SHINE Medical Technologies has landed a $150 million deal with a New York firm that will fuel construction of its medical radioisotope production facility in Janesville.
SHINE announced Tuesday that health care investment firm Deerfield Management Co. has agreed to commit $150 million in financing to SHINE’s facility. The money will come in portions as SHINE meets milestones in building its molybdenum-99 manufacturing plant.
Katrina Pitas, SHINE vice president, called the deal “the largest financing in Wisconsin startup history.”
She said it’s “validation” for SHINE that its goal—to be the first private U.S. company to produce and ship medical moly-99 using nuclear particle accelerators—is no longer uncharted territory for major investors.
Pitas, a nuclear physicist who handles business development for SHINE, said the Deerfield agreement combines with $30 million the company has raised through a capital campaign.
SHINE didn’t provide an overview of its finances, but Pitas said the agreement with Deerfield is the biggest single piece of financing SHINE has secured in its decade-long quest to become a domestic producer of moly-99.
Moly-99 is a radioisotope used to illuminate bone and body tissue in thousands of medical imaging tests a day.
“It’s the biggest (financing) we’ve had so far and likely the biggest we will need to do in the near future,” Pitas said, although she said the company plans to continue to raise funding.
The deal comes as SHINE prepares to launch construction of a 45,000-square-foot plant on Janesville’s south side, just east of the Southern Wisconsin Regional Airport.
Construction could cost more than $100 million, SHINE officials have said.
At a test and demonstration facility near the future plant site, SHINE has begun assembling particle accelerator equipment that mirrors technology it’ll use in the production of moly-99.
This is the second time Deerfield Management has worked on a financing deal with SHINE. In 2014, SHINE announced a massive $125 million debt and equity financing agreement with the company. At the time, SHINE was in the midst of millions of dollars of work to gain federal regulatory approval to build a nuclear radioisotope factory in the city.
Pitas said Deerfield is an ongoing investor in SHINE, but she said the company ultimately never invested in SHINE’s project under the terms of the 2014 deal.
The agreement announced Tuesday is a new financing deal with Deerfield that’s larger in scope than the 2014 agreement, she said.
The deal is more than symbolic of a major investor’s confidence in SHINE’s ability to become one of few domestic producers in a moly-99 market that some peg at $600 million a year.
As a startup company, SHINE as has been viewed by investors as an oddity and a hybrid—a nuclear company crossed with a health care company, a firm that required lots of startup capital and the construction of a highly specialized, heavily regulated facility that relies on groundbreaking technology and equipment.
That has posed challenges as the company tried to woo large-scale investors.
“We’ve always been successful raising the money we needed to complete the next step in terms of advancing the project and moving forward,” Pitas said. “But this is the first time that we’ve had validation from an institutional investor who has really done their homework, understood what SHINE is about.
“To have them as a partner is tremendous for SHINE.”
Pitas called Deerfield a “very well-respected” investor in the health care industry. She said Deerfield and SHINE have built trust as SHINE has met some of its biggest tangible milestones.
“Since 2014, we’ve retained this relationship with Deerfield throughout construction permitting and SHINE’s building one” testing and demonstration facility, she said. “They’ve seen us set out to do something and achieve it over and over again.”
Removal of the Milwaukee Street bridge in downtown Janesville has been on hold for about six weeks, but work is expected to resume sometime this week.
Contractor Zenith Tech had planned to drop pieces of the bridge onto barges, but the water has been flowing so fast that it raised safety concerns, said Jim Simpson, project manager for the state Department of Transportation.
The concern was that the barges could break free in the current, said Paul Woodard, city director of public works.
Zenith Tech submitted a change in its erosion-control plans Tuesday, and the state approved them, Simpson said.
Zenith plans to move equipment to the bridge Wednesday and begin demolition Thursday, Simpson said.
The plans calling for removing the two middle bridge arches with cranes and then using barges for the remaining two spans on either side of the river, where the flow is not as fast, Simpson said.
The 105-year-old bridge likely will be cut into 4-foot-wide sections with a backhoe-mounted chisel, and cranes will transfer those pieces to trucks, Simpson said.
Debris from the spans nearest the shoreline will be dropped onto barges, and cranes will unload the barges onto trucks, Simpson said.
Zenith’s plans indicate the removal could be completed in about four weeks, but work will continue through the winter and spring, barring weather delays, Simpson said.
Zenith is also the contractor for the replacement bridge, Simpson said. The contract calls for work to be completed by June 21.
Zenith Tech could be penalized $2,070 per day for every day past that date, unless the state grants the company an extension, Simpson said.
The project is behind schedule, Simpson said, but he has not yet talked to the company about whether it can catch up.
Woodard suggested one way to catch up could be to add shifts or overtime.
The bridge replacement is part of the city’s ARISE riverfront revitalization plan.
