This week, ASP Isotopes will be hitting the Nasdaq as $ASPI.
They hold an exclusive, global license for the aerodynamic separation of isotopes, essentially a much less expensive and environmentally friendly method of harvesting and enriching natural radioactive isotopes for medical scans and treatments.
These are not by-products of nuclear energy reactors.
Their technology has much broader (and even more lucrative) potential than the medical market, but we’ll get to that later.
For now, we will focus on the 8.1-billion-dollar global market for nuclear medicine, which happens to be packing a 13% compound annual growth rate.
If you have ever had a diagnostic scan, like a CT or PET scan, or radiation treatment for cancer, you have already benefited from these isotopes. Eighty percent of all diagnostic medical scans worldwide rely on molybdenum-99 (99Mo to its friends) or its child isotope, technetium-99m (99mTc).
ASP’s plants are modular, with a small footprint, and can be constructed faster and for significantly less capital than traditional isotope separation facilities.
As a result of this IPO, their first plant to manufacture Molybdenum isotopes (Mo-100) is expected to be commissioned in early 2023, with commercial production beginning in late 2023 or early 2024.
The plan after the first plant is to self-finance future plants. They are currently focused on Molybdenum due to the increasing demand for medical isotopes and the planned phase-out of nine out of 10 of the existing nuclear reactors.
Longer-term opportunities exist in the enrichment of Silicon-28, Lithium-6, Oxygen-18, Zinc-68, Xenon-136, and Ytterbium-176. If you aren’t a physicist, this probably doesn’t mean much.
What is important to understand is that this technology has many applications and that while they will produce less material than a traditional isotope separation plant, they will be producing at much higher margins.
Catalyst: Demand & Geopolitical Pressure
Global demand for radioisotopes is growing, especially in China and India, where modern medical technology use is reaching the new middle class.
The U.S. is currently dependent on Russia for 31 radioisotope supply chains, and as of July this year, 19 of those had already experienced disruption.
The real blue sky here is the future technologies in development that will need isotopes.
With souring relations with Russia and the planned closure of nine out of 10 aging research reactors in the next eight to 10 years, the U.S. Department of Energy has acknowledged the supply issue, and legislation is being worked on that will provide government support to this industry. It is my assumption that ASP will attempt to benefit from some of this funding.
Blue Sky Rabbit Holes
If you know me or my picks, you will know that I like a solid business case with a lot of built-in blue skies. For ASP Isotopes, the Mo99 business will more than make the numbers work if they execute their business plan.
The real blue sky here is the future technology in development that will need isotopes. My three favorite possibilities are the use of Silicon-28 for quantum computing, U-235 and Lithium-6 for small modular reactors, and of course, Chlorine-37 for molten salt reactors for safe energy storage.
Any one of these three technologies could revolutionize this world. Quantum computing alone, with an expected 1000x increase in computation power, would unlock knowledge at unprecedented rates for humanity. It is being held back by, guess what, a bad isotope. Si-29 currently causes decoherence of qubits, and Si-28, with a 60% higher thermal conductivity, will lessen this problem and can be applied to solar cells and fiber optics. ASP can produce Si-28 enriched to 99.9%
There is almost nothing in the market that makes a good comparison to $ASPI.
Small modular reactors are all the craze in the nuclear energy world. These can be produced in a factory with greater safety, efficiency, and the ability to bring power supplies to isolated areas.
This is likely the future of nuclear and the US DOE has committed billions to the Advanced Reactor Design Program (ARDP).
Molten Salt Reactors (MSRs) are in development with several companies, and if successful, the technology will give us a much cleaner alternative to lithium batteries. Think grid-connected battery farms to stabilize the power grid and expand clean energy storage. These MSRs rely on liquid salt or fluoride and, of course, chlorine-37.
Ownership and Share Structure
I already own shares in $ASPI from before their IPO (I am always on the lookout for new deals and asymmetric trades, wink, wink). The IPO transaction is expected to price at $4, giving them a market cap of $120 million.
Who knows what will happen at the opening?
I expect it to begin trading today or tomorrow. The date will be subject to approval by the SEC, as always. With about 32 million shares total, the actual trading float should be in the neighborhood of 3.5 million shares, which is very tight for a Nasdaq-listed company.
Revenue Expectations
When it comes to listing on the Nasdaq, companies cannot put out forward-looking statements, so I had to hunt around to see what they had expected before deciding to list. So, know that these statements are what I believe to be accurate, but since the company cannot legally speak to them in a quiet period, it is the best I can provide.
ASP Isotopes had said before that they had signed a letter of intent for five times the productive capacity of the first plant. That would be 20 million in revenue and 16m in gross profit. They have stated before that because of the large return on investment, they plan on reinvesting proceeds into additional capacity. I expect to see them build several new plants in the next five years.
There is almost nothing in the market that makes a good comparison to $ASPI, I was able to find International Isotopes (INIS), which currently has a trailing price-to-earnings ratio of 23, and China Isotope & Radiation Corporation (1763. HK) traded on the HKSE with a trailing P/E of 10.88. Like all things with new innovative technology and companies, there is little use in comparing the old with the new.
This is a pre-revenue company; read this as a speculative play.
While I never give investment advice and am not an investment advisor, I can tell you that my $ASPI shares are a part of my high-risk / high-reward portfolio. This is where I put companies that I feel have huge potential, but that still requires a lot out of management to make my dreams come true.
My total high-risk / high-reward portfolio makes up no more than 25% of total stock market investments and must be rebalanced a lot because there is a lot of volatility in it.
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PennyQueen Disclosures
I have not and will not be compensated for this report in any way. I write reports on my favorite picks; this is meant to be educational and not investment advice, as I am not an investment advisor, just a mom on a mission to make the world better and make money along the way.
Disclosures
1) PennyQueen: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: ASP Isotopes. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None.
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