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Last week GT Advanced Technologies (GTAT) traveled to Helsinki, Finland to showcase its Hyperion Technology for use in the treatment of cancer! Up to this point GT has indicated that the company's patented Hyperion technology will focus on advanced materials including silicon, sapphire and SiC. Hyperion is GT's high energy, high current proton accelerator and is protected by 55 issued patents, and GT has 25 additional pending patents related to Hyperion. GT's Hyperion technology is truly revolutionary, and the latest cancer treating application that I will get into shortly officially makes Hyperion a can't miss technological innovation.
GT's Hyperion high current implanter delivers 10x more energy versus other high current implanters. GT's Hyperion delivers 2,000 keV (proton energy) versus 200 for other high current implanters. GT has indicated that the micron thickness "sweet spot" for advanced materials including silicon, sapphire and SiC is between 20 and 50 microns thick. GT also indicated that other high current implanters are only able to produce film thickness of 5 microns, which eliminates them from producing advanced materials at a meaningful thickness to challenge GT's emerging materials business. As you can see from the charts below, taken from GT's March 2014 New Product Technology Briefing, GT's Hyperion technology is in a league of its own.
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GT's Hyperion: Accelerator Based Neutron Producer to Treat Cancer
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GT has been busy over the past several months building global awareness regarding its Hyperion Technology for use as an accelerator based neutron producer to treat cancer. GT has been making the rounds regarding Boron Neutron Capture Therapy (BNCT), a cancer treatment therapy performed to selectively destroy cancer calls that have been injected with Boron-10 compound. The BNCT process uses a very small amount of neutrals that are irradiated to cause a nuclear reaction in the boron injected cells. The end result is that the treatment destroys cancer cells and leave normal cells in the vicinity untouched and relatively damage free. The cancer cells are injected with boron and are followed up by a neutron beam, which energizes the boron and releases cancer-killing radiation. The incumbent technology that currently provides Neutron beam are nuclear reactors, which come with their own set of health risks and concerns.
In April, just a few months ago, GT attended a two-day workshop on Accelerator Based Neutron Production (ABNP) in Italy. Noah Smick of GT gave an overview (page 14) of GT's Hyperion Accelerator for BNCT highlighting Hyperion's power, adaptability along with Hyperion's straightforward manufacturing process, simplicity to operate as well as its low-cost and high reliability.
In order for large-scale commercialization of the technology to be successful, the accelerator must be straightforward to manufacture, simple to operate, low-cost and highly reliable. GT Advanced Technologies' Hyperion 4 accelerator is well suited for this application. Initially developed for use in proton-induced exfoliation, the Hyperion 4 is a single-ended electrostatic accelerator designed to operate at 40-50 mA and 2.0 MeV. It can readily be adapted to meet the demands of BNCT. We present the major Hyperion 4 design features and the operating conditions achieved to date.
Last week nine members of GT's team headed off to Finland to showcase GT's Hyperion "high energy, high current proton accelerator ideally suited for BNCT". GT's team included; Ted Smick, Geoff Ryding, Paul Farrell, Noah Smick, William Park, Paul Eide, Takao Sakase, Murali Venkatesan, Mike Vyvoda, who all were scheduled to attend the 16th International Congress on Neutron Capture Therapy. One big difference between GT's June summary in Finland of Hyperion for the clinical application of BNCT was the depth and detail in the summary versus the April summary that was presented in Italy. GT went as far as placing an ad on page 4 of the 200 plus page conference package. Below is GT's summary from June's 16th International Congress on Neutron Capture Therapy hosted in Finland.
