Advanced Oncotherapy plc
Annual Report
2020
Democratising Proton Therapy
Advancing cancer treatment with innovative,
cost effective technology
Advanced Oncotherapy plc.
Annual Report 2017
Advancing cancer treatment with
innovative, cost effective technology
Advanced Oncotherapy plc
Annual Report
2019
Advanced Oncotherapy plc
Annual Report 2018
Advancing cancer treatment with
innovative, cost effective technology
Advanced Oncotherapy plc
Annual Report
2020
Democratising Proton Therapy
Advancing cancer treatment with innovative,
cost effective technology
Democratising Proton Therapy
Advancing cancer treatment with innovative,
cost effective technology
This report is available on our website
www.avoplc.com/en-gb/Investors/Company-Documents
ADVANCED ONCOTHERAPY PLC
1
TO OUR SHAREHOLDERS
STRATEGIC REPORT
OUR PURPOSE
We are driven by our purpose: democratising proton therapy.
Just as the mobile revolution democratised communication among people, healthcare must be democratised. At Advanced
Oncotherapy, we believe access to healthcare is a fundamental human right. Yet, the provision of healthcare is still not universal
and many people cannot afford quality health services.
Proton therapy is one of the many segments in healthcare where a different global approach that is truly democratic must
emerge.
Fundamentally, we believe in a new model that will change the way we treat cancer, and the relationship between patients and
physicians as we know it.
TO OUR SHAREHOLDERS
FINANCIAL REPORT
STRATEGIC REPORT
Introduction to Advanced Oncotherapy
Why our Commitment to Patients?
What We Do
How We Do It
GOVERNANCE REPORT
Advanced Oncotherapy Team
Corporate Governance Report
Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
ONLINE
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes Forming Part of the Financial Statements
Notes to the Accounts – Group
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes to the Accounts – Company
OTHER INFORMATION
Notice of Annual General Meeting
Explanatory Notes to the Notice of Annual
General Meeting
Company Information
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You can find more information about Advanced Oncotherapy at www.avoplc.com
2 ANNUAL REPORT 2020
GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
We know accessibility and affordability are hindering the widespread use of proton therapy.
Innovation in healthcare breaks down these walls of cost, time and location. With our technology originated at the world-
renowned place of excellence and science – CERN – we work every day to make proton therapy a reality for every patient.
Our LIGHT technology possesses the power to remove the obstacles which are associated with legacy systems and which
prevent access to proton therapy for all.
ADVANCED ONCOTHERAPY PLC
3
TO OUR SHAREHOLDERS
STRATEGIC REPORT
TO OUR SHAREHOLDERS
Dear shareholders,
It is my great pleasure to introduce another annual report and
accounts at such a pivotal time in Advanced Oncotherapy’s
development.
2020 will certainly be remembered all over the world for the
Covid-19 pandemic, an unprecedented health crisis of epic
proportions bearing profound social, economic and financial
consequences. My first and foremost thoughts are for all of those
who lost their dear ones over the past year. I also
want to express my utmost gratitude to all our
employees and partners who have shown
remarkable dedication, agility and resilience
during these unprecedented circumstances.
•
As Albert Einstein suggested, out of
crises can emerge new and incredible
opportunities, particularly if traditional
approaches and paradigms are
questioned and challenged. This
Covid-19 pandemic is no exception; it
underscores three major opportunities
for Advanced Oncotherapy:
•
The Covid-19 pandemic has been a
wake-up call for governments to do more
to tackle cancer. Cancer is a pandemic
in itself and time is exceedingly precious.
Every minute during 2020, nine people were
diagnosed with cancer in Western Europe1.
A one-month delay in treating cancer results in a 6 to 13%
higher risk of dying2. Sadly, 50% of governments had their
cancer services partially or completely disrupted as a result of
the Covid-19 pandemic3 and it is estimated that some 50,000
people in the UK are probably missing a cancer diagnosis4.
Yet, the stark impact of the pandemic on cancer care has
made everyone realise the actual human cost of neglecting
non-communicable diseases like cancer. With the number
of new cancer cases currently expected to rise by more than
45% over the next twenty years5, more actions must be taken
to bend the curve and raise further awareness at all levels. We
have already seen governments, payers and other healthcare
stakeholders seeking new ways to accelerate the fight against
cancer and deploy new initiatives. Advanced Oncotherapy
has a key role to play in this broad eco-system.
The Covid-19 pandemic is reshaping oncology practice and
delivery of cancer care broadly, shifting care onto virtual
•
conditions,
including cancer, or
platforms and minimising the number of hospital patient
visits through more efficient and targeted radiation therapy
systems. These new solutions facilitate access to innovation
of cancer centres and support more partnerships to accelerate
the convergence of radiation with targeted drugs. These are
a few important changes we foresee and which we believe
will continue well beyond the short- to mid-term of the active
pandemic.
The Covid-19 pandemic has taken a terrible toll around the
world – but some sectors have been more
affected than others. People with underlying
those
living in countries with under-developed
healthcare infrastructure have been hit
disproportionately hard by the virus.
This makes our purpose centred
around defeating cancer through
the democratisation of proton
therapy more meaningful than
ever. We want to play our part
and have an impact in broadening
access to cancer therapy by making
therapy more accessible
and affordable. All the decisions we
have taken were not always the easiest
ones, but they were the right ones to
serve our purpose and I am convinced that
many patients around the world and all our
proton
stakeholders will soon reap the rewards of our strategy.
In the face of these challenges, we continued to make progress
on our strategy. This is a testament to the leadership of Nicolas
and his management team who have navigated the Company
through the year and ensured people across our Company
remained focused on our purpose and project. Ensuring our
LIGHT system can deliver a proton beam for all radio-sensitive
tumours remains our number one priority for 2021.
The success of our strategy and execution plan relies on well-
proven design and industrial processes. It is also predicated on
four important strategic pillars:
•
differentiated, asset-light and patient-centric business model;
commitment to do business responsibly and sustainably;
innovation with clear metrics
continued
initiatives and assess their expected return; and
unique culture embedded in our governance framework.
to prioritise
•
•
•
“I am confident that the business model we are building
around the superiority of LIGHT and centred around
customers' needs is a long-term sustainable growth model
that will prove rewarding for Advanced Oncotherapy's
shareholders”
1 Source: WHO
2 Source: The British Medical Journal
3 Dr. André Ilbawi, from WHO
4 Source: Macmillan Cancer Support
5 Source: WHO
6 This is approximately ten times faster than cyclotrons
7 Up to 10 times smaller versus cyclotrons
4
ANNUAL REPORT 2020
GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
DIFFERENTIATED, ASSET-LIGHT AND PATIENT-CENTRIC
BUSINESS MODEL
The commercial launch of LIGHT represents a shift away from
competition and into a space where, as a technology disrupter,
we can provide long-term attractive return opportunities for our
customers.
LIGHT has been designed to treat at an affordable cost a large
spectrum of tumours. Its potential goes well beyond the hard-
to-treat tumours such as head and neck tumours. Its ability
to deliver radiation pulse-by-pulse 200 times per second6
combined with its significantly narrower proton beam7 make it
perfectly suited to sculpt radiation doses based on the irregular
shape of the tumour, taking into account potential tumour motion
as a result of breathing and heart movements.
As we seek to deliver our mission of democratising proton
therapy, it is clear to me that there is a significant need to
reduce the high upfront capital costs associated with legacy
proton therapy systems. This is key to lowering the hurdle to
wider adoption of proton therapy, particularly for many local and
smaller treatment centres. Our LIGHT system is well placed to
do exactly that: through a reduction of the building costs and the
implementation of a different financing model:
•
Building costs – The LIGHT system is modular and therefore
can be easily installed directly into clinical facilities. It produces
proton beams at the required energy level for treatment
without the need for degraders, greatly decreasing the need
for expensive shielding and thus reducing the building and
installation cost. This is of paramount importance when
considering that the building and the installation of a proton
therapy system – which can be in excess of $200 million
depending on the site and configuration – represent up to
two-thirds of the project cost;
Financing model – The modular design of LIGHT also means
that it can be used as a financing security for future purchase
orders. Unlike legacy systems, LIGHT can become available
to customers through tailor-made lease financing solutions.
This has been the basis of the partnership we announced in
January 2021 with DiaMedCare AG, the Swiss-based active
asset financing partner in the life sciences sector. Under the
terms of the partnership agreement, DiaMedCare will acquire
LIGHT systems and lease them back to the Company's
customers that are commissioning the LIGHT system
for oncology treatments. In addition, subject to contracts,
DiaMedCare will also be able to bridge manufacturing costs
until delivery of the LIGHT system to customers.
•
In summary, I am confident that the business model we are building
around the superiority of LIGHT and centred around customers’
needs is a long-term sustainable growth model that will prove
rewarding for Advanced Oncotherapy’s shareholders.
COMMITMENT TO DO BUSINESS RESPONSIBLY AND
SUSTAINABLY WITH A CLEAR SOCIAL PURPOSE
Many years ago, CERN designed LIGHT with the view of doing
the right thing for patients, society and our planet:
•
it can be installed in a contiguous and densely populated
environment, allowing patients to be treated at proximity to
their families;
it can be easily installed directly into existing clinical facilities;
it can be transported in standard containers and trucks; it does
not require expensive cranes or load handling devices; and
as a result of being able to be operated with an efficiency
constantly above 90% which drastically limits stray radiation
and reduces the need to build large shielding, it can be
integrated in an environmentally friendly manner.
•
•
•
We must acknowledge the legacy of the pioneering scientists
who have been involved in this breakthrough innovation. We
are also determined to continue to raise our game. This is why,
together with our partners, we are committed to support the
treatment of children at cost in the catchment area and train
physicians and engineers, when deploying the LIGHT solution
in countries with limited healthcare access.
As part of our journey to democratise proton therapy and improve
the health and well-being of the 19 million people diagnosed with
cancer every year, of which 57% are in low and middle-income
countries where survival rates are currently lowest, we have an
important objective: achieving a 230MeV beam on our LIGHT
system that is being assembled in Daresbury. Yet, we recognise
that to be successful in the long-term we need to have a vision
that goes beyond the first machine. This means we must have
the right foundation in place to operate ethically and sustainably.
At Advanced Oncotherapy, we have been focused on this for
many years. We believe in the need to transition to an economy
that is centred on sustainability.
In 2020, we also formed a dedicated, cross-disciplinary ESG
working group bringing HR, Finance and Supply Chain together.
We are committed to enhancing our ESG performance and are
developing a structured roadmap defining our key areas of focus
and development. We will set out a clear roadmap intended
to build on this platform, pinpointing specific areas of focus to
deliver against internal and external expectations.
Another building block of our business model lies in the
opportunity to receive a share of the future profits generated by
the proton centres in addition to the proceeds associated with
the sale of the LIGHT systems. Recent examples of this include
agreements with the London Clinic, the Mediterranean Hospital
in Limassol, Cyprus and Saba Partners. This is being made
possible because of our competitive pricing offering regardless
of the clear and superior profile of the LIGHT system as well as
our commitment to deploy product upgrades without penalising
early technology adopters. The benefits of this approach are
manifold. This helps us broaden our customer base and drive
adoption whilst generating additional potential revenue streams.
This should also facilitate stable cash generation, with profitability
supported by long term service contracts and margin profit share
agreements.
LIGHT FLASH AND THE COMBINATION OF LIGHT WITH
IMMUNOTHERAPY, TWO MAJOR OPPORTUNITIES
WHICH CAN LEAD TO A PARADIGM SHIFT IN THE USE OF
PROTON THERAPY
Innovation is not a choice; it is a necessity to achieve sustainable
competitive advantage and create value. It is also a “must”
because the LIGHT platform – as the first commercial linear proton
accelerator – lends itself perfectly to future upgrades. We are
particularly excited about the prospects of FLASH, which paves the
way for treating patients in one visit. Due to its smaller beam size
and tailored made treatment plan, the use of our LIGHT system
– in combination with specific immunotherapeutic agents – also
holds great promises. Such approach can be designed to elicit
an immune response in resistant tumours as well as tackling
metastases based on radiation targeted at the primary tumour.
ADVANCED ONCOTHERAPY PLC
5
TO OUR SHAREHOLDERS
STRATEGIC REPORT
TO OUR
SHAREHOLDERS _Continued
IN OUR GOVERNANCE
UNIQUE CULTURE EMBEDDED
FRAMEWORK
Culture is at the heart of execution, driving results and creating value,
which is why it remains our key priority. Our culture continues to
foster agility, embrace change, encourage entrepreneurism, focus on
execution and deliver high performance. It pivots on the mindset of our
team and partners, who inspire trust, listen, find out, collaborate, take
risks, find solutions, encourage and celebrate.
To help our employees and partners achieve their best and support the
Company’s priorities, the Board continues to adapt. As announced in
June 2020, we have streamlined the size of the Board for corporate
governance purposes and to ensure we have a more agile and balanced
Board to reflect the Company's strategy. As a result, Mr Gabriel Urwitz,
Mr Peter Sjöstrand, Mr Chunlin "Allen" Han, and Dr Yuelong Huang
(all Non-Executive Directors of the Company) stepped down at the
Company's Annual General Meeting in July 2020. In addition, in the
context of our vision to build a more balanced and international business,
we were delighted to welcome Lori Cross as a Non-Executive Director
in September 2020. Lori is a successful business executive with over 35
years of experience in transforming leading global medical technology
and
life sciences organisations and commercialising disruptive
healthcare business models.
LOOKING AHEAD
At Advanced Oncotherapy we believe that in the next 20 years the
industry will need more than 10,000 proton therapy treatment rooms,
representing a 50-fold increase over the current global capacity. This,
we think, will be driven by the increasing realisation and demonstration
that proton therapy allows radiation oncologists to effectively irradiate
tumours whilst sparing up to 60% of the surrounding healthy tissue
compared to conventional radiation therapy. We want to play a
fundamental role in the transformation of this market. To truly unlock
this potential, the industry needs more precise and cost-efficient proton
therapy systems. We believe proton therapy systems based on our
proprietary LIGHT technology can achieve this.
We are cognisant that our journey towards the democratisation of proton
therapy has not been and will not be linear, but we know that continued focus
on the vision is the right path to take for shareholders, customers, partners,
colleagues and our communities. This is why, during this unprecedented
year, we took the decision to weather the storm whilst continuing to invest
in the business and our strategy. As a result, jobs were protected, and
we proceeded with our plans to invest behind the commercial launch of
LIGHT and the set-up of our assembly site. This strategy was offset by
some discretionary one-off cost savings. Looking ahead, we expect these
investments to deliver higher growth over time and significant value.
Finally, I would like to thank my fellow Board members, the senior
leadership team and all of the Group’s employees for the exceptional
work they have done during this unprecedented year. I appreciate the
patience shown by our shareholders who share my view of the value
accretion potential. I am very grateful for their continued support.
Dr Michael Sinclair
Executive Chairman
29 June 2021
6
ANNUAL REPORT 2020
GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
ADVANCED ONCOTHERAPY PLC
7
TO OUR SHAREHOLDERS
STRATEGIC REPORT
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
8 ANNUAL REPORT 2020
GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
INTRODUCTION TO ADVANCED ONCOTHERAPY
ADVANCED ONCOTHERAPY AT A GLANCE
OUR VALUES
STATEMENT FROM THE CEO
INVESTING NOW FOR BUILDING A BETTER TOMORROW
The role of Advanced Oncotherapy in building the future of proton therapy
Towards a sustainable growth
A BREAKTHROUGH IN PROGRESS
WHY OUR COMMITMENT TO PATIENTS?
A PERSONAL STORY: GISELA AND MICHAEL
ACKNOWLEDGMENTS FROM THE CHAIRMAN OF ADAM
WHAT WE DO
OUR FOCUS
Cancer and purpose of cancer therapies
Radiation therapy remains the most established and economical cancer therapy
Proton therapy: the new generation of radiation treatments
Current and future potential for proton therapy in cancer care
OUR DISTINCTIVENESS
Our LIGHT system
Our business model
Our long-term orientation driven by innovation
HOW WE DO IT
OUR SET-UP
Innovation: key to Advanced Oncotherapy’s DNA
A dual strategy focused on outsourcing and in-house assembly
OUR PROCESSES
Focus on quality, a mindset influencing each action undertaken by the Company
Following a well-proven regulatory path
OUR RESOURCING PLAN
Our funding plan: securing the means of the Company’s and customers’ ambitions
Our people
OUR STRATEGY
PRINCIPAL RISKS AND RISK MANAGEMENT
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ADVANCED ONCOTHERAPY PLC
9
TO OUR SHAREHOLDERS
ADVANCED ONCOTHERAPY
AT A GLANCE
STRATEGIC REPORT
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
•
•
•
CERN spin-off
Flagship solution: LIGHT
LIGHT, a proton therapy solution that offers
significant advantages over legacy systems,
including smaller footprint, modular design,
ease of installation, fast electronic control of
the proton beam and energy, significant cost
saving for customers
• Offices in the UK, Switzerland, the US and
the Netherlands
•
Listed on AIM; ticker: LON: AVO
Large addressable market
$140 billion market
•
4,000 proton therapy centres needed worldwide
95 proton therapy centres in operation today
•
•
Longstanding commitment to cancer with a proven technology
•
67 years since the first proton treatments were performed in the Berkeley Radiation Laboratory
32 years since the first linear proton accelerator – the basis for LIGHT – was used at the proton
therapy centre in Clatterbridge in the UK
67 years since CERN, the world’s largest physics lab in the world, was created
•
•
Breakthrough technology with strong barriers to entry
•
•
•
The first commercial linear proton therapy system for cancer
10/15 years, the time needed to develop a physics-applied concept into an optimised design ready for industrialisation
$526 million, the average cost to develop a complex medical device in the industry, more than twice what has
been invested in the LIGHT platform and infrastructure to date
10 ANNUAL REPORT 2020
Approximately 150 suppliers delivering components; LIGHT system being assembled and tested in
Daresbury, UK
230 MeV beam, the maximum energy, expected in H2:21
Three installations already planned with operators (subject to final agreements) prior to certification
The present
•
The future
•
•
•
•
•
•
•
40-50%, the potential cost savings for future machines
Potential for up to 80% of the equipment to be funded through leasing arrangements
FLASH LIGHT and LIGHT in combination with immunotherapy; two major
opportunities leading to a paradigm shift
Revenue model and potential revenue streams
•
Approximately one-third of the revenues in equipment sale
Approximately one-third of the revenues in long-term servicing, project
management and project upgrades
Approximately one-third of the revenues in profit sharing arrangements
with customers
The investment case
•
Clear purpose and vision, with a talented team and
strong culture
• Growth opportunities within a total addressable
market of approximately US$140 billion
Appealing business fundamentals – differentiated
product set to break the current market status quo
and protected by strong barriers to entry
Differentiated asset: asset-light and patient-centric
business model – key pillars in place for strong,
sustainable and profitable cash-flow generation
Investments made and existing partnerships
removing constraints to growth and ensuring the
scalability of the business and attractive return
profile
Durable mission and financial value creation
•
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ADVANCED ONCOTHERAPY PLC
11
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT TO OUR SHAREHOLDERS
OUR VALUES
STRATEGIC REPORT
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Our ways of working are based on a set of core values which have shaped our culture.
We are committed to creating value for all our stakeholders:
•
•
•
•
•
being a partner of choice
bringing significant medical benefit for patients, doctors and payers
offering a great place to work for employees
delivering a sustainable positive contribution to society
earning competitive returns for our investors
12
ANNUAL REPORT 2020 GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
Life
We collaborate across our professional disciplines, and with our suppliers and investors, to create
outcomes that go beyond the sum of the parts. Putting the well-being of patients and staff at the heart
of our mission, we change people’s lives for good.
Safety
We choose the right path, not the easy path. We do the right thing to ensure the safety of patients, our
users and our staff. We are rigorous in our research, our development and our testing, never accepting
short-cuts.
Quality
We focus on patient outcomes, reliability and consistency. Our professionalism, commitment and
precision deliver world-class results, meeting the most stringent medical requirements.
Innovation
We push the boundaries of what can be achieved between physics and engineering, creating something
that has never been done before. Our agility and entrepreneurial spirit are changing cancer treatment
for ever.
13
ADVANCED ONCOTHERAPY PLC STATEMENT FROM THE
CHIEF EXECUTIVE OFFICER
At Advanced Oncotherapy, we have a unique opportunity to
help democratise proton therapy. We believe the Company’s
technology is truly disruptive with the ability to bring profound
change to the treatment paradigm within the radiation oncology
market. That said, we remain cognisant that success in
achieving this also requires us to navigate a highly regulated
and fast-changing environment.
Over the past year, Advanced Oncotherapy has made significant
progress towards achieving its corporate objective of having
its first LIGHT system generating a 230MeV
beam in 2021, despite the global impact of
the Covid-19 pandemic. I am proud of the
way in which the Company has adapted
and responded to challenges presented
in order to support patients, healthcare
systems, partners and our employees.
In this statement, we will reflect on
the operational progress made as
well as our financial results for the
period ended 31st December 2020.
The Covid-19 pandemic and the
way we responded
The Covid-19 pandemic dominated all
aspects of life and business during 2020
and in these unprecedented times Advanced
Oncotherapy was no exception. From mid-
March 2020, we saw an impact on our operations
due to decisions by governments to implement
lockdowns to tackle and constrain the impact of the outbreak
and, as a result, our assembly site in Daresbury, Cheshire, UK
was closed for two months. The integration and testing activities
resumed from May 2020, but due to the nature of our project
– assembling a radiation-based system in a confined space –
we were unable to deploy full resources to the same extent as
we had done previously. In addition, the pandemic disrupted
our supply chain, preventing some of our key suppliers from
performing maintenance and quality tests.
In the midst of the outbreak of Covid-19, we had to rapidly
adapt our organisation. Throughout this period, we prioritised
the health and safety of all our employees and, in order to
achieve this objective, we performed a full risk assessment,
implemented our business continuity plan, adapted to the
latest Covid-19 guidance provided by the UK Government and
implemented new policies to ensure strict compliance with the
Health and Safety requirements.
As many organisations have done as a result of the pandemic,
we also changed the way we worked together with the majority
of employees working from home from mid-March 2020. The
smooth and successful transition to communicating via video
meetings, best practice sharing sessions, and rebalancing
"Under extraordinary circumstances, our employees have
shown immense creativity and can-do attitude in their
wholehearted efforts to deliver on our execution plan. Their
determination and hard work made us able to make clear
progress. I believe this comes as a consequence of our
crystal-clear purpose and long-established company values:
life, safety, quality and innovation."
14
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
the business enhanced workplace
workloads across
engagement for most. As an organisation, we hope to continue
using many of the new ways of doing business post-pandemic
whilst embracing flexible working solutions for all employees.
In order to continue progress with regards to the development
of the LIGHT system over the past year, our team initially
focused on progressing documentation required for regulatory
approval – with most of the day-to-day work carried out by our
employees remotely. This was a significant workstream, given
that LIGHT has more than 15,000 components,
and we have made excellent progress to
enhance our documentation workstreams and
software development. Working with P-Cure,
the supplier of the patient positioning
system (PPS), the Company enhanced
the
efficient installation of future systems,
enabling quicker system start-up and
key documentation
to ensure
commissioning.
the shifts
During 2020, with
employee working conditions,
in
the
Board decided that it was important to
continue investing behind our strategic
priorities. As an organisation, we want to
emerge from the pandemic in a stronger
competitive position, placing a high priority
on keeping our valuable workforce as intact as
possible and completing our ongoing projects.
Accordingly, we invested in enhancing our IT infrastructure with
the installation of simultaneous stream multi-video and audio
communication systems helping our team at Daresbury with
remote technical guidance from the Company’s R&D facility in
Geneva, Switzerland. Our verification and validation testers also
received new qualifications, thus removing the need for external
consultants and reducing future uncertainty, potential delays and
additional costs. This strategy was complemented with decisive
actions to mitigate the financial impact triggered by Covid-19
where we introduced measures aimed at reducing non-essential
spending and safeguarding our net financial position.
Our strategic approach to the challenges brought by Covid-19
enabled us to continue to make progress throughout the year.
As a result, we have entered into a new phase with a sharper
business and a higher confidence in our ability to deliver
sustainable long-term growth.
THE PROGRESS WE MADE IN 2020
Understanding the basics of LIGHT…
With the introduction of LIGHT technology, we are pushing
the boundaries of what can be achieved between physics and
engineering to create something that has never been done
before. The complexity of the project and the competitive
barriers of entry arise from the various specialities needed for
the design, production and testing of the machine.
To assess the operational achievements made during the year,
it is therefore important to understand the conceptual science
behind the acceleration of protons in our LIGHT system.
Protons are accelerated with an electric field and then steered
and focused with a magnetic field. Electric fields along the
accelerator switch from positive to negative at a given frequency
pulling protons forward along the accelerator. This acceleration
occurs in radiofrequency (RF) cavities, called radio-frequency
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 data. To respond to one of the key challenges currently faced by
end users, the lack of an integrated control software suite, we
have worked with Raysearch and successfully tested a seamless
software suite customised for LIGHT. This provides users with a
single interface for patient preparation, treatment and follow-up
processes, whilst limiting potential risks and facilitating a better
end user experience for clinicians and healthcare workers.
In addition, we have further strengthened relationships with our
key stakeholders, including suppliers and regulatory partners.
This was showcased by our decision to follow the US Food and
Drug Administration (FDA) pre-submission process, an approach
that gives us regular and expanded access to the FDA. This will
provide us with a critical step in gaining valuable feedback from
the FDA ahead of certification whilst de-risking our regulatory plan.
Infrastructure in place to support assembly and testing
activities
The purpose of the site located at Daresbury, Cheshire is to
assemble and test the various units of the LIGHT system so that
the proton beam meets the relevant medical, health and safety
requirements and standards. This infrastructure is now in place
and can set the course for future success. The most critical
parts include fixed and temporary shielding walls, the stands on
which the RF cavities are conditioned, the ultra-high vacuum,
the cooling systems and the instruments needed for testing.
Most importantly, this means that we have now been able to start
conditioning the accelerating structures. The conditioning process
is time-consuming, and we had to implement extra precaution
measures for the first system. As part of the conditioning
process, we have had to gradually increase the power that the
RF cavities can receive so that their performance is reliable and
optimised, which is arguably one of the most important tasks to be
undertaken before generating proton beams. If not done correctly,
the high-precision engineering modules can be damaged. With
three conditioning stands successfully installed, we can now
perform parallel tests and condition the full LIGHT system.
Quality: the epicentre of our operations
Completing our regulatory plan requires the Board and
management team's relentless focus and is an integral part
of developing our infrastructure and the manufacture of our
LIGHT system to ensure its safety, efficiency and reliability.
The importance we place on quality requires robust processes
across our entire organisation in accordance with the stringent
requirements of the relevant regulatory bodies that oversee
clearance and approval for use of medical devices.
quadrupole (RFQ), side-coupled drift tube linacs (SCDTLs)
and coupled cavity linacs (CCLs). These cavities are specially
designed metallic chambers which allow radio waves to interact
with passing bunches of protons.
Each time a bunch of protons passes the electric field in an RF
cavity, some of the energy from the radio waves is transferred to
the protons, nudging them forward. The higher the energy level
protons gain, the quicker they travel through the LIGHT accelerator
and the deeper in the body they will travel before stopping and
releasing their energy which is where most radiation damage will
occur. It is important that protons do not collide with gas molecules
on their journey through the LIGHT accelerator, so the beam is
contained in an ultra-high vacuum inside a metal beam pipe.
As we develop the LIGHT system, specific expertise is needed
by the Company in a number of areas including: environmental
health and safety, radiation safety, electromagnetic compatibility
and electromagnetic interference, beam dynamics, electrical
engineering, electronics, mechanical engineering, vacuum
technology, magnet technology, RF technology, power converters,
IT, radiation protection, cooling and ventilation, survey and
alignment, electrical networks, and civil and structural engineering.
… to assess the operational achievements during the year
During 2020, the Company reached a number of significant
milestones in its goal to ensure that our first LIGHT system
is operational by the end of 2021 with a 230MeV beam. We
remain on track with this objective.
All the accelerating RF cavities required for accelerating protons
to their maximal energy have now been manufactured and
delivered to the Daresbury assembly site. The patient positioning
system (PPS), which includes the diagnostic quality CT scanner
used to scan patients in a seated position, the real-time X-ray
verification system which enables imaging of a moving tumour,
and the robotic chair which can move and rotate the patient with
high accuracy and precision, have also all been delivered.
In order to deposit bunches of protons 200 times per second onto
the tumour, radio waves which transfer their energy to protons
must have the right characteristics in terms of amplitude (height of
the radio wave) and frequency (how close the waves are); both of
which must be stable. The successful configuration and testing of
the modulator- klystron systems (MKS) has been completed and
was a result of close collaboration with our supplier, ScandiNova.
As a result, the MKS now support the LIGHT system’s capability
to vary the proton beam energy from 70 MeV to 230 MeV in only
five milliseconds. Even within a tumour, different cells may respond
in different ways to treatment or radiation. The ability to change
the intensity of the beam, i.e, the number of protons per pulse, is
particularly important in tailoring our solution to patient needs and to
optimising the treatment plan for patients. The higher the intensity of
the beam, the more densely the radiation will be delivered, resulting
in more damage made to the tumour. During the initial conditioning
phase, the full intensity was achieved representing a key step
forward in the assembly of the LIGHT system; this provides the
basis for an optimised treatment plan which broadens the potential
spectrum of tumours which can be successfully treated.
The software system that controls the accelerator and supports
the medical treatment has been an important area of focus during
the period. Proton therapy systems include a wide range of
software, ranging from the preparation of the full treatment plan,
daily proton delivery to patient workflow and recording of patient
ADVANCED ONCOTHERAPY PLC
15
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT TO OUR SHAREHOLDERS
STATEMENT FROM THE
CHIEF EXECUTIVE OFFICER _Continued
STRATEGIC REPORT
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
largely revolves around performing
Our regulatory plan
verification and validation activities, meaning that each individual
part, system and sub-system of LIGHT must be tested and
documented with the view of ensuring that our product not only
meets all the requirements from a user's standpoint but has also
been manufactured to the specifications provided to suppliers
and all relevant standards. These activities are currently being
performed in accordance with the standards of excellence
required for medical devices and the ISO-13485 certification
which we successfully obtained in January 2019.
A subsequent external audit was performed in December 2020 by
Lloyd's Register focused on installation, integration and product
safety management operations. The review confirmed that the
design, development and the manufacturing control activities
were in compliance with the highest standards for safety and
product performance. This result provides a strong platform for the
continued integration of the LIGHT system, as it highlights our focus
on quality and the need to have robust processes in accordance
with the stringent requirements associated with medical devices.
Commercial momentum
At Advanced Oncotherapy, prior to March 2020, we made strong
inroads through commercial partnerships with The London Clinic
(TLC), the Mediterranean Hospital of Limassol (MHL) in Cyprus and
University Hospitals Birmingham NHS Foundation Trust (UHB).
In our partnership with TLC, we entered into a memorandum of
understanding to sell a LIGHT system and structured the partnership
in such a way that Advanced Oncotherapy will receive a share of
the profit generated by TLC’s proton therapy service. TLC is one of
the UK's largest private charitable hospitals and has a pioneering
cancer treatment centre in its Duchess of Devonshire wing that is at
the forefront of advancing healthcare through the adoption of new
technologies. Since this announcement in February 2020, we have
made good progress in defining the patient workflow, and fine-
tuning our referral strategy whilst taking into account opportunities
to treat more patients following the decision of the Cleveland Clinic
(London) to refer cancer patients to TLC.
Following the announcement of our research collaboration
with the world leading Cleveland Clinic in December 2019,
the Cleveland Clinic has now installed the LIGHT treatment
planning system (TPS) software and commenced a two-year
study to evaluate the target conformity of proton mini-beams in
comparison with X-ray stereotactic body radiation therapy and
stereotactic radiosurgery.
In February 2020, we entered into an agreement to sell a three-
treatment room system to the MHL in Cyprus for €50 million
and to receive a share of the profit generated from this proton
therapy service. The MHL provides high-quality medical services
to not only citizens of Cyprus but also to tourists seeking medical
treatment. Under the terms of the agreement, the installation of
a three-treatment room system is due to commence before the
end of 2023, subject to customary conditions and documentation
being in place. Discussions with planners are ongoing and we
have worked with the MHL to progress the technical and planning
requirements. Further updates in respect to the agreement
and the schedule of payments to be received by Advanced
Oncotherapy will be made at the appropriate time.
During the period, we also announced a collaboration with UHB
in line with our continuous efforts to fast-forward our growth and
the roll-out of the LIGHT system. Our partnership with UHB is
aimed at treating patients in Daresbury in the context of our
certification plan. The partnership also envisages the installation
of a machine in Birmingham at Queen Elizabeth Hospital
Birmingham, which is part of the UHB campus. UHB is preparing
to install LIGHT beam data into its TPS and we are cooperating
to plan for the initial Daresbury patient indications. In addition,
we agreed on an appropriate revenue sharing arrangement
with UHB and we will also work with them to jointly develop
further advanced technical and clinical features to increase the
awareness of proton therapy for the treatment of cancer.
In light of the Covid-19 pandemic, country wide lockdowns
enforced in March 2020 reduced the time we spent with
potential customers. However, as 2020 progressed our business
development efforts evolved and since the beginning of 2021,
we are experiencing an acceleration in commercial discussions,
as demonstrated by the recent letter of intent with Saba Partners
for the installation and maintenance of a LIGHT system in Glion,
Switzerland, in a contract valued at up to US$107 million.
Financing foundations
We have been able to continue to make progress with our activities
as a result of the completion of equity investments totalling £30
million (including warrants and shares issued in lieu of fees) since
the beginning of 2020, despite the difficult equity market conditions.
We also secured additional financial flexibility through a strategic
funding partnership and debt facility of up to £40 million, of which
€20 million (£18 million) was from our long-standing supplier, VDL
Groep, and US$30 million (£22 million) from Nerano Pharma, an
existing investor of Advanced Oncotherapy. In August 2020, the
Company drew down US$10 million from the interest-bearing
secured convertible facility with Nerano Pharma.
In May 2021 the Company extended the repayment date of
the existing £10 million loan facility with Credit Suisse AG on a
rolling quarterly basis through to May 2022.
The mix of equity and debt financing arrangements secured
during the period provides the Company with greater financial
flexibility and allows us to further the development of our LIGHT
system and advance our pipeline of construction opportunities.
The past year was pivotal for Advanced Oncotherapy, as we
took our first strategic steps in securing funding arrangements
to advance our pipeline of construction opportunities. This was
reflected in January 2021, when we announced a partnership
with DiaMedCare (renamed Kineo Finance since June 2021)
the globally active asset financing partner in the life sciences
and other innovative technology sectors. Under the terms of
the partnership agreement, DiaMedCare will acquire LIGHT
systems and lease them back to the Company's customers that
are commissioning the LIGHT system for oncology treatments.
In addition, DiaMedCare will also be able to bridge manufacturing
costs until delivery of the LIGHT system to customers, which
is expected to make the business less capital-intensive in the
future. This partnership will play a crucial role in removing the
upfront costs of acquiring and installing LIGHT by converting
CapEx to OpEx. Vendor financing, such as this agreement, is
expected to unlock significant additional upside and accelerate
the speed of adoption.
Continued innovation with clear metrics to prioritise
initiatives and assess their expected return
At Advanced Oncotherapy, we believe that we must continually
and tirelessly fight cancer. To do so, we intend to use the
versatility of the LIGHT platform to deploy new features uniquely
positioning Advanced Oncotherapy in the battle against cancer.
However, to achieve our mission, we recognise the need for
discipline and having the right processes in place to ensure
16
ANNUAL REPORT 2020 GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
delivery against our strategy and value creation.
As a result, we have formed a global screening and incubation
team led by ADAM’s Executive Chairman, Professor Steve Myers,
whose role is to identify new opportunities based on a clear set of
criteria. These include: monitoring long-term trends and innovative
subjects in industry and society; analysing growth potential of new
ideas; assessing how potential new business areas fit with the
overall mission of the Company; and reviewing whether internal
developments or partnerships are the best way forward.
Such processes have been crafted with the ultimate objective
of striking the right balance between optimising and prioritising
resources and objectives, promoting an effective team working
environment, establishing a creative culture and keeping a
commitment to build the future of radiation therapy. We hope that
this team will help to develop a deep and robust pipeline of future
opportunities for the LIGHT system which fills us with excitement.
Our financial results
The Group recorded a comprehensive loss of £23.4 million in
the year ended 31 December 2020 (2019: £21.3 million), with
shareholder funds as at 31 December of £44.1 million (2019:
£42.9 million). Cash and cash equivalents at the year-end were
£2,317,451 (2019: £3,235,167), although these year-end figures
do not take into account post period financing agreements.
Outlook
Looking ahead, 2021 is set to be an important year for us with
our goal of having the first LIGHT system generating a full energy
beam, and in due course the commencement of treating patients
with our clinical partner UHB. We have made notable progress
at our Daresbury site over the past year and the ongoing work at
the site to optimise our machine installation process will reduce
the start-up time for future LIGHT systems and support the
assembly of future machines through our commercial contracts.
Our financing agreements announced during the period will be
key to continuing the development of the LIGHT system and
advancing our pipeline of construction opportunities.
the LIGHT system. We are confident about future orders of the
LIGHT system and expect further acceleration of our commercial
pipeline when our machine is fully operational, taking advantage
of the unique exemption in proton therapy which provides the
opportunity for manufacturers to sell machines prior to certification.
IN CLOSING
Under extraordinary circumstances, our employees have shown
immense creativity and a can-do attitude in their wholehearted
efforts to deliver on our execution plan throughout 2020. Their
determination and hard work made it possible for us to make clear
operational progress. I believe this comes as a consequence of
our crystal-clear purpose and long-established Company values:
life, safety, quality and innovation. This progress also follows our
continued investment in our people and organisation, creating an
inclusive, diverse and safe working environment in which colleagues
have equal opportunities to thrive and fulfil their potential.
We have many important milestones ahead of us during 2021
which I outlined during our Investor Day in October 2020, but
we remain on track to have our first LIGHT system generating
a 230MeV beam by the end of 2021, a major inflection point for
Advanced Oncotherapy.
I feel privileged to be leading this great Company and am pleased to
see the operational progress made day to day by all our employees.
I would like to thank our team for their agility and commitment over
the past twelve months given the difficult circumstances. Special
thanks must go to our partners and collaborators, without whom
we could not succeed in our operational goals, and our Board of
Directors for their continued support and constructive strategic
advice to the organisation. Finally, I would like to send a thank you
to our shareholders for their continued support as we continue to
progress on our ambition to democratise proton beam therapy as
a treatment for cancer.
In line with our business model, we have signed a number
of commercial partnerships and will continue to seek further
opportunities for partnerships and future purchase orders of
Nicolas Serandour
Chief Executive Officer
29 June 2021
ADVANCED ONCOTHERAPY PLC
17
INVESTING NOW FOR BUILDING A
BETTER TOMORROW
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Patients
How we do it
Why our
commitment for
patients?
What we do
18 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT Why our commitment for patients?
Despite the great progress achieved over the last decades,
cancer is a complex disease with significant unmet medical
needs. The prognosis for certain tumours remains highly
unsatisfactory. With one in two people developing cancer during
their lifetime, cancer patients are the reason we come to work
every day.
At Advanced Oncotherapy, we are passionate about
transforming patients’ lives. The need of patients who are silently
waiting with their families for affordable and accessible cancer
solutions gives us humility and a strong sense of purpose and
responsibility. Patients are the source of our inspiration.
We are proud of who we are – our CERN roots and all the work
done by eminent scientists and engineers are a unique privilege.
This is why we must be courageous in both decision and action.
We commit ourselves to scientific rigour, ethics, and access to
medical innovations for all.
We believe that good business means a better world. We are
building the foundations today to build a better tomorrow.
What we do
Treating patients with a lower risk of side effects is a priority for
clinical oncologists. This is why proton therapy, an effective and
well-proven modality in the current spectrum of cancer treatment
options, holds unique promise for many patients. Yet only a
minority of them have access to it. Our focus is to democratise
proton therapy by making it more accessible, affordable and
acceptable.
In our pursuit of this mission, our distinctiveness rests on three
key elements:
• We are assembling a breakthrough solution: LIGHT is
uniquely positioned to address today’s challenges;
• We are building a business model based on three pillars:
a commitment to put customers and patients at the core
of what we do, a viable and attractive financing model
which is set to transform the future of proton therapy,
strategic partnerships aimed at aligning the interest of all
stakeholders and creating significant value;
• We are investing in new ideas: this focus on innovation is
embedded in all the actions we are taking now, to build a
better future tomorrow with greater access to healthcare
care and continued improvement in the medical outcomes.
How we do it
To deliver on these objectives, we are leveraging what has set
our Company apart: innovation and flexibility.
Our set-up is built for innovation. We see discipline and
processes as key tools to ensure that creativity will create the
right returns and value. To do so, we assess our own ideas in
the same way that our customers evaluate our product and
solution offering: innovation must be democratised and fostered
through strategic partnerships.
We remain focused on building an agile and lean organisation
with a dual strategy
the
manufacturing activity and assembling in-house the LIGHT
components at the heart of a campus dedicated to accelerators
and science and sponsored by the UK Government.
focused on both outsourcing
As a medical device company, we follow well-tested processes
focused on quality, a mindset influencing all our actions. We are
working closely with regulators and our clinical partners to attain
product certification and ensure long-term commercial success.
Our execution is supported by a resourcing plan aimed at
enhancing value over time through the funding of operations
prior to product certification and the implementation of financing
partnerships. These will ensure the delivery of our fast-growing
pipeline is not limited by our balance sheet and we sustain our
competitive edge.