The bridge was built after a fire destroyed buildings on the previous bridge in 1913.
Talk to a few people searching for a place to live in Janesville, and the stories of their search will likely tell you the city is facing a housing shortage.
Identifying the lack of available residential inventory is simple, but understanding how the city wound up in this position is more complicated.
Economic Development Director Gale Price shared some of those causes Tuesday night in a presentation that connected the housing shortage to economic development. The League of Women Voters sponsored the event.
In the late 1990s and early 2000s, Janesville awarded more than 200 building permits annually for single-family and two-family homes. That number plummeted to 91 in 2008 and bottomed out at 31 in 2011, Price said.
Annual permit numbers have ticked upward since but have yet to surpass 100 since the decline.
Meanwhile, Rock County unemployment fell from a peak of 13.6 percent in March 2009 to a present rate just above 2 percent. In that time, almost 5,000 more people entered the local workforce, but Janesville’s population stayed the same, Price said.
The city had more jobs to offer but fewer places to live. If Janesville doesn’t increase its available housing stock, that could complicate a company’s ability to recruit and retain employees, Price said.
No business has ever pulled out of development talks with the city solely because of the housing shortage, but having move-in ready residences means workers have the option to move to Janesville and not commute, he said.
When Dollar General came to town, the company relocated 10 employees to serve as the local management team. Only one of those people wound up living in Janesville, Price said.
Executives from other companies have also told him Janesville didn’t offer the type of housing they expected, he said.
Earlier in the day, Price led another related discussion at City Hall: a follow-up to a June housing summit. This brief talk was mostly intended for a local development audience and touched on city zoning policies.
One, known as a planned unit development, would allow the city to override certain zoning codes for a specific project without having to rewrite an entire ordinance. The process would take roughly the same amount of time to complete, but changing an ordinance to make one project work could have long-term consequences, Price said.
The city is preparing to update its comprehensive plan, so some zoning ordinances that hinder development could be permanently changed. There’s no firm timeline for when the city will update the plan.
Price mentioned at the night event that the city has five housing developments in the works. Tax increment financing would be part of the negotiations on all of them.
While some of those would cater to higher-income residents, Price reiterated the need to support blue-collar or retail employees who aren’t paid as well.
The Wisconsin Housing and Economic Development Authority offers tax credits for such development. Because Janesville hasn’t had one of those projects built since 2002, it has bonus credits from WHEDA that could give a low-income housing developer an advantage.
The city also plans on closing a tax increment financing district near Highway 14, then extending it for one year to use the increment for residential development. It would likely be used for low-income housing, Price said.
Any residential project that comes via TIF closure would not have to happen within the TIF district’s boundaries.
Republican lawmakers plan to hold a lame-duck session as early as next week to curb the incoming Democratic governor’s powers over state rules, add GOP appointees to a state board and possibly move the 2020 presidential primary to help a conservative state Supreme Court justice.
Unlikely to be part of the session is the reason lawmakers claim to be calling it in the first place: a long-stalled $70 million subsidy package to save a Kimberly-Clark plant in the Fox Valley.
Republicans who control the Senate are still short at least six votes for that measure and might not be able to pass it, Senate Majority Leader Scott Fitzgerald, R-Juneau, said Tuesday.
Fitzgerald and other Republicans are moving fast to try to get legislation to Gov. Scott Walker before he leaves office Jan. 7 and is replaced by Tony Evers.
As part of the lame-duck session, Republicans could take action that would boost a conservative Supreme Court justice’s chances at re-election but at a cost of potentially millions to taxpayers.
Fitzgerald said Republicans hadn’t made decisions on moving the presidential primary and were listening to the concerns of clerks who said the change would be costly, burdensome and confusing. The move could also dilute the strength of Wisconsin’s delegates to the Republican National Convention, Fitzgerald said.
Republicans have talked about moving the presidential primary because that vote could drive Democratic turnout higher on the same day Justice Daniel Kelly is slated to appear on the ballot in the Supreme Court race. The extra election in 2020 would cost taxpayers millions of dollars.
Asked about the upside of moving the primary, Fitzgerald said, “I think there’s many people that think that Justice Kelly would have a better chance if there’s not really this competitive Democrat primary for president. That’s the concern, I think. But I’ve got to be honest with you, I think the campaign would be just as concerned that that would be a criticism used against Kelly in the end.”
Sen. Jon Erpenbach, D-Middleton, expressed surprise at Fitzgerald’s open talk of moving the primary only to help Kelly.
“We all knew this, but to hear it that bluntly is shocking,” Erpenbach said.
Senate Republicans have long been short of the votes needed to pass the $70 million incentive package for Kimberly-Clark, and Fitzgerald said they are no nearer to securing them.
