TIDMAVO
RNS Number : 1735S
Advanced Oncotherapy PLC
29 September 2017
ADVANCED ONCOTHERAPY PLC
("Advanced Oncotherapy" or the "Company")
Half-year Report
Advanced Oncotherapy (AIM: AVO), the developer of a next
generation proton therapy system for cancer treatment, announces
its unaudited results for the six months ended 30 June 2017 and
post-period events.
Highlights:
-- Technological milestones reached with successful integration
and testing of proton source, RFQ and SCDTL significantly
de-risking development process
-- Progress at the Harley Street site on-track with next stage
of sub-structural work underway through Deconstruct
-- Preparation of two production lines for LIGHT system commercial roll-out
-- Additional financing from consortium led by longstanding
shareholder AB Segulah, with long-term financing options under
consideration
-- Strengthening of scientific and operational expertise
-- Shareholder funds of GBP32.01 million as at 30 June 2017, up
from GBP22.63 million a year earlier; cash and cash equivalents of
GBP235,437, with a post period end GBP3.90 million financing from
AB Segulah consortium and corporation tax R&D refund of GBP3.05
million received
Nicolas Serandour, CEO of Advanced Oncotherapy, said:
"Technological development of our LIGHT system continues to be
on track and, through the successful integration and testing of
three of the four key structures of LIGHT's accelerating system, we
have significantly de-risked the development process and have
overcome the greatest technical challenges that this system faces.
We are now well positioned to accelerate the proton beam through
additional SCDTL modules and, beyond that, to integrate the fourth
key component, the CCLs. The Harley Street site also progresses
well and our principal contractor Deconstruct remains on
schedule.
"As our technological progress advances we find ourselves in a
much stronger position as we assess financing options and we have
been encouraged by positive feedback. We have been able to put
financing agreements in place and we hope to provide an update to
shareholders on longer-term financing options in due course.
"We will update shareholders regularly on our future progress
and we remain on track to build a proton therapy system capable of
treating superficial tumours by the end of Q3 2018."
Advanced Oncotherapy Plc www.avoplc.com
Dr. Michael Sinclair, Executive Tel: +44 20 3617 8728
Chairman
Nicolas Serandour, CEO
Stockdale Securities (Nomad &
Joint Broker)
Antonio Bossi / David Coaten Tel: +44 20 7601 6100
Stifel Nicolaus Europe (Joint
Broker)
Jonathan Senior / Ben Maddison Tel: +44 20 7710 7600
Walbrook PR (Financial PR & IR) Tel: +44 20 7933 8780 or avo@walbrookpr.com
Paul McManus / Anna Dunphy Mob: +44 7980 541 893 / Mob: +44
7876 741 001
About Advanced Oncotherapy Plc www.avoplc.com
Advanced Oncotherapy is a provider of particle therapy in the
treatment of cancer, which harnesses the very best in modern
technology. Advanced Oncotherapy's R&D team, ADAM, in Geneva,
focuses on the development of a proprietary proton accelerator -
LIGHT (Linac Image Guided Hadron Technology). LIGHT accelerates
protons to the energy levels achieved in legacy machines but in a
compact and truly modular unit, offering significant cost
advantages. LIGHT also delivers proton beams in a way that
facilitates greater precision and electronic control, which are not
achievable with currently available alternative technologies.
Advanced Oncotherapy will offer healthcare providers affordable
systems that will enable them to treat cancer with an innovative
technology, offering better health outcomes and lower treatment
related side effects.
Advanced Oncotherapy continually monitors the market for any
emerging improvements in delivering proton or particle therapy and
actively seeks working relationships with providers of these
innovative technologies. Through these relationships, the Company
will remain the prime provider of cutting edge, cost-effective
systems for particle therapy.
EXECUTIVE CHAIRMAN'S STATEMENT
I am delighted to update shareholders with our report for the
six months ended 30 June 2017 and to provide a review of the
further significant progress being made in the technical
development of our next generation proton therapy system,
LIGHT.
We are very pleased with the considerable advances that have
been made to date with the successful integration of three of the
four key structures for LIGHT's accelerating system, a milestone
which has greatly reduced the overall technical risk of this
project. Progress at our flagship Harley Street site remains on
track and additional funding agreements allow us to approach
long-term financing options from a stronger base. We continue to be
mindful of our future ability to meet a huge medical need with a
successful commercial roll-out of the LIGHT system once development
of our first system is completed and I will update on progress in
this area below. We remain confident that demand for our
next-generation proton therapy system will be strong and that
additional commercial sales will be secured in due course.
Most importantly, we remain firmly on track to build a proton
therapy system capable of treating superficial tumours by the end
of Q3 2018, a critical milestone that once reached will mark a
significant inflection point for delivering value to
shareholders.
