By The Swiss Trader
New advances using medical isotopes to battle cancer have been making news as of late. Brachytherapy, also called internal radiotherapy, is a form of nuclear medicine where seeds containing radioactive isotopes are implanted in the body to treat such cancers as prostate, breast, head and neck, and brain cancer, by delivering a radioactive isotope to a targeted tumor, diminishing the size of the tumor or killing the cancer. Brachytherapy allows for higher doses of radiation to more specific or targeted areas of the body compared to conventional radiation therapy or external radiation utilizing a machine from outside of the body. The therapy has been shown to have fewer side effects and the overall treatment time is usually shorter. Below are three companies that are engaged in medical isotope manufacturing and are also developing their own brachytherapy products to treat cancer, and their stocks have reflected positively on their results.
IsoRay, Inc. (NYSEAMEX:ISR), a small medical technology company based in Richland, Washington, saw its stock soar over 85% in trading recently as it announced success with its isotope cesium-131 (Cs-131) sutured seeds and seed sutured mesh for internal radiation therapy for brain cancer. Dr. Theodore H. Schwartz and Dr. Gabriella Wernicke, both of Weill Cornell Medical Center, presented their findings at The Society of Neuro-Oncology, titled “The study of Neurosurgical Resection and Intra-operative Cesium-131”. Meningiomas are an assorted set of tumors that develop in membranous layers surrounding the brain and the spinal cord and account for one-third of all brain tumors. They are generally fast growing tumors with a high rate of reoccurrence after the initial treatment regimen. These tumors can exert pressure on the brain, destroy brain cells, and bring on a variety of health issues, including lowering the patient’s quality of life. Typically meningiomas require multiple treatments with external beam radiation following surgery; and because tumors are often large and irregular in shape, delivering a precise dose of radiation is problematic. However, with IsoRay’s Cs-131, the seeded sutures were placed within the tumor bed at the time of surgery providing immediate radiation therapy to the entire tumor bed and at margins which was dosed to prevent tumor reoccurrence. The study showed Cs-131′s relative effectiveness in treating brain tumors compared to other common treatments. According to Dr. David G. Brachman, Medical Director of Radiation Oncology at St. Joseph’s Hospital and Medical Center Barrow Neurological Institute in Phoenix, Arizona, “Cesium-131 provides a unique biological advantage regarding the timing of radiation, being utilized at the time of the surgery before tumor cells can repopulate, which helps to maximize the therapeutic benefit of radiation treatment.”
The success of Cs-131 is positive news considering that IsoRay’s third quarter revenue was disappointing due its weakening prostate treatment sales as more men have avoided taking the prostate test electing the wait and see approach due to a report published by the U.S. Preventive Services Task Force recommending against routine PSA screening. This slowdown in the prostate market further reinforced IsoRay’s focus in expanding the use of isotope Cs-131, which was approved by the FDA in 2003 for treatment of malignant disease of the head and neck, brain, breast, prostate, and other organs. IsoRay’s Chairman and CEO, Dwight Babcock, commented, “We continue to be optimistic about the growth in adoption of our growing array of new products. Physicians and institutions are reporting outstanding results in the use of our prostate and non-prostate treatments utilizing cesium-131 seeds for brain cancer, head and neck cancer, prostate cancer, and lung cancers. Given this growing acceptance and interest, we remain committed to our strategic sales and market objectives, which we believe will contribute to long term growth and profitability.”
IsoRay is a $28 million market cap company. Its stock had stumbled a bit since its July 16th announcement of securing $3.5 million in institutional funding, and had traded in the high $0.30s to mid $0.60s. However, the announcement of the success of Cs-131 appears to have put IsoRay back on the map, as is evident with volume rising from an average of just under 200 thousand shares traded per day to well over 2 million on Tuesday. The success of Cs-131 also benefits other companies using seed-based brachytherapy, as its popularity in usage continues to grow. I like IsoRay and its Cs-131 product, and I can see the stock continue to climb, especially if more positive news continues in the future.
Advanced Medical Isotope Corporation (OTC:ADMD), based out of Kennewick, Washington, is one of the few companies producing medical isotopes in the US. Recently the company expanded its production base by forming a strategic partnership with Safety by Design, PC, of Colorado, in collaboration with Colorado State University, to develop medical isotope products that are in high demand and short supply in the Rocky Mountain Region. They also announced that they are developing production processes and procedures to produce isotopes using the 1 megawatt TRIGA Reactor currently operating at the Denver Federal Center. The site is ideal for producing the short-lived radionuclides because it is minutes away from Denver International Airport and two other General Aviation airports. The initial production will focus on a skin cancer product, holmium-166 (Ho-166); then utilizing the same isotope the partnership plans to develop products for the treatment of joint pain, liver cancer, and multiple myeloma. The long term goal, according to ADMD and Safety by Design, is to create an isotope production roadmap for other TRIGA reactor facilities in the United States and expand the breadth of relevant chemical separation methods while evaluating health physics operational procedures for facilities with less sophisticated isotope handling capabilities. This partnership enhances ADMD’s vision of becoming a major supplier of medical isotopes in the US. In May 2010, the company entered into a License Agreement for the patent rights of a radioisotope production using electron beam accelerators creating short lived radioisotopes such as Mo-99 and Tech-99 with the University of Missouri. ADMD is also producing short lived and stable isotopes for Positron Emission Tomography (PET) procedures with a PULSAR Isotope Production system, the first compact linear accelerator (LINAC) in North America designed for the production of medical isotopes used in PET imaging.
