Leveraging the modularity of LIGHT

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.
• PT therapy: Currently, PTCOG estimates that there are 240 treatment rooms available in 97 PT centres worldwide. However, the number of treatment rooms needed by 2040 is estimated to be 10,000, which implies 20% CAGR for the next 20 years. To achieve this, costs need to be significantly reduced.
• Attractions of LIGHT: Conventional cyclotron accelerators need to be installed into the deep sub-basement early in the construction of a PT centre. In contrast, AVO’s LIGHT system, with its linear accelerator, can be assembled into a ready-built structure. Being modular, it can be used as security in a financing deal.
• Novel business model: Unlike conventional models which rely solely on the initial equipment sale followed by long-term service and maintenance contracts, AVO is adopting a model that combines traditional sales with customer profit-sharing arrangements, and facilitates the roll-out of technology upgrades.
• Investment summary: After some years in development, AVO is nearing the finishing line with its first LIGHT PT system. However, the corporate goal is to have a pipeline of installations to satisfy the pent-up demand and bring down the cost of PT, thereby making this form of treatment available to many patients. The current EV only reflects the quantum of investment to get LIGHT where it is today, whereas the NPV of the cashflows from all potential sources of income from its novel business model is 214p (178p fully diluted).