It had been a quietly optimistic summer for nanotechnology stocks. But progress was checked in September, with a couple of well-fancied companies suffering reversals.

The Lux Nanotech Index, which measures a basket of smaller companies specializing in nanotechnology and larger ones with interests in its application, ended the third quarter up slightly from August, but well short of its April peak of 1,840.

One company hit was Toronto-based Nucryst, which makes silver nanoparticle wound dressings that have impressed the market. Nevertheless, its share value almost halved after an announcement on 20 September admitting the failure of efficacy trials on NPI 32101, a cream for treating eczema.

Another fashionable nanotech stock on the slide is Minneapolis-based NVE Corporation, a leader in applying spintronics to sensors and memory chips. After almost touching $40 on 17 September, the company's stock has slipped back to less than $28.

British company Cambridge Display Technology fared better, its stock rising sharply after an upgrading by analysts optimistic about the long-term prospects for the company's polymer light-emitting-diode display screens.

According to Peter Hebert, chief executive of Lux Research, the New York-based consultancy that compiles the index, the overall health of the sector is vouched for by a stream of collaborations between small nanotech suppliers and major companies. In August, for example, Turkey's largest oil company, Petrol Ofisi, agreed to work with Oxonica, based in Oxford, UK, to adapt the British company's nanocatalysts as fuel additives.