Whenever we look at Altair Nanotechnologies (Nasdaq: ALTI ) we are reminded of the exasperated nuns in The Sound of Music as they all sing of the untamable Julie Andrews, "How do we solve a problem like Maria?"
The company has had so many re-inventions, re-namings, re-organizations -- with each one carrying management's promise that this is the new dawn -- that after this latest restructuring we are reduced to re-marking, 'oh re-ally!'
We have been frustrated at management's lack of focus and its inability to turn projects into commercial reality, so much so that I (Carl here) have successfully shorted Altair in the past.
Things began to change with the retirement of the CEO in May 2004 and his replacement by Dr. Alan Gotcher, first as a consultant and then as permanent CEO in August of that year. He has further consolidated his position by assuming the post of president after the recently announced termination of the previous incumbent.
The company is now split into two divisions, Life Sciences and Performance Materials, based upon what Altair claims is a "unique, patented, scaleable technology platform that provides the ability to economically manufacture a wide variety of high-quality nanomaterials."
Further to that, it is researching commercial uses for those nanoscale materials, mainly titanium dioxides and lanthanum and looking for partners to market these discoveries. To date, it has been relying upon government grants and at the end of 2004, it recorded $1.2 million in revenues and a net loss of $7 million. It survived through the year by exercising some warrants and raising $11 million in cash.
Breakthroughs for both sides
Since the turn of the year, both divisions have reported some stunning breakthroughs for the future of the company. The first was signing a commercial partner for its lead drug candidate Renazorb. In January, it announced that a licensing agreement had been signed with California-based Spectrum Pharmaceuticals (Nasdaq: SPPI ) , giving Spectrum the exclusive worldwide rights to develop, market, and sell RenaZorb for human therapeutic and diagnostic applications.
That was quickly followed by an announcement from the materials division of a performance breakthrough in lithium-ion battery technology, increasing the number of recharge and discharge cycles from a few hundred to many thousand. Altair further declared it has confidentiality agreements in place with major battery manufacturers, but could not name them yet.
It is interesting to note that in a previous position with office products manufacturer Avery Dennison (NYSE: AVY ) , Gotcher led the teams that created and commercialized the Duracell On-Cell tester battery label. Duracell is owned by Gillette (NYSE: G ) and would certainly qualify as a "major battery manufacturer," but whether this is the company Altair is alluding to is only our speculation at this time.
Finally, to maintain this momentum, Altair announced a placement to institutional investors of 5 million shares at a price of $4.05, raising a much-needed $20 million cash for the company.
This is a stunning turnaround in such a short space of time. If the animal trials currently being conducted by Spectrum validate the trials already done by Altair and lead to further milestone payments, and if it can sign agreements with the battery manufacturers, then Altair is poised for extraordinary growth. Right now, we are not buying, holding, or shorting it, but we are watching it closely.
The battery technology is a disruptive one that means Rules are being broken. That's what gives us reason to consider it as a Rule Breaker.
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Share your views with Carl (TMFBreakerCarl) and John (TMFBreakerJohn) on the Nanotechnology discussion board.