Piefer: Financial support, backing from leaders helped Janesville win $85 million factory
By Brian E. Clark
The $9 million aid package Janesville offered SHINE Medical Technologies last month was a big reason why the company chose Rock County for its factory.
But not the only one, says Greg Piefer, the Milwaukee native who is SHINE’s founder and CEO.
Piefer, who earned his undergraduate and doctoral degrees from UW-Madison, negotiated with several states for sites to build SHINE’s medical isotope plant.
WisBusiness audio“At the end of the day, there were economic incentives offered by all the states and communities we looked at,” he says. “Wisconsin was competitive. And obviously, this had special meaning for me, coming from Wisconsin, a state that has a workforce of incredibly talented and hardworking people.”
In the end, the decision came down to three cities in the Badger State: Janesville, Stevens Point and Chippewa Falls, all of which he says offered good deals.
Though one of SHINE’s major backers is from Stevens Point, Janesville won out because of the financial support and because leaders there “expressed a tremendous amount of support which made us feel really welcome, and that was a big deal,” Piefer says.
Moreover, he says the site where the plant will be located is extremely stable geologically and has a low water table.
“All those things added up to the strongest story for Janesville,” he says. “And that’s how we ended up there.”
Janesville’s package is a combination of a tax increment financing (TIF) agreement and a loan guarantee, Piefer said. The 10-year TIF deal will help pay for infrastructure improvements at the site, while the loan guarantee will help get financing for the $85 million project, he says.
Piefer estimates that the plant will cost $25 million, while the production equipment will run another $10 million or so. The remainder will be spend on land, licensing, architecture, design and engineering costs, he says.
There also will be millions more, he says, that will be spent for commercialization activities to “take the technology from where it is today to where it needs to be for commercial production.”
The start-up is now located at the University Research Park in Madison, but will soon be moving to offices in Middleton. Piefer is working closely with Thomas "Rock" Mackie, director of medical devices at the Morgridge Institute for Research at UW-Madison. Mackie is also a professor of medical physics and a co-founder of TomoTherapy.
If all goes well, Piefer hopes to have the Janesville plant finished by late 2014. It will employ up to 120 people who will earn salaries of around $60,000 annually.
Piefer says the name SHINE was originally a technology acronym that stood for Subcritical Hybrid Intense Neutron Emitter, which is more than a mouthful.
Now, though, he says it simply represents the nature of the company’s products, “which illuminate disease from the inside out.”
SHINE was formed in 2010. It was first called Phoenix Medical Isotopes and was an offshoot of Phoenix Nuclear Labs. The name was switched to SHINE about a year ago.
Piefer, 36, says the seed for SHINE was planted while discussing his career future with several UW professors who told him that nuclear fusion -- considered by many the dream energy source of the future -- could be used to make useful products and money long before it would be a profitable power source.
Peifer earned his PhD in nuclear engineering, learning how to commercialize nuclear fusion.
“I got this indoctrination that you could use it (fusion) to make products that have money and value today,” he says. “Then you could reinvest a portion of that money to make (those products) better and take them to the next step. And maybe eventually get to this great dream of clean energy.”
Piefer said the plant initially will make molybdenum 99 (commonly known as "moly 99"), which could supply up to half the demand for the medical isotope in the United States.
When moly 99 breaks down, it becomes technetium 99M. Technetium 99M is then put onto a drug, he says, and that drug is attracted to a disease. Then the technetium 99M decays into a more stable form and emits a low-energy gamma ray that can be detected by a special camera.
“The emission of that gamma ray is what allows a doctor to look inside your body and see heart disease or cancer,” explains Piefer, noting that moly 99 is now used in about 30 different medical diagnostic imaging procedures.
“It is used worldwide about 40 million times a year, treating more than one person every second” he says.
Though moly 99 was in short supply several years ago, he says there is now an adequate amount of the isotope available.
“Still, the supply chain is very tenuous and it’s not going to improve soon because it is all produced in old research reactors,” he says.
“It’s kind of a long story how the supply chain got in this situation,” he says. “But the long and short of it is that there were two new reactors being built in Canada, each of which was supposed to be able to cover world demand.
“No one else wanted to get into the market because of those two reactors. But when those two reactors were turned on and demonstrated an inherent safety flaw, and the next 10 years of work that was done on them failed to correct the flaw, the project was cancelled completely. So it left the supply chain depending on these older reactors that weren’t supposed to run this long.”
That means the supply chain is still dependent on 50-year-old reactors that Piefer compares to old cars.
“They break down,” he says. “They shut down for safety or other reasons that happen to old systems. There are only a handful that supply the entire supply chain and if you lose one or two, it’s real trouble.”
In 2009 and 2010, two of those reactors shut down, which led to what he describes as a “massive shortage” of moly 99.
Doctors treating people with chest pains or cancer could not use the proper tools they needed, he says.
“It was a very bad time for people with heart disease and cancer when those two reactors were down,” he says.
Piefer acknowledges that some Janesville-area residents are leery of having a plant that deals with nuclear products near them.
That’s one of the reasons the factory will be built on an 84-acre site with a big buffer around the facility.
Piefer says one of his goals is to change how people view the word "nuclear."
“In a certain context and used the wrong way, it can be associated with bad things. But it can also be associated with life-saving things like our products.
“But we did put a buffer around the plant so we didn’t have to worry about the worst-case scenario and it being a danger to the public. We weren’t required by regulation to do it, but we thought that it would make everyone feel more comfortable.”