amic research report 01-16-14 stock symbol (qb:admd)

Download AMIC Research Report 01-16-14 Stock Symbol (QB:ADMD)

Post on 23-Aug-2014



Investor Relations

4 download

Embed Size (px)


ADVANCED MEDICAL ISOTOPE CORPORATION – INNOVATION IN CANCER THERAPIES – WATCH FOR FDA APPROVAL THIRD POINT RESEARCH, LLC Initial Report Rating: STRONG SPECULATIVE BUY OTCQB:ADMD Current Price: $0.07 Price Target: $0.50 – Should FDA Clearance be Granted Odds of FDA Clearance: >80% by mid-2014 Third Point Research, LLC Analyst Certification


  • THIRD POINT RESEARCH, LLC Initial Report Rating: STRONG SPECULATIVE BUY OTCQB:ADMD Current Price: $0.07 Price Target: $0.50 Should FDA Clearance be Granted ADVANCED MEDICAL ISOTOPE CORPORATION INNOVATION IN CANCER THERAPIES WATCH FOR FDA NEWS Odds of FDA Clearance: >80% by mid-2014 Third Point Research, LLC Analyst Certification We, hereby certify (1) that the views expressed in this research company report accurately reflect our personal views about any, or all, of the subject securities or issues reflected in this company report, (2) that we do not own these securities, (3) that we will not trade these securities within three months of production of this report. Please see other important disclosures at the end of this report. January 2014 Advanced Medical Isotope Corporation (OTCQB:ADMD) has filed premarket notification to the FDA for its Yttrium-90 (Y-90) RadioGel brachytherapy cancer treatment device, which utilizes a dissolvable (referred to as resorbable), biodegradable polymer and yttrium-90 microspheres for containment rather than metal or glass seeds. We believe odds of FDA clearance by mid-2014 are above 80%. We believe the Company is on the verge of a major product introduction into the brachytherapy cancer treatment market. We view the Y-90 RadioGel device and the other Y-90 products as compelling hybrids between the legacy low dose rate products that utilize permanent seeds for the treatment of prostate cancer and the high dose rate therapies that are gaining in popularity. There have been very few meaningful treatment developments for prostate cancer in quite some time. We believe the Companys Y-90 isotope-based cancer therapy using a patented polymer delivery methodology could be one of the most significant advances in the treatment of prostate cancer within the past 10 years. The safety profile of beta-emissions from the Y-90 isotope, for both patient and practitioner, is a significant improvement over currently available products with penetrating x-ray or gamma ray photons, because high-energy beta particles deliver a much higher percent of their radiation energy to the tumors being targeted, as contrasted to nearby healthy organs and tissues. Accordingly, we believe use of Y-90 also may provide superior efficacy, compared to legacy brachytherapy products. The Y-90 RadioGel device and the other Y-90 products could begin generating substantial revenues at an attractive margin as early as late 2014. The Company is also involved in the production of other isotopes used in nuclear medicine. Several of these critical isotopes are in short supply as available nuclear reactors are shutdown. This market offers an additional and steady potential revenue stream for the Company. Over the coming weeks we will be watching for two events, news relative to FDA clearance and news relative to fundraising activities. Should we get positive news relative to either event, we would expect the shares to trade considerably higher. Market Data Financial Summary Market Cap (MM) Shares Outstanding (MM) Float Dividend Yield 52-Week Range $8.0 109 40 n/a $0.03-$0.24 Sept 13 Quarterly Rev (MM) 9-Month Revs to Sept 13 Cash end of Last Quarter (MM) Total Assets (MM) Long-Term Debt (MM) Shareholders Equity (MM) $0.115 $0.140 $0.026 $.522 $9.0 ($8.5) Please see important disclosures, including analyst certification 1
  • ADVANCED MEDICAL ISOTOPE CORPORATION (OTCQB:ADMD) A ADVANCED MEDICAL ISOTOPE CORP. INNOVATION IN CANCER THERAPIES D V few years. Medical isotopes are used for both diagnostic purposes and treatment. A N C E Executive Summary D Advanced Medical Isotope Corporation (AMIC) has built a team of renowned radiochemists and other scientists focused on the development, production and distribution of medical isotopes. In addition, the AMIC team has significant expertise in critical operational areas including regulatory, manufacturing, sales and marketing as well as finance. The Company is fully reporting and current with the Securities & Exchange Commission with the common shares traded on the OTCQB market under the symbol ADMD. M E D I C A The Company was founded in 2006 by entrepreneur and former Wall Street financial consultant, James C. Katzaroff, who is today the Chairman of the Board and Chief Executive Officer. Management team members and board members have a considerable ownership position and have invested heavily in the business. The Company has been very successful in partnering with local, state and federal agencies, including being awarded a $1.3 million federal grant for the development of innovative brachytherapy cancer treatments. L