The role of Advanced
Oncotherapy in building
the future of proton
therapy
ADVANCED ONCOTHERAPY PLC 19
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT
TO OUR SHAREHOLDERS
STRATEGIC REPORT
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Towards a
sustainable growth
Leveraging our LIGHT platform…
•
•
•
•
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Can be installed in a contiguous and densely populated environment;
patients to be treated at proximity to their family; no need to travel long
distances
Can be transported in standard containers and trucks; no need for
expensive cranes or load handling devices
Limited shielding requirements
Can be disassembled and removed
Less radiation than a dental practice
… to create a sustainable growth
•
•
•
Company and partners supporting the treatment of children at cost in the catchment area
Training plan for physicians and engineers
Assembly site on the Science and Technology Facilities Council's campus, a campus dedicated to science, sponsored by the
UK government and with a net zero target by 2040
20 ANNUAL REPORT 2020
GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
ADVANCED ONCOTHERAPY PLC
21
A BREAKTHROUGH IN PROGRESS
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Mayo Clinic highlights the role of proton therapy in combination with immunotherapy. Due to its smaller beam size, LIGHT is ideally
suited in this context
Equity fundraise of c.£5.9 million
Infrastructure in place to support assembly and testing activities; system now capable of supporting the delivery of a proton pulse
every 5 milliseconds; full medical software suite integrated; successful re-certification of ISO 13485
Lessor financing partnership with DiaMedCare; expected to provide leasing arrangement to customers in Europe and the US;
opportunity for DiaMedCare to bridge manufacturing costs until delivery of the LIGHT system to customers
Equity fundraise of c.£7.7 million
Cancer partnership between The London Clinic and the Cleveland Clinic in London; more patients to be referred to the proton
therapy centre in Harley Street
LIGHT Treatment Plan System software installed at the Cleveland Clinic
Site preparation at Daresbury ready to support the ultra-high vacuum tests and the high-voltage conditioning of the accelerating
structures; machine installation process optimised enabling the reduction of the start-up time for future LIGHT systems; first series
of the magnets steering the beam towards the treatment room delivered
£40 million funding secured through a strategic €20 million funding partnership with VDL Groep and a $30 million debt facility from
Nerano Pharma
Equity raise of c.£15 million
Collaboration with University Hospitals Birmingham (UHB) NHS Foundation Trust; installation of a LIGHT system in collaboration with
UHB; envisaged location on the UHB campus in Birmingham; revenue sharing arrangement to be implemented; R&D collaboration
Manufacturing of all critical hardware for first full-energy LIGHT system completed
Sale of a LIGHT system to the Mediterranean Hospital in Cyprus; Company to receive €50m and share of
profits from clinical services
The London Clinic selected as the operator of the Proton Centre in Harley Street, London; Advanced
Oncotherapy to receive a share of the profit of the Harley Street centre in London
February 2020
February 2020
February 2020
Scientififc partnership with the Cleveland Clinic
February 2020
December 2019
The performance in 2020
marked a significant step
forward for Advanced
Oncotherapy
2021, a pivotal year for the
Company
22
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 March 2021
January 2021
January 2021
January 2021
October 2020
September 2020
September 2020
September 2020
June 2020
April 2020
February 2020
Key deliverables for 2021
• Medical software suite integrated in standalone operation
•
•
•
Patient Positioning System installed
All accelerating structures conditioned
All accelerating structures aligned
• Machine operational with a full energy 230MeV beam, energy needed for treating all patients
•
•
Further commercial partnerships and purchase orders
Financing partnership(s) to support the delivery of the pipeline
23
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC TO OUR SHAREHOLDERS
STRATEGIC REPORT
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
24 ANNUAL REPORT 2020
GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
INTRODUCTION TO ADVANCED ONCOTHERAPY
ADVANCED ONCOTHERAPY AT A GLANCE
OUR VALUES
STATEMENT FROM THE CEO
INVESTING NOW FOR BUILDING A BETTER TOMORROW
The role of Advanced Oncotherapy in building the future of proton therapy
Towards a sustainable growth
A BREAKTHROUGH IN PROGRESS
WHY OUR COMMITMENT TO PATIENTS?
A PERSONAL STORY: GISELA AND MICHAEL
ACKNOWLEDGMENTS FROM THE CHAIRMAN OF ADAM
WHAT WE DO
OUR FOCUS
Cancer and purpose of cancer therapies
Radiation therapy remains the most established and economical cancer therapy
Proton therapy: the new generation of radiation treatments
Current and future potential for proton therapy in cancer care
OUR DISTINCTIVENESS
Our LIGHT system
Our business model
Our long-term orientation driven by innovation
HOW WE DO IT
OUR SET-UP
Innovation: key to Advanced Oncotherapy’s DNA
A dual strategy focused on outsourcing and in-house assembly
OUR PROCESSES
Focus on quality, a mindset influencing each action undertaken by the Company
Following a well-proven regulatory path
OUR RESOURCING PLAN
Our funding plan: securing the means of the Company’s and customers’ ambitions
Our people
OUR STRATEGY
PRINCIPAL RISKS AND RISK MANAGEMENT
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ADVANCED ONCOTHERAPY PLC
25
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
A PERSONAL STORY:
GISELA AND MICHAEL
This is the story of Gisela and Michael.
"In November 2016 our lives took a sudden
and heart-breaking turn when our 3-year-
old daughter, Bianca, was diagnosed
with a very rare and aggressive form of
brain cancer called embryonal tumour
with multilayered rosettes. We will never
forget that dark Tuesday afternoon when
we were given the results of her histology.
We knew something was wrong when
we saw Bianca’s neurosurgeon waiting
for us with an entourage that included a
neuro-oncologist and a social worker: “We
were surprised. It’s much worse than we
expected,” the oncologist said. “Bianca has
an extremely rare grade IV brain cancer
called ETMR”. But the worst was yet to
come; he later told us that our options
were either to go home and “make her
comfortable” or radiate her whole brain and
spine with devastating consequences and
a dismal prognosis. When we arrived back
home that afternoon Bianca was playing
with her twin sister, full of life and healthy in
appearance. That day we did not have the
strength to look her in the eyes. We were
devastated beyond words.
After a week of intensive research, we
decided to leave London to treat Bianca in
Boston. Her year-long treatment included
two brain surgeries, six cycles of gruelling
chemotherapy, six weeks of proton therapy
with daily general anaesthesia and two
clinical trials including radio-immunotherapy.
Against all odds Bianca is in early remission
today. Sadly, we are part of the lucky few as
80% of children diagnosed with her tumour
die within two years. Bianca’s strength and
positivity, as well as the countless wonderful
doctors, nurses, researchers and other
families we have met along the way, have
been deeply humbling and inspiring.
Proton therapy is saving lives, but
accessibility and affordability are hindering
its widespread use
26
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
During our journey we got to know the
world of paediatric oncology well and its
sad realities, the most appalling of which
being the inexplicable lack of research
funding. Most paediatric cancers are
extremely rare diseases which do not
financially justify any investments in
research. These diseases are largely
ignored by the pharmaceutical industry
and receive only 4% of government
oncology research grants. In the past
30 years only three drugs have been
approved that were specifically developed
to treat children with cancer. The lack of
a protocol for many of these cancers
makes the difficult journey for families
even lonelier. This is unacceptable and
we cannot let those children down."
If you want to donate and help Solving Kid’s Cancer (SKC)
•
•
•
•
100% of all donations go to research
SKC is an independent and non-profit organisation which invests in the highest-impact research projects without any ties
to any particular research institution or hospital
SKC works across borders and in collaboration with other like-minded non-profit organisations
SKC has a world-renowned scientific board and a proven track record in finding, funding and advocating for innovative
research projects, which create more novel and less toxic treatment options for children with cancer and ultimately save
lives
•
SKC is a certified 501(c)(3) organisation based in New York City. Donations are tax deductible (EIN: 20-8735688)
27
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC ACKNOWLEDGEMENTS FROM THE
EXECUTIVE CHAIRMAN OF ADAM
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Very rarely, one is offered an opportunity to participate in work
which can prevent premature deaths of thousands of people.
Following my mandate as CERN Director of Accelerators and
Technologies and then the setting up of the CERN Medical
Applications Office, I took this opportunity and decided to
join the staff of AVO-ADAM for the same reason as all of my
colleagues and most of our supporting investors: to participate
in the democratisation of proton therapy by ensuring a better
and cheaper technology for the majority of cancer patients, and
not only for a minority. My experience as an accelerator physicist
working on some of the world’s most challenging projects, such
as the Large Hadron Collider, gave me the intimate conviction
that LIGHT – the system initially developed by CERN and TERA
before AVO and its fully owned subsidiary ADAM accelerated
its industrialisation and commercialisation plan – was not only a
project with a very insignificant technology risk but also a project
that could change the lives of many people.
This year alone, nearly 10 million people will die of cancer, and if
left unchecked, the number of deaths will increase to 13 million per
year by 2030. That is about 1,500 deaths every hour. 70% of these
deaths are expected to occur in low- and middle-income countries.
Therefore – and despite great progress over the last decades
– it is not surprising that cancer patients need breakthrough
technologies and support from the moment they hear the dreaded
word “cancer”. At AVO-ADAM, this is exactly how we are tackling
cancer: by delivering a state-of-the-art technology and by ensuring
the continuous support of all stakeholders, including customers,
suppliers, payers, investors, etc.
With this in mind, our executive chairman (Dr Michael Sinclair),
our CEO (Nicolas Sérandour) and myself are indebted to our
staff for their outstanding work and devotion aimed at the same
single objective-to save lives. Without them, none of this would
be possible. Their energy and their ability to work as a team
and deliver all the technical milestones set by our organisation
more than three years ago have been a constant stimulus and
a great source of inspiration. This organisation is also fortunate
to benefit from the experience of high-calibre individuals with
experience in radiation and proton therapy. To name a few,
these include Moataz Karmalawy (previous head of Proton
Therapy at Varian), Michel Baelen (previous head of Regulatory
Affairs at IBA), Hans von Celsing (previous founding board
member of Elekta and director at Mevion), Euan Thomson
(previous CEO of Accuray), Nick Plowman (head of Clinical
Oncology at St Bartholomew’s Hospital and Senior Clinical
Oncologist to the Hospital for Sick Children at Great Ormond
Street), Jay Loeffler (Senior advisor; Herman and Joan Suit
Professor of Radiation Oncology at Harvard Medical School
and Chair of the Department of Radiation Oncology at the Mass.
General Hospital), Chris Nutting (Chair at The Royal Marsden
and The Institute of Cancer Research London; President of
the British Oncological Association), Margaret Spittle (Senior
advisor; Clinical oncologist, University College London Hospital
(“UCLH”) and Consultant Adviser in Radiation Medicine to HM
Royal Navy/Ministry of Defence), etc. Their views, support
and validation of our technology are crucial for the successful
realisation of our goal.
A debt of gratitude is also due to Dr. Samuel Chao Chung Ting,
Sir Tejinder Virdee, Prof Joe Incandela, Prof Ugo Amaldi for their
28
endorsement. It is a great honour that such talented scientists
– who opened the road to new insights into the world of physics
– have supported us in our objective. Their insights have further
strengthened my commitment to change how cancer can be
treated. Their achievements that have conferred the greatest
benefit to humankind are also as significant as my excitement
to see our first patients treated and soon the delivery of FLASH
which will allow a treatment in only one single visit.
Special thanks are also due to our investors. Without their
support, AVO would not be able to achieve our ambitious
objective: cancer treatment for all patients and in particular the
younger ones.
Finally, I would like to dedicate this report to the 100 million people
who are currently fighting cancer. They are the reasons why we
are dedicated to this endeavour. I am of the firm conviction that
affordable proton therapy can and must be offered as a matter of
urgency. This is my purpose and my commitment.
Steve Myers
Executive Chairman of ADAM
Awarded honorary doctorates by the University of Geneva in
2001, by Queen’s University, Belfast in 2003, and by Dublin City
University in 2017; elected as a fellow of the Institute of Physics
in 2003, and of the Royal Academy of Engineering in 2012;
honorary member of the European Physical Society, and of the
Royal Irish Academy; awarded the Duddell Medal and Prize
of the Institute of Physics in 2003; awarded the International
Particle Accelerators Lifetime Achievement Prize "for his
numerous outstanding contributions to the design, construction,
commissioning, performance optimisation, and upgrade of
energy-frontier colliders - in particular ISR, LEP, and LHC - and
to the wider development of accelerator science"; awarded the
EPS Edison Volta Prize in 2012 and joint recipient of the Prince
of Asturias Prize of Spain in 2013; Officer of the Order of the
British Empire (OBE).
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
6
5
1
4
2
3
1
•
2
•
3
•
Dr. Samuel Ting
Prof. Ugo Amaldi
Prof. Stephen Myers, OBE
4
•
5
•
6
•
Prof. Herwig Schopper
Prof. Joe Incandela
Sir Tejinder Virdee
The LIGHT project has received the endorsement of:
Dr. Samuel Ting
•
Founder of the Alpha Magnetic Spectrometer experiment installed on the International Space Station in 2011
Physics Nobel Prize winner
Prof. Joe Incandela
•
• Member of the National Academy of Sciences (NAS) for the discovery of the Higgs Boson at the LHC
Professor of Physics at the University of California
•
•
•
Prof. Ugo Amaldi
•
President of TERA Foundation
Fellow of the European Physical Society
Sir Tejinder Virdee
•
Professor of Physics at Imperial College London
Special Breakthrough Prize in Fundamental Physics for 'leadership in the scientific endeavour that led to the discovery
of the Higgs Boson
Prof. Herwig Schopper
•
• Golden Plate Award of the American Academy of Achievement
Former Director General of CERN, former senior member of UNESCO
29
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
TO OUR SHAREHOLDERS
STRATEGIC REPORT
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
30 ANNUAL REPORT 2020
GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
INTRODUCTION TO ADVANCED ONCOTHERAPY
ADVANCED ONCOTHERAPY AT A GLANCE
OUR VALUES
STATEMENT FROM THE CEO
INVESTING NOW FOR BUILDING A BETTER TOMORROW
The role of Advanced Oncotherapy in building the future of proton therapy
Towards a sustainable growth
A BREAKTHROUGH IN PROGRESS
WHY OUR COMMITMENT TO PATIENTS?
A PERSONAL STORY: GISELA AND MICHAEL
ACKNOWLEDGMENTS FROM THE CHAIRMAN OF ADAM
WHAT WE DO
OUR FOCUS
Cancer and purpose of cancer therapies
Radiation therapy remains the most established and economical cancer therapy
Proton therapy: the new generation of radiation treatments
Current and future potential for proton therapy in cancer care
OUR DISTINCTIVENESS
Our LIGHT system
Our business model
Our long-term orientation driven by innovation
HOW WE DO IT
OUR SET-UP
Innovation: key to Advanced Oncotherapy’s DNA
A dual strategy focused on outsourcing and in-house assembly
OUR PROCESSES
Focus on quality, a mindset influencing each action undertaken by the Company
Following a well-proven regulatory path
OUR RESOURCING PLAN
Our funding plan: securing the means of the Company’s and customers’ ambitions
Our people
OUR STRATEGY
PRINCIPAL RISKS AND RISK MANAGEMENT
10
12
14
18
20
22
26
28
32
34
36
40
44
50
56
60
62
64
65
66
68
70
72
ADVANCED ONCOTHERAPY PLC
31
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
•
The last few years have seen remarkable
advances in preventing and treating
cancer:
•
there has been a 27% decline in
cancer death rates since 1991;
• more than 2.6 million deaths from
cancer have been averted in the
United States over the last two
decades;
those diagnosed
in 1970, of
with cancer in the United States,
approximately half would have
been alive five years later. For those
diagnosed in 2009, the figure was
closer to 70%;
two out of three people with cancer
now live at least five years after
diagnosis - with many living much
longer. More than 50 million people
are living within five years of a past
cancer diagnosis.
•
in medical
Such a
transformation
through a
outcomes has arrived
combination of public-health measures
(such as smoking education), improved
healthcare (such as earlier diagnosis),
and novel therapies. This has turned
select diagnoses, once considered
terminal,
conditions.
However, much more remains to be
done. Pancreatic cancer, glioblastoma,
and non-small cell lung cancer share poor
five-year survival and have realised only
limited improvement in the past decade.
Improving the quality and quantity of
research into these cancers is therefore
a key priority.
chronic
into
Cancer, a heavy burden for patients
and society
Cancer refers to any one of a large
number of diseases characterised by the
development of abnormal cells that divide
uncontrollably and have the ability to
infiltrate and destroy normal body tissue.
These extra cells may form a mass of
tissue, called a tumour. Some cancers,
such as leukaemia, do not form tumours.
Cancer is caused by mutations to the
DNA within cells. The DNA inside a cell is
packaged into a large number of individual
genes, each of which contains a set of
instructions telling the cell what functions
to perform, as well as how to grow and
divide. Errors in the instructions can cause
the cell to stop its normal function and
may allow a cell to become cancerous.
Frequently, cancer cells can break away
from this original mass of cells, travel
through the blood and lymph systems,
and lodge in other organs where they
can again repeat the uncontrolled growth
cycle. This process of cancer cells leaving
an area and growing in another body area
is termed metastatic spread or metastasis.
In 2020, 19.3 million new cancer cases
were diagnosed, and 10 million people
have died of cancer, based on the
International Agency for Research on
Cancer. It is estimated that globally, one
in two people develop cancer during their
lifetime.
Cancer results
in economic burden
for patients, healthcare systems, and
countries due to healthcare spending,
and productivity losses from morbidity
and premature mortality.
OUR FOCUS
Cancer and purpose
of cancer therapies
The financial burden of cancer
63%
of cancer patients and families reported
financial struggles following a cancer
diagnosis (source: Asbestos.com, 2019
survey)
$161 billion
estimated cancer healthcare spending in
the US (source: The Cancer Atlas)
$181 billion
productivity loss from morbidity and
premature mortality in the US (source:
The Cancer Atlas)
€57 billion
estimated cancer healthcare spending
in the European Union (source: The
Cancer Atlas)
€142 billion
total burden, incl. productivity and
ancillary costs, in the European Union
(source: The Cancer Atlas)
?
Did you know?
The highest five-year survival estimates
can be seen in patients with testicular
cancer (95.3% in the US), melanoma
of skin (91.3% in the US) and thyroid
cancer (87.4% in the US)
Five-year survival rates for pancreatic
cancer, glioblastoma, and non-small cell
lung cancer remain below 50%; these
three cancers collectively represent
more than 250,000 new diagnoses each
year in the United States alone
32 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT
Purpose of cancer therapies
The goal of treatment is to kill as many cancerous cells
while reducing damage to normal cells nearby. Advances in
technology make this possible.
Several modalities have been developed over the years and
used – alone or in combination – in multiple clinical situations.
These include surgery, medication through systemic or targeted
chemotherapy or immunotherapy and radiation. This multi-
modality approach stems from the complexity of the disease as
well as some of the drawbacks associated with the technologies
available today. For example, the lack of clear and sharp edge
between most tumours and normal tissues together with the
infiltration of tumour cells into normal tissues around the bulk of
the tumours are often issues for surgeons. Removing cancerous
tissues through surgery shall be avoided if it is associated with
unacceptable morbidity.
Radiation, used alone or in association with different treatments,
has been an effective tool for treating cancer for more than 100
years. It is estimated that about two-thirds of US cancer patients
will receive radiation as unique treatment or as part of a more
complex therapeutic protocol, and it remains today the most
economical approach to cure cancer.
(In $ '000)
110
100
90
80
70
60
50
40
30
20
10
0
Average Cost of Cancer
102.4 One year
61.7
Six months
56.6
Pancreatectomy
42.4
39.4
31.8
Cystectomy
Pulmonary Lobectomy
Colectomy
35.8
Three months
24.2
Two months
14.2
Prostatectomy
13.8 One month
13.2 One month
Medication
Surgery
Surgery
Chemotherapy
Radiation
Radiation
Source: Drugwatch.com
ADVANCED ONCOTHERAPY PLC
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Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Radiation therapy
remains the most
established and
economical cancer
therapy
Atom
The power of radiation
Fundamentally, all tissue cells are made up of molecules with
atoms as their building blocks. In the centre of every atom is the
nucleus. Orbiting the nucleus of the atom are negatively charged
electrons. Techniques exist to pull electrons out of their orbits in
a process called ionisation, causing the atom to become charged
or ionised. As such, this changes the characteristics of the atom
and consequentially the character of the molecule within which the
atom resides. Because of ionisation, molecules within the cells,
especially the DNA, are damaged, which impacts their ability to
divide or proliferate. When ionisation is applied to the part of the
body where a cancer is located, the DNA inside the cancer cell is
broken, rendering it unable to repair or copy itself. As a result the
cancer cell dies. Ionisation is possible if there is a source of energy
sufficient enough to cause chemical changes by breaking chemical
bonds. X-ray, gamma radiation produce such a killing energy.
Energy emitted from a source is generally referred to as
radiation. Radiation can be natural or caused by man and as
such is all around us. Examples include heat or light from the
sun, microwaves from an oven, X rays from an X-ray tube and
gamma rays from radioactive elements. Ionisation radiation can
be produced through:
•
•
•
alpha particles (helium nucleus);
beta particles (electrons);
gamma and X-rays.
carry a negative charge. Because both particles carry a charge,
they interact directly with electrons in the human tissue through
coulombic forces (like charges repel each other; opposite
charges attract each other). Therefore, both types of particles
damage human cells. However, they are not well suited for
radiotherapy. For example both have low penetration depth (up
to three to four millimetres with beta particles), hence, they are
not used in radiotherapy.
Unlike alpha and beta particles, gamma particles and X-rays
have no charge. Gamma particles are electromagnetic forms of
radiation which are electrically neutral. Their killing effect is not
caused by coulombic forces but rather by the energy absorption
by the human body. Gamma radiation and X-rays are almost
identical with exception to their source of origination:
• Gamma rays are produced from unstable radioactive
sources which decay. The unstable material is constantly
decaying (for more than five years for Cobalt-60 as an
example) and cannot be turned off;
X-rays are generated in a vacuum tube where high voltage
is used to accelerate electrons to a high velocity, that then
collide with a metal target, an anode creating X-rays. This
collision creates photons, elementary massless stable
particles with no electric charge. Because X-rays radiation
is produced by an X-ray tube, it can be turned off when it
is not in use.
•
Alpha particles are commonly emitted by all of the larger
radioactive nuclei such as uranium or radium. They carry a
positive charge. Beta particles are low-energy electrons and
For the reasons above, X-rays are today the most commonly
used form of radiation for treating cancer. It is estimated that
99.8% of radiation is delivered through X-rays.
?
Did you know?
Photons can be ionised and have different energies, ranging
from micro-waves, infrared rays, UV radio waves to gamma
rays. All of these are invisible light occurrences, some of which
can interact with matter, ionise and damage it. This explains how
ultraviolet radiation from sunlight causes sunburns (UV photons
interact with skin) and why X-ray radiotherapy can irradiate
tumours and destroy malignant cells.
?
Did you know?
Only the energy from ionising radiation that is absorbed by the
human body can cause harm to health. To understand its biological
effects, radiation oncologists must estimate how much energy
needs to be deposited per unit mass of the part of the body with
which the radiation is interacting.The international unit of measure
for an absorbed dose is the gray (Gy), which is defined as 1 joule
of energy deposited in 1 kilogram of mass. The biological effect
of this radiation depends not only on the amount of the absorbed
dose but also on the intensity of the ionisation in the living cells
caused by radiation. This is known as the equivalent dose. For
example, protons will cause significantly more harm than the
same amount of the absorbed dose of beta or gamma radiation.
The unit of equivalent dose is the sievert (Sv).
34 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT
Longer wavelength, lower frequency
waves such as heat and radio have
less energy than shorter wavelength,
higher frequency waves like X and
gamma rays. X-rays and gamma
radiation have frequencies in the
range of 100 billion billion hertz
and very short wavelengths (1
million millionth of a metre). Not all
electromagnetic (EM) radiation is
ionising. Only the high frequency
the electromagnetic
portion of
spectrum, which includes X-rays and
gamma rays, is ionising.
radiation physics and computer technology; these made it possible
to aim radiation more precisely. Examples of innovations include:
•
Conformal radiation therapy (CRT); this uses CT images
and special computers to very precisely map the location
of a cancer in three dimensions. The patient is fitted with a
plastic mould or cast to keep the body part still and in the
same position for each treatment. The radiation beams are
matched to the shape of the tumour and delivered to the
tumour from several directions;
Intensity-modulated radiation therapy (IMRT); this is similar
to CRT, but along with aiming photon beams from several
directions, the intensity of the beams can be adjusted. This
gives even more control in decreasing the radiation reaching
normal tissue while delivering a high dose to the cancer;
Stereotactic radiation therapy; this radiation technique
is aimed at delivering a large, precise radiation dose to a
small tumour;
Intraoperative radiation therapy (IORT); this is a form of
treatment that delivers radiation at the time of surgery.
The radiation can be given directly to the cancer or to the
nearby tissues after the cancer has been removed. It is
more commonly used in abdominal or pelvic cancers and
in cancers that tend to recur. IORT minimises the amount of
tissue that is exposed to radiation because normal tissues
can be moved out of the way during surgery and shielded,
allowing a higher dose of radiation to the cancer.
•
•
•
The introduction of the new and more conformal photon-based
technologies above has improved the therapeutic index and
medical outcomes for patients. Yet, the physics of photons
make it impossible to avoid the damage of the healthy tissue
surrounding the tumour. The use of photons has drawbacks as
further outlined thereafter.
need to have an energy ranging from 50 to 230 MeV (mega-
electron-volts) so that tumours located at any depth in the
human body can be treated.
For sake of comparison, a spark from a household appliance
imparts an energy to individual particles within it of a hundred
electron-volts, a factor of:
•
2.3 million less compared to the required energy of protons
when treating a tumour at a depth of 32 cms in the human
body
70 billion less compared to the energy of the collided
particles at the Large Hadron Collider (LHC) in March 2010
The need to fractionate the radiation dose
Damaging the DNA destroys specific cell functions, particularly
their ability to divide or proliferate. While both normal and
cancerous cells go through this repair process, a cancer cell’s
ability to repair molecular injury is frequently inferior. This is
because cancer cells grow more quickly than normal cells. As
a result, cancer cells sustain more permanent damage, which
leads to cell death. In order to give normal cells time to heal and
to reduce patient's side effects, radiation treatments are typically
given in small daily doses, also called fractions, five days a week,
over a 5-7 week period.
Most cancers are treated with 30 fractions and a dose of 2 Gy per
fraction. These values were decided empirically decades ago. In
recent years, there has been more research on the optimum
fractionation and dose per fraction. With the advent of more
conformal radiation therapy techniques, the dose to healthy
surrounding tissue has been reduced so that doses per fraction
can be increased for many treatment sites. Consequently, there
is a trend towards hypofractionation, which provides not only
a potential biological advantage but also a reduced burden
on patients who, for example, welcome a one-week treatment
course over a five-week course.
The ultimate objective of hypofractionation is the delivery of
FLASH, which enables a treatment in one single visit. This is
further explained on page 56.
Conventional radiotherapy; now at the limits of its full potential
Radiotherapy is a recognised medical discipline that has
experienced significant development since 1895 when X-rays were
discovered by Wilhelm Conrad Röntgen. Important progress was
achieved during the last quarter of the 20th century with advances in
? Did you know?
Radiation is observed everywhere - in the air, water, food, soil
and in all living organisms. In fact, a large proportion of the
average annual radiation dose received by people results from
natural environmental sources. Each person is exposed to an
average of 2.4 mSv per year of ionising radiation from natural
sources. This can be compared against 20-60 mSv for the entire
treatment course (i.e. for a period of one month) of a tumour
requiring 60 Gy of radiation over a field of 20 cm.
In the domain of electricity, the energy is measured in kilowatt-
hour (kWh). One kWh is equivalent to 3.6 megajoule. In atom
physics, the energy is measured in electron-volts (eV). One eV
is equivalent to 1.6 x 10(-19) joule. In proton therapy, protons
•
ADVANCED ONCOTHERAPY PLC
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Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Proton therapy: the
new generation of radiation
treatments
Physics of proton therapy and difference with
X-rays
Proton therapy is an advanced form of cancer
therapy that takes radiation to a new level. It targets
areas of the body with a higher degree of precision
and with fewer side effects than what is observed
with conventional X-rays machines.
However, the major advantage of proton therapy
treatment over standard radiation therapy is that
protons deposit negligible amounts of energy as
they travel towards the cancerous tumour and then
due to a unique physical characteristic called the
Bragg Peak, deposit the majority of the radiation
dose directly in the tumour and do not travel any
further through the body.
These unique advantages of proton therapy lead to the potential for fewer harmful side effects, more direct
impact on the tumour, and increased tumour control.
Dose (%)
100
Bragg Peak
80
60
40
20
Damage occurring
to surrounding tissue
Tumour
X-rays (Photons)
Photon dose distributions
as a function of depth show
a maximum dose close
to
the entrance after a
short build-up and then an
decreasing
exponentially
deposition with
energy
increasing depth in tissue.
0
10
20
30
40
Depth (cm)
Protons
The proton dose increases with depth, resulting in a Bragg curve with a peak at the required
depth level. This results in significant extra dose in the tumour.
As protons travel through the body, most of the energy is reserved and released where the protons
stop, i.e. in the tumour. Photons release energy along the entire path they travel. This fundamental
difference is what makes proton therapy preferential for certain tumours. If critical organs are along
the path the radiation travels, protons cause less damage to them. Proton therapy can reduce excess
radiation to normal cells and critical structures and organs with 60% less radiation to healthy tissues.
36 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT
The potential benefits of proton therapy have been established for many years:
Proton therapy delivers less radiation to healthy tissues and critical organs resulting in fewer, less severe short - and
long-term side effects than standard radiation therapy
• More targeted – Proton therapy delivers radiation directly into the tumour to attack cancer cells while minimising exposure
in surrounding tissues and organs. According to the American Society of Clinical Oncology (ASCO), proton therapy may
deliver up to 60% less radiation to healthy tissue around the target site, while delivering a higher dose to the tumour itself.
•
•
Proton therapy carries a lower risk of undesirable side effects as it limits the damage to normal, healthy tissue
The chances of developing a secondary cancer in later life due to radiation treatment are significantly reduced
Proton therapy offers a high versatility
•
•
•
•
•
Proton therapy can be used to treat both adults and children with cancer
It is a highly preferred radiation treatment option for paediatric cases. Children are susceptible to injury from standard
X-rays radiation because their tissues and organs are growing rapidly. Proton therapy results in less impact on quality of
life outcomes, developmental delays, memory impairment, clinically significant endocrinopathy, hearing difficulties, and
Intelligence Quotient (IQ) declines. Additionally, the use of proton therapy was shown to reduce the risk of secondary
cancers
Because the proton beams can be directed and delivered with such precision, treatment plans can be customised to deliver
radiation near surrounding critical organs and within the borders of the tumour, whatever shape it is
Proton therapy is the only radiation treatment available that can treat recurrent tumours that have previously been treated
with radiation
Radiation oncologists have more flexibility in the way they can treat patients. Due to fewer complications and side effects,
physicians can potentially deliver higher curative doses of radiation to the tumour. They can also more safely escalate the
level of radiation to the tumour
Proton therapy is a highly convenient treatment for patients
•
Proton therapy is painless
• Many patients undergoing proton therapy treatments are able to continue their normal activities, such as going to work and
exercising
Proton therapy can be used in conjunction with other cancer treatment modalities
This is supported by a growing body of clinical evidence showing that proton therapy is effective while reducing side-
effects for many cancers
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Why our commitment to patients?
What we do
How we do it
The following is only a partial list of tumour types that may benefit from proton therapy. Proton therapy may be an option for other
diagnoses and indications not listed below.
Brain
Head /
Neck
Oesoph
-ageal
Breast
Lung
Liver
Rectal/
Anal
Prostate
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
31% increase in disease control for aggressive tumours at base of skull
(chordomas) at 5 years
50% less likely to have secondary brain tumour following treatment
55% reduction in average dose to the hippocampus (memory function)
in treatment of meningioma
27% reduction in overall risk of needing a feeding tube for oropharyngeal
cancer
Fewer side effects from the first 3 months after treatment, quicker return
to normal function in patients with oropharyngeal cancer
45% reduction in overall risk of needing a feeding tube for nasopharyngeal
cancer
Dramatic reduction of negative impact on taste, nausea, and painful
changes to the mouth in salivary gland treatment
44% relative increase in disease free survival rate for nasal and paranasal
sinus cavity cancers at 5 years
10% increase in overall survival at 5 years in stage I-III disease
10% increase in local cancer control at 5 years in stage II-III
15% decrease in distant metastasis at 5 years in stage II-III
26% reduction in pulmonary toxicity compared with X-ray therapy (IMRT)
21% reduction in the risk of severe, treatment related lymphopenia,
particularly in lower oesophagus
3-4-day reduction in average hospital stay after surgery
88% less radiation dose to the heart for left sided breast cancer
44% reduction in clinically significant radiation doses to the lung
90% of partial breast irradiation cases result in good to excellent cosmetic
outcomes at 5 years
• Well tolerated - Less than 4% serious side effects (grade III) in locally
advanced breast cancer
•
•
•
•
•
35% relative increase in overall survival for Stage II & III lung cancer
56% relative reduction in incidences of serious (grade III) pain with
swallowing (esophagitis)
Up to 4-week reduction in treatment time for select cases
Associated with excellent local control and favourable survival rates
Able to treat larger tumours (>6cm) ineligible for stereotactic radiation
(SBRT) or ablation
• More than 50% reduction in radiation dose to critical structures including
bone marrow
•
•
•
•
•
•
•
5% higher 5-year overall survival in intermediate risk
Highest quality of life compared to surgery, X-rays, or brachytherapy
patients
35% less radiation to the bladder and 59% less radiation to the rectum
42% reduction in relative risk of developing a secondary malignancy
50% reduction in treatment related bowel frequency and urgency at 2
years
21% lower risk of urinary toxicity at 2 years
25% lower risk of erectile dysfunction at 2 years
38 ANNUAL REPORT 2020
Source: Provision Care
TO OUR SHAREHOLDERSSTRATEGIC REPORT Further clinical opportunities exist beyond conventional cancer
applications. An example is the treatment of arrhythmias, an
area of high unmet need and early clinical trials are ongoing
with conventional radiation therapy being used to treat first
patients. The benefits of proton therapy as a more targeted
radiation modality together with the opportunity to change the
deposition of radiation at a very fast pace, i.e. quicker than
heartbeats, hold significant clinical promises. This potential
opportunity is expected to expand the target patient population
and drive higher utilisation of the installed base of proton
therapy equipment. Other promising non-cancer applications
of proton therapy relate to arteriovenous malformations (AVM),
age-related macular degeneration (AMD), renal sympathetic
denervation and atrial fibrillation.
Looking at non-oncological indications: the
example of arrhythmia
•
•
•
•
•
•
In early 2020, a patient was
for arrhythmia using proton therapy
treated
Abnormalities of cardiac rhythm are prevalent
in community-dwelling older adults, affecting
>2% of individuals
Currently there are four established modalities
of treatment of heart arrhythmias in particular:
antiarrhythmic drugs, a procedure which
consists in shocking the heart into healthy
heart rhythm, the implantation of a cardioverter-
defibrillator, or catheter ablation
These
treatment modalities are highly
unsatisfactory. Up to 80% of patients on
antiarrhythmic drug therapy have another
atrial fibrillation episode within three years;
up to 30% of patients who underwent cardioversion have another atrial fibrillation episode within 60 days; the
cardioverter-defibrillator causes severe pain and decreases the quality of life. While catheter ablation is the method
of treatment for arrhythmias that provides the best results, it is only used for 33% of EU patients, 5% of US cases,
and 0.5% in Russia due to the cost of the procedure
In 2014, the treatment of arrhythmia with radiotherapy was studied and raised as a potentially safer, non-invasive
method of disactivating cells causing arrhythmias. In a clinical trial (ENCORE-VT), the radiosurgery was reduced
to 15 min, and the median number of episodes was reduced by 80% in the first three months. Quality of life
improved in five of nine of the measured aspects at six months. Patients experienced only transitory toxicities of the
treatments. Proton therapy is expected to offer improved precision over conventional radiotherapy in the treatment
of heart arrhythmias: Radiation leads to well documented late toxicities in the heart tissue
The initial focus of Advanced Oncotherapy is on cancer indications, but arrhythmia was later identified as a key
opportunity. The Company has filed a patent called LINAF (US Patent No. US10363439B2, 2019). The key
content of LINAF is the treatment of cardiac disorders and atrial fibrillation using LIGHT and a description of the
key technological aspect of the LIGHT system. The technological aspect of LIGHT which makes cardiac treatment
possible is the varying of the energy of the beam in combination with a 3D feedback system
• Owing to the structure of the LIGHT accelerator, the energy of the protons and the dose deposition location can be
adjusted within a few milliseconds. This is especially important as the motion of organs situated in the thorax and
abdomen means that there is an interference between the target movement and dynamic beam delivery. The smaller
size of the beam spot using LIGHT is another key differentiating factor. LIGHT is designed for the utmost precision of
proton therapy, which allows to minimise the effect of alterations in the internal density along the beam path
ADVANCED ONCOTHERAPY PLC
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GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Current and future
potential for proton
therapy in cancer care
The proton therapy market is going through rapid growth. As of December
2020, there are 95 proton therapy centres in the world; this corresponds to a
four-fold increase since 2010.
This fast growth – forecasted to continue at 15% per annum – has been
accompanied by massive changes in recent history, many attributed to
the introduction of smaller and cheaper proton therapy systems and to the
increasing market awareness.
# Patients Treated with Proton Therapy
# of Patients (Worldwide)
220,000
(Dec-19)
200,000
100,000
1965
1975
1985
1995
2005
2015
# of Proton Centres
# of Treatment Rooms
4,000
9,800(1)
21
1995
95
242
2020
2030
Needed
47
1995
235
610
2020
2030
Needed
1 There is a need for 9,800 rooms by 2040 (i.e. CAGR 2018-
2040:19%). This assumes 50% of 29 million cancer patients by 2040
get radiotherapy; 20% of patients under radiotherapy receive proton
therapy; based on an average number of 300 patients per annum
per treatment room; net of the treatment rooms already in operations
and ordered
Initially, proton therapy was used to treat radio-
resistant
tumours such as chordoma and
melanoma. With the development of additional
delivery techniques, indications were gradually
expanded to other cancers, such as head and
neck, lung, liver, pancreatic, and prostate cancers.
Although accompanied with high investment and
running costs, the number of proton therapy centres
has increased quickly since the first hospital-based
Loma Linda University Proton Therapy Centre
(Loma Linda city, California, USA) was established
in 1990. Now there are 95 proton therapy centres
worldwide, and more than 220,000 patients have
been treated with proton therapy. The existence
of these centres enables large cooperative clinical
trials to be performed; significantly increasing the
scientific literature on proton therapy during the last
decade.
However, the analysis of the growth pattern has highlighted major differences and trends:
•
•
•
Demand in the USA has been largely focused on single room systems; in contrast demand in APAC countries is
largely based on multi-room systems
Although developed markets currently dominate the sales of proton therapy equipment, emerging markets
represent faster growth opportunities
Cost reduction has been key to drive the installation of new machines; however, price reduction appears to have
reached a plateau
40 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT
“I’ve had the privilege to be part of
the Proton Therapy industry for the
past 15 years as the President of the
Particle Therapy business for Varian Medical
Systems for 13 years and as a President and Chief
Commercial Officer for Advanced Oncotherapy for the
past two years.
In all those years I’ve worked with hundreds of healthcare
providers around the Globe including top luminaries in the field of
radiation therapy.
Without an exception they all unanimously agree that proton
therapy would be the treatment of choice of radiation therapy
in most cases even with the current cost structure; and it
would be the method of choice for 100% of patients if
the cost per patient was equal."
Chief Commercial Officer of Advanced
Moataz Karmalawy,
Oncotherapy
ADVANCED ONCOTHERAPY PLC
41
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
High unmet medical needs
Despite proton therapy gaining momentum in recent years, the need for new equipment remains highly unsatisfied. For example :
•
There are currently 14,600 X-rays machines in the world; in comparison, there are 95 proton therapy centres treating cancer
patients in 235 treatment rooms
This means the global capacity in proton therapy allows to treat only up to 70,000 patients in one year
Less than 0.2% of all cancer patients worldwide underwent proton therapy in 2020, which is due to the barriers to market
adoption
•
•
Today =
95 centres
4,800 rooms /
1,960 centres
10%(1)
24,000 rooms /
9,800 centres
50%(1)
48,000 rooms /
19,600 centres
100%(1)
1 When assuming 10%, 50% and 100% of radiation
therapy is delivered with proton therapy
42 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT Barriers to market entry
Although the number of centres offering proton therapy is still limited, there is potential for surpassing the 15% annual market growth
that is currently expected. However, this requires the industry to introduce new systems and models which address these barriers
to adoption.
Together with the continuous growth in the number of centres, it is expected that the proton therapy promise of therapeutic gain will
be fulfilled for all current and future radiotherapy indications if the following barriers for market penetration – access, affordability and
acceptability – are being addressed.
s
t
n
e
m
t
a
e
r
t
n
o
i
t
a
i
d
a
r
t
n
e
c
r
e
P
s
n
o
t
o
r
p
h
t
i
w
35%
30%
25%
20%
15%
10%
5%
0%
Median
neighbourhood
income
<$63,000
≥$63,000
≤100 miles
>100 miles
Distance patient to reporting facility
Percentage of external beam radiation treatments given
with protons stratified by the distance between the patient
residence and reporting facility and the median neighbourhood
household income.
