International Isotopes’ net loss doubled in 2017, but the company said the spike was driven by three factors that are not expected to repeat. It also has a number of growing business opportunities this year and beyond that should further bolster the bottom line, President and CEO Steve Laflin told RadWaste Monitor.
The Idaho Falls, Idaho, nuclear medicine company recorded a $3.76 million net loss for the year, according to its latest earnings report. The figure for 2016 was $1.88 million.
Management cited three specific contributors to the increased loss: a nearly $1 million non-cash write-down upon becoming managing member of New Hampshire quality control products manufacturer RadQual; higher legal fees, from $263,000 in 2016 to $791,000 last year, primarily from an unsuccessful arbitration over a shipping container that was never delivered after International Isotopes paid its deposit; and a $255,000 loss on the deposit for the container.
“These three factors fully account for the increased loss and are not expected to be a recurring factor in the Company’s financial statements going forward,” according to an International Isotopes press release.
Laflin said his company will not appeal the arbitrator’s decision in favor of California-based Alpha Omega Services over the container contract. “The track record for those is not encouraging at all, so we’re just going to move on,” he said in a Tuesday telephone interview.
In its earnings release, International Isotopes noted that overall revenue in 2017 increased by 13 percent on a year-over-year basis, from $6.55 million in 2016 to $7.42 million in 2017. While the company does not release revenue forecasts, that trend should be maintained or even grow this year, Laflin said.
Revenue was up in the radiochemical products, nuclear medicine standards, and radiological services business lines in 2017.
The only drop, 41 percent, was in sales of cobalt products used for cancer treatments and other medical purposes, along with cargo container security scanning. That was due to lack of cobalt supply dating to 2014 connected to the interruption of material from the Department of Energy’s Advanced Test Reactor in Idaho. However, the company has found a separate supplier that has already made three shipments of cobalt-60. The stream of processed cobalt from the Advanced Test Reactor is also expected to resume in late 2018, with sales in 2019.
While cobalt sales landed at only roughly $500,000 last year, Laflin said he expects them to soon return to International Isotopes’ annual historic levels of $2 million to $2.5 million: “We’ll begin to see that this year, maybe not all of that, but certainly by 2019.”
International Isotopes in 2017 secured contracts with the Energy Department and the International Atomic Energy Agency, the United Nations’ nuclear watchdog, for extracting radiation sources from therapy devices and shipping them to storage. Another four to five contracts are on the horizon, primarily from the IAEA, Laflin said. While he could not discuss specifics, the CEO noted that past projects were completed in Central and South America: “I think there’s still a few opportunities there, but also in other parts of the world as well.”
The U.S. Food and Drug Administration could rule by the end of 2018 on International Isotopes’ new drug application for a generic sodium iodide radiopharmaceutical product, which could be used for diagnosis and treatment of thyroid diseases, along with investigational and clinical trials of breast, lung, and other cancers.
The company submitted its application in 2016 and hoped for a response, potentially with approval, in the first quarter of 2017. Instead, the FDA asked for additional information, which International Isotopes should provide within 30 to 60 days. It could take six months after that for the FDA to issue its ruling.
After that, it should take just a couple months to begin sending product to the market, Laflin said. He said International Isotopes is not releasing revenue forecasts for the new product.
The facility, in development since 2004, would convert deputed uranium hexafluoride (DUF6) waste produced during uranium enrichment into depleted uranium tetrafluoride (DUF4) – which then could be converted via the Fluorine Extraction Process into high-purity fluoride gases which are in demand for a host of applications such as production of microelectronics parts and high-speed silicon chips.
The company has operated a pilot facility in Idaho and has a 40-year license from the Nuclear Regulatory Commission to build and operate the New Mexico plant. But there is only one potential U.S. customer at this point – Eunice, N.M.-based uranium enrichment provider URENCO USA.
“They are operating, they are producing [DUF6] tails, they are stockpiling waste on their site,” Laflin said. “It is a looming problem. If they reach the point where their license limit is, at some point in the future that’s a tremendous amount of material and a tremendous liability for somebody to take on and clean up.”
But with the downturn in the nuclear power market, with an increasing number of utilities announcing plant closures, there is little likelihood of additional uranium enrichment providers coming online to produce nuclear fuel. Given that, the de-conversion facility has been on hold since 2013. The first-of-its-kind nature of the project financing required that the plant be fully under contract, but URENCO only wanted to use roughly half of the facility’s capacity, Laflin said.
Under a project participation agreement with Lea County, International Isotopes was originally required to begin construction on the plant by the end of 2014. That did not happen, and a July 2015 amendment extended deadlines to Dec. 31, 2016, to begin construction and Dec. 31, 2017, to complete the first phase and have 75 employees on the job.
Those dates also passed without construction beginning, and International Isotopes is in talks with Lea County to again stretch the deadlines to 2020 or later. If “Lea County does not agree to that modification and we do not retain title to the property, it could have a material adverse impact on our planned de-conversion and FEP project since another location would need to be selected and evaluated for environmental compliance,” International Isotopes said in its latest 10K filing with the U.S. Securities and Exchange Commission.
Before the project was put on hold, the company spent about $19 million to $20 million, half of which was for securing the NRC license, Laflin said.
The CEO acknowledged URENCO could turn to the Department of Energy for DUF6 conversion at the federal agency’s operational plants in Kentucky and Ohio. But International Isotopes’ costs would be lower, he said.
In the meantime, there is little pressure to expedite another extension of the agreement with Lea County.
“We’ve presented a proposal to revise the agreement with date extensions,” Laflin wrote Thursday in a follow-up email. “The county and representatives from the State have verbally agreed to such an extension, however, the actual modification to the agreement has not been completed at this point.”