I S O T O P The market for medical isotopes is valued at approximately $5 billion worldwide and is expected to grow considerably over the next E Third Point Research, LLC E AMIC has exclusively licensed an yttrium-90 (Y90) polymer composite technology from Battelle Memorial Institute, developed at Pacific Northwest National Laboratory, a leading research institute for government and commercial customers. The license agreement grants AMIC the exclusive right to manufacture and market products using the Y-90 polymer composites for treating a broad range of cancers. Brachytherapy is a form of radiotherapy where a radiation source is placed inside or adjacent to cancerous tissues. In the case of treatment for prostate cancer, the radioactive isotopes are usually placed in small metal or glass shells called seeds. Many of these seeds are then inserted via catheters into the prostate where the radiation is delivered to cancerous tissue. Certain other cancers may be treated in a similar fashion with brachytherapy. Battelle and the Company have developed a new brachytherapy cancer treatment that combines products well known to the FDA. Y-90 is a well accepted medical isotope. It is currently approved in conjunction with antibodies or polymers for cancer treatment. The RadioGel device polymer composite building blocks are synthetic and natural non-toxic materials well known to the FDA for cosmetics and food applications. The Company regards the selection of yttrium-90 as the isotope for its brachytherapy products as a significant decision during product development. Apart from the introduction of the cesium-131 (Cs-131) isotope, which has a significantly shorter half-life relative to the isotopes used in legacy brachytherapy products, there has been little January 2014 2
  • ADVANCED MEDICAL ISOTOPE CORPORATION (OTCQB:ADMD) advancement in prostate related brachytherapy over the past few years. While the half-life of Cs-131 was a significant improvement over previously used isotopes at 9.7 days, Y-90s half-life is only 2.7 days. A shorter half-life is significantly desirable as the patient treated with brachytherapy is radioactive until the energy dissipates. In addition to a shorter half-life, Y-90 delivers a significantly higher average therapeutic energy, which delivers the prescribed dose of radiation much more quickly and which should provide more effective treatment and reduce patient side effects. Importantly, the Y-90 isotope emits short-range beta radiation, while other brachytherapy isotopes in use emit penetrating x-ray or gamma radiation. Short-range beta particles are easier to shield and yield much lower dose rates outside the patient. These features make beta emitters safer for medical workers, the patients family and others who are near the patient. The patent rights licensed from Battelle include several important features, one of which is for the use of a biodegradable polymer to completely replace the metal or glass casing used in previous generations of brachytherapy seed products. Metal or glass seeds, after dissipating the radioactive energy to kill the cancer cells, are left in the prostate. The biodegradable polymer, which is used in the Companys patented RadioGel device and polymer seed products eventually dissolves and is naturally absorbed by the body. The Company recently applied for 510(k) marketing clearance from the FDA and is expecting a positive response by mid-2014. Because predicate products are already on the market, we believe the odds of clearance are very high. The U.S. market for prostate-related brachytherapy products is approximately $300 million, with the worldwide market valued at approximately $600 million. The breast and liver cancer markets combined are similar in size to the prostate market, so addition of these two cancer types would double the potential market size. According to Bio-Tech Systems, the U.S. brachytherapy market is projected to reach $2.0 billion by 2016. Third Point Research, LLC Newer therapies, which deliver higher dosage rates of radiation over a shorter period of time, are now coming online. These are potentially more effective than are the traditional low dose, slow delivery brachytherapy products. The Companys Y-90 products could potentially offer many of the same benefits of these newer high dose therapies, but with a lower risk of side effects such as impotence and incontinence when treating prostate cancer. Additionally, the RadioGel device will likely be a much more cost effective solution, which could allow the Company to realize superior gross margins. For its longer-term pipeline, the Company also is active in the development of other medical isotopes and isotope technologies. As nuclear reactors age and are taken off-line for maintenance or decommissioned, many medical isotopes are in short supply, or soon will be. Though particle accelerators can produce isotopes primarily for diagnostic applications, these isotopes are not preferred for most treatments. The Company has installed a linear particle accelerator near its Washington State headquarters. The equipment is capable of producing a