Democratising Proton Therapy
Advancing cancer treatment with
innovative, cost-effective technology
Advanced Oncotherapy plc
Annual Report
2021
Advanced Oncotherapy plc ("AVO") is a British company
active in the field of cancer treatment. Following the
acquisition of ADAM SA, a CERN spin-off radiation
therapy company, AVO aims to capitalise on the know-
how and infrastructure that CERN has provided to build
an innovative linear accelerator for proton therapy, LIGHT.
Its purpose is to deploy globally affordable proton therapy
machines with clinical superior benefits to cyclotron and
synchrotron alternatives.
Its development strategy and unique business model
are designed to maximise product differentiation and
value creation whilst seeking to minimise regulatory and
execution risk.
What we do
"LIGHT will democratise access to healthcare
globally and make proton therapy accessible to
cancer patients regardless of their location and
financial wealth. Put simply, we are seeking to
remove the current bottlenecks and put LIGHT in
the hands of most healthcare institutions so that a
majority, not a minority, of cancer patients benefit
from the latest innovation in proton therapy and
have the right tools to defeat cancer."
Nicolas Serandour
Chief Executive Officer
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
STRATEGIC REPORT
Introduction
Investment case
Chairman and CEO letter
Purpose, values and excellence
Relevance and evolution
Sustainability review
Five priorities in action
Product and market positioning
Market overview and opportunities
Our LIGHT system
Our innovation roadmap
Business delivery
Our delivery plan
Our business model
Section 172
Principal risks and risk management
GOVERNANCE REPORT
Advanced Oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
FINANCIAL REPORT
Consolidated statement of 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
Information about Advanced Oncotherapy: www.avoplc.com
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Table of contents
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ANNUAL REPORT 2021
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ANNUAL REPORT 2021
With our LIGHT system, we have the ambition and
the means to democratise proton therapy by treating
patients not only at proximity to their family but also at a
more affordable price for payers: proton therapy for all,
not just the lucky ones. This is particularly beneficial for
children, and we are proud to be working with partners
who share this vision by going the extra mile for them.
1.
Story with a clear ethical purpose and true social impact
In the cancer market, an area with significant needs, we
provide the latest technological advancement in proton
therapy – a more targeted radiation therapy sparing up
to 60% of healthy tissue. With the introduction of our
LIGHT system, we expect to substantially increase the
global availability of proton therapy, well above today’s
global capacity of 87,000 patients a year.
3.
Growing market opportunity with strong unmet
need due to current costs
Our manufacturing processes are outsourced to leading
manufacturers, further de-risking our business model,
creating leaner operations, and laying out the foundations
for cost optimisation, accelerated lead times and high-
volume production. We work with world-class partners
and assemble our LIGHT systems in partnership with
a UK-government body, the Science and Technology
Facilities Council (STFC).
4.
Broad industrialisation ecosystem in place with
high-quality partners
Our LIGHT system – created at the world-renowned physics
and engineering institute, CERN – is designed to offer the
most precise and fastest proton beam for cancer treatment
whilst providing significant cost savings for payers. Due to its
modularity and its ability to be installed into existing buildings,
LIGHT is the first proton therapy equipment that can be
leased, which is expected to dramatically accelerate the
adoption curve, replicating the success of other breakthrough
medical equipment such as MRI or CT scanners.
2.
Revolutionary CERN technology applied to address
the current shortcomings in radiation therapy
The management team has significant experience in
developing and launching radiation and proton-based
equipment with extensive regulatory and commercial
expertise. It is supported by experts and advisors whose
reputation is unquestionable.
7.
Experienced management team with great track-
record and supported by high-profile industry
experts
Our ability to dismantle and move our LIGHT system
is the foundation of our business model. We can lease
LIGHT to prospective customers, which reduces their
upfront considerations. Furthermore our partnership
with Kineo is an opportunity to fund our working capital
requirements. The low treatment cost per patient and
the ability of operators to service the debt due to the
attractive financial profile of a proton therapy centre
provide us with a further opportunity to take economic
interest in the operations of the clinical facility whilst
accelerating the pipeline ramp-up.
6.
