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Nanosciences could be one of the founding fathers of nanotechnology building on their
BioForce Nanosciences, Inc.
1615 Golden Aspen Drive, Suite 101
Ames, IA 50010 USA
Eric Henderson, Ph.D.
Founder, Chairman & CSO
Interview conducted by:
Lynn Fosse, Senior Editor
July 20, 2006
Eric Henderson, Ph.D. Founder, Chief Executive Officer, Chief Science Officer
Dr. Henderson founded BioForce Nanosciences while serving as Professor of Genetics,
Development and Cell Biology at Iowa State University in Ames, Iowa. He is an
internationally recognized scientist with a strong record of accomplishment of grant and
investor funding. He was one of the first to integrate atomic force microscopy with
bionanotechnological research and has pioneered the development of many AFM applications
in the life sciences. He has published 94 manuscripts including the cover of
Science magazine and numerous other peer-reviewed journals. Dr. Henderson
has spent the last 11 years developing the scientific vision, IP strategy and business
plan execution pathway of the Company.
CEOCFO: Dr. Henderson, what was your vision when you founded the company and where
are you today in that vision?
Dr. Henderson: The vision was based on an observation
made when I was introduced to an Atomic Force Microscope (AFM). The vision derived from
the ability of using an (AFM) to manipulate molecules and surfaces. To a molecular
biologist, like me, the direct interaction with the molecular level was a phenomenal
capability. My students and I realized that there was a lot of opportunity represented by
the AFM, especially on the life science/molecular molecular side of the world because
people were not using this type of instrumentation for biology. That revelation led to the
founding of the company, development of some intellectual property and a long, often
circuitous, path that we have continued to follow faithfully.
CEOCFO: What is the main
focus today and the main products?
Dr. Henderson: We have been selling products for over
ten years into the Atomic Force Microscopy (AFM) community; a variety of support products.
During that time, we developed our own instrumentation to complement the AFM by
facilitating modification of surfaces at an ultra-precise spatial scale and that product
line is now represented by the NanoArrayer.
CEOCFO: What is the
application for your NanoArrayer?
Dr. Henderson: The NanoArrayer is a printing
machine or a surface modifying machine that allows one to put molecules and materials onto
silicon chips or other surfaces, with extremely high precision to provide a pathway for
building ultra miniaturized devices and bioanalytical tests. These devices and tests are
consistent with the future vision of medicine and diagnostics. With these tools in hand it
will not be long before a patient can visit their physician who will take a drop, rather
than milliliters, of blood, put it on a chip and then provide you with critical
information about your current health as well as your predisposition to various
conditions. In many cases tests that are currently quite invasive like tissue or organ
biopsies and that only provide information on only one specific problem, will become
obsolete. The industry is rapidly developing biomarkers, most often proteins that report
on the state of ones health. When you go into the doctor nowadays, they may take ten
milliliters of blood and do a few tests on a slide or in a lab setting. However, the
future vision, which is not that far in the away, pending a lot of regulatory approval, is
that you can reduce the amount of material needed and vastly increase the amount of
information garnered from that test.
CEOCFO: You have many
patented processes and intellectual property, will you give us a sense of the industry
itself and where BioForce is in the industry?
Dr. Henderson: There tend to be three types of
companies working in the Nanotechnology space; one of those types is a company that
already does something that has a nanotechnological component. For example, latex paint
may contain latex particles that are nanoscale, so a company that makes latex paint really
is not a nanotechnology company, but they may rebrand themselves or their products as
nano, to take advantage of the interest in nano. There are companies that
acquire huge amounts of intellectual property in immature technologies and try to create
the value based on the potential of all that intellectual property. I view those companies
more as investment vehicles than actual bona fide companies in the sense that they may
make money for investors in the short-term, but it is unlikely that they are going to be
the founding companies of the industry. The third type of company or business venture in
this space, and this is what we are trying to do, are companies who develop a smaller but
more realistic or practical IP portfolio in the near-term and try to produce products that
generate revenues now. At the same time these companies continue to build into that IP
portfolio, by adding technologies that are not that far out, but a step ahead of where we
are now. I believe the nanotechnology revolution is going to last for 200 years, much like
the industrial revolution. The nanotech revolution is just in its infancy. The companies
that are going to be the founding companies are the ones that are going to be the analogue
in the industrial revolution of the guys who made metal extractors and ball bearing and
other practical and essential elements of the industry. We are not going to see
nanobots that cure cancer for a hundred years, if ever, but to get to the
point where those fantastic ideas are even testable requires is many incremental
CEOCFO: You recently
received what you call a key patent, will you tell us about that?
Dr. Henderson: The patent we just received was for the
NanoArrayer instrument itself. The instrument, that we are selling now, is an
enabling tool that will allow people to take the next step in development in terms of
nanotechnological miniaturized devices.
CEOCFO: Who is buying
Dr. Henderson: The first wave of customers so far has
been academic and industrial research laboratories. We anticipate placing and selling our
machines in academic and industrial research labs for the next twelve to eighteen months.
Generally, with the new and enabling technology like ours there is a fairly definable
window of time during which people take that technology, do new and exciting things that
creates a buzz and begins a snowball effect, which ultimately ends up creating a market in
the pharmaceutical, diagnostics or other large industries.
CEOCFO: Is there much
competition for you?
