Could not pass it up...bot at 5.50 today...2 months ago we hit 19.50...that was the 52wh and lifetime high (those were the days <GG>...seems like ages ago that everything was pointed northward...actually has been a little over a month). Been following this one for a long time and i think we have an exciting future ahead, notwithstanding the present dislocation in the mkts:
gpg
Isonics To Expand Si28 Wafer Production to 600,000
Over Next 12 months and Double Lifescience's
Revenues and Margins Over Next 36 Months
GOLDEN, Colo.--(BUSINESS WIRE)--April 26, 2000--Isonics Corporation (OTCBB:ISON - news, ISONW - news)
provided the following the text of Isonics' President & CEO James E. Alexander's address to shareholders at the annual
meeting held today:
Ladies and Gentlemen,
Good Morning and welcome to the Isonics Corporation 1999 Annual Shareholders Meeting.
I would like to highlight the major milestones we have recently achieved and to highlight opportunities and goals for the next
twelve months. First, I would like to welcome the great many new shareholders who have come on-board only this year. From
discussions with a number of them, they invested because of Isonics' opportunities in the semiconductor market. While we plan
to not disappoint them, I want to assure you that while our opportunities in the semiconductor market are great, Isonics'
business activities in other areas are equally as promising.
In fiscal 1999 Isonics achieved a record $17 million in revenues. In December of last year, we sold our depleted zinc business
to Eagle-Picher for $8.2 million. Going forward without the depleted zinc revenues, we will have core business revenue of
about $12 million from the sale of stable and radioactive isotope products used for medical imaging & therapy, diagnostics,
drug design, and basic research. We have over 300 customers in twelve countries on four continents. This business is profitable
on a stand-alone basis and has substantial growth potential. To realize this potential, Isonics plans to:
Actively expand our marketing efforts in new territories with selected new products with more added-value for our
customers.
Restructure relationships with our existing isotope suppliers to become a true partner, not just a buyer.
Acquire or invest in companies that presently use isotopes or have new isotope technologies with substantial growth
potential.
For our existing businesses, Isonics has targeted an average of 25% growth in revenue and a 20% improvement in margins,
averaged annually over the next three years. This means improving average margins to about 40% and doubling revenue to
about $24 million, exclusive of any acquisitions or major new product initiatives.
Among the new product initiatives are several outstanding opportunities, one of which is brachytherapy. This is a cancer
treatment that consists of implanting radioactive ``seeds'' about the size of a grain of rice into a tumor. This has recently received
significant attention since it has recently been shown to be as effective in the treatment of prostate cancers as surgery, but
without undesirable side effects such as impotence. This market is estimated to grow substantially from its 2000 level of about
$200 million to over $500 million as male baby-boomers age. The most expensive ``seed'' component is the radioisotope,
estimated to be as much as 20% of the selling price. This represents a market size approaching $100 million annually just for
the radioisotope.
Iodine-125 is the predominant radioisotope being used in prostate brachytherapy ``seeds'' today. Isonics supplies the stable
isotope xenon-124 to others who make iodine-125 from it in a nuclear reactor. We also supply the radioisotope iodine-125
directly to ``seed'' manufacturers. We have and are supplying iodine-125 and xenon-124 to Nycomed-Amersham,
International Isotopes, and Implant Sciences.
Palladium-103 is another radioisotope that is used in about 30% of all ``seeds''. Its shorter decay half-life can lead to a more
efficient use of its cancer-killing energy, arguably making it a better cancer therapy agent. At present, palladium-103 is
substantially more expensive than iodine-125. If palladium-103 were available at comparable price levels to iodine-125, many
believe it would be the isotope of choice. Theragenics Corporation is the major supplier of Pd-103 ``seeds'' today.
Isonics has identified several novel approaches for producing palladium-103 which show promise to be substantially less
expensive than conventional methods. We believe we can commercialize one of these potentially patentable methodologies and
capture a substantial part of this $100 million market for brachytherapy isotopes.
