infringing our IP. If they are using the “three-five” or “two-six” groups of elements (from the Periodic Table) to make quantum dots, we think there is a very high likelihood they are infringing our IP.”

But it’s unlikely that future payments will be as large as Samsung’s. “For several years, there was only one company in the world selling cadmium-free quantum dot TVs. That was Samsung,” Tenner states. “Today, Samsung still has just under a 90% market share, but other companies now have 10% of the market.”

It is these companies that provide the most obvious immediate opportunities for further licensing. However, quantum dots have a broad use of potential uses across many industries. In the life sciences, for example, this technology is thought to have the potential to be used to identify and highlight cancerous cells. But these applications are probably several years away, Tenner thinks.

In the meantime, Nanoco believes it is highly likely that others are infringing its rights. “And we are now planning – having had our patents validated in the IPR process and having achieved a big settlement with Samsung – to invite others to take out a licence rather than waiting to get sued,” Tenner stresses.

But, because litigation is not currently a core competency of Nanoco’s team, the company is now asking itself how to best move forward with its IP strategy. “We are thinking about who our advisors would be, how we would structure it, and whether to set up an in-house division,” Tenner comments.

“We have effectively already set up a small business unit inside the company that is looking at this. The question is whether there are other ways to exploit [our IP] or leverage it over time.” This could involve hiring in-house counsel to do it or outsourcing the work, he explains. “It may even involve selling the IP to someone else and having a licence back to the IP.”

The answer was the perceived value of the IP. Even though we hadn’t litigated it yet, it kept shareholders’ faith in the company’s value.”

However, this increased the potential risk associated with asserting its patents against Samsung. “Going into this litigation, there was binary risk for us,” Tenner states. “If we lost, not only would we have failed in the lawsuit, but it would have suggested that our core IP was not enforceable.” But companies need to be prepared to use the IP that they own, he insists, otherwise it is useless.

One of the reasons Nanoco was sufficiently confident to assert its rights was that the narrative behind the litigation was so compelling and simple, Tenner stresses. “Samsung came to us in 2006-2007 and said they didn’t know how to make cadmium-free quantum dots and asked if we could help them. Their chief scientist at the time was on-record as saying that she did not know how to make them,” he claims. “We worked extensively with them for six or seven years after that. Like many small companies, we effectively did that for nothing because the potential prize was so big. But we got to 2013 and Samsung effectively pulled the plug on our cooperation agreement.”

The importance of litigation funding

Nevertheless, Nanoco would not have been able to utilise the US legal system without financial assistance, Tenner emphasises. “The cost of US litigation would have been unaffordable for Nanoco,” he says. “I asked the former CEO: Why not get somebody else to pay for the litigation? He said: Is that even a thing? And I said: of course, it is a thing. Whether it is a health claim, an employment claim, there are companies that will fund third-party litigation in return for a share of the pie.”

But potential funders wanted to make sure Nanoco had a strong case before they would commit, Tenner explains. “In 2018 or 2019, we formally put Samsung on notice, while a lot of due diligence on our case and supporting evidence was performed by potential funders and also legal advisors.”

This process had the collateral benefit of boosting Nanoco’s own confidence in its stance, Tenner comments. “If an independent funding organisation was willing to put its money where its mouth was, having done a detailed review of the case, that gives us confidence,” he says.

Ultimately, however, there were no shortage of companies willing to fund the litigation. “To choose a funder, we ran a beauty parade,” Tenner explains. “We had four different bids and evaluated them like for a tender.” These all put forward different terms and conditions depending on the size of the win and how the win was achieved. “We probably could have got ten bids, but we thought four was enough. We picked GLS Capital.”

Nanoco also worked with strategic advisor Ron Epstein, a former Head of IP at Intel, as well as US legal counsel at Mintz Levin Cohn Ferris Glovsky & Popeo and Caldwell Cassady & Curry. cont....