Race for isotope shows Wisconsin's strength

The Milwaukee Journal Sentinel
Published: November 5, 2011

What does it say about a state's innovation-based economy when it boasts not one but two of the four U.S. companies racing to produce a medical isotope so essential that it's used in 50,000 clinical tests per day?

Something reassuring, it can be hoped, especially if you believe Wisconsin's future depends in part on its ability to grow new companies from within.

NorthStar Medical Radioisotopes and Shine Medical Technologies were among many emerging firms that presented to investors and others at last week's Wisconsin Early Stage Symposium in Madison. The event showcased companies across the technology spectrum - from novel software applications to nano-crystalline diamonds used in manufacturing to cancer-fighting drugs to "green" water treatments and building materials.

That kind of diversity speaks well of Wisconsin's reawakened entrepreneurial spirit, which will create jobs over time by spawning more start-up companies. The more companies that are seeded, the more likely it becomes that some will grow to maturity.

Know-how and talent

NorthStar and Shine are prime examples of companies poised to grow, even if it might appear they're in direct competition.

That's because both possess the know-how and talent to address an emerging national problem - a shortage of molybdenum-99, or "mo-99," which decays into a safe isotope used in 50,000 nuclear medicine procedures every day in the United States alone.

Called technetium-99m in its laboratory state, the isotope is used to diagnosis problems of the heart, kidneys, lungs, liver, spleen, bones and blood flow, among dozens of other conditions. It's an established, safe way of testing patients.

Here's the problem: None of this isotope is produced today in the United States. In fact, all of the foreign sources rely upon conventional nuclear reactors that average about 50 years old. Those reactors are likely to be decommissioned soon and some have already been shut down for repairs.

Although unique in ways that only a nuclear physicist would understand fully, the solutions being pursued by NorthStar and Shine involve producing mo-99 in commercial quantities at less cost while producing virtually no dangerous waste. They are two of just four companies being supported by the National Nuclear Security Administration as it pushes for more reliable and diverse domestic technologies.

The federal grants will help, of course, but both companies must raise millions of dollars from private investors to reach their goals of supplying the nation - if not the world - with mo-99. That's why both were pitching to investors in Madison, along with many other companies with technologies and business plans that hold potential.

Over two days, 43 companies at varying levels of maturity presented to angel investors and venture capitalists in three separate forums. An additional 53 companies were highlighted for winning $45 million in federal Small Business Innovation grants, which are merit-based awards that go only to companies that demonstrate the potential to turn their research into products. Dozens more companies were on hand to learn and network - or to tell their stories to younger companies following in their footsteps.

Venture capital lacking

If you're imagining Wisconsin has become a start-up Eden, however, think again. While the state has made significant strides in leveraging homegrown technology, creating companies, providing support for entrepreneurs and attracting the right talent, it still has one missing ingredient: investment capital.

"We have unbelievable assets, and we're way at the bottom in terms of venture capital," said Kevin Conroy, chief executive officer of Exact Sciences. He was among four C-level executives who spoke during a panel discussion about Wisconsin's assets and its challenges, especially for early-stage companies. All agreed that, while they have thrived, other companies run the risk of dying on the vine unless they find more investment capital.

Proposals to create a state-leveraged growth capital fund, with elements that would also spark angel and seed funds, are pending in the Legislature. A proposal endorsed by Gov. Scott Walker would create a $100 million fund that would attract about three times that amount in private capital, largely from outside Wisconsin, and pay back the state while creating jobs. It's similar to plans that have worked in other states.

The 100 or so start-up companies that gathered in Madison last week are the tip of a much larger iceberg called innovation. Much of it still lurks beneath the surface of the state's economic seascape, waiting to emerge when conditions are right.

In Wisconsin, most conditions are right. It has the basic research foundation and plenty of ideas with commercial potential. It has talented people who can help companies grow. It also has an emerging entrepreneurial culture.

Unless it finds a way to attract more capital, however, many of the seeds being planted here today will be transplanted to more fertile ground outside Wisconsin.