Nordion and Global Medical Isotope Supply

(Updated March 2012)

Understanding Medical Isotopes

• Nuclear medicine is one of the most powerful analytical tools available to physicians and patients today because of its ability to provide dynamic views of organ structure and function.
  
  
• Medical isotopes, a critical component of global nuclear medicine, are very small quantities of radioactive substances used in safe, cost-effective imaging and treatment of disease.
  
  
• Once processed into radiopharmaceuticals, medical isotopes are used to diagnose and treat many diseases, including cardiac and neurological conditions and several types of cancers.
  
  
• Over 10,000 hospitals worldwide use radioisotopes in medicine, and about 90% of the procedures are for diagnosis. The most common radioisotope used in diagnosis is technetium-99, with some 30 million procedures per year, accounting for 80% of all nuclear medicine procedures worldwide¹.
  
  
• Medical isotopes have a short shelf life and therefore cannot be inventoried.

Nordion and the National Research Universal reactor (NRU)

• Nordion is a highly reliable and flexible supplier of medical isotopes, including Mo-99.
  
  
• Nordion obtains its medical isotopes primarily through Atomic Energy of Canada Ltd. (AECL), which owns and manages the NRU, which has been in service since 1957.
  
  
• The NRU provides Nordion with flexibility and scalability and allows us to be responsive to customer needs.
  
  
• Currently, six nuclear reactors supply 90-95% of the world's medical isotope demand:
  

  Reactor	Location	Age
  Maria	Poland	38
  Osiris	France	46
  Safari-1	South Africa	47
  BR2	Belgium	51
  HFR Petten	Netherlands	51
  NRU	Canada	55

  
  Source: OECD, Interim Report on the supply of Medical Radioisotopes, 2010
  
  
• In October 2011, the Canadian Nuclear Safety Commission renewed AECL's operating licence for the Chalk River Labs, including the NRU, to 2016.
  
  
• On February 9, 2012 the Government of Canada published a Request for Expressions of Interest (RFEOI) concerning the restructuring of AECL's Nuclear Laboratories, which include NRU.
  
  
• Nordion has a long term supply agreement for isotopes from the facilities described in the RFEOI and has responded to the RFEOI accordingly.

Nordion's agreement with Russia's JSC Isotope

• In September 2010, Nordion announced it had entered into a supply agreement with a Russian Federation partner, The Open Joint Stock Company "Isotope" (JSC Isotope) for a supplemental supply of Mo-99 until 2020.
  
  
• JSC Isotope continues to develop its processing capability and capacity of Mo-99 from three reactors in Dimitrovgrad, Russia.
  
  
• We expect to receive quantities sufficient for regulatory approval testing in late 2012.
  
  
• Based on the processing issues experienced to date by JSC Isotope, we estimate that once they have fully ramped up supply, which we expect to occur prior to 2016, JSC Isotope will be able to supply significantly less than our current supply requirements. At this time we cannot estimate the amount that JSC Isotope can supply as we are still validating their capacity. We expect to obtain a better idea, in late 2012 or early 2013, of their supply capabilities after they ship Mo-99 samples.
  
  
• Nordion continues to take a multi-source approach to isotope supply. We are working to assess and develop other supplemental and long-term potential sources of Mo-99 from both reactor and non-reactor projects.

Nordion and MAPLE

• Nordion was acquired in a government privatization in 1991, with secure long term supply of medical isotopes a key component of the transaction.
  
  
• To address long term supply security, in 1996, Nordion (then called MDS Nordion) and AECL entered a contractual agreement that committed AECL to construct and deliver two new nuclear reactors and a processing facility (known as the MAPLE project). The MAPLE project was intended to replace the NRU reactor and current processing facility and provide a stable, long-term supply of medical isotopes for doctors and patients around the world.
  
  
• On May 16, 2008, AECL and the Government of Canada announced the discontinuation of the MAPLE project, without consulting or notifying Nordion.
  
  
• Nordion is currently in arbitration with AECL over the cancellation of the MAPLE project.
  
  
• Presentation of evidence was completed in Q1 2012. Final arguments are currently set to be completed in May 2012, with a decision sometime thereafter.
  
  
• Nordion continues to believe that completing MAPLE represents the best solution for a stable, safe, long-term supply of medical isotopes.

¹World Nuclear Association, October 2011 9 http://www.world-nuclear.org/info/inf55.html