Advanced Oncotherapy (LSE:AVO) Chief Executive Officer Sanjeev Pandya caught up with DirectorsTalk for an exclusive interview to discuss their $40 million contract win with Sinophi and the 15 year distribution agreement with China
Q1: I believe there’s good news, I assume very good news from your prospective regarding your company, could you just explain that please?
A1: You’ll have seen from the news today that we signed our first major contract for purchase of our LIGHT system which is our system for producing protons. The first contract we signed was with China for a purchase price of around $40 million and why I think this is hugely significant is it really validates where we are and where we are as a company today. The partner we’ve signed with a company called Sinophi Healthcare, it’s a UK company but they’re based in China and they are backed by Morgan Stanley Private Equity. The company is in the process of developing oncology centres in hospitals where they hope to put our LIGHT system. The other part of the agreement, as well as buying the first LIGHT system will be a 15 year distribution agreement whereby Sinophi will assist us in selling and installing machines not only into mainland China but other parts of south-east Asia including Thailand, Malaysia and Singapore.
Q2: So this could be the start of a series of deals given the publicity you have for your product and the momentum that you have clearly in terms of news flow?
A2: Yes, you’re absolutely right. I think even this deal in China per se really gives you an idea of some of the numbers, the numbers are astronomical, they’re huge. China is obviously a much bigger market than Europe and the United States and if we were to look at the city where we’ve signed the deal, it’s Huai’an City and they have a population of 5.5 million and Huai’an City is actually located in the Jiangsu province which has a population of 80 million. Even the hospitals there, these are large hospitals, they’re a 1,000 bed hospitals and there’s one hospital that has 3,000 beds so you can imagine the number, the volume of patients is very significant indeed.
Q3: Why aren’t we seeing the NHS or the American’s or other sort of state healthcare providers coming in and buying your product right now?
A3: We have been in advanced discussions with several players in the United States and in Europe and we are close, we believe, to signing our first collaboration in the United States.
Q4: In terms of how this will affect Advanced Oncotherapy, are you looking for a major re-rating in terms of the market capitalisation that you have? What is your perspective at this point?
A4: I think the market’s reacted pretty positively to the news, our share price was heading towards 8p a few minutes ago so I think that in itself says a lot for the value that the marketplace is on this deal. I just hope that we continue to produce this sort of quality of news flow to keep the market going in the right direction.
Q5: Lets presume this $40 million going into your bank account, how are you going to develop and react to this?
A5: The actual details of the deal are obviously commercially sensitive. The $40 million is an indicative price of the machine, of the LIGHT system, obviously that will reach us in various stages and various stage payments as we produce more and more parts of the accelerator and as we install the machine into China and then as we start to treat patients. So the $40 million will come in various stages and various stage payments.
Q6: And it would enable you to develop and consolidate your position in terms of your technology?
A6: That’s correct, yes.