“I think there’s people that are just like, ‘Wow,’ you know, ‘are we going to have to kind of do the same thing if there’s a corporation the size of Kimberly-Clark that suddenly announces some type of closing, plant closing?’” Fitzgerald said.
Fitzgerald did not declare the measure dead, saying Senate President Roger Roth, R-Appleton, continues to try to round up votes.
“It still appears the votes are not there as we stand here today,” Fitzgerald told reporters. “It’s going to take a significant number of Democrat votes to get this through.”
Backers of the deal appear unlikely to get them—no Senate Democrat has shown support for the measure.
“It’s become clear that Republicans never intended this lame-duck session to be about saving jobs at Kimberly Clark,” Senate Minority Leader Jennifer Shilling, D-La Crosse, said in a statement. “This whole special session has been a ruse to rush through more partisan bills, rig elections and consolidate more power in the hands of Republican politicians.”
The Kimberly-Clark workers’ union president was in Madison on Tuesday to try to persuade lawmakers to support the package.
“We’re just hopeful that we can make something happen,” Dave Breckheimer, a United Steelworkers union president at the Neenah papermaker, said. “We’re meeting with senators to answer any questions they may have and explain what the facility is about and what it means to Wisconsin.”
Fitzgerald said 10 or 11 of his members support the deal. Republicans control the Senate 18-15; 17 votes would be needed to pass the measure.
The Assembly has already passed the deal. If the Senate approves the measure, it would go to Walker, who backs the subsidies.
Senators have to make a decision soon because Kimberly-Clark has said it will close a Fox Crossing plant and will change course only if it gets payments from the state.
Walker on Nov. 15 said the Senate would need to act by this Friday to keep Kimberly-Clark’s Fox Crossing plant open.
“If the state fails to act, I believe before the end of this month, those jobs are gone,” Walker said then.
Fitzgerald said he hoped to be on the floor as soon as next week—but for the other measures, not the Kimberly-Clark deal.
Republicans are also looking at changing the landscape at the state Department of Justice before Democrat Josh Kaul replaces GOP Attorney General Brad Schimel, including eliminating or scaling back the solicitor general’s office.
Fitzgerald spoke after meeting privately with the Senate caucus he leads. Assembly Speaker Robin Vos, R-Rochester, held a similar meeting with his caucus but did not speak to reporters.
The two were to meet afterward in Walker’s office, but Fitzgerald said he did not know if they would be meeting with Walker or his chief of staff, Eric Schutt.
During his campaign to unseat Schimel, Kaul said he would reduce the office’s scope.
“Attorney General-elect Kaul’s first priority is keeping Wisconsinites safe, and he would welcome a discussion with legislative leadership on this and many other issues,” said Kaul spokeswoman Gillian Drummond.
Since its creation in 2015, the office of specialized appeals court lawyers has overseen the department’s handling of a number of high-profile disputes, including a challenge to the state’s legislative maps, and its intervention in a number of out-of-state disputes.
Schimel has increased staffing in the office in that time, and Democrats have criticized its existence as a vehicle to advance conservative interests.
“There’s some good attorneys over there that if you made a change to the solicitor’s office, there’s probably some attorneys over there that you’d probably love to talk to about maybe coming to work in the Legislature,” Fitzgerald said.
He said lawmakers would likely write into state law a work requirement for some people who participate in the BadgerCare Plus health care program. President Donald Trump’s administration recently gave Wisconsin permission to implement the work requirement, but Evers has said he might not do so.
By passing legislation, lawmakers could compel him to implement the change.
Lawmakers are also looking at adding more Republican appointees to the Wisconsin Economic Development Corp. board, which oversees efforts to attract and retain businesses in Wisconsin.
Some Republicans had considered also adding more GOP appointees to the state Building Commission, but Fitzgerald said his caucus was dropping that idea. The commission is chaired by the governor and approves the construction and maintenance of state and UW System buildings.
GOP lawmakers are also considering taking away some of the governor’s authority over rules that are designed to implement state statutes and have the force of state law.
They also want to lock rules governing the state’s voter ID requirement into law, which would make it harder for Evers to make any adjustments to that requirement.
Evers has tapped two top Department of Public Instruction officials to join a team assembled to ensure a smooth transition between administrations.
Brian Pahnke, assistant state superintendent for the division of finance and management, will join Evers’ team as his policy director. DPI’s senior policy adviser Jeff Pertl also will join the team as a policy adviser.
Evers also has hired Planned Parenthood of Wisconsin’s Jamie Kuhn as an adviser.
Both Kuhn and Pertl are on the Dane County Board.
Evers also announced the creation of a 12-member advisory council on health care policy.
Mary E. Arndt
Virene N. Boughton
Karen S. Chesmore
Dorothy M. Clapper
Terry L. Jacobs
Ladine L. Osinski
Ernest Guy Winters