Technology update
During the six months to 30 June 2017 and beyond we have made
significant advancements in the technology development and
manufacture of our first LIGHT system. As a reminder, our system
has four key components that are integral to the successful
completion of a system capable of patient treatment. The first unit
is the proton source which then feeds the protons to the second
component, the Radio Frequency Quadrupole ("RFQ"). As we announced
in March 2017, we achieved a significant technological milestone by
firing a proton beam through the integrated proton source and RFQ
at the maximum design-anticipated energy of 5 MeV. The next stage
is for the beam to pass through the low-speed accelerators, the
Side Coupled Drift Tube Linacs ("SCDTLs"), before passing through
the high-speed accelerators, the Coupled Cavity Linac ("CCL")
modules, the fourth key structure.
Whilst all four structures had already been tested individually
and the proton source successfully integrated with the RFQ and
demonstrated to be functioning as expected, we were able to update
shareholders earlier this month on completion of another key
technological milestone: namely the successful integration and
testing of three of the four key elements of the LIGHT system for
the first time.
The integration of the first SCDTL with the RFQ and proton
source, with acceleration of the proton beam through all integrated
units marks a further de-risking of the technological development
process, given that it is materially more challenging to accelerate
protons at lower speeds.
Much of the linear accelerator technology has already been
validated through the successful testing of the Linac Booster
("LIBO") prototype. LIBO is a "high speed" accelerator and most
closely matches the design and operational requirements of the CCL
modules, and so this, combined with the latest successful
integration of the first three key LIGHT structures, should provide
shareholders with confidence that the greatest technological
challenges of this project have already been overcome.
During the period we also announced that the LIGHT system's
unique ionisation chamber was received from our partner Pyramid
Technical Consultants Inc. The ionisation chamber is a critical
element of LIGHT's overall safety system, monitoring beam position,
spot size and dosage, and will be part of the delivery system in
the treatment rooms. In addition, the patient positioning
subsystem, which includes the patient treatment chair and robotic
arm which moves the chair and patient, had been completed and as
other subsystems are completed, such as imaging and treatment
management software, they will be integrated to form the whole
Patient Positioning System ("PPS").
Harley Street update
Progress at 141/143 Harley Street continues apace and we are
very pleased with the works already carried out by Deconstruct (UK)
Limited ("Deconstruct") who were appointed and are being paid by
The Howard de Walden Estate as principal contractor to the Harley
Street construction project. Deconstruct are highly experienced in
strategic demolition and in particular in the technical expertise
needed to preserve the integrity and appearance of Grade 2 listed
buildings, such as 141/143 Harley Street.
Deconstruct came on site in January to carry out preliminary
assessment and have already completed the structural demolition and
enabling work required in the first stages of this project. The
next stage of sub-structural works is now underway with the secant
piling, required to secure the retaining walls in the basement of
the building, now well underway. A short video on the progress of
the site can be seen on our website here: www.avoplc.com
The work at Harley Street for the creation of the Harley Street
Proton Therapy Centre, the site of central London's first proton
therapy centre, remains on schedule and we have every confidence
that we are on-track for the site to be ready for installation by
H1 2019 with first patient treatment expected by mid-2020.
Future plans for commercialisation
Whilst the technical development of our first LIGHT system and
the Harley Street site is a key focus of the Company we must also
be mindful of our ability to respond to the huge worldwide medical
need for access to an affordable proton therapy technology that can
be easily installed and safely operated in areas of high patient
population density.
To this end we continue to work with our manufacturing partners
to make the preparations necessary for the manufacture and building
of our completed LIGHT systems through the construction of two
production lines capable of producing eight machines per year.
Whilst these production volumes are expected at the initial stage
of roll-out, we are well positioned to further ramp-up production
of our system. Because of the LIGHT system's modular nature, mass
production capability, compactness and requirement for less
shielding, we are in a good position to increase production to meet
demand and also ensure lower manufacturing and installation lead
times.
In terms of our existing pipeline for the LIGHT system, we
continue to receive substantial interest in the technology. We
remain in discussions for a second site in Birmingham. As well as
this, we are looking at a number of sites in the USA and multiple
other opportunities in Europe, Asia and the Middle East. We retain
full distribution rights for the LIGHT proton therapy system in
China and other countries in South East Asia and remain of the
opinion that this will be an exciting and dynamic potential market
for our technology and are confident that we will achieve
commercial success here, having received strong indications of
interest in this region already.
Our confidence in LIGHT's commercialisation is also borne out by
the desire from the scientific and clinical communities for
technical improvements in proton beam therapy. These include rapid
proton beam modulation (direction, energy and dose), beam size and
improved treatment planning and execution, all of which LIGHT is
designed to offer.
