Advanced Medical Isotope Corporation (ADMD.OB) produces and distributes medical isotopes used in molecular imaging, therapy, and nuclear medicine to diagnose and treat diseases. The product line includes stable isotopes as well as radio pharmaceuticals. The radio chemicals include products such as F-18, an isotope for positron emission tomography (PET) imaging used for purposes such as cancer detection, heart imaging, and brain imaging. Radiotherapy, used in the treatment of cancer tumors, is making rapid progress and now includes radio chemicals that target tumors directly, thereby minimizing systemic damage as well as local damage to otherwise healthy tissue. Radiotherapy is often a last resort for cancer patients who have inoperable tumors that could respond when exposed to radioactive sources.
Founded in 2005, Advanced Medical Isotope Corporation is a microcap company with a current market capitalization in the region of $20 million. CEO and founder James Katzaroff has assembled a highly regarded team of experts in radiotherapy, nuclear medicine, and radioisotope production. The demand for medical isotopes is rising. In the United States alone, 18 million medical procedures using medical isotopes are performed every year, and the number is expected to increase at a rate of 10% annually. Currently, 10% of all non-PET radioisotopes used in the United States are manufactured in the country while the remaining 90% are imported. Local manufacturing of non-PET radioisotopes is highly fragmented, as no existing producers offer a wide range of products.
Molybdenum-99 and its derivative Technetium-99m are the most commonly used medical radioisotopes in the world. They are used in more than 50,000 diagnostic procedures in the United States every day. The isotopes face a huge threat, but also have a huge opportunity. The isotopes are currently being produced by aging reactors nearing the end of their effective lives and there seems to be no plans in replacing them. The NRU reactor in Canada is scheduled to shut down by 2015. If the shutdown goes according to plan, the world will lose about 50% of its total Mo-99 production. The company has entered into a joint venture with the existing Missouri University Research Reactor to provide up to 50% of the U.S. demand, and production is expected to start seven or eight years after commencement of the project. This represents a huge opportunity.
Radiogel will deliver the radioactive isotope directly into the tumor-- a dose of radiation sufficient to destroy the cancer cells. Radiogel is different from other treatments of cancer because of the use of liquid polymer that is injected into the site of the cancer. The liquid polymer quickly warms up to body temperature and forms a lattice at the injection site that traps the isotope within the cancer affected region. The treatment has the potential to irradiate tumors that cannot be removed surgically or treated effectively with other treatments. The company says that if they can introduce the therapy to the market by 2013, sales could reach $5 million to $15 million annually, with future sales potential in the range of $75 million to $100 million.
The company has the technical credibility and the licensing agreement in place to develop its new radiogel treatment. Although it cannot be evaluated in terms of conventional financial metrics, this company's stock has already seen a considerable appreciation partly because of the announcement of the licensing deal. While I see no short-term catalyst for immediate price appreciation, the stock looks promising in the long-term, and investors should watch closely for buying opportunities.