NEW YORK, June 16, 2003 (PRIMEZONE) -- The following investment opinion is being issued by Global Partners Securities Inc. regarding Altair Nanotechnologies, Inc. (Nasdaq:ALTI):
Current Price: $1.12 52-Week High/Low: $1.30 - $0.30 Float: 24.2M Risk: High Rating: Speculative
Recommendation: Accumulate
We are initiating coverage of Altair Nanotechnologies, Inc. with a 12-month price target of $2.50 to $3.00. It is our belief that the stock is significantly undervalued as the price does not reflect the company's significant opportunities within the pharmaceutical industry or the growing market potential of nanotechnology, the science of the small. While the risks are high, this is an extremely interesting company as Altair, one of a handful of publicly traded pure nanotechnology companies in the U.S. and Europe, holds the leading patented process to cost-effectively produce commercial quantities of a wide variety of nanomaterials.
The Technology
Nanotechnology gets it name from the measurement called a nanometer, which is one-billionth of a meter. Altair derives its nanomaterials from inorganic elements utilizing its patented and patent-pending technologies to produce metal oxides, metal titanates and a combination of crystals ranging from 10 to 1,000 nanometers. These nanomaterials target numerous applications including pharmaceuticals, coatings, ceramic thermal sprays, energy (hydrogen), advanced battery and fuel cell) and homeland security. According to MIT Technology Review, nanotechnology is the most significant emerging materials technology for this century.
According to a NanoBusiness Alliance report published last year, venture capitalists are getting on the nanotechnology bandwagon as direct venture investments were predicted to reach $1 billion in 2002 and $1.2 billion in 2003. In May 2003, the U.S. House of Representatives passed the Science Committee legislation which authorizes a national nanotechnology research and development program, along with $2.36 billion over a three year period for funding the program. Altair has retained DykemaGossett, PLLC, a Washington, D.C. law firm, to aggressively seek grant monies. The firm recently assisted the company, together with Western Michigan University, with obtaining a $1 million grant to develop titanium dioxide nanoparticle sensors for the detection of chemical and biological weapons.
The Company
Three years ago, Altair Nanotechnologies repositioned itself to focus on the emerging nanotechnology sector. Altair believes that its patented and patent-pending processes offer a number of technological advantages over competing nanoparticle production technologies by enabling the economical production of commercial quantities of nanomaterials with precise control of particle size, shape, structure and chemical composition to a degree not attainable by other companies.
While there are myriad uses for nanomaterials - from self-cleaning tiles or glass, cosmetics, to futuristic microscopic devices that will be designed to enter our bodies and perform surgery, Altair has focused on markets that can benefit today and provide enormous potential in the very near future.
Target Markets
Pharmaceuticals
Altair's nanomaterials have been used in the development of a new drug candidate, RenaZorb(tm). RenaZorb is a phosphate binder for the removal of phosphate in kidney dialysis patients. The market for phosphate binders is currently $400 to $500 million and could expand to over $1 billion with a cost-effective drug presenting improved dosing and patient compliance. Altair has engaged RBC Capital Markets as its exclusive financial advisor to assist the company in identifying and evaluating companies within the pharmaceutical industry that have an interest in developing RenaZorb with a development license. An initial development license should provide revenues ranging from $4 to $15 million.
The company has made significant progress with RenaZorb and has received positive results from both in vitro laboratory testing and in vivo testing in rats and dogs by two pharmaceutical companies. RenaZorb has attracted a number of pharmaceutical companies and they are in various stages of conducting due diligence on the company, the drug candidate and the test results. There is only one FDA approved competing product in the market, Renagel(tm) from Genzyme. Shire Pharmaceuticals has received an approvable letter from the FDA for Fosrenol(tm).
Pigment
Altair recently received a patent pertaining to its process for producing high-grade pigment, a $9 billion business. Altair has entered into an agreement with an agent with offices in the People's Republic of China (PRC) to represent its process, called Altair Hydrochloride Pigment Process (AHPP), to the businesses in the PRC. The PRC has a world class reserve of titanium ore and favorable labor costs. Several companies, including the Government Engineering Agency overseeing pigment development in China, have expressed interest in licensing the process, but the SARS epidemic has slowed down the negotiations. Currently, the PRC will not approve new pigment plants using the old sulfate process for environmental reasons; therefore we believe that Altair's process will be favorably looked upon.
Energy
Altair just announced a teaming agreement with UK-based Hydrogen Solar Production. The companies plan to form a new Nevada company to collaborate in the development and commercialization of a solar hydrogen generator using the Tandem Cell(tm) as the basis for their development. The goal of the development team is to generate hydrogen power from light and water. This process would eliminate the environmental and economic problems associated with conventional hydrocarbon fuels. The program will be funded by private and government grants. Altair's nanomaterials have already been used in the manufacturing of solid oxide fuel cells. The company is contacting organizations such as the National Laboratories and the Solid State Energy Conversion Alliance that require additional technology resources to meet their program objectives.
In addition to Altair's fuel cell development program, the company has other programs that target the energy sector. It has developed nanomaterials that have demonstrated significantly rapid charging and discharging rates. This is a huge benefit for advanced battery development within the automotive industry, as well as other applications using hybrid or fuel cell systems. The company is currently in discussions pertaining to the funding of its nano-based battery materials with two separate groups that have already demonstrated the use of Altair's materials in thin film batteries and super capacitors.
Homeland Security
Altair and Western Michigan University (WMU) received a $1 million DOE grant to fund their joint development of nanosensors for detecting chemical and biological weapons and an agent for the breakdown and concentration of radioactive nuclides. The nanosensors should have significant use in national defense applications and homeland security programs, and the remediation agent addresses the on-site reduction of radioactive waste. WMU and Altair plan to obtain additional grants worth $1 million or more per year.
Risks
- While we believe the company should break even by year-end, the company may have to go back to the capital markets to fund its growth plan.
- Altair depends on key management and technical employees.
- Possible de-listing by NASDAQ due to stock price. The company currently has 90 days to meet the minimum bid rule. The stock is currently trading over $1.00
Note: All expenses to visit the company were paid by ALTI.
Peter Cardillo Director of Research June 15, 2003 The information contained herein is based on sources that we believe reliable, but its accuracy is not guaranteed. Westfalia Investments, Inc. or its officers, directors or employees may at times have a position in the securities described herein and may sell or buy them to and from customers. COPYRIGHT 1994 by: Westfalia Investments, Inc. presently known as Global Partners Securities, Inc. The views expressed herein accurately reflect the research analyst's personal views. The research analyst will receive compensation in the form of commission from transactions executed in the security referenced for those accounts maintained by the firm. This compensation may influence the recommendation in the research report. There may be greater risks involved in securities recommended and should be discussed with a financial professional.