MDS warns of severe isotope shortages on reactor delays

MDS Inc warned of severe global shortages of the medical isotopes used to treat and diagnose cancer if there are any further delays in returning Ontario’s Chalk River nuclear reactor to service.

Atomic Energy of Canada Ltd. said this week that repair work at the reactor, which has been out of commission since May last year, was slower than anticipated. The facility, which provides about a third of the world’s supply of isotopes, was scheduled to be back in production in March.

“There is potential for a shortfall in global supply that is more severe than anything we have seen in the past,” Steve West, who took over as chief executive of MDS last week, said in an interview. “This is a subtle change that could be very impactful,” he said of the AECL report.

West said MDS, which supplies more than half of the world’s isotopes, is currently studying the potential impact of the delay on global supply.

Medical isotopes are used in the diagnosis and treatment of diseases such as cancer. The shutdown last year by the Chalk River facility triggered a major shortage of the elements, leading to delays in cancer and cardiac tests for thousands of patients.

Getting Chalk River up and running is even more urgent now, as a major reactor in the Netherlands is scheduled to go offline for maintenance on Feb. 19.

West said MDS is also seeking to secure other sources of supply for the isotopes. The company is talking to Russia’s Karpov Institute of Physical Chemistry in Moscow and is working with the TRIUMF Laboratory, based at the University of British Columbia in Vancouver, on alternative ways of producing the form of molybdenum used in the isotopes without uranium.

In the short-term however, West says the most effective way of boosting supply would be to restart work on the Maple nuclear reactor project that was supposed to replace the more than 50-year-old National Research Universal reactor at Chalk River.

The government pulled the plug on the Maple project, in which MDS had invested more than $300 million, in 2008. The Ottawa-based company is now involved in a $1.6 billion lawsuit with the government over the affair.

“We believe with third-party involvement, if you got on with it quickly, the Maple facility could be up and running in two-to-three years,” West said.

He said MDS would not be prepared to put up any more of its own cash to complete the project. The Chalk River shutdown is already wiping about $4 million a quarter off the company’s earnings before interest, tax, depreciation and amortization, or EBITDA.

“We have already invested a huge amount in it,” he said. “We would support a sensible and sustainable business plan.”

MDS is repositioning the company to focus on the $4 billion-a-year medical isotopes business. It has sold its MDS Analytical Technologies business to Danaher Corporation and is in talks with interested parties over its MDS Pharma Services unit.

Even taking account of the current losses from the Chalk River shutdown, West said the MDS Nordion isotope unit “remains a viable standalone business.”