Access: It makes no difference that effective proton therapy
treatments exists if patients cannot access them. Improving
access to proton therapy is essential. Given the scarcity
of proton therapy equipment and their location often in
the outskirt of large cities, patients must travel significant
distances to receive their treatment. This lack of access and
unequal geographical spread of proton centres are directly
linked to dependence on legacy accelerators and the need
to build large infrastructure, which is particularly problematic
when installing proton therapy systems in areas where land is
a scarce resource
Affordability: Capital costs for setting up and running proton
therapy facilities are high; this makes the treatment cost per
patient highly prohibitive. Prior to the installation of proton
therapy systems in the UK, patients were sent to private clinics
abroad at a cost of around £114,000. Proton therapy is now
available in the UK, but its cost is still in excess of £60,000 -
70,000. This is the direct consequence of using legacy proton
therapy systems which remain associated with a series of
unsolved technical challenges. Despite the various technology
advancements, the underlying principles of proton acceleration
and deceleration have not changed: the industry has failed
to introduce more efficient systems. Therefore, a substantial
reduction in acquisition and operational costs must occur; this
is unlikely to happen in the foreseeable future, unless different
(i.e., non-circular) proton accelerators are being introduced
Acceptability: The physician community’s use of proton
therapy can be broadened and achieved through:
•
a better understanding of the cost-benefit of proton
therapy over conventional radiation techniques. With 15 to
20 new clinical trials per year, the body of clinical evidence
is expanding quickly and expected to result in a broader
market adoption. Broader availability of proton technology
will also open doors for a generation of new data to assist
with and help enhance research and clinical trials
the reduction and mitigation of treatment uncertainties
regarding the precise delivery of the beam: The current
generation of proton therapy platforms incorporate on-
board patient imaging to assure precise positioning. This
is typically performed immediately prior to the proton
beam delivery. Although patient positioning precision
has improved substantially, during the actual “beam-on”
period, there remains some uncertainty regarding the
precise delivery of the beam. New systems are expected
to result in significant improvements
•
ADVANCED ONCOTHERAPY PLC
43
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTProton therapy is still reserved to a minority of patients; lack of facilities is a source of inconvenience for patients who often have to travel long distances to receive the treatment they needAdvanced Oncotherapy is committed to addressing these challenges; the design of the LIGHT system is placing the Company in a privileged position to disrupt the market
OUR DISTINCTIVENESS
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Advantages of Proton LINACs vs Cyclotrons
Cyclotrons
Our LIGHT system
Large beam cross section
Fixed energy
LIGHT is the first commercial linear proton therapy system
dedicated to the treatment of tumours. It combines a compact
linear accelerator made up by a sequence of accelerating
structures and the hardware and software needed for covering
the needs of clinicians, such as the treatment planning function
and its optimisation. LIGHT accelerates protons in a straight
path obviating the need for bending magnets and addressing
the technical challenges associated with legacy systems.
Protons acceleration is provided by a single pass of the protons
through a series of radiofrequency (RF) cavities. LIGHT as a
proton linear accelerator has desirable characteristics:
Less targeted
Less adaptive
Clinical efficacy
More targeted
More adaptive
Small beam cross section
Variable energy
Proton LINAC
Small beam cross section: this enables a more accurate
treatment through a smaller and more targeted beam
The major components of the LIGHT accelerator include:
Variable energy: the rapid electronic energy changes
at a repetition rate of 200 times per second provide the
opportunity to deliver a more conformal treatment and a
better treatment of moving organs
No absorbers: the ability to control the energy of protons,
without the need for moveable absorbers results in less
induced radiation, lower shielding requirements and reduced
costs
Modular design: modularity offers advantages
for
installation, commissioning, moving location/ transportation,
maintenance and dismantling
•
•
•
•
The ion source which injects protons into a 750 MHz
radiofrequency quadrupole (RFQ) developed by CERN
The RFQ which accelerates the protons to 5 MeV and
passes them through a series of side-coupled drift tube
LINACs (SCDTLs)
Due to their relatively high impedance, the SCDTL
structures are ideal for accelerating the protons to 40–
70 MeV
Following the SCDTLs are a series of Coupled Cavity
LINACs (CCLs) which accelerate the protons to the
needed energy, 230 MeV for the LIGHT system
44 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT
Cyclotrons
Use of absorbers
Non-modular design
More expensive to install
More expensive to dismantle
Costs
Less expensive to install
Less expensive to dismantle
No absorbers
Modular design
Proton LINAC
ADVANCED ONCOTHERAPY PLC
45
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Making proton more accessible
Conventional proton therapy systems
require a large footprint and significant
capital investment. This is primarily due
to the unsolved technical challenges
associated with the way protons are
accelerated: in a circular fashion; this
makes proton therapy out of reach
for most hospitals and inaccessible for
many patients. Making more compact
systems and reducing their costs are a
way to lower the threshold and make
proton therapy a treatment option
available to everyone.
Why conventional proton therapy
systems are not widely accessible
Illustration for a three-room centre
using the fastest technology of a
cyclotron.
20,000m3 of
concrete
Accelerator
weighting
280 tonnes,
roughly the
same as a
Boeing 747
1,700 tonnes of
reinforcement
provided by
steel rebar up
to 100mm thick
1,000-tonne
cranes used
to lift the
equipment
Temperature as
low as -269ºC
to cool the
superconducting
magnets used in
cyclotrons
Three rotating
cylindrical
chambers (also
called gantries)
with 10 metres
in diameter and
weighing around
180 tonnes
Up to 6
meters thick
concrete walls
to contain
radiation
46 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT Making proton therapy more affordable
In circular proton therapy systems, protons are accelerated and
emitted to a fixed and maximum energy of 230MeV. At an energy
of 230MeV, a proton beam will deliver most of its radiation in the
patient’s body at a depth of 32 centimetres, that specific spot being
called the Bragg peak. As this maximum energy is not suitable
for treatment, protons must be decelerated to reduce the energy
of the beam. This is achieved by placing lightweight rotating
absorbers of varying thickness in the beam path at the exit of the
circular accelerator and before protons reach the patient. These
absorbers – also called energy degraders or Energy Selection
Systems (ESS) – are moved mechanically, enabling to adjust
and reduce the energy of protons. However, these degraders
release additional secondary particles and waste many of the
protons in the process, which is reflected in a low transmission.
For example, only 20% of the protons accelerated to an energy
of 170MeV reach the right target area, i.e. the tumour, the
remaining 80% being lost in induced stray radiation that must be
contained to protect staff through thick and expensive radiation
shielding. This is a key driver of the large footprint needed and
prohibitive cost to house conventional proton therapy systems.
Furthermore, the rotation of the absorbers of varying thickness is
done mechanically once or twice per second, a particularly slow
rate when treating moving organs.
To address these challenges and following more than 25
years of work at CERN and ADAM, Advanced Oncotherapy
has developed a compact high frequency full-linear proton
accelerator that does not require degraders, hence offering
an optimal solution in proton therapy. Instead of accelerating
protons in a spiral as is the case with cyclotrons, LIGHT speeds
up the protons in a straight line. Protons are accelerated in a
series of accelerating modules that can be individually switched
on or off, a purely electronic process that is designed to be
carried out at up to 200 times a second. In other words, the
energy of protons is changed electronically at a very fast rate
that is particularly suited for the treatment of moving targets and
without the need for absorbers. This results in a much higher
transmission. LIGHT has a transmission of more than 95% for
all the energies required to treat patients. In contrast and as
highlighted above, the transmission of a conventional cyclotron
with energy degraders is less than 20% when accelerating
protons to an energy of 170MeV.
Transmission of the beam flux in respect to maximum
output at the end of the beam delivery system
LIGHT
Conventional cyclotron with ESS
)
%
i
i
(
n
o
s
s
m
s
n
a
r
T
e
v
i
t
a
e
R
l
120
100
80
60
40
20
0
70
120
170
220
Energy (MeV)
LIGHT is well positioned to reduce the treatment price per patient
at a fraction of the price charged today for patients receiving
proton therapy. The per patient cost of providing proton therapy
is largely driven by two key elements; both have been a key
area of attention when LIGHT was being designed:
•
the building and the installation of a proton therapy system
represent up to two-thirds of the project costs;
throughput and the extent to which the proportion of
fixed costs can be apportioned across different number
of patients has a significant impact on the cost and the
resulting tariff price per patient.
•
LIGHT has been designed to minimise the costs of setting up
and running a proton therapy centre as well as maximise the
patient throughput. The LIGHT system is modular and hence
can be easily installed directly into clinical facilities. It produces
proton beams at the required energy level for treatment without
the need for degraders, therefore greatly decreasing the need
for expensive shielding and reducing the building and installation
cost.
As highlighted above, LIGHT requires less shielding, a
significant source of cost reduction. LIGHT is also constructed
in reasonable size modules. This has many advantages over
conventional proton therapy systems:
•
it can be easily installed directly into existing clinical
facilities;
it can be installed in a contiguous and densely populated
environment;
it does not require expensive cranes or load handling
devices;
it is easier to transport, commission and decommission;
it enables easier maintenance given that individual modules
can be replaced as opposed to the entire system.
•
•
•
•
The modularity of the LIGHT system also brings additional
benefits for customers in the context of facilitating high-volume
production and optimising future costs as well funding the
acquisition of the equipment and reducing the upfront cash
outlay. These are further described on pages 66 and 67.
One of the significant challenges faced by users of proton
therapy systems to date has been the lack of an integrated
control software suite. The Company has been working in
partnership with RaySearch Laboratories AB to develop a
seamless software suite customised for the LIGHT system
which will support personalised precision proton therapy. The
software suite provides users with a single interface for patient
preparation, treatment and follow-up processes, which limits
potential risks, facilitates a better user experience for clinicians
and healthcare workers and increases the patient throughput.
Furthermore, LIGHT can easily be used for hypofractionation,
a technique in which the treatment is delivered in fewer larger
doses, possibly requiring only one patient's visit in the case
of FLASH. As a result, LIGHT is well positioned to reduce the
number of treatment visits, hence taking advantage of new
reimbursement models that favour reimbursement per treatment
course as opposed to reimbursement per visit.
ADVANCED ONCOTHERAPY PLC
47
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Making proton therapy more acceptable
There is a large and compelling body of clinical evidence showing that, for many cancers, proton therapy is overall safer and
more effective than conventional radiation, particularly for complex and difficult-to-treat tumours or for tumours for which a dose
escalation paradigm and/or a reduced dose-bath to the organs at risk is pursued. However, proton therapy – based on the legacy
systems currently on the market – remains a costly treatment with an additional cost factor of 2-3 when compared to conventional
radiotherapy. Notwithstanding the 220,000 patients treated with protons as of 2019(1), additional clinical evidence focused on the
cost-benefit is expected to result in a broader acceptability. New clinical data, together with the introduction of LIGHT which is
expected to treat patients at a cost closer to conventional radiotherapy, are expected to shift the treatment paradigm and make
proton therapy a treatment of choice for a wider range of cancer indications.
We are witnessing a new era in proton therapy
research, with an unprecedented number of
clinical studies under way. For three decades,
research has focused heavily on paediatric
tumours and tumours of the brain, spine and
prostate, establishing that proton therapy is
efficacious, enables precise targeting of tumours
permitting higher doses of radiation with few
short- and long-term side effects, and maintains
a high quality of life for patients. The treatment
also has been shown to reduce the likelihood of
treatment-related malignancies. Researchers
now are exploring the clinically meaningful
in diseases of
benefit of proton
high incidence, particularly lung and breast
cancer, where the precision and limited side
effects can provide effective treatment with
significant long-term benefit to the patient.
Initial results prove hopeful, especially for lung
cancer, which remains the No. 1 cancer killer of
both men and women.
therapy
1,200
1,000
s
r
e
p
a
p
l
l
A
700
600
400
200
0
Yearly Scientific Publications on Proton Therapy
15.0%
12.5%
10.0%
7.5%
5.0%
2.5%
0.0%
r
e
n
c
a
c
e
t
a
t
s
o
r
p
d
n
a
l
a
t
c
e
r
o
o
c
,
t
s
a
e
r
B
l
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018
Breast
Colorectal cancer
Prostate
All
1 +23% year on year; impact of pandemic still being assessed for 2020
Source: PubMed
“If the cost was not an issue,
proton therapy would be the
treatment of choice for most patients
with localised tumours”
- Prof. Jay Loeffler,
Harvard Medical School
Acceptability is also expected to be further enhanced through technological
upgrades aimed at improving the quality of the proton beam and reducing
treatment uncertainties. This is further developed on pages 56 and 57.
48 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT
What has LIGHT been
designed for?
How does the design of LIGHT make it
possible ?
Why is it relevant ?
Improved dose
conformality
•
•
•
The beam energy modulation in the LIGHT
system is done electronically at a fast
rate (i.e., up to 200 times per second). In
contrast, the control of the beam energy in
cyclotrons is done mechanically through
the use of absorbers, making their energy
modulation very slow (i.e., up to 2 or 3
times per second).
The spot size in the LIGHT system can
also be changed electronically at fast rate.
The smallest transverse dimension of
beams is produced with linear accelerators
such as LIGHT unlike legacy accelerators
which are unable to produce a beam
smaller than 3 millimetres. The opportunity
of the LIGHT minibeam is to offer a beam
size of less than one millimetre.
•
Improving the dose conformity is an
opportunity for delivering a better clinical
performance. This can be achieved through
a higher frequency at which radiation is
deposited onto the tumour and a smaller
size of the proton pulses.
• Delivering more conformal treatments
offers the opportunity to treat the entire
class of moving tumours.
Volumetric repainting
and active range
control
•
The electronic control of beam energy in
the case of LIGHT allows for volumetric
repainting.
•
Volumetric repainting makes the radiation
dose distribution more homogeneous,
hence improving the medical outcome.
Higher radiation doses
and fewer fractions
• Currently, hypofractionation is not able to
• Hypofractions (large dose fractions) are
be fully realised with legacy proton therapy
systems. This is because hypofractionation
depends on normal tissue sparing instead
of repair, so target conformity is of utmost
importance.
• With a scanning system, the smallest
possible beam emittance is required.
The LIGHT system is expected to offer a
significant advantage in this regard.
more convenient for the patients because
fewer total treatment sessions are required.
• Hypofractions also result in an increased
throughput of patients per year.
Adaptive radiotherapy
•
•
LIGHT is highly programable; it can adjust
treatment delivery rapidly by electronic
control and there is no need for absorbers
to change the beam energy.
LIGHT offers full integration including all
software and hardware making adaptive
proton therapy a reality. Included in the
software package is on the fly patient
specific QA using fast Monte Carlo.
•
The accuracy of proton therapy is
dependent on patient changes over the
course (weeks) of treatment; so adaptive
radiotherapy is needed to improve the
quality of the treatment.
The breakthrough LIGHT technology is
designed to offer clinical advantages in
conformality and versatility of use
ADVANCED ONCOTHERAPY PLC
49
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT Our business model
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Our understanding of the customers' needs
Customers and patients are at the core of our business and every
decision made. We believe being customer centric is key to ensure
our business model stands out in an increasingly competitive
marketplace, that is seeing profound transformation. These
changes stem from technological advancements as well as macro-
and micro-economic factors. As governments and health insurers
worldwide implement measures to control costs, public hospitals
are operating on tighter budgets, while private facilities are receiving
lower reimbursements. These measures – combined with the
increasing market awareness and direct push from patients – have
triggered a transformation of the purchasing process characterised
by the following trends:
•
•
•
•
•
there is a growing demand from smaller healthcare institutions;
decisions that used to be the sole preserve of doctors are now
also made by hospital administrators and other non-clinicians;
emerging markets – which have suffered from a lack of cancer
infrastructure – are taking more steps to leapfrog developed
economies and introduce cutting-edge technologies;
the past few years have seen a rise in “value” customers, i.e.,
those who gravitate to systems that are good enough and
competitively priced. So, pricing competition has been key to
win market shares. However, pricing levels are now reaching
a plateau and more emphasis is being placed on both the
services offering that has to be broader and more differentiated
and the need to deliver superior medical outcomes;
aligning interest is becoming a more prevalent pre-requisite
for customers. This entails the potential participation of the
technology provider to the operations of the clinical centre
through a risk-reward strategy as well as the opportunity to
“staple” a financing package directly to the technical solution.
This is further described in page 66.
These dynamics have forced proton therapy companies to
adjust their business models and – in the absence of a disruptive
technology and service offering – consider M&A as an alternative
route for diversification or exit strategy. With a disruptive technology
that lends itself perfectly for establishing a more customer-centric
business model, Advanced Oncotherapy is in a privileged position
to shift the treatment paradigm and make its vision of democratising
proton therapy a tangible reality.
"Proton beam therapy is a very exciting new treatment but access has been limited due to the costs
and size of equipment. Until now. Advanced Oncotherapy's LIGHT system reduces size and cost, while
providing the same high success rate for patients. We're excited to be the first hospital in London to
offer this new treatment. The new service will adjoin our main site on Harley Street, and enable The
London Clinic to help even more patients fight and survive cancer while furthering our aim of advancing
healthcare"
Al Russell,
Chief Executive Officer of The London Clinic
50 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT Proton therapy market
today and future needs
Today
Future
FUNCTIONALITY
• Range of features
•
•
Intensity of attribute
Appropriateness for
usage
RELIABILITY
•
•
•
Longevity of
performance
Trust in supplier
Availability of support
CONVENIENCE
•
•
•
Ease of use
Accessibility of
product
Simplicity of
appropriation
COST
INNOVATORS
EARLY ADOPTERS
EARLY MAJORITY
LATE MAJORITY
“With more than 25 years of experience in the medical industry and after leading the worldwide
Particle Therapy business of Varian, I realised a long time ago how vital customer-centricity
is when market shares in the recent years have been gained through pricing strategies. The
LIGHT platform is obviously pushing new boundaries and setting Advanced Oncotherapy apart,
but this needs to be nurtured with the quality and history of the relationships we are building
with our customers. Having the right people, doing the right things, with the right attitude and
genuinely caring about our customers is what counts. It is a testament to our dedication to our
customers and staying at the forefront of innovation that we have been able to build a network
around prestigious healthcare institutions such as The London Clinic, The Cleveland Clinic, the
Mediterranean Hospital and the University Hospital Birmingham NHS Trust."
Moataz Karmalawy,
Chief Commercial Officer of Advanced Oncotherapy
ADVANCED ONCOTHERAPY PLC
51
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
“Legacy proton therapy systems are usually associated with high
upfront capital costs that can introduce a significant hurdle to
adoption, particularly for many smaller treatment centres. Thanks
to its modular design, its lighter weight and its improved proton
efficiency, Advanced Oncotherapy's LIGHT systems are a true
innovation for the market of proton therapy. DiaMedCare's tailor-
made lease financing solutions for Advanced Oncotherapy's
customers will eliminate large upfront payments for the system and
will make proton therapy more accessible to local, smaller hospitals.
We are convinced that our innovative financing will strongly enhance
the future growth of Advanced Oncotherapy.”
Kreske Nickelsen,
Partner at DiaMedCare
“At Advanced Oncotherapy, we believe that the key to success does
not “just” rely on bringing a new product to the market, but it also
involves altering the conventional business models and service
offerings which have been the norm for the last decades. As we are
accelerating our plans for commercialisation, we must act now and
implement a business model which enables us to thrive and sustain
our competitive advantages. The way we structured our commercial
partnerships and our collaboration with DiaMedCare illustrates how
we wish to democratise and build the future of the proton therapy
industry.”
Nicolas Serandour,
Chief Executive Officer of Advanced Oncotherapy
A unique financing model made possible by the
design of the LIGHT system
Although harnessing technological innovations is a
key imperative for healthcare institutions, keeping
pace with such advancements requires considerable
capital expenditure. This is particularly the case for the
acquisition of medical equipment. This is why leasing
has always been a favoured, and often only, means
facilitating the acquisition of all the equipment needed
by healthcare providers. This financing solution has
gained popularity as a cost-effective
investment-
enabler; it spreads the cost of the equipment over
an agreed financing period, with monthly finance
payments arranged to align with the expected benefit
of its use, such as improved operational efficiency.
This removes the need for a large initial outlay,
thereby improving cash flow and working capital.
Additionally, financing arrangements can incorporate
other costs such as installation as well as introduce the
possibility of technology upgrade in line with technology
developments.
Some of the most commonly leased or rented
medical devices currently include ultrasound, remote
patient monitoring equipment, X-rays systems
and other laboratory equipment, which are also
continually changing in the face of new developments.
Unfortunately, the implementation of leasing solutions
for the acquisition of proton therapy equipment has
proved to be very challenging up to now, contributing to
limit the market adoption. This is because legacy proton
therapy machines are bulky and cannot be moved from
one clinical site to another, hence they cannot be used
as a financing security. The introduction of LIGHT – as
a modular device which can be retrofitted into existing
building through the assembly of individual components
directly at the customer’s site – is shifting the financing
paradigm, making leasing a tangible opportunity for
customers.
In January 2021, Advanced Oncotherapy established a
financing partnership with DiaMedCare, a Swiss-based
active financing specialist for innovative technologies
and equipment for projects in Europe and the United
States. DiaMedCare – which is chaired by Prof. Erich
Reinhardt, former CEO of Siemens Healthcare – has an
in-depth understanding of radiation and proton therapy.
This knowledge makes it more capable of creating
customised financing packages that fit the specific
requirements of prospective customers – for instance,
flexing the financing period to suit the organisation’s
cash flow. This contrasts with the standard financing
terms usually available from generalist financiers.
As an illustration of this greater flexibility, DiaMedCare
will also be able to bridge manufacturing costs until
delivery of the LIGHT system to customers, subject
to definitive agreements being entered into between
the Company, DiaMedCare and the customer. This
is an important step forward in the commercialisation
strategy of the Company as it will not only accelerate its
fast-growing commercial pipeline but will also ensure its
growth prospects are not limited by its balance sheet.
52 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT Aligning interests with customers through profit sharing
arrangements
Another building block in the execution strategy of the Company
lies in the opportunity of structuring commercial partnerships
whereby profits of the healthcare centres are shared with the
Company. In February 2020, the Company announced the
sale of a three-treatment room system to the Mediterranean
Hospital of Limassol, Cyprus for €50 million, together with
an operating agreement enabling Advanced Oncotherapy to
receive a share of the net profits from the clinical services. In
the same spirit, Advanced Oncotherapy and The London Clinic
agreed to receive a share of the profit generated by the centre
located in Harley Street, London, using the LIGHT machine
sold by the Company.
This innovative business model – complemented by financing
solutions as detailed on pages 52 to 54 – is key to sustain
a differentiated profile in the current fast-paced business
environment. It brings in particular many benefits, including:
•
Increased customer loyalty: This closer link with customers
is an opportunity to build stronger relationships, gain more
insights about the customers’ operations, putting the
Company in a position to offer services which continuously
increase customer satisfaction;
Attractiveness for new customers: Offering an attractive
pricing strategy and delivering a breakthrough solution
that is set to be upgraded is a particularly attractive
combination in the marketplace which can be further
enhanced through a cooperation between partners rather
than the conventional supplier/customer relationship;
•
This strategy is being shaped by various forces, including:
•
Advanced Oncotherapy is committed to democratise proton
therapy and as such setting an attractive pricing policy for
customers is an important area of focus, regardless of the
clear and superior profile of the LIGHT system. Profit sharing
arrangements are therefore a way to fairly balance the return
expectations of both the Company and the customers;
ensuring that the LIGHT platform lends itself perfectly
for a roll-out of new features over time. The Company
acknowledges that early technology adopters must not be
penalised, hence the necessity for Advanced Oncotherapy
and the customers to work closely together.
•
• More
•
recurring
revenue stream: Profit sharing
arrangements are a way to smooth any potential
fluctuations in demand, especially in times of economic
pressures;
Enhanced profitability for the Company: The design of
LIGHT plays a key role in the profitability of the clinical
centre, particularly given its potential to treat more patients
at lower operating costs. Therefore, any profit-sharing
arrangements provide the Company with the opportunity
to enhance its profitability profile. These potential financial
benefits are highlighted below.
The financial implications for the Company: Illustrative example
Year 1
Illustrative revenues(1)
£350 - 600m
Year 10
Illustrative revenues(1)
£800 - 1,800m
86%
8%
6%
Sales
Maintenance
Profit sharing
1 Assumptions:
• 10 multiroom systems sold p.a. for 10 years
• Selling price: £30-50 million
• Maintenance and servicing agreement: annual cost for
the operator at 8-10% of the selling price
• Profit sharing: 20-50% of the clinic’s net profit
31%
28%
41%
Advanced
Oncotherapy
Suppliers
Customers
ADVANCED ONCOTHERAPY PLC
53
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Lower customer
acquisition costs(1)
Additional streams
of revenue(2)
x
Higher retention
rates
=
Higher lifetime
revenue
x
Lower cost to
serve and for
upgrades
=
Better customer
economics
+
=
Value creation
1 Through leasing arrangements; small up-front
considerations paid by customers
2 Includes sales of LIGHT machines, servicing and
maintenance contracts, project management,
financing, profit sharing
54 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
ADVANCED ONCOTHERAPY PLC
55
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Introducing LIGHT is the opportunity to disrupt the radiation oncology
market and shift the cancer treatment paradigm.
Because LIGHT is a breakthrough technology, it is an ideal platform for
subsequent innovation and improvement, unlike circulator accelerators on
the market which are now reaching their limits in terms of technical upgrades
and cost reduction. Therefore, factoring in the future new product releases
applied to the LIGHT platform as part of a broader commercialisation plan
is essential to achieve sustainable competitive advantage and create value.
The following summarises a few projects which are developed.
Page 60 further outlines how innovation is nurtured within the Company
and to which extent the combination of a unique mindset with organisational
processes leveraging a multi-disciplinary approach yields a well-defined
innovation roadmap.
Our long-term
orientation driven by
innovation
FLASH
Minibeams
The purpose of FLASH radiotherapy is to treat cancer
in one single visit as opposed to 20-35 visits, which is
the norm today. Given the significance of this topic and
its potential impact on the convenience for patients, it
is legitimate to see a lot of ongoing studies in which
Advanced Oncotherapy plays a key part.
FLASH radiotherapy involves the ultra-fast delivery
of radiation treatment at dose rates several orders
of magnitude greater than regimes currently used in
routine clinical practice, i.e., 40/200 Gy per second
as opposed to 2 Gy per minute. This enables the
same amount of radiation to be delivered in a single,
rapid treatment as opposed to being divided over a
number of weeks. Animal models have shown that
ultra-fast dose rates allow normal tissue tolerance
levels to be exceeded, thus enabling high doses of
radiation to be delivered while maintaining a similar
tissue sparing profile. FLASH therapy has been used
to treat only a handful of patients to date; results are
encouraging, and various studies are ongoing.
LIGHT has been designed specifically to incorporate
this next generation delivery regimen. One major
advantage is that LIGHT maintains a constant
efficiency above 95%, regardless the location of
the tumour in the body. In contrast, conventional
proton therapy systems are highly inefficient and
hence produce much greater level of stray radiation
that must be contained with shielding walls. Given
the significantly higher radiation dose required with
FLASH and the clinical need to adjust the energy
below 230MeV, the thickness of such walls is
expected to be much greater than 6 meters which
are currently necessary with the current regimes
associated with legacy systems. This makes LIGHT
an ideal platform for FLASH.
56 ANNUAL REPORT 2020
The ability of a proton therapy system to ensure maximum conformity and
hence target radiation onto the tumour and its irregular shapes is directly
correlated to the size of the proton beam. Legacy accelerators have reached
a limit with a proton beam of 3 millimetres. Due to their nature, the transverse
dimensions of beams produced by linear accelerators such as LIGHT are
the smallest amongst all accelerator types. In a major advancement, the
LIGHT system intends to offer a beam size of less than one millimetre.
This holds great promise, particularly for the treatment of tumours where
a high conformity is needed. Because of the lower entrance dose sparing
associated with the minibeams, the following illustration shows that a lower
radiation dose is expected to be delivered to the patient with the minibeams
(B) compared to standard scanned proton beams (A).
The LIGHT system’s use of minibeam technology is currently under
evaluation in a research collaboration with the Cleveland Clinic.
Proximal Dose Sparing (B) from Proton Minibeams in Comparison to Regular
Proton Beams (A)
Source: Girst et al. 2016
TO OUR SHAREHOLDERSSTRATEGIC REPORTConventionalMinibeam<1mm3-8mm Proton tomography
The LIGHT system is designed with an integrated conventional
(X-rays) CT scanner that enables real time imaging and
adaptation of the treatment plan during therapy, enabling
increased accuracy of targeting. CT data is used to construct
a digitally constructed radiograph for use in patient set up and
treatment planning.
Yet, CT data does not provide information concerning the
penetration of protons. Therefore, there is an opportunity to
further optimise the imaging capability of the LIGHT system by
using protons as a means for imaging and not just for treatment
purposes; this is a subject of investigation. The underlying
principle is to image a patient with a a higher energy beam than
used for treatment, such that the Bragg peak is located beyond
the patient’s body. This allows for a better imaging of the dose
deposition. As part of the PRaVDA Consortium, the Company is
committed to supporting the development of new concepts and
instrumentation to provide accurate information about the proton
beam's dose, energy and profile before and during treatment.
The richer dataset provided by proton imaging together with the
ability of the LIGHT system to generate a higher beam energy,
i.e., an energy of 330MeV resulting in a Bragg peak beyond the
patient’s body, are key to develop more advanced treatment
planning functions. These can be further enhanced through the
integration of machine learning and artificial intelligence tools
which can further refine tumour targeting. Indeed, such tools
are already used in routine clinical practice in radiology and
radiation oncology today, however, due to the (still hypothetical)
depth and quality of information provided by proton imaging, the
benefits of integrating such tools could be further multiplied.
Proton therapy and Immunotherapy
The combination of proton therapy with immunotherapy has
gained substantial interest over the last two years. Recent
clinical results support the pre-clinical experiments pointing to
a benefit for the combined treatment in metastatic cancers.
Protons have physical advantages which can lead to a
reduced damage to the immune cells, that are required for
an effective immune response. In addition, they may have
biological advances due to the release of cytokine mediators
of inflammation. Consequently, proton therapy can turn these
immunologically "cold" tumours into "hot" tumours, thus
enabling the immune system to identify and kill the cancer,
hence tackling the potential resistance of cancer cells to
immune checkpoint inhibitors used as a monotherapy. New
clinical studies such as the LEAP study performed by the Mayo
Clinic highlight the synergies between immunotherapy and
radiotherapy and how they can potentially allow for a better
treatment of cancers.
Protecting our innovation
In a study published by the Harvard Medical School, the
overall cost of development for a complex medical device has
been estimated at $526 million, an amount significantly greater
than the investment made to date for the development of the
LIGHT solution. Furthermore, and for projects with a strong
physics-content, it is estimated that 10-15 years are necessary
to develop a conceptual design into an optimised design ready
for industrialisation.
Having the right procedures to protect innovation and the
LIGHT’s brand are therefore an essential part of the strategy of
the Company. To do so, the Company is building a portfolio of
patents, trademarks, copyrights and registered design rights.
Beyond these sources of protection, the Company can rely on
the know-how that has been built for many years. This know-
how is the result of the expertise needed across a large list
of differentiated specialties and explains the time needed for
developing a ready-for-manufacturing design. This constitutes
a particularly strong barrier to entry.
Key Disciplines and Barriers to Entry
Civil &
Structural
engineering
Environmental
health & safety
Electrical
networks
Survey &
alignment
Cooling &
ventilation
Radiation
protection
Power
converters
RF technology
Radiation
safety
Electromagnetic
compatibility &
interference
Beam
dynamics
Electrical
engineering
Electronics
Mechanical
engineering
Magnet
technology
Vacuum
technology
ADVANCED ONCOTHERAPY PLC
57
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT TO OUR SHAREHOLDERS
STRATEGIC REPORT
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
58 ANNUAL REPORT 2020
GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
INTRODUCTION TO ADVANCED ONCOTHERAPY
ADVANCED ONCOTHERAPY AT A GLANCE
OUR VALUES
STATEMENT FROM THE CEO
INVESTING NOW FOR BUILDING A BETTER TOMORROW
The role of Advanced Oncotherapy in building the future of proton therapy
Towards a sustainable growth
A BREAKTHROUGH IN PROGRESS
WHY OUR COMMITMENT TO PATIENTS?
A PERSONAL STORY: GISELA AND MICHAEL
ACKNOWLEDGMENTS FROM THE CHAIRMAN OF ADAM
WHAT WE DO
OUR FOCUS
Cancer and purpose of cancer therapies
Radiation therapy remains the most established and economical cancer therapy
Proton therapy: the new generation of radiation treatments
Current and future potential for proton therapy in cancer care
OUR DISTINCTIVENESS
Our LIGHT system
Our business model
Our long-term orientation driven by innovation
HOW WE DO IT
OUR SET-UP
Innovation: key to Advanced Oncotherapy’s DNA
A dual strategy focused on outsourcing and in-house assembly
OUR PROCESSES
Focus on quality, a mindset influencing each action undertaken by the Company
Following a well-proven regulatory path
OUR RESOURCING PLAN
Our funding plan: securing the means of the Company’s and customers’ ambitions
Our people
OUR STRATEGY
PRINCIPAL RISKS AND RISK MANAGEMENT
10
12
14
18
20
22
26
28
32
34
36
40
44
50
56
60
62
64
65
66
68
70
72
ADVANCED ONCOTHERAPY PLC
59
OUR SET-UP
Innovation: key
to Advanced
Oncotherapy’s DNA
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
In the 21st century, innovation practices and initiatives have become
more important than ever due to a fast and unpredictably changing global
environment. When it took decades for great inventions to be unveiled in
the past, in today’s business world it is just a few years. It is therefore of
paramount importance that the Company continues embracing the principles
of innovation management which have been built upon its privileged access
to CERN and which have set Advanced Oncotherapy apart.
Yet, being innovative and creative is easier said than done. Below are a few
important aspects which are forging the innovation plan of the Company; these
are embedded in the unique culture of the Company and its organisation.
Innovation, a
gravitational force
shaping the culture of
the Company
Due to its close links to the highly prestigious CERN and its mission of democratising proton
therapy, the Company views innovation not as a choice, but rather as a requisite for success. In
order to achieve the triple aim of improving care, improving health and reducing spend, Advanced
Oncotherapy relies on a product-oriented culture whereby the commercialisation of LIGHT is not
seen as the ultimate goal, but rather as an important milestone in the journey of transforming the
radiation oncology market. In that context, the Company has created a scientific and engineering
hub in Geneva, Switzerland, at close proximity to CERN and an integration, verification and
validation centre at STFC in Daresbury, UK; these are gravitational forces attracting key talents
in the industry and leveraging a multi-disciplinary approach. As such, the unique culture of
Advanced Oncotherapy is a critical determinant of the innovation success of the Company.
Innovation is the result of a complex thought-process which is originated by creativity and which must
be challenged and analysed from various perspectives; it requires a set of cross-cutting practices to
structure, organise, and encourage it. For this reason, a global screening and incubation team has been
formed to identify new opportunities based on well-proven principles and processes aimed at:
•
tracking down long-term trends and innovative subjects in industry and society;
analysing their growth potential;
checking whether potential new business areas fit well with the overall mission of Advanced
Oncotherapy.
•
•
Such processes have been crafted with the ultimate objective of striking the right balance between
optimising and prioritising resources and objectives, promoting an effective team working environment,
establishing a creative climate and keeping a commitment to build the future of radiation therapy.
Discipline
and process,
the keys to nurture
the creativity of the
employees and
partners of the
Company
Advanced Oncotherapy views patients and physicians as the primary source of innovation
because their experience, practical knowledge and feelings determine the way proton
therapy must be delivered. Furthermore, the commitment of the Company to develop more
personalised solutions entails a high level of user involvement and constant information flows
between patient and practitioners. For this reason, the Company has implemented various
initiatives, including:
•
operational partnerships with customers beyond the delivery and maintenance of the
LIGHT system; please refer to page 53 for further details;
scientific partnerships which externalise innovations and supplement the internal research
and development programmes of the Company.
•
These collaborations play a key role in understanding the patient journey, enabling practitioners
to identify value-creating activities and ideas for service development and innovation and
ultimately addressing citizens’ priorities. The Company’s partnerships with the University
Hospital Birmingham NHS Trust and the Cleveland Clinic are good examples of its commitment
to using a customer-centric approach to drive innovation.
Innovation must be
democratised
60 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
ADVANCED ONCOTHERAPY PLC
61
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
and products, their adherence to quality and certifications,
their commitment to provide technical and engineering
product support, their competitiveness and ability to
optimise production and costs, their experience in past
prototype build, their innovative capacity and processes to
protect IP at all times, and their commitment to corporate
social responsibility;
control cost and optimise cash allocation. Cost-savings
achieved by the partners of Advanced Oncotherapy help
the Company release capital for investment in other
areas, such as the set-up of the infrastructure needed
for assembling machines or the development of new
functionalities which require Non-Recurring Engineering
costs.
•
By dedicating its internal resources for assembling the LIGHT
system on the campus of the UK Government’s Science and
Technology Facilities Council (STFC) in Daresbury, the Company
gains valuable insights for the future commissioning of new
systems and the development of new product features. Further
information on the assembly of LIGHT and the cooperation with
STFC can be found on page 64.
To develop an efficient and reliable supply chain, the Company
has built a long-term partnership model with its suppliers. It is
the philosophy of Advanced Oncotherapy to involve them, as
a core component in the end-to-end value chain with the view
of achieving the product satisfaction performance objectives as
well as maximising responsiveness and adaptivity. This is why
most suppliers’ contracts are driven by risk-sharing principles
supported by effective and rigorous supply control processes
which include audit and monitoring against the product’s
requirements. Partners in the supply chain are required to
address timebound corrective actions if necessary, and commit
to make technical improvements to production, improve the
sustainability of their operations and operate in a transparent
manner at all times.
Drawing on its vision to serve a global market and democratise
proton therapy, Advanced Oncotherapy is constantly seeking
options to gain more flexibility and better financial terms across
the whole value chain. Potential cost savings of 40-50% on
future machines have already been identified through value
engineering program and leveraging the relationship with
suppliers, hence generating a faster, more reliable, and cheaper
production results while capitalizing larger production volumes.
Underpinning this strategy are the Company’s efforts to optimise
its supply chain resources. This has led the Company to assess
the operational areas in which a greater concentration of its
supplier base and source purchases from top-performing
strategic suppliers will be beneficial. Consequently,
the
Company decided to cement a broader partnership with VDL
ETG Precision BV in June 2020. Under this new collaboration,
Advanced Oncotherapy and VDL ETG Precision have expressed
the common intention to work on a number of additional areas
beyond the activities currently performed by VDL ETG Precision.
The objectives of this partnership are to provide a more higher-
level assembly resulting in an overall efficient and effective
delivery of LIGHT systems and to position the parties at the
forefront of clinical innovation and precision manufacturing. This
was complemented by an unsecured €20 million working capital
facility from VDL ETG Precision to support the manufacturing
and sale of future LIGHT systems.
A dual strategy focused
on outsourcing and in-
house assembly
In order to enhance its competitiveness and leverage its skillset,
Advanced Oncotherapy has made the strategic decision to:
•
develop an outsourced manufacturing and specialised
supply chain with established world-class equipment
providers;
internalise the assembly process of LIGHT based on a
modular build plan at its site in Daresbury, UK.
•
the LIGHT components and
This dual strategy – built upon the outsourcing of the production
their
and procurement of
subsequent assembly which is performed in-house – aims
to fulfil various objectives. By outsourcing the production, the
Company is better placed to:
• make the Company’s organisation more flexible and agile.
Outsourcing is an opportunity to free up internal resources
and focus on the Company’s strengths, allowing staff to
concentrate on their areas of expertise and on the future
strategy;
the
enhance
Company. By working with established Original Equipment
Manufacturers, the Company gets access to capabilities
otherwise not accessible or affordable, hence providing a
more productive and efficient support with the delivery of
greater quality components;
develop system speed and hedge risk exposure (e.g.,
geopolitical risks, currency fluctuations, changes in cost
factors). The Company has selected its partners based on
stringent criteria, including the ability to deliver products
based on a clear delivery plan, the quality of their services
the efficiency and competitiveness of
•
•
“We work with very large organisations
such as BMW Group and many
established players in the semi-
conductor area, and I can say that the
calibre of the team and the processes Advanced Oncotherapy
put in place to produce items in high demand are what you
would expect in large well-established organisations.”
Guustaff Savenje,
Senior Vice-President of VDL Group
62 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT “Our priority is to develop and operate a responsible, sustainable and agile supply chain that meets
both the demand of the dynamic radiation oncology market and the stringent regulatory, health and
quality requirements of the medical device industry. Underpinning this vision is our commitment to
develop long-lasting relationships with our suppliers built upon a clear alignment of interests and
our drive to make LIGHT as accessible, affordable and acceptable as possible.”
Ed Lee,
Chief Operating Officer of Advanced Oncotherapy
ADVANCED ONCOTHERAPY PLC
63
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
OUR PROCESSES
Focus on quality, a
mindset influencing
each action undertaken
by the Company
An assembly site located at the heart of a campus
dedicated to accelerators and science and sponsored
by the UK Government
The Company has established a testing and assembly
site on the premises of the UK Government’s Science and
Technology Facilities Council (STFC) through a 15-year
lease. This partnership with STFC:
•
provides access to an established and certified facility
as well as a strong local manufacturing base; and
leverages the strong reputation of STFC as an
organisation of excellence for research, development
and operation of future particle accelerators.
•
64 ANNUAL REPORT 2020
Throughout 2020, significant investment has been made to
customise the site in order to:
•
assemble the first LIGHT system;
perform the necessary tests as part of the Verification
and Validation process, a pre-requisite for product
certification;
ensure smooth operations for the installation, integration
and conditioning of the relevant components of the
future LIGHT machines;
treat first patients in partnership with the University
Hospital Birmingham NHS Trust.
•
•
•
TO OUR SHAREHOLDERSSTRATEGIC REPORT As a medical device supplier, Advanced Oncotherapy operates in one
of the most regulated sectors in which significant quality systems and
product requirements must be satisfied. These are intended to ensure that
the Company consistently designs, produces, and places onto the market
LIGHT systems that are safe and fit for their intended purpose. Furthermore,
consistently with our objective of delivering defect-free products, reliable
technical information, and effective help in using our LIGHT solutions, the
Company has developed approaches aimed at building quality into processes
at every step of the value chain-from design and manufacturing to sales and
service. The following gives an overview of the principles supporting the
Company’s commitment to safety and to providing a high-quality product.
Advanced Oncotherapy has adopted a process-based quality management
system as a way to accomplish daily work and deliver LIGHT systems as per the
commercial arrangements agreed with customers and in accordance with the
relevant medical, health and safety requirements and standards. The Company’s
work is organised to understand the customers’ requirements, design the most
reliable way to produce, deliver and instal LIGHT, and to measure how the team
at Advanced Oncotherapy is doing every step of the way.
