AVO’s goal is to deliver an affordable and novel proton beam therapy (PBT) system, based on state-of-the-art technology developed originally at the world-renowned CERN. 2018 was characterised by the achievement of a number of technical milestones, including successful integration and validation of all the module types that constitute the LIGHT accelerator, thereby de-risking the project. AVO is delivering on its schedule to have the first LIGHT machine set up in Daresbury (Cheshire) ready for treating first patients by the end of 2020, while completing the final building stage at the Harley Street site.
- Strategy: AVO is developing a compact and modular PBT system at an affordable price for the payor, financially attractive to the operator, and generating superior patient outcomes. AVO benefits from technology know-how developed by ADAM, a spin-off from CERN, and relies on a base of world-class suppliers.
- LIGHT update: At its AGM in July, management highlighted that its Daresbury site would be used not only for the integration and assembly of LIGHT, but also for the verification and validation process, which entails the treatment of a small cohort of patients. Meanwhile, Harley Street is being handed over to AVO for fit- out.
- Financing update: AVO has announced a Subscription of new Ordinary shares at 40p per share to raise £14.4m (gross), of which £11.0m is new capital, together with a new £4.0m loan facility from a significant shareholder. The new funds (£18.4m) will be used for progressing the verification and validation of LIGHT.
- Risks: What started off as a long-term vision to have a modular and affordable PBT system, based on the latest technology, is getting ever closer, with the end now in sight. While execution and commercial risks remain, the increasing probability of a successful outcome is attracting worldwide attention.
- Investment summary: AVO’s market capitalisation of £90m equates only to the amount invested into LIGHT to date, which reflects neither the enormous technical challenges that have been overcome, nor the market potential. A DCF analysis of the LIGHT prospects generates an NPV of at least 239p per share (fully-diluted). The disconnect between fundamental and market valuations offers an investment opportunity, which will reduce as AVO completes its financing plan.
