Jeremy L. Dillon
RW Monitor
2/21/2014

Perma-Fix Environmental Services announced this week that it would form a subsidiary company, Perma-Fix Medical Corporation, which will focus on the production of the medical isotope Technetium-99 (Tc-99m). With Canada set to stop government spending in 2016 on the National Research Universal (NRU) reactor in Canada, one of the world’s largest suppliers of Tc-99m, the medical isotope industry is expecting a shortage in the market. “As a result of data in support of our technology, we made the strategic decision to separate our medical technology for the production of Tc-99m from our core nuclear services,” Perma-Fix Chairman and CEO Louis Centofanti said in a release. “Our plan is to independently fund this new medical technology at the subsidiary level. In this way, we believe we can efficiently and effectively bring the technology to market, while minimizing dilution to our shareholders.”

With this new subsidiary, Perma-Fix can better highlight the new technology away from its other core business, Centofanti said. “It’s so much different than our core business,” Centofanti told RW Monitor this week. “We see value in actually setting it up as a free-standing entity. We have been financing this thing for the past three, four years, and we see it having several values: being able to validate the technology through these efforts; allowing Perma-Fix to stop funding it; and giving more visibility to our investor base of the technology and its value. I think out of this most people will be surprised by the value seen in this new subsidiary,” he said.

Perma-Fix has tapped WDM, a microcap investment bank based in Poland, to assist in raising funds for the new company. “We are getting ready now to go to the FDA and the EU equivalent,” Centofanti said. “With that, we will need a higher level of funding for the project to go through the FDA process so that’s the catalyst to do that.” Centofanti said that much of Perma-Fix’s research and development is based in Poland and the company is comfortable operating with a Polish bank, but he characterized the main reason for using a European bank as “seeing much greater interest in trying to fix the present system from the European market than in the U.S.”

Centofanti highlighted the new technology as a “safer and more cost-efficient” alternative to how the medical isotope is currently produced. Usually, the manufacturers produce the isotope through thermal fission of highly enriched uranium in specialized reactors, but this process results in high levels of radioactive waste that raises proliferation concerns. With Perma-Fix’s new process, those concerns are avoided by using natural aluminum that are irradiated in small reactors more widely available than the specialized reactors, eliminating the weapons grade uranium waste problems. “Importantly, the process we developed meets the US and global market supply needs for Tc-99m without the use of weapons grade uranium, which we believe will assist in reducing environmental concerns associated with the current production methodology, including issues around reprocessing of materials and production of high level waste requiring permanent disposal,” Centofanti said. “Additionally, we expect our new process will reduce the threat associated with international production, transportation and/or use of highly enriched uranium in the production of medical isotopes.”