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27 January, 2010 - 16:02 By Staff Reporter

TeraView CEO, Dr Don Arnone

TeraView CEO, Dr Don Arnone

Backgrounder: Headquartered in Cambridge, 3D imaging and spectroscopy specialist, TeraView has developed technology to generate, detect and manipulate Terahertz light. TeraView provides a range of solutions applicable to drug discovery and formulation; medical and dental diagnostics; security screening, explosives detection and contraband detection. The list of applications continues to grow as new applications, such as in the food, agriculture, cosmetics, paints and coatings, and semiconductor markets are established.

TeraView was spun-out of Toshiba Research Europe in April 2001 by its co-founders, Sir Michael Pepper (CSO) and Dr Don Arnone (CEO), to exploit the intellectual property and expertise developed in sourcing and detecting terahertz radiation, using innovative semiconductor technologies.

Leading industry proponents of the technology sit on the advisory board and TeraView maintains close links with the Cavendish Laboratory at the University of Cambridge, where modern terahertz technology was pioneered in conjunction with the team at TeraView.

1. Where does TeraView stand in efforts to commercialise Terahertz? The company has established repeat business in three main sectors: 1) analytical and pharmaceutical market where we supply systems and solutions for characterising new types of solid state materials (composites, high frequency materials, nanomaterials etc.) as well as to help the pharma industry develop and maintain the quality of solid drugs forms 2) semiconductor test and quality assurance, where we supply system-based solutions for the test and quality control of advanced integrated circuits used in mobile phones, PCs and video games and 3) homeland security and defence, where our unique ability to record the ‘Terahertz fingerprints’ of explosives through clothing without resorting to detailed images of human anatomy has the potential to address outstanding deficiencies and privacy concerns around airport security.

These three markets use the same basic property of Terahertz light to safely penetrate through materials, and inspect and detect faults or threats. These are the sectors where the technology is starting to take hold and we are generating repeat business with our customers. 2. How have you coped with challenges with recession? TeraView provides capital equipment as part of its solutions to some of our customers, and all businesses have been hit in this area by the recession. We have responded by vigorously selling across the range of sectors noted above, some of which have been less hard hit than others. The geographic diversity in our markets – including sales in Asia, the US as well as Europe – has also been important in seeking to maintain the level of business. The company made the decisions necessary to control its cost base, and we are now expanding at the appropriate rate to take advantage of market growth. 3. What excites you most about Terahertz technology and TeraView? We have worked hard to understand what unique value our technology can bring to customers as our products and business have matured, and are now at a stage where we are providing real solutions to customer needs, and doing this across a range of sectors. One example is the security area – several years ago, Terahertz was a new technology with some promise, today we have contracts with US defence suppliers who are selling equipment to the US Department of Homeland Security to detect airborne chemical agents, and we have the potential to help detect explosives in a similar vein.

We are also helping the semiconductor and pharmaceutical industries design and maintain the quality of products, and this know-how ends up in the mobile phones that you buy or in some cases in the drugs that you might take to keep you healthy. We increasingly make a real if hidden contribution to such products, and have the potential to add a lot more value. This is one of the areas that excites us most about Terahertz, and TeraView has pioneered it and is selling it. 4. Has a killer application been identified yet?The applications that have been cited above are those where Terahertz can provide valuable and unique information for customers, and which represent attractive markets as well as benefits for the safety and security of society as a whole.

We have early stage commercial validation of these markets, and are now focusing on optimising our solutions and growing the business in these areas. This will validate these markets as the key ones for Terahertz products, and this is our focus. There is huge market potential beyond, but focus is key at this point. 5. What are your biggest challenges? A key challenge is that technology adoption cycles – particularly for a powerful technology like Terahertz – are long.  As an imaging and diagnostic modality, Terahertz is around 10 years old, and hence considerably younger than other analogous technologies like X-Ray, MRI or ultrasound that people might encounter in every day life, which have been around for several decades.

The challenge therefore is to focus hard on the best opportunities, but recognise that markets have adoption cycles that can only be influenced to a certain degree. The advantage of TeraView is that it has worked through much of this process and is poised to use its strong commercial relationships and IP position to exploit these opportunities, but this has take some time. Another key challenge in a new business is routes to market, and here partnerships with organisations that have established sales and marketing as well as support infrastructure is key.

Finally, investment is an important challenge – getting products from a basic validation phase to complete, field deployable systems requires resources; the UK government has a role to play here alongside commercial and financial funding sources, particularly in areas such as security which are key to public safety. 6. What is your exit strategy for investors? Our strategy is focused upon preparing the different sectors of our business for exit, and using relationships and partnerships as tools to nurture and accelerate this process, as well as to build the business to maximise value for shareholders. Our investors have been very supportive of the company, and this remains a key plank of our strategy going forward. 7. What are the challenges in commercialising a disruptive technology? Disruptive technologies in some sectors can face the barriers of customer scepticism and resistance from incumbents already selling into these sectors. The key to overcoming customer scepticism is to work closely with customers to validate the technology and to develop tools and products for their needs; this is of course just good sense in terms of product development, but it also means that customers have some ‘ownership’ of the product that you are introducing.

It is also key to ensure that the views of these customers (both the individuals themselves and their companies) carry weight in the market place. Working in partnerships with incumbents is also important in order to provide complementary solutions alongside their existing products to fill capability gaps. 8. How international is your business? Right from the start of TeraView, we had an international focus, with sales being driven by Asia and the US as much as Europe. We founded the company on the basis that it would be an international business from day one, and that has continued to be the case. We are known as much in parts of Asia and the US as we are in Europe, which is a reflection of this strong international presence. 9. What are the implications of your international profile with regard to your Cambridge headquarters? As our business expands overseas, we are considering the best route for sales, marketing and support abroad, balancing these against associated costs. However, our Cambridge headquarters remains our hub for both new product innovations as well as a usefully located base for supporting our customers globally and we foresee this continuing for some time, with sales more devolved to the different geographies as the business expands through distributors and in some cases direct channels. 10. What are your key goals for 2010? Put simply, we want to validate the current growth and high level of interest we see in different markets, turning these into solid sales. We want to couple this with our success to date with partnerships in different sectors to aid product development and to serve as routes to market.

These are both key elements to providing better products and service to our customers, supporting our world-class staff and ultimately building value for our shareholders over the next 12 months.

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