Business model with complementary and strong
sustainable revenue streams and a leasing model
that is unique in proton therapy
With all the critical parts of LIGHT manufactured and
delivered to our assembly site as well as our ISO13485
certification, we are focused on the lower-risk parts of our
project and on completing the Verification and Validation
of LIGHT, a process aimed at ensuring the specification
and user requirements are met. Therefore, we are
uniquely positioned to fulfil a pipeline of interest already
established in the UK, Europe, the US and across Asia
and become the undisputed leader for proton therapy.
5.
Rigorous process-driven approach allowing the
company to deliver on its plan
INVESTMENT
CASE
Advanced Oncotherapy is a specialist developer and provider of a breakthrough proton therapy system, the LIGHT
system, which is the result of 25 years of work at CERN and ADAM. Our focus is on developing and supplying
technologies to maximise the destructive effect of radiation on tumours whilst minimising damage to the patient's
healthy tissues. We strive to defeat cancer and democratise proton therapy across the globe.
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ADVANCED ONCOTHERAPY PLC 2
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
Introduction
Product and market positioning
Business delivery
34,000+
LIGHT and its supporting equipment has more
than 34,000 items, of which roughly half are
commercially off the shelf
The product complexity of LIGHT is a strong barrier to entry, given the
need to document the design records (e.g. product requirements, product
architecture, Bill of Materials, design reports, product risk analysis, etc.)
1/3 millimetre
The accurate evaluation of the beam energy
requires measurement of time differences to
picosecond precision; a picosecond being the
time it takes light to travel one third of a millimetre
Protons can go as fast as 60% speed of light. Measuring the time protons
travel between two spots of the machine is crucial to deliver the right
treatment for patients
4,400
Almost 4,400 documents have been needed to
support the certification of LIGHT through the
quality management system
As an ISO13485-certified company, Advanced Oncotherapy must provide
meaningful data evidence of effective quality controls. Data quality and availability
are critical to the success of a quality management system framework to drive
continuous improvement and preventative quality control activities
650 million
Protons travelling at a speed of 650 million km/
hour will damage a tumour located at a depth of
32 cm
Accelerated protons get “energised”; the higher their energy and their speed,
the deeper in the body the radiation damage will be made. There is a direct
relationship between the energy of protons and their speed
200
Approx. 200 separate registered IP assets have
been filed in more than 35 countries
Advanced Oncotherapy has a dedicated IP department to manage and grow
its IP portfolio and to identify, assess and manage IP risks. The Company uses
a range of approaches and strategies, depending on the type and content of
property and its relation to the overall company strategy as defined by the Board
1,045
1,045 work applications were submitted in 2021
from people willing to join Advanced Oncotherapy
The Company employs 174 employees as of end of 2021
5
The deposition of proton pulses can be varied and
occur once every 5 milliseconds
This ultra-fast change makes LIGHT ideally suited for suited for the treatment
of moving targets
3 billion
The electromagnetic field inside the LIGHT
accelerator changes sign 3 billion times per
second
Protons are charged particles and can be accelerated if placed in an electro-
magnetic field. The strength and direction of the magnetic field is constantly
changing so that the north pole becomes the south pole and vice-versa
Our Project in Numbers
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ANNUAL REPORT 2021
Dear shareholders,
Despite the unknowns brought by COVID-19 over the
period, the Company’s objectives and purpose remained
consistent with our vision of democratising proton therapy
and guided our employees and partners to overcome
moments that, at times, seemed insurmountable. We are
now pleased and proud to say that Advanced Oncotherapy
is on the verge of doing something that has never been
done before – building a sustainable and value-enhancing
platform to democratise access to proton therapy. We
continue to be centre stage in the transformation of cancer
care and the deployment of proton therapy, and what we
do in this critical phase will define us for decades.
From C to Sea
20 years ago, when family members had cancer, they
would often call it the C word and it was hard to blame
them: cancer was largely a death sentence for those who
were unfortunate enough to get it. Few people can say
their lives have not been touched by the disease, either
personally or through friends and family. However, the
combination of advances in cancer treatments, improved
awareness and diagnosis, has changed the trajectory and
prognosis of cancer.