Financing
Post-period end, in July, we announced that a consortium led by
one of our longstanding investors, AB Segulah, provided additional
financing to the Company through a GBP3.9m loan facility. At the
same time we agreed with Bracknor to waive the requirement for the
Company to drawdown the minimum of 10 tranches and declared that
the Company would not intend to use the Bracknor facility in the
future.
The support shown by our Swedish investors allows us to approach
long-term financing options from a stronger position. We continue
to assess additional long-term financing options and conversations
have been encouraging, particularly in light of the reassurance
that our continuing technological progress provides in terms of our
ability to overcome the most challenging technical aspects of our
development programme. We look forward to updating shareholders as
these conversations advance.
Scientific and Operational expertise
With the need to deliver on both technological development and
commercial roll-out into a clinical setting it is essential for us
to have both scientific and operational expertise providing input
at a Board level, ensuring that we continue to deliver to the
expectations we laid out to shareholders in March 2017 and which we
believe will be the catalysts for shareholder value.
Professor Steve Myers' contribution to the Board has been
particularly welcomed given his hands-on experience as Executive
Chairman of our fully owned subsidiary, ADAM S.A., and his past
role as Director of Accelerators and Technology at CERN. Hans von
Celsing, also appointed as a Non-Executive Director, has
considerable experience in the business development of both
radiation and proton therapy companies.
We also now benefit from the direct contribution at the Board
level from Dr. Nick Plowman a key opinion leader in radiation
oncology technology and clinical oncologist at St Bartholomew's
Hospital and Great Ormond Street Hospital.
We are aware of the need to ensure that our Board composition is
appropriate and provides us with the necessary technical, medical
and commercial expertise to deliver on our ambitious plans to
become a world-leading manufacturer of affordable, accessible and
most effective next-generation proton therapy systems. We are also
greatly encouraged to see the extent of support from our Board in
their own shareholding interests in the business and the degree to
which they continue to purchase shares.
In addition, the senior management team was reinforced by Ed
Lee, who joined as Chief Operating Officer. Ed joined from Optivus
Proton Therapy at Loma Linda University, site of the world's first
and longest running commercial proton therapy centre. Dr. Jonathan
Farr also joined us from the St Jude Children's Research Hospital,
a world renowned institution in paediatric oncology, as Senior
Vice-President of Medical Physics.
Financials
The Company recorded a loss of GBP6.78 million in the six months
to 30 June 2017 (H1 2016: GBP5.34 million), with shareholder funds
increasing to GBP32.01 million over the same period (H1 2016:
GBP22.63 million).
Cash and cash equivalents at 30 June 2017 were GBP235,437, with
working capital of GBP3.63 million, a post period financing
agreement for GBP3.90 million and GBP3.05 million of the
corporation tax R&D refund received.
The Board is having ongoing discussions with potential funders
and remains confident that additional funds will be available as
and when needed.
Outlook
There is an increasing demand for proton therapy globally, with
millions of patients who could potentially benefit from this
technology. 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.
The technological development of our LIGHT system remains
on-track and importantly we have achieved the most challenging
milestones in relation to the acceleration of protons, which has
significantly reduced the overall technology risk of the
accelerating system. Going forwards, we expect to update
shareholders on newsflow in firing the proton beam through
additional SCDTL modules, further news on the development of the
PPS and on the directional dose delivery system.
Work at our Harley Street site remains on schedule and we
believe we are in a stronger position to secure long-term
financing, particularly as we continue to advance the technical
development of our first LIGHT system. We continue to have strong
commercial interest in future LIGHT systems.
We will continue to update shareholders on our progress as
regularly as possible and remain confident that we are on track to
deliver a world-leading proton therapy technology that will have a
major impact on cancer treatments across the globe.
On behalf of the Board, I would like to thank our shareholders
and everyone working towards our shared goal for their continued
support and look forward to updating them further on our exciting
journey.
