Home » Advanced Oncotherapy (AVO) » Advanced Oncotherapy #AVO – Exclusive distribution agreement for China and other geographies & new equity investments for a total consideration of £37m

Advanced Oncotherapy #AVO – Exclusive distribution agreement for China and other geographies & new equity investments for a total consideration of £37m

Advanced Oncotherapy (AIM: AVO), the developer of next-generation proton therapy systems for cancer treatment, announces that it has signed an exclusive distribution agreement with Yantai CIPU Medical Technology Co. Ltd. to market and sell Advanced Oncotherapy’s LIGHT system across China, Macau, Taiwan, Hong-Kong and South Korea. Under the agreement, Yantai CIPU will make a payment of £16.5 million to Advanced Oncotherapy.

At the same time, the Company has secured £20.9 million of equity investments to fund the continuing technical development of its first LIGHT system and its installation at the Harley Street Proton Therapy Centre.

Key highlights

  • Advanced Oncotherapy to raise a total £37.4 million of financing, of which £30.0 million from Yantai CIPU and £7.4 million from other investors;
  • Yantai CIPU to pay Advanced Oncotherapy £16.5 million to market and sell Advanced Oncotherapy’s LIGHT systems across China, Macau, Taiwan, Hong-Kong and South Korea;
  • Yantai CIPU to subscribe for 45 million shares at 30p, raising £13.5 million equity finance;
  • Other investors to subscribe for 24.6 millionshares at 30p, raising £7.4 million. These other investors include members of the Board, as well as the members of the consortium formed by AB Segulah who are converting the loan made to the Company in July 2017 and interests of a total of £4.1 million;
  • The subscription price of 30p per share represents a premium of 2% to the volume-weighted average share price of one month prior to 1 December 2017.

Distribution Agreement with Yantai CIPU

Yantai CIPU and the Company have entered into a distribution agreement whereby Yantai CIPU has been appointed as the exclusive distributor in the People’s Republic of China, Hong Kong, Macau, Taiwan and South Korea of the LIGHT system, the Company’s proprietary proton accelerator. As part of the distribution agreement, Yantai CIPU has agreed to pay Advanced Oncotherapy £16.5 million. The receipt of funds is subject to approval from the Government of the People’s Republic of China for the transfer of monies to the United Kingdom.

Having already identified eleven potential installation sites for the LIGHT system, Yantai CIPU and the Company have committed to a target of three installations over the first four years and the financing of ten further systems following the regulatory approval of the LIGHT system in China. Going forward, the Board remains confident that there will be a high demand for the product, particularly as precision medicine has been listed as one of the strategic industries to receive support in the People’s Republic of China’s 13th Five-Year Plan for economic and social development (2016-20).

As part of the distribution agreement, Advanced Oncotherapy will issue to Yantai CIPU 500,000 warrants to subscribe for Ordinary Shares pursuant to the terms of a warrant deed to be executed by the Company at the time of admission of the new Ordinary Shares as detailed below in respect of each binding purchase agreement for the sale of a LIGHT system up to a maximum of 11 purchase agreements. The Warrants are exercisable for five years after issuance at an exercise price equal to 130% of the one-month average share price prevailing on the date of the delivery of a LIGHT System.

About Yantai CIPU

Based in Yantai, China, Yantai CIPU invests in the health industry, including the field of high-end medical equipment companies, both in China and internationally. Yantai CIPU is ultimately owned by the Han family.

Equity Investment from Yantai CIPU

In addition, Advanced Oncotherapy has signed a subscription agreement with Yantai CIPU, whereby Yantai CIPU will subscribe for 45,000,000 ordinary shares of £0.25 each in the capital of Advanced Oncotherapy (“Ordinary Shares”) at a price of 30p per Ordinary Share (the “Subscription Shares”), providing gross funds of £13,500,000. Shareholders should be aware that these funds are not currently in the UK and the receipt of these funds and of the funds under the Distribution Agreement is subject to approval from the Government of the People’s Republic of China for the transfer of monies to the United Kingdom.

In addition, the Equity Investment by Yantai CIPU is subject to the approval of the Advanced Oncotherapy shareholders as set out below and to completion of customary due diligence in relation to a new substantial shareholder in an AIM quoted company.

It is expected that Mrs. Zhang RenHua and Mr. Chunlin Han, will join the Board of Advanced Oncotherapy following completion of the subscription by Yantai CIPU and completion of the requisite due diligence procedures for the appointment of directors to the board of an AIM quoted company. A further announcement regarding their appointment will be made in due course. The Board expects that the Company’s strategy for the LIGHT system’s commercial roll-out in Asia will benefit greatly from the Han family’s extensive knowledge and experience in this area. Together, the Company and Yantai CIPU intend to explore opportunities to manufacture parts of the LIGHT system in the region.

Additional Subscriptions

Conditional upon completion of the subscription by Yantai CIPU, certain existing or new shareholders in the Company have also agreed to subscribe for, and/or convert outstanding loans into, new Ordinary Shares.