Cancer mortality rates have plummeted over the past
years, with four out of five of those diagnosed with
childhood cancer set to survive for more than five years
after diagnosis. While this is great news, much more
remains to be done. An estimated ten million people die
from cancer each year, and about 75% of cancer survivors
have one or more health problems, often as a side-effect of
the treatments they received, ranging from heart failure due
to chemotherapy, to secondary malignancies as a result
of radiotherapy. Chronic problems are also associated
with surgeries to remove cancers. These methods have
influenced an ‘innovation’ mindset that is focused on
improving clinical outcomes and patients’ quality of life. This
is best exemplified by the development of more targeted
cancer modalities, arguably the most important paradigm
treatment shift in cancer care over the last decade.
Proton therapy – as an effective proven radiation therapy
with limited long-term side effects due to its high precision
– has a key role to play in transforming cancer treatment.
Yet, with only 114 proton therapy centres currently
across the globe, only circa 87,000 cancer patients can
be treated in one year at a cost which is often out of the
reach of individual patients and is clearly unsustainable for
healthcare systems. This situation is unsatisfactory and, as
such, access to proton therapy needs to be democratised.
We believe this can be achieved through our ‘blue ocean’
strategy which relies on the following ‘5S’ principles:
CHAIRMAN
AND CEO LETTER
Dr Michael Sinclair
Executive Chairman
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ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
•
Solving customers’ needs: Our LIGHT solution consists
of a breakthrough linear accelerator, an integrated
imaging and positioning system and the latest software
advancement, which when taken together provide
a medically superior solution that is easier to install
and can be fitted in existing structures, and more
accessible, resulting in a significantly lower treatment
cost for payors. This is not only value-enhancing for our
customers, but also for the Company’s shareholders;
•
Supporting customers through long-term servicing
agreements;
•
Scaling our infrastructure to deliver a fast-growing
pipeline, further reduce costs and lead times;
•
Sharing our vision with all stakeholders through a
long-term interest alignment. We intend to expand
the market opportunity through a uniquely designed
business model built upon a joint risk / reward
sharing policy as evidenced by the profit-sharing
arrangements agreed with customers; and
•
Sustaining our competitive advantage by leveraging
our proprietary LIGHT platform through a continuous
commitment to innovate, attracting top talent and making
a positive impact on wider society and the environment.
Executing our global strategy
In a highly regulated industry, we must continue to
demonstrate our ability to adapt to our environment
and remain agile by accelerating the speed at which
we execute our strategy to deliver improved returns.
In 2021, the executive team made significant progress
in overseeing the assembly of the LIGHT system at
our assembly and integration site located in Daresbury,
UK, as well as laying out the groundwork for a potential
successful market approval.
Execution of our ‘5S’ strategy has also required a disciplined
approach to how we invest in our assets. Over the last
two years, we have made significant investments in our
infrastructure. The trajectory of investment across our
organisation is pivoting towards further cost optimisation
for future machines and faster delivery times. The Board
supports this approach and continues to encourage the
executive team to shift their attention to rapid execution, with
the key focus areas being the long-term financial benefits
of making Advanced Oncotherapy the undisputed industry
leader and innovator in the proton therapy field. This is crucial
if we are to benefit from the versatility of the LIGHT platform
and knowledge uniquely nurtured within our organisation as
we pursue our various multi-year strategic goals.
In 2021, our execution plan and resilience as an
organisation continued to be tested by COVID-19.
While the pandemic has resulted in continual shifts and
disruptions to normal business patterns – supply chain
Introduction
Product and market positioning
Business delivery
Nicolas Serandour
Chief Executive Officer
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ANNUAL REPORT 2021
functioning, fluctuating demand in certain areas, workplace
operations – we continued to be focused on our LIGHT
project. We instigated supply chain initiatives to identify and
use alternative components and suppliers whilst complying
to ISO standards and medical device requirements. We
contracted with key suppliers to recruit additional installation
and testing expertise and capacity. Most importantly, we
kept our sights on our long-term objectives and our dynamic
vision for the future of health. This confirmed the fortitude
of our employees and dedication to the values that guide
our behaviour every day and help us to build a business
of the future. We are inspired by the abundant accounts of
the extraordinary care, compassion and commitment of our
employees as well as the strength of our organisation which
has been resourceful and adaptable, able to anticipate,
improvise, and draw on deep reserves of experience,
relationships, and know-how.