Dr. Henderson: There are competing technologies and
there will be an increasing number of competing technologies as people develop uses for
this capability. In the old days, there were a couple of companies making ball bearings
but nobody had cars yet and there was no compelling reason to compete. As soon as someone
developed the wheel and Henry Ford started cranking out the Model-T, the world suddenly
needed lots and lots of ball bearings and there were many more manufacturers. Very few
techniques can do what we do now with the NanoArrayer. But we are sure that there will be
competing technologies, which is why we have been diligent trying to protect the approach
that we have using the patented process.
CEOCFO: Will you tell us
about the financial picture of the company?
Dr. Henderson: It has been a rollercoaster over the
last ten years. We started out with funding derived primarily from federal grants. About
six years ago began taking investor money in a seed format. With one exception, we never
really sought a large amount of institutional money. The one exception is Societe General
Asset Management Group in France. They have helped us out through some tough times and
have been supportive. Most recently, we raised some money through a private placement that
was tethered to our reverse merger, which made us a public entity. Now that we are public,
we have a lot more reporting obligation and we are completely transparent to the public
with regard to our SEC filings. The upside is that we have opportunities to raise
money through public stock transactions or broker transactions.
CEOCFO: Are your
potential customers looking for a system like yours or is there a large missionary
component to your sales?
Dr. Henderson: We have to really sell it; we started a
sales/data acquisition program and acquired the names of 3500 interested parties. This was
done through presence at a lot of tradeshows and promotion on our side. The need for this
proactive approach was anticipate, as nobody had ever seen this machine before. In fact,
often when potential users see it, they say you cant do that, We say
but it is doing it, but they say, No, no you cant do that.
There is sort of an activation energy barrier that is almost a disbelief that has to be
overcome. Then, you see a light in their eyes, and that is what we are looking for. We
love it when we hear a customer say, I can now do something I have always wanted to
do but until the BioForce technology was available, I was unable to do it. I think
the awareness is going to change in the next twelve to eighteen months as more external
parties validate the technology.
CEOCFO: Do you customize
your products or is it a one-size fits all?
Dr. Henderson: We are half way between both of those
situations. We have a standardized production model. We are capable of customizing it for
a compelling reason, but we do not want to get into the entrepreneurial vacuum of
customizing every single one for each customer because then we end up not being able to
make any money. It costs you more to do the custom work.
CEOCFO: Where does the
price fit into how quickly people will accept it?
Dr. Henderson: The list price of the machine in the US
is $125,000. From the business perspective, we do not want to run this company
spending other peoples money forever. The sooner we can break-even and start running
in the black, the better. We have to create some sort of profit margin with respect to how
much it costs us to build the machine, which is not inexpensive, and what we can
reasonably charge as a sales price. That said, our machine is priced on the low end for
instruments of this nature and nobody has balked too much at the price, however we keep in
mind that for a researcher to get $125,000 dollars generally requires that they write some
sort of grant application that includes an instrument purchase of that magnitude. This
creates a sales cycle of 9 to 12 months. To mitigate this effect to some degree we have
discount and leasing programs to allow people to access this instrumentation quickly and
start using it, which is more important to us than generating a lot of revenues this
CEOCFO: Is your
management team in-place as you go forward?
Dr. Henderson: We are doing well with the management
team. We have an outstanding COO, by the name of Kerry Frey; he has many years experience
at large corporations and start-ups. We brought him on to build up the business side of
the business: negotiations, operations and sales and marketing. He is doing a great job.
We just hired a very top-tier sales person and that side of the business is where we were
weakest and where we are putting a lot of our energy. We are also putting some of our
energy into corporate management in particular with regard to securities management
because now that we are a public company again we have amplified fiduciary
responsibilities. We do not have a CFO, but we do have a system in place involving two
external accountants/auditors that, for the time being, are cost-effective and carry out
the role of CFO. However, I anticipate that we would like to have our own senior level
financial manager internally in the not too distant future.
CEOCFO: Do you see joint
Dr. Henderson: Definitely! Now that we have the
NanoArrayer on the market and we are starting to make a few sales, we can begin to exploit
the efforts of our internal R&D program and commercialize specific aspects of our
technology. To manifest those applications as rapidly and effectively as possible, we are
going to have to partner with people in the drug-discovery and diagnostic
CEOCFO: In closing, why
should potential investors be interested and what should they realize about the company
that does not jump off the page at first glance?
Dr. Henderson: Because we are an island unto ourselves,
being a high technology Company in Iowa, nothing about us jumps off the page. We have been
off the radar and living in the VC flyby zone for a decade! I did not make
that up; people coined that phrase a long time ago. One point that interested parties
should recognize is that we have such a strong belief in the value of practical
nanotechnology we are trade marking the phrase. We believe that nanotechnology is
real and that it will change the way we live. Many people seem to be coming to terms with
the excessive hype surrounding nanotech, but that hype still confuses some and creates an
environment in which some people have taken advantage of that confusion for their own
gain, and I think that has hurt the industry. We are trying to be very transparent about
what our technology can do and what it cannot do, what we anticipate doing in the future
and at what kind of time frame we are looking. In the long run, assuming we can stay on
track and achieve our projected break-even point, we are well positioned to be one of a
few founding companies in this industry. Moreover, by feeding in new technologies at the
appropriate times, we should be able to maintain that stature. I often think in terms of
models provided by long-lived Japanese and European companies that, after a hundred or
more years of evolution, end up manufacturing chemicals, making electronic devices and
also operating a food production component. I would like this company to be one of the
founding fathers of nanotechnology, and how we diversify over time will be both exciting
and somewhat unpredictable. We could end up being the primary producer of home health
products, proteins and petroleum!
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