Advanced Oncotherapy

26th Sep '16 by Meldrew

9 comments 11579 reads

Advanced Onchotherapy (AVO), formerly Care Capital, is an AIM registered company that has abandoned the health property market to focus on the development and marketing of an innovative form of proton therapy machine that was developed by a company called ADAM as a spin off of CERN in Geneva. AVO now owns ADAM and the patent rights to the machine. AVO claims that it will be much smaller and cheaper than current 'first generation' proton beam therapy machines that use cyclotron technology to produce the proton beam and that it could make proton beam therapy affordable to a great many more health establishments around the world than is currently the case with existing technology.

The first machine to be produced is currently under testing and is due to be installed in a clinic that is planned to be developed in Harley Street, London. If all goes to plan, it is intended that the first patient will be treated in Harley Street towards the end of 2017. Further machines will be supplied, under contract to AVO, by Thales who are a major French manufacturing company, to meet current contracts held by AVO for proton therapy centres and any future contracts.

I am interested in the company as a potential personal investment and consider it is worth keeping an eye on. I am a private investor with some, albeit limited, experience in investing on my own account. This is my first post about any company on this website so I am very much feeling my way. I apologise if I've unintentially broken any rules. Most of my information about AVO comes from the AVO company website.

If anyone has any knowledge of or opinions on the company, please feel free to share what you know or think and get a discussion going.

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Kelvin Prescott

26th Sep '16

Evening Meldrew

I've had a look myself. I wouldn't invest, though in this case I'll happily admit that the analysis came from Tom Winnifrith rather than my own actual head.

http://www.shareprophets.com/views/23730/advanced-oncotherapy-placing-next-week-will-it-start-to-be-honest-about-how-small-its-potential-market-is

Now... the bear case about Advanced Oncotherapy may be wrong. There may be a big market out there and it might eventually come good. But, I would encourage you to compare £AVO with another life sciences company on AIM at a similar valuation. Lets consider Lifeline Scientific Inc (LON:LSIC) for example. Very similar market caps. £AVO=£66m, whereas £LSIC=£57m

That's where the similarity ends. One is turning a consistent profit on turnover with good growth prospects and a great return on capital. The other isn't.

So, whilst Advanced Oncotherapy may save the lives of many people in future, I think it unlikely to enrich yours. Even if you were minded to invest for reasons of social value, I think that Lifeline Scientific hits the mark more effectively.

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slight postscript, having had a quick look at LSIC, turns out its subject to a bid offer that means its a bit redundant as an investment today! However, the point I was trying to make (clearly badly) remains the same. AVO looks like a pretty poor investment proposition...

Meldrew

27th Sep '16

Hi Kelvin,

Thanks for your response..

I'm familiar with TW's views on AVO. Given AVO's current lack of income and the fact that any future income is tied to events that may or may not come to pass, I would probably agree with both his and your assessments if it were not for the fact that I think that TW might be wrong about the technology and the potential market for it. His comments about the technology that AVO has got gives me the impression that TW didn't look too closely at that side of things.

I'll try to explain the case for AVO technology as far as I understand it.

The current market for proton therapy is based on a small number of very large, very expensive and very complex machines that require substantial underground bunkering and shielding to protect the public and staff from the radiation that the cyclotrons that produce the beam emit in all directions. Even the new mini cyclotrons being installed in places such as UCLH have to be bunkered underground and shielded. The sheer expense of constructing, installing and maintaining the complex cyclotrons limits the number of machines that can be afforded and therefore the number of patients that can be treated by proton therapy. Consequently, it forces a rationing system that limits the conditions that are deemed appropriate to be treated by proton therapy. The expense is added to by substantial decommissioning costs at the end of the life of the cyclotrons when radiated material has to be disposed of. Cost is therefore the main limiting factor for the application of proton therapy. It limits the number of facilities built and the size of the potential market for proton therapy.

That is why almost all radiotherapy is carried out using much cheaper photon therapy machines, of which there is a very large number throughout the world. The down side of photon therapy is the damage that it causes to the healthy tissue around any tumour. That is a particular concern with tumours near the brain, especially in the case of children such as Ashya King for whom proton therapy is needed to avoid the brain damage often caused by photon therapy. I am led to believe that if proton therapy became economically competitive with photon therapy that most hospital would prefer to use proton therapy.

AVO claim that their proton beam technology which is one of the first medical spin offs from the CERN Large Hydron Collider in Switzerland is very different to cyclotron technology, that it is much smaller, and much cheaper to produce, instal, maintain and decommission. That it does not produce extraneous radiation so is safe to use in almost any location such as a town house in Harley Street where they plan to instal their first machine as a demonstration showpiece. AVO claims that it can not only replace cyclotron based proton therapy machines but can compete on cost terms with photon therapy. That means that the AVO system makes it affordable for any hospital to replace their photon therapy machines with the much safer proton therapy machines.

