(Janesville, WI) By Jim Leute, Gazette
SHINE Medical Technologies has signed a massive debt and equity financing deal that company officials said brings their medical isotope plant one step closer to reality in Janesville.
The $125 million deal is with Deerfield Management, a New York health care investment firm.
Katrina Pitas, SHINE vice president of business development, said the deal will go a long way in helping SHINE build its $100 million manufacturing plant on Janesville's south side.
When it opens in 2017, the plant is expected to produce more than a quarter of world supply for the most commonly used isotope in nuclear medicine, molybdenum-99.
SHINE plans to use low-enriched uranium in a series of eight accelerators to produce molybdenum-99, which is used in more than 30 kinds of diagnostic imaging procedures and more than 40 million medical imaging tests each year.
The company wants to fill a void expected when two other nuclear reactors that use highly enriched uranium to produce isotopes are taken out of service in 2016 and 2020. The plants in Canada and the Netherlands are the world's leading isotope suppliers.
Under the terms of the financing, Deerfield would provide SHINE loans in milestone-driven phases, Pitas said. She could not discuss the specific milestones, she said.
A portion of Deerfield's commitment also would include equity financing.
“Part of it will be equity financing, which will help with the construction, but the majority of it will be debt financing,” Pitas said.
Steve Hochberg, a partner at Deerfield, said the firm wants to be a part of the solution to the shortage of Mo-99 in the United States.
“We are encouraged with the progress that the SHINE team has made to date on its novel approach to produce Mo-99 from low-enriched uranium,” he said.
The Department of Energy's National Nuclear Security Administration also is matching every dollar SHINE raises up to a total of $25 million.
The combination of funding sources will be used to complete the design and construction of the plant and cover ramp-up costs.
SHINE officials have estimated that construction, equipment and regulatory costs will hit $180 million by the time the plant opens.
In Janesville, SHINE expects to fill at least 125 high-paying jobs.
“This is really huge for us, not only for what it is but also because of the catalyst it provides for the project,” Pitas said.
Greg Piefer, SHINE founder and chief executive officer, said the company has gained significant momentum in 2014.
SHINE signed a distribution agreement with GE Healthcare to distribute Mo-99.
In June, SHINE agreed to discussions with Indonesian representatives about a possible investment in the Janesville plant and a second SHINE plant in Indonesia to serve the Eastern Hemisphere.
Three months later, it announced a $2.4 million fundraising deal to cover operating costs as it works to get a construction permit from the Nuclear Regulatory Commission.
“This is an important step toward complete financing of our North American plant,” Piefer said about the Deerfield deal.
“Deerfield's reputation in the healthcare industry is unparalleled, and I'm thrilled they share SHINE's vision for a reliable, domestic supply of medical isotopes.”
Pitas said the company continues to work with the NRC, which has completed its first review of SHINE's plans and is now requesting additional information.
SHINE isn't the only U.S. company searching for a solution to the Mo-99 shortage.
In fact, it's not even the only Rock County company eyeing the problem.
NorthStar Medical Radioisotopes broke ground in July on a medical isotope production plant in Beloit.
Initially, about 20 employees will work in the Beloit plant, and employment could grow to 165 by 2018.