A New Wave Of Detectives

THE COLLAPSE of the fiber-optics business in 2001 was a near catastrophe for many small companies whose livelihood was developing equipment that guides light waves carrying digital and voice signals. But some have successfully shifted to incorporating their optical sensors into a new wave of rugged and portable scientific instruments.

In the past five years, a number of small companies have popped up that are using fiber optics and tunable light sources to build a generation of nonintrusive spectroscopic instruments, points out Terry McMahon, an industrial instrument consultant and principal in Leonia, N.J.-based market-research publisher PAI Partners. These new firms have made possible instruments that once were the stuff of scientific dreams, everything from gas purity analyzers mounted on remote pipelines to handheld instruments that can quickly verify the integrity of pharmaceutical ingredients.

Some of these new firms could end up being part of larger instrument industry consolidators, such as Thermo Fisher Scientific or PerkinElmer, that despite their size are not willing to take the risk of developing brand-new technology on their own, McMahon says. They would rather bide their time and buy a company with proven technology.

In the meantime, the small firms get financing from venture capitalists or leverage investments from the Department of Defense and other government funding vehicles such as Small Business Innovation Research awards. They may survive independently, or a larger firm may buy them.

Polychromix, for example, grew out of an $8 million project funded by the Defense Advanced Research Projects Agency to use spectroscopy to detect chemical and biological warfare agents, explains Chief Executive Officer Brian J. Mitchell. The project brought together Sandia National Laboratories, the industrial conglomerate Honeywell, and Massachusetts Institute of Technology. The two lead researchers from MIT and Sandia founded the company and redirected the technology to the optical telecommunications business.

For several years, Polychromix supplied microelectromechanical systems (MEMS) to the fiber-optics business. Used with laser diodes as optical data and telephone switches, MEMS assemblies send billions of photons along optical fibers toward their destination, Mitchell says. The slowdown in the telecommunications market, however, led Polychromix back to the remote-spectroscopy technology on which it was founded in 2001.

The firm now supplies $18,000-$40,000 handheld MEMS-based near-infrared analyzers that can identify plastics and carpet fiber for recycling, verify pharmaceutical raw materials, and flag chemical warfare agents. With 25 people on staff, Polychromix gets backing from investors such as the German electrical equipment maker Siemens and the Central Intelligence Agency's venture fund, In-Q-Tel. Mitchell says Polychromix is one of a number of companies that "morphed from optical telecommunications to scientific instrumentation."

ANOTHER COMPANY with roots in the telecommunications market is SpectraSensors. Spun off from the NASA/California Institute of Technology Jet Propulsion Laboratory in 1999, the firm is run by managers with a background in lasers, according to Sam Miller, a marketing communications specialist at the firm. SpectraSensors has adapted tunable diode laser technology used in the telecommunications industry for near-IR absorption spectroscopy.

Sometimes running on solar power, the firm's instruments can be coupled to natural gas lines in remote locations to detect the presence of moisture that could lead to an explosion, Miller says. Other SpectraSensor analyzers based on the tunable diode laser technology can detect carbon dioxide, hydrogen sulfide, methane, and ammonia in gas streams at refineries, petrochemical facilities, and gas refining plants.

Like Polychromix, SpectraSensors has attracted a number of investors; Japanese securities company Nomura, South San Francisco-based firm Blueprint Ventures, and the investment arm of Chevron all have placed bets on the firm's technology.

Tunable laser diode technology is also at the heart of Axsun Technologies, a company that started out in 1999 as a components supplier to the telecommunications business. Beginning in 2002, the firm diversified its business into near-IR spectroscopic devices to monitor industrial processes including pharmaceutical, petrochemical, food, and semiconductor manufacturing, says William Ahern, Axsun's director of marketing.

Axsun also developed a handheld analyzer that can, for instance, help sort carpet and plastics for recycling. "Diversification was part of our plan to accelerate growth," says Ahern, an electrical engineer with a background in optical communications. "We've outlasted the downturn, and now the telecommunications business is growing again." The firm has venture capital supporters including Prism VentureWorks and Vantage Point Venture Partners. With about 90 employees, Axsun is now profitable and plans to remain a supplier to both the telecommunications and instrumentation markets, Ahern says.

At least one small firm without a telecommunications pedigree quickly took advantage of optical technology when it found an opportunity. Founded in 1969 to supply nondepleting oxygen sensors, Delta F saw an opening in the market for trace moisture analyzers, according to Curt Fauth, the firm's CEO. In the late 1990s, it licensed technology from physical sciences research firm Southwest Sciences to make analyzers based on tunable laser absorption technology.

Delta F's oxygen-sensor technology had made it a big supplier of sensors used to monitor bulk gas purity by semiconductor fabricators and big industrial gas makers such as Praxair and Air Liquide, Fauth says. But the firm realized it could expand and serve the same customer base with moisture-sensing technology derived from the telecommunications business. The transportable devices allow users to continuously monitor and spot-check gas quality along a supply line.

Delta F was started in 1969 by entrepreneur John Gallagher. After he died in 1989, Fauth says, a British firm bought the company and sold it a few years later to private investors. Fauth expects that Delta F, which employs 50 people, will be sold sometime in the future but says the investors have no particular timeframe for monetizing their investment.

HAPPY ON HIS OWN, physicist Ronald Rosemeier, who owns Brimrose Corp. of America, has no plans to sell the electrooptics specialty firm he founded in 1978, says Jolanta I. Soos, chief technology officer. The firm builds tunable laser components for the telecommunications industry, and it has also developed handheld near-IR spectrometers that can, for instance, check whether wine grapes in the field are ready for harvest and index the grape vine's location with a built-in global positioning chip.

Brimrose started out by leveraging government Small Business Innovation Research awards to develop instruments and communication devices for military uses that it then translated into commercial products, says Soos, who like Rosemeier is a physicist trained at Johns Hopkins University. Leveraging the awards, the company developed acousto-optic tunable filter (AOTF) technology that harnesses near-IR and other light sources to create spectroscopic images of biological and medical material, for example.

The firm, which employs 60 people, also makes AOTF-based spectrometers for in-process chemical, pharmaceutical, polymer, and food monitoring. Brimrose, Soos says, is determined to continue on an independent course. It does not have outside financial backers and is looking to expand.

"There are a lot of opportunities for small companies with specialized measurement technology," says McMahon, the consultant. The big guys know how to manufacture, test, and promote scientific instruments. But by piggybacking telecommunications know-how onto spectrometric analysis, some agile small companies that were facing a discomfiting end have managed to survive and even thrive.