Advanced Oncotherapy’s quality system is registered to the ISO13485
international standard for the design, manufacture, and distribution of medical
devices. This standard describes the requirements for developing, producing,
distributing, and maintaining high quality products and services for customers
working in the medical industry.
“Advanced Oncotherapy's and ADAM's
compliance with the ISO13485 standard
illustrates the importance that the Company
places on the quality of its product and the
need to have robust processes across our
entire organisation in accordance with the
stringent requirements associated with
medical devices.”
Michel Baelen,
Director Regulatory Affairs, Quality & HSE
of Advanced Oncotherapy
The ISO13485 certification was granted in January 2019 and was further validated in December 2020 through an external audit
by Lloyd's Register. It enables Advanced Oncotherapy and ADAM to continue to develop the LIGHT proton therapy system in
compliance with the highest standards for safety and product performance, and to make its product available for the first patient
treatment, once the LIGHT proton therapy system medical device file has been approved.
Under the leadership of Michel Baelen, ex-head of regulatory affairs at IBA for 19 years, the Company
is pursuing the following regulatory clearance routes:
•
•
CE Mark needed for the commercialisation of LIGHT in Europe: LIGHT has been classified as
a Class IIb device (“Potentially hazardous devices”) and as such no clinical trials are required
according to guidelines. However, given the novelty of LIGHT, a small-scale clinical investigation
plan is being implemented to prove safety. This is expected to show a significantly equivalent
performance to predictive devices. This programme is jointly designed and executed with the
University of Birmingham and Queen Elizabeth Hospital;
510(k) certificate needed for the commercialisation of LIGHT in the US: The 510(k) route for a
predicate device is open to the Company. The US clearance presents a significant overlap with
the CE Marking process.
Under both regulatory paths, the verification and validation of LIGHT must be completed ahead of its submission for regulatory approval.
Verification and validation are independent procedures that are used together for checking that LIGHT meets requirements and
specifications and that it fulfils its intended purpose. As part of the validation process, evidence must support that LIGHT provides
the appropriate value proposition to the customer and satisfies intended use and user needs.
“Quality is not a function or process; it is a mindset that inspires all of our employees and partners
to go the extra mile and deliver the right product as if it was used by our friends and family. It must
be nurtured through an unrelenting investment.”
Nicolas Serandour,
Chief Executive Officer of Advanced Oncotherapy
ADVANCED ONCOTHERAPY PLC
65
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTFollowing a well-proven regulatory path OUR RESOURCING PLAN
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Our funding plan:
securing the means
of the Company’s and
customer’s ambitions
In light of the market needs, Advanced Oncotherapy has already taken
important initiatives to remove constraints to growth and ensure the
scalability of the business. The partnership with DiaMedCare – described on
page 52 – is an important step in this direction. It entails a leasing agreement
between DiaMedCare and the customer as well as a working capital facility
for the benefit of the Company. This is separately complemented by an
unsecured €20 million working capital facility from VDL ETG Precision to
support the manufacturing and sale of future LIGHT systems.
Resourcing our Future Projects – Structuring Considerations
Payment of LIGHT
components
4
Pre-hire facility
3
Manufacturing /
delivery of
components
2
Purchase
Order
1
1
2
3
Purchase order
Down-payment
Cost of manufacturing the equipment funded
through a “pre-hire arrangement”
•
Interest charge paid by AVO and either
“covered” by the down-payment from the
operator or passed to the customer
LIGHT used a security
•
4
AVO to purchase LIGHT components
Delivery and Installation of LIGHT on the Customer site
Leasing agreement /
Debt facility
5
Rents / debt
repayment
5
“Pre-hire” facility transferred to the OpCo /
Customer; AVO’s debt is then extinguished
• Opportunity for the financing partner to
monetize future cash-flows depending
on the envisaged “ownership” of LIGHT
6
6
DiaMedCare
receives annual payments
(rents or debt repayment & interests)
Stapled financing solution = pipeline acceleration by limiting the upfront investment for the customer and
deferring the payment of the system once it generates revenue to the hospital
For each proton therapy project, there are 4 key stakeholders:
•
Advanced Oncotherapy
DiaMedCare
Hospital / operator
Real estate developer / construction company (with support or not from the financing partner)
•
•
•
Approaching customers with a consortium, a fully baked solution and one voice is key
66 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTAdvanced OncotherapySuppliersDiaMedCareOpCo / CustomerAdvanced OncotherapySuppliersDiaMedCareOpCo / Customer Due to the modularity of LIGHT which lends itself perfectly
to leasing models, Advanced Oncotherapy has been able to
establish such a financing partnership that reduces the balance
sheet impact for both customers and the Company. This is key
to unlock the high demand for the LIGHT system. The structuring
arrangements together with an illustrative financial scenario have
been summarised below. The Company is in discussion with
other financing institutions to replicate this model in selected
geographies.
ADVANCED ONCOTHERAPY PLC
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GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Another important aspect of our ability to deliver and succeed relates to our
ways of optimally resourcing our projects consistently with our culture and
mission.
Enabling everyone to work at their best contributes to our overall success as a
Company and we continue to focus on developing careers, ensuring inclusivity
and mental well-being.
We believe that people remain at the heart of investing and our long-term
focus is on retaining, developing and attracting the right talent for our current
and future business needs. To achieve this, we concentrate on our sense of
purpose, our working environment and quality of work, and strive to provide a
positive, inclusive and collaborative culture for this key stakeholder group to
thrive within.
Our people
We measure our effectiveness by actively seeking feedback via multiple channels to ensure we evolve our employee proposition
alongside our business strategy. Our intention is to provide the best possible environment where, regardless of role, location or
background, all employees can realise their potential.
In 2020, we had to change the way we work by adapting our nimble organisation to new challenges
•
New processes and organisational changes
Emergency plan and advice to employees
•
Enhanced remote work and IT improvements – simultaneous stream multi-video/audio communications for remote technical
guidance with “hands-on” team at the assembly site in Daresbury
Full risk assessment with implementation plan based on governments’ Covid-19 guidance
Comprehensive health and safety training plans
PPE and sanitisers, mask enforcement, team segregation, etc.
•
•
•
Additional support and reallocation of priorities
•
Continued operation at Daresbury, surge resources at Daresbury to support operations
Confirmed commitment from supply base to deliver objectives per the programme need
Remote work focused on documentation supporting the regulatory filings
Staff well-being and engagement
•
Regular staff gatherings, staff survey
Regular company briefings on the changing regulations in UK, Switzerland and France and the Company’s response to
them to keep our staff safe
•
•
•
68 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT 88%
of our employees feel
their overall well-being
is similar or better since
working remotely
88%
of our employees
feel trusted to work
productively at home
Bridget Biggar, HR Director
ADVANCED ONCOTHERAPY PLC
69
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT OUR STRATEGY
Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Our strategy to disrupt and democratise the proton therapy market is underpinned by our relentless focus on the following
imperatives and actions.
1. Drive proton
therapy adoption
8. Focus on
sustainability
2. Adopt a
commercial
approach based on
local mindset
7. Seek creative
partnerships
3. Prioritise
and implement
innovation
6. Invest to win the
war for talent
4. Optimise cost
position
5. Leverage service
as a differentiator
1. Drive proton therapy adoption: Be the leader in increasing the adoption of proton therapy by promoting research activity, helping
develop treatment protocols and influencing patient funnels.
2. Adopt a commercial approach based on local mindset: Align interest with customers and build further insights into the mindset of
customers.
3. Prioritise and implement innovation: Define future new features of LIGHT and prioritise future product releases based on an
innovation roadmap; recognise speed is as important as the level of new differentiation.
4. Optimise cost position: Implement the plan to achieve efficiencies cost targets in partnership with the supply base.
5. Leverage service as a differentiator: Further develop a separate service infrastructure to promote responsiveness, enhance long-
term relationships with customers and build a diversified, sustainable and profitable source of cash-flows.
6. Invest in talent: Invest to attract and retain top talent as the industry remains characterised by scarcity and competition for skills
and capabilities.
7. Seek creative partnerships: Opportunistically leverage partnerships to enhance the differentiated profile of the LIGHT platform.
8. Focus on sustainability: Integrate sustainability in a systematic way throughout the entire value chain and decision-making process
in order to truly influence the Company directions and build resilience.
70 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT 1. Drive proton
therapy
adoption
Our strategy to drive market adoption is built upon clinical programs – in partnerships with our customers – to
influence treatment approaches and establish loyalty across the patient and physician community. Our partnership
with the prestigious Cleveland Clinic to perform studies supporting the superiority of the LIGHT system against other
X-rays technologies together with the policy of the Cleveland Clinic to refer cancer patients to the Harley Street Proton
Therapy Centre illustrate this important facet of our strategy.
2. Adopt a
commercial
approach
based on local
mindset
Commercial approaches must be customised to each market and individual needs and constraints. Our approach is
therefore based on removing the silos arising from the conventional supplier/customer relationship and implementing
a joint risk/reward sharing policy as evidenced by the profit-sharing arrangements agreed with The London Clinic and
the Mediterranean Hospital.
3. Prioritise
and implement
innovation
Creativity is about unleashing the potential of new ideas, which is subjective and hard to measure. Because innovation
goes one step further and is completely measurable, our innovation approach is supported by a process-driven
framework articulated around key metrics (e.g., assessment of the market needs, impact on customer’s satisfaction,
financial impact for the Company, ability to execute within the right timeframe and resources, etc.) and is nurtured
by our CERN deep-rooted culture of pre-empting the necessary changes. Further details about our processes and
solutions to reap the right returns on investment are further outlined on pages 56 and 57.
4. Optimise cost
position
By installing a lean sigma discipline and business culture from the start, we have established the key foundations
enabling us to focus from the beginning on quality and cost control. This has required investment in our infrastructure
and Non-Recurring Engineering costs as we are approaching the final steps to introduce LIGHT to the market.
Such investments have been made following detailed optimisation studies with the view of streamlining processes,
reducing costs and future lead times. To do so, we are supported by a team with an in-depth experience in managing
complex cross-border manufacturing processes, which has consistently achieved demanding goals. Please refer to
pages 60 to 65 for further details.
5. Leverage
service as a
differentiator
Service engineers are key to increase the product quality and durability standards and create customer loyalty. They
can also act as independent sources of market intelligence. Under the leadership of Ed Lee, Chief Operating Officer of
Advanced Oncotherapy and former production and technical field service director at Optivus Proton Therapy, important
metrics (e.g., equipment uptime, maintenance costs, equipment operating costs, equipment life, spare parts inventory,
mean time to recovery (MTTR) targets, etc.) have been identified. Measures have been put in place to calibrate these
performance indicators against the data set gathered during the Verification and Validation process. A specific emphasis
has also been put on creating an effective and symbiotic relationship between the technical and the client servicing
teams, so that all the data gathered during the phase of assembly and conditioning is fully exploited, going forward.
6. Invest in
talent
Finding qualified executives for key operational roles is not without challenges, given the scarcity of talent and
increasing competition. We have implemented a policy combining incentives, training and recruitment programmes.
Keeping our innovation hub in Geneva, at close proximity to CERN and having a verification and validation site at
STFC are also central to our strategy.
7. Seek creative
partnerships
Staying at the forefront of innovation is predicated on our ability to leverage the versatility of the LIGHT platform and
deploy our technology in new markets. This can be done organically, but opportunistic partnerships – as exemplified
by our distribution partnership with Realcan – can help us achieve this goal more rapidly and efficiently.
8. Focus on
sustainability
Ensuring sustainability through the deployment of our technology is an important facet of our growth strategy. Further
information about the initiatives we implemented in 2020 are indicated on pages 20, 96 and 97.
ADVANCED ONCOTHERAPY PLC
71
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT Introduction to Advanced Oncotherapy
Why our commitment to patients?
What we do
How we do it
Mitigation:
The Group utilises internal specialists in regulatory affairs who
consult with other external experts to ensure that processes
meet current regulatory, health and safety requirements. The
Group regularly reviews regulations changes through proactive
discussions with key industry officials, professional advisors and
regulatory bodies where appropriate. Furthermore, the Group
has a business and Group-wide compliance structure which is
continually assessed and trainings are provided to employees
on a wide range of topics, including good manufacturing practice
activities, quality control, legal policies including whistleblowing,
and anti-bribery and corruption. The Group is regularly audited
by regulatory authorities to ensure compliance with relevant
legislation and contractual obligations and acts to address any
recommendations.
3. ABILITY TO SELL EFFECTIVELY
Description:
The Group’s brand does not benefit from a longstanding history
in the marketplace. The process of winning major contracts is
typically protracted, and the Group operates in a competitive
environment.
Mitigation:
The Group has strengthened the management team to add
resources to the sales and marketing function. The commercial
arrangements announced in 2020 are based on a flexible
customer-centric approach. In 2021, the Group announced a
partnership with a specialised funding institution, with a view
to providing vendor financing and leasing arrangements and
support customers.
4. REPLICATION OF THE TECHNOLOGY
Description:
Whilst the business uses its own proprietary technology, a
competitor could attempt to replicate a linear proton accelerator
technology for medical use.
Mitigation:
The Group's focus on creating a linear-based turn-key system
requires a combination of technology and specialised skills
which is hard to replicate. The Group continually develops
its model to leverage the versatility of the technology, adding
further value to its clients and differentiating its service from
competitors. In addition, the Group's patent portfolio, the know-
how and the diversity of the required skills which are complex to
develop constitute a further barrier for new entrants. The Group
actively manages its IP, engaging with specialists to apply for
and defend IP rights in appropriate territories. A strong emphasis
is also placed on innovation in order to sustain a competitive
advantage.
5. INTRODUCTION OF NEW TREATMENT MODALITIES OR
COMPETING TECHNOLOGIES
Description:
The Group faces a threat to its LIGHT franchise from the
development of alternative cancer treatment modalities and
technologies by competitors. Competitive propositions could
erode the sales potential of LIGHT.
PRINCIPAL RISKS AND
RISK MANAGEMENT
The principal risks and uncertainties facing the Group are
detailed below. Further risks not currently known or risks that
have been considered to be less material may also have an
adverse impact on the business.
1. EARLY STAGE OF OPERATIONS, PRODUCT LAUNCH
TIMELINES AND FUNDING REQUIREMENTS
Description:
The Group currently has no positive operating cash flow.
Product launch timelines are at risk of delay. There is a risk
therefore that it could take longer than presently expected by
the Directors. If such delays occur the Group may require further
working capital. This means that the Group faces uncertainties
in its cash flow until the installed base is large enough.
Mitigation:
The Group has successfully advanced the LIGHT technology
for several years, including securing research collaborations
and sale contracts. The Group employs tight cost controls
across the business and has raised £100 million equity between
December 2017 and December 2020. It continually monitors
opportunities which provide financing flexibility in order to
deliver on its strategic priorities. The Group also prepares short
term and medium cash flows to ensure that the business has
adequate funding to execute its business strategy. The Directors
shall seek to minimise the risk of delays by careful management
of projects by working with accredited experts, suppliers and
building companies.
2. LEGAL, REGULATORY AND COMPLIANCE ISSUES
Description:
The Group operates in a highly regulated environment and will
need to obtain various regulatory approvals. These regulations,
including the time required for regulatory review, vary from
country to country and can be lengthy, expensive, and uncertain.
Regulatory and law changes can occur, impacting the approval
process of new technical features as well as the key health,
safety and regulatory requirements needed for installing and
operating a LIGHT System. Failure to proactively identify and
comply with industry laws and medical regulatory aspects could
result in fines, penalties, business disruption, reduced revenue,
and/or potential exclusion from tender processes.
72 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORT Mitigation:
The Group closely monitors the competitive landscape in key
markets. The Group believes that any emerging technology
validates the unmet need for a cancer radiation treatment
modality which decreases the toxicity to surrounding organs
at risk. The Group takes pride in the fact that the uniquely
small size of its beam make LIGHT particularly relevant for
the clinical studies investigating FLASH, LEAP, the mini-beam.
Furthermore, the Group notes that an increasing number of
innovations could be used in combination with radiation, such
as immunotherapy. Such innovations are therefore perceived as
an opportunity rather than a threat.
6. BREXIT AND COVID-19 RISK
Description:
The Group’s structure across the UK, Europe and the US,
increases its exposure to adverse local political decisions
and economic events impacting the medical industry and the
Company. There is a risk that possible changes resulting from
the Brexit or from the Covid-19 outbreak could lead to additional
barriers to trade and regulatory divergence which could
adversely affect the Group. The longer-term effects of Brexit
and Covid-19 are difficult to predict, but could include financial
instability and slower economic growth or economic downturn in
the UK, Europe and/or the global economy.
Mitigation:
The Group mitigates this risk by having an increasingly broad
offering, service and geographical range, limiting the impact
of events in any single territory. The Group also takes into
account political risk when assessing new contracts or product
acquisitions. The Group will continue to monitor the Brexit and
Covid-19 situations and assess the impact on the Group’s ability
to access capital in the UK.
7. HIRING AND RETAINING TALENTS
Description:
The success and future growth of the Group is in part dependent
on the continued performance and delivery of the Directors and
key employees. The Group operates in a highly specialised field
where there is strong competition for required skills and talent.
Key personnel leaving the Group could lead to a short-term
reduced capacity to service client projects.
Mitigation:
The Group seeks to recruit talent on a continuous basis and
has built a network of contracted specialists who can provide
additional resource when required. In order to attract the best
talent, the Group offers competitive packages to its staff which
includes a share option scheme, private medical insurance
and flexible working. The Group has appropriate remuneration
packages to help retain key employees. The Group provides
significant opportunities
learning, development and
leadership training. In addition, all permanent employees are
given the opportunity to become shareholders of the Group.
for
8. RELIANCE ON THIRD PARTIES
Description:
The business model for the Group anticipates that it will have
limited internal resources over the next few years and that it will use
third party providers wherever possible to conduct the research,
development, registration, manufacture, marketing and sales of
its proposed products. The commercial success of the Group’s
products will depend upon the performance of these third parties.
Mitigation:
The Group seeks experts in the areas where it utilises
outsourcing. Wherever possible, the Group seeks to have
duplicate suppliers to lessen the reliance on a particular vendor.
9. MANUFACTURING
Description:
There can be no assurance that the Group’s proposed LIGHT
systems will be capable of being manufactured in commercial
quantities, in compliance with regulatory requirements and
at an acceptable cost. The Group intends to outsource the
manufacture of components of LIGHT and, as such, will be
wholly dependent upon third parties for the provision of adequate
material supplies. Those are available from a limited number of
suppliers and there can be no assurance that adequate supplies
at acceptable cost can be obtained.
Mitigation:
The Group mitigates this risk by retaining its own assembly
site, entirely dedicated to the assembly of LIGHT systems.
Furthermore, the Group outsources production to trusted
manufacturing and global partners which the Group assesses
regularly. The Group also has
industry-leading quality
management systems and audits supply partners where
appropriate. The Group also intends to maintain appropriate
stock levels of its key parts of LIGHT, with a focus on long-lead
items, allowing to better serve clients’ needs.
10. SYSTEMS AND INFRASTRUCTURE
Description:
The Group is dependent on its IT technical infrastructure and
systems for the management of its core operations and research
and development programmes. The Group’s dependence
on technology in its day-to-day business means that systems
failure would have a high impact on the operations.
Mitigation:
Continuity of access to data and integrity of data is maintained
through the implementation of a system of data storage, offsite
backup and monitoring of key coding and modelling data.
In 2020, the Group invested further in servers dedicated to
highspeed computation which has significantly reduced the time
required to complete complex simulations.
11. FOREIGN EXCHANGE
Description:
The Group has significant operations and activities outside the
UK where the Group is listed and outside Switzerland where
its engineering and development team is located. The Group is
therefore exposed to foreign exchange risk.
Mitigation:
The Group reduces its exposure to currency fluctuation on
translation by having a diversified base of multi-currency
accounts, creating a natural financial hedge. The Group does
not issue or use financial instruments of a speculative nature
and the Group’s treasury function does not act as a profit centre.
ADVANCED ONCOTHERAPY PLC
73
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORT TO OUR SHAREHOLDERS
STRATEGIC REPORT
7474 ANNUAL REPORT 2020
ANNUAL REPORT 2020 GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
THE TEAM
Board of Directors
The Executive Team
Medical Advisors
CORPORATE GOVERNANCE REPORT
STATEMENT OF DIRECTORS' RESPONSIBILITIES
AUDIT COMMITTEE REPORT
REMUNERATION COMMITTEE REPORT
SECTION 172 STATEMENT
GROUP DIRECTORS' REPORT
INDEPENDENT AUDITOR’S REPORT
76
78
80
82
88
90
92
96
98
102
ADVANCED ONCOTHERAPY PLC
7575
ADVANCED ONCOTHERAPY PLC
BOARD OF DIRECTORS
As a Board we have collective responsibility for the long-term success of Advanced Oncotherapy and are
accountable to all stakeholders of the Company.
1
2
4
3
5
7
6
8
9
1
•
Dr Michael Sinclair, Executive Chairman
• Mr. Michael Bradfield, Non-Executive Director
2
• Mr. Hans von Celsing, Non-Executive Director
3
• Mrs. Lori Cross, Non-Executive Director
4
5
•
Prof. Steve Myers, OBE, Executive Director and
ADAM Executive Chairman
6
•
Dr. Nick Plowman, Non-Executive Director and
Chairman, Medical Advisory
• Mr. Nicolas Serandour, Chief Executive Officer
7
8
•
Dr. Enrico Vanni, Non-Executive Director
• Mrs. Renhua Zhang, Non-Executive Director
9
7676 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 The Team
Corporate Governance Report
Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
Dr. Michael Sinclair
Executive Chairman
C
Mrs. Lori Cross
Non-Executive Director
E
Appointed to the Board since 2006. MB, BS in
Medicine and physiology.
KEY SKILLS AND COMPETENCIES
Michael brings significant financial, healthcare and
international experience to the Board, gained from his
long career with hospital and healthcare institutions.
CURRENT EXTERNAL APPOINTMENTS
Trustee of The London Clinic; Non-Executive
Chairman of Symthera Inc; Board member of Opiant
and various educational non-profit organisations.
PREVIOUS EXPERIENCE
Michael was the founder and former CEO of Nestor
Healthcare and Allied Medical Group Limited. He was
chairman and founder of Lifetime Corporation Inc. and
US based Atlantic Medical Management LLP. Former
member of the Board of Overseers of Tufts University
Medical School.
Mr. Michael Bradfield
Non-Executive Director
A R
Appointed to the Board in 2013. On the audit and
remuneration committees. Michael has a law degree
from LSE.
KEY SKILLS AND COMPETENCIES
Michael has significant experience in marketing,
insurance and corporate leadership.
CURRENT EXTERNAL APPOINTMENTS
Chairman of Fairford Medical Ltd, Fairford Medical
Services Ltd, Health Imaging Solutions Ltd and
Quest Medical UK Ltd, all active in the Diagnostic
Medical Imaging field; on the board of Stockgain
Asset Management, Henstridge Properties Ltd, the
Vail Foundation, the Covenant & Conversation Trust
(registered charity).
PREVIOUS EXPERIENCE
Michael is the founder and former CEO of Hospital
Plan Insurance Services, a company sold to AIG
in 2000. He was previously Chairman and CEO of
Acacia Asset Management Ltd, Hamilton Capital
Management Ltd and Acacia Trust Ltd
Mr. Hans von Celsing
Non-Executive Director
A R
E
Appointed to the Board in 2017. On the audit and
remuneration committees. MBA from Harvard School
of Economics.
KEY SKILLS AND COMPETENCIES
Hans brings over 35 years’ experience to the Board with a
particular focus on radiation therapy, medical innovation,
product launches as well as corporate governance.
CURRENT EXTERNAL APPOINTMENTS
CEO of Plasma Surgical; Executive Chairman of
Clinical Laser Thermia Systems AB; chairman of
Gelexir Healthcare Ltd, Peptonic Medical and Partner
Fondkommission AB; part-time consultant at Berkshire
Investment Management.
PREVIOUS EXPERIENCE
Hans was an Adviser to Mevion Medical Systems
for eight years and supported their international
expansion in Europe and Asia. He joined Elekta, as
Executive Vice President, in its early stages in 1985.
Both Elekta and Mevion are active in the Radiation
Oncology Technology market.
Appointed to the Board in 2020. BS in Biomedical
Engineering, MBA and Masters of Engineering
Biomedical Systems.
KEY SKILLS AND COMPETENCIES
Lori has a wealth of experience in building and
transforming leading global organisations, specialising
in Medical Technology and Life Sciences. She also has
extensive experience in strategic innovation, operational
scale-up/execution, and leadership development.
CURRENT EXTERNAL APPOINTMENTS
President and founder of MindSpan Consulting; Board
member of Fastems and Electrosonic.
PREVIOUS EXPERIENCE
Lori has successfully designed and commercialised
numerous, disruptive healthcare business models, with
executive positions at VIASYS Healthcare (acquired by
Cardinal Health), Instrumentarium/GE Medical Systems,
Smith & Nephew and Baxter Edwards Laboratories.
Prof. Steve Myers
Executive Director and ADAM Executive Chairman
Appointed to the Board in 2015. Honorary Member of
the European Physical Society and of the Royal Irish
Academy.
KEY SKILLS AND COMPETENCIES
Steve – as a world-class expert in accelerator physics
– brings extensive experience of working on complex
physics projects, particularly relating to engineering,
innovation and project management.
CURRENT EXTERNAL APPOINTMENTS
n.a.
PREVIOUS EXPERIENCE
At CERN since 1972, Steve was leader of the
Accelerator and beams Division from 2000 until 2009.
In 2009 he was nominated fora five-year mandate
as the Director of Accelerators and Technology (with
special emphasis on the LHC). He then led the CERN
Medical Applications Initiative from 2014 until 2016.
Steve has been awarded (2003 London) the IOP
Duddell (renamed Gabor in 2008) medal and Prize.
He has also received the lifetime achievement award
(2010 Kyoto) from the Internal Particle Accelerators
Committee and shared the EPS Edison Volta Prize
(2012 Milan and Strasbourg) and the Prince of
Asturias Prize of Spain (2013 Oviedo).
Dr. Nick Plowman
Non-Executive Director
Appointed to the Board in 2017. Chairman of the
Advanced Oncotherapy Medical Advisory Board since
2013. MA, MD, FRCP, FRCR.
KEY SKILLS AND COMPETENCIES
Nick brings an unprecedented depth of clinical
experience in both paediatric and adult oncology to the
Board. As a leader amongst clinicians, Nick has a wealth
of insight which is invaluable in the deployment of LIGHT.
CURRENT EXTERNAL APPOINTMENTS
Senior Clinical Oncologist
to St Bartholomew's
Hospital and The Hospital for Sick Children Great
Ormond Street, London.
the Board
Mr. Nicolas Serandour
Chief Executive Officer
Joined
in September 2014. Nicolas
previously held the roles of Group Finance Director
and Chief Operating Officer. He assumed the role of
CEO in October 2016. Management school (ESSEC)
and post-degree master in risk management.
KEY SKILLS AND COMPETENCIES
Nicolas has extensive financial management and advisory
experience in the healthcare and banking industry with
general operational management experience.
CURRENT EXTERNAL APPOINTMENTS
None.
PREVIOUS EXPERIENCE
Nicolas is a former advisor at Lazard, Lehman
Brothers and JPMorgan where he provided strategic
and financial advice to healthcare companies.
Dr. Enrico Vanni
Non-Executive Director
A R
Appointed to the Board in 2013. On the audit and
remuneration committees. PhD and post-doctoral
experience in chemistry.
KEY SKILLS AND COMPETENCIES
Henri brings extensive advisory and consulting
experience, especially on advising boards on strategic
healthcare transformation and governance matters.
CURRENT EXTERNAL APPOINTMENTS
Vice-chairman of Novartis and Board member of
Lombard Odier & Cie SA.
PREVIOUS EXPERIENCE
Henri began his career as a research engineer at
IBM in the US. He later joined McKinsey & Co. in
Switzerland, where he managed the Geneva office
and led the firm’s European pharmaceutical practice.
Since retiring in 2007, Henri has continued to support
leaders of pharmaceutical and biotechnology
companies on core strategic challenges facing the
healthcare industry. Former director of Eclosion2 SA,
Alcon Inc. and Actavis Plc.
Mrs. Renhua Zhang
E
Non-Executive Director
Appointed to the Board in 2018.
KEY SKILLS AND COMPETENCIES
Renhua brings strong business and operational
experience across the healthcare market, with a
particular focus on China.
CURRENT EXTERNAL APPOINTMENTS
Co-Founder, CEO, and Vice Chairman of the Board of
Realcan Pharmaceutical; supervisor at the Shandong
Ruixiang Dental; supervisor at Shandong Chengen
Invst. Co., Ltd; director and General Manager at
Shandong Realcan Pharmaceutical Distribution Co.,
Ltd; executive director at Yantai Ruiyou Invst. Co., Ltd.
PREVIOUS EXPERIENCE
Renhua was the former Director of Nursing for
one of China’s leading regional Hospital Systems;
she graduated in Business Administration from the
Shandong Television Broadcast University.
PREVIOUS EXPERIENCE
Nick has a long-term interest in advances in the
radiotherapeutic methods to treat prostate cancer and
brain- and body-focussed radiotherapy techniques. He
wrote over 300 research papers in radiotherapy and
clinical oncology.
A
R
E
C
Member of the Audit Committee
Member of the Remuneration Committee
Member of the ESG Committee
Chairman
ADVANCED ONCOTHERAPY PLC
7777
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC THE EXECUTIVE TEAM
The Executive Team provides input and recommendations to assist the Chief Executive Officer in the day-to-day
management of the business and its operations. Team members combine experience and expertise across a range
of disciplines.
1
2
4
7
3
5
8
10
6
9
11
1
•
Dr. Michel Baelen, Director, Regulatory Affairs
• Mr. Ed Lee, Chief Operating Officer, President Europe
7
• Mrs. Bridget Biggar, HR Director
2
• Mrs. Berengere Pons-Chabord, Senior Vice-
8
3
•
4
•
Dr. Jonathan Farr, Chief Clinical Officer
Dr. Manuel Gallas, Technical and Engineering Director
• Mrs. Louise Harley-Smeur, Senior Vice-President,
5
President, Corporate Finance
• Mr. Graham Pughe, Senior Vice-President, Accounting
9
• Mr. Benoit Raskin, Programme Director
10
Intellectual Property
• Mr. Julian Tokuta, Director, Supply Chain
11
• Mr. Moataz Karmalawy, Chief Commercial Officer,
6
President US
7878 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 The Team
Corporate Governance Report
Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
Dr. Michel Baelen
Director, Regulatory Affairs
Mrs. Louise Harley-Smeur
Senior Vice-President, Intellectual Property
Mr. Graham Pughe
Senior Vice-President, Accounting
•
• More than 19 years of experience in
Regulatory and Quality for proton therapy
Former Head of Regulatory Affairs
and Quality Assurance at IBA
Former Quality Coordinator at the
University Hospital Saint-Luc at the
Catholic University of Louvain
•
Mrs. Bridget Biggar
HR Director
•
Fellow of the UK Chartered Institute
of Personnel and Development
•
• Masters
in
Applied
Positive
Psychology from the University of
Pennsylvania
13
employer
years
representative on the Employment
Tribunal Board of England and
Wales; has been an HR Director in
various start-ups
an
as
Dr. Jonathan Farr
Chief Clinical Officer
More than 14 years of Radiation Physics
experience across USA and Europe
•
Former Chief of Radiation physics
and Associate Professor at St. Jude
Children's Research Hospital
Current Privat Dozent at University
of Essen-duisburg and chief medical
physicist at WPE
Author of many peer-reviewed
publications
in
proton, other particles and photon
radiotherapy
advances
on
•
•
Dr. Manuel Gallas
Technical and Engineering Director
•
than 10 years managing
tech product design and
of
innovation and R&D
• More
high
development, management
technology
across a broad area of expertise
Ph.D. in High Energy Physics and an
eMBA in Management of Technology,
Innovation, and Entrepreneurship
Fellow then Staff at CERN from 1999
to 2008 working on the PS-DIRAC
proton experiment and the ATLAS
Large Hadron Collider (LHC), Higgs-
searching experiment
•
•
European Patent Attorney and
Head of the Intellectual Property
Department
• Working in IP since 2001, half the
time working on medical inventions;
prior to that, during the 1990s, has
worked in UK hospitals as a medical
physicist, specialising in radiotherapy
and imaging
•
•
Seasoned finance professional with a
strong technical grounding within all
areas of the finance spectrum
Implemented robust and pragmatic
solutions
industries
for various
including newspaper publishing, food
manufacturing and building materials
Mr. Moataz Karmalawy
Chief Commercial Officer, President US
•
Former General Manager of the
Worldwide Particle Therapy Business
for Varian Medical Systems, the
world’s
largest manufacturer of
radiotherapy equipment
• Grew the order book of Varian to over
$1bn and achieved a 50% market
share of the global particle therapy
products market
Also worked at Philips Medical
Systems, Inc and won a performance
for quality &
excellence award
customer satisfaction industry wide
•
Mr. Ed Lee
Chief Operating Officer, President Europe
Mr. Benoit Raskin
Programme Director
• More than 20 years experience in
proton therapy as project manager
and director at IBA
Deep experience of site installation,
commissioning, contract acquisition
and customer acceptance
•
Mr. Julian Tokuta
Director, Supply Chain
• More than 20 years of professional
procurement experience at Proxima
Group and Accenture
Substantial
in
delivering supply chain strategies and
procurement excellence that address
unanticipated business challenges
achievements
•
•
•
29 years of experience in operations
and manufacturing
Former Production and Technical
Field Service Director at Optivus
Proton Therapy
• Manufacturing
operations
and
experience spanning
from high-
volume/low-mix to low-volume/high-
mix industries such as Automotive,
Aerospace,
Military/Defence,
Nuclear, and Medical Device
Mrs. Berengere Pons-Chabord
Senior Vice-President, Corporate Finance
•
•
•
in
Strong experience
financial
analysis, business planning and
Board/management reporting
Previously worked for Lazard as an
M&A Vice-President
Transaction experience covers a
wide range of private and public
transactions, including acquisitions,
divestitures, and more complex
structures
ADVANCED ONCOTHERAPY PLC
7979
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC MEDICAL ADVISORS
The medical advisory board comprises distinguished scientists and leaders of medical research and physics
institutions. It provides insight, scientific direction, and expertise to Advanced Oncotherapy’s leadership team.
1
2
3
4
5
1
•
2
•
3
•
4
•
5
•
Prof. Ugo Amaldi, Adviser
Dr. Jay Loeffler, MD, Adviser
Prof. Chris Nutting, Adviser
Dr. Margaret Spittle, OBE, Adviser
Dr. Euan Thomson, Adviser
8080 ANNUAL REPORT 2020
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Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
Prof. Ugo Amaldi
Adviser
Dr. Margaret Spittle, OBE
Adviser
•
•
•
•
Has been working at CERN since the 1970s; founded
the DELPHI Collaboration, at CERN’s LEP Accelerator:
established TERA, the Italian Foundation for Hadrontherapy
Led the design effort of the Italian National Centre of
Oncological Hadrontherapy (CNAO)
Awarded the Gold Medal for science and culture by the
President of the Republic of Italy
Appointed Fellow of the European Physics Society
Dr. Jay Loeffler, MD
Adviser
•
•
Herman Suit Professor of Radiation Oncology at Harvard
Medical School, Boston
Chair of the Department of Radiation Oncology at the
Massachusetts General Hospital, Boston
• Member of the Institute of Medicine of the National
•
Academies of Science
Prof. Chris Nutting
Adviser
• World leading consultant oncologist
•
Consultant clinical oncologist and chair at The Royal
Marsden and The Institute of Cancer Research London;
chairman of the National Advisory Board on Head and
Neck Cancer to the Cancer Services Collaborative
President of the British Oncological Association
•
•
Clinical oncologist at University College London Hospital
(UCLH) and consultant adviser in Radiation Medicine to
Royal Navy and the Ministry of Defence
• Member of the Nuclear Safety Committee and Medical
Adviser Board member to UK All Party Committee on
Breast Cancer
Dr. Euan Thomson
Adviser
•
Trained as a physicist; nearly 20 years of experience
in research, clinical practice, consulting and corporate
management and more than 14 years of experience as a
CEO
• Operating partner at Khosla Ventures; CEO of AliveCor;
Director of the Hospice of the Valley
Served as global lead of R&D, digital technology and
advanced innovation for J&J; previously the CEO of
Accuray for 10 years; consultant for other medical device
companies
including Varian Oncology Systems and
Radionics; has served as Chair of the California Division of
the Entrepreneur of the Year award
ADVANCED ONCOTHERAPY PLC
8181
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC CORPORATE GOVERNANCE REPORT
Good corporate governance is a prerequisite for a well-run company and this corporate governance report reflects
the new regulations which encourage transparency in governance reporting and enhance understanding of how
Advanced Oncotherapy is managed.
Business model
and strategy
Understanding
shareholder
needs and
expectations
Considering
wider stakeholder
and social
responsibilities
Risk
management
A well functioning
Board of
Directors
Appropriate skills
and experience
of the Directors
Evaluation
of Board
performance
Corporate culture
Maintenance
of governance
structures and
processes
Shareholder
communication
The underlying principle of the QCA code is that “the purpose
of good corporate governance is to ensure that the Company
is managed in an efficient, effective and entrepreneurial
manner for the benefit of all shareholders over the longer
term".
The Board of Directors of the Company fully endorses the
importance of corporate governance and has adopted The
Quoted Companies Alliance Corporate Governance Code
(2018) (the “QCA Code”), which they believe is the most
appropriate recognised governance code for a company of its
size with shares admitted to trading on the AIM market of the
London Stock Exchange. The Board considered that the QCA
Code provides the Company with the framework to help ensure
that a strong level of governance is maintained, enabling the
Company to embed the governance culture that exists within
the organisation as part of building a successful and sustainable
business for all its stakeholders.
The QCA Code has ten principles of corporate governance that
the Company has committed to apply within the foundations
of the business. Each principle is listed below together with an
explanation of how the Company applies or otherwise departs
from each of the principles. The Company is subject to the City
Code on Takeovers and Mergers.
DELIVER GROWTH
•
Establish a strategy and business model which promote
long-term value for shareholders;
Seek to understand and meet shareholder needs and
expectations;
Take into account wider stakeholder and social responsibilities
and their implications for long-term success; and
Embed effective risk management, considering both
•
•
•
opportunities and threats, throughout the organisation.
MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK
• Maintain the Board as a well-functioning balanced team led
•
•
•
by the Chair;
Ensure that between them the Directors have the necessary
up to date experience, skills and capabilities;
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement;
Promote a corporate culture that is based on ethical values
and behaviours; and
• Maintain governance structures and processes that are
fit for purpose and support good decision-making by the
Board.
BUILD TRUST
•
Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders
and other relevant stakeholders.
PRINCIPLE ONE – BUSINESS MODEL AND STRATEGY
The Group’s strategy is explained within the previous Strategic
Report section, on pages 70 to 71. It intends to invest for growth
in the following areas:
•
provide a turn-key solution that delivers the best outcome
for patients by bundling the LIGHT technology with
complementary services, including training, maintenance,
financing, and building development and installation;
build on the LIGHT technology to make the treatment more
affordable for patients whilst optimising the financial returns
of the operators;
ensure the Company builds the right network and
capabilities to deliver its fast-growing pipeline in a way
that aligns the interest of all stakeholders of Advanced
Oncotherapy;
•
•
8282 ANNUAL REPORT 2020
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Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
•
plan and produce a series of product releases with
continued technical and medical upgrades through a strong
commitment to maintain an active R&D effort; and
• maintain brand awareness and reputation of the Group.
The key challenges to the business and how these are mitigated
are detailed on pages 72 and 73.
PRINCIPLE TWO – UNDERSTANDING SHAREHOLDER
NEEDS AND EXPECTATIONS
The Company communicates with its shareholders principally
via a Regulatory Information Service, its website, social media,
formal company meetings and periodic investor presentations.
An up-to-date information flow is maintained on the Company’s
website http://www.avoplc.com which contains all press
announcements, financial reports as well as operational
information on the Company’s activities.
Copies of the annual report (which includes the notice of the
AGM) are available to all shareholders and can be downloaded
from the investors section of the Company’s website. The Board
is keen to ensure that the voting decisions of shareholders
are reviewed and monitored and that approvals sought at
the Company’s AGM are as much as possible within the
recommended guidelines of the QCA Code. The results of the
resolutions put forward to the AGM are communicated to the
shareholders by way of RNS.
The Company’s management meets prospective and existing
investors from to time to time to update them on progress
made and to assess the availability of funding to advance the
Company’s plans.
The Company has recorded a number of media interviews
which are available to download on leading investor-focussed
websites and from the media section of the Company’s website.
The Company has established an email alert service on its
website to which shareholders and other interested parties can
subscribe to receive company announcements as and when they
wish (www.avoplc.com/en-gb/Investors/Investor-Alert-Service).
All contact details are included on the investor relations website.
–
THREE
CONSIDERING WIDER
PRINCIPLE
STAKEHOLDER AND SOCIAL RESPONSIBILITIES
The Company is aware of its corporate social responsibilities
and the need to maintain effective working relationships across
a wide range of stakeholder groups. This is evidenced and
underpinned by the vision and values of the Company, described
in pages 12 and 13 of the Strategic Report. The Company regards
its employees and their families, its partners, customers and its
shareholders to be the core of the wider stakeholder group. It is
the Group’s policy and practice to comply with health, safety and
environmental regulations and the requirements of the countries
in which it operates to protect its employees, partners, assets
and the environment. A range of processes and systems have
also been put in place to ensure that there is close oversight and
contact with these key resources and relationships.
Staff employed by the Group are based primarily in Switzerland
and the UK. As well as providing employees with appropriate
remuneration and other benefits, together with a safe working
importance of
environment,
the Board
recognises
the
communication with employees to motivate them and involve them
fully in the business. Staff are kept informed of major developments
from the Chief Executive Officer and are encouraged to discuss
these matters openly within the Company. Weekly updates are
also sent to the team and weekly and bi-weekly meetings are
also organised at each division’s level to ensure a constant flow
of information. Furthermore, a company-wide internal information
system shares information on key developments, enabling the
Company to efficiently fulfil customer requirements.
