Alexium on familiar pathway to market

Momentum is building for Alexium, after the award-winning tech developer initially struggled to find its feet.

Inventing a smart technology is sometimes the easy bit; developing a market and making profits from the technology can be a lot harder, which is why locally listed Alexium International Group stands out from its tech rivals.

At the heart of Alexium, and the reason for its 534 per cent total shareholder return over the past 12 months, is a chemical that won acclaim in the US six years ago, but then failed to achieve commercial recognition.

Essentially, the Alexium technology is a process to treat the surface of a variety of materials, including textiles, with an environmentally friendly, cost-effective finish that is water repellent and flame retardant.

Alexium’s chairman and prominent local technology investor, Gavin Rezos, said that after Alexium won the award for world’s best technology in 2009, it proved difficult to attract venture capital funding for further product development in the wake of the GFC.

An added problem was that there were so many potential uses for what is described as non-halogen, bromine-free chemical that the tricky question became where to start developing markets.

Mr Rezos remembers getting a call from one of the US founders of Alexium, who asked how he could grow the business.

“I suggested bringing it to Australia, and then taking it back to the US when it was ready,” Mr Rezos told Business News.

The market-development solution has been to focus on a sector in need of updated technology – flame resistance – with particular focus on textiles used in clothing and furniture, including car and aircraft seating.

By choosing a clear commercial pathway, Alexium is developing traction with investors as it starts to book meaningful sales, initially in the US home furnishings sector, starting with mattresses.

A former banker, Mr Rezos has a track record of successfully finding a way to commercialise technologies. He followed a similar route to that mapped out for Alexium with an earlier business, pSivida, which found markets for inventions made by QinetiQ, an arm of the British government’s defence department.

Alexium has pSivida-like roots and is following a playbook developed by Mr Rezos, who is also a director of the Perth-based mineral sands miner, Iluka, a major shareholder in the British metals research business Metalysis, which is likely to be the subject of a stock exchange float later this year.

A defence connection for Alexium started with a search by US authorities for better fire protection technology for textiles, including the uniforms worn by members of that country’s armed forces.

The US Air Force was an early sponsor of Alexium’s technology, providing more than $US30 million in early-stage research funding, mainly to find something better than bromine, a naturally occurring element with health-damaging side effects.

“The US Defense Department can only take things up to a benchtop scale and then find someone to develop the technology further,” Mr Rezos said.

“We came in after the bench top success of the technology when it wasn’t certain what the commercial applications might be.

“Our input was to focus on the fire-retardant properties of Alexium’s chemicals because we could see that was where the market was going to come towards us.

“The fire-retardant industry has been based on the same technology for more than 40 years, it’s not very effective and what’s more it appears to be toxic.”

With a product ready to go and having chosen a market, there were still hurdles for Alexium to jump, including proving to potential customers that it was cost effective, environmentally friendly, durable, and lightweight.

“In going through that process we found a way to make nylon fire retardant,” Mr Rezos said.

Taking a new fire-retardant product to the market was a bold move, because bromine had been dominant for decades, which meant no-one saw it as a problem that needed fixing, until reports emerged of its potential toxicity.

Sales of Alexium’s chemical products are starting to be booked, with 20 customers in the US holding trials (with some expected to reach consumers in the next few days).

“There is a mattress maker which will have product in stores next week,” Mr Rezos said.

“That will be the first consumer product and then we have automotive users and home furnishings heading for market release.

“Fundamentally, the product has an application wherever a fire retardant is required.

Investors are warming to Alexium, with a recent capital raising taken up largely by institutional fund managers; and early backers are no doubt delighted with the stock’s rise from a low last year to 8.2 cents to recent sales at 65 cents.