The LIGHT system: a machine that will
revolutionise cancer treatment
There is currently a significant unmet medical need in the
treatment of cancer, and we believe the LIGHT system
can play a key role in revolutionising cancer therapy. The
modularity and movability of the LIGHT system allow us to
lease machines to healthcare providers – a new business
model in the proton therapy market – uniquely positioning
the Company in the market and providing us the opportunity
to play a key role in revolutionising proton therapy.
The accelerator, currently under final assembly, is driven
by four inductive output tubes (IOTs) operating at 750 MHz,
which generate the relevant power for the radiofrequency
quadrupole (RFQ), and 13 klystrons operating at 3 GHz,
which provide high radio-frequency power to the machine
to accelerate the proton beam. The accelerator is cooled,
kept under vacuum, and monitored by beam diagnostics
and the Company’s time-of-flight energy measurement
algorithm. Our proprietary LIGHT Accelerator Control
System integrates more than 300 separate devices and
is driven from a control room where operators accelerate
and steer the proton beam. Protons go through a gallery of
accelerators moving as a 200Hz pulsed beam through the
RFQ, the side-couple drift tube linacs (SCDTLs) and then
through the 15 coupled cavity linacs (CCLs) accelerating
up to a maximum energy of 230 MeV, the energy required
to treat deep-seated tumours at a depth of 32cm. Patient
treatment will take place in the treatment room which is
located at the end of the accelerator where a state-of-
the-art robot chair, with CT scanner and X-Ray panels for
accurate patient positioning, has been installed.
During the period, the Company has continued to make
significant progress with the commissioning of the LIGHT
system. The machine installed at Daresbury has been
successfully optimised to deliver a proton beam with
a beam size smaller than 1 mm and a beam current of
about 50 μA, equivalent to 500 million protons per pulse.
As a result, the Company has made good progress in
preparing data for the US Food and Drug Administration
(FDA) regarding the stability, intensity and spot size of
the proton beam. These new data sets demonstrate
that the measurements of the quality of the beam match
those from computer simulations. The Company can now
proceed to finalise the integration of the remaining high
energy accelerating modules of the LIGHT machine and
further optimise the proton beam.
We have continued to work with our clinical collaborator
(the University Hospitals Birmingham NHS Foundation
Trust) and Clarivate, a global analytics company, to define
the clinical protocol for treating the first patients. These
discussions have been held in close coordination with
the FDA, the UK Medicines and Healthcare products
Regulatory Agency (MHRA) and the European Notified
Body, which we consult with on a regular basis. As a result
of these discussions, the Company has been requested to
provide new measurement data to confirm that the beam
performance is maintained within the required tolerances
for the clinical use both in terms of energy (i.e. depth in the
body) and intensity (i.e. number of protons per second).
Although these measurements have not been conducted
with the final configuration for 230MeV, they indicate that the
beam stability is not a cause for concern in the planned final
configuration, a key step which is expected to de-risk the
overall certification process. This request originates from the
fact that the key LIGHT components are now assembled in
situ at Daresbury and the underlying parameters have been
optimised in recent months as the Company performs the
verification and validation activities, a key step in ensuring
product certification.
Commercial momentum
Over the past year, we continued to build commercial
momentum around the LIGHT system. During the period,
we signed a lessor financing partnership with Kineo
Finance (formerly known as DiaMedCare). Under the
terms of the partnership agreement, Kineo Finance will
acquire LIGHT systems from the Company and lease
them to customers that are commissioning the LIGHT
system for oncology treatments. As such, we will be able
to offer customers easier access to the LIGHT system
through a flexible financing solution that reduces the need
for large initial upfront payments from customers.
During the period, we also signed a letter of intent with
Saba Partners SA for the proposed purchase of a three-
treatment room LIGHT system in Switzerland. The
Company is working to obtain the applicable CE marking
clearances and is working with Saba Partners to put in place
a binding agreement and finalise the legal documentation.
These agreements build on the commercial momentum
for the LIGHT system from our earlier agreements with the
London Clinic, the Mediterranean Hospital in Limassol,
Cyprus, and University Hospital Birmingham NHS
Foundation Trust (UHB).
Adapting our structure to address health, social
and environmental challenges
CHAIRMAN
AND CEO LETTER_Continued
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ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
Our long-standing aspiration of creating value for society
and for our future business is more relevant than ever,
given the mounting threats to people’s lives and livelihoods
posed by the health, social and environmental challenges
dominating today’s global agenda. The past two years
have underscored the essential role of science in tackling
these challenges, whether managing a rogue virus or
transitioning into an eco-friendlier environment.
