Applying Marketing Principlesto Bring Technology to

Commercial Reality

CDMA Fall 2005 MeetingPhiladelphia, PA

Gerald C. Marterer, Vice PresidentInternational Paper Co.

September 28, 2005

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How It Started

• 1996 – “playing with molecules” in pure research environment

• Intent was to improve stability of curing agent polyamides

• Unexpected serendipitous results:– Gellation of organics– A “techno oddity”– Became technology hobby shop

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Introduction

Pine Trees

Tall Oil Fatty Acid (TOFA)

Polymerized Fatty Acid (Dimer)

Perhaps you’ve had the opportunity to work with polymerized tall oil fatty acid – commonly referred to as “dimer acid”- or perhaps one of its esters or amides. It is a product of the pine chemical industry. To be fair, it is a product made as well from all manner of vegetable oils. There is nothing in the world like dimer acid. First it contains 36 carbon atoms – the closest material with similar reactivity to dimer is dodecanedioic acid with only 12 carbon atoms. Even in its purest form the atoms of dimer are arranged in hundreds of combinations of branched chains many with five or six-menbered rings. This makes the material inherently non-crystalline and therefore good for wetting surfaces and not becoming brittle at lower temperatures. And it bears two carboxylic acid groups which may be turned into a variety of esters, alcohols, and amides. In contrast, dodecanedioic acid is a strictly linear diacid, with high crystalline structure, good for making nylons.

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Dimer Acid

Unique combination: largehydrocarbon (C36), oil-lovingmass with two acid groups

Hundreds of isomers Non-crystalline (clarity, good low temperature properties)

Derivatives via reactions at the acid groups Esters, alcohols and amides

Which have good surface-wetting properties adhesives, inks, lubricants.

Perhaps you’ve had the opportunity to work with polymerized tall oil fatty acid – commonly referred to as “dimer acid”- or perhaps one of its esters or amides. It is a product of the pine chemical industry. To be fair, it is a product made as well from all manner of vegetable oils. There is nothing in the world like dimer acid. First it contains 36 carbon atoms – the closest material with similar reactivity to dimer is dodecanedioic acid with only 12 carbon atoms. Even in its purest form the atoms of dimer are arranged in hundreds of combinations of branched chains many with five or six-menbered rings. This makes the material inherently non-crystalline and therefore good for wetting surfaces and not becoming brittle at lower temperatures. And it bears two carboxylic acid groups which may be turned into a variety of esters, alcohols, and amides. In contrast, dodecanedioic acid is a strictly linear diacid, with high crystalline structure, good for making nylons.

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React dimer acid with a polyamine, remove water Terminate the chain with a carboxylic acid Thermoplastic, non-crystalline (clear, flexible) solids Softening points from ca. 80–190oC High molecular wt. PAs are hot melt adhesives Low molecular wt. are for flexographic inks High amine number are epoxy curing agents

Dimer-Based Polyamides

Dimer acid-based polyamides are of special interest to my company and to me. We make them by reacting dimer acid and a diamine such as ethylene diamine or a polyamine such as diethylenetriamine. They can be tough or brittle, have softening points up to about 200 degrees C and are well-established hot-melt adhesives and electrical potting compounds, epoxy curing agents, and components for solvent-based flexographic inks for printing on flexible films and foils from alcohol and alcohol-toluene or alcohol-xylene blends. They are not soluble in water or most organic liquids, certainly not in mineral oils, ketones, ethers and the like.

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Dimer Polyamides–Standard vs. Gellant Conventional dimer-based polyamides have limited solu-

bility in solvents; dissolve only in aromatic/alcohol blends Used as thixotropic agents for alkyd paints in Europe Recognized (1996) that termination of the polymer chain

with fatty alcohol gave materials cabable of gelling mineral oils and fatty esters

Initial application was in clear candles (1999) New polymers extend gelation to virtually all organic liquids Applications emerging in home and personal care products.