Another substantial opportunity for Isonics is Positron Emission Tomography (PET). PET is a medical imaging technology that
can see areas of high biological activity and detect very early stage cancers sooner than other available methods. If cancer can
be found in an early stage, it can be treated more effectively, at lower cost, and at a higher rate of success. While PET imaging
is somewhat more expensive than the other technologies, the overall cost of patient treatment is less and the value much greater.
PET uses the radioisotope fluorine-18 which is produced in a medical cyclotron from stable oxygen-18. Isonics is arguably the
second largest supplier of oxygen-18 world-wide. We do this in conjunction with our supply partner Global Scientific
Technologies. Our plan is to expand oxygen-18 by building a U.S. plant using our partner's technology. We are also
considering expanding our presence in this growing business by investing in one or more of our major customers. The market
for fluorine-18 is expected to reach several hundred million dollars per year within the next five years.
Carbon-13 is the rare, stable isotope of carbon. Isonics has been supplying carbon-13 products since our founding in 1993.
The major uses of carbon-13 are drug design and diagnostic breath tests (DBTs). DBTs are tests in which a patient ingests a
carbon-13 labeled compound. Breath samples are taken and analyzed. Changes in the carbon-13 content can be used to
detect disease, triage patients, track therapy, and generally assess health. These tests require FDA approval and are somewhat
more expensive than the conventional tests they replace. For this and other reasons, DBTs have not met growth expectations.
Isonics has identified a new, lower cost technology for the production of carbon-13. We intend to obtain an exclusive license to
this technology and to develop it into a commercial process. We have also identified a number of carbon-13 based tests that
can be applied to wellness, weight loss, fitness, lifestyle, and nutrition, and will not require FDA approval. Our intention is to
develop these tests for the over-the-counter market.
The above three initiatives will require some incubation time, but hold the promise to increase top line performance over
five-fold in three to five years with very strong margins.
Now let's move on to silicon-28. We are very pleased with our progress. Research to date has been quite promising. Effort to
penetrate the high performance microprocessor market is proceeding as planned. We are continuing to meet requests for, and
provide wafers to, chip manufacturers such as Applied Micro Devices and Cyprus Semiconductor, and government supported
research projects. Heat management remains one of the industry's greatest hurdles. Even the temperature distribution within the
chip itself is a major issue. We believe silicon-28 is an answer.
The response from conference participants at Semicon Europa 2000, Europe's largest semiconductor conference, indicated
that our efforts promoting the benefits of isotopically pure silicon-28 have been quite effective. We were sought out by a
number of companies wanting to try silicon-28 in such varied applications as silicon-germanium devices, SOI wafers, low
temperature sensors and filters, photovoltaic devices and solar cells, power semiconductors, fiber optic devices, and a ``lab on
a chip''. Working with these companies is an excellent way to leverage our resources to identify commercial opportunities, any
one of which could result in substantial orders.
We are continuing to develop our supply chain to demonstrate to potential customers that we can provide both epitaxial and
bulk silicon-28 wafers at the appropriate quality, quantity, and price in order to make silicon-28 the material of choice in
applications where its superior heat conductance properties can be fully exploited.
During the next twelve months we plan to grow our present capacity of 100,000 epitaxial wafers per year to over 500,000.
We also plan to produce an initial quantity of 1,000 bulk wafers and to grow that capacity to over 100,000 per year over the
next 24 months.
Our Eagle-Picher relationship has really moved us ahead by providing a less expensive and U.S.-based source of silicon-28.
The pilot production presently operating will deliver its first material next month and provide the basis for our early production.
Very soon, we will have discussions with Eagle-Picher regarding substantially increasing their capacity to support our forecasts.
We are expanding our ability to turn the raw enriched silicon-28 (made by Eagle-Picher and our Russian suppliers) into high
purity gases needed to produce epitaxial wafers and to produce the polysilicon metal needed to make bulk wafers. We have
initially out-sourced this production, but are now bringing this technology in-house so we can have better quality and cost
controls.