In that regard, we are committed to being a sustainable
business. To achieve this ambition, we strive to do business
in a financially, environmentally, and socially responsible
way. We have designed a breakthrough proton system
that is well-positioned to meet the increasing needs of our
customers and patients who are demanding more circular
and sustainable products around the world. We have a
clear, science-based, disciplined and affordable path to
further promote our ESG principles; which is particularly
relevant as we continue to grow our capacity.
Furthermore, we are committed to strong diversity through
ensuring academic qualifications are not the sole criteria
for hiring, bespoke training and mentoring, flexible working
policies and an inclusive culture as well as having the right
competences to meet future challenges.
Financing foundations
We have been able to continue with progressing
our activities as a result of the completion of equity
investments since January 2021 totalling c.£58 million
(before costs). Funds raised have supported the Company
as it progresses towards having a fully operational LIGHT
system operating at 230MeV during summer 2022.
Our financial results
The Company recorded a comprehensive loss of £30.3
million in the year ended 31 December 2021 (2020: £23.4
million), with shareholder funds as at 31 December 2021 of
£61.4 million (2020: £44.1 million). Cash and cash equivalents
at the year-end were £4,260,490 (2020: £2,317,451).
Outlook
Looking ahead, 2022 is a significant year for us at Advanced
Oncotherapy as we move towards the delivery of our first
LIGHT system operating at 230 MeV. We have made
significant strides towards achieving this milestone during the
period and have set the foundations to fast forward the global
adoption of the LIGHT system. We remain on track with our
timeline of summer 2022 to deliver a machine at 230 MeV.
In closing
The Company has emerged stronger despite the
challenges it faced in 2021. We have made significant
progress towards the delivery of our first LIGHT system
operating at 230 MeV and have shown resilience in the
face of adversity. We are convinced that this Company is
taking the right steps to shape a successful future.
Such progress would not have been possible without the
tremendous effort and dedication of our staff. We remain
confident in our ability to deliver the first machine with a
230 MeV beam during summer 2022 and look forward to
what will continue to be a significant year for the Company.
On behalf of the Board of Directors, we would like to
offer our sincere thanks to all Advanced Oncotherapy
employees for their dedication and contributions to
the good operational and strategic progress and to
the management team for their leadership. And most
importantly, thank you for supporting us as shareholders,
for your loyalty and for being a part of our journey.
Introduction
Product and market positioning
Business delivery
Dr Michael Sinclair
Executive Chairman
30 June 2022
Nicolas Serandour
Chief Executive Officer
30 June 2022
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ANNUAL REPORT 2021
PURPOSE, VALUES AND
EXCELLENCE
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ANNUAL REPORT 2021
Our Purpose
Our Values
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 the better.
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.
At Advanced Oncotherapy,
we strive to defeat cancer and
democratise proton therapy
across the globe.
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ADVANCED ONCOTHERAPY PLC 8
ADVANCED ONCOTHERAPY PLC
Our Areas of Excellence
Beam dynamics
Electronics
Civil and structural engineering
Health and safety
Cooling and ventilation
Magnet technology
Electrical engineering
Mechanical engineering
Radiation safety
Electrical networks
Power converters
RF technology
Survey and alignment
Electromagnetic compatibility & interference
Radiation protection
Vacuum technology
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
Introduction
Product and market positioning
Business delivery
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ANNUAL REPORT 2021
RELEVANCE AND
EVOLUTION
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ANNUAL REPORT 2021
•
2021: Lessor financing partnership with Kineo
to support financing customers’ needs and
working capital of the Company; £46m raised
in equity
•
2020: £23m raised in equity raises and £40m
credit facility with VDL and Nerano
•
2021: Infrastructure in place to support
assembly and testing activities
•
2019: ISO 13485 certification
•
2018: Assembly and testing site finalised with
STFC
•
2016: Optimisation and industrialisation
programme in partnership with Thales
•
2014/16: Suppliers selected
Bringing innovative financing
solutions to customers and
to support the working capital
needed for new machines
Building an infrastructure
that supports high-volume
production with quality at its
core
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ADVANCED ONCOTHERAPY PLC 10
ADVANCED ONCOTHERAPY PLC
In a study dated September 2019 and published by the Harvard Medical School, it was estimated that the overall cost of
development for a complex medical device was $526 million. Notably, this is more than the double the investment made into
developing the LIGHT System. 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.
