Distribution agreement and capital increase

AVO is focused on delivering a more affordable, novel, proton-based radiotherapy system, based on technology originally developed at the world-renowned CERN. Major milestones have been achieved in 2017 and the company remains on track with its development plan to deliver and install the first LIGHT system in 2019. Confidence has been enhanced greatly with integration of the first three structures, overcoming technical challenges of accelerating the proton beam. Announcement of a distribution agreement for China, and a sizeable capital increase should resolve the market’s concerns about long-term funding of this important project.

• Strategy: To develop a compact, modular and affordable proton therapy system that generates superior patient outcomes. AVO benefits from the technology know-how developed by ADAM, a medical spin off from CERN, and relies on a base of world-class suppliers.
• Distribution agreement: Taking advantage of the considerable opportunity for proton therapy in China, mainly, plus Macau, Taiwan, Hong Kong & South Korea, AVO has signed an exclusive agreement with Yantai CIPU, an experienced international medical equipment investor, for a £16.5m up-front payment.
• Capital increase: Concomitantly, AVO is issuing 69.6m new Ordinary shares @30p per share to raise gross new funds of £16.8m and convert the AB Segulah loan (£4.1m), subject to shareholder approval. Yantai CIPU is subscribing for 45.0m shares and will own 29.9% of the enlarged share capital.
• Risks: The funding risk has now greatly reduced, although release of cash from the People’s Republic of China requires approval from the Government. The more complex technical challenges of the LIGHT project have been overcome, but there is still risk in completing integration of the four structures.
• Investment summary: Demand for Proton Therapy is increasing worldwide and the need for a small, flexible, and affordable machine is apparent. AVO has attracted strong partners and discussions with potential customers globally have already started. Resolution of the financing requirement allows management to focus all its efforts on delivering the first LIGHT system on schedule.