TORONTO - The new CEO of nuclear medicine company MDS Inc. (TSX:MDS) is hopeful the government-run reactor that supplies the company will be up and running again soon, but MDS isn't taking any chances and is working to secure several new sources of isotopes.
"Our overall goal is to continue to maintain our leadership position, that's our goal, and I would anticipate that by evaluating various long-term supply options we'll be in a position to do that," Steve West said in an interview.
West said he will continue his predecessor's quest to have Ottawa resurrect its dormant MAPLE reactor program, which would have seen two already-built reactors in Chalk River, Ont., replace the aging National Research Universal reactor, which has been shut down since May due to a heavy water leak.
The shutdown of the reactor, which produced about a third of the world's supply of medical isotopes, has resulted in a global shortage of the product, used to diagnose and treat cardiac problems, neurological conditions and several types of cancer. Exacerbating this is the pending shutdown of a similar reactor in the Netherlands.
"Of all the options that are out there currently, this is the one that I think is most expedient to secure long-term supply," West said.
AECL and MDS's isotope division, Nordion, undertook the MAPLE project in 1999. Nine years later, the project was millions over budget and years behind schedule when the Conservative government pulled the plug.
In response, MDS filed a $1.6-billion lawsuit against AECL and the federal government, alleging negligence and breach of contract.
MDS is determined not to rely on any one supply of isotopes, and is securing other sources in case the MAPLE reactors never come online, West said.
The new sources include partnerships with the Karpov Institute of Physical Chemistry in Moscow and the TRIUMF laboratory at the University of British Columbia. The company is also currently evaluating "other possibilities for long-tern supply," he added.
West, formerly head of MDS's Nordion business, officially replaced Stephen DeFalco as CEO of the company last week as part of its attempt to reinvent itself as a smaller, more focused medical isotope business.
In September, MDS said it would sell off most of its business units so it could focus on Nordion. Under DeFalco, MDS set out to grow in the United States and internationally through acquisitions, but failed to perk up MDS's sagging share price or financial performance.
The company is in the process of selling its Analytical Technologies business for $650 million to Washington, D.C.-based Danaher Corp. (NYSE:DHR) and has promised to return between $400 million and $450 million of the money it gets from the sale to shareholders through a share buyback.
Additionally, MDS has put its Pharma Services unit up for sale, and West said MDS is making progress in talks with "interested parties."
"I'm a big believer in focus and priorities and I think the decision to focus on the Nordion business will serve shareholders well going forward," West said.
Despite the troubles at the NRU reactor, MDS's renewed focus on its "core strengths" of medical isotopes, radio-therapeutics and sterilization technologies will position it well to succeed going forward. As well, the company is working to develop its research and development capabilities through collaborations such as a recent partnership with the University of Ottawa's Heart Institute, West said.
And a new focus on helping other companies bring their products to market gives MDS a better sense of new developments in the field of nuclear medicine and could lead to manufacturing partnerships down the road, he added.
West, who holds a degree in genetics from the University of London, joined MDS in 2001 and was named president of MDS Nordion in 2003.
Shares in MDS lost two cents to $7.80 in Monday trading on the Toronto Stock Exchange.