Isonics plans to formalize relationships with at least one first tier wafer manufacturer and one major polysilicon producer.
Employing their proven production technology will definitely provide the level of confidence needed by a customer to commit to
large, long-term orders.
Also, in the next year we will explore the possibilities for isotopically pure gallium. Gallium is used in such compound
semiconductors as gallium arsenide, gallium phosphide and gallium nitride - all of which are covered by the Yale patents to
which Isonics has exclusive rights. These compounds are used to manufacture lasers and light emitting diodes (LEDs). The
thermal conductivity of these materials is notoriously poor while these devices generate large amounts of heat that limits product
lifetimes. No one has measured the thermal conductivity or even produced isotopically pure versions of these materials. It will
be another first for Isonics. We expect to find a benefit, the size of which we cannot predict. If it is in the range of silicon-28,
we would expect to proceed to provide sample materials to device manufacturers for evaluation. I am personally excited about
these possibilities.
Last, but by far from least, let's talk about Interpro. We acquired Interpro in 1998 because it was a key part of our depleted
zinc supply chain, and because it provided other materials processing technologies which we believed would enable us to create
additional added-value products. Interpro's base business was supplying contract R&D services for the mineral processing and
environmental remediation industries. Shortly after the acquisition, we began looking for ways to exploit Interpro's capabilities.
We have found an excellent fit in the recovery and recycling of zinc. While this is not isotopic zinc, it is an opportunity of great
dimensions.
Aspects of this technology are potentially patentable, therefore I cannot provide as much detail as I would like at this time. I can
say that our progress to date has exceeded our expectations and we are ahead of schedule for a pilot scale test this summer
with a full-scale plant being built within eighteen months. One such plant could produce 30,000 tons of zinc worth over $30
million at current prices and be exceptionally profitable. We can envision two such plants in the U.S. and one each in Western
Europe and Asia.
Our plan is to obtain a strategic investment directly into Interpro, based on the success of the pilot scale demonstration. Since
this is not an isotope-based opportunity, we would expect to divest Interpro to a strategic partner or spin it off as an IPO
sometime in the 2001/2002 timeframe.
To let you judge our progress over the next year, I'm going to provide twelve objectives the management team has committed
to meet:
Life sciences and healthcare
Show revenue growth and margin improvements on existing products
Announce new brachytherapy strategy
Break ground on U.S. oxygen-18 facility
Launch carbon-13 wellness/fitness business
Electronic materials
Announce formal wafer manufacturing partnership
Produce silicon-28 bulk wafers
Begin at least 5 more silicon-28 evaluation projects
Sign at least one licensing or development agreement with a major microprocessor manufacturer
Begin isotopically pure gallium development
Corporate
Begin trading on NASDAQ
Complete warrant exchange offer
Obtain strategic investment in zinc recycling project
This is a large and aggressive set of important objectives for fiscal year 2001. I believe we should be judged successful if we
meet only 80% of them. I believe we can meet them all!
Thank you again for coming today and for your continued faith in Isonics.
Isonics Corporation is a specialty chemical and advanced materials company which develops, commercializes, and markets
stable and radioisotope based products. These ultra-pure materials provided enhanced performance properties and have
commercial applications in several areas, including semiconductor devices, medical diagnostics, imaging and therapy, drug
development, and energy production. For more details, visit Isonics Web site at www.isonics.com.
Except for historical information contained herein, this document contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks and uncertainties that
may cause the Company's actual results or outcomes to be materially different from those anticipated and discussed herein.
Other important factors that the Company believes might cause such differences are discussed in the risk factors detailed in the
Company's 10-KSB for the year ended April 30, 1999 filed with the Securities and Exchange Commission. In assessing
forward-looking statements contained herein, readers are urged to carefully read all cautionary statements contained in the
Company's filings with the Securities and Exchange Commission.
Contact:
Cameron Associates
Michael Brod
212-245-8800
michael@cameronassoc.com
or
Isonics Corporation
James E. Alexander
303-279-7900 |
