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Advanced Medical Isotope Corporation Message Board

  • dominic.lasalle dominic.lasalle Nov 6, 2012 1:26 PM Flag

    An excellent story on isotope suppliers

    Nov 4 article under the headlines. On seeking alpha.

    Sentiment: Strong Buy

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    • Here is the section from the article about ADMD

      Small Presence

      In my search for a company that could benefit from closing reactors and one that has the means to supply the U.S. with a commonly used isotope, I found Advanced Medical Isotope Corporation (ADMD.OB). The company is small, and its success will be dependent on Canadian policy and its impact on isotope production. However, ADMD is perfectly positioned to benefit from the shortage of Mo-99, which is the most commonly used medical isotope, along with its derivative, technetium-99m. The NRU reactor, used by Nordion, produces most of the country's Mo-99 and its derivative. Therefore, once the reactor closes, it could leave a gaping hole in the U.S. supply line. The Petten reactor could pick up some of the slack; however, it's nearly 50 years old and has had its share of problems, including being temporarily closed in 2009 to fix corroded pipes. Both Covidien and Nordion are attempting to correct the issue. Covidien will try with its tiny reactors, but won't be able to meet the full demand. Nordion will attempt with its overseas supply, but with increased costs, and the inability to reach certain locations in the isotopes' short lifespan.

      ADMD is surprisingly similar to both companies, and just so happens to have fallen into the perfect situation. ADMD does not own a reactor, but has close ties to Missouri University Research Reactor (MURR). By using a reactor for production purposes, the company would have a similar business model to Nordion, which involves large returns on invested capital along with requiring very little additional capital. The company's joint venture with MURR entails a propriety compact method to produce Mo-99 and believes that it can provide half of the U.S. demand. Finally, the company also plans to expand its presence in Positron Emission Tomography (PET), a $1 billion industry growing at over 25% annually, as well as other fast-growing isotope markets that are widely used in the U.S. The company already has the technology, is producing revenue, and is well positioned to capitalize on the massive shortages that will occur, but must be addressed in the U.S.

      Conclusion

      When making an investment decision, it is important to gauge the health of certain sectors and determine its outlook based on known information. Right now we know that the NRU reactor will soon close if drastic updates to the reactor do not occur. A nuclear reactor is not intended to last forever, and eventually must be replaced. Both Covidien and Nordion have been effective at innovating to meet demand and to create a better product with less supply. But as supply continues to dwindle, the price for diagnostic procedures and treatments for conditions, such as heart disease and cancer, will rise. With 30 million worldwide procedures, this is a necessary product and a problem that cannot be ignored. And since the U.S. is highest in demand, it becomes our duty to supply the product. The problem is identifying the shift in power. Both Covidien and Nordion have controlled this space for many years, and there aren't many companies positioned to replace either in this particular market. It's possible that nothing changes and Canada makes the moves to update its facilities. However, the U.S. simply cannot wait and hope that the Canadian government will fund and rebuild crucial reactors, because these reactors are too important to our healthcare system. Hence, U.S reactors, such as MURR, must become active, and new innovating techniques to produce Mo-99 will go into effect. At that time, companies that are best positioned will benefit, as will patients, the healthcare system, and the U.S. economy. All these factors are dependent on the country producing such an important isotope rather than relying on production from outside. Advanced Medical Isotope Corporation is an OTC.BB company and the associated risk must be considered prior to any investment in the company.

      Sentiment: Strong Buy

 
ADMD
0.004-0.001(-20.00%)Aug 27 3:59 PMEDT

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