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Got Milk? Spider Silk!

04/16/2004 12:00 am EST

Focus:

Neil George

Editor, Profitable Investing

It’s hard to imagine the words "goat-milk-grown spider silk" in reference to a stock recommendation, but in Neil George’s Personal Finance , this phrase is indeed coincident with a low-priced and extremely speculative tech-stock idea, from contributing editor Damon Carroll.

"Materials engineering involves creating or transforming materials that have applications for the realms of medicine, industry, and military, to name only a few. From strengthening fibers used in medical sutures to developing new tungsten alloys for heavy industry or titanium composites for next-generation golf clubs, material scientists are keen on improving the very building blocks of our workaday lives. Some innovations seem to have been pulled straight from the pages of science-fiction books, but make for very interesting study and could prove to be lucrative investments. Here’s one we think has some legs, so to speak.

"Quebec-based Nexia Biotechnologies (CA:NXB 
Toronto) is one of the most fascinating stories in materials science, and a speculative investment bet that spiders hold the key to the future of fiber technology. Spider silk is the strongest fiber in nature—five times stronger than steel by weight, and its marvelous tensile strength and elasticity were well-known even in ancient times. The Greeks used spider web to suture wounds and aboriginal peoples used it to craft nets, bags and fishing lines. Scientists believe that it has modern-day applications as well, and have labored for decades to reproduce it in the laboratory. The US Army, always the vanguard of high-technology research, teamed up with DuPont in the 80s to chemically produce a spider silk equivalent in its quest for high-performance anti-ballistic fibers. But DuPont underestimated its molecular complexity and was unable to create any significant quantities of silk. Today, the Pentagon and the Canadian government have enlisted Nexia to pick up where DuPont left off, and the company is on its way to bringing products to market.

"It’s been difficult to exploit spider silk’s amazing properties, acquired only after 400 million years of evolution. Unlike silkworms, spiders can’t be farmed. They’re territorial cannibals and will devour each other if placed in close proximity. This makes it nearly impossible to produce large quantities of the silk—a cold fact for aspiring spider-silk moguls. However, Nexia has created a novel, four-legged solution to this eight-legged paradox, turning to an old familiar farm hand for help: the goat. Combining molecular genetics with goat husbandry, Nexia has succeeded in reproducing the characteristic bioactive proteins of spider silk in the milk of transgenic goats. Scientists have, in effect, microinjected the spider’s silk genes into goats, and have used a 'milk-specific' promoter to direct the expression of those genes only in the goats’ mammary glands during lactation. The milk is then collected in milking parlors and treated to separate the silk protein from the milk. After further processing, the end product is a reasonable facsimile of actual spider’s silk, with the look and feel of silkworm silk, but dozens of times stronger, tougher, and more flexible.

"Nexia has managed to spin silk strands as thin as 12 nanometers in diameter, and targets its spider silk BioSteel product for use in the medical field as fine, flexible micro sutures for small wounds—for example, in small cuts to the cornea—or as replacement ligaments. The material is fully bio-compatible—in this regard no different from traditional silk—but such medical applications await FDA approval. Meanwhile, the military is more interested in Nexia’s plans to make BioSteel body armor—and both the Canadian government and the Pentagon have sponsored the research. It’s too early to gauge its chances for success, but Nexia’s transgenic platform for creating new materials is one of the more interesting and potentially revolutionary businesses around. Nexia is a speculative buy below $1.25 Canadian." (Editor's Note: I'd re-emphasize the very speculative nature of this low-priced stock and urge readers to adhere to the advisor's buy limit.)

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