2007 was an awful year for drug delivery companies, and 2008 is shaping up to be no better. The share prices of many drug delivery companies are trading at or below their 10-year averages as investors realize that convenient delivery of large molecules that heretofore required painful injections isn't necessarily a compelling commercial opportunity. Still, intrepid venture capitalists are investing in some companies that are capitalizing on one key difference: these fledgling start-ups use nanotechnology to create therapies that are significantly different--especially in terms of safety and efficacy--from the first-generation drugs they hope to supplant.

Liquidia Technologies is developing nanoparticles whose size, shape, particle cargo, and target specificity can be exquisitely controlled. In order to create its particles, Liquidia borrows fabrication methods originally developed by the electronics industry. I

Israeli start-up Nanolymf . believes its technology could be used to create oral versions of some of the biggest intravenous and injectable drugs on today's market, including lipophilic drugs that are not readily bioavailable because of biochemical barriers that block their absorption. Nanolymf's nanoencapsulation technology allows the drug to bypass metabolic filters in the intestine and liver, resulting in increased bioavailability following oral administration.