CEO Letter - July 23, 2006
As a result of industry consolidations, plant closings and lack of capital spending in the automotive, paper and related industries, we made the decision to concentrate our intellectual property assets, research and new product development attention to the high value-added (and higher margin) applications in the pharmaceutical, healthcare, food and specialty packaging markets. We have found strong interest from these promising markets with selected applications where our technology provides significant value-added benefits compared with conventional sterilization techniques. As a result, we are applying our sterilization technology to new specific markets as well as through strategic alliances that give us a presence and potential in a number of other industries and markets.
While our earlier activities with a pharmaceutical company did not progress to pre-clinical trial work, our work with that customer introduced us to an important application that required the non-thermal, monochromatic germicidal advantages unique to our technology.
Triton and our Customer, the Ophthalmic Division of a large U.S. Company, have successfully researched, developed and demonstrated the non-thermal sterilization of packaged contact lenses, an industry that generates over $5 billion in worldwide annual revenues. This application of Triton's monochromatic Excimer light source has resulted in significant improvement in performance compared with other sterilization methods that have been considered and tested. The results of the preliminary, but extensive, series of tests conducted at our customer's R&D facility using Triton sterilization equipment is preparing us to seek FDA approval for this application. Additional sterilization systems will be shipped to our customer this summer to run and complete these Validation Studies in order to gain approval for the contemplated in-line production conversion to Triton's non-thermal sterilization method. Among the many benefits of this revised production process is that Triton's technology is potentially a cost effective alternative to retort (pressure and steam) sterilization method and allows the Ophthalmic company to consider the use of new preferred materials for contact lenses and its packaging that could not be used with a thermal sterilization process Triton currently has a pending patent specifically applied to the ophthalmic application.
While it has taken more than three years to reach this critical pre-commercialization stage, our work has received attention from other markets requiring similar performance advantages in non-thermal disinfection and sterilization in the food and beverage industries. These markets will include extended shelf life food packaging as well as the processing of nutrient infant food products, juice and dairy products.
In support of these applications, Triton has entered into an agreement with a privately owned company that is focused on the manufacture of a stainless steel gravity bottle-filling and capping system that meets the highest sanitary and hygienic standards. Todays new generation of food and beverage products require filling standards that will assure consumers the highest level of freshness, flavor and quality these were the requirements we responded to with our Excimer light-source sterilization technology. The Agreement we negotiated is based on another Triton pending patent that will enable a more efficient means of container sterilization, at high speed, and allow the use of materials that are more desirable (freshness, flavor and quality) related to the non-thermal sterilization protocol enabled by Triton's technology. It is also our intention, in coordination with and under the leadership of our partners, to establish a pilot plant operation in Illinois. This pilot plant will enable potential customers to rent time at the facility for feasibility and verification of our sterilization process for their products and product packaging.
In February of this year, our technology was presented in an invited paper (Solving the PET Sterilization Puzzle with High Spectral Intensity Excimer Technology) at the Aseptipak conference in Atlanta (Global Forum on Aseptic Processing, Filling and Packaging). The food industry inquiries that we have received after that presentation were further influenced by new concerns expressed by the Industry about chemical treatment methods (using Hydrogen Peroxide and Paracetic Acid). We believe that this has opened some new product sterilization and packaging opportunities for us to explore for juice processing and other beverage and bottle filling applications.
For infant nutritional products, Triton has conducted successful experiments with a Global Manufacturer of infant formulas to verify the efficacy of our germicidal inactivation of a thermal resistant microorganism (Enterobacter Sakazaki) while retaining the nutritional, sensory and other performance benefits of the product. While this is an early stage activity, our next step is to set up pilot plant activity before the end of the calendar year.
In the Pharmaceutical sector, one of our strategic partners is evaluating the use of our monochromatic lamps in Water for Injection (WFI) distribution systems to maintain system sterility. WFI is produced by distillation/condensation and fed into a storage tank from which it is continuously recirculated around the plant. This is the lifeline of any biopharm plant. The system is maintained at 185o F to prevent any bacterial growth. At the use points it is usually cooled for operator safety. The two main benefits of Triton's technology would be energy savings and elimination/reduction of a low level corrosion known as "rouge" that occurs in these "hot" systems over time.
A second application in the Bio-Pharmaceutical Industry is the use of our monochromatic germicidal lamps to sterilize the growth media that is fed into bioreactors. The two common methods are heat sterilization and sterile filtration. Sterile filtration is very costly as the filters are disposed of after each use and heat sterilization is a large energy consumer.
To better penetrate the pharmaceutical products market, we have been working with a sanitary process components company that has extensive marketing and manufacturing experience with custom modular process systems in the pharmaceutical, food, beverage, personal care products and other high purity industries. In addition to the application specific germicidal delivery of monochromatic light for food and pharmaceutical applications, the systems packaging requires specialized sanitary standards technology and field service that our partner provides.
In June of this year, our monochromatic sterilization technology was presented in an invited paper at the Sterilization and Aseptic processing for the 21st Century conference in DC. The paper was presented in the "Emerging Sterilization Methods" agenda.
We prefer partnering with specialists in each field of use along with joint customer development to help us reach commercial sales earlier than operating independently. In the post 9-11 period, we have made progress both working directly with prospective customers on their application needs as well as with partners who bring technical expertise, marketing and sales capabilities to our business objectives.
Dr. Jim Stangroom, a co-inventor on our base opaque fluid treatment patent, and a contributor to our chemistry, fluid dynamics and process algorithm development, manages our liaison and technology activities in Sheffield UK. Tony McNulty joined Triton operations in 2002 and has provided senior engineering and technology project management for systems, electrical and Radio Frequency/High Voltage (RF/HV) engineering.
We continue to welcome opportunities for the treatment and control of opaque industrial fluids and prefer those applications that recognize the importance of minimizing and/or eliminating the use of chemical biocides that impact operating costs and worker health.
Triton's investment in application specific technology that provides benefits through the use of non-chemical and non-thermal pathogen inactivation for food safety, medical research, materials processing and improved enviromental working conditions have critical milestones set for 2006.
Barry Ressler Chairman