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How To Make A Gel

Heat the gellant (typically 5-20% by wt. of the total formulation) to its melt point (usually 80-100oC);

Add the liquid with agitation, holding the temperature constant;

Cool to about 10-20oC below the gellant melt point and

Pour the mixture into a container, mold, package, etc.

See, e.g. Arizona, US #6,268,466

15% SylvaclearTMA200 in Finsolv®TN

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OC

NH

NH

OC

OC NH

NH

OC NH

OC R

R

R

Fatty dimer segments form oil-loving zones

Hydrogen bonding forms oil-repellant zones

How Gellants Work

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Gellant Classes1. Ester Terminated Polyamide (ETPA)

2. Tertiary Amide-Terminated Polyamide (ATPA); dimer acid, a diamine and a di-fatty amine.

3. Polyether-Terminated Polyamide (PAOPA); dimer acid, a diamine and a polyether mono amine.

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Gellant Test Data

Mineral oil Heat transfer fluids Mono/di/triglycerides Soya methyl ester Soybean oil Castor oil

Mineral spirits Alcohols (>C8) Xylene Aliphatic acetates Glycol dimethyl ethers Plasticizer Esters

Ester- and tertiary amide-terminated polyamides can gel these relatively non-polar liquids:

You can see that the release or evaporation of the hexyl acetate looks very like the gelled hexyl acetate. Reader may need to return to previous slide to talk about spiking and tailing.

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Gellant Test DataPolyether-terminated polyamides can gel these relatively polar liquids:

Propylene carbonate N-methyl pyrrolidone Aromatic esters Ethyl lactate DMSO Ketones

Glycols 2-Methoxyethyl ether Linear polyether polyols Branched polyether polyols Dipropylene glycol Ethoxy ethyl propionate

You can see that the release or evaporation of the hexyl acetate looks very like the gelled hexyl acetate. Reader may need to return to previous slide to talk about spiking and tailing.

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“A Hammer in Search of a Nail”

• Sister company involved in fragrances– Immobilized fragrances

– Clear candles

• Jumped into market with no market analysis or STP

• Initial results felt good

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Gellants in Candles Mineral Oil - Ester (fuel) Polyamide (gellant), Fragrance Oil; Clarifiers (diol, fatty acid).

See: Bath & Body Works, US #6,214,063

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Gellants for Candles(Sales)

0

2.0

4.0

6.0

8.0

1997Sa

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$M

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Candles

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Gellants for Candles(Sales)

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1997 1998Sa

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Candles

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Gellants for Candles(Sales)

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8.0

1997 1998 1999Sa

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Candles

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Gellants for Candles(Sales)

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1997 1998 1999 2000Sa

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Candles

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Gellants for Candles(Sales)

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1997 1998 1999 2000 2001Sa

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Candles

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Gellants for Candles(Sales)

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6.00

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1997 1998 1999 2000 2001 2002Sa

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Candles

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Gellants for Candles(Sales)

0

2.00

4.00

6.00

8.00

1997 1998 1999 2000 2001 2002 2003Sa

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Rev

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$M

M

Candles

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Gellants for Candles(Sales)

0

2.00

4.00

6.00

8.00

1997 1998 1999 2000 2001 2002 2003 2004Sa

les

Rev

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$M

M

Candles

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Gellants for Candles(Sales)

0

2.00

4.00

6.00

8.00

1997 1998 1999 2000 2001 2002 2003 2004 2005FSa

les

Rev

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$M

M

Candles

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“Ready, Fire, Aim”

• Samples sent to everyone

• Everyone was interested

• No experience in segments

• How to get burned!

