# Advanced Oncotherapy funded through to clinical events

- Link: https://www.directorstalkinterviews.com/advanced-oncotherapy-funded-through-to-clinical-events/412838049
- Published: 2020-07-02T07:28:44+01:00
- Author: Amilia Stone

**Advanced Oncotherapy** (LON:AVO) goal is to deliver an affordable and novel proton
therapy (PT) system, called LIGHT, based on state-of-the-art technology developed
originally at the world-renowned CERN. Over the past two years, the project has 
been significantly de-risked through important technical milestones. AVO is working
on the verification and validation phase, prior to LIGHT being used on the first
patients to support CE certification. A recent equity issue, new loan facilities
and some commercial announcements earlier in 2020 highlight the increasing confidence
that is building in AVO’s ability to achieve its goal to deliver LIGHT in the near
future.

 * **Strategy:** AVO is developing a compact and modular PT system, which is affordable
   for the payor, financially attractive to the operator, and generating superior
   patient outcomes. AVO benefits from technology know-how developed by ADAM (CERN
   spin-off), and relies on a world-class supplier base.
 * **2019 results:** EBIT was in line with expectations, higher operating costs 
   being offset by lower share-based payments. Introduction of IFRS 16 for lease
   liabilities does affect the net cash/(debt) calculation, but recent capital increases
   via an equity issue and new loan facilities have strengthened AVO’s finances.
 * **Commercial update:** AVO has seen significant commercial traction, with three
   collaborations announced in early 2020. Its flexible, customer-focused, business
   model can generate four potential revenue streams: sale of LIGHT systems, maintenance
   contracts, software licence fees and project management fees.
 * **Risks:** The more complex technical challenges have been overcome, and progress
   towards assembling a fully functional accelerator is under way. The annual report
   highlights the upcoming challenges and how they are being mitigated, with new
   funding giving financial flexibility to reach the finishing line, despite COVID-
   19.
 * **Investment summary:** The EV of £123m equates only to the amount invested into
   LIGHT to date, which reflects neither the enormous technical challenges that 
   have been overcome, nor the market potential – our DCF valuation is 229p. The
   market will wake up to this opportunity, as assembly of the first LIGHT system
   reaches its conclusion and Advanced Oncotherapy applies for CE certification.
   Commercial deals indicate that buyers are comfortable about the timing of LIGHT
   delivery.

[DOWNLOAD THE FULL REPORT](https://www.hardmanandco.com/wp-content/uploads/2020/07/AVO-FY2019-results-and-corp-update-2-July-2020.pdf)

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