Dr. Michael Sinclair
Executive Chairman
29 September 2017
Consolidated statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months
to to Year to
30-Jun-17 30-Jun-16 31-Dec-16
GBP GBP GBP
Revenue - - -
Cost of sales - - -
Gross profit - - -
Administrative expenses (7,320,943) (5,897,535) (13,087,307)
Operating loss (7,320,943) (5,897,535) (13,087,307)
Finance income 51 9,219 9,045
Finance costs (535,616) (47,843) (106,338)
Loss on ordinary activities before
taxation (7,856,508) (5,936,159) (13,184,600)
Taxation 712,295 - 2,818,050
Loss after taxation from continuing
operations (7,144,213) (5,936,159) (10,366,550)
Discontinued operations
Loss for the period from discontinued
operations - - 22,100
Loss after discontinued operations (7,144,213) (5,936,159) (10,344,450)
Loss for the period
Equity shareholders of the parent Company (7,144,213) (5,936,159) (10,346,660)
Non-controlling interests - - 2,210
Other comprehensive income
Exchange differences on translation
of foreign operations 368,922 598,218 1,608,705
Total comprehensive loss for the period
net of tax (6,775,291) (5,337,941) (8,735,745)
Total comprehensive loss attributable
to:
Equity shareholders of the parent Company (6,775,291) (5,337,941) (8,737,955)
Non-controlling interests - - 2,210
(6,775,291) (5,337,941) (8,735,745)
Consolidated statement of financial position
Unaudited Unaudited Audited
6 months
to 6 months to Year to
30-Jun-17 30-Jun-16 31-Dec-16
GBP GBP GBP
Non-current assets
Intangible assets 26,701,419 14,785,591 23,355,065
Property, plant and equipment 1,372,943 1,139,607 1,464,264
Investment property 310,000 310,000 310,000
28,384,362 16,235,198 25,129,329
Current Assets
Trade and other receivables 2,255,581 1,043,693 506,963
Corporation tax R&D refund 3,786,094 1,978,251 3,148,006
Cash and cash equivalents 235,437 665,311 1,448,524
Inventories 9,024,226 8,641,122 7,437,508
15,301,338 12,328,377 12,541,001
Total assets 43,685,700 28,563,575 37,670,330
Current liabilities
Trade and other payables (4,979,171) (4,933,638) (3,134,314)
Borrowings (6,695,000) (1,000,000) (543,250)
(11,674,171) (5,933,638) (3,677,564)
Non-current liabilities
Borrowings - - -
Deferred tax - - -
- - -
Total liabilities (11,674,171) (5,933,638) (3,677,564)
Net assets 32,011,529 22,629,937 33,992,766
Equity
Share capital 20,192,132 14,214,924 18,116,946
Share premium reserve 43,301,056 32,815,856 43,117,741
Share option reserve 4,843,698 3,828,971 4,258,148
Reverse acquisition reserve 11,038,204 11,038,204 11,038,204
Loan note conversion reserve 1,950,000 - -
Exchange movements reserve 1,894,461 515,051 1,525,539
Accumulated losses (51,208,022) (39,783,069) (44,063,813)
Equity attributable to shareholders
of the Parent Company 32,011,529 22,629,937 33,992,766
Non-controlling interests - - -
Total equity funds 32,011,529 22,629,937 33,992,766
Consolidated statement of cash flows
Unaudited Unaudited Audited Audited
6 months to 6 months to Year to Year to
30-Jun-17 30-Jun-16 31-Dec-16 31-Dec-16
Continuing Discontinued
operations operations
Cash flow from operating
activities
Loss after taxation (7,144,213) (5,936,159) (10,366,550) 22,100
Adjustments:
Taxation (712,295) - (2,818,050) -
Finance costs 535,666 47,843 106,338 -
Finance income (51) (9,219) (9,045) -
Depreciation 180,863 127,090 345,371 -
Share based payments 644,050 783,192 1,909,871 -
Cash flows from operations before
changes in working capital (6,495,979) (4,987,253) (10,832,065) 22,100
Changes in inventories (1,586,718) (4,222,833) (3,019,219) -
Change in trade and other
receivables (1,701,887) (521,960) 14,770 -
Change in trade and other
payables 2,326,427 2,471,340 662,213 14,912
Cash (used) / generated from
operations (7,458,157) (7,260,706) (13,174,302) 37,012
Interest paid (340,008) (24,747) (246,550) -
Corporation tax receipt 74,207 805,980 2,454,268 -
Cash flows from operating
activities (7,723,958) (6,479,473) (10,966,583) 37,012
Cash flows from investing activities:
Capital expenditure on
intangible assets (3,346,354) (1,625,585) (8,908,411) -
Purchase of plant and equipment (89,542) (229,325) (770,339) -
Interest received 51 9,219 16,713 -
Cash flows from investment
activities (3,435,845) (1,845,691) (9,662,037) -
Cash flows from financing activities:
Equity share capital raised 250,000 32,340 13,538,747 -
Convertible loan notes 3,794,967 - - -
Other short term loans 5,901,750 - (456,750) -
Intra Group Cash Transfers - - 19,991 (19,991)
Cash flows from financing
activities 9,946,717 32,340 13,101,988 (19,991)
Decrease in cash and cash
equivalents (1,213,086) (8,292,824) (7,526,633) 17,021
Cash and cash equivalents at
beginning of the period 1,448,523 8,958,135 8,958,135 -
Cash and cash equivalents at
end of the period 235,437 665,311 1,431,502 17,021
A copy of the unaudited interim accounts for the six months ended 30 June 2017 is available
from the Company's website at www.advancedoncotherapy.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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