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by Spekulator at Wall Street Wires
Quick reminder. I am an active investor into smaller companies where I see (a) genuine value (b) good management (c) an unusual or groundbreaking product. Mostly a,b and c have to be present and correct, but I will make exceptions. I am invested into companies listed on Nasdaq, London main market, AIM and some NEX stocks (formerly ISDX or PLUS Markets).
Just over a month ago I published a small communique about Advanced Oncotherapy (AVO.L), a London AIM listed company developing a groundbreaking proton beam therapy machine to treat cancer. Before I bring you up to date on the latest moves, a quick reminder about what AVO (what most call them) do.
The AVO technology has been developed by ADAM, a spin-off company that AVO bought from CERN, the Hadron Collider people. The most advanced, atom-splitting, Higgs-Bosun particle busting company around has a medical spin-off owned completely by AVO. Clearly as before, both ‘a’ and ‘c’ receive a resounding tick.
Proton therapy for cancer has been around for a few years. It can be summed up as follows. If conventional radiotherapy is likened to throwing a blanket of radioactive beams over a patient to treat a tumour, then proton therapy is a needle of beams going directly to the tumour without affecting the tissue around it. Particularly important for growing children. Several well publicised cases have seen young lives saved and improved through this treatment.
The problem though is the size of the machine and housing required to insulate and treat safely. AVO is developing a LIGHT machine, which in comparison is the size of a bus versus a soccer field. In a March update, the AVO CEO Nicholas Serandour said the first LIGHT system “is expected to be capable of treating superficial tumours in Q3 2018.” That’s just over a year away. AVO is developing its own exclusive treatment centre in Harley Street, London to be completed by Q1 2019. That’s less than 2 years away.
Now we come to financing, where there have been problems: the company has had to go cap in hand to institutions to borrow money, sometimes at a punitive rate. This is due to delays in developing the LIGHT machine, something that as a technology investor I am used to.
An unpopular arrangement with Bracknor Investments meant that AVO borrowed money in exchange for shares and warrants, which worked fine so long as the shares didn’t dip below the nominal 25p. They did, so large fees and additional payments were due. Thankfully, a group of major shareholders under AB Segulah have provided a £3.9m loan to the company on far more agreeable terms, and will no doubt continue to support in future. The group of investors incidentally includes Peter Gyllenhammar, the former Volvo CEO and Aviva Chairman and a shrewd, pragmatic man. A crisis in funding at the company has now passed, and AVO now has a secure future.
I said before that the management team led by Nicholas Serandour and Michael Sinclair have attracted some leading medical practitioners to the board. These people have reputations, (in some cases legends) to protect among their peers. Clearly they (as do I) see the potential this company has to revolutionise the whole process of radiotherapy. Therefore ‘b’ also gets a tick.
Of course the vicious attacks that some so-called investor websites have been making on the company and the AVO management team continued after the funding announcement yesterday. Do these people have an agenda? Perhaps. But with security and funding now in place, AVO can complete the first LIGHT machine and the Harley Street Centre.
At just 17p per share, and a market cap of c£12m, AVO technology should start to deliver a material difference for cancer sufferers in the next few years. As this moves closer, I expect a commensurate increase in the valuation of the company.