[Updated 4/25/19, 11 am CT. See below.] U.S. technology startups continue to pull in heaps of cash to try and stave off shortages of a crucial medical radioisotope.
NorthStar Medical Technologies said this week it closed a deal to receive up to $100 million in secured debt financing from funds managed by Oberland Capital Management. Beloit, WI-based NorthStar said it received $75 million up front, and the company has the option to draw $25 million more by the end of 2020.
NorthStar said it will use the funding to expand its capacity for producing the isotope molybdenum-99 using processes that don’t involve uranium. The company produces batches of the isotope at a nuclear reactor in Columbia, MO, as part of a partnership with the University of Missouri Research Reactor, though NorthStar’s long-term plan is to also manufacture molybdenum-99 at its Wisconsin headquarters using electron beam accelerators, a spokesperson told Xconomy. [Added spokesperson comment to clarify production plans.—Eds.]
Molybdenum-99 decays into technetium-99m, the most widely used radioisotope in medical imaging procedures. Scarcity of the key radioisotope in recent years has sparked concern and kicked off a race between several U.S. companies to resume domestic production of the material. NorthStar began making and selling molybdenum-99 last year, becoming the first domestic producer of the radioisotope in more than 25 years.
NorthStar also sells a device called the RadioGenix System, which decays the molybdenum-99 into technetium-99m. The FDA approved NorthStar’s device last year. The company’s business model involves selling molybdenum-99 and the RadioGenix device to nuclear pharmacies, which compound and dispense radioactive materials for use in procedures involving radioisotopes and other nuclear medicines. These nuclear pharmacies use NorthStar’s equipment to decay the molybdenum-99 into technetium-99m, and sell the finished product to hospitals.
In addition to boosting its manufacturing capacity, NorthStar said it will use the financing to help make its production processes more efficient, enhance the RadioGenix System, and invest in research and development. The company’s projects include a 20,000-square-foot expansion of its Beloit facility and augmenting its manufacturing capabilities at its facility in Missouri.
“NorthStar is further investing in the future with additional planned expansions and ongoing R&D activities,” NorthStar CEO Stephen Merrick said in a prepared statement.
The investment comes about five months after a nearby competitor, Shine Medical Technologies, secured a windfall of its own. In November, Janesville, WI-based Shine said it raised a $30 million Series B venture funding round. It also closed a separate agreement with Deerfield Management, which will provide Shine with up to $150 million in financing, to be doled out in stages if Shine hits certain milestones.
Shine—which uses a different method than NorthStar currently uses to make molybdenum-99, involving particle accelerators—has yet to begin producing the isotope for customers. The company recently said it plans to break ground in early May on its planned facility for producing medical isotopes at a commercial scale. Manufacturing operations are expected to begin in 2021, Shine said in November.
Shine CEO Greg Piefer told Xconomy in 2015 he didn’t think getting to market first would spell the end of the competition between the U.S.-based medical isotope technology companies. (Another player is Coquí RadioPharmaceuticals.) Indeed, if the recent financing deals for NorthStar and Shine are any indication, the war for market dominance is just getting started.