SHINE CEO: Prototype facility would be a 'marketing tool'
JANESVILLE—SHINE Medical Technologies CEO Greg Piefer said a planned prototype facility in Janesville would be a “marketing tool” to show potential investors how the company's new technology works.
A prototype also would help the upstart SHINE mitigate risk as it continues to design its full-scale, 57,000-square-foot production facility on Janesville's south side, Piefer said. It's a project of at least $200 million that the company says it does not yet have fully funded.
In SHINE's annual update to the public Wednesday afternoon at Holiday Inn Express in Janesville, Piefer said “90 percent” of private investors SHINE has approached in the past have been put off by the fact that SHINE's process for producing molybdenum-99 is not yet tangible to them.
SHINE has successfully tested its particle accelerator technology at its former Monona headquarters and in a federally-licensed laboratory setting, but after several years of development, SHINE has still never fully linked its own equipment in a real-world, production setting.
“They (investors) don't know it (nuclear production), and they not only don't know it, they don't know who to call to tell them,” Piefer said. “We're going to put it together. We're going to put our neutrons, our (uranium) target together in Building One. They can come see it. We can turn it on. It's going to make moly (99).”
The radioisotope Mo-99 would be used in medical tests.
Piefer said a prototype facility in Janesville would allow SHINE on a limited basis and on a smaller scale to run its particle accelerator to produce test batches of Mo-99. That could demonstrate to potential investors the company's equipment will in fact split molecules and that SHINE can make the jump to full-scale radioisotope production.
“I consider it to be a marketing tool. It's going to be cool. We're going to see how the pieces fit together. And we're going to learn some things about (facility) integration. It'll look exactly like the system in the production facility,” Piefer said.
SHINE plans to build an 11,500-square-foot prototype building on privately-owned land just south of the city parcel on Janesville's south side where SHINE proposes to later build its full-scale facility.
Under the current timeline, Piefer said Wednesday, SHINE would break ground on the prototype facility in July and could have it complete and in running order in 2018. The company could break ground on a full-scale production facility in mid-2018, he said.
That would push SHINE's timeline for full commercial production of Mo-99 downhill several months from SHINE's earlier estimate of late 2019 to “around the first half” of 2020, Piefer said.
That's similar to an updated timeline SHINE Vice President Katrina Pitas gave The Gazette in May. Pitas at that time said the prototype facility would be running sometime in early 2018.
Piefer said Wednesday that SHINE to date has raised $60 million for its full project—$20 million in private funding in the past year alone. SHINE earlier tabbed estimates for construction of the full project at as much as $200 million, though Piefer didn't give an update Wednesday on the project's full costs.
The company hasn't said how much it would spend on the prototype facility, which was not part of its original project plans.
Piefer acknowledged SHINE's prototype facility slows its path toward commercial Mo-99 production, but he called the slowdown a choice by top company officials.
“The choice has been made as a result of conversation with our investors, new board members and experts who have done a lot of projects in the nuclear industry and looking at why those projects succeed and why those projects fail,” Piefer said.
Some nuclear facilities, Piefer said, have begun building projects “too early.” The companies would schedule ongoing project design work just ahead of construction.
SHINE's full project involves a complicated design and build. Operation of the facility would be reviewed and permitted by federal nuclear regulators.
Piefer said investors in the project and SHINE board members worried about the risk “that if we proceed with the design (now), we were going to need to do rework. And rework on a facility like this is really, really expensive.”
Piefer said retracing steps in construction of the full facility could involve concrete tear-out and replacement costs ranging in the tens of millions of dollars.
A smaller-scale, prototype facility, he said, would put SHINE in a better position to demonstrate its production would work and to continue raising private investments and "enhance" design on its full facility, while keeping risks lower until the project is at a more "mature" state.
The city of Janesville is proposing amending the original, $9 million tax increment financing deal that covers SHINE's proposed Mo-99 production facility. According to a city memo released Wednesday, the deal would add $1.5 million in tax increment financing incentives. The incentives would pay for SHINE to at some point relocate the prototype facility to the TIF parcel just north, where its full project would be built.
The TIF amendment goes to the council for consideration Monday.
According to SHINE, the city has spent $600,000 so far on the SHINE project. Most of that spending is on city services to the proposed SHINE campus.
The deal allows SHINE to recover some of its up-front spending on facilities the company would build prior to its full-scale factory, although SHINE has stressed that it's not asking the city for a dime to build the prototype.
Janesville resident Billy McCoy grilled Piefer on Wednesday over the level of federal investment in the SHINE thus far. McCoy said he'd read in a Madison newspaper that SHINE had $50 million in federal funding already.
SHINE earlier had received a commitment for $25 million in matching funds through a cooperative agreement with the federal government.
Piefer explained that SHINE would be required to match the fed's $25 million with an equal amount of funding, and that's why the government calls the agreement a $50 million package, he said.
In an off-the-cuff comment, Piefer seemed to suggest SHINE has broached the topic of the federal government increasing its current financial stake in SHINE's Janesville project.
“I'd love if they'd go to $50 (million). I've been trying to get them to,” Piefer told McCoy, amid chuckles from other residents and officials in attendance.
The Gazette later asked Piefer whether SHINE has approached federal authorities seeking more funding for its Janesville project. Piefer declined further comment and suggested The Gazette submit its question to SHINE in writing.
Last updated: 8:31 pm Wednesday, June 7, 2017