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The Hyperion™ is a single ended ion accelerator that operates at proton current in the range of 40-50 mA and energy in the range of 2.0 - 2.5 MeV. It has voltage stability < 0.1% at full current, which is important for operation near the Li(p,n) reaction threshold. These parameters are very desirable for clinical application of BNCT. The high voltage generator is a gas pressurized high voltage DC system that employs two novel features. It uses a voltage generation technique based on stacked, independently powered and independently controlled power supplies in place of simple diode rectifiers used in previous voltage multiplier high voltage generators. Fiber optics is employed to control and monitor the series connected power supplies. The second novel design feature is the active stabilization of the acceleration tube gradient by attaching the output of each stacked power supply directly to the acceleration tube electrodes. This feature prevents fluctuations of the beam tube gradient, which are the primary cause of beam current limits in high current DC ion accelerators. These changes in voltage generation and architecture are engineered in a modular configuration that can readily be adapted to meet the demands of BNCT in a clinical environment. It also operates at very high electrical efficiency with a typical proton beampower to 'wall' power ratio of ~50%. We present the major Hyperion™ design features and the operating conditions achieved to date.
The Current Accelerator Based Neutron Sources (ABNS) Marketplace
The current marketplace for Accelerator Based Neutron Sources related to Boron Neutron Capture Therapy (BNCT) consists of at least three major players excluding GT Advanced Technologies. Sumitomo Heavy Industries based in Japan announced the world's first accelerator based Boron Neutron Capture Therapy (BNCT) system ordered for a hospital in March 2013. The first order was set for installation on the premises of the Southern Tohoku General Hospital of the Southern Tohoku Research Institute for Neuroscience and clinical trials are planned to commence in FY2015. Sumitomo is planning on filing an application for approval of a BNCT system in 2016.
A second provider of Accelerator Based treatment apparatus has been constructed by Mitsubishi Heavy Industries for use at Tsukuba University in Japan. Image below was taken from the Proton Medical Research Center, University of Tsukuba.
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A third provider of Accelerator Based treatment apparatus is AccSys Technology, an affiliate of Hitachi. On January 24, 2013, AccSys Technology announced that it had entered into a collaborative research agreement with Cancer Intelligence Systems and National Cancer Center in Japan to design, build and implement an accelerator based Boron Neutron Capture Therapy System
GT's Hyperion high energy, high current proton accelerator is ideally suited as a Boron Neutron Capture Therapy (BNCT) to treat cancer. The marketplace place for Accelerator Based Neutron Sources related to Boron Neutron Capture Therapy is just in its infancy. The next step will be clinical trials followed up by the eventual replacement of nuclear reactions at BNCT treatment locations. Hyperion unit sales are expected to average around $10m per unit and it will only take a few medical facilities to generate $100m of sales for GT in the not so distant future. GT indicated that they expect to receive a PO for Hyperion in 2014 related to Medical or Military and the first order might indeed come from a BNCT research facility to complete a clinical trial using GT's Hyperion proton accelerator.
BNCT has been evaluated clinically as an alternative to conventional radiation therapy for the treatment of malignant brain tumors as well as the treatment for locally advanced head and neck cancer. Nuclear reactor powered BNCT treatment options can be extremely dangerous and are not the most viable options for hospital settings. On the other hand proton accelerators, like GT's Hyperion technology that does not involve nuclear power is the ideal tool that is needed to bring BNCT to hospital settings. With any change in technology used for medical treatments, Hyperion would need to be installed inside a facility and be clinically tested before the technology can be approved for mass adoption. Any facility that becomes equipped with a proton accelerator will become a cutting edge world leading cancer treatment facility.
I am currently modeling Hyperion sales of $100m in 2015 and $800m in 2016 with a 45% gross margin. In terms of EPS contribution, I expect Hyperion to contribute $0.18 in 2014 and $1.45 in 2016. I believe GT's Hyperion business is currently worth $24 per share or a $3.6 billion of market cap, based on my enterprise forward P/E of 16.62 times my FY 2016 EPS estimates. GT's Hyperion technology makes up $24 of my $87.50 price target for shares of GTAT, based on 16.62 times my FY 2016 EPS estimate of $5.26.
Now it makes even more sense why GT's CEO Tom Gutierrez during GT's Q4 2012 conference call was so excited about Hyperion:
And quite honestly, I don't see anybody that's anywhere near competing with us right now, on next-generation technologies that we're developing. The Hyperion, nobody's got that.
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