Nanoco has signed a framework agreement with STMicroelectronics (ST). This covers both development work and commercial supply of nano-materials for use in multiple infra-red sensing applications over a five-year period. While the agreement underpins the operational cash runway, which was recently extended to Q221, there is still significant uncertainty regarding future revenues, so our estimates remain under review.
Nanoco and ST have been working together for around two years, originally as part of a supply chain for a major US customer, with Nanoco manufacturing nanomaterials thatST used to improve the sensitivity of its silicon infrared sensors. Now the US customer has withdrawn from the scene, at least for the moment, and the exclusivity agreement with them has lapsed, ST is able to offer these enhanced, proven, near infrared sensors across its extensive, global customer base. The agreement covers the supply of small-scale volumes of nanomaterials for this proven application. It also covers a development project extending from April to December 2020 on a new generation of nanomaterials for potential use in other infrared sensing applications.
The agreement also commits ST to taking a specified minimum volume of nanomaterials from Nanoco if the enhanced sensors gain market traction and commercial volumes are required. These would be produced at the existing facility in Runcorn. Given the time taken to qualify devices,we expect this to be late 2021 at the earliest.
Although this agreement is extremely good news for Nanoco, it will need to progress other projects with potential customers to reach Q221 without restructuring. Management has yet to finalise third-party funding for the patent infringement lawsuit against Samsung and continues to seek medium-term funding to increase its options.