U.S. Army Awards Phoenix Nuclear Labs $3.6M in Contracts

Phoenix Nuclear Labs, which has developed particle accelerator-driven technology with applications in areas such as weapons inspections and medical imaging, said on Tuesday that it had been awarded two contracts by the U.S. Army worth a combined $3.6 million.

Under the terms of the first contract, valued at $2.6 million, Monona, WI-based Phoenix will deliver to the Army a neutron radiography system for detecting defective munitions. Neutron radiography is a nondestructive way of inspecting objects that’s similar to X-rays, Phoenix said. The system will be the first of its kind to be installed in an ammunition manufacturing facility, said Evan Sengbusch, Phoenix’s vice president of business development.

The deliverable for the second contract, which is worth $1 million, is not a machine but a report, Sengbusch said. Phoenix’s objective is to show that its technology, which will rely on the same neutron source it’s developing under the first contract, can identify concealed explosives as far as 20 meters away, he said.

Sengbusch said that if Phoenix successfully demonstrates its technology in a lab setting, the likely next step would be to build a new, compact neutron source and “prove the principle out in a more operational setting.” That might mean mounting a neutron generator to a vehicle and driving on a test range to assess the system’s detection capabilities, he said.

The agreements come less than two years after Phoenix won a $3 million contract from the Army to build a neutron radiography device. “The Army’s support for PNL’s technology over the last eight years has been tremendous,” Sengbusch said.

While X-rays and neutron radiography both provide the ability to “see” through metal without interacting with it, the latter technology is better at penetrating shell casings and other high-density materials, said Ross Radel, Phoenix’s CEO.

Phoenix, launched in 2005, has so far delivered several of its neutron generator systems, including one to Picatinny Arsenal in Wharton, NJ, Sengbusch said. Another went to Shine Medical Technologies, a company that shares space—and history—with Phoenix.

Phoenix is the exclusive supplier of neutron generators that Shine plans to use to manufacture molybdenum-99, the material that decays into technetium-99m, the most widely used radioisotope in medical diagnostic imaging.

Shine projects it will start producing molybdenum-99 in 2018 at a plant in Janesville, WI, about 40 miles southeast of the Monona facility from which Shine and Phoenix currently operate. Shine received a key construction permit from the Nuclear Regulatory Commission in February, and the company has said it expects to break ground sometime next year.

Both Phoenix and Shine were founded by Greg Piefer, a nuclear engineer who earned a Ph.D. from the University of Wisconsin-Madison. Piefer started Shine in 2010, around the time the U.S. Department of Energy’s National Nuclear Security Administration created a program aimed at spurring domestic production of molybdenum-99. That same year, Phoenix hired Radel, who said he started out doing technical work, “and that evolved into running the company.”

Phoenix’s technology has potential uses in fields beyond medical imaging and defense, Sengbusch said, such as solar-cell production, semiconductors, and the testing and calibration of nuclear reactors.

Sengbusch said that Shine will likely be moving to Janesville before construction on the new plant is complete, possibly as soon as this fall. That will give Phoenix, which currently has 31 full- and part-time workers, a little more elbow room, he said. But eventually they’ll require additional “bunker” space, he said, describing the areas where Phoenix runs and tests its machines. Sengbusch said his company plans to build or retrofit a facility in the next few years, but remain in the Madison, WI, area. If Phoenix elects to construct a new headquarters, the company will not have to go through the same permitting process as Shine, which plans to use radioactive material at its plant and is therefore more strictly regulated, he said.

The total amount of money that has come into Phoenix is “past the $20 million mark,” Sengbusch said. That figure includes about $10 million in grants, $5 million in equity funding, and at least $5 million in commercial contracts, he said, adding that the company expects to be profitable or come “very close” to breaking even in 2016. Sengbusch declined to say what Phoenix’s revenues were in 2015, or share sales projections for the current year.

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