Nanoco Group plc (LON:NANO), a world leader in the development and manufacture of cadmium-free quantum dots and nano-materials, confirms that it has signed a second agreement with its undisclosed US listed partner (the “Partner”), further to the Material Development and Supply Agreement between the two companies announced on 8 February 2018. The terms of the new agreement include additional success based milestone payments and development-based funding.
Under this expanded agreement, and in parallel with all current commitments to the Partner, Nanoco will develop next generation nano-materials for applications in future technologies including advanced electronic devices. This development activity will begin immediately and will be conducted at Nanoco’s Manchester, UK R&D facility.
As previously disclosed, the Partner is funding the capital expenditure required to expand the manufacturing capabilities of Nanoco’s existing Runcorn facility in order to supply the Partner with commercial volumes of product. This process is already underway, with an agreement reached in March to take over 10,000 sq. ft. of additional space in Runcorn to build a state-of-the-art production facility in order to commence commercial supply in January 2019. All timelines for the agreement announced on 8 February remain on schedule.
Michael Edelman, Chief Executive of Nanoco Group Plc, said: “We are extremely pleased to announce today’s development agreement with our new US listed Partner which further demonstrates the significant momentum we are seeing across our business and the potential applications of our technology across multiple end markets.
“As a business, we are proud to be innovators in the development of nano-materials, with extensive intellectual property and specialist knowledge that gives us a clear competitive lead in this technology. Under this new agreement we will be developing an exciting new generation of nano-materials for use in future technologies.”
Edison Research note:
Nanoco’s extension of its partnership with a major listed US corporation indicates the relationship could be both significant and long lasting. Visibility remains limited, but with revenue opportunities across three applications, sensors, display and lighting, we expect to see a meaningful inflection in financial performance from here. Nanoco’s credentials as a
platform technology company are also strengthened.
The agreement is with the same large listed US corporation with which the company announced a partnership in February. That partnership is for the scale up and mass production of infrared nanomaterials for sensing/sensor applications with volume production is expected to start in Q119. This agreement is for the research and development of nanomaterials for potential use in the same or similar applications.
Nanoco was selected by this partner through a competitive process against a number of much larger players. Management cites the company’s IP (c 600 patents or patent applications), world-leading nanomaterials R&D expertise and ability to manufacture at scale as factors in the decision. The doubling of manufacturing capacity at Nanco’s Runcorn site to support the first agreement indicates the potential from this partnership is significant. This follow-on R&D agreement suggests the partnership has the potential to be a lasting one. We still lack the visibility to forecast beyond FY18, but the milestone payments from this deal should provide further revenue and balance sheet support in the near term. With a maturing portfolio of volume shipment opportunities across sensors, display and horticultural lighting, we expect to see a meaningful inflection in financial performance from here.