All employees of the Company participate in an annual
ROADMap assessment process which is designed to ensure
that there is an open and confidential dialogue with each person
in the Company to promote successful two-way communication
with agreement on goals, targets and aspirations of the employee
and the Company. These feedback processes help to ensure that
the Company can respond to new issues and opportunities that
arise to further the success of employees and the Company. The
Company has close ongoing relationships with a broad range of
its stakeholders and provides them with the opportunity to raise
issues and provide feedback to the Company.
Advanced Oncotherapy’s website was upgraded at the end of
2019 and in 2020, taking into account some of the comments
provided by shareholders. A corporate video has also been
produced and shown on the website following requests from
potential customers. Informal contact is promoted through use of
social media such as Facebook, Twitter, Linkedin and Yammer.
PRINCIPLE FOUR – RISK MANAGEMENT
Risk assessment and evaluation is an essential part of the
Company’s planning and control system. This is also critical
to safeguard the Company’s assets and enable it to meet
its strategic objectives. The Company operates in a highly
regulated environment and as such is necessarily subject to
stringent medical norms and regulation as well a rigorous health
and safety regime.
The Board has delegated the responsibility for reviewing and
monitoring the risk management systems to the Audit Committee,
which works closely with the management and reports back to
the Board. A key role of the Audit Committee is to manage rather
than eliminate the risk of failure to achieve business objectives;
therefore, it can only provide reasonable, but not absolute,
assurance against material misstatement or loss.
Information about the key risks to the business, and how
these are mitigated can be found on pages 72 and 73. This
is supplemented by a risk log updated internally by the
management team. The Board considers risks to the business
during Board meetings. The Company formally reviews and
documents the principal risks to the business at least annually.
The Executive Directors and the senior management team
meet on a regular basis to review ongoing performance, discuss
budgets and forecasts and new risks associated with ongoing
trading. The Audit Committee met three times during the year
ending 31st December 2020.
PRINCIPLE FIVE – A WELL FUNCTIONING BOARD OF
DIRECTORS
The Board currently comprises of six Non-Executive Directors
and three Executive Directors.
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The biographies on page 77 include further disclosures in
relation to the Directors, their relevant experience, skills and
personal qualities and capabilities.
Duties
The Board as a whole is collectively responsible for the success
of the Company and provides leadership of the Group within
the framework of effective controls, which enable risks to be
assessed and managed. It sets out the Group’s values and
standards and ensures that its obligations to shareholders and
other stakeholders are understood and met.
In accordance with the Companies Act 2006, the Board complies
with a duty to:
•
•
•
•
•
•
•
act within their powers;
promote the success of the Company;
exercise independent judgement;
exercise reasonable care, skill and diligence;
avoid conflicts of interest;
avoid benefits from third parties; and
declare any
interest
arrangement.
in a proposed
transaction or
Time Commitment
Executive Directors are expected to devote most of their time
to their duties with the Company. The Non-Executive Directors
devote considerable time to the Group beyond the programme
of Board and Board Committee meetings. Their activities
necessarily include further investigation of reports submitted
to them and discussion with the senior executives and other
subject matter experts, and extend to induction and training
to ensure they understand the business and are kept up to
date with emerging technology, regulations, and other matters
impacting the Group.
Independence
The Directors are mindful that a balance between Executive and
independent Non-Executive Directors should be maintained to
facilitate impartial and equitable decision making.
The individual members of the Board have equal responsibility
for the overall stewardship, management and performance of
the Group and for the approval of its long-term objectives and
strategic plans.
Whilst the Board recognises that having an Executive Chairman
is not considered best practice under the QCA Code, it feels
that the commitment, expertise, industry connections and
enthusiasm the Executive Chairman brings to the role offset
this. The role of the Chairman is reviewed periodically by the
Board.
The current division of responsibilities between the Executive
Chairman and Chief Executive Officer have each been agreed
by the Board. Dr Michael Sinclair, the Executive Chairman, is
responsible for the running of the Board. Nicolas Serandour, the
Chief Executive Officer, has executive responsibility for running
the Group’s business and implementing its strategy.
All Non-Executive Directors serving at the year-end bring an
independent judgement. The Board does not consider the
shareholdings of the Non-Executive Directors as detailed
8484 ANNUAL REPORT 2020
on page 99 to have any effect on their independence. The
Executive Chairman and other Non-Executive Directors have
other directorships, which are not deemed to conflict with the
business of the Company.
Attendance
The Board met seven times in 2020, excluding separate ad-hoc
meetings and calls. It has established an Audit Committee and
a Remuneration Committee, the particulars of which appear
hereafter. The record of each Director’s attendance at Board
meetings is set out below.
Directors who were unable to attend specific meetings reviewed
the relevant papers and provided their comments to the
Executive Chairman of the Board or Committee. Any Director
who misses a meeting receives, as a matter of course, the
minutes of that meeting for reference.
Scheduled
Board
meetings
Ad hoc
Board
meetings2
Audit and
Remuneration
Committees
Director
Dr. Michael Sinclair
Mr. Michael Bradfield
Mr. Hans von Celsing
Mrs. Lori Cross
Prof. Steve Myers, OBE
Dr. Nick Plowman
Mr. Nicolas Serandour
Dr. Enrico Vanni
7/7
6/7
7/7
1/1
7/7
4/7
7/7
7/7
Mrs. Renhua Zhang
2/71
5
5
5
1
4
4
5
5
1
4
7
5
1 Mr Chunlin Han attended board meetings when Ms Renhua Zhang
has been unable to attend meetings
2 Where often only a quorum is necessary
Company Secretary
All Directors have access to the advice and services of the
Company Secretary, Henry Clarke, who is responsible for
ensuring that the Board procedures are followed, and that
applicable rules and regulations are complied with.
Access to Information
Guidelines are in place concerning the content, presentation and
timely delivery of papers by management to Directors for each
Board meeting so that the Directors have enough information
to be properly briefed. Where issues arise at Board meetings,
the Executive Chairman ensures that all Directors are properly
briefed and, when necessary, appropriate further enquiries are
made.
In addition, the Board keeps abreast of ongoing changes relating
to governance and compliance, the AIM Rules for Companies,
QCA Code, the Market Abuse Regulation and other statutory
and regulatory developments. In that regards, all Directors
have access to the Company’s NOMAD, Company Secretary,
lawyers and auditors and are able to obtain advice from other
external bodies as and when required, at the Company’s
expense. Details of the Company’s advisors can be found on
the website and on page 152 of the annual report.
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Services and Re-election
All Executive Directors have service agreements with the Group
terminable by either party upon the minimum notice period being
met. The notice period is 24 months for Dr. Michael Sinclair
and Nicolas Serandour and six months for Prof. Steve Myers.
Non-Executive Directors are initially appointed for a three-year
term, but their appointment is terminable by either party on three
months’ written notice. The letters of appointment of all Directors
are available for inspection at the Company's registered office
during normal business hours.
Executive Directors
Dr. Michael Sinclair
Mr. Nicolas Serandour
Prof. Steve Myers, OBE
Non-Executive Directors
Mr. Michael Bradfield
Mr. Hans von Celsing
Mrs. Lori Cross
Dr. Nick Plowman
Dr. Enrico Vanni
Mrs. Renhua Zhang
Date of Appointment
16th June 2006
27th August 2014
26th January 2017
26th April 2013
26th January 2017
29th September 2020
9th February 2017
1st October 2013
28th August 2018
Executive and Non-Executive Directors retire by rotation in
accordance with the Company’s Articles of Association which
prescribe that at every Annual General Meeting one third of the
Directors shall retire from office. However, to underline their
accountability to shareholders and the Board's commitment to
appropriate corporate governance, each Director will stand for
re-election at the upcoming AGM. The Board has concluded that
each Director is eligible for re-election. The Executive Chairman
and the Chief Executive Officer evaluate succession planning
at the Board level and will discuss this with the Non-Executive
Directors as appropriate.
New Appointments
When a new appointment to the Board is made or a removal
is being considered, thought is given to the particular skills,
knowledge and experience that could be of benefit to the Board.
In the case of a new appointment, a formal process is then
undertaken, which may involve external recruitment agencies,
with appropriate consideration being given, in regard to Executive
appointments, to internal and external candidates. Before
undertaking the appointment of a Non-Executive Director, the
Executive Chairman establishes that the prospective Director
can give the time and commitment necessary to fulfil his/her
duties, in terms of availability both to prepare for and attend
meetings and to discuss matters at other times.
Share Dealing
The Company has established a Group share dealing code
which complies with all applicable legislation and which is
in accordance with the requirements of the Market Abuse
Regulation which came into effect in 2016. All the Directors of
the Group understand the importance of compliance with the
Code. At every Board meeting, Directors are reminded whether
they are allowed to trade shares of the Company.
PRINCIPLE SIX – APPROPRIATE SKILLS AND
is dedicated
EXPERIENCE OF THE DIRECTORS
Diversity
The Company embraces diversity and
to
encouraging inclusion without compromising professionalism,
experience and expertise. This is reflected in the composition of
the Board who has significant industry, financial, public markets
and governance experience and who possesses the necessary
mix of experience, skills, personal qualities and capabilities
to deliver the strategy of the Company for the benefit of the
shareholders over the medium to long-term. One-third of the
Non-Executive Directors are female.
Skills and Experience
The Board recognises the importance of having a balanced and
diversified set of skills and experience which reflect the current
maturity of the Company as well as its growth prospects. In that
respect, in September 2020, the Board appointed Lori Cross
who brings over 35 years of experience in commercialising
disruptive MedTech innovations and a wealth of experience in
the US, a key market for the Company.
Further information regarding each current Director’s experience,
skills and capabilities is summarised below.
Director
Dr Michael Sinclair
Mr. Michael Bradfield
Mr. Hans von Celsing
Mrs. Lori Cross
Prof. Steve Myers
Dr. Nick Plowman
Mr. Nicolas Serandour
Dr. Enrico Vanni
Mrs. Renhua Zhang
CEO
Experi-
ence
•
•
n.a
n.a
n.a
•
•
Finance Strategy
Remu-
neration
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Health-
care and
Engi-
neering
•
•
•
•
•
•
•
•
•
HR /
people
•
•
•
•
•
•
•
•
PRINCIPLE SEVEN – EVALUATION OF BOARD
PERFORMANCE
This year the Board conducted a Board Effectiveness review
under the auspices of the Senior Independent Director Hans von
Celsing and Non-Executive Director Lori Cross, assisted by the
Company Secretary. The Board was surveyed in May 2021. The
Board is considering the findings of the review and formulating
responses. As part of this process, a policy for board effectiveness
reviews for future years was developed to align with the strategic
governance needs of the Company. As the Board is keen to
continuously develop its corporate governance, the work will
be continued under the Environmental, Social and Governance
sub-committee of the Board that was established in May 2021.
The members include Hans von Celsing, Lori Cross and Renhua
Zhang, with the Company Secretary.
PRINCIPLE EIGHT – CORPORATE CULTURE
The Board firmly believes that sustained success will best
be achieved by adhering to a corporate culture of treating all
stakeholders fairly and with respect. Accordingly, in dealing with
each of the Company’s principal stakeholders, the Company is
guided by its values of life, safety, quality and innovation. Pages
12 and 13 of the Strategic Report further details these ethical
ADVANCED ONCOTHERAPY PLC
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CORPORATE GOVERNANCE REPORT _Continued
values. The Board places great emphasis on this aspect of
corporate life and seeks to ensure that this flows through all that
the Company does.
Openness and Well-being
The Company takes the welfare of all its employees extremely
seriously and continues to invest in its people, who are encouraged
to develop and grow with the business. Advanced Oncotherapy
strives to continually improve the working environment and
benefits of its people. It prides itself on its inclusive culture and
team spirit, and in operating in a fair and sustainable manner
whilst management encourages the staff to operate in an honest
and respectful manner. This is done by listening to and actioning
feedback given during its ROADMap process (performance
management conversations), and internal HR channels, with
immediate attention paid to any concerns raised. The Company
is continually improving the support provided to managers to help
ensure that they are actively listening and valuing their teams.
The Company's commitment to staff is shown in the significant
investment made to upgrade facilities and the working environment.
During the Covid-19 pandemic, the Company has also increased
communication and support to all staff with frequent updates about
the local situation and measures taken to keep everyone safe. The
Company has invested in the training of the HR team to become
mental health first aiders to support the increased levels of stress
and anxiety some are facing in the light of Covid-19.
Anti-Bribery and Corruption
All staff and Directors are bound by the Company's Anti Bribery
and Corruption policies. The Company has a zero-tolerance
approach with its policies to protect the Company, its employees
and those third parties with which the business engages. These
policies are provided to staff upon joining the business to ensure
that everyone within the business is aware of the importance of
all dealings within the Company being carried out with the highest
integrity. All policies are regularly reviewed and compliance
training is given. Each employee is required to sign an agreement
to confirm that they understand and will comply with the policies.
Diversity
The Board believes it is crucial for the success of the Company
to have a diverse workforce comprised of individuals with
different ideas, strengths, interests and backgrounds. It sees
a great benefit in the diversity of employees, as this helps the
Company to better fulfil the wishes and multi-faceted demands
of customers around the world and provides a higher-performing
workplace. The Company strives to create an environment
where all employees are heard and appreciated – regardless
of gender, nationality, ethnic origin, religion, world view, abilities,
age, sexual orientation or identity.
The Board believes in mixed leadership teams as a competitive
advantage and driver of success. By the end of 2020, the Company
had recorded a total of 26% of women globally. The Group applies
fair and equitable employment policies, and these ensure that
entry into, and progression within, the Group is determined solely
by the fair application of relevant job criteria and by personal ability
and competence. The Company actively promotes the career
development of its employees. Full and fair consideration (having
regard to the person's particular aptitudes and abilities) is given to
applications for employment and the career development of disabled
persons. The Group will take all practicable steps to ensure that if an
employee becomes disabled during the time they are employed, their
employment can continue. It continues to review both performance
and potential as a key part of its annual performance management,
career development and succession planning processes. Diversity
is at the heart of the Group culture, which is characterised by a
meritocratic and collaborative ethos. 26 different nationalities are
represented in the Group as of 31st December 2020.
Whistleblowing Procedures
The Company’s management structure emphasises short
reporting lines, encouraging its staff to realise their full potential,
as well as to raise issues and concerns with senior managers
and Directors. In addition, the Group operates a whistleblowing
policy which allows all employees to raise concerns to senior
management in strict confidence about any unethical business
practices, fraud, misconduct or wrongdoing.
PRINCIPLE NINE – MAINTENANCE OF GOVERNANCE
STRUCTURES AND PROCESSES
The Board retains full and effective control over the Company
and holds regular Board meetings at which financial, operational
and other reports are considered and where appropriate voted
upon. It has ultimate accountability for good governance and
is responsible for monitoring the activities of the management
team. The Board is responsible for the Company’s strategy and
key financial and compliance issues.
The Board has a schedule of matters specifically reserved for its
approval. These matters are delegated to the Board Committees,
Executive Directors, executive management team and senior
management where appropriate. The schedule of matters reserved
for the Board can be found on the website www.avoplc.com.
The Board is satisfied that the Company’s governance structures
and processes are consistent with its current size and complexity.
The current structure enables the retention of key skill-sets within
the Company whilst facilitating the enhancement of the senior
management base and the continuing development of the Board
and the management in line with the QCA Code's key principles. As
the Company grows, the Directors will ensure that the governance
framework is reviewed and appropriately updated to support the
development of the business. The Company continues to look
at how to best improve its corporate governance; and as a fast-
growing company Advanced Oncotherapy is constantly looking for
ways to strengthen its Board, whilst ensuring that the business is
led by people with the right experience, passion and enthusiasm.
There are three Board committees – Audit, Remuneration and
ESG Committees. The roles and responsibilities of each are
detailed below. The terms of reference of the Audit Committee
and the Remuneration Committee are set out on the Company’s
website. All Board Committees report back to the Board following
a Committee meeting.
Audit Committee
The Board is required to establish formal and transparent
arrangements for considering how it should apply required
financial reporting standards and internal control principles. The
Board is also responsible for maintaining appropriate independent
relationships with the Group's external auditors, RPG Crouch
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The Team
Corporate Governance Report
Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
Chapman LLP. As a result, a sub-committee of the Board – the
Audit Committee – exists to scrutinise and clarify any qualifications,
recommendations and observations within the audited accounts
and report of the Group's auditors. The Audit Committee is also
responsible for reviewing the effectiveness of the Company’s
internal controls and risk management systems as well as assisting
with the Board’s oversight of the independence and performance
of the Company’s Auditor, in all cases having due regard to the
interests of shareholders. When satisfied, the Audit Committee
presents the audited accounts and report to the Board and reviews
the effectiveness of resultant corrective and preventative measures.
Hans von Celsing is currently the Chairman of the Audit Committee.
Dr. Enrico Vanni and Michael Bradfield, both Non-Executive
Directors, are the other members of the Audit Committee. The
composition of the Audit Committee is reviewed on an annual
basis to ensure that it is comprised of members with skills and
competences relevant to the radiotherapy equipment sector and
with financial experience. The biographies of all the members of
the Audit Committee are on page 77 and show that the members
of the Audit Committee have gained a combination of financial,
investment and other relevant experience throughout their careers,
which satisfies the provisions of the Quoted Company Alliance
("QCA") Code. The Audit Committee may invite representatives of
the management team and other Directors to attend the meetings
as appropriate. The Chairman of the Audit Committee maintains
dialogue with them outside of the scheduled meetings and meets
with the auditors without the presence of Executive Directors and
members of the finance team.
The Audit Committee met three times in 2020. Matters
considered at these meetings included:
•
reviewing and approving the annual report and financial
statements for the year and half-year end;
recommending to the Board on the appointment of auditors
and confirmation of their independence, scope for audit
work, remuneration and effectiveness;
considering the reports from the external auditors identifying
any accounting or judgemental issues requiring the Board’s
attention;
reviewing the Going Concern Statements presented in
the Annual Report, the supporting budgets, forecasts and
evidence as well as the performance evaluation process for
the Audit Committee;
reviewing and approving the group’s tax strategy; and
considering the adequacy of the whistle-blowing policy,
the anti-bribery training and monitoring as well as the data
protection policy and procedures.
•
•
•
•
•
Remuneration Committee
The Remuneration Committee reviews the performance of the
Executive Directors and senior executives and determines their
terms and conditions of service, including their remuneration and
the grant of share awards, having due regard to the interests of
shareholders. The Remuneration Committee reviews individual
performance to ensure that targets are both challenging and
closely linked to the Group’s strategic priorities.
The level of remuneration of the Directors is set out in the Group’s
Remuneration Report on pages 92 to 94. It is a rule of the
Remuneration Committee that a Director shall not participate in
discussions or decisions concerning his/her own remuneration.
The chairman of the Remuneration Committee is Hans von
Celsing(1). Dr. Enrico Vanni and Michael Bradfield, both Non-
Executive Directors, are the other members of the Remuneration
Committee.
The Remuneration Committee met four times in 2020.
ESG Committee
Post year-end, the Company established a new Board sub-
committee created to focus on Environmental, Social and
Corporate Governance (“ESG”) matters and instructions for the
ESG Committee were adopted in May 2021. In the midst of the
COVID-19 crisis, we believe that the importance of environmental,
social and governance analysis has been reinforced.
Members include Lori Cross, Renhua Zhang and Hans Von Celsing.
The committee ensures that the Company has an Environmental,
Social and Governance Strategy (the “ESG Strategy”) and that it
remains fit for purpose, that short and long term objectives for the
Company’s ESG Strategy are in place and that key metrics are
reported on, and that all related policies are regularly reviewed and
updated and remain in compliance with any relevant national and
international regulations.
PRINCIPLE TEN – SHAREHOLDER COMMUNICATION
The importance of engaging with shareholders underpins the
essence of the business. Therefore the Company ensures that
there are numerous opportunities for investors to engage with
both the Board and executive team.
The Board places a high priority on transparent and effective
communications with shareholders. As an AIM listed company
there is a need to provide fair and balanced information in a way that
is understandable to all stakeholders. The Board recognises the
importance of engaging with all stakeholders including employees,
investors, partners, suppliers, media and communities.
The primary communication tool with shareholders is the
Company’s website, https://www.avoplc.com. The shareholders
are also kept up to date through Regulatory News Service,
(“RNS”) on regulatory matters and matters of material substance.
The Company reports formally to its shareholders and the
market twice each year with the release of its interim and full
year results. The full year results are audited by an external firm
of auditors with the interim statement usually subject to a review
by the same external auditors. These reports contain full details
of all the principal events of the relevant period together with an
assessment of current trading and future prospects. The interim
report and other investor presentations are also available on
the website. The Company has full electronic communications
in place, so that shareholders (unless they elect otherwise) will
have access to communications through the Company’s website.
Upon conclusion of Shareholder meetings arrangements are
made that the outcomes of votes cast by shareholders to be
disclosed in a clear and transparent manner. If a significant
proportion of votes (20%+) was ever cast against a resolution,
the Company would provide, on a timely basis, an explanation of
what actions it intends to take to understand the reasons behind
that vote result, and, where appropriate, any different action it
has taken, or would take, as a result of the vote.
1 Dr. Enrico Vanni took over the role of chairman of the remuneration
Committee as of May 2021.
ADVANCED ONCOTHERAPY PLC
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GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
TO OUR SHAREHOLDERS
STRATEGIC REPORT
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and Accounts in accordance with applicable law and
regulations.
in accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The maintenance
and integrity of the Company’s website is the responsibility of
the Directors. The Directors’ responsibility also extends to the
ongoing integrity of the financial statements contained therein.
DIRECTORS’ CONFIRMATIONS
We confirm that to the best of our knowledge:
•
the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole;
the strategic report includes a fair review of the development
and performance of the business and the position of
the Company and the undertakings included in the
consolidation taken as a whole, together with a description
of the principal risks and uncertainties that they face; and
the Annual Report and Accounts, taken as a whole, are fair,
balanced and understandable, and provide the information
necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
In the case of each Director in office at the date, the Directors’
Report is approved:
•
so far as the Director is aware, there is no relevant audit
information of which the Group and parent company’s
auditors are unaware; and
they have taken all the steps that they ought to have
taken as a Director in order to make themselves aware
of any relevant audit information and to establish that the
Group and parent company’s auditors are aware of that
information.
This responsibility statement was approved by the Board of
Directors on 29 June 2021 and is signed on its behalf by:
Dr Michael Sinclair
Executive Chairman
29 June 2021
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards
(IFRS) as applied in accordance with the provisions of the
Companies Act 2006 and have elected to prepare the parent
company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law), including
FRS 101 Reduced Disclosure Framework. Under company law
the Directors must not approve the accounts unless they are
satisfied that they give a true and fair view of the state of affairs
of the Company and of the profit or loss of the Company for that
period.
•
•
In preparing the parent company financial statements, the
Directors are required to:
•
select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
•
•
•
reasonable and prudent;
state whether applicable IFRSs as applied in accordance
with the provisions of the Companies Act 2006 have been
followed for the group financial statements and United
Kingdom Accounting Standards, comprising FRS 101,
have been followed for the Company financial statements,
subject to any material departures disclosed and explained
in the financial statements; and
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any
time the financial position of the Company and enable them to
ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
WEBSITE PUBLICATION
The Directors are responsible for ensuring the Annual Report
and the financial statements are made available on a website.
Financial statements are published on the Company’s website
88 ANNUAL REPORT 2020
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ANNUAL REPORT 2020 FINANCIAL REPORT
OTHER INFORMATION
GOVERNANCE REPORT
The Team
Corporate Governance Report
Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
ADVANCED ONCOTHERAPY PLC 89
89
ADVANCED ONCOTHERAPY PLC
AUDIT COMMITTEE REPORT
The Audit Committee plays a key role in governance of the Group’s financial reporting and risk management and
ensures that shareholders’ interests are protected and the Company’s long-term strategy is supported.
COMPOSITION OF THE AUDIT COMMITTEE
The members of the Audit Committee are independent Non-
Executive Directors who possess the necessary depth of
financial and commercial expertise to fulfil their role. Detailed
information on the experience, skills and qualifications of all
Committee members can be found on page 87. The Board
is satisfied that the Committee Chair, Hans von Celsing, has
recent and relevant financial experience.
Although not members of the Audit Committee, the CEO, the
SVPs (Finance and Accounting) and the Company Secretary
are also invited to attend meetings, unless they have a conflict
of interest. Other senior members of the business are invited to
attend meetings as appropriate.
TERMS OF REFERENCE
The terms of reference of the Audit Committee are available for
review on the Company’s website at www.avoplc.com. These
are reviewed periodically taking into account relevant legislation
and recommended good practice.
FINANCIAL REPORTING
The Audit Committee’s primary responsibility in relation to the
Group’s financial reporting is to review, with management and
the external auditors, the quality and appropriateness of the
annual and half-yearly financial statements. The Audit Committee
focuses on the quality of accounting policies and practices, the
appropriateness of underlying assumptions, judgements and
estimates made by management, key audit matters identified
by the external auditors, the clarity of the disclosures and
compliance with financial reporting standards, an assessment of
whether the Annual Report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for
shareholders to assess the Group’s position and performance,
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Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
business model and strategy. The Audit Committee received
reports from management in relation to the identification of critical
accounting judgements and significant accounting policies.
The Audit Committee has discussed areas of risk with the
auditors and agreed for the following areas of heightened
risk to be reviewed and assessed in the audit of the Group’s
performance in the financial year to 31st December 2020:
•
•
•
• Going concern.
Carrying value of intangibles;
Carrying value of inventory;
Accounting for convertible loan agreements; and
For each of the above areas the Audit Committee considered
the key facts and judgements outlined by management.
Members of management attended the section of the meeting of
the Audit Committee where their item was discussed to answer
any questions or challenges posed by the Audit Committee. Key
findings are provided in the Independent Auditor's Report on
pages 102 to 105. The Audit Committee was satisfied that there
are relevant accounting policies in place in relation to these key
areas and management have correctly applied these policies.
FAIR, BALANCED AND UNDERSTANDABLE
The Annual Report and Accounts continues to focus strongly
on key strategic messages and the Audit Committee has had
due attention to this emphasis and balance of this where it may
affect disclosures elsewhere in the Annual Report and Accounts.
In addition, the Audit Committee gave due consideration to the
integrity and sufficiency of information disclosed in the Annual
Report and Accounts to ensure that they clearly explain the
Group’s financial position, performance, business model and
strategy. An assessment of the narrative reporting was also
undertaken to ensure consistency with the financial statements,
including appropriate disclosure of material or significant items
necessary to aid a reader’s understanding and appropriate
balance of reported and adjusted performance measures.
In conclusion, the Audit Committee reported to the Board that it
considers the Annual Report for the year ended 31st December
2020 to be fair, balanced and understandable and provides the
information necessary for shareholders to assess the strategy,
business model and financial position and performance of the
Company.
RISK MANAGEMENT
The Audit Committee oversees the effectiveness of the Group’s
risk management and reviews and monitors the key risks in order
to eliminate or mitigate against those risks. The Audit Committee
has assured itself that a risk management framework is in place
and effective; it is satisfied that risks are within the risk appetite
of the Group and, where mitigating actions are undertaken, they
are proportionate.
EXTERNAL AUDIT
The external auditors, RPG Crouch Chapman LLP, were first
appointed in the financial year to 31st December 2011. The
fees paid to RPG Crouch Chapman LLP for the financial year
to 31st December 2020 were £55,500 (2019: £55,500). In line
with its Terms of Reference, the Audit Committee undertakes
a thorough assessment of the quality, effectiveness, value and
independence of the audit provided by RPG Crouch Chapman
LLP each year, seeking the views of the Board, together with
those of relevant members of the executive team.
The Board is satisfied that the Group has adequate policies
and safeguards in place to ensure RPG Crouch Chapman
LLP maintain their objectivity and independence. The external
auditors report to the Audit Committee annually on their
independence from Advanced Oncotherapy. Periodic rotation
of key audit partners is also required. Current audit partner
Colin Turnbull first started overseeing the external audit of
the Company with effect from the financial year ended 31st
December 2018.
In line with the requirements of the Revised Ethical Standard
issued December 2019 by the Financial Reporting Council
(FRC), the Audit Committee continues to have a robust policy
for the engagement of the external auditors’ firm for non-
audit work. The Audit Committee received a report covering
the auditors’ fees including details of non-audit fees incurred.
Details of the amounts paid to the external auditors during the
year for audit and other services are set out in Note 2 to the
financial statements. The external auditors were engaged for
one non-audit assignment during the year. The use of their
knowledge of the facts under consideration was seen as being
cost effective for the Group. Their engagement was not deemed
to compromise their objectivity.
Following the most recent review, the Audit Committee
recommended the reappointment of RPG Crouch Chapman
LLP as auditors of Advanced Oncotherapy, and RPG Crouch
Chapman LLP expressed their willingness to continue.
A resolution to reappoint RPG Crouch Chapman LLP and a
resolution to enable the Directors to determine their remuneration
will be proposed at the Annual General Meeting.
INTERNAL AUDIT
The Company does not currently have an internal audit function.
The Audit Committee presently considers this to be appropriate
given the close involvement of the Executive Directors and senior
management on a day-to-day operational basis. However, the
Board, with advice from the Audit Committee, annually reviews
the need for an in-house internal audit function.
LOOKING AHEAD
The Audit Committee’s oversight of financial reporting, external
audit, and the further development of the control and risk
environments have been areas of significant focus. These are
likely to remain so for the year ahead as the Company grows in
line with its strategy. The Audit Committee remains focused on
ensuring that finance and risk capability is enhanced appropriately
to reflect an increasingly regulated environment.
I am confident that the Audit Committee has the necessary skills
and experience to continue to meet the challenges ahead.
Hans von Celsing
Chairman of the Audit Committee
29 June 2021
ADVANCED ONCOTHERAPY PLC
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GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
REMUNERATION COMMITTEE REPORT
This report is intended to explain the remuneration approach adopted by the Company and to enable shareholders
to appreciate how it underpins the Group’s business growth and strategic objectives.
The Remuneration Committee is primarily responsible for
assessing the performance of the Executive Directors and senior
management of the Company and make recommendations to
the Board on matters relating to their remuneration and terms
of service. The Remuneration Committee is also responsible
for making recommendations to the Board on proposals for the
granting of share options and other equity incentives pursuant
to any employee share option scheme or equity incentive
plans in operation from time to time as well as employee
benefit structures across the Group. In discharging its duties,
the Remuneration Committee considers the wider economy,
the market in which the Company operates and the overall
performance of the Company and the individuals.
This report does not constitute a Directors’ remuneration report
in accordance with the Companies Act 2006. As a company
whose shares are admitted to trading on AIM, the Company is
not required by the Companies Act to prepare such a report.
However Advanced Oncotherapy has always recognised the
need to report in an open and transparent manner and align
with shareholder and stakeholder expectations. Therefore, and
in exercising its role, the Remuneration Committee shall have
regard to the recommendations put forward in the QCA Code
and, where appropriate, the QCA Remuneration Committee
Guide and associated guidance. The Remuneration Committee
meets as and when necessary, but at least twice each year.
COMPOSITION OF THE REMUNERATION COMMITTEE
AND RESPONSIBILITIES
The composition of the Remuneration Committee and its
responsibilities are set out in page 87.
TERMS OF REFERENCE
The terms of reference of the Remuneration Committee are
available for review on the Company’s website at www.avoplc.
com. These are reviewed periodically taking into account
relevant legislation and recommended good practice.
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Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
REMUNERATION POLICY
The remuneration policy of the Company is formulated to attract
and retain high-calibre executives and motivate them to develop
and implement the business strategy set by the Board in order
to optimise long-term stakeholder value. It is the intention that
this policy should conform to best practice standards and that it
will continue to apply for 2021 and subsequent years, subject to
ongoing review as appropriate. The policy is framed around the
following key principles:
•
total rewards will be set at levels that are sufficiently
competitive to enable the recruitment and retention of high-
calibre executives;
total incentive-based rewards will be earned through
the achievement of demanding performance conditions
consistent with shareholder interests;
incentive plans, performance measures and targets will
be structured to operate soundly throughout the business
cycle;
the design of long-term incentives will be prudent and will
not expose shareholders to unreasonable financial risk;
in considering the market positioning of reward elements,
account will be taken of the performance of the Group and
of each individual senior team member; and
reward practice will conform to best practice standards as
far as reasonably practicable.
•
•
•
•
•
When formulating the scale and structure of remuneration levels
the Remuneration Committee considers market rates, drawn
from external market data, for the level of remuneration offered
to directors of similar type and seniority in other companies
whose activities are similar to Advanced Oncotherapy. In
addition, the Remuneration Committee also considers the
pay and employment conditions of team members when
determining their remuneration as well as the relevant legal and
regulatory requirements and corporate governance guidelines.
Where appropriate it seeks advice from external consultants. No
Director was involved in deciding the level and composition of
their own remuneration.
Each Executive Director’s remuneration package consists
of basic salary, discretionary bonus, share options and other
benefits, including Medical health insurance, life cover and
pension contributions. An appropriate balance is maintained
between the fixed and performance related remuneration
elements.
The policy on each element of remuneration and how it operates,
is also detailed on the following page. The main elements of the
remuneration packages are as follows.
BASIC ANNUAL SALARY AND PENSION
Basic annual salary and contribution to pension arrangement
or payments in lieu of pensions are reviewed annually by the
Remuneration Committee. This takes into account a number of
factors, including the current position and progress of the Group,
individual contribution and market salaries for comparable
organisations.
DISCRETIONARY BONUS
Bonus awards are determined by the Remuneration Committee
taking into account Company and individual performance. They
are either related to the achievement of personal, departmental
and/or Group targets/milestones. In addition, the Remuneration
Committee has the discretion to settle an element of any bonus
in shares or share options in lieu of cash considerations.
LONG-TERM INCENTIVE PLAN AND SAVE AS YOU EARN
SCHEME
Details can be found on page 94.
DIFFERENCES IN THE REMUNERATION POLICY OF THE
EXECUTIVE DIRECTORS AND THE GENERAL EMPLOYEES
the structure of
There are no material differences
remuneration arrangements for the Executive Directors and
senior management, aside from quantum and participation
levels in incentive schemes, which reflect the fact that a greater
emphasis is placed on performance-related pay for Executive
Directors and the most senior individuals in the management
team. The Group aims to provide remuneration structures for
employees which reflect market norms.
in
NON-EXECUTIVE DIRECTORS
Non-Executive Directors’ fees were reviewed in October 2020,
in the context of the changes made to the Board in June 2020.
In addition to an annual fixed fee of £30,000, Non-Executive
Directors are paid additional fees for memberships of Board
Committees. Fees for Non-Executive Directors are set by the
Board.
Committee Chairmanship fee: £15,000
•
• Other Committee Membership fee: £10,000
On 26th October 2020, the Company agreed to issue 250,000
new ordinary shares to Hans von Celsing, Dr. Enrico Vanni,
Michael Bradfield and Dr. Nick Plowman in lieu of additional fees
to be paid reflecting additional work that has been undertaken
by these Directors since they respectively joined the Board of
Advanced Oncotherapy.
Non-Executive Directors do not receive any pension payments
or other benefits. They do not participate in bonus or incentive
schemes. Most Non-Executive Directors have historically
elected to receive their fees in shares of the Company. Please
refer to Directors' shareholding on page 99 and options on page
119.
CONCLUSION
The Board firmly believes that the remuneration policy of the
Company effectively rewards and incentivises the executive and
senior management team in pursuit of the Company’s strategic
aims and that these incentives align with long-term stakeholder
value creation.
OTHER BENEFITS
Medical health insurance, life cover and pension benefits and
other benefits may also be provided to employees once they
have met eligibility criteria.
Hans von Celsing
Chairman of the Remuneration Committee
29 June 2021
ADVANCED ONCOTHERAPY PLC
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GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC REMUNERATION COMMITTEE REPORT _Continued
Element of
pay
Link to
remuneration
policy/strategy
Key features/
Operation
Potential
value
Performance
metrics
Base salary To attract and
Reviewed annually.
retain high-calibre
executives.
Senior members’ experience,
responsibilities and performance
taken into consideration.
Performance is assessed both
from an individual and business
perspective.
Reflects market data for comparable
positions in similar companies.
No maximum or minimum
annual increase.
None.
Higher increases than the
average percentage for the
workforce may be appropriate,
for example, where an
individual changes role, where
the complexity of the Group
changes, where an individual
is materially below market
comparators or is appointed on
a below market salary with the
expectation that his/ her salary
will increase with experience
and performance.
Benefits
Pensions
To provide an
attractive package
alongside basic
salary to attract and
retain executives.
To provide market
competitive
arrangements.
Perfor-
mance
related
bonus
To incentivise
achievement of
Company targets
and other near-
term strategic
objectives.
Long- Term
Incen-
tive Plan
(“LTIP”)
To align executives
to the interests
of shareholders
and to incentivise
long-term financial
performance.
Benefits include but are not limited
to private medical insurance, fuel
benefit and dental insurance.
The potential value of medical
insurance benefits is limited by
the terms of the policy.
None.
The Company contributes to executives’
existing personal pension schemes.
Between 7% and 10% of basic
salary
None.
Cash payments in lieu of pension are
available in the event an executive
has exceeded their personal pension
allowance.
Bonus can be settled in shares
or share options in lieu of cash
considerations.
Latest award was announced on
6th October 2020, under which the
Remuneration Committee awarded
twenty-four million options with an
exercise price of 50 pence per share
to Executive Directors and senior
management (implying a premium
of c.61.9% to the weighted average
share price over the prior 30 days
and a premium of 100% to the issue
price of the fundraising completed by
the Company in May 2020).
The options have a five-year term,
expiring on 5th October 2025 and will
vest upon the achievement of conditions.
The vesting of the Options is subject
to the continued employment of the
option holders.
Payments capped at 100% of
salary.
Additional discretionary bonus
can be awarded subject to
specific contributions, roles and
performance of individuals.
n.a.
Takes into account Company and
individual performance, which
are related to the achievement of
personal, departmental and/ or
Group targets/milestones.
Performance conditions, targets
and weightings set at the time of an
award to ensure they are stretching
and aligned with the Company's
strategy to build shareholder value.
Latest grant of LTIP options
announced in October 2020;
options to vest at the discretion
of the Remuneration Committee,
based on four vesting conditions:
•
the LIGHT system is fully
operational at 230MeV;
the first patient has been treated;
the LIGHT system has been
certified; and
the Company's share price has
been in excess of £1.00 for 30
consecutive calendar days.
•
•
•
Savings
related
share option
scheme or
SAYE (Save
As You
Earn) plan.
To encourage
ownership and
align the interests
of employees and
external shareholders
and build long- term
value.
Open to all employees with more
than one month's service.
Maximum monthly savings of
£500.
None.
Participants can make monthly
contributions of up to £500 on a
three-year savings account.
As per this SAYE plan, the
Board granted options over a
total of 962,162 new shares.
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OTHER INFORMATION
GOVERNANCE REPORT
The Team
Corporate Governance Report
Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
ADVANCED ONCOTHERAPY PLC
9595
ADVANCED ONCOTHERAPY PLC SECTION 172 STATEMENT
Section 172 of the Companies Act 2006 requires Directors to take
into consideration the interests of stakeholders and other matters
in their decision making. The Directors continue to have regard to
the interests of the Group’s employees and other stakeholders,
including the impact of its activities on communities, the
environment and the Group’s reputation when making decisions.
Acting in good faith and fairly between members, the Directors
consider what is most likely to promote the success of the Group
and its members in every decision made.
Advanced Oncotherapy’s purpose is to democratise proton
therapy. Its strategy is aligned to strong, structural trends: the
increase in cancer incidence, the improved prognosis for a
range of cancer indications which raises the need for reduced
side effects, and the limited financial resources faced by all
health systems.
Advanced Oncotherapy exists to help patients afford a cutting-
edge technology which helps improve long-term outcome, but
which is currently not widely available. Through the LIGHT
system and services, the Group is looking to provide smaller
health practices with the flexibility to equip themselves with what
the Company thinks is the best technology, and at the same
time decreases the cost of a proton therapy treatment.
That said, success in delivering for customers and shareholders
depends on effective engagement with all stakeholders. Various
feedback processes help to ensure that the Group can respond
to new issues and opportunities that arise to further the success
of employees and the Group. The Group has close ongoing
relationships with a broad range of its stakeholders and provides
them with the opportunity to raise issues and provide feedback
to the Group.
9696 ANNUAL REPORT 2020
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Corporate Governance Report
Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
Stakeholder
group
Investors
How we engage with stakeholders?
Feedback / Areas of interest raised in 2020
Half and
full-year results, annual report, AIM
compliant website with investor relations section, PR
support, investor day in October, Stock exchanges
announcements, regular press releases and social
media updates
Investors’ feedback is considered when discussing
strategy, performance and policies, e.g. cyber-
security, financial strength, risk management. The
resolutions for 2020 were passed based on 56% of
votes cast (42% in 2019) and acceptance levels of
more than 99%.
Customers
(including
commissioners
and patients)
Direct engagement with commissioners by senior
colleagues; review of care pathways with health
insurance companies led by senior management;
trade and research conferences
Customers’ focus is primarily on business integrity, the
delivery of a high-quality clinical service, time to market,
product suitability, patient workflow and support with
planning authorities on behalf of customers
Policymakers and
regulators
to policy papers, sector-wide analysis,
Input
partnering, data input
Interactions with regulators concern patient safety,
patient journey, management audits, sector regulation
Employees
(including
contractors,
potential recruits)
Suppliers
Surveys;
appraisals; intranet; training programmes
team meetings; all staff meetings,
Corporate objectives, diversity and inclusion, training
and development, succession planning
Assessments, contract negotiations; review and audit
meetings
Sustainable procurement,
protection, anti-bribery and corruption, credit terms
IP protection, data
Cyber Security
Our cyber strategy is constantly evolving to anticipate and respond to the advances being made in the
technologies we use and the threats we face.
