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Advanced Oncotherapy: THE INVESTMENT CASE

Advanced Oncotherapy secures £37.4mln of new financing

The injection will bankroll the continuing technical development of the firm’s first LIGHT system and its installation at the Harley Street Proton Therapy Centre
Harley Street sign
The proton therapy system is being installed at a facility in Harley Street, London

Shares of Advanced Oncotherapy PLC (LON:AVO), the developer of next-generation proton therapy systems for cancer treatment, shot up 30% after it secured £37.4mln of fresh funding, with £30mln of this coming from a new Chinese investor.

The injection will bankroll the continuing technical development of the firm’s first LIGHT system and its installation at the Harley Street Proton Therapy Centre.

READ: Advanced Oncotherapy making significant progress; in stronger position to assess funding options

The cash will come in three distinct tranches. Yantai CIPU Medical Technology, a medical devices firm based in the People’s Republic, is directly investing in Advanced Oncotherapy. It is acquiring £13.5mln in shares at 30p each, giving it a 29.9% stake in the business.

It is also paying £16.5mln for the rights to sell the LIGHT system China, Macau, Taiwan, Hong-Kong and South Korea.

Funding from investors

A further £7.4mln will come from other equity investors who are also buying stock at 30p each, which represents a 10% discount to last night’s closing price.

Chief executive Nicolas Serandour said he was delighted to have concluded a deal that brought in longer-term financing as well as a new, experienced strategic partner.

READ: Advanced Oncotherapy on track with development of first LIGHT system as it checks off another key milestone

"This deal is consistent with our strategy to focus our resources on the technological development of the first LIGHT system and to establish partnerships with those businesses that have a strong track record of market access and a unique expertise in their own geographies,” he added.

“With our long-term financing arrangements now well engaged we can continue to focus on making our unique proton therapy technology available to patients around the world."

The company in its update said work with Metric Capital Partners to conclude a £24mln loan facility continues.

“Terms and conditions are being updated to reflect the developments since the initial announcement of the agreement with Metric in May 2016,” it added.

Shares motor

The shares, up 132% in the last week, advanced 13p to 46p in morning trade. That's an immediate 10p a share profit for investors who backed the latest fundraiser.

LIGHT stands for Linac Image Guided Hadron Technology. The kit is cheaper and smaller than the current units, which are almost prohibitively expensive.

It has the ability to propel protons at the speeds generated by much larger machines.

The proton accelerator used by Advanced Oncotherapy was licensed from CERN, the European Organisation for Nuclear Research, which is currently hunting the ‘God particle’.

Increasing demand for proton therapy

“There is an increasing demand for proton therapy globally, with millions of patients who could potentially benefit from this technology,” said chairman, Dr Michael Sinclair recently.

“While the access to this technology remains scarce, there is a significant unmet medical need the LIGHT system is uniquely suited to provide.

“We are in a prime position to provide a novel and disruptive technology that advances current methods of cancer treatment in the UK and worldwide.

“There is mounting evidence for the clinical superiority of proton therapy over traditional X-ray radiotherapy.

“This evidence will only increase as more proton beam centres are built and more patients are treated. LIGHT's modularity and linear design allow for mass production, shorter manufacturing lead times, easier installation/commissioning and offer both cost and clinical advantages.”

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