This includes the consortium formed by AB Segulah, a significant shareholder of the Company, AFMS Radgivning Och Invest AB, Peter Gyllenhammar AB, Mijesi AB and Emendum AB, who are converting the loan made to the Company in July 2017 and interests of a total of £4.1 million into 13,555,617 Ordinary Shares (the “Conversion”).

Executive Directors Dr. Michael Sinclair, Pr. Stephen Myers, Nicolas Serandour, and Non-Executive Directors Henri Vanni, and Dr Nick Plowman have agreed to subscribe in total for 4,279,050 Ordinary Shares at a price of £0.30 per Ordinary Share, providing additional funds of £1,283,715.

The subscription by Yantai CIPU, the directors and other investors and the Conversion will be subject to shareholder approval for the authority to issue the relevant Ordinary Shares as set out in a Circular to be sent to shareholders shortly. Following completion of these transactions, the total number of shares in Advanced Oncotherapy will amount to 150,501,672. Yantai CIPU will hold 29.9% of the enlarged issued share capital of the Company.

The participations by Yantai CIPU, AB Segulah, other investors and certain directors in the transactions set out above and their resulting holdings in the enlarged share capital of the Company will be as follows:

Investment Number of newly subscribed shares Percentage of enlarged share capital held after completion of the transactions
Yantai CIPU £ 13,500,000 45,000,000 29.9%
Consortium led by AB Segulah (Loan Conversion) £ 4,066,685 13,555,617 12.6%
Dr Michael Sinclair, Executive Chairman £ 500,000 1,666,667 4.4%
Nicolas Serandour, CEO £ 500,000 1,666,667 1.2%
Prof Stephen Myers, Executive Chairman of ADAM £ 100,000 333,333 0.5%
Henri Vanni, NED £ 137,500 458,333 1.1%
Dr. Nick Plowman, NED £ 46,215 154,050 2.4%
Other investors £ 2,019,543 6,731,812 4.9%
Total £ 20,869,943 69,566,479  

Lancea LLP advised the Company on the Subscription and Distribution agreements made by Yantai CIPU.

Status of loan facility by Metric Capital Partners

Advanced Oncotherapy and Metric Capital Partners have confirmed their intention to continue to work towards the provision of a £24 million loan facility. Terms and conditions are being updated to reflect the developments since the initial announcement of the agreement with Metric Capital Partners in May 2016.

Commenting, Nicolas Serandour, CEO of Advanced Oncotherapy, said: “I am delighted that we have been able to conclude deals to provide shareholders not only with the security of longer-term financing, but which also introduce a new experienced strategic investor with strong distribution capacity and already established commercial interest in Asia, particularly in one of our key target markets, China.

“It is a little over a year now since I took on the role of Chief Executive Officer and I am pleased to note that as the calendar year draws to a close we have successfully integrated and tested the proton source, RFQ and SCDTL significantly de-risking the development process. We are also pleased with the progress of the Harley Street site with the next stage of sub-structural work well underway.

“This deal is consistent with our strategy to focus our resources on the technological development of the first LIGHT system and to establish partnerships with those businesses that have a strong track record of market access and a unique expertise in their own geographies. With our long-term financing arrangements now well engaged we can continue to focus on making our unique proton therapy technology available to patients around the world.”

For further information, please contact: 

Advanced Oncotherapy Plc www.avoplc.com
Dr. Michael Sinclair, Executive Chairman Tel: +44 20 3617 8728
Nicolas Serandour, CEO  
Stockdale Securities (Nomad & Joint Broker)
Antonio Bossi / Ed Thomas Tel: +44 20 7601 6100
Stifel Nicolaus Europe (Joint Broker)
Jonathan Senior / Ben Maddison Tel: +44 20 7710 7600
Walbrook PR (Financial PR & IR) Tel: +44 20 7933 8780 or avo@walbrookpr.com
Paul McManus / Anna Dunphy Mob: +44 7980 541 893 / Mob: +44 7876 741 001
Lancea LLP (Advisors)
Pascal Isbell / Samuel Ogunsalu Tel +44 20 3301 8015 / +44 20 3301 8005

About Advanced Oncotherapy Plc www.avoplc.com

Advanced Oncotherapy is a provider of particle therapy with protons that harnesses the best in modern technology. Advanced Oncotherapy’s team “ADAM”, based in Geneva, focuses on the development of a proprietary proton accelerator called Linac Image Guided Hadron Technology (LIGHT). LIGHT’s compact configuration delivers proton beams in a way that facilitates greater precision and electronic control which is not achievable with older technologies.

Advanced Oncotherapy will offer healthcare providers affordable systems that will enable them to treat cancer with an innovative technology as well as lower treatment related side effects.

Advanced Oncotherapy continually monitors the market for any emerging improvements in delivering proton therapy and actively seeks working relationships with providers of these innovative technologies. Through these relationships, the Company will remain the prime provider of an innovative and cost-effective system for particle therapy with protons.

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