•
2021: LIGHT capable of delivering a proton
pulse every 5 milliseconds and initial maximum
intensity reached; synergistic LIGHT/
immunotherapeutic approaches; treatment
room installed in Daresbury
•
2020: Manufacturing of all critical hardware
completed; LIGHT treatment plan installed at
the Cleveland Clinic
•
2019: Studies confirming the superiority of
LIGHT and its potential for FLASH
•
2018: LIGHT capable of accelerating protons
at 52 MeV
•
2017: First SCDTL integrated
•
2015: Successful RF power testing of the first
CCL unit
•
2001: Successful testing of the first LINAC
booster ("LIBO")
•
1993: Validation of the design
•
2021: Letter of Intent from Saba Partners to
buy a LIGHT System
•
2020: Partnership with The London Clinic, the
Mediterranean Hospital and the University
Hospitals Birmingham NHS Trust
•
2019: Partnership with the Cleveland Clinic;
clinical site built in Harley Street, London
•
2017: Distribution and equity partnership with
Realcan
Bringing a differentiated
technology on the market with
superior medical outcomes
Demonstrating an agile
commercial mindset with a
focus on aligning interest
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
Introduction
Product and market positioning
Business delivery
SUSTAINABILITY
REVIEW
•
Housing a LIGHT accelerator does not involve large shielding
•
The installation of LIGHT does not require expensive cranes or load
handling devices
•
LIGHT can be disassembled and removed from one site to another
•
Our assembly site is sponsored by the UK government and with a
net zero target by 2040
•
We use energy saving technology and LED lights wherever possible
•
We reviewed travel policies to reduce the number of journeys and
trips made
•
We promote the use of technology to replace travel to meetings with
the use of video conferencing
Environment
•
Our purpose is to democratise proton therapy and offer access to
people who cannot afford the treatment
•
Children are a particular focus; with our partners we are committed
to support their treatment at cost in the catchment area
•
Our commitment to expand access to innovations will help more
patients live longer, better lives
•
LIGHT can be installed in densely populated areas; this means
patients do not have to travel long distance; hence they can be
treated at proximity to their home
•
We continue to be committed to equal opportunities when it comes
to recruitment, appointing and development, irrelevant of gender,
race, or religion
•
We emphasise employee safety, health and development while
promoting diversity and inclusion, integrity, mutual respect
Society
•
By contributing to treat patients at a more affordable cost and reducing
expensive long-term side effects of treatment, we help patients and
families reallocating financial resources on other priorities
•
The deployment of LIGHT is expected to be accompanied with the
creation of logistic hubs in selected geographies, further expanding
the skill set of people and building an important network of partners
around the world
•
We are committed to train physicians and engineers around the
world to accelerate the deployment of LIGHT
•
We follow the QCA Code on good corporate governance
•
We deliver our plan in accordance with ISO-13485
•
We promote flexible working for every role where this is possible
Economy and Governance
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ANNUAL REPORT 2021
Our approach is holistic and integrates the three dimensions of sustainability:
•
Society – how we contribute to a better tomorrow for all
•
Environment – how we minimise our impact on nature
•
Economy and governance – how we invest in medical advances, create jobs
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
Introduction
Product and market positioning
Business delivery
12
ADVANCED ONCOTHERAPY PLC
FIVE PRIORITIES IN
ACTION
Solve
Support
Scale
Share
Sustain
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ANNUAL REPORT 2021
Our corporate strategy has five distinct focus areas. It is built on our purpose and our ambition to be a sustainable
business. We aim to:
•
solve customers’ needs;
•
support customers through long-term servicing contracts;
•
scale the infrastructure to meet the demand;
•
share vision with all stakeholders through long-term interest alignment;
•
sustain the Company’s competitive advantages.
Accessing a larger segment of the radiation therapy market…
We intend to disrupt the radiation therapy market by selling to a broad range of customers that have yet to make an investment
in proton therapy due to the challenges associated with conventional proton therapy.