• “Bunny Marketing”

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“Call Time Out”(2002)

• Market-based analysis

– Ready, aim, fire

– STP

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Market-Based Strategic Planning

Market trends

+ Characteristics of customers’ Industries

+

Competitive environment

+

AZC customer/ product profitability

“READY” “AIM” “FIRE”

Attractivenessof importantcustomersegments

Valuepropositionoptions forattractivesegments

Customerstrategiesand needs

Potentialcompetitorresponses

Target segments

+AZC valueproposition for each targetedsegment

AZC capabilities

Application/ People implicationsannual plan • Building skills • Building will • Staffing changes

Budget External initiatives • Alliances • Divestitures

Facilities & Tracking andcapital adjustmentimplications approach

Implementation

Expected benefits:• Better customer & product mix• Higher price levels• Sales volume growth• Higher profits and ROI

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“Call Time Out”(2002)

• Market-based analysis

– Ready, aim, fire

– STP

• Analyze channels

• Determine need for partners

• Determine opportunities for licensing

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Controllable gel strength (by concentration, alcohol)

Light color (approaching “water white”) High fragrance loading with excellent

compatibility, linear release Provides gloss to skin care applications Never act as thickeners - gels do not become

less elastic when diluted, just softer, jelly-like

Features/Advantages

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Compatible with organic components and actives in formulations, allowing high actives loadings

Release of actives is unimpeded Transparency for many formulations Easily processed into formulations with heat

(processing temperatures <100C) and shear; low process viscosities are typical.

Provides uniform dispersion of pigments and other solids in formulations

Features/Advantages

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In Air Fresheners

Can load up to 50% fragrance in gels Clear, firm, stable Free-standing or container formats Compatible with most fragrance oils Unimpeded release of volatiles.

See: Jeyes, WO #02/066084

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Water-Friendly Gellants ”WF” gellants dissolve or disperse in water. Gel blends of surfactant, fragrance, actives, carrier liquids. Product is a firm, clear

solid that “rinses” away in water.

Application to bath oilbeads, toilet bowl careproducts.

See: Arizona US publishedapplication #2004/0186263

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In Personal Care Products Cosmetics

• Lipstick• Mascara• Foundations• Scenting oils

Creams, lotions Antiperspirants Sunscreens, insect

repellents

See: Arizona, US #6,875,245 and Color Access, US #6,497,861

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Opportunity

•Fuel Additives / Grease

•Candles

•Toner

•Dust/Particle Control

•Phase Change

•Industrial Cleaners

•Paints & Coatings

Technology fit - does it work?

Large volume opportunity Likely margins Comments

•Currently pursuing in Europe, US

•Largely European initiative

•Barriers to entry include long product dev. time, testing

•Currently in testing, potentially attractive

•Fad-driven, pursued but not sustained

•Xerox-initiated interest

•Competes against commodity materials

•In testing

•Competes against commodity materials

•Limited end-use technology fit

Overall Attractiveness

Potential Gellant Segments

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Gellants for Personal Care(Sales)

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Personal Care

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Gellants for Personal Care(Sales)

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2001 2002Sa

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Personal Care

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Gellants for Personal Care(Sales)

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2001 2002 2003Sa

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Personal Care

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Gellants for Personal Care(Sales)

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2001 2002 2003 2004Sa

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Personal Care

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Gellants for Personal Care(Sales)

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1.00

2.00

3.00

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2001 2002 2003 2004 2005FSa

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Personal Care

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Lessons Learned

• Understand patent landscape early on

• Protect composition patents from downstream applications filings

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Gel-Based Candles

261 Patents & Apps.

Assignee Labels

Gellant Composition

of Matter

PolyamideElectrolyte Gels

Gellant CableFiller

PersonalCare Products

Arizona

Arizona Portfolio Covers Several Key Gellant Application Areas

Cosmetic Products

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Lessons Learned

• Understand patent landscape early on

• Protect composition patents from downstream applications filings

• Before going to market:– Use “ready, aim, fire”– Complete STP

• Beware of short life cycles

• Be ready to partner or license

• “Guns, Germs and Steel”

Output You Want, Created By a Series of Inputs

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