Signing the partnership is big news for the little company, but what should peak investors’ interest in ADMD is news that came out of Duke University and its study of an alternative brachytherapy approach by injecting radioactive seeds directly into the body instead of using a catheter to deliver the radioactive material. The doctors, using mice models, injected tumors with a biodegradable elastin-like polypeptide with radioactive iodine, and after only a single administration, the most effective variation shrank tumors in all of the mice regardless of tumor type. It also completely eliminated tumors in two-thirds of the mice with head-and-neck tumors, and all of the mice with prostate tumors. This news should have a positive effect on ADMD because the company has been developing its own internal radiotherapy with its injectable Radiogel cancer treatment. Radiogel utilizes a water-based polymer containing yttrium-90 (Y-90) microspheres that are injected directly into the tumor. Once injected the liquid warms and turns into a gel forming a lattice trapping the Y-90 in injection site. High energy beta particles irradiate the cancer cells with little of the radiation affecting nearby healthy tissue. Radiogel can be injected during a surgical procedure or directly through the skin and can be utilized when a cancer tumor cannot be surgically removed. Though Radiogel technology is in its early stages of development, as the Duke study has shown, injectable brachytherapy could have a major impact on the future methods used to battle various cancers.
ADMD is a $16.22 million market cap company, and though its stock has dipped heavily on Thursday’s trading, it is still up over 68% YTD. With Thursday’s drop ADMD is selling for $0.16 per share, which could be an excellent entry price considering that ADMD now has diversified into two separate markets, though both involving the medical isotopes it produces. With Radiogel and its expanding isotope production base, I like the potential growth of ADMD; and if either proves successful I could see a larger pharmaceutical company show interest in buying the company.
Nordion Inc. (NYSE:NDZ), based in Ottawa, Canada, one of the world’s leading providers of isotopes via a network of global suppliers and partners has had a tough year seeing its stock fall over 25%. It’s seen its isotope business threatened with Canada’s 58-year old NRU reactor at Chalk River scheduled to be shut down by 2016, and its recently signed supply agreement with the Russian company, JSC Isotope, which operates 3 reactors in Dimitrovgrad, Russia, has come under fire.The problem is JSC Isotope uses highly enriched uranium (HEU), also known as bomb grade uranium, to process its isotopes; and with the change in US policy, if Nordion wishes to continue selling isotopes to companies in the US, it is going to need a supplier that does not produce medical isotopes using HEU. Considering Nordion receives about 40% of its revenue from its medical isotopes business, if the company is unable to acquire low enriched uranium-produced isotopes in the future, it would have a detrimental effect on its overall business.
Nordion is a diversified company; it also produces targeted therapies for a variety of cancers, including TheraSphere, a radioembolization or selective internal radiation therapy that uses isotope Y-90 microspheres (also known as seeds). TheraSphere, which is currently in phase III study for treatment of inoperable liver cancer, delivers Y-90 directly to the liver tumors via a catheter, the seeds flow directly into the tumor becoming permanently lodged in the small blood vessels, destroying the cancer from within. TheraSphere is used to treat patients with unresectable (inoperable) hepatocellular carcinoma (HCC), the most common form of primary liver cancer, and can be used as a bridge to surgery or transplantation in these patients. It is also indicated for the treatment of HCC patients with portal vein thrombosis
Nordion, a $406.57 million market cap company, closed on Wed at $6.55 per share, slightly above its 52- week low of $5.51 per share. In September, Forbes using Nordion’s Relative Strength Index (RSI) of 16.9, found the stock to be oversold; and the fundamentals have changed very little since September making the stock still at a very good entry price. Earlier this September, on the strength of Nordion’s sterilization technologies business (which accounts for 50% of the company’s value), Dr. Alan Ridgeway of Toronto’s Paradigm Capital Inc., initiated coverage with a “buy” rating and a $14.00 target price. Dr. Ridgeway pointed out that Nordion has installed more than half of the irradiation sterilizers in the world, and supplies about 70% of the world’s demand for the irradiation isotope cobalt-60. Separately, Douglas Miehm of RBC Dominion Securities Inc. also has a “outperform” rating and a $14.00 price target based on his Discounted Cash Flow (DCF) analysis.
I like all three of these companies risk reward potential. Hopefully the analysts are correct and Nordion’s stock has seen the worst of its fall. IsoRay and ADMD are developing brachytherapy’s that may one day be the norm, and both stocks appear to still have good entry prices. But what might make ADMD stand out from other medical development microcap companies is that there are 18 million nuclear medical procedures in the U.S. each year and they require medical isotopes — and there is a shortage of medical isotopes which ADMD intends to fill. The need for medical isotopes is not going away; ADMD should have a solid future in developing a line of medical isotopes and building a solid customer base. But caution is advised anytime one invests in microcap companies: They offer huge upside potential and corresponding downside risks. Interested investors are advised to perform additional research to ascertain which, if any, of these companies fit their investment criteria.
Disclosure: Long ADMD