The owners of the house in Harley Street are the Howard de Waldon estate who own much of Marlebone and most of Harley Street and have done so for centuries. The Howard de Waldon estate state on their website that they aim to build on the reputation of Harley Street as a foremost centre of medical excellence and have sought out companies that they believe can enhance that reputation. They have awarded AVO a 50 year lease on the house and have undertaken to pay the £6.5 million cost of adapting the house for AVO's use.

If the claims made by AVO are true that opens up a vast new market for proton therapy and knocks TW's criticism that AVO is attempting to enter a limited and already saturated market on the head.

As I said, I am keeping my eye on AVO.

8th Jan '17

All components of the LIGHT system have been delivered to Geneva and work on integrating and testing the whole system is progressing with the proton source producing proton beams, the first key component integrated with the proton source and tested and work progressing with integrating and testing the remaining components.

Representatives from CERN who are involved in the development of the LIGHT system appear confident that the system will work and will change the way that both proton therapy and photon therapy will be provided in future.

The key elements of the system are that it will be cheaper to manufacture, install and maintain than existing cyclotron proton therapy machines, will take up less room and will be far cheaper to decommission at the end of its life as it it will produce negligible radiation contamination to be removed from site.

In addition, it is expected to compete on price with the more dangerous photon therapy that affects tissue surrounding the tumour whereas proton therapy does not.

The current downside of AVO is that it has no contracts, no income and has not even got a completed system to demonstrate.

The upsides are that the LIGHT system is the result of many years research by CERN who still own the patents and are still deeply involved in its development and testing. The LIGHT technology is based on tried and tested CERN technology some of which was developed for the Large Hydron Collider and adapted for the LIGHT system. The system is licenced to AVO to bringing to the marketplace and not owned by them.

Finally, contrary to what some believe, LIGHT it is not merely a tweaking or an improvement on existing cyclotron based proton therapy systems, it is a completely different technology that existing providers do not have access to. LIGHT is revolutionary and protected by large numbers of CERN's patents, as one might expect of an organisation of CERN's size and reputation.

I have taken advantage of the recent drop in the share price to dip my toe in.

whitmad

It's a very good story, like so many others. I've learned the hard way to avoid those. I wish them the best of luck and hope that they succeed, and I would certainly be interested in investing as a growth proposition when they demonstrate the ability to deliver and make a profit.

10th Jan '17

I couldn't resist but it I've only taken a small punt.

1st Mar '17

I liked the story and I am of the opinion that, although the technology is sound the management are a let down. I have sold my small punt as I believe that it will not be a good investment for some time to come. I can not see it performing well until after the latest financial arrangement is ditched.

2nd Oct '17

In the end I sold the few shares I'd bought but I still like the story so I'm keeping an eye on them. I think that if they can overcome their financial problems and start selling their machines they might be worth a closer look.

Zoiberg

29th May '18

Meldrew I would completely ignore anything that TW says. He and his associates always display an ignorance of the technology - an ignorance of which they seem to be proud. I personally think he is a completely worthless distraction.
This is however, despite having been around for a few years, an early stage company. They have major hurdles to jump in terms of a) getting the technology to work as an integrated unit b) getting the regulatory approvals to start treatments of which incidentally, I see no mention c) funding their ambitions - the latest potential deal (I haven't yet read it in detail) with a Chinese company will at least double the number of shares in circulation and I am also minded of an earlier mooted deal with a Chinese company (Sinophi? - I am just working from rusty memory rather than recent research) which fell through.
The last time I I looked their website was painting the opposition in terms of huge bunkered installations weighing hundreds of tons whereas if you google opposition companies like Mevion then the opposition's proposition these days seems to be a lot slimmer.
As you may have gathered I once swallowed the story hook, line and sinker and I could still be convinced that in the future they may land a whale! However, for now I am maintaining a watching brief!

4th Jun '18

Zoiberg. I have had a similar experience of AVO as you and have similar feelings about it. I am attracted by the technology and its provenance but I think that the BoD leaves a lot to be desired.

I am keeping an eye on it but suspect that it would take a lot to tempt me to invest. I have a feeling that even if they manage to get LIGHT to market and sell a lot of them, shareholders might still have to wait a long time to see much of a reward.

There is also the issue of the fast progress that seems to being made in other treatments for cancer. It might be that by the time LIGHT becomes available for use, it may not be needed because there may be effective biological treatments that might prevent cancers developing in the first place.

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Meldrew

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