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Radiotherapy is a common treatment used in fighting cancer. It is estimated[1] that approximately 50% of all cancer patients receive radiotherapy in some form. The amount of radiation applied to the tumor is often decided on the sensitivity of the surrounding normal tissue. Several biotech companies are currently working to increase the effect of radiation on the tumor, while also decreasing the negative effects on the surrounding healthy tissue. A better understanding of the molecular response to radiation within the cell has allowed these biotech companies to formulate innovative targeted radiation treatments that could benefit both patients and investors.
One company that is pursuing new technology in the area of targeted radiation treatment is Advanced Medical Isotope Corporation (OTC:ADMD). Most biotech companies pursue a single drug or treatment, but this company is unusual in that it is pursuing two lines of business, one of which it already has an established presence. It is already well established in the manufacturing and distribution of medical isotopes with uses in imaging, therapy, and nuclear medicine as well as radio chemicals such as F-18, an isotope used in positron emission tomography (PET) imaging for detecting cancer and imaging for the heart and brain. [2][3]
The second area that it is pursuing is targeted radiation therapy for solid tumors. Injectable radiogel therapy is a treatment delivery system for yttrium-90, which is a well established and approved medical isotope used in treating several different kinds of cancer. Advanced Medical Isotope has entered into a licensing agreement with a major independent research and development company, Battelle, which provides access to eight important patents. Radiogel treatment consists of delivering microspheres of yttrium-90 in a water-based biodegradable polymer injected directly into the tumor. Body heat converts the polymer into a lattice, which traps the isotope directly into the tumor, and greatly reduces its affect on surrounding healthy tissue while improving its efficacy. The company will begin receiving royalty payments based on a percent of gross sales[4] in 2013, and estimates that peak potential sales could approach $75 million to $100 million annually.
There is also a major market opportunity in the medical isotope business. Medical isotopes are used in 18 million procedures in the United States and 30 million procedures globally every year. Isotopes are a very important ingredient in nuclear medicine used for diagnosis and treatment. There is a looming global shortage of the most commonly used medical isotopes, molybdenum-99, and its derivative, technetium-99m. This is because the NRU reactor in Canada, which produces about 50% of the total molybdenum-99 produced globally, is scheduled to shut down by 2015 and is not going to be replaced.
This means that there will be no production of these isotopes in North America. Only certain reactors are suitable for production, and electricity-generating reactors will not suffice. Advanced Medical Isotope is well placed to take advantage of the shortage due to its agreement with the Missouri University Research Reactor. The company expects to be in a position to provide 50% of U.S. demand, and production will start over the next seven to eight years.
The company has a highly qualified and respected team of specialists and a solid track record in the manufacture of medical isotopes. It has recently strengthened[5] its board of directors with the addition of Thomas J. Clement, one of the leading medical device entrepreneurs in the field today. He was a founding employee of Heart Technology, which grew to more than $100 million in revenue before being acquired by Boston Scientific. In 1998, Clement co-founded Pathway Medical Technologies. As CEO, he successfully raised more than $84 million. Pathway was acquired by Bayer Healthcare of Germany in 2011. He is presently the CEO of two start-up companies, and serves as a director of several medical technology companies.
Like all development-phase biotechs, Advanced Medical Isotope is a high-risk investment. The company burned $29 million in cash during the second quarter of 2012, compared to $49 million in the first quarter. Total cash flows from financing activities amounted to $545 million in the second quarter and $290 million in the first quarter.
But, the company looks very promising, especially since it is not dependent on one single treatment or drug. As stated earlier, sales for the radiogel treatment could reach $75 million to $100 million annually. With a support level around $0.22, and heavier trading volume in recent sessions, this could prove to be an optimal entry point. If you are looking for exposure to new, potentially groundbreaking cancer treatments, you should consider Advanced Medical Isotope Corporation.
