Advanced Oncotherapy plc (LON:AVO) goal is to deliver an affordable and novel PT system, called LIGHT, based on state-of-the-art technology developed originally at the world-renowned CERN. The company is in the process of completing the complex assembly of its first full energy system, optimising, validating and verifying all aspects of this process. Meanwhile, it is liaising with the relevant regulators as part of the approval process. The FDA has requested some specific beam measurement data, which has added three months to the process but will generate important technical data that differentiates LIGHT and could be used in future marketing.
- Strategy: Advanced Oncotherapy 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.
- Regulatory update: Although the FDA has requested some specific proton beam measurement data that will add up to a maximum of three months to the completion schedule, it highlights the progress that AVO has made with the FDA, and US regulatory approval now appears likely to come ahead of CE marking.
- First LIGHT: Having been developing this highly technical and complex project for the past six years, the FDA’s request for additional data suggests that the first fully energy LIGHT system will now be completed by the end of 2Q’22. However, the market should be comforted by the progress made towards US approval.
- Risks: To date, one of the key risks has been funding. However, AVO’s recent largest capital increase, coupled with alternative financing arrangements, have greatly diminished this risk. Regulatory risks have been reduced through ongoing dialogue with the FDA via the modular Q-Submission 510(k) process.
- Investment summary: After some years in development Advanced Oncotherapy is nearing the finishing line with its first LIGHT system. However, the goal is to have a pipeline of installations to satisfy the pent-up demand and bring down the cost of PT. The current EV is lower than the quantum of investment to get LIGHT to where it is today. Additionally, the NPV of the cashflows from all potential sources of income from AVO’s evolving business model is currently 215p (161p fully diluted).
