Make money from medical isotopes

A grave medical crisis in the US has helped Advanced Medical Isotopes (Pink Sheets: ADMD) surge 122% since we tipped it in July. If you bought in then, you might be tempted to take profits. But news this week suggests you should wait.

Sourced from decayed uranium from nuclear power plants, medical isotopes are used in 18 million procedures in the US each year. But there is a desperate shortage of them.

Doctors have been forced to ration tests for cancer, and hospitals and clinics have been hit with massive bills of up to $30,000 higher than normal after isotope suppliers hiked prices this spring.

Now, after months of impassioned pleas from doctors, the US government has decided to tackle the crisis. This week, a bill passed the US House Committee on Energy and Commerce that could devote $165m towards developing medical isotopes (such as the critical moly-99 isotope) in the US.

Moly is sourced from five ageing nuclear reactors around the world. At the moment the US relies on the Petten reactor in Netherlands and the BR2 high-flux reactor in Brussels for its supply. As we pointed out in July, the temporary closure of the 52-year old Chalk River plant in Ontario – which supplies 40% of the global market – has caused a shortage of medical isotopes. Moly-99 has a half life of just 67 hours, making it impossible to stockpile.

So the Americans are moving to develop domestic supply. But who will they give the cash to? The nearest term solution, according to Dr Robert Atcher, president of the Society of Nuclear Medicine, is for the US Department of Energy to convert a research reactor at the University of Missouri to manufacture medical isotopes. In July, we noted that Advanced Medical Isotope Corporation signed a deal with the University of Missouri to produce moly-99 isotopes using its cyclotron facility – which is expected to come into operation in two to four years.

Sure, when the Chalk River plant is restarted (possibly as soon as the first quarter of next year), supply constraints will ease. But only for a while. The two reactors built to replace the ancient Chalk River plant have been mothballed due to massive cost overruns. According to the National Academy of Sciences, demand for Moly-99 in the US is expected to grow at a minimum of 5-10% a year.

ADMD is an excellent candidate for receiving funds under the US bill, having entered into agreements to produce isotopes at Idaho State University, the University of Missouri, the State University of New York at Buffalo and the University of Utah. The bill comes before the House at the end of the month and will then go to the Senate. So investors who have ridden the firm’s recent surge should hang on. There could be more to come.