On the home straight

AVO’s 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. Over the past two years, important technical milestones have significantly de-risked the project. Now, AVO is working on the verification and validation phase, prior to LIGHT being used on the first patients to support CE marking. At its recent investor day, the company highlighted how its differentiated business model is attracting commercial partners that should enhance long-term shareholder returns. Additionally, it is reducing the cost of PT so that it becomes accessible to all.

• 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.
• First LIGHT: AVO has been actively working towards its target of delivering the first LIGHT system by the end of 2021. While this goal is possible, certain external factors impacting the supply chain, such as the global shortage of semi-conductors and thermo-switches, could see this slip into 1Q’22.
• Business model: Modularity of the LIGHT system offers more flexible financing options for customers in comparison to what is possible with traditional straight purchases of LIGHT: more specifically, large upfront capital outlays are not needed under an operating partnership business model. Our forecasts reflect a mix of traditional straight purchases and operating partnerships.
• Risks: To date, one of the key risks has been funding. However, AVO’s recent largest capital increase, coupled with the alternative financing arrangements, have greatly diminished this risk. Timing for the first fully operational LIGHT system might be affected by external factors beyond the company’s control.
• Investment summary: After some years in development, AVO 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 reflects only the quantum of investment to get LIGHT to where it is today, whereas the NPV of the cashflows from all potential sources of income from AVO’s evolving business model is currently 217p (162p fully diluted).