Startups Race to Solve Looming Medical Radioisotope Crisis

There’s a shortage of radioactive material that few people outside the medical community know about. And the best hope for solving the problem—and reduce nuclear proliferation risks linked to it—rests in the hands of a handful of startups operating on a mix of government and private money.

The medical isotope technetium-99 is injected into tens of thousands of Americans every day for medical scans to diagnose heart disease and cancer. The problem is that the material from which it’s derived—molybdenum-99—is made at aging Cold War-era nuclear research reactors, all of which are located outside the United States. And the process uses highly enriched uranium and generates nuclear waste as a byproduct.

In 2009, two research reactors shut down for maintenance, causing a global shortage that forced hospitals to use alternative medical scans, which expose patients to higher doses of radioactivity. And in 2016, a research reactor in Canada, which is the largest producer of molybdenum-99 in the world, is scheduled to shut down, raising worries over availability and a spike in global prices.

In response to the supply crunch, the U.S. Department of Energy’s National Nuclear Security Administration (NNSA) in 2010 launched a program to develop domestic sources of molybdenum-99 using alternative methods. It funded research in different technical pathways, focusing on methods that avoid using highly enriched uranium and produce less nuclear waste.

Last month, it awarded another round of grants to two Wisconsin-based companies—Shine Medical Technologies and NorthStar Medical Radioisotopes—which needed to raise matching private funds. Since 2010, Shine Medical has received $13.9 million and NorthStar Medical has received $16.1 million from the program.

Neither company, nor any of the other U.S.-based companies now vying to become molybdenum-99 suppliers, has yet to demonstrate they can produce the material at low cost and commercial scale. But the story of these two startups—located within five miles of each other in the Madison, WI, area—is a test case in how effectively science-based businesses, backed by public and private funding, can tackle some of society’s pressing problems.

NorthStar Medical claims it will be first to bring molybdenum-99 production to the U.S. The company is in the final stages of getting FDA approval for its neutron capture-based method and expects to be in production in the second half of next year, says chief science officer James Harvey. It has already broken ground on a facility to make isotopes in Beloit, WI, and plans to hire more than 150 people.

With the neutron capture method, molybdenum-98 is exposed to a barrage of neutrons from the core of a nuclear research reactor to produce the desired molybdenum-99 isotope. This process was demonstrated in the U.S. decades ago and carries little technical risk, Harvey says. The company plans to sell the material along with a new type of generator that would allow customers to produce technetium-99 on site.

In parallel, NorthStar Medical is developing an accelerator-based method in which a stream of electrons, generated by commercially available machines used for sterilization, is shot at molybdenum-100. Unlike the reactor approach, this accelerator would produce no nuclear waste, according to Nature. Harvey expects to start operation of the accelerator at the end of 2016.

“Redundancy of production is a key aspect of what the market expects of producers,” he says. “We will be the first domestic producer on a large scale.”

The market for medical isotopes is worth about $600 million per year, says Gregory Piefer, the CEO and founder of Shine Medical. That helps explain why a number of companies now plan to make molybdenum-99. Others include Coral Gables, FL-based Coqui Radiopharmaceuticals, Atlanta-based Perma-Fix Medical Corporation, and Northwest Medical Isotopes, which is seeking to commercialize a process developed at Oregon State University.

Piefer became attracted to medical isotopes when he was still in graduate school at University of Wisconsin-Madison. During his studies, he investigated nuclear fusion to produce energy, but he and his advisors thought that similar techniques could be used for a more commercially ready market: medical isotopes.

Shine Medical also uses an accelerator to make molybdenum-99, but its method produces little nuclear waste and fits directly into the processes and equipment hospitals and pharmacies use today, Piefer says. (He is also the founder of Phoenix Nuclear Labs, which spun out Shine Medical and uses the same neutron generator technology.)

Its system starts with two heavy versions of hydrogen—deuterium and tritium gas—and pumps them into a small chamber with a magnetic field around them, producing helium and free neutrons. The neutrons hit the uranium salts (these are not highly enriched uranium) to produce useful isotopes with minimal waste.

The technology has been demonstrated, but it has not yet been run continuously as it would have to at commercial scale, Piefer says. The company has supply agreements in place and plans to build a production plant in Janesville, WI.

But technology, or even approval by the Nuclear Regulatory Commission, are not the company’s biggest barriers to hitting the market, Piefer says. “The physics is fine,” he says. “I lose zero sleep over whether the technology will work.”

Instead, lack of funding has slowed company progress, Piefer says, pushing its planned production start time to 2018. The company’s work isn’t a great fit for venture capitalists, who tend to work on shorter time frames, nor private equity companies that typically aren’t willing to take a lot of technology risk.

Like NorthStar Medical, Shine Medical has sought out money from angels and investors willing to put money into ventures that will takes years to come to market. One of those investors is New York-based Deerfield Management, which agreed in October to invest up to $125 million in Shine, a combination of equity and debt financing based upon Shine hitting certain undisclosed milestones.

“The return for private investors is phenomenal,” Piefer says. “On the other hand, it is new, it’s first of a kind. And it is nuclear, which private investors are not used to throwing money at by themselves.”

Because these medical isotopes are important to providing good, affordable healthcare, Piefer thinks the government is right to partially fund research and development—at least temporarily. “Do we get there by 2018? It totally depends on if we can find the right investors with the right mindset or if the government can play a bigger role,” he says.

Ideally, there will be multiple sources of medical isotopes to ensure availability and keep prices low within a few years. Whether this happens on not depends not just on the technical ingenuity of innovative entrepreneurs, but also their ability to create a working financial model for science-based businesses.

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