With 95% staff moving to remote working in March 2020, new controls and procedures were defined to ensure
sufficient data backup and decreased cyber risk. This resulted in new controls definitions and guidance for cloud
security to support secure growth across the businesses.
Environmental performance
Managing the environmental risks facing our business is crucial to creating long-term value for our customers,
shareholders and the communities of which we are part.
We believe the limited stray radiations generated by the LIGHT system act as a game changer in the long-term
sustainability of proton accelerators and more broadly proton therapy.
Corporate Culture
We believe that the way in which we conduct ourselves on a daily basis is key to building trust, maintaining
our reputation and positive relationships with our stakeholders and ultimately in achieving long-term business
success. Training is a key component of how we diffuse the corporate culture.
We are proud to have been awarded a renewal of our ISO-13485 certification in 2020, supporting the operational
activities at the installation and integration site in Daresbury.
Valuing our people
The Group considers its people for employment, training, career development and promotion on the basis of their
abilities and aptitudes, regardless of physical ability, age, gender, sexual orientation, religion or ethnic origin.
We also believe in the importance of giving employees the opportunity to benefit from the Group’s success
through share ownership. Of eligible employees, 90 employees participated in the SAYE Option Plan at the end
of the year.
Sustainable Procurement
Centred on an outsourced manufacturing model, the Group relies on circa 150 third-party suppliers. The support
of the Group’s Supply Chain is vital in becoming a sustainable business. Our expanded relationship with VDL
exemplifies the strength of the bond that we build with our partners.
For enhanced transparency and mutual protection in the management of our third-party relationships, the Group
uses automated purchasing and approvals processes, coupled with robust service level agreements.
ADVANCED ONCOTHERAPY PLC
9797
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC GROUP DIRECTORS’ REPORT
The Directors present their annual report and the financial statements of the Group for the year ended 31st December
2020.
CORPORATE DETAILS
Advanced Oncotherapy plc is a public limited company incorporated
and registered in England and Wales under the Companies Act
with registered number 05564418. Its registered office is Level 17,
Dashwood House, 69 Old Broad Street, London EC2M 1QS.
Advanced Oncotherapy plc owns 100% of ADAM S.A.
Image Guided Hadron Technology (LIGHT). LIGHT's compact
configuration delivers proton beams in a way that facilitates
greater precision and electronic control.
Advanced Oncotherapy will offer healthcare providers affordable
systems that will enable them to treat cancer with innovative
technology as well as expected lower treatment-related side effects.
DIRECTORS AND THEIR INTERESTS
Brief biographical descriptions of the current Directors of the
Company are set out on 77. The beneficial and non-beneficial
interests of the Directors in the Company’s ordinary shares
along with details of Directors’ share options, are contained in
the Directors’ remuneration report set out on pages 92 to 94.
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.
The powers of the Directors are determined by UK legislation
and the Company’s Articles of Association, together with
any specific authorities that may be given to the Directors by
shareholders from time to time (for example the authority to allot
or purchase shares in the Company).
At the Annual General Meeting, to be held on Friday, 30 July 2021 at
2.00pm, all the Directors will offer themselves for re-election.
QUALIFYING THIRD PARTY INDEMNITY PROVISIONS
The Company has made qualifying third-party indemnity
provisions for the benefit of its Directors during the reporting
period and these remain in force at the date of this report.
DIRECTORS’ AND OFFICERS’ INSURANCE
The Company has purchased and maintained throughout the
financial year Directors’ and Officers’ liability insurance to cover
any claim for wrongful acts in connection with their positions.
The insurance provided does not extend to claims arising from
fraud or dishonesty.
PRINCIPAL ACTIVITY
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
RESEARCH AND DEVELOPMENT
During the year the Group expensed through the income statement
£0.1 million (2019: £0.1 million) in relation to research and
development costs. These costs are for ADAM physics consultancy
costs incurred on research projects, not capitalised as an intangible
asset. In addition, development costs amounting to £5.8 million
(2019: £9.3 million) were capitalised within intangible assets.
LIKELY FUTURE DEVELOPMENTS IN THE BUSINESS OF
THE GROUP
The outlook is available on pages 17 and 40-43.
BUSINESS REVIEW
The Directors are required by Company Law to set out a fair review
of the business, its position at the year end and a description of the
principal risks and uncertainties facing the group and to prepare
the financial statements in accordance with applicable law and
International Financial Reporting Standards (IFRS) as applied in
accordance with the provisions of the Companies Act 2006. They
consider that the results for the year and the closing financial
position as shown in the Financial Statements and accompanying
notes are satisfactory for the business. The strategic report on
pages 8 to 73 provides this review and financial position and
these are incorporated by cross-reference and form part of this
report. The corporate governance report on pages 76 to 105
should be read as forming part of the Directors’ report.
9898 ANNUAL REPORT 2020
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Audit Committee Report
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Section 172 Statement
Group Directors’ Report
Independent Auditor’s Report
The business is still pre-revenue and continues to invest in the
development and building of the first LIGHT machine through
expenditure on intangible assets and inventory. The business
has funded this through borrowings and equity raises.
EMPLOYEES
The Group is committed to promoting equal opportunities in
employment. Its employees and job applicants will receive equal
treatment regardless of age, disability, gender reassignment,
marital or civil partner status, pregnancy or maternity, race,
colour, nationality, ethnic or national origin, religion or belief,
sex or sexual orientation. Every effort is also made to retain
and support employees who have a disability during their
employment, including flexible working to assist their re-entry
into the workplace and making alternative suitable provisions.
The Executive Directors regularly engage with employees to
seek their views and provide briefings and presentations on key
developments and strategy. Employees are encouraged to offer
suggestions and views, and to raise queries with the Directors
and senior managers.
To aid in retention, a benefits package encompassing death
in service and medical insurance, together with a contributory
pension scheme, is offered to all employees, in addition to
salary. A discretionary bonus scheme and a long-term incentive
programme are also available.
HEALTH, SAFETY AND ENVIRONMENT
The Directors are committed to ensuring the highest standards
of health and safety for the employees of the Group. The
Directors are also committed to minimising the impact of the
Group’s operations on the environment.
RESULTS AND DIVIDENDS
The results for the year and the financial position at 31st
December 2020 are shown in the Consolidated Statement of
Comprehensive Income on page 108 and the Consolidated
Statement of Financial Position on page 109.
The Directors do not recommend the payment of a dividend
(2019: no dividend) so that cash is retained in the Company for
building the first LIGHT machine and capital expenditures that are
required for the rapid growth of the business. The results of the
Group for the year are explained further on pages 114 to 137.
SHARE STRUCTURE
Details of the authorised and issued share capital, together with
details of the movements in the Company’s issued share capital
during the year, are shown in Note 19 to the consolidated financial
statements. The Company has one class of ordinary share which
carries no right to fixed income. Each share carries the right to one
vote at general meetings of the Company. There are no specific
restrictions on the size of a holding nor on the transfer of shares,
which are both governed by the general provisions of the Articles
of Association and prevailing legislation. The Directors are not
aware of any agreements between the holders of the Company’s
shares that may result in a restriction on the transfer of securities
or on voting rights. No person has any special rights of control over
the Company’s share capital and all issued shares are fully paid.
SUBSTANTIAL SHAREHOLDINGS
On 31 May 2021, the Company had been notified that 8 parties
had holdings of 3% or more in the ordinary share capital of the
Company. The number of ordinary shares and the percentage
of the total shares held by each party is outlined below:
Holder
Liquid Harmony Limited
Celeste Mgt SA
Nerano Capital Limited*
Jarvis IM
Lombard Odier AM
P. Glatz
DNCA
Hargreaves Lansd.
Number of
Shares
% of Total in
Issue
45,000,000
28,333,333
22,500,000
15,811,174
15,810,284
15,659,162
15,125,000
11,400,198
12.9%
8.1%
6.4%
4.5%
4.5%
4.5%
4.3%
3.3%
* Controlled by Mr Seamus Mulligan. Mr Seamus Mulligan also
controls Barrymore Investments which owns 7,905,721 shares
in the Company’s ordinary share capital.
DIRECTOR'S SHAREHOLDINGS
The beneficial interests of the Directors in the share capital of
the Company at 31 December 2020 and 31 December 2019
were as follow:
Holdings by Directors or
Holdings Under Their Control
31st December
2020
31st December
2019
Mrs. Renhua Zhang
45,000,000
45,000,000
Dr. Michael Sinclair & Family
8,280,604
7,468,178
Mr. Michael Bradfield
Dr. Nick Plowman
Dr. Enrico Vanni
Mr. Nicolas Serandour
Prof. Steve Myers
Mr. Hans von Celsing
Mrs. Lori Cross
7,443,240
7,193,240
4,412,804
4,042,804
2,796,361
2,126,361
1,760,467
1,760,467
983,902
512,500
0
783,902
142,500
n.a
Information on Directors' remuneration and share option rights
is given in Note 7 on page 118.
DONATIONS
During the year, the Company made no charitable donations
(2019: nil).
DISCLOSURE OF INFORMATION TO AUDITORS
Each of the persons who are Directors at the time when this
Directors’ Report is approved has confirmed that:
•
so far as that Director is aware, there is no relevant audit
information of which the Company’s auditors are unaware; and
that Director has taken all the steps that ought to have been
taken as a Director in order to be aware of any information
needed by the Company’s auditors in connection with
preparing their report and to establish that the Company’s
auditors are aware of the information.
•
This confirmation is given and should be interpreted in accordance
with the provisions of Section 418 of the Companies Act 2006.
ADVANCED ONCOTHERAPY PLC
9999
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
GROUP DIRECTORS’ REPORT _Continued
INDEPENDENT AUDITORS
RPG Crouch Chapman LLP have expressed willingness to
continue in office for the year ending 31st December 2021. Their
re-appointment is proposed to shareholders in the Notice of the
forthcoming Annual General Meeting.
RISK MANAGEMENT
The Board is responsible for the Group’s system of risk
management and continues to develop policies and procedures
that reflect the nature and scale of the Group’s business. Further
details of the key areas of risk to the business identified by the
Group are included on pages 72 and 73.
GOING CONCERN
The Group has made a loss before tax of £25.3m (2019:
£21.9m) and is presently pre-revenue and, as such, has relied
upon equity and debt funding to progress its development plans.
Post year end, the Group has successfully raised £6m in equity
and £4.1m in short term loans as detailed further in Note 28.
The directors regularly review cash flow forecasts to determine
whether the Group has sufficient cash reserves to meet its
future working capital requirements and development plans.
The Group’s plans indicate that they need to raise further
finance and the Directors are confident based on past history
of successful fundraising and discussions with investors that the
Group will be successful in raising these funds. Additionally, they
consider they can defer settlement of creditors, reduce short term
expenditure and obtain short-term finance should there be any
delay in completing any such fundraising to allow continuance of
their plans. They therefore consider it appropriate to prepare the
Group’s financial statements on a going concern basis.
However, as at the date of approval of these financial
statements, there are no legally binding agreements in place in
relation to any fundraising or extension of terms with creditors
and as the success of any finance raising is outside the control
of the company there can be no certainty that additional funds
will be forthcoming, which indicates the existence of a material
uncertainty which may cast doubt about the Group’s ability to
continue as a going concern and therefore it may be unable
to realise its assets and discharge its liabilities in the normal
course of business. The financial statements do not include
the adjustments that would result if the Group was unable to
continue as a going concern.
ARTICLES OF ASSOCIATION
The Company’s Articles of Association may only be amended
by special resolution at a general meeting of the shareholders.
ANNUAL GENERAL MEETING
The Annual General Meeting of the Company will be held at the
offices of Advanced Oncotherapy plc, Third Floor, 4 Tenterden
Street, London W1S 1TE on Friday, 30 July 2021 at 2.00pm.
Full details of the business to be transacted at the AGM can be
found in the Notice of Annual General Meeting on pages 148 to
150 of this report.
CAUTIONARY STATEMENT REGARDING FORWARD-
LOOKING INFORMATION
Forward-looking statements are statements relating to the
future which are based on information available at the time such
statements are made, including information relating to risks and
uncertainties. Although Directors believe that the forward-looking
statements in this Annual Report are based on reasonable
assumptions, the matters discussed in the forward-looking
statements may be influenced by factors that could cause
actual outcomes and results to be materially different from those
expressed or implied by these statements. The forward-looking
statements reflect knowledge and information available at the
date of the preparation of this Annual Report and the Company
undertakes no obligation to update these forward-looking
statements. Forward-looking statements are identified by using
the words ‘anticipates’, ‘believes’, ‘expects’, ‘intends’ and similar
expressions in such statements. Important factors that could
cause actual results to differ materially from those contained
in forward-looking statements, certain of which are beyond the
control of the Board, include, among other things, those factors
identified in the Risk section in pages 72 and 73. Nothing in this
Annual Report should be construed as a profit forecast.
APPROVAL AND RECOMMENDATION
This Directors’ Report was approved by the Board and was
signed on its behalf on 29 June 2021.
The Board are of the opinion that all resolutions which are to be
proposed at the 2020 Annual General Meeting are in the best
interests of its shareholders as a whole and, accordingly, unanimously
recommend that they vote in favour of all the resolutions as the
Board intends to do in respect of their own holdings.
EVENTS AFTER THE REPORTING PERIOD
In January 2021, the Group raised additional equity of 5.9 million
through the subscription of 14,801,040 new ordinary shares by
new and existing shareholders. Further equity of 464,596 was
raised by the exercise of warrants for 1,594,116 shares.
In March 2021, the Group received a short term loan of £1.6m
and a further £2.5m in April 2021, both repayable in July 2021.
In January 2021, the Group also announced that DiaMedCare
AG had agreed to offer Advanced Oncotherapy’s customers
access to its leasing solutions, in Europe and the United
States primarily. DiaMedCare AG will also be able to bridge
manufacturing costs until delivery of the LIGHT system to
customers. The terms of any financing solutions provided by
DiaMedCare AG will be specific to each project and will be
subject to definitive agreements being entered into between
the Company, DiaMedCare AG and the customer.
Separately in June 2021, the Group announced the signature
of a Letter of Intent with Saba Partners for the sale of a three
room system in Switzerland.
Dr. Michael Sinclair
Executive Chairman
Registered Office: Level 17, Dashwood House, 69 Old Broad
Street, London EC2M 1QS
100100 ANNUAL REPORT 2020
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OTHER INFORMATION
GOVERNANCE REPORT
The Team
Corporate Governance Report
Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors’ Report
Independent Auditor’s Report
ADVANCED ONCOTHERAPY PLC
101
101
ADVANCED ONCOTHERAPY PLC INDEPENDENT AUDITOR’S REPORT
‘Company’) and
We have audited the financial statements of Advanced
its subsidiaries
Oncotherapy PLC (the
(the ‘Group’) for the year ended 31 December 2020 which
comprise the Consolidated statement of profit or loss and other
comprehensive Income, the Consolidated and Parent Company
Statements of Financial Position, the Consolidated Statement of
Cash Flows, the Consolidated and Parent Company Statements
of Changes in Equity and the related notes.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable
law and international accounting standards in conformity with
the requirements of the Companies Act 2006. The financial
reporting framework that has been applied in the preparation of
the Company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom
Generally Accepted Accounting Practise.
that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
We draw attention to Note 30 b) in the accounting policies,
concerning the Group’s ability to continue as a going concern.
The matters explained in Note 30 b) indicate that the Group needs
to raise further finance to fund its working capital needs and
development plans. As at the date of approval of these financial
statements there are no legally binding agreements relating to
securing the required funds. These events or conditions along
with the matters set forth in Note 30 b) indicate the existence of
a material uncertainty which may cast significant doubt over the
Group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
In our opinion:
•
the financial statements give a true and fair view of the
state of the Group’s and of the Parent Company’s affairs as
at 31 December 2020 and of the Group’s loss for the year
then ended;
the Group financial statements have been properly
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006;
The Parent Company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practises; and
the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
•
•
•
BASIS FOR OPINION
We conducted our audit in accordance with International
Standards on Auditing (ISAs (UK) and applicable law. Our
responsibilities under those standards are further described
in the Responsibilities for the audit of the financial statements’
and section of our report. We are independent of the Group
and the Company in accordance with the ethical requirements
102102 ANNUAL REPORT 2020
We have highlighted going concern as a key audit matter. In
auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors’ assessment of the Group and the
Parent Company’s ability to continue to adopt the going concern
basis of accounting included:
•
Analysing Management’s and the Directors’ cashflow
forecast which forms the basis of their assessment that the
going concern basis of preparation remains appropriate
for the preparation of the Group and Company financial
statements for a period of at least twelve months from the
date of approval of these financial statements;
Testing the mathematical integrity of the cashflow model in
order to ensure the basis of preparation of the model;
Assessing costs included within the cashflow forecast and
where available agreeing these costs to other evidence
obtained during the course of our audit work is in line with
our expectations;
•
•
• Obtaining details of post year ends fundraisings and
agreeing supporting documentation and cash received;
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• We reviewed loan agreements and ensured the repayments
subject to substantive testing where considered necessary.
•
•
were appropriately included in the forecasts;
Discussing with Management and the Board the Group’s
strategy to continue to ensure funds are available to the
Group to fund its plans; and
Reviewing and considering the adequacy of the disclosure
within the financial statements relating to the Directors’
assessment of the going concern basis of preparation.
OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit scope focused on the Group’s principal activities
and the reporting entities held, being Advanced Oncotherapy Plc
and ADAM S.A. We have identified both entities as significant
components for the purposes of our financial statement audit,
based on their relative share of total assets. We have performed
a full scope audit for these components, having performed
substantive procedures over 99% of total assets.
The remaining components of the Group were considered non-
significant. We performed full scope audit procedures over for UK
Group entities subject to audit at the head office location in the
United Kingdom where the accounting records of all companies
in the group are held. Other insignificant components were
All audit work (full scope audit or review work) was conducted by
RPG Crouch Chapman LLP.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
Key audit matters were identified as carrying value of inventories,
intangible asset valuation and going concern which has been
covered above.
In arriving at our opinions set out in this report, we highlight the following
risks that, in our judgement, had the greatest effect on our audit:
Audit risk
How we responded to the risk
Intangible asset valuation
Our audit work included, but was not restricted to:
The Group’s Intangible assets consist of direct costs relating to
the internal development of the proton therapy technology and
machines. Please refer to Note 10.
As an intangible asset not yet ready for use Management and the
Board are required to perform an annual impairment review. Given
the materiality of the assets in the context of the Group’s consolidated
statement of financial position and the judgement involved in making
this assessment we consider this to be a key audit matter.
•
• Reviewing the impairment model provided and checking
that the value in use model meets the requirements of the
accounting standard;
Testing the mathematical integrity of the cashflow model in
order to ensure the basis of preparation of the model;
• Discussing with Management the assumptions used and
obtaining details to support the key assumptions; and
Sensitising the cash flow for assumptions.
•
Carrying value of inventories
Our audit work included, but was not restricted to:
Inventory consists of the cost of components for a research
machine and machines being developed for sale. There is
judgement involved in the assessment of whether the carrying
value is the lower of cost or fair value less costs to sell and
therefore we consider this to be a significant risk
• Confirming costs to date are accurate by reference to invoices;
• Confirming costs to complete to budgets and supporting documents;
• Considering if the budget is reasonable based on costs to
date against original budget; and
• Considering sales price of similar equipment or indicated
sales price in any correspondence with potential customers.
Accounting for convertible loan agreement
Our audit work included, but was not restricted to:
The Company entered into a $30m loan facility during the year
and drew down $10m of this facility. The terms of the loan are
complex and due to IFRS financial reporting requirements and
the use of a number of assumptions potentially included in the
accounting treatment, we consider this to be a significant risk.
• Confirming amounts received to drawdowns and confirming
liability at year end to confirmation;
• Reviewing management’s proposed accounting treatment for the
loan facility, agreeing terms to loan agreements and considering
against the requirement of the financial reporting framework;
• Reviewing management expert’s report;
• Considering competence of management’s expert as
required under ISA (UK);
• Confirming the inputs used in the valuation to supporting
information; and
• Confirming the disclosures in regards the loan and the
related financial instruments are appropriately disclosed.
ADVANCED ONCOTHERAPY PLC
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GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC INDEPENDENT AUDITOR’S REPORT _Continued
OUR APPLICATION OF MATERIALITY
We define materiality as the magnitude of a misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be
changed or influenced. We use materiality in determining the
nature, timing and extent of our audit work and in evaluating the
results of that work.
We determined materiality for the Group and Company financial
statements as a whole to be £1,500,000 (2019: £1,500,000)
which represents 1.25% (2019: 1.4%) of the Group’s gross
assets. This benchmark is considered the most appropriate
because assets are the key item for an entity in the development
phase.
Materiality for the current year is at the same level as the level
that was determined for the year ended 31 December 2019.
The rate applied is considered appropriate given the stage of
development of the Group and the nature of the assets.
We use a different level of materiality, performance materiality, to
drive the extent of our testing and this was set at 50% of financial
statement materiality for the audit of high-risk areas and 75% for
areas considered to be lower risk. We also determine a lower
level of specific materiality for certain areas such as Directors’
remuneration and related party transactions.
We determined the threshold at which we will communicate
misstatements to the Audit Committee to be £75,000. In addition,
we will communicate misstatements below that threshold that, in
our view, warrant reporting on qualitative grounds.
Whilst materiality for the financial statements as a whole was
£1,500,000 each significant component of the Group was
audited to a lower level of £1,125,000 to £500,000 which was
used to determine the financial statement areas that were
included within the scope of the Component audits and the
extent of sample sizes used during the audit.
OTHER INFORMATION
The directors are responsible for the other information. The other
information comprises the information included in the annual
report other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006 ARE UNMODIFIED
In our opinion, based on the work undertaken in the course of
104104 ANNUAL REPORT 2020
the audit:
•
the information given in the Strategic Report and the Report
of the Directors for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
the Strategic Report and the Report of the Directors
have been prepared in accordance with applicable legal
requirements.
•
MATTER ON WHICH WE ARE REQUIRED TO REPORT
UNDER THE COMPANIES ACT 2006
In the light of the knowledge and understanding of the Group and
Parent Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
Strategic Report or the Report of the Directors.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY
EXCEPTION
In the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
the directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the
parent company, or returns adequate for our audit have not
been received from branches not visited by us; or
the parent company financial statements and the part of
the Directors’ Remuneration Report to be audited are not
in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by
law are not made; or
we have not received all the information and explanations
we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors' responsibilities
statement set out on page 88 the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and the Company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate
the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an Auditor's Report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 The Team
Corporate Governance Report
Statement of Directors' Responsibilities
Audit Committee Report
Remuneration Committee Report
Section 172 Statement
Group Directors' Report
Independent Auditor’s Report
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities,
including fraud
We gained an understanding of the legal and regulatory
framework applicable to the group and the industry in which it
operates, and considered the risk of acts by the group which
were contrary to applicable laws and regulations, including
fraud. These include but were not limited to compliance with
Companies Act 2006 and IFRS.
We designed audit procedures to respond to the risk, recognising
that the risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment. We focused on laws
and regulations that could give rise to a material misstatement
in the financial statements.
Our tests included, but were not limited to:
•
supporting
documentation,
agreement of the financial statement disclosures to
underlying
performing
substantive testing of account balances which were
considered to be a greater risk of susceptibility to fraud;
enquiries of management as to whether there was any
correspondence from regulators;
performed journals testing with a focus on identifying
entries that could be indicative of fraud;
testing consolidation entries to ensure consistency and
appropriateness of application;
review of minutes of board meetings throughout the period;
and
obtaining an understanding of the control environment in
monitoring compliance with laws and regulations.
•
•
•
•
•
These procedures are designed to address the risk of material
misstatements in respect of irregularities, including fraud, but do
not provide absolute assurance as to the non-existence of any
such misstatements.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising
that the risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example,
forgery, misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely we are to become aware of it.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our Auditor's Report.
USE OF REPORT
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we
might state to the Company’s members those matters we are
required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company and
the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Colin Turnbull ACA
Senior Statutory Auditor
for and on behalf of RPG Crouch Chapman LLP
Statutory Auditor, Chartered Accountants
14-16 Dowgate Hill
London
EC4R 2SU
29 June 2021
ADVANCED ONCOTHERAPY PLC
105105
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC TO OUR SHAREHOLDERS
STRATEGIC REPORT
106106 ANNUAL REPORT 2020
ANNUAL REPORT 2020 GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
NOTES TO THE ACCOUNTS – GROUP
COMPANY STATEMENT OF FINANCIAL POSITION
COMPANY STATEMENT OF CHANGES IN EQUITY
NOTES TO THE ACCOUNTS – COMPANY
108
109
110
111
113
114
138
139
140
ADVANCED ONCOTHERAPY PLC
107107
ADVANCED ONCOTHERAPY PLC CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2020 - Financials in £
Revenue
Cost of sales
Gross loss
Administrative expenses
Operating loss
Finance income
Finance costs
Loss on ordinary activities before taxation
Taxation
Loss after taxation
Loss for the period
Equity of shareholders of the parent company
Non-controlling interests
Other comprehensive income
Items that will or may be subsequently re-classified as to profit or loss:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year net of tax
Total comprehensive loss attributable to:
Equity of shareholders of the parent Company
Non-controlling interests
Loss per ordinary share
Basic and diluted
Weighted average number of shares (000's)
Note
1
1
2
1,3
1,4
5
Group
2020
Group
2019
-
-
-
-
(20,269,788)
(20,269,788)
3,297
(5,032,981)
(25,299,472)
-
-
(20,659,460)
(20,659,460)
15,572
(1,233,545)
(21,877,433)
-
1,082,827
(25,299,472)
(20,794,606)
(25,299,472)
(20,794,606)
- -
(25,299,472)
(20,794,606)
1,902,660
(23,396,812)
(462,413)
(21,257,019)
(23,396,812)
(21,257,019)
- -
(23,396,812)
(21,257,019)
9
9
(8.75)p
288,981
(9.83)p
211,479
The accompanying Notes on pages 114 to 137 form part of the financial statements.
108108 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 31 December 2020 - Financials in £
Non-current assets
Intangible assets
Property, plant and equipment
Right of use assets
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Corporation tax R&D refund
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Non-current liabilities
Licence Fee Received
Lease liabilities
Borrowings
Embedded Derivative
Total liabilities
Net assets
Equity
Share capital
Share premium reserve
Share option reserve
Reverse acquisition reserve
Exchange movements reserve
Accumulated losses
Equity attributable to shareholders of the Parent Company
Total equity funds
Note
Group
2020
Group
2019
10
11
12
13
15
13
13
14
16
12
17
16
12
17
17
19
21
22
23
24
56,869,415
6,710,777
31,437,161
934,834
95,952,187
22,138,323
1,885,224
-
2,317,451
26,340,998
122,293,185
(6,438,217)
(2,731,920)
(10,039,316)
(19,209,453)
(16,500,000)
(29,604,809)
(8,258,435)
(4,578,210)
(58,941,454)
(78,150,907)
44,142,278
83,359,894
61,442,782
7,675,332
11,038,204
2,892,186
(122,266,120)
44,142,278
44,142,278
49,183,428
6,002,500
32,528,667
914,938
88,629,533
15,048,228
2,140,657
1,768,591
3,235,167
22,192,643
110,822,176
(4,881,210)
(1,594,691)
-
(6,475,901)
(16,500,000)
(31,046,827)
(13,864,384)
-
(61,411,211)
(67,887,112)
42,935,064
61,105,852
60,452,065
7,853,803
11,038,204
989,526
(98,504,386)
42,935,064
42,935,064
These consolidated financial statements have been approved and were authorised for issue by the Board of Directors on 29 June
2021.
Dr Michael Sinclair
Executive Chairman
Nicolas Serandour
Chief Executive Officer
Registered number: 05564418
The accompanying Notes on pages 114 to 137 form part of the financial statements.
ADVANCED ONCOTHERAPY PLC
109109
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 31 December 2020 - Financials in £
Balance at
01 January 2019
Loss for the year
other comprehensive income
exchange movement
Total comprehensive
income
Share
capital
Share
premium
reserve
Share
option
reserve
Reverse
acquisition
reserve
Exchange
movement
reserve
Accumulated
losses
Total equity
share holders
interest
42,391,523
50,724,177
7,198,580
11,038,204
1,451,939
(78,808,925)
33,995,499
-
-
-
-
-
(20,794,606)
(20,794,606)
-
-
-
-
(462,413)
-
(462,413)
-
-
-
-
(462,413)
(20,794,606)
(21,257,019)
Shares Issued in the period
18,714,329
10,975,557
-
-
-
-
29,689,885
Expenses deducted from
share premium
Lapsed options
Lapsed warrants
Share based payments
- Share option charge
- Share warrants charge
Balance at
31 December 2019
Balance at
01 January 2020
Loss for the year
other comprehensive income
exchange movement
Total comprehensive
income
-
(1,247,669)
81,414
-
-
-
(1,166,255)
-
-
(1,014,117)
-
-
1,014,117
-
-
-
(85,028)
-
-
85,028
-
-
-
-
-
872,539
800,415
-
-
-
-
-
-
872,539
800,415
61,105,852
60,452,065
7,853,803
11,038,204
989,526
(98,504,386)
42,935,064
61,105,852
60,452,065
7,853,803
11,038,204
989,526
(98,504,386)
42,935,064
-
-
-
-
-
(25,299,472)
(25,299,472)
- - - -
1,902,660 -
1,902,660
- - - -
1,902,660
(25,299,472)
(23,396,812)
Shares Issued in the period
22,254,042
2,003,103
-
-
-
-
24,257,145
Expenses deducted from
share premium
Lapsed options
Lapsed warrants
Share based payments
- Share option charge
- Share warrants charge
Balance at
31 December 2020
-
(1,012,386)
-
-
-
-
(1,012,386)
-
-
-
-
(510,950)
(1,026,788)
-
-
-
-
510,950
1,026,788
-
-
- -
-
-
704,533
654,734
- -
-
-
-
-
704,533
654,734
83,359,894
61,442,782
7,675,332
11,038,204
2,892,186
(122,266,120)
44,142,278
The accompanying Notes on pages 114 to 137 form part of the financial statements.
110110 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
CONSOLIDATED STATEMENT OF
CASH FLOWS
For the year ended 31 December 2020 - Financials in £
Cash flow from operating activities
Loss after taxation
Adjustments to cash flows from non-cash items
Depreciation of property, plant and equipment
Amortisation of right of use assets
Finance income
Finance expense
Taxation
Share based payment expense
Impairment of inventory
Foreign exchange
Cash flows from operations before
changes in working capital
Changes in inventories
Change in trade and other receivables
Change in trade and other payables
Cash (used) / generated from operations
Corporation tax receipt
Cash flows from operating activities
Cash flows from investing activities
Interest received
Purchase of buildings, plant and equipment
Capital expenditure on intangible assets
Proceeds from disposal of investment property
Cash flows from investment activities
Cash flows from financing activities
Proceeds from issue of ordinary shares
Costs of share issue
Interest paid
Long term loan receipts
Lease payments
Short term loan receipts
Cash flows from financing activities
Increase/(decrease) in cash and cash equivalents
Exchange gain/(loss) on cash and cash equivalents
Cash and cash equivalents at 01 January 2020
Cash and cash equivalents
The accompanying Notes on pages 114 to 137 form part of the financial statements.
Group
2020
Group
2019
(25,299,472)
(20,794,606)
1,000,115
1,331,698
(3,297)
5,032,981
-
1,340,949
730,544
1,294,951
(15,572)
1,233,545
(1,082,827)
2,005,987
- -
471,204
(62,188)
(16,125,822)
(16,690,166)
(7,090,095)
235,537
968,798
(5,034,142)
(151,080)
(1,517,532)
(22,011,582)
(23,392,920)
1,768,591
-
(20,242,991)
(23,392,920)
3,297
(1,656,335)
(5,781,884)
-
15,572
(2,658,105)
(9,344,556)
310,000
(7,434,922)
(11,677,088)
18,040,021
25,692,058
(728,853)
(327,086)
7,621,951
(1,865,946)
(665,125)
(160,677)
13,800,000
(1,369,231)
4,000,000 -
26,740,087
(937,825)
20,109
3,235,167
2,317,451
37,297,025
2,227,017
(4,903)
1,013,053
3,235,167
ADVANCED ONCOTHERAPY PLC
111111
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC TO OUR SHAREHOLDERS
STRATEGIC REPORT
112112 ANNUAL REPORT 2020
ANNUAL REPORT 2020 GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
NOTES FORMING PART OF THE FINANCIAL
STATEMENTS
Consolidated
Company
1. Segment reporting
2. Operating loss
3. Finance income
4. Finance costs
5. Taxation on profit for ordinary activities
6. Staff costs
7. Directors' Remuneration
8. Pensions
9. Loss per share
10. Intangible assets
11. Plant and equipment
12. Leases
13. Trade and other receivables
14. Cash and cash equivalents
15. Inventories
16. Trade and other payables
17. Borrowings
18. Financial instruments
19. Equity share capital
20. Share based payments
21. Share premium reserve
22. Share option reserve
23. Reverse acquisition reserve
24. Exchange movement reserve
25. Capital commitments
26. Contingent liabilities
27. Related Party Transactions
28. Post balance sheet events
29. Supporting statements of cash flows - Analysis of net debt
30. Principal accounting policies – Group
Page
114
A. Principal accounting policies
115
B. Intangible assets
115
115
116
C. Property, plant & equipment
D. Leases
E. Investment in subsidiaries
117
F. Trade and other receivables
118
G. Trade and other payables
Page
140
140
140
141
142
142
143
120
H. Inventories
143
I. Borrowings
J. Related party transactions
K. Financial instruments
143
144
145
120
121
122
122
123
123
124
124
124
126
128
129
131
131
131
131
131
131
132
133
133
133
ADVANCED ONCOTHERAPY PLC
113
113
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC NOTES TO THE ACCOUNTS – GROUP
For the year ended 31 December 2020 - Financials in £
1. Segment reporting
Notes
3
4
10
11
Revenue
Cost of sales
Gross Loss
Administrative expenses
Operating loss
Finance income
Finance costs
Loss on ordinary activities
before taxation
Capital Expenditure
Intangible assets
Property, plant and equipment
Total assets
Total liabilities
Net assets/(liabilities)
Development
of Proton
Therapy -
UK
-
-
-
(11,104,749)
(11,104,749)
3,297
(5,032,884)
2020
Development
of Proton
Therapy -
Switzerland
-
-
-
(8,279,694)
(8,279,694)
-
(97)
Development
of Proton
Therapy -
USA
-
-
-
(885,345)
(885,345)
-
Group
-
-
-
(20,269,788)
(20,269,788)
3,297
-
(5,032,981)
(16,134,336)
(8,279,791)
(885,345)
(25,299,472)
501,546
1,315,203
82,073,874
(74,862,311)
7,211,563
5,280,338
-
340,282
40,194,549
(3,246,897)
36,947,652
850
24,762
(41,699)
(16,937)
5,781,884
1,656,335
122,293,185
(78,150,907)
44,142,278
During 2020 the Group operated in one business segment: Proton Therapy.
Notes
3
4
10
11
Revenue
Cost of sales
Gross Loss
Administrative expenses
Operating loss
Finance income
Finance costs
Loss on ordinary activities
before taxation
Capital Expenditure
Intangible Assets
Property, Plant and Equipment
Total assets
Total liabilities
Net assets/(liabilities)
Development
of Proton
Therapy -
UK
-
-
-
(11,853,675)
(11,853,675)
15,572
(1,162,437)
2019
Development
of Proton
Therapy -
Switzerland
-
-
-
(7,801,405)
(7,801,405)
-
(71,108)
Development
of Proton
Therapy -
USA
-
-
-
(1,004,380)
(1,004,380)
-
-
Group
-
-
-
(20,659,460)
(20,659,460)
15,572
(1,233,545)
(13,000,540)
(7,872,513)
(1,004,380)
(21,877,433)
4,250,136
2,334,087
76,860,329
(65,051,976)
11,808,353
5,094,420
324,018
33,948,751
(2,805,529)
31,143,222
-
-
13,096
(29,607)
(16,511)
9,344,556
2,658,105
110,822,176
(67,887,112)
42,935,064
114114 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
2. Operating loss
Operating loss is arrived at after charging:
Depreciation
Amortisation of right of use assets
Foreign exchange loss or (gain)
Amounts payable to the Group's Auditor and their associates for:
- audit of the Group's annual accounts
- audit of the Group's subsidiaries
- taxation compliance
Note
11
12
2020
2019
1,000,115
1,331,698
471,204
17,500
32,500
5,500
730,544
1,294,951
244,676
17,500
32,500
5,500
3. Finance income
Interest receivable on deposits
Total
4. Finance costs
Interest expense on short term facilities
Interest expense on secured loans
Interest expense on lease liabilities
Embedded derivative cost
Total
Refer to Note 17 for information on the secured loan interest rates.
2020
3,297
3,297
2019
15,572
15,572
2020
291,408
2,557,025
1,322,763
861,785
5,032,981
2019
40,826
573,858
618,861
-
1,233,545
ADVANCED ONCOTHERAPY PLC
115115
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
5. Taxation on profit for ordinary activities
(a) Tax (credit) / charge comprises
Current tax
UK corporation tax charge/(credit) for the year
2020
-
2019
-
UK corporation tax charge/(credit) for the previous year
-
(1,082,827)
Deferred tax
Origination and reversal of temporary differences
Total tax credit
-
-
-
(1,082,827)
(b) Factors affecting tax credit for the year
The tax assessed for the year differs from the standard rate of corporation tax in the UK (19.0%) (2019: 19.0%)
The differences are explained below:
Loss on ordinary activities before tax
Loss on ordinary activities multiplied by the standard rate
of corporation tax in the UK at 19.00% (2019: 19.0%)
Effects of:
Research and Development claim this year
Research and Development claim prior year
Permanent differences
Capital allowances in excess of depreciation
Short term timing differences
Unprovided losses carried forward
Tax credit for the year
(c) Unprovided deferred tax assets at 19.0% (2019: 19.0%)
Losses carried forward
R&D tax credit on Intangible assets
Accelerated capital allowances
Total
2020
2019
(25,299,472)
(21,877,433)
(4,806,900)
(4,156,712)
-
-
360,518
90,655
573,215
3,782,511
-
-
(1,082,827)
609,576
54,412
1,163
3,491,561
(1,082,827)
2020
2019
(20,915,823)
(16,939,236)
7,545,825
1,083,814
(12,286,184)
7,450,525
777,690
(8,711,021)
No deferred tax asset has been recognised on the above item on the grounds that it is uncertain when taxable profits will arise
against which losses carried forward may be utilised.
116116 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
6. Staff costs
Wages and salaries
Social security costs
Pension costs
Other benefits
Share based payments
Total
2020
12,917,614
1,130,903
933,981
350,672
1,340,949
16,674,119
2019
12,339,626
1,257,742
804,008
64,285
1,205,572
15,671,233
Staff costs include amounts of £5,240,672 (2019:£4,762,191) which have been capitalised within development projects during
the year.
Government grants of £89,535 (2019: nil) have been included in Wages and Salaries. These were received to assist with the
costs of furloughing two employees in the UK and a lump sum for assistance in the US.
Details of employee share options are set out in Note 20.
The monthly average number of persons employed during 2020 was 139 (2019: 127), categorised as follows:
Managerial
Operational
Product development
Administrative
Total
2020
10
24
61
44
139
2019
10
20
58
39
127
ADVANCED ONCOTHERAPY PLC
117117
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
7. Directors' remuneration
The salaries and benefits of the Directors of the Group payable by the Company or any of the Group companies for the year
ended 31 December 2020 were as follows:
Appointed
Resigned
Base
salary
Bonus
Pension
Medical
Board Fees
Other
benefits
Total
2020
Dr Michael Sinclair, Exec Chairman
16 Jun 06
270,147
-
-
300,000
-
30,000
Nicolas Serandour, CEO
Prof Steve Myers
Michael Bradfield
Lori Cross
Dr Nick Plowman
Dr Enrico Vanni
Hans Von Celsing
Renhua Zhang
Chunlin Han
Yuelong Huang
Peter Sjöstrand
Gabriel Urwitz
Total
27 Aug 14
26 Jan 17
26 Apr 13
29 Sep 20
09 Feb 17
01 Oct 13
26 Jan 17
28 Aug 18
264,599
-
26,400
96,100
7,500
30,000
30,000
30,000
-
96,100
96,100
96,100
29,113
-
28 Aug 18
31 Jul 20
17,863
-
28 Aug 18
31 Jul 20
17,863
-
28 Aug 18
31 Jul 20
17,500
-
28 Aug 18
31 Jul 20
16,800
-
-
-
-
-
-
18,623
288,770
6,298
2,914
336,298
267,513
-
122,500
-
7,500
6,000
-
132,100
-
-
-
-
-
-
-
-
126,100
-
126,100
-
-
-
-
-
29,113
17,863
17,863
17,500
16,800
-
-
-
-
-
-
-
-
-
-
-
1,057,785
384,400
30,000
6,000
27,835 1,506,020
Mr Bradfield, Dr Plowman, Dr Urwitz, Dr Vanni and Mr Von Celsing elected to take their remuneration to June 2020 in shares. Dr
Sinclair took part of his salary in shares. The Bonus' for certain of the Company's Non-Executive Directors were in lieu of additional
fees to be paid reflecting additional work that has been undertaken by these directors since they respectively joined the Board of
Advanced Oncotherapy. This includes additional responsibilities undertaken by each director on the respective board committees.
The Bonus' were settled in shares.
The amounts stated above for these payments are at the fair value of the shares based on the share price at the date of the issue.
Mrs Renhua, Mr Han, Dr Huang and Mrs Cross did not take their remuneration and these amounts are included in creditors.
