IsoRay Inc. (ISR)

GliaSite^® / Iotrex™ Now Cleared to Commence Sales
Signs European Distributor for GliaSite^® / Iotrex™
Disappointing Margins Due to Supplier Expected to Resolve

Download Full 25-Page Report with Important Disclosures: ISR Update 11-23-11

1.) GliaSite^® Clears Last Regulatory Hurdle – Ready to Commence Sales: On November 22, 2011 IsoRay announced final approval from the State of Washington Department of Health to manufacture GliaSite^®. This follows IsoRay’s recent FDA 510(k) clearance on September 12th. IsoRay is now ready to commence marketing their GliaSite radiation therapy system, a balloon catheter device used to deliver Iotrex™ (Iodine-125) to treat malignant brain cancer following resection surgery. The GliaSite system already has established reimbursement for both in-patient and out-patient settings. While the GliaSite device will currently be used to deliver Iotrex, investors should note that IsoRay is currently developing a liquid formulation of Cs-131 to be used in place of Iodine-125.

2.) IsoRay Signs European Distribution Partner for GliaSite^®/Iotrex™: On November 3, 2011 IsoRay announced they entered into an international distribution agreement with Karlheinz Goehl-Medizintechnik Goehl for distribution in Germany, Austria, Switzerland, Italy and Luxembourg for the GliaSite radiation therapy system. Karlheinz Goehl-Medizintechnik Goehl, located in Germany, was previously the largest international distributor of the GliaSite radiation therapy system when the product was owned by Hologic.

3.) Supplier Negatively Impacts Margins: IsoRay reported disappointing gross margins of only 5.4% for FY Q1 2012 due to increased isotope costs (cost of goods sold) as their primary supplier underwent scheduled maintenance. This caused IsoRay to rely more heavily on their second source which was $70K higher. In addition, they purchased excess isotope for R&D of liquid Cesium-131 to be developed for use with the GliaSite^® radiation therapy system once approved. IsoRay expects to also use some of the excess isotope for sales in the current quarter and anticipates margin improvement.

4.) Treatment of New Cancer Types: While prostate cancer remains as the most common procedure using Cs-131 seeds, IsoRay is starting to see growth in non-prostate cancer indications. FYQ1 results demonstrated treatment growth of 20% in brain cancer, head and neck cancer, and lung cancer compared to the prior year period (and the company is seeing growth in the current quarter as well). For the month of October, IsoRay has seen sales revenue increasing 14% over October FY2010 with non-prostate revenue increasing approximately 132% and prostate revenues increasing approximately 7%. Cases increased in the month of October by 24% with non-prostate cases increasing approximately 175%, while prostate cases increased approximately 18% over the cases in October FY2010.

5.) Maintaining Strong Speculative Buy rating and 12-18 month price target of $3.00. We believe that IsoRay remains “under the radar” on Wall Street as management begins executing on multiple growth strategies. Our valuation is based on a 35x multiple on projected fiscal year 2015 EPS and discounted 25% for cumulative risk.

Download Full 25-Page Report with Important Disclosures: ISR Update 11-23-11

IsoRay Reports Solid Financial Results for FY2011
U.S. Launch of GliaSite® / Iotrex™ Expected This Quarter 

Download Full 25-Page Report with Important Disclosures: ISR Update 10-06-11

1.) GliaSite® Receives FDA Clearance to Market in U.S.: On September 12, 2011 IsoRay announced they received FDA 501(k) clearance to market their GliaSite® radiation therapy system, a balloon catheter device used to deliver Iotrex™ (Iodine-125) to treat malignant brain cancer following resection surgery. IsoRay improved the product design and manufacturing techniques requiring a new FDA 501(k) clearance. GliaSite® already has established reimbursement for both in-patient and out-patient settings.

2.) Preparing for U.S. Launch of GliaSite®/Iotrex™: IsoRay has begun preparations for the U.S. launch in Q4. Investors should note that GliaSite® is the only FDA-approved balloon catheter for brachytherapy treatment of brain cancer. IsoRay is also negotiating distribution agreements with the previous European distributor of GliaSite®. While the GliaSite® device will initially be sold for use with Iotrex™, a liquid formulation of Iodine -125, IsoRay also plans to develop a liquid formulation of Cs-131 for use with GliaSite®.

3.) Solid Fiscal Year-End 2011 Results: Although top-line revenues were relatively flat with FY 2011 sales of $5.2M versus from $5.3M in FY 2010, to $5.2 million in FY 2011, gross profit rose 59% to $1.2M from $726K in FY 2010 as well as decreased operating expenses due to IRS section 48D research grants. As a result, IsoRay was able to reduce their net loss by 30% from ($4.0M) and ($0.18) EPS loss in FY 2010 to ($2.9M) and ($0.11) EPS loss in FY 2011.

4.) Maintaining Strong Speculative Buy rating and 12-18 month price target of $3.00. We believe that IsoRay remains “under the radar” on Wall Street as management begins executing on multiple growth strategies. Our valuation is based on a 35x multiple on projected fiscal year 2015 EPS and discounted 25% for cumulative risk.

Download Full 25-Page Report with Important Disclosures: ISR Update 10-06-11

IsoRay’s Cesium-131 Used to Successfully Treat Metastasized Brain Cancer

Download Full 6-Page Note with Important Disclosures: Morning Note 09-26-11 ISR

IsoRay announced that Cesium-131 brachytherapy (internal radiation therapy) seeds were used for the first time to treat metastasized brain cancer. The seeds were implanted directly into a woman’s brain following tumor resection to treat a cancer that had originated in the breast and she is now cancer-free. The procedure was performed by doctors at New York Presbyterian Hospital/ Weill Cornell Medical Center. Treatment of metastasized cancers, cancers that originate in other organs, is the latest application of IsoRay’s Cesium-131 brachytherapy treatment. The patient recently appeared for a television interview which can be seen at:

http://www.wptv.com/dpp/news/health/medical_breakthroughs/brain-seeds%3A-planting-tumor-fighters

We also note that IsoRay is currently developing a liquid form of Cesium-131 for use in their recently FDA-cleared GliaSite® radiation therapy system, a balloon catheter device currently used to deliver Iotrex™ (Iodine-125) for malignant brain cancer.

Download Full 6-Page Note with Important Disclosures: Morning Note 09-26-11 ISR

FDA Clears GliaSite® Radiation Balloon Catheter System for Brain Cancer
IsoRay Also Developing Liquid Cesium-131 to Replace Iotrex™ with GliaSite

Download Full 5-Page Note with Important Disclosures: Morning Note 09-12-11 ISR

IsoRay announced they have received FDA 501(k) clearance to market their GliaSite® radiation therapy system, a balloon catheter device used to deliver Iotrex™ (Iodine-125) to treat malignant brain cancer following resection surgery. IsoRay had improved the product design and manufacturing techniques including a new balloon manufacturing system, which required a new FDA 501(k) clearance for use and the improved GliaSite® delivery system exceeded all prior product specifications during the reporting and testing phase. The GliaSite® system already has established reimbursement for both in-patient and out-patient settings. The new FDA 510(k) clearance can be accessed at: http://www.accessdata.fda.gov/cdrh_docs/pdf11/K111931.pdf

IsoRay is now making preparations for launch in the United States to be followed by launch in Europe. In addition, IsoRay is also seeking FDA clearance for their new liquid form of Cesium-131 that would be delivered using the GliaSite® system replacing the current radioisotope Iotrex™ (Iodine-125).

Download Full 5-Page Note with Important Disclosures: Morning Note 09-12-11 ISR