AVO.L Regulatory News (AVO)

1 May 2015

Advanced Oncotherapy plc

("AVO" or the "Company")

Successful £20 million fundraising

to complete installation of first LIGHT system at Harley St, London

Advanced Oncotherapy (AIM: AVO), the developer of next-generation proton therapy systems for cancer treatment, announces that it has raised approximately £20 million net of expenses, to continue the development of its LIGHT system, with the first unit expected to be installed in Harley Street, London, by the end of 2016 and first patient treatments expected in 2017.

Highlights

· Placing of 262,500,000 new ordinary shares of 1 penny each (the "New Shares") at 8 pence per New Share to raise c. £20 million net of expenses (the "Placing")

· Oversubscribed Placing with existing and new institutional investors by Westhouse Securities and Beaufort Securities, as joint brokers to the Company

· Admission to trading on AIM expected on 8 May 2015 

· Funds to be used to complete the development of the Company's first LIGHT system for cancer treatment

· The directors expect the Harley Street LIGHT system installation by the end of 2016 with patient treatments starting in 2017

· First commercial sales contract signed with Sinophi for China LIGHT installation for c. US$40 million

· Strong pipeline of installations (including SUNY Upstate Medical University Hospital, New York, as well as Huai'an City China and letters of intent with Spire Healthcare and BMI Healthcare in the UK)

Sanjeev Pandya, CEO of Advanced Oncotherapy, said: "I am delighted that we have received such support from both our existing shareholders and a larger institutional following as part of this fundraising. We are now well funded to ensure the successful delivery of our first LIGHT system which we expect to install in our prime UK location of Harley Street. We are on target to install our next-generation proton therapy system in the heart of London by the end of next year offering patients this life-changing treatment in 2017.

"The raising of these funds now, allows us as a management team to focus solely on delivering this ground breaking technology to the UK to this timeline and we believe our success in doing so will generate significant value for shareholders."

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Background to and reasons for the Placing

Advanced Oncotherapy is focused on proton therapy, a highly-targeted type of radiotherapy that can treat hard-to-reach cancers with a lower risk of damaging surrounding healthy tissues and causing harmful side effects.

It is now widely accepted that the physical property of protons gives them an intrinsic advantage over traditional high-energy X-rays as a source of therapeutic radiation. This is because protons stop once they hit their target - the tumour site - whereas X-ray beams carry on through the body. Cancer cells are harmed whilst healthy tissue is spared. However proton therapy remains today a rare resource with only 54 centres in the world offering such treatments. Use of proton therapy has been limited by two factors: the massive size of the machines needed to accelerate the protons to the required killing energy and speed, and the cost of the bunkers to house the equipment often over three storeys tall which results in prohibitive treatment costs for patients and payors.

With its LIGHT (Linac for Image Guided Hadron Therapy) system - being developed by Advanced Oncotherapy and ADAM (a spin off from CERN acquired in 2013) - the Company is focused on delivering a new generation unit which will accelerate protons to the energy levels achieved in legacy machines but in a unit that has a lower cost and is more compact. The compact configuration of the LIGHT system allows it to deliver proton beams in a way that facilitates a greater precision and electronic control which is simply not achievable with older technologies.

The Company believes its LIGHT system will deliver significant clinical, cost and physical advantages over "first generation" proton therapy systems. In so doing, the directors believe that LIGHT will, in all likelihood, make them virtually obsolete. Key features of the LIGHT system include:

· First Linear Accelerator for proton therapy

§ Same frequency as conventional radiotherapy LINACs

· More affordable

· More compact

§ Can fit into existing city centre hospitals

· Precise and dynamic scanning beam

§ More precise

§ Rapid variation of energy, expected to be 2-3 milliseconds

§ Better operational efficiency and utility

· An integrated system and turn-key solution which is modular

· Lower maintenance and operating cost compared to competition

Key milestones have recently been met to achieve the delivery of the first LIGHT accelerator in 2016, ready for treating patients by 2017:

· First commercial contract with Sinophi for one LIGHT machine at c.US $40m.

· 7 letters of intent with a value in excess of £200m from both the public and private sectors, including BMI Healthcare, Spire Healthcare and SUNY Upstate Medical University Hospital ("SUNY").

· Agreement to install a machine in Harley Street with the property development costs being borne by Howard de Walden Estate, estimated at between £6-7m.

· The successful manufacture of the first Couple Cavity Linac module in January 2015.

Use of net proceeds

c.£7m of the funds raised from the Placing will be used to support the development of a complete LIGHT accelerator and will allow the Company to complete its first installation of a LIGHT machine at its Harley Street site in London.

Of the remaining proceeds, c.£7m of the funds will be used to fund Company working capital, c.£3m will fund support systems for the first LIGHT machine and c.£3m will fund patient facing systems of the machine.

In addition to the agreements to deliver the LIGHT system to hospitals and healthcare groups such as SUNY, Spire Healthcare or BMI Healthcare, the Company is currently in discussions with a number of other hospitals and healthcare organisations. The Company is focussed on delivering a new generation unit which will accelerate protons to the energy levels achieved in legacy machines but in a unit that has a lower equipment and running cost and is more compact.

Certain directors of the Company had wanted to participate in the Placing; however, they are now in a close period due to the requirement for the accounts to 31 December 2014 to be published at the latest by the end of June 2015 and are therefore prevented from participating in the Placing. They have however indicated that they intend to increase their shareholding in the Company once they are allowed to do so under the AIM Rules.

Placing Statistics

Admission

In order to qualify for EIS treatment, the Placing is being conducted in two tranches. However, it is expected that both the EIS placing shares and the further placing shares will be admitted to trading on or around 8 May 2015.

Application has been made for the New Shares to be admitted to trading on AIM ("Admission") on 8 May 2015.

Total Voting Rights

Following Admission, the Company's enlarged issued share capital will comprise 1,339,185,457 ordinary shares, with voting rights. The Company does not hold any ordinary shares in treasury. Therefore the total number of ordinary shares in the Company with voting rights will be 1,339,185,457. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Warrants

The Company has agreed, conditional on shareholder approval, to issue 13,391,855 warrants (the "Warrants") to Westhouse Securities. The Warrants will be exercisable until the end of April 2020 at an exercise price of 8p per ordinary share.

Conditionality

The Placing is conditional upon, inter alia, Admission becoming effective and the Placing Agreement between the Company and Westhouse Securities and Beaufort Securities becoming unconditional and not being terminated in accordance with its terms.