Appointed
Resigned
Base
salary
Bonus
payment
Pension
Medical
Board Fees
Other
benefits
Total
2019
Dr Michael Sinclair, Exec Chairman
16 Jun 06
203,502
336,955
700
Nicolas Serandour, CEO
Prof Steve Myers
Michael Bradfield
Dr Nick Plowman
Dr Enrico Vanni
Hans Von Celsing
Renhua Zhang
Chunlin Han
Yuelong Huang
Peter Sjöstrand
Gabriel Urwitz
Total
27 Aug 14
26 Jan 17
26 Apr 13
09 Feb 17
01 Oct 13
26 Jan 17
28 Aug 18
28 Aug 18
28 Aug 18
28 Aug 18
28 Aug 18
118118 ANNUAL REPORT 2020
247,084
124,685
24,708
252,205
30,000
30,000
30,000
30,000
30,000
30,000
30,000
30,000
30,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,000
-
-
-
-
-
-
-
13,769
554,926
4,490
3,483
400,967
255,688
-
-
-
-
-
-
-
-
-
30,000
36,000
30,000
30,000
30,000
30,000
30,000
30,000
30,000
972,791
461,640
25,408
6,000
21,742 1,487,581
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
7. Directors' remuneration continued
Directors' share options
Michael Bradfield
Prof Steve Myers
Nicolas Serandour
At
01 Jan
2020
400,000
215,000
- 1,500,000
400,000
200,000
1,400,000
-
-
-
- 6,500,000
-
-
(400,000)
-
-
(400,000)
(200,000)
-
-
-
-
Dr Michael Sinclair
545,000
-
- 5,500,000
Dr Enrico Vanni
100,000
-
(100,000)
Granted
during
the year
Lapsed or
expired during
the year
Exercised
during
the year
At
31 Dec
2020
Option
price
pence
Date
of
grant
Earliest
exercise
date
Expiry
date
-
-
-
-
-
-
-
-
-
-
-
200.0p 05 May 15
01 Jul 15
30 Jun 20
215,000
100.0p
20 Feb 19
20 Feb 19
20 Feb 24
1,500,000
50.0p
01 Oct 20
Note¹
04 Oct 25
-
-
1,400,000
6,500,000
95.0p
01 Oct 14
01 Oct 16
07 Jan 20
200.0p 05 May 15
01 Jul 15
30 Jun 20
100.0p
20 Feb 19
20 Feb 19
20 Feb 24
50.0p
01 Oct 20
Note¹
04 Oct 25
545,000
100.0p
20 Feb 19
20 Feb 19
20 Feb 24
5,500,000
50.0p
01 Oct 20
Note¹
04 Oct 25
-
200.0p 05 May 15
01 Jul 15
30 Jun 20
Total
3,260,000 13,500,000 (1,100,000)
- 15,660,000
56.9p
Note¹ See vesting conditions in Note 20 Share based payments
As disclosed above 13,500,000 (2019: 2,160,000) options have been issued to the Directors during in the year. The fair value of
these options has been charged to the Consolidated Statement of Comprehensive Income.
Directors' share warrants
At
01 Jan
2020
Granted
during
the year
Lapsed or
expired during
the year
Exercised
during
the year
At
31 Dec
2020
Warrant
price
pence
Date
of
grant
Earliest
exercise
date
Expiry
date
Dr Enrico Vanni
40,816
-
-
-
40,816
100.0p
31 Aug 18
31 Aug 18
31 Aug 23
Hans von Celsing
6,000
-
-
-
6,000
100.0p
31 Aug 18
31 Aug 18
31 Aug 23
Dr Nick Plowman
61,224
-
-
-
61,224
100.0p
31 Aug 18
31 Aug 18
31 Aug 23
Total
108,040
-
-
-
108,040
100.0p
As disclosed above no warrants have been issued to the Directors during in the year (2019: nil).
ADVANCED ONCOTHERAPY PLC
119119
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
8. Pensions
The Group operates a defined contribution pension scheme. Contributions payable for the period of £901,485 (2019: £798,935)
are charged in the statement of comprehensive income. One Director (2019: Two) accrued retirement benefits during the year. A
charge of £30,000 (2019: £25,408) has been included in the year for the Directors.
9. Loss per share
Basic loss per share is calculated by dividing the loss for the period by the weighted average number of ordinary shares in issue
during the year. This is disclosed on page 108 on the income statement. An alternative to this is the loss per share based on the
comprehensive loss attributable to the equity holders of the group. This is shown below.
Loss attributable to equity holders of the Group (£'s)
Weighted average number of ordinary shares in issue (000s)
Loss per share (pence per share)
2020
2019
(25,299,472)
(20,794,606)
288,981
(8.75)p
211,479
(9.83)p
Diluted loss per share
The Group has two categories of dilutive potential ordinary shares - share options and warrants. Both the Group's share options
and warrants have been excluded from the calculation of diluted loss per share as the entity is loss making and they would be
anti-dilutive. These instruments could potentially be dilutive in the future.
Events after reporting period
As at 29 June 2021 the Company had 349,834,730 ordinary shares in issue. Assuming the same loss for the year ended 31
December 2020 the basic loss per share for the year ended 31 December 2020 divided by the current number of shares in issue
would decrease to (7.23)p per share.
120120 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 10. Intangible assets
Development costs
At 01 January 2019
Additions
Foreign exchange difference
At 31 December 2019
Development costs
At 01 January 2020
Additions
Foreign exchange difference
At 31 December 2020
LIGHT
Accelerator
Treatment
Software
Total
29,340,059
10,825,014
40,165,073
4,527,926
4,816,630
9,344,556
(223,144)
(103,057)
(326,201)
33,644,841
15,538,587
49,183,428
33,644,841
15,538,587
49,183,428
3,938,402
1,301,955
1,843,482
602,148
5,781,884
1,904,103
38,885,198
17,984,217
56,869,415
For the purpose of impairment testing of intangible assets, the Group’s continuing operations are regarded as a single cash-
generating unit relating to the development and operation of the LIGHT technology.
The recoverable amount is based on value in use using discounted risk-adjusted projections of the Group’s pre-tax cash flows
over 10 years and then at a flat rate into perpetuity which is considered by the Board as a reasonable period given the long
development and expected operational life cycle of the LIGHT technology. The projections include assumptions about the number
of units to be sold in each financial year, expected unit selling price and production cost, pipeline conversion, competition from
rival products and pricing policy as well as the possibility of new technology entering the market. In setting these assumptions
the Directors consider their own past experience, external sources of information (including information on expected increases
and ageing of the populations in our established markets and the expanding patient population in newer markets), our knowledge
of competitor activity and our assessment of future changes in the proton beam industry. The 10 year period is covered by
internal budgets and forecasts. Given that internal budgets and forecasts are prepared for all projections, no general growth
rates are used to extrapolate internal budgets and forecasts for the purposes of determining value in use. The methods used to
determine recoverable amounts have remained consistent with the prior year. The weighted average pre-tax discount rate used
was approximately 12.5% (2019: 12.5%).
As a further check, the market capitalisation is compared to the book value of the Group's net assets: as of the date of this report,
the market capitalisation is higher than the book value of the net assets.
No impairment was found necessary.
The Group has also performed sensitivity analysis calculations on the projections used and discount rate applied. By their
nature, the value in use calculations are sensitive to the underlying methods, assumptions and estimates. Consistent with prior
years, as part of the impairment review process, management has not identified that reasonably possible changes in certain
key assumptions may cause the carrying amount of the intangible assets to exceed the recoverable amount. At 31 December
2020, the Group held intangible assets currently still being developed, for which the most sensitive assumption is the probability
of final technical success, and given their nature, impairment adjustments triggered by future events that have yet to occur may
be material. In addition, there is a significant risk that impairments recognised in any one period may be subject to material
adjustments in future periods.
ADVANCED ONCOTHERAPY PLC
121121
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
11. Plant and equipment
Cost
At 01 January 2019
Foreign exchange difference
Additions
At 31 December 2019
Depreciation
At 01 January 2019
Foreign exchange difference
Charge for the year
At 31 December 2019
Net book value
At 01 January 2019
At 31 December 2019
Cost
At 01 January 2020
Foreign exchange difference
Additions
At 31 December 2020
Depreciation
At 01 January 2020
Foreign exchange difference
Charge for the year
At 31 December 2020
Net book value
At 01 January 2020
At 31 December 2020
12. Leases
Right-of-Use Assets
At the beginning of the period
Additions
Amortisation
Foreign exchange movements
At the end of the period
122122 ANNUAL REPORT 2020
Leasehold
property
3,062,125
7,476
2,308,358
5,377,959
27,932
-
268,604
296,536
3,034,193
5,081,423
5,377,959
12,360
543,583
5,933,902
296,536
234
415,638
712,408
5,081,423
5,221,494
Computer
hardware and
software
368,604
(2,434)
90,181
456,351
244,083
(1,507)
64,167
306,743
124,521
149,608
456,351
14,886
274,895
746,132
306,743
9,249
131,805
447,798
149,608
298,334
Fixtures,
fittings and
equipment
1,808,270
(52,001)
259,566
2,015,835
880,253
(33,660)
397,773
Total
5,238,998
(46,959)
2,658,105
7,850,145
1,152,268
(35,167)
730,544
1,244,366
1,847,645
928,017
771,469
2,015,835
104,957
837,857
2,958,649
1,244,366
70,663
452,672
1,767,700
771,469
1,190,949
4,086,730
6,002,500
7,850,145
132,203
1,656,335
9,638,683
1,847,645
80,146
1,000,115
2,927,906
6,002,500
6,710,777
2020
2019
32,528,667
144,664
(1,331,698)
95,528
31,437,161
9,613,736
24,237,535
(1,294,951)
(27,653)
32,528,667
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 12. Leases continued
Lease liabilities
At the beginning of the period
Additions
Interest expense
Lease payments
Foreign exchange movements
At the end of the period
The maturity profile of discounted lease payments
Repayable within one year
Current liabiities
Repayable in two to five years
Repayable in more than five years
Non-current liabilities
Total borrowings
2020
2019
32,641,518
145,195
1,322,763
(1,865,946)
93,199
32,336,729
2,731,920
2,731,920
7,466,124
22,138,684
29,604,809
32,336,729
9,389,329
24,030,212
618,861
(1,369,231)
(27,653)
32,641,518
1,594,691
1,594,691
7,903,708
23,143,119
31,046,827
32,641,518
Break clauses
The only lease that provides a break clause that has not already passed is for the property at STFC Daresbury. The earliest date
at which the break clause could take effect is July 2023, management currently do not intend to exercise this break option.
13. Trade and other receivables
Due greater than 1 year
Property rent deposits
Property decommissioning deposits
Total due greater than 1 year
Current receivables
VAT recoverable
Advance payments to suppliers
Property and other deposits
Prepayments
Corporation tax
Total current receivables
The corporation tax debtor recognised at 31 December 2019 was received in May 2020.
14. Cash and cash equivalents
Cash and cash equivalents
Amounts in foreign exchange denominated by
Cash included above which is pledged as security. (See Note 17)
Swiss Franc
Euro
US Dollar
Sterling
2020
2019
584,834
350,000
934,834
661,286
238,848
9,943
975,147
1,885,224
-
1,885,224
2020
2,317,451
122,280
234,527
32,481
1,928,163
500,000
564,938
350,000
914,938
355,919
87,669
9,547
1,687,522
2,140,657
1,768,591
3,909,248
2019
3,235,167
276,162
62,764
15,596
2,880,645
500,000
ADVANCED ONCOTHERAPY PLC
123123
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
15. Inventories
Work in progress - LIGHT
Total
2020
22,138,323
22,138,323
2019
15,048,228
15,048,228
All of the above items of Inventory have been valued at cost less an impairment provision of 1,908,925 (2019: £1,908,925)
relating to the LIGHT work in progress. No increase in the impairment provision was considered necessary by the Directors.
Costs included in Inventory are for finished components of the LIGHT machine that will be sold as part of future LIGHT installations.
16. Trade and other payables
Due greater than 1 year
Licence Fee Received
Total due greater than 1 year
2020
2019
16,500,000
16,500,000
16,500,000
16,500,000
The agreement under which the license fee was received in the prior year from our Chinese partner, Liquid Harmony, a shareholder,
requires certain milestones to be met within a five year from receiving the fee including development of the products and obtaining
regulatory approval in China within 5 years. If these conditions are not met the amount will be fully repayable.
Current
Trade payables
Other taxes and social security
Accruals and deferred income
Total
17. Borrowings
Amounts falling due within one year
Secured loans
Leases
Total amounts falling due within one year
Amounts falling due over one year
Secured loans
Leases
Total amounts falling due over one year
Total borrowings
The maturity profile of gross debt is as follows
Repayable within one year
Repayable in two to five years
Repayable in more than five years
Total borrowings
124124 ANNUAL REPORT 2020
2020
2019
1,598,315
1,358,372
3,481,530
6,438,217
1,854,182
279,106
2,747,922
4,881,210
2020
2019
10,039,316
2,731,920
12,771,236
8,258,435
29,604,809
37,863,244
50,634,480
12,771,236
15,724,559
22,138,684
50,634,480
-
1,594,691
1,594,691
13,864,384
31,046,827
44,911,211
46,505,902
1,594,691
22,752,970
22,158,241
46,505,902
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
17. Borrowings continued
A debt facility with Credit Suisse AG ("Credit Suisse") for £10 million is secured against an aggregated amount of £10.5 million,
Nerano Pharma Ltd ("Nerano Pharma") acting as Third Party Pledgor having placed £10 million in a pledged account, with the
remaining £0.5 million placed in a pledged account by the Company. Interest rate payable on the Loan is 2 per cent. above LIBOR
per annum. In May 2021, the Company extended the repayment date of the £10 million loan facility on a rolling quarterly basis
through to 11 May 2022.
Nerano Pharma is the ultimate parent company of Nerano Capital, a shareholder of the Company. A loan from Nerano Pharma
of £4 million was received in the prior year and interest accrues at 12 per cent per annum for annual payment or 15 per cent per
annum if paid at the end of the loan. A further loan of £4 million was received and fully settled through the issue of shares along
with interest and fees on 11 May 2020.
On 28 June 2020, the Company entered into an interest-bearing secured convertible facility with Nerano Pharma for up to $30
million with the Company being able to issue drawdown requests at any time during the three-year term.
A rate of interest of 5 per cent. per annum will accrue on all amounts drawn under the Nerano Facility, paid annually in cash on
each anniversary of the Nerano Facility with the option for the Company to defer payment of that interest until the maturity date of
the Nerano Facility on 29 June 2023. On the maturity date all amounts drawn under the Nerano Facility and any interest accrued
thereon shall be repayable by the Company. The Facility provides an option for the Company to voluntarily repay part, or all, of the
loan (along with any accrued interest) prior to the maturity date. The Nerano Facility is secured on the LIGHT components being
built in Daresbury and Geneva, associated intellectual property and the property at Harley St. Nerano Pharma will be entitled to
a share of the profit generated by the Harley Street Centre for up to 15 years.
Nerano Pharma may convert any amount that the Company has opted to voluntarily prepay during the life of the Nerano Facility
and at maturity of the Nerano Facility in June 2023, any outstanding loan amounts and interest payable, in each case, into new
ordinary shares in Advanced Oncotherapy at a price of 25 pence per ordinary share.
Pursuant to the terms of the Nerano Agreement, the Company granted 5 million warrants to subscribe for new ordinary shares to
Nerano Pharma exercisable until 28 June 2025 at an exercise price of 50 pence. Details of the measurement have been included
in Note 20.
On the 17 August the company drew down $10m of the loan facility. Although convertible, the loan does not meet the fixed
number of shares for a fixed loan value and therefore the convertible feature has been separated from the host contract and
recognised as an embedded derivative. The below table shows the movement in the loans.
Proceeds received
Recognition of embedded derivative
Costs including warrants
Interest accrued
Foreign exchange
Fair value adjustment at reporting date
Carrying value at the year end
Host Loan
Embedded derivative
7,621,951
(3,716,425)
(654,734)
399,243
(143,173)
-
3,506,862
-
3,716,425
-
-
-
861,785
4,578,210
The fair value of the embedded derivative was designated as a level 3 in accordance with fair value hierarchy as per financial
instruments note. The fair value has been determined in conjunction with a third party valuation firm, using a Monte Carlo
simulation forecasting the share price at the date the conversion is exercised. The following assumptions were used in the
calculation of the derivative option:
Share price
Exchange rate
Volatility share price
Volatility exchange rate
Time period
Assumptions
17 August 2020
31 December
31p
1.31
50%
9.1%
2.86
36p
1.366
50%
9.5%
2.49
A change in forex rate of -/+5% would move the derivative valuation by approximately £200k whilst a -/+5% movement on the
share price would move the valuation by approximately £400k.
ADVANCED ONCOTHERAPY PLC
125125
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
18. Financial instruments
The Group’s principal financial instruments comprise short-term receivables and payables, lease liabilities, embedded derivatives
and borrowings, short-term bank deposits and cash. All of the financial instruments are measured at amortised cost with the
exception of the embedded derivative which is measure at fair value. There is currently no material difference between the
carrying value of financial assets and liabilities and their fair value. The prime objectives of the Group’s policy towards financial
instruments are to maximise returns on the Group’s cash balances, manage the Group’s working capital requirements and
finance the Group’s ongoing operations.
Capital management
The Group's objectives when maintaining capital are:
•
•
to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and
benefits for other stakeholders, and
to provide an adequate return to shareholders.
The Group does not yet have any significant recurring revenues and finances its operations through the issue of new shares and
loans. The Group’s capital resources are managed to ensure it has resources available to invest in operational activities designed
to generate future income. These resources were represented by £2,317,451 of cash as at 31 December 2020. During 2020 the
Group utilised a number of short and longer term debt facilities in order to provide liquidity to the group.
Assets
Total assets
Debt
Secured loans
Lease liabilities
Equity
Share capital and share premium
Reserves
Total capital
Debt as a % of total capital
Debt as a % of total assets
2020
2019
122,293,185
110,822,176
18,297,751
32,336,729
13,864,384
32,641,518
50,634,480
46,505,902
144,802,676
121,557,917
(100,660,398)
(78,622,853)
44,142,278
42,935,064
94,776,758
89,440,966
53.4%
41.4%
52.0%
42.0%
Management of financial risk
The main risks associated with the Group’s financial instruments have been identified as interest rate risk, liquidity risk, exchange
rate risk, and credit risk. The Board is responsible for managing these risks and the policies adopted, which have remained largely
unchanged throughout the year, are set out below.
Interest rate risk
The Group has debts which are the subject of fixed interest rate agreements and, therefore, there is no interest rate risk arising.
Liquidity risk
The Group has financed operations to date through the issue of equity and debt. All of the financial instruments are measured
at amortised cost with the exception of the embedded derivative which is measured at fair value. In connection with its business
plan, management anticipates additional increases in operating expenses, working capital requirements, and capital expenditures
in line with the growth of its business, relating to the lease for the assembly site, the purchase of additional inventory, the hiring
of personnel, and marketing expenses. It expects that those will continue to be funded through a combination of existing funds
and further issuances of shares, and debt issuances. Thereafter, it is expected that the Group will need to raise additional capital
and generate revenues to meet long-term operating requirements. Additional issuances of equity will result in dilution to current
shareholders.
126126 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
18 . Financial instruments continued
All of the Group's Trade and Other Payables are due within three months.
The Credit Suisse loan of £10m was due for repayment in May 2021 however the date has been extended to May 2022.
The Licence Fee received will only be repayable if certain milestones, as indicated in Note 16, are not met.
The maturity of Liabilities is:
Trade and other payables
Borrowings
Lease liabilities (undiscounted)
Total
Due in less than
one year
Due between
two and five years
Due over
five years
6,438,217
-
-
10,039,316
3,194,934
19,672,467
14,501,728
-
8,026,698
22,528,425
94,564,857
94,564,857
Exchange rate risk
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency other than
their functional currency. The Group's policy is, where possible, to allow Group entities to settle liabilities denominated in their
functional currency). Where Group entities have liabilities denominated in a currency other than their functional currency (and
have insufficient reserves of that currency to settle them), cash already denominated in that currency will, where possible, be
transferred from elsewhere within the Group.
As of 31 December 2020 the Group's net monetary assets by functional currency of the Group’s entities were as follows.
Currency denomination of monetary
assets/liabilities
GBP
CHF
Euro
USD
Total
Functional currency of entity
GBP
CHF
EUR
USD
Total
(13,944,215)
1,220 -
(1,985)
(13,944,980)
30,391
(1,519,975)
- -
(1,489,584)
(241,963)
(28,528)
(1,800)
-
(272,291)
(7,731,810)
(11,751)
-
(604)
(7,744,165)
(21,887,597)
(1,559,034)
(1,800)
(2,589)
(23,451,020)
The Directors consider that a movement of 10% of GBP and USD represents the entities exposure to foreign exchange risk and
do not consider the impact to be material therefore no sensitivity analysis is presented.
Credit risk
The Group is not currently trading and has limited financial assets and therefore the Directors' do not consider that credit risk is
material.
Cash at bank is held only with reputable banks with high quality external credit ratings which represents the maximum credit
exposure. This represents the maximum credit risk to the Group.
ADVANCED ONCOTHERAPY PLC
127127
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC p/Share
54.91p
39.66p
-
38.00p
49.73p
27.25p
-
26.11p
43.43p
25.18p
28.26p
26.11p
39.31p
38.40p
36.34p
NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
19. Equity share capital
Ordinary shares of 25p each
Number
Share Capital
Share Premium
Total
As at 01 January 2019
169,566,092
42,391,524
50,724,177
93,115,701
Shares Issued in the period
74,857,314
18,714,329
10,975,557
29,689,885
Expenses deducted from Share Premium
-
-
(1,247,669)
(1,247,669)
Total for year 2019
74,857,314
18,714,329
9,727,888
28,442,216
As at 31 December 2019
244,423,406
61,105,852
60,452,065
121,557,917
Shares Issued in the period
89,016,167
22,254,042
2,003,103
24,257,145
Expenses deducted from Share Premium
-
-
(1,012,386)
(1,012,386)
Total for year 2020
89,016,167
22,254,042
990,717
23,244,759
As at 31 December 2020
333,439,573
83,359,894
61,442,782
144,802,676
Shares issued in the period
May-20
Oct-20
Total
Shares issued in the prior period
Jan-19
May-19
Aug-19
Sep-19
Sep-19
Nov-19
Dec-19
Total
61,947,835
15,486,959
108,470
15,595,429
27,068,332
6,767,083
882,247
7,649,330
89,016,167
22,254,042
990,717
23,244,759
25,000,000 6,250,000 3,577,998 9,827,998
5,862,500 1,465,625 785,575 2,251,200
29,797,502 7,449,375 3,380,203 10,829,578
2,400
600 3,000 3,600
150.00p
7,364,162 1,841,041 958,800 2,799,841
6,250,000 1,562,500 937,500 2,500,000
580,750 145,188 84,812 230,000
74,857,314 18,714,329 9,727,888 28,442,216
38.02p
40.00p
39.60p
38.00p
The Directors were authorised at a General Meeting in May 2020 to allot and issue up to 61,221,586 shares. 61,221,586 were
issued as shares in May 2020 raising £15.4 million of equity.
At the same meeting, the Directors were further authorised to allot and issue up to 91,693,498 shares. This authority lapsed at
the 2020 Annual General Meeting in July 2020.
In May 2020, 726,249 shares were issued under a residual authority from a General Meeting in July 2019, raising £0.2 million of
equity.
The Directors were authorised at a General Meeting in July 2020 to allot and issue up to 91,911,372 shares. 27,068,332 were
issued as shares in October 2020 raising £7.6 million of equity. In October 2020 24,600,000 were issued as options.
A further 16,395,156 were issued as shares between January and May 2021, raising £6 million of equity.
128128 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 20. Share based payments
(a) Share Options
The Group's shares options are detailed in note a below. The options in issue are all equity options and vest over a term of 1 to 5 years.
They do not have performance conditions attached other than the 24m shares options issued on 01 October 2020 under the LTIP scheme.
The vesting conditions attached to the issue are detailed below:
•
•
•
•
6m on the LIGHT System being fully operational
6m on first patient treated
6m on the LIGHT system being certified
6m if the share price is above £1 for 30 consecutive days.
The first three of these are non-market conditions and are reflected in the number of options expected to vest in accordance with the
accounting policy. The vesting period is assessed by management based on their expectation of the conditions being satisfied based
on the project timeline. Management expect these all to fully vest over a two year period. The inputs in the Black and Scholes model
are detailed later in this note.
The latter item is a non-market condition and is reflected in the fair value of the options in accordance with the accounting policy. The
inputs in the Monte Carlo simulation are detailed later in this note.
Share Options
Share options held by Directors are disclosed in Note 7. The total number of options outstanding at the year end are as follows:
Grant
date
01-Sep-13
01-Jul-15
01-Oct-16
13-Feb-17
29-Aug-17
20-Feb-19
01-Mar-19
01-Oct-20
01-Oct-20
Total
Maximum date
of exercise
06-Jan-20
30-Jun-20
31-Jan-20
12-Feb-22
28-Aug-22
20-Feb-24
31-Aug-22
31-Oct-25
31-Oct-25
Exercise
price
75.00p
200.00p
95.00p
200.00p
130.00p
100.00p
40.00p
50.00p
100.00p
Outstanding at start
of period 01 January
2020
80,000
900,000
400,000
400,000
400,000
3,720,000
1,404,324
-
-
7,304,324
Issued in
the period
-
-
-
-
-
-
-
24,000,000
600,000
24,600,000
Lapsed in
the period
Share options as at
31 December 2020
(80,000) -
(900,000) -
(400,000) -
400,000
400,000
3,720,000
1,404,324
24,000,000
600,000
30,524,324
-
-
-
-
-
-
(1,380,000)
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the period
Lapsed during the period
Exercised during the period
Issued during the period
Outstanding at the end of the period
Exercisable at the end of the period
2020
Weighted average
exercise price
107.36p
162.32p
-
51.22p
59.63p
110.16p
Number
of options
7,304,324
(1,380,000)
-
24,600,000
30,524,324
5,120,000
2019
Weighted average
exercise price
127.11p
102.75p
-
84.04p
107.36p
123.39p
Number
of options
5,566,669
(3,711,687)
-
5,449,342
7,304,324
5,900,000
Exercise
period
Exercise
price
Issued in
the period
Lapsed in
the period
Maximum date
of exercise
(b) Warrants
Warrants held by Directors are disclosed in Note 7. The total number of warrants outstanding at the year end are as follows:
Share warrants
held at 01 January
2020
1,840,000
535,674
168,652
302,325
722,223
838,710
21,800,000
1,000,000
450,000
2,617,312
3,500,000
385,000
-
34,159,896
(1,840,000)
(535,674)
(168,652)
-
-
-
-
-
-
-
-
-
-
(2,544,326)
03-Apr-15
01-May-15
14-May-15
22-Feb-17
26-Apr-17
24-May-17
24-May-17
26-Apr-18
31-May-18
31-Aug-18
07-May-19
31-Oct-19
28-Jun-20
Total
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
5,000,000
02-Apr-20
30-Apr-20
13-May-20
21-Feb-21
25-Apr-21
23-May-21
23-May-21
23-Mar-22
11-Jun-22
31-Aug-23
07-May-24
31-Aug-24
28-Jun-25
-
-
-
-
-
(4,236)
(31,313)
-
-
-
-
-
-
(35,549)
177.50p
200.00p
206.25p
86.00p
36.00p
31.00p
25.00p
70.00p
50.00p
100.00p
100.00p
100.00p
50.00p
Share warrants
held at 31
December 2020
-
-
-
302,325
722,223
834,474
21,768,687
1,000,000
450,000
2,617,312
3,500,000
385,000
5,000,000
36,580,021
Exercised in
the period
ADVANCED ONCOTHERAPY PLC
129129
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
20. Share based payments continued
The number and weighted average exercise prices of share warrants are as follows:
Outstanding at the beginning of the period
Lapsed during the period
Exercised during the period
Issued during the period
Outstanding at the end of the period
Exercisable at the end of the period
2020
Weighted average
exercise price
53.73p
184.59p
25.71p
50.00p
44.14p
44.14p
Number
of warrants
34,159,956
(2,544,326)
(35,549)
5,000,000
36,580,081
36,580,021
2019
Weighted average
exercise price
51.44p
150.00p
150.00p
100.00p
53.73p
53.73p
Number
of warrants
31,395,210
(1,117,854)
(2,400)
3,885,000
34,159,956
34,159,956
The fair value of services received in return for share options and warrants is measured by reference to the fair value of the share
options and warrants granted. For issues without market performance conditions, this estimate is based upon a Black Scholes
model. Where the awards include market conditions, a Monte Carlo simulation model is used. The inputs into the various models
for options and warrants granted in the year are as follows:
Options
Expected
life
First vesting
date
Risk
free rate
Exercise
price
Share
price
Volatility of
share price
Options
Vested
Options
Granted
Expiry
Fair
Value
Monte Carlo
5
31-Mar-22
0.10%
50p
32.5p
76.50% -
6,000,000
31-Oct-25
834,000
Black-Scholes
5
5
31-Mar-22
05-Oct-20
0.10%
0.10%
50p
100p
32.5p
32.5p
76.50% - 18,000,000
31-Oct-25
3,042,000
76.50% 600,000
600,000
31-Aug-22
86,720
24,600,000
3,962,720
Total
Warrants
Expected
life
First vesting
date
5
28-Jun-20
Risk
free rate
0.10%
Exercise
price
Share
price
Volatility of
share price
Warrants
Vested
Warrants
Granted
Expiry
Fair
Value
50p
32.5p
76.50% 5,000,000
5,000,000
28-Jun-25
654,735
Total
5,000,000
654,735
Volatility was determined with reference to the Company's share price movements over a period equivalent to the expected lives
of the options and warrants retrospectively from the date of issue.
The Group recognised the following share-based payment expense during the period:
Charged to the profit and loss account
Expense arising from fair value of share options currently in issue
Expense arising from fair value of warrants currently in issue
Expense arising on employee services paid in shares
Expense on settlement of financial liability
Total charge to the profit and loss account
Charged to share premium
Expense arising from fair value of warrants issued in period
Total
Charged to long term loans
Expense arising from fair value of warrants currently in issue
Total
130130 ANNUAL REPORT 2020
2020
704,533
-
636,416
1,297,174
2,638,123
2020
-
-
2020
654,734
654,734
2019
872,539
800,415
333,033
106,335
2,112,322
2019
81,414
81,414
2019
-
-
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
21. Share premium reserve
Company law restricts the use of the share premium reserve of £61,442,782 (2019:£60,452,065), which may only be applied in
paying unissued shares of the Company in respect of capitalisation issues and in writing off the expenses of, or the commission
paid or discount allowed on, any issue of shares or debentures of the Company.
22. Share option reserve
The share option reserve of £7,675,332 (2019: £7,853,803) arises owing to the provision in respect of IFRS 2 "Share based
payments".
23. Reverse acquisition reserve
The reverse acquisition reserve of £11,038,204 was created on 31 July 2006 when the Company became the legal parent of
CareCapital Limited ("CCL") by way of a share exchange agreement. The business combination was regarded as a reverse
acquisition under IFRS 3 whereby CCL, the legal subsidiary, is the acquirer and has the power to govern the financial and
operating policies of the legal parent so as to obtain benefits from its activities.
24. Exchange movement reserve
The foreign exchange movement reserve comprises all foreign currency differences arising from the translation of the financial
statements of the foreign operations.
25. Capital commitments
The Group and its subsidiaries had capital commitments of £1,554,283 (2019: £528,000). This was in respect of the building
modifications being undertaken at the STFC Daresbury site.
26. Contingent liabilities
The Directors are not aware of any contingent liabilities at the 31 December 2020 (2019: £nil).
ADVANCED ONCOTHERAPY PLC
131131
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
27. Related party transactions
The following related party transactions are required to be disclosed in accordance with IAS24.
There are no employees considered as key management other than the directors whose remuneration is detailed in Note 7.
A family member of Dr Michael Sinclair, Executive Chairman, was employed by the Group. The
remuneration and benefits payable under the contract, excluding Company statutory and other costs, were:
The Group received services from Berkshire Investment Management Limited, a company controlled
by Hans von Celsing, a Group Director
The balance due to Berkshire Investment Management Limited as at 31 December 2020 was:
In October 2020, as disclosed in Note 7, the following options were issued:
Michael Sinclair (Director)
Nicolas Serandour (Director)
Steve Myers (Director)
In May 2020, the following shares were issued:
2020
2019
198,440
231,754
54,955
24,000
Price
78,871
7,244
Quantity
50.00p
5,500,000
50.00p
6,500,000
50.00p
1,500,000
Michael Sinclair (Director)
Michael Sinclair (Director)
Dr Nick Plowman (Director)
Enrico Vanni (Director)
Enrico Vanni (Director)
Dr Nick Plowman (Director)
Hans von Celsing (Director)
Prof Steve Myers (Director)
Gabriel Urwitz (Former Director)
In October 2020, the following shares were issued:
Dr Nick Plowman (Director)
Enrico Vanni (Director)
Dr Nick Plowman (Director)
Hans von Celsing (Director)
In February 2019, as disclosed in Note 7, the following options were issued:
Michael Sinclair (Director)
Nicolas Serandour (Director)
Steve Myers (Director)
In August 2019, the following shares were issued:
Michael Sinclair (Director)
Enrico Vanni (Director)
Enrico Vanni (Director)
Michael Bradfield (Director)
Dr Nick Plowman (Director)
Dr Euan Thomson (former Director)
Gabriel Urwitz (Director)
Prof Chris Nutting (former Director)
Subscription
25.00p
400,000
In Lieu of Salary
25.00p
265,944
NED Fees
Subscription
NED Fees
NED Fees
NED Fees
Director Fees
NED Fees
NED Fees
NED Fees
NED Fees
NED Fees
Subscription
Subscription
NED Fees
NED Fees
NED Fees
NED Fees
NED Fees
NED Fees
25.00p
120,000
25.00p
300,000
25.00p
120,000
25.00p
120,000
25.00p
120,000
25.00p
200,000
25.00p
60,000
30.00p
250,000
30.00p
250,000
30.00p
250,000
30.00p
250,000
100.0p
100.0p
100.0p
545,000
1,400,000
215,000
40.0p
40.0p
40.0p
40.0p
40.0p
40.0p
40.0p
40.0p
875,000
87,500
112,500
112,500
112,500
112,500
62,500
37,500
The Group has taken advantage of the exemption available under IAS 24 'Related Party Disclosures' not to disclose details of
transactions between Group undertakings which are eliminated on consolidation in the Group Financial Statements.
132132 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 28. Post balance sheet events
In January 2021, the Group raised additional equity for a net amount of £5.6 million through the subscription of 14,801,040 new ordinary
shares by new and existing shareholders. Further equity of £464,596 was raised through the exercise of warrants for 1,594,116 shares.
Separately in June 2021, the Group announced the signature of a Letter of Intent with Saba Partners for the sale of a three-room
system in Switzerland for a total contract value of up to US$107 million (equivalent to c.£75.5 million).
In March 2021, the Group received a short term loan of £1.6m, repayable in July 2021.
In April 2021, the Group received a short term loan of £2.5m, repayable in July 2021.
29. Supporting statements of cash flows - Analysis of net debt
Cash
flows
Principal
repaid in
shares
Costs
paid in
shares
Fair value
of warrants
cost
Recognition
of embedded
derivative
New lease
liability
recognised
Accrued
interest
Foreign
exchange
Total
At 31
December 2019
At 1
January 2019
Cash at bank and in hand
1,013,053
2,227,017
Lease liabilities
(9,389,329)
1,369,231
-
-
-
-
Borrowings
Total
(3,000,000) (13,639,323) 3,057,330 106,335
(11,376,276) (10,043,075) 3,057,330 106,335
At 1
January 2020
Cash at bank and in hand
3,235,167
(937,825)
Lease liabilities
(32,641,518)
1,865,946
-
-
Borrowings
Total
(13,864,384)
(11,294,865) 4,000,000
(43,270,735) (10,366,744) 4,000,000
-
-
-
-
30. Principal accounting policies – Group
-
-
-
-
-
-
-
-
-
-
-
(4,903)
3,235,167
(24,030,212)
(618,861)
27,653 (32,641,518)
-
(331,396)
(57,330)
(13,864,384)
-
(24,030,212)
(950,257)
(34,580)
(43,270,735)
At 31
December 2020
-
-
-
-
20,109
2,317,451
(145,195) (1,322,763)
(93,199)
(32,336,729)
654,734
3,716,425
- (1,652,834)
143,173 (18,297,751)
654,734
3,716,425
(145,195) (2,975,597)
70,083 (48,317,029)
a. Accounting convention, basis of preparation and going concern
These financial statements have been prepared under accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006. The financial statements have been prepared on the historical cost basis modified to include
certain assets and liabilities at fair value.
The Directors have taken advantage of the exemption offered by Section 408 of the Companies Act 2006 not to prepare a separate
statement of comprehensive income for the Parent Company.
Advanced Oncotherapy PLC (“the Company”) is a public limited company incorporated and domiciled in the UK. The nature of the
operations and principal activities of the Company and its subsidiary undertakings (the “Group”) are set out in the Strategic Report on
pages 8 to 73 and the Directors’ report on pages 98 to 100. These consolidated financial statements are presented in pounds sterling
because that is the predominant currency of the economic environment in which the Group operates.
Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and opinions or statements received from competent professional advisors. The
assumptions used are considered to be reasonable under the circumstances and the results of which form the basis of making judgements
about the carrying values of assets and liabilities that are readily apparent from other sources. Actual results may differ from these estimates.
Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised if the revisions affects only that period.
Critical estimates and judgements that have the most significant effect on the amounts recognised in the financial statements and/or have
a significant risk attached to:
1. The values ascribed to Intangible assets. The Directors carried out an impairment review of the Intangible assets and found that no
impairment is necessary. At 31 December 2020, the Group held intangible assets currently still being developed, for which the most
sensitive assumption is the probability of technical success and, given their nature, impairment adjustments triggered by future events
that have yet to occur which may be material. In addition, there is a significant risk that impairments recognised in any one period may
be subject to material adjustments in future periods. See Note 10 and Note w below.
Inventory. The Directors have made significant accounting estimates in respect of the carrying value of inventory at the year-end both
in respect of estimated selling prices and costs to complete the inventory. These estimates have been based on quoted amounts
from suppliers and on discussions with or signed contracts with potential customers. An impairment provision of £nil (2019: 1.9m) has
been provided. Some sales values are contractually agreed thus a 20% reduction in those not agreed would lead to an impairment of
£1.1m. An increase in expected costs of 20% would lead to an impairment of £4.3m.
2.
ADVANCED ONCOTHERAPY PLC
133133
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
30. Principal accounting policies – Group continued
3.
Incremental interest rates on Leases. On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which
had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the
present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The
weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 3.0%. The determination
of applicable incremental borrowing rates at the commencement of new lease contracts also requires judgement. The Group
determines its incremental borrowing rates by obtaining interest rates from various external financing sources and makes certain
adjustments to reflect the terms of the lease. The Group considers the relevant market interest rate, based on the weighted average
of the timing of the lease payments under the lease obligation.
4. Going concern – refer to Note 30 b for judgments in respect of the going concern basis of preparation.
5. Valuation of share based payments – the estimation related to share based payments includes the selection of an appropriate
valuation option pricing model, consideration as to the inputs into the valuation model chosen and the estimation of the number of
the awards that will ultimately vest. Inputs subject to estimation relate to the future volatility of the share price based on historically
observed volatility from trading in the Company’s shares, over a historical period between the date of grant and the date of exercise.
Management has used a Monte Carlo model to calculate the fair value of the awards which include market based conditions. Further
disclosure of inputs relevant to the calculations is set out in Note 20.
6. Accounting for loan agreements and valuation of embedded derivative – management have applied judgement in accounting for
the loan received from Nerano. In determining the appropriate accounting, they have considered the terms of the arrangement and
identified that the loan contains an embedded derivative that needs to be recognised separately from the host contract. Additionally,
they have applied judgement in determining which of the cash flows arising from the arrangement can be estimated reliably in
determining what should be included in the amortised cost calculation.
The fair value of the embedded derivative has been determined through a range of inputs and modelling the results of the change in
these inputs. Inputs are determined based on past performance, comparable instruments and management’s determination of the
suspected future time horizons for the conversion of the instruments. These forecasted values are by their nature estimates and therefore
there is uncertainty with relation to the valuation of these instruments. Further details in relation to the valuation of these instruments can
be found in Note 17.
A summary of the Group accounting policies is set out below, together, where relevant, with an explanation of where changes have
been made to previous policies on the adoption of new accounting standards in the year. Certain new standards, amendments and
interpretations to existing standards have been published that are mandatory for the Group's accounting periods beginning on or after 01
January 2020 and these have been adopted in the financial statements.
b. Going concern
The Group has made a loss before tax of £25.3m (2019: £21.9m) and is presently pre-revenue and, as such, has relied upon equity and debt
funding to progress its development plans. Post year end, the Group has successfully raised £6m in equity and £4.1m in short term loans.
The directors regularly review cash flow forecasts to determine whether the Group has sufficient cash reserves to meet its future working
capital requirements and development plans. The Group’s plans indicate that they need to raise further finance and the Directors are
confident based on past history of successful fundraising and discussions with investors that the Group will be successful in raising these
funds. Additionally, they consider they can defer settlement of creditors, reduce short term expenditure and obtain short-term finance
should there be any delay in completing any such fundraising to allow continuance of their plans. They therefore consider it appropriate to
prepare the Group’s financial statements on a going concern basis.
However, as at the date of approval of these financial statements, there are no legally binding agreements in place in relation to any
fundraising or extension of terms of with creditors and as the success of any finance raising is outside the control of the company and
is thus considered to be a material uncertainty. There can be no certainty that additional funds will be forthcoming which indicates the
existence of a material uncertainty which may cast doubt about the Group’s ability to continue as a going concern and therefore it may
be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include the
adjustments that would result if the Group was unable to continue as a going concern.
c. Basis of consolidation
The consolidated financial information includes financial information in respect of the Group and all of its subsidiary undertakings.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive in-come
from the effective date of acquisition or up to the effective date of disposal, as appropriate. All intra-group transactions, balances, income
and expenses are eliminated on consolidation.
The consolidated financial statements consolidate the financial statements of the Company and its subsidiary undertakings (together “the
Group”) drawn up to 31 December 2020.
A subsidiary is an entity controlled by the Company. Control is achieved where the Company:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses con-
trol of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the con-
solidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the
Company ceases to control the subsidiary.
