February 1, 2004, "Sci-Fi Investment Opportunities -- Man-made diamonds...very tiny cameras that see inside your body . . . more" (Bottom Line/Personal)

by Daniel Burstein

Professional investors are backing breakthrough technologies, many of which will be widely available within two years. Some of the companies behind these technologies are publicly traded-creating a ground-floor opportunity for investors who have an appetite for risk...

CAMERA IN A PILL

Imagine swallowing a camera so small that it takes moving pictures of its incredible voyage through your digestive tract. Diagnosing abdominal pain or gastrointestinal (GI) tract bleeding currently involves expensive, invasive procedures. A fiber-optic endoscopic camera inserted down the throat can reach only a portion of the small intestine.

With the new technology, called capsule endoscopy, the patient swallows a single-use color-imaging "pill" about the size of a large vitamin.

How it works: The capsule contains a transmitter, video camera and light- emitting diodes to illuminate the GI tract. It transmits 55,000 images to a portable data recorder that the patient wears on a belt. The capsule moves into the small intestine and is excreted eight hours later. Result: Precise photos delivered painlessly at a cost of several hundred dollars-about half the cost of the fiber-optic endoscopy procedure. These capsules currently are in use in more than 50 countries, including the US.

Risks: The imaging results may be flawed or misinterpreted simply because the technology is so new. In a tiny percentage of patients suffering obstructions of the GI tract, such as inflamed tissue, the capsule may get stuck.

Company to watch: Israel-based Given Imaging Ltd. It had $29 million in sales as of the end of September 2003, including patented video capsules.

Biggest potential market: Millions of endoscopic procedures are performed annually in the US. The company also plans to use its technology to examine other parts of the GI tract.

Information: Given Imaging Ltd., 770-662-0870, www.givenimaging. com. NASDAQ:GIVN. Recent share price: $18.20.

FLAWLESS "CLONED" DIAMONDS

That diamond anniversary ring is about to get a lot cheaper. Flawless diamonds grown inside laboratories soon may sell for as little as $5/carat. The price for a real diamond starts at about $3,000/carat.

How it works: Several processes to "grow" diamonds are being explored. In one, a diamond wafer-less than one-tenth of a carat-is placed in a vacuum with chemical gases, where it is pressure-cooked at 1,800¡F for several days. This experimental process can grow a gem as large as three carats. When polished and cut, the stone's color and composition are virtually indistinguishable from a mined diamond.

Some man-made diamonds designed for industrial use are expected to come to the market within the next year. They are expected to sell for about one-third less than mined diamonds.

Company to watch: Apollo Diamond, Inc., a private company based in Boston, which holds the patent for the carbon-gas process. The firm has not projected its revenues or stated where it will market these diamonds. Within five years, Apollo also plans to make industrial diamonds for the microprocessors that are used in computers and electronics. Diamond microchips can handle higher temperatures than silicon chips, allowing computers to run hundreds of times faster.

Risks... Lead time: It will take at least a decade for the semiconductor industry to accommodate diamond microchips.

Competition: De Beers, the diamond-industry giant, has begun sending to major jewelers testing machines that it claims can distinguish between man-made and mined diamonds.

Questionable retail demand: A diamond's mystique comes from its scarcity and high price. Sales might never materialize if mined-diamond wholesalers get the Federal Trade Commission to label the new stones "synthetic."

Information: Apollo Diamond, Inc., 763-923-2260, www.apollodiamond. com.

DOMESTIC ROBOTS

The next generation of robots will fulfill the promise of the sci-fi TV cartoon The Jetsons-machines so agile, user-friendly and affordable that no home will be without them.

Examples: Robots will dust, wash windows and detect suspicious odors, such as gas, fires, even the noise of a burglar.

How it works: The technology is based on artificial intelligence developed by scientists from MIT's world-famous Artificial Intelligence Lab.

Company to watch: iRobot Corp., a private company in Burlington, Mas-sachusetts. Its Roomba vacuum cleaner has racked up almost $50 million in sales since its introduction in 2002. The battery-operated Roomba sells for about $200. Available at The Sharper Image...Best Buy...Hammacher Schlemmer...and many other stores...or by calling 866-4-ROOMBA.

Risks: While iRobot can make robots that climb and swim, it has yet to translate this technology into a range of must-have consumer products. However, the company does have several major government and corporate contracts.

Information: iRobot Corp., 781-345-0200, www.irobot.com.

MEDICAL INHALANTS

Swallowing pills is a slow, inefficient way to introduce medicine to the body. Many new drugs, from insulin to antianxiety medicines, are being packaged in spray form with inhalers similar to those of asthma medication.

How it works: Liquid-based medicine goes directly into the lungs through an aerosol.

Company to watch: Dov Pharmaceutical, Inc. (a company in which my firm has invested), which is developing an inhalant drug for anxiety and panic attacks. The potential market is substantial-with 19 million Americans aged 18 to 54 affected. In pill form, the drugs take too long to work on an event-specific basis, and they have side effects when taken continuously.

Risk: Getting FDA approval. Dov still is in clinical trials. The approval time is unknown. If approved, it will take at least a year for the product to come to market.

Information: Dov Pharmaceutical, Inc., 201-968-0980, www.dovpharm.com. NASDAQ:DOVP. Hackensack, New Jersey. Recent share price: $12.90.

RADIO FREQUENCY IDENTIFICATION DEVICES (RFID)

You're familiar with this technology if you use a wireless pass in your car to zip through highway tolls or a Mobil Speedpass to buy gas. The possibilities are endless-frozen dinners that transmit cooking instructions to a reader inside the microwave...sweaters that tell the washing machine their care instructions.

How it works: A data-packed chip embedded in the product labeling or tag transmits information via radio waves.

Company to watch: Alien Technology Corp., a private company based in Morgan Hill, California. It developed a plan to use RFID tags to track every carton from its distribution centers to reduce theft and improve shelving and store inventory. It also markets RFID technology to other companies.

Risks: Privacy concerns. RFID technology can track you through your personal possessions. Police conceivably could monitor your purchases. However, Alien Technology contends that it can create a "kill" that disables tracking once a product is purchased.

Information: Alien Technology Corp., 408-782-3900, www.alien technology.com

Bottom Line/Personal interviewed Daniel Burstein, managing partner, Millennium Technology Ventures Advisors, a venture capital fund in New York City that focuses on new Internet, telecommunications, biotech and health-care technologies.

He is author of five books on new technology trends and global economic issues, including Road Warriors (Dutton). His upcoming book, due out in June, is The Best Thing Ever Said About the Rise, Fall and Future of the Internet Economy (Squibnocket).