The domestic solar panel industry is swamped by cheap products flooding in from China, but Santa Clarita solar panel film maker Biosolar Inc. thinks it has the innovation that will let it survive.

The company has developed a thin protective film from plant material for solar panels that it claims is more efficient and environmentally safer than conventional solar panel films made from petroleum products. These films, or backsheets, protect the panels from water, wind and dust damage while providing insulation for the electricity-producing components of the photovoltaic panels.

The company is trying to bring its product to market, but the timing couldn’t be worse. Investors and lenders have been fleeing the solar panel market since last summer’s debacle at Fremont solar panel maker Solyndra Corp. Several other domestic solar panel makers have also gone under as production has mostly shifted to China and other Asian countries. Panel prices have fallen nearly 50 percent in the past year.

As a result, Biosolar executives dropped plans to seek a partnership with domestic panel manufacturers and are pursuing deals with several Asian companies.

That follows the company’s reverse-stock split of 1-30 last summer after shares dropped to 13 cents; it was hoped the split would enable the company to list on a major exchange instead of trading over the counter.

So far, investors have not been impressed.

The reverse split worked for a few weeks as the share price rose to nearly $4. But then the stock resumed its slide; last month, shares dipped back below $1 before rebounding. The stock was $1.15 a share May 9, up nearly 13 percent for the week and one of the biggest gainers on the LABJ Stock Index. (See page 36.) The rebound followed an announcement that the company is pursuing a manufacturing agreement with Asian panel makers.

“The industry leaders are suffering now big time, so it’s really hard for a startup like Biosolar to make it,” said Aaron Chew, an alternative energy analyst with Maxim Group in New York.

Chew said that the only hope for companies such as Biosolar is to team up with an Asian manufacturer. But even then it would be tough.

Biosolar executives have spent several months in China and other Asian countries trying to line up a manufacturer willing to use its plant-based film.

Chief Executive David Lee, responding via e-mail from China, said he and Chief Technology Officer Stanley Levy met with five Asian solar panel manufacturers in February and recently returned to Asia to try to reach a deal with one or more of them.

Lee said Biosolar initially intends to make its backsheets in the United States and has lined up a contract manufacturer on the East Coast. Then it would sell the backsheets to a panel maker in Asia. Later on, as volume increases, Biosolar might manufacture the backsheets in Asia.

But the company’s challenge will be to make the backsheet cheaper for a panel maker to buy than conventional petroleum-based backsheets.

Lee said the plant-based technology for solar panel backsheets is cheaper than petroleum-based films because it lasts longer and has greater insulating capacity.

But proving that to the manufacturers is likely to be a long process.

“The manufacturers’ qualification cycles are long, so we needed to get started early,” Lee said.

Even if Biosolar can reach an agreement, getting the financing to mass produce its solar cell film will be challenging, especially now that lenders and investors have soured on the solar industry.

So company executives plan to turn to factoring, or short-term lending. In his e-mail, Lee said that Biosolar’s plan calls for a factor to loan money to the company so that it can ramp up production. Then, once the solar panels are made and sold to panel installers, and Biosolar is paid, the company can pay the loan.

Factoring isn’t commonly used to launch technology, and it looks especially risky now given the turmoil in the solar panel industry. After last year’s bankruptcy at Solyndra, another of the nation’s largest solar panel makers, First Solar Inc. of Tempe, Ariz., has seen its shares plunge 85 percent, forcing it to lay off 2,000 workers.

Adding to the industry’s troubles: a leveling off of demand for solar panels in the United States as cheap natural gas prices have led to drops in the price of power in many parts of the country.

“Basically, we now have 50 percent more supply than we need, so prices are going to continue to drop,” said Maxim Group analyst Chew.

He is skeptical many investors will hang around long enough to find out whether Biosolar’s technology can dramatically lower solar panel production costs.

“People are putting their money in other industries right now, not solar,” he said. “Biosolar will have to prove rather quickly that its technology can lower the cost to produce solar panels. Maybe then they will have a shot.”