September 23, 2010 / 11:02 AM / 7 years ago

UPDATE 2-MDS Nordion taps Russian supplier for isotopes

* MDS says companies could explore forming joint venture

* Unit aims to supply up to 20 percent of global supply

* MDS shares rise 1.8 percent

TORONTO, Sept 23 (Reuters) - Canada’s MDS Nordion MDS.TO, one of the world’s largest provider of isotopes used to diagnose cancer, said on Thursday a state-owned Russian producer will become one of its suppliers, providing a cushion against further shutdowns of an aging Canadian reactor.

A unit of Rosatom State Corp will supply MDS with molybdenum-99 (Mo-99), the most prominent isotope used in nuclear medicine. It is the parent isotope for technetium-99m, used in roughly 80 percent of nuclear medicine procedures globally. Applications include diagnosing heart disease or detecting hard-to-find cancers.

MDS said it will exclusively process, distribute and sell Mo-99 supplied by Rosatom’s Isotope unit outside Russia until 2020. In addition, the two companies may form joint ventures and other programs.

MDS said the deal will help offset the impact of any more shutdowns at Atomic Energy of Canada Ltd’s (AECL) Chalk River nuclear reactor in Ontario, the main supplier of isotopes to MDS.

Chalk River is one of the few reactors in the world that produce commercial quantities of Mo-99. Isotope aims to join its ranks.

While MDS sees limited supplies initially, it said the goal is for the Rosatom unit to produce up to 20 percent of global Mo-99 demand to help back up MDS’s long-term requirements.

Chalk River, which reopened recently, closed in May 2009 when the AECL discovered a heavy water leak at the facility, also known as the National Research Universal reactor. MDS took a severe hit following the closure.

The 53-year-old NRU is the world’s oldest reactor. When it is in full operation, it has provided about 35 to 40 percent of the world’s medical isotopes and roughly 50 percent of those used in North America.

Given the reactor’s age, MDS has been exploring other supply options. Last week, it said that market demand has become uncertain following the shutdown of the aging reactor, forcing MDS’s customers to diversify supply sources. [ID:nN15241028]

Canada plans to spend C$35 million over next two years to help develop new technology to produce medical isotopes.

The Ottawa-based company was known as MDS Inc until last year when it sold off its other businesses to focus on nuclear imaging, radiotherapy and sterilization technologies. By the end of 2010, it plans to change its name once again, to Nordion Inc.

Shares of the Ottawa-based company were up 19 Canadian cents, or 1.8 percent, at C$10.53 on the Toronto Stock Exchange midmorning on Thursday.

$1=$1.03 Canadian Reporting by Solarina Ho, additional reporting by Ashutosh Joshi in Bangalore;+1 416 941 8067; Reuters Messaging:

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