134134 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
30. Principal accounting policies – Group continued
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those
used by the Group.
The purchase method of accounting is used to account for business combinations that result in the acquisition of subsidiaries by the Group.
The cost of a business combination is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the business combination. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any excess
of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent
liabilities recognised is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions between the Company and its subsidiaries, which are related
parties, are eliminated in full.
d. Intangible assets-research and development
Development activities involve a plan or design for the production of new and innovative proton beam cancer therapy machines.
Development expenditure is capitalised only if development costs can be measured reliably, the proton therapy machine is technically and
commercially feasible, future economic benefits are probable, and the Group has sufficient resources available to complete development
and to use, lease or sell the asset. The expenditure capitalised includes only the cost of gross direct labour that is directly attributable to
preparing the asset for its intended use or third-party costs incurred directly on the development activities above. Capitalised development
expenditure is measured at cost less accumulated amortisation and accumulated impairment losses. Other research and development
expenditure not meeting the above criteria is recognised in the income statement as incurred. Capitalised development costs are amortised
over the period from the date the development generates revenue. As at 31 December 2020 the proton therapy machines are still in the
development phase and therefore no amortisation has been recognised in the income statement. Management estimates the useful
economic life of the proton machines to be 20 years once development has been completed.
e. Property, Plant and Equipment
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life:
Fixtures and fittings
Plant - equipment
Plant - LIGHT development equipment
Computer equipment
Leasehold Improvements
20% of cost
14 % to 20% of cost
20% of cost
33.3% to 50% of cost
are written off over the term of the lease
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Where parts of an
item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
f. Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents
comprise cash on hand, deposits with banks and other short-term highly liquid investment maturities of three months or less, net of short
term bank overdrafts.
g. Trade and other receivables
Trade and other receivables are recognised initially at the transaction price. They are subsequently measured less any provision for
impairment in relation to expected credit losses. At each reporting date the Group assesses the expected credit losses and changes in
credit risk since initial recognition of the receivable and a provision for impairment is recognised when considered necessary.
h. Trade and other payables
Trade and other payables are recognised initially at the transaction price and subsequently measured at amortised cost using the effective
interest method.
i. Holiday Pay Accrual
A liability is recognised to the extent of any unused holiday pay entitlement which is accrued at the Statement of Financial Position date and
carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement.
j. Government Grants
Grants have been received from the UK and US governments to assist with staff furlough and payroll costs during the COVID pandemic.
The grants are included in the financial statements to the extent that they have been received for the reporting period and confirmation has
been received that they will become repayable at any point. No other forms of government assistance have been received.
k. Inventories
Stocks are stated at the lower of cost and realisable value. Cost is based on the first-in first-out principle. Net realisable value is the
estimated selling price in the ordinary course of business, less the estimated costs of selling expenses. Any write down to net realisable
value is recorded in cost of sales.
Work in progress is valued at the cost charged for material supplies and the cost charged by sub-contractors for work completed or in
progress with those sub-contractors. No element of Group overhead or finance cost has been included.
l. Revenue recognition
During prior periods, the company received an amount of £16.5m for an exclusive distribution agreement issued to Liquid Harmony Ltd.
This amount is fully repayable if the entity does not complete the development of the products and have regulatory approval in China within
5 years of the signing of the agreement. As a result of the conditions attached requiring full repayment no revenue, has been recognised.
ADVANCED ONCOTHERAPY PLC
135135
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
NOTES TO THE ACCOUNTS – GROUP
Continued - Financials in £
30. Principal accounting policies – Group continued
m. Income taxes
The charge for current taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed.
Deferred tax is provided using the balance sheet liability method in respect of temporary differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding tax bases used in computation of taxable profit.
Deferred tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected
to apply when the related deferred tax asset is realised or the deferred tax liability is settled. It is recognised in profit or loss except when it
relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected
to apply when the related, deferred tax asset is realised or the deferred tax liability is settled. It is recognised in profit or loss except when it
relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
difference can be utilised. Deferred tax assets and liabilities are offset only when they relate to taxes levied by the same authority, with a
legal right to set off and when the Group intends to settle them on a net basis.
n. Pensions
The Group makes defined contributions to employees’ personal pension plans. Contributions payable to the employees’ schemes are
recognised as an expense in the statement of comprehensive income as incurred.
o. Share based payments
The cost of granting share options and other share based remuneration to employees and Directors is recognised through the statement
of comprehensive income on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.
These share based payments are measured at fair value at the date of grant by use of an option pricing mode. Where the share options
only contain service conditions or non-market conditions, a Black – Scholes model is used. Where the share options contain market
conditions, a Monte Carlo simulation model is used and reflected the in the fair value of the options granted. Details of the assumptions
used in those models are included in Note 20 Share based payments.
For equity-settled transactions with non-employees, the costs are recognised through the statement of comprehensive income with
measurement based on the fair value of goods or services received.
p. Foreign currencies
Transactions in currencies other than the entity’s functional currency are recorded at the exchange rate prevailing at the transaction dates.
Foreign exchange gains and losses resulting from settlement of these transactions and from retranslation of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
The assets and liabilities of foreign entities are translated into sterling at the rate of exchange ruling at the balance sheet date and their
statements of comprehensive income and cash flows are translated at the average rate for the period. Exchange differences arising are
transferred to reserves as a separate component of equity.
The Group's presentational currency is GBP.
q. Financial instruments
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.
Loans are initially recognised net of associated transaction costs. Subsequent to initial recognition, they are stated at amortised cost.
r. Loans and Borrowings
Loans and borrowings are recorded at amortised cost using the effective interest method using the expected cash flows attached to the
financial instrument, with interest-related charges recognised as an expense in finance cost in the statement of comprehensive income. In
rare circumstances, where cash flows are not possible to be predicted the contractual cash flows over the contractual term of the financial
instrument are used.
Where the loan includes a convertible feature, resulting in the possible settlement through issue of shares management consider if the
conversion would result in a fixed loan amount being settled with a fixed number of shares. Where this is the case, the cash flows attached
to the financial instrument are discounted at a market rate of interest and the difference between cash proceeds and the present value of
cash flows being recorded in equity. If the conversion feature does not result in the settlement of a fixed loan amount with a fixed number
of shares, the financial instrument is assessed as containing a host financial liability held at amortised cost and a financial liability held at
fair value through profit and loss.
The fair value of the derivative component held at fair value through profit and loss is derived at draw down date and recognised separately
from the host contract which is held at amortised cost. The derivative component is subsequently measured at fair value at each reporting
date with the changes being recorded in profit and loss.
s. Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
t. Financial liability and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
136136 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 30. Principal accounting policies – Group continued
u. Borrowing costs
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
v. Segmental reporting
As the Group’s business activities were not complex, being the development and building of the LIGHT system, and the management of
a healthcare related property, management reviews information based on different locations and, accordingly, the operating segments are
based on such a geographical split.
w. Impairment of non-current assets
The Group’s main asset is it development costs which are not yet ready for use. As a result an annual impairment revenue review is
performed which involves estimating the recoverable amount of the assets, which is the higher of its fair value less costs to sell and its value
in use, is estimated in order to determine the extent of the impairment loss. Where the carrying value of an asset exceeds its recoverable
amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly. Impairment charges are
included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income.
x. Leases
The majority of the Group’s accounting policies for leases are set out in Note 12.
Identifying Leases
The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in
exchange for consideration. Leases are those contracts that satisfy the following criteria:
(a) There is an identified asset;
(b) The Group obtains substantially all the economic benefits from use of the asset; and
(c) The Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not
identified as giving rise to a lease.
In determining whether the Group obtains substantially all the economic benefits from use of the asset, the Group considers only the
economic benefits that arise use of the asset, not those incidental to legal ownership or other potential benefits.
In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs how and for what purpose
the asset is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the
nature of the asset, the Group considers whether it was involved in the design of the asset in a way that predetermines how and for what
purpose the asset will be used throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Group
applies other applicable IFRSs rather than IFRS 16.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating
leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments,
discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted average lessee’s incremental borrowing
rate applied to the lease liabilities on 1 January 2019 was 3.0%. The determination of applicable incremental borrowing rates at the
commencement of new lease contracts also requires judgement. The Group determines its incremental borrowing rates by obtaining
interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease. The Group considers
the relevant market interest rate, based on the weighted average of the timing of the lease payments under the lease obligation.
y. Changes in Accounting Policy
(i) New and amended standards adopted by the Group:
The accounting policies adopted are consistent with those of the previous financial year. New or amended financial standards or
interpretations adopted during the year and that have a significant impact upon the financial statements are detailed below.
(ii) The following standards, amendments and interpretations, which are effective for reporting periods beginning after the date
of these financial statements, have not been adopted early:
Standard
Description
IAS 1
IAS 8
IFRS 3
Presentation of Financial Statements
Accounting Policies, Changes in Accounting Estimates and Errors (Amendment -
Disclosure Initiative - Definition of Material)
Business Combinations (Amendment - Definition of Business)
Conceptual Framework for Financial Reporting (Revised)
IBOR Reform and its Effects on Financial Reporting - Phase 1
IFRS 16
IFRS 17
Covid-19-Related Rent Concessions
Insurance Contracts
Effective date
1 January 2020
1 January 2020
1 January 2020
1 January 2020
1 January 2020
1 January 2020
1 January 2021
In reviewing the above standards, the Company does not believe that there will be a material impact on the financial statements.
ADVANCED ONCOTHERAPY PLC
137137
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC
COMPANY STATEMENT OF
FINANCIAL POSITION
As at 31 December 2020 - Financials in £
Non-current assets
Intangible assets
Property, plant and equipment
Right of use assets
Investment in subsidiaries
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Corportion tax R&D refund
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Non-current liabilities
Licence Fee Received
Lease liabilities
Borrowings
Embedded Derivative
Total liabilities
Net assets
Equity
Share capital
Share premium reserve
Share option reserve
Accumulated losses
Total equity
Notes
2020
2019
B
C
D
E
F
H
F
F
G
D
I
G
D
I
17
19,768,925
5,964,648
30,515,239
8,052,458
59,214,302
19,267,379
5,159,144
30,982,270
8,052,458
45,108,723
123,515,572
108,569,974
22,139,087
1,765,183
-
2,193,430
26,097,700
149,613,272
(4,015,017)
(1,968,945)
(10,039,316)
(16,023,278)
(16,500,000)
(29,475,974)
(8,258,435)
(4,578,210)
(58,812,619)
(74,835,897)
74,777,375
83,359,894
61,442,782
7,675,332
(77,700,632)
74,777,376
15,048,228
1,934,765
1,768,591
2,979,668
21,731,252
130,301,226
(3,534,627)
(916,567)
-
(4,451,194)
(16,500,000)
(30,206,903)
(13,864,384)
-
(60,571,287)
(65,022,481)
65,278,745
61,105,852
60,452,065
7,853,803
(64,132,975)
65,278,745
The Company's loss for the financial year was £15,105,395 (2019: £14,153,072 loss).
These financial statements have been approved and were authorised for issue by the Board of Directors on 29 June 2021
Signed on behalf on the Board of Directors by
Dr Michael Sinclair
Executive Chairman
Nicolas Serandour
Chief Executive Officer
Registered number: 05564418
The accompanying Notes on pages 140 to 145 form part of the financial statements.
138138 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
COMPANY STATEMENT OF
CHANGES IN EQUITY
For the year ended 31 December 2020 - Financials in £
Share
capital
Share
premium
reserve
Share
options
reserve
Accumulated
losses
Total
Balance as at 01 January 2019
42,391,523
50,724,177
7,198,580
(51,079,048)
49,235,232
Loss for the year
-
-
-
(14,153,072)
(14,153,072)
Total comprehensive income
-
-
-
(14,153,072)
(14,153,072)
Shares Issued in the period
18,714,329
10,975,557
- -
29,689,885
Expenses deducted from share premium
-
(1,247,669)
81,414 -
(1,166,255)
Lapsed options
Lapsed warrants
Share based payments
- Share option charge
-
-
(1,014,117)
1,014,117
-
-
-
(85,028)
85,028
-
-
-
-
-
-
-
-
872,539 -
872,539
- Share warrants charge
-
-
800,415 -
800,415
Balance at 31 December 2019
61,105,852
60,452,065
7,853,803
(64,132,975)
65,278,745
Balance at 01 January 2020
61,105,852
60,452,065
7,853,803
(64,132,975)
65,278,745
Loss for the year
-
-
-
(15,105,395)
(15,105,395)
Total comprehensive income
-
-
-
(15,105,395)
(15,105,395)
Shares Issued in the period
22,254,042
2,003,103
Expenses deducted from share premium
Lapsed options
Lapsed warrants
Share based payments
- Share option charge
- Share warrants charge
(1,012,386)
-
-
-
-
24,257,145
(1,012,386)
-
-
-
(510,950)
510,950
(1,026,788)
1,026,788
-
-
-
-
-
-
-
-
-
-
-
704,533 -
704,533
-
-
654,734 -
654,734
Balance as at 31 December 2020
83,359,894
61,442,782
7,675,332
(77,700,632)
74,777,376
The accompanying Notes on pages 140 to 145 form part of the financial statements.
ADVANCED ONCOTHERAPY PLC
139139
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC NOTES TO THE ACCOUNTS – COMPANY
As at 31 December 2020 - Financials in £
A. Principal accounting policies
(i) Company
The separate financial statements of the Company are presented as required by the Companies Act 2006 and in accordance
with FRS 101 United Kingdom generally accepted accounting practice.
In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following
disclosures:
•
Disclosures regarding revenue;
Disclosures regarding the cash flow statement;
Disclosures in respect of transactions with wholly owned subsidiaries;
Disclosures in respect of capital management;
The effects of new but not yet effective IFRSs; and
Disclosures in respect of the compensation of Key Management Personnel
•
•
•
•
•
(ii) Investment in subsidiaries
Investments in subsidiaries are carried in the Company’s statement of financial position at cost less, where appropriate,
accumulated impairment.
(iii) Amounts owed by subsidiaries
Amounts owed by subsidiaries are held at amount remitted less an allowance for expected credit losses.
B. Intangible assets
Development Costs
At 01 January 2019
Additions
At 31 December 2019
At 01 January 2020
Additions
At 31 December 2020
15,017,243
4,250,136
19,267,379
19,267,379
501,546
19,768,925
In accordance with IAS 38, £501,546 (2019: £4,250,136) of costs relating to the development of the LIGHT proton therapy
machine were capitalised during the year.
C. Property, plant and equipment
Leasehold
property
Computer
hardware and
software
Fixtures,
fittings and
equipment
2019
Cost
At 01 January 2019
Additions
At 31 December 2019
Depreciation
At 01 January 2019
Charge for the year
At 31 December 2019
Net book value
At 01 January 2019
At 31 December 2019
140140 ANNUAL REPORT 2020
3,062,125
2,115,756
5,177,881
27,932
264,805
292,737
3,034,193
4,885,144
183,567
23,872
207,439
131,353
18,345
149,698
52,214
57,741
122,324
194,459
316,783
62,393
38,131
100,524
59,931
216,259
Total
3,368,016
2,334,087
5,702,103
221,678
321,281
542,959
3,146,338
5,159,144
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
2020
Cost
At 01 January 2020
Additions
At 31 December 2020
Depreciation
At 01 January 2020
Charge for the year
At 31 December 2020
Net book value
At 01 January 2020
At 31 December 2020
D. Leases
Right-of-Use Assets
At the start of the period
Additions
Amortisation
At the end of the period
Lease liabilities
At the start of the period
Additions
Interest expense
Lease payments
At the end of the period
C. Property, plant and equipment continued
Leasehold
property
Computer
hardware and
software
Fixtures,
fittings and
equipment
5,177,881
534,353
5,712,234
292,737
393,822
686,559
4,885,144
5,025,675
207,439
44,425
251,864
149,698
31,781
181,479
57,741
70,385
316,783
736,424
1,053,207
100,524
84,096
184,620
216,259
868,588
Total
5,702,103
1,315,203
7,017,306
542,959
509,699
1,052,658
5,159,144
5,964,648
Land and buildings
2020
2019
30,982,270
144,664
(611,695)
30,515,239
31,123,470
144,664
1,284,749
(1,107,964)
31,444,919
1,968,945
1,968,945
7,332,380
22,143,594
29,475,974
31,444,919
7,356,429
24,237,536
(611,695)
30,982,270
7,180,737
24,030,211
563,248
(650,726)
31,123,470
916,567
916,567
6,662,547
23,544,356
30,206,903
31,123,470
The maturity profile of discounted lease payments
Repayable within one year
Current liabiities
Repayable in two to five years
Repayable in more than five years
Non-current liabilities
Total borrowings
Break clauses
The only lease that provides a break clause that has not already passed is for the property at STFC Daresbury. The earliest date
at which the break clause could take effect is July 2023, management currently do not intend to exercise this break option.
ADVANCED ONCOTHERAPY PLC
141141
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC NOTES TO THE ACCOUNTS – COMPANY
E. Investment in subsidiaries
At 01 January 2019
At 31 December 2019
At 01 January 2020
At 31 December 2020
2019
8,052,458
8,052,458
2020
8,052,458
8,052,458
The Company owned the following principal subsidiary companies as at 31 December 2020:
Subsidiary Company
Country of Incorporation
Share class
% Holding
ADAM S.A.
Advanced Oncotherapy Resources Ltd
APTS Harley Street Ltd
Advanced Oncotherapy (China) Ltd
Advanced Oncotherapy Proton Therapy Services Ltd
CareCapital (Southampton) Ltd
CareCapital Ltd
Oncotherapy UK Ltd
The London Proton Therapy Centre Ltd
The Women's Cancer Centre Ltd
Advanced Oncotherapy Americas Inc
CareCapital Gesundheitsimmobilien GmbH
CareCapital Gesundheitsimmobilien Vervaltungs GmbH
Gesundheitszentrum Adlershof 2 Minderheitsbeteiligungs GmbH
Gesundheitszentrum Königs Wusterhausen 2 GmbH and Co. KG
Advanced Oncotherapy B.V.
Notes
1 Dormant
2 Indirectly held
Switzerland
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
USA
Germany
Germany
Germany
Germany
The Netherlands
1
1
1
1
1 2
1
1
1
1 2
1 2
1 2
1 2
1 2
3
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
3 Registration completed in February 2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
90%
90%
100%
100%
100%
F. Trade and other receivables
Due greater than 1 year
Property rent deposits
Property decommissioning deposits
Amounts owed by subsidiary undertakings
Total
2020
2019
258,461
350,000
58,605,841
59,214,302
257,553
350,000
44,501,170
45,108,723
In accordance with IFRS 9, the Company has considered the impairment of loans due from its primary subsidiary company
and has made the following provisions in 2020:
Increase in provision during the year
Current
VAT recoverable
Advance payments to suppliers
Property rent deposits
Other debtors
Prepayments
Corporation Tax
Total
142142 ANNUAL REPORT 2020
2020
-
2019
1,664,000
2020
2019
581,723
238,848
2,819
103,910
837,883
1,765,183
-
1,765,183
221,768
87,669
3,150
30,009
1,592,169
1,934,765
1,768,591
3,703,356
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020
G. Trade and other payables
Non current
Licence Fee Received
Total
Current
Trade payables
Social security and other taxes
Other creditors
Accruals and deferred income
Total
H. Inventories
Inventories
Work in progress - LIGHT
Total
2020
2019
16,500,000
16,500,000
16,500,000
16,500,000
1,339,126
225,788
183,410
2,266,693
4,015,017
936,556
91,769
58,611
2,447,691
3,534,627
2020
2019
22,139,087
22,139,087
15,048,228
15,048,228
All of the above items of Inventory have been valued at cost less an impairment provision of 1,908,925 (2019: £1,908,925)
relating to the LIGHT work in progress. No increase in the impairment provision was considered necessary by the Directors.
Costs included in Inventory are for finished components of the LIGHT machine that will be sold as part of future LIGHT
installations.
I. Borrowings
Amounts falling due within one year
Secured loans
Unsecured loans
Total
Amounts falling due over one year
Secured loans
Unsecured loans
Total
See Note 17 for details of liabilities and securities given.
2020
2019
10,039,316
-
10,039,316
-
-
-
2020
2019
See Note 17
8,258,435
-
8,258,435
13,864,384
-
13,864,384
ADVANCED ONCOTHERAPY PLC
143143
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC NOTES TO THE ACCOUNTS – COMPANY
J. Related party transactions
The following related party transactions are required to be disclosed in accordance with IAS24.
There are no employees considered as key management other than the directors whose remuneration is detailed in Note 7.
2019
2020
A family member of Dr Michael Sinclair, Executive Chairman, was employed by the Group.
The remuneration and benefits payable under the contract, excluding Company statutory and
other costs, were:
The Company received services from Berkshire Investment Management Limited, a
company controlled by Hans von Celsing, a Group Director.
The balance due to Berkshire Investment Management Limited as at 31 December 2020 was:
In October 2020, as disclosed in Note 7, the following options were issued:
Michael Sinclair (Director)
Nicolas Serandour (Director)
Steve Myers (Director)
In May 2020, the following shares were issued:
198,440
231,754
54,955
24,000
78,871
7,244
Price
Quantity
50.00p
5,500,000
50.00p
6,500,000
50.00p
1,500,000
Michael Sinclair (Director)
Michael Sinclair (Director)
Dr Nick Plowman (Director)
Enrico Vanni (Director)
Enrico Vanni (Director)
Dr Nick Plowman (Director)
Hans von Celsing (Director)
Prof Steve Myers (Director)
Gabriel Urwitz (Former Director)
In October 2020, the following shares were issued:
Dr Nick Plowman (Director)
Enrico Vanni (Director)
Dr Nick Plowman (Director)
Hans von Celsing (Director)
In February 2019, as disclosed in Note 7, the following options were issued:
Michael Sinclair (Director)
Nicolas Serandour (Director)
Steve Myers (Director)
In August 2019, the following shares were issued:
Michael Sinclair (Director)
Enrico Vanni (Director)
Enrico Vanni (Director)
Michael Bradfield (Director)
Dr Nick Plowman (Director)
Dr Euan Thomson (former Director)
Gabriel Urwitz (Director)
Prof Chris Nutting (former Director)
Subscription
25.00p
400,000
In Lieu of Salary
25.00p
265,944
NED Fees
Subscription
NED Fees
NED Fees
NED Fees
Director Fees
NED Fees
NED Fees
NED Fees
NED Fees
NED Fees
Subscription
Subscription
NED Fees
NED Fees
NED Fees
NED Fees
NED Fees
NED Fees
25.00p
120,000
25.00p
300,000
25.00p
120,000
25.00p
120,000
25.00p
120,000
25.00p
200,000
25.00p
60,000
30.00p
250,000
30.00p
250,000
30.00p
250,000
30.00p
250,000
100.0p
100.0p
100.0p
545,000
1,400,000
215,000
40.0p
40.0p
40.0p
40.0p
40.0p
40.0p
40.0p
40.0p
875,000
87,500
112,500
112,500
112,500
112,500
62,500
37,500
The Group has taken advantage of the exemption available under IAS 24 'Related Party Disclosures' not to disclose details of
transactions between Group undertakings which are eliminated on consolidation in the Group Financial Statements.
144144 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 K. Financial instruments
The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest
rates.
Management of risks
Credit risk is managed as follows:
Cash at bank is held only with reputable banks with high quality external credit ratings. The Company’s financial assets and
liabilities are classified as follows:
Trade and other payables
Trade and other receivables
Cash and cash equivalents
Borrowings
Total
Trade and other payables
Trade and other receivables
Cash and cash equivalents
Borrowings
Embedded derivative
Total
Amortised cost
2020
(3,789,229)
715,190
2,193,430
(18,297,751)
(19,178,360)
Fair value
2020
(3,789,229)
715,190
2,193,430
2019
(3,534,627)
862,480
2,979,668
(13,864,384)
(13,556,863)
2019
(3,534,627)
862,480
2,979,668
(18,297,751)
(13,864,384)
(4,578,210)
-
(23,756,570)
(13,556,863)
Regarding liquidity risk, the Company, in the future, need to raise further equity or debt funds to fulfil its objectives and.or
finance working capital requirements through future stages of development.
ADVANCED ONCOTHERAPY PLC
145145
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC TO OUR SHAREHOLDERS
STRATEGIC REPORT
146146 ANNUAL REPORT 2020
ANNUAL REPORT 2020 GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
NOTICE OF ANNUAL GENERAL MEETING
EXPLANATORY NOTES TO THE NOTICE OF ANNUAL GENERAL MEETING
COMPANY INFORMATION
148
150
152
ADVANCED ONCOTHERAPY PLC
147147
ADVANCED ONCOTHERAPY PLC NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting (“AGM”)
of Advanced Oncotherapy plc, registered in England and Wales with
the registered number 05564418 (the 'Company’), will be held at the
offices of Advanced Oncotherapy plc, Third Floor, 4 Tenterden Street,
London W1S 1TE on Friday, 30 July 2021 at 2.00pm for the following
purposes:
ORDINARY RESOLUTIONS
To consider, and if thought fit, to pass the following resolutions which
will be proposed as Ordinary Resolutions:
1. To receive the audited financial statements and the Auditor’s and
Directors’ reports for the year ended 31st December 2020.
2. To re-appoint Michael Bradfield as a Director of the Company.
3. To re-appoint Hans von Celsing as a Director of the Company.
4. To re-appoint Lori Cross as a Director of the Company.
5. To re-appoint Prof. Steve Myers as a Director of the Company.
consider necessary or expedient in connection with shares
representing fractional entitlements or on account of either legal
or practical problems arising in connection with the laws of any
territory, or of the requirements of any recognised regulatory
body or stock exchange in any territory;
b) other than pursuant to sub-paragraph 14(a) above, the
allotment of equity securities up to an aggregate nominal
amount of £26,237,604.75 (the equivalent of up to 104,950,419
Ordinary Shares). This power shall expire on the earlier of
fifteen months from the date of passing of this Resolution and
upon the conclusion of the next AGM of the Company to be
held in 2022 unless previously renewed, varied or revoked by
the Company in general meeting, save that the Company may
before such expiry make any offer or agreement which would
or might require equity securities to be allotted after such expiry
and the Directors may allot equity securities in pursuance of any
such offer or agreement as if the power conferred hereby had
not expired.
6. To re-appoint Dr Nick Plowman as a Director of the Company.
By order of the Board
7. To re-appoint Nicolas Serandour as a Director of the Company.
8. To re-appoint Dr Michael Sinclair as a Director of the Company.
9. To re-appoint Dr Enrico Vanni as a Director of the Company.
10. To re-appoint Renhua Zhang as a Director of the Company.
11. To re-appoint RPG Crouch Chapman LLP as Auditors of the
Company to hold office until the conclusion of the next AGM at
which accounts are laid before the Company.
12. To authorise the Directors to determine the remuneration of the
Auditors.
13. THAT the Directors be and are hereby generally and unconditionally
authorised for the purposes of section 551 of the Companies Act
2006 (“the Act”), to exercise all the powers of the Company to allot
shares in the Company and/ or to grant rights to subscribe for, or
to convert any securities into shares in the Company, and/or the
grant of rights to subscribe for or to convert any securities into
Ordinary Shares up to a maximum aggregate nominal amount
of £26,237,604.75 (the equivalent of up to 104,950,419 Ordinary
Shares), this authority to expire on the earlier of fifteen months
from the date of the passing of this resolution or the conclusion
of the next AGM of the Company to be held in 2022 unless
previously renewed, varied or revoked by the Company in general
meeting, save that the Company may before such expiry make
any offer or agreement which would or might require shares in the
Company to be allotted and/or rights to subscribe for or to convert
any securities into shares in the Company to be granted after such
expiry and the Directors may allot shares in the Company, or grant
rights to subscribe for or to convert any securities into shares in
the Company, in pursuance of any such offer or agreement as if
the authority conferred hereby had not expired.
SPECIAL RESOLUTION
14. THAT, subject to the passing of Resolution 13 above, in substitution
for all previous powers to the extent unused, the Directors be and
are hereby unconditionally empowered pursuant to sections 570
and 571 of the Act to allot equity securities (as defined in section
560 of the Act) pursuant to the authority granted to the Directors
pursuant to Resolution 13 above as if section 561 of the Act did
not apply to any such allotment, provided that this power shall be
limited to:
a) the allotment of equity securities in connection with a rights
issue, open offer or equivalent offer in favour of the holders
of Ordinary Shares and such other equity securities of the
Company as the Directors may determine in which such holders
are offered the right to participate in proportion (as nearly as
may be) to their respective holdings of such equity securities
or in accordance with the rights attached thereto but subject to
such exclusions or other arrangements as the Directors may
Dr Michael Sinclair
Executive Chairman
Registered Office: Level 17, Dashwood House,
69 Old Broad Street, London EC2M 1QS
29 June 2021
NOTES
1. COVID-19
The board takes its responsibility to safeguard the health of its
shareholders, stakeholders and employees very seriously and
so the following measures will be put in place for the AGM in
response to the COVID-19 pandemic and the current measures
being implemented by the Government in the United Kingdom,
such measures being expected to continue until after the date of
the AGM.
The formal business of the General Meeting will only be to
consider and vote upon the resolutions set out in the notice of
meeting. The holding of the meeting will be kept under review in
line with Public Health England guidance on or around Friday, 30
July 2021. For this reason, shareholders are actively discouraged
from physically attending the AGM given the current measures
being implemented by the Government in the United Kingdom.
Shareholders seeking to attend the AGM, beyond those selected
in advance to satisfy the quorum requirement, may be refused
entry. The Company is taking these precautionary measures to
safeguard its shareholders', stakeholders' and employees' health
and make the General Meeting as safe and efficient as possible.
Shareholders wishing to vote on any of the matters of business
are urged to do so through completion of a proxy form online
which can be completed and submitted in accordance with the
instructions thereon. We strongly recommend voting electronically
at www.signalshares.com as your vote will automatically be
counted. To be effective, the proxy vote must be submitted at
www.signalshares.com so as to have been received by the
Company’s registrars not less than 48 hours (excluding weekends
and public holidays) before the time appointed for the meeting or
any adjournment of it. By registering on the Signal shares portal
at www.signalshares.com, you can manage your shareholding,
including:
- cast your vote
- change your dividend payment instruction
- update your address
- select your communication preference.
148148 ANNUAL REPORT 2020
TO OUR SHAREHOLDERSSTRATEGIC REPORTANNUAL REPORT 2020 It is strongly recommended that the Chairman of the meeting is
appointed as proxy by shareholders as it is unlikely that any other
persons will be admitted to the meeting other than the second
participant in the quorum based on the current measures being
implemented by the Government in the United Kingdom.
In normal conditions the completion and return of a proxy vote does
not preclude a shareholder from attending a general meeting in
person and voting should the shareholder wish to do so. However,
whilst restrictions remain in place in the United Kingdom relating
to the COVID-19 pandemic along with applicable Public Health
Guidance, shareholders should not assume an ability to attend
the AGM in person to vote. As mentioned above, shareholders
are actively discouraged from attendance at the meeting as part
of the Company’s compliance with the current measures being
implemented by the Government in the United Kingdom.
If you need help with voting online, or require a paper proxy form,
please contact our Registrar, Link Group by email at enquiries@
linkgroup.co.uk, or you may call Link on 0371 664 0391. Calls are
charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable
international rate. Link Group are open between 09:00 - 17:30,
Monday to Friday excluding public holidays in England and
Wales. Submission of a Proxy vote shall not preclude a member
from attending and voting in person at the meeting in respect of
which the proxy is appointed or at any adjournment thereof.
2. The AGM is to be held at the Company’s administrative head
office at Level 3, 4 Tenterden Street, London W1S 1TE.
3. Please indicate on your proxy how you wish your votes to be cast
in respect of the resolutions to be proposed at the said meeting.
If you do not indicate how you wish your proxy to use your votes,
the proxy will exercise his/her discretion both as to how he/she
votes and as to whether or not he abstains from voting. Your
proxy will have the authority to vote at his/her discretion on any
amendment or other motion proposed at the meeting, including
any motion to adjourn the meeting. Any power of attorney or other
authority under which the proxy is submitted must be returned to
the Company’s Registrars, Link Group, PXS1, 10th Floor, Central
Square, 29 Wellington Street, Leeds, LS1 4DL. If a paper form
of proxy is requested from the registrar, it should be completed
and returned to Link Group, PXS1, 10th Floor, Central Square, 29
Wellington Street, Leeds, LS1 4DL to be received not less than 48
hours before the time of the meeting.
4.
5.
In the case of joint holders, the signature of the holder whose
name stands first in the relevant register of members will suffice
as the vote of such holder and shall be accepted to the exclusion
of the votes of the other joint holders. The names of all joint
holders should, however, be shown.
If a member is a corporation, the form must be executed either
under its common seal or under the hand of an officer or agent
duly authorised in writing. In the case of an individual the proxy
must be signed by the appointor or his/her agent, duly authorised
in writing. CREST members should use the CREST electronic
proxy appointment service and refer to Note 6 below in relation to
the submission of a proxy appointment via CREST.
In each case the proxy appointment must be received with any
authority (or a notarially certified copy of such authority) under
which it is signed.
6. CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so for
the AGM to be held on the above date and any adjournment(s)
thereof by using the procedures described in the CREST manual.
CREST personal members or other CREST sponsored members
who have appointed a voting service provider(s), will be able to
take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message (a
“CREST proxy instruction”) must be properly authenticated in
accordance with Euroclear UK and Ireland Limited’s specifications
and must contain the information required for such instructions
as described in the CREST manual. The message, regardless of
whether it constitutes the appointment of a proxy or an amendment
to the instruction given to a previously appointed proxy must,
in order to be valid, be transmitted so as to be received by the
Company’s agent (lD: RA10) by the latest time(s) for receipt of
proxy appointments specified in the notice of meeting. For this
purpose, the time of receipt will be taken to be the time (as
determined by the time stamp applied to the message by the
CREST applications host) from which the Company’s agent is
able to retrieve the message by enquiry to CREST in the manner
prescribed by CREST. After this time any change of instructions
to proxies appointed through CREST should be communicated to
the appointee through other means.
CREST members and, where applicable, their CREST sponsors
or voting service providers should note that Euroclear UK and
Ireland Limited does not make available special procedures in
CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST
proxy instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a voting service
provider(s), to procure that his/her CREST sponsor or voting
service provider(s) take(s) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors or joint
service providers are referred, in particular, to those sections of
the CREST manual concerning practical limitations of the CREST
system and timings.
The Company may treat as invalid a CREST proxy instruction
in the circumstances set out in regulation 35(5) (a) of the
Uncertificated Securities Regulations 2001.
Pursuant to regulation 41 (1) of the Uncertificated Securities
Regulations 2001 (2001 No. 3755) the Company has specified
that only those members registered on the register of members
of the Company at close of business on 20 July 2021 shall be
entitled to attend and vote at the AGM in respect of the number of
Ordinary Shares registered in their name at the time. Changes to
the register of members after close of business on 20 July 2021
shall be disregarded in determining the rights of any person to
attend and vote at the AGM.
7. Under Section 319 of the Act, the Company must answer any
question relating to the business being dealt with at the meeting
put by a member attending the meeting unless:
a. answering the question would interfere unduly with the
preparation for the meeting or involve the disclosure of
confidential information;
b. the answer has already been given on a website in the form of
an answer to a question; or
c. it is undesirable in the interests of the Company or the good
order of the meeting that the question be answered.
8. The following documents will be available for inspection at the
Company’s registered office during normal business hours on
any weekday (Saturdays, Sundays and English public holidays
excluded) from the date of this notice of the Annual General Meeting
until the date of the Annual General Meeting and at the place of
the meeting at least 15 minutes prior to the commencement of the
Annual General Meeting until its conclusion:
a. copies of the Directors’ contracts of service;
b. copies of the Non-Executive Directors’ letters of appointment;
c. a copy of the Articles of Association of the Company is available
on the Investor Relations section of the Advanced Oncotherapy
website (www.avoplc.com) on the Company Documents page.
ADVANCED ONCOTHERAPY PLC
149149
GOVERNANCE REPORTOTHER INFORMATIONFINANCIAL REPORTADVANCED ONCOTHERAPY PLC TO OUR SHAREHOLDERS
STRATEGIC REPORT
EXPLANATORY NOTES TO THE NOTICE OF
ANNUAL GENERAL MEETING
shareholders. In certain circumstances, it may be in the interest
of the Company for the Directors to be able to allot some
shares for cash without having to offer them first to existing
shareholders. In line with common practice, Resolution 14
therefore seeks authority to empower the Directors to allot
equity securities for cash other than in accordance with the
statutory pre-emption rights, in connection with a rights issue
and other pre-emptive offers and otherwise up to a maximum
nominal amount of £26,237,604.75. In addition, there are
legal, regulatory and practical reasons why it may not always
be possible to issue new shares under a rights issue to some
shareholders, particularly those resident overseas. To cater
for this, this Resolution also permits the Directors to make
appropriate exclusions or arrangements to deal with such
difficulties. Unless renewed, revoked, varied or extended,
this authority will expire at the conclusion of the next Annual
General Meeting of the Company to be held in 2022 or
fifteen months from the date of the passing of the resolution,
whichever is the earlier.
This year, Resolutions are proposed at the Annual General
Meeting and the purpose of each of the Resolutions is as
follows:
ORDINARY BUSINESS
Resolution 1: The Report and Accounts
The Directors will present their report and the audited financial
statements to 31st December 2020, together with the auditors'
report therein.
Resolutions 2-10: Re-appointment of retiring Directors
The Articles of Association of the Company stipulate that
any Director shall only hold office until the conclusion of the
next annual general meeting following the date of his/her
appointment. Furthermore, the articles require that one third of
the Directors retire at each Annual General Meeting. Corporate
Governance guidance recommends that each of the Directors
retire and offer themselves for re-appointment. Biographical
details relating to each of the Directors can be found on the
Group’s website: www.avoplc.com
Resolution 11: Appointment of Auditors
The Company is required to appoint auditors at each
Annual General Meeting at which accounts are laid before
shareholders, to hold office until the next such meeting. This
Resolution proposes RPG Crouch Chapman LLP be re-
appointed as auditors for the current year.
Resolution 12: Auditors' remuneration
This Resolution authorises the Directors to determine the
auditors’ remuneration.
SPECIAL BUSINESS
Resolution 13: Authority to allot shares
Section 549 of the Companies Act 2006 stipulates that
Directors cannot allot shares or rights to subscribe for shares
in the Company (other than the shares allotted in accordance
with an employee share scheme) unless they are authorised
to do so by the shareholders in general meeting. The
Directors’ general authority to allot shares was granted at the
General Meeting held on 29 July 2020 which will expire at the
conclusion of this AGM. Resolution 13 seeks a new general
authority from shareholders for the Directors to allot Ordinary
Shares or to grant rights to subscribe for and/or to convert any
securities into Ordinary Shares up to an aggregate nominal
value of £26,237,604.75. The Directors consider it desirable
that the specified number of Ordinary Shares and/or rights to
subscribe for and/or to convert any securities into Ordinary
Shares be increased by 30% so that they can satisfy existing
warrants and options and allow headroom to more readily take
advantage of possible equity raising opportunities. Unless
renewed, revoked, varied or extended, this authority will expire
at the conclusion of the next AGM of the Company to be held
in 2022 or fifteen months from the date of the passing of the
resolution, whichever is the earlier.
SPECIAL RESOLUTION
Resolution 14: Disapplication of pre-emption rights
If the Directors wish to allot any Ordinary Shares for cash
in accordance with the authority proposed in Resolution 13,
the Companies Act 2006 requires that new Ordinary Shares
must generally be offered first to shareholders in proportion
to their existing holdings. These are the pre-emption rights of
150150 ANNUAL REPORT 2020
ANNUAL REPORT 2020 GOVERNANCE REPORT
FINANCIAL REPORT
OTHER INFORMATION
ADVANCED ONCOTHERAPY PLC
151151
ADVANCED ONCOTHERAPY PLC COMPANY INFORMATION
DIRECTORS
Mr. Michael Bradfield * † Non-Executive Director
Mr. Hans von Celsing * † ▪ Non-Executive Director
Mrs. Lori Cross ▪
Non-Executive Director
Executive Chairman of ADAM
Prof. Steve Myers
Non-Executive Director
Dr. Nick Plowman
Chief Executive Officer
Mr. Nicolas Serandour
Executive Chairman
Dr. Michael Sinclair
Dr. Enrico Vanni * †
Non-Executive Director
Mrs. Renhua Zhang ▪
Non-Executive Director
* Member of the Audit Committee
† Member of the Remuneration Committee
▪ Member of the ESG Committee
COMPANY SECRETARY
Henry Clarke
REGISTERED OFFICE
Level 17, Dashwood House
69 Old Broad Street
London, EC2M 1QS
TRADING AND CORRESPONDENCE ADDRESS
Third Floor, 4 Tenterden Street
London, W1S 1TE
REGISTERED NUMBER
05564418 (England and Wales)
WEBSITE
This annual report and other information about Advanced
Oncotherapy plc, including share price information and details
of results announcements, are available at www.avoplc.com
AUDITORS
RPG Crouch Chapman LLP
5th Floor, 14-16 Dowgate Hill
London, EC4R 2SU
NOMINATED ADVISER AND JOINT BROKER
Allenby Capital Limited
5th Floor, 5 St Helen's Place
London, EC3A 6AB
JOINT BROKER
SI Capital Limited
46 Bridge Street
Godalming, GU7 1HL
SOLICITORS TO THE COMPANY
Faegre Baker Daniels LLP
7 Pilgrim Street
London, EC4V 6LB
David Conway and Co
1 Great Cumberland Place
London, W1H 7AL
Dechert LLP
160 Queen Victoria St
London, EC4V 4QQ
PUBLIC RELATIONS
FTI Consulting
200 Aldersgate, Aldersgate Street
London, EC1A 4HD
REGISTRARS
Link Group
10th Floor Central Square
29 Wellington Street
Leeds, LS1 4DL
152152 ANNUAL REPORT 2020
ANNUAL REPORT 2020
Annual report 2020
Powerful technology to treat cancer
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