ADVANCED MEDICAL ISOTOPE CORPORATION (OTCQB:ADMD) Therapeutic Benefits that are Similar to HDR Treatments - As we indicated above, it appears to us that low dose rate treatment utilizing metal or glass seed for the treatment of prostate cancer is experiencing reduced popularity as physicians look toward more advanced treatments. The new Y90-based options that AMIC will likely soon be bringing to the market offer many of the advantages of the high dose rate treatments that seem to be gaining in popularity. We believe as the Company begins marketing efforts, the advantages of this new product relative to legacy low dose rate treatments will drive market adoption. Implementation Scenarios for AMIC’s Yttrium-90 Based Products We see several possible implementation scenarios relative to the RadioGel™ device and AMIC’s other Y-90 brachytherapy products, assuming that they achieve FDA clearance, which we believe is highly likely, particularly for the Y-90 RadioGel™ device for which AMIC has already filed its 510(k) application: Scenario One - Implementation in line with that achieved thus far by the new Cs-131 product manufactured by IsoRay, Inc. The current marketer of Cs-131 products, IsoRay, Inc. (NYSE) produced approximately $850,000 in prostate related Cs-131 product sales last quarter. A similar sales rate of Y-90 product would put AMIC at approximately a $3.4 million run rate per year. We would view the development of such a scenario as a disappointment, as we believe much higher penetration rates are possible due to the significant features and benefits of the Y-90 product line versus the competition. Scenario Two - Implementation in line with that of Cs-131, with a 10% market share gain. A lukewarm reception by the market, which represented the Company acquiring a 10% market share, would produce approximately $15 million per year in revenues for sales from within the United States. Sales in Europe and Asia could easily produce an additional $15 to $20 million in revenue per year for the Company, which would place total revenues between $30 million-$45 million. Scenario Three - 10%+ market penetration of prostate, breast, pancreatic, liver, head and neck cancer indications. Considering there are approximately a quarter million prostate and a quarter million breast cancer cases each year within the US alone, almost all of which will need treatment, and a market that is likely three times this size outside of Third Point Research, LLC January 2014 19
20. ADVANCED MEDICAL ISOTOPE CORPORATION (OTCQB:ADMD) the United States, it is easy to predict numbers that are in the hundreds of millions of dollars in sales several years out should the market significantly catch on to Y-90 as a viable and superior brachytherapy medical isotope. The Y-90 Marketing Plan On December 2, 2013, management issued a press release discussing its threeyear strategy, which focuses its corporate activities on the rollout of the Y-90 products following the anticipated FDA clearance. Considering the limited capital available to the Company, we are pleased to see the Company indicate its desire to pursue a partnership-based marketing strategy in the United States, which would involve third-party arrangements for manufacturing, sales, distribution and licensing, for what could be a significant new product into the cancer treatment market. The Company would, however, retain control of its products and a significant role in regulatory matters, marketing and education/training of medical professionals. The Company’s press release stated that outside of the United States, the Company was contemplating entering into licensing arrangements. We see this as favorable because such arrangements could result in advances, guarantees and royalty payments for the Company, while avoiding or minimizing the costs and risk of launching and growing the product line around the world. In October 2013, the Company also announced the addition of an experienced technology company CEO, deal-maker and licensing expert to its board of directors as vice-chairman. In its December 2 press release, the Company explained that this individual would advise the Company in seeking and selecting partners and licensees. We see this as a strong addition to the Company’s capacity to commercialize its products. It also appears the Company is contemplating acquiring a controlling interest in a European-based operation that would potentially help move AMIC into positive operating cash flow more quickly. This operation would assist AMIC in selecting international licensees and also would be an important in enhancing AMIC’s overall isotope and technology distribution capability. Based on the language used in the recent press release, it appears the Company has identified the target company, but a definitive agreement is contingent upon financing. Third Point Research, LLC January 2014 20