…by providing a solution, not just a product …
We intend to be a patient-centric solutions leader. Our commitment is to solve problems through a turn-key solution. We focus
on what matters for all stakeholders in our ecosystem: integrated solution including the accelerator, the imaging system, the
software package; medically superior solution to existing systems; easier to install and fit; more accessible; value-enhancing for
customers and the Company’s shareholders.
… and enhancing awareness of the LIGHT benefits
We intend to attract new customers by educating the market about our leading and differentiated system and its unique capabilities.
SOLVE customers’ needs
Providing long-term servicing contract to ensure reliability of the operations; …
We intend to support our customers – beyond the installation of a LIGHT system – by being the single-point responsibility for
long-term servicing and maintenance operations. The complexity of proton therapy systems demands that they are serviced by
a single source that has the knowledge and the ability to do so, so that customers can reliably operate LIGHT.
… a key strategic pillar that has many other advantages
We intend to leverage our servicing strategy; this is expected to result in future business development opportunities and generate
steady income streams.
SUPPORT customers through long-term servicing contracts
Promoting a “skin in the game” culture with key stakeholders
We intend to build partnerships through a clear long-term interest alignment. Our approach is therefore based on removing the
silos arising from the conventional supplier/customer relationship. To do so, we are focused on implementing new models as
exemplified by our partnership with Cosylab, a strategic supplier focused on software development and incentivised through
payment in Company’s shares.
Working closely with customers
We intend to expand the market opportunity through a uniquely designed business model built upon a joint risk/reward sharing
policy as evidenced by the profit-sharing arrangements agreed with customers. This brings many benefits such as the opportunity
to gain valuable insights about the customers’ operations and generate more recurring revenue streams.
SHARE vision with all stakeholders through long-term interest alignment
Leveraging our proprietary LIGHT platform
We intend to leverage our proprietary LIGHT platform by continuously enhancing our clinical capabilities with new and improved
product functionalities and technologies, including the development of FLASH, the deployment of mini-beams and the synergistic
combination of proton therapy with immunotherapies. The latter leverages the unique features of LIGHT, including its high
precision and ultra-fast delivery, and offers the opportunity to treat cancer types which can not be treated today. Further routes
for innovation relate to beam delivery, patient imaging, positioning and motion management and streamlined clinical workflow.
Investing in talent
We intend to attract and retain top talent as the industry remains characterised by scarcity and competition for skills and
capabilities. This is key to sustain our competitive edge and nurture our culture.
Making a positive impact on society and environment
We intend to integrate sustainability in a systematic way throughout the entire value chain and decision-making process to truly
influence the Company directions and build resilience.
SUSTAIN the Company’s competitive advantages
Building the foundation for delivering a fast-growing pipeline…
We intend to scale our assembly infrastructure and deepen the relationship with our partners and suppliers to increase the
number of LIGHT systems which can be installed in any given year.
… and further optimising costs and delivery times
We intend to further optimise costs and reduce lead times by implementing identified initiatives and leveraging our operational set-up.
SCALE the infrastructure to meet the demand
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ADVANCED ONCOTHERAPY PLC
CANCER, SET TO BECOME THE NUMBER-ONE
CAUSE OF DEATH IN MOST
SOCIETIES
Cancer, the abnormal proliferation of cells which is
capable of both invading surrounding normal tissue
and spreading throughout the body
Cancer is a broad term often used to describe a large group
of diseases defined by uncontrolled cell growth and division.
These cancer cells do not die. They invade normal tissues
and organs, and eventually spread throughout the body. Their
generalised loss of growth control is the net result of accumulated
abnormalities in multiple cell regulatory systems and is reflected
in several aspects of cell behaviour that distinguish cancer cells
from their normal counterparts:
•
Cancer cells do not stop growing and dividing. Unlike
normal cells, cancer cells do not stop growing and dividing
when there are enough of them. So, the cells keep doubling,
forming a lump (tumour) that grows. A tumour forms, made
up of billions of copies of the original cancerous cell. Cancers
of blood cells (leukaemia) do not form tumours, but they
make many abnormal blood cells that build up in the blood;
•
Cancer cells have abnormal differentiation. They do not
mature normally; therefore, they are not able to carry out
their functions;
•
Cancer cells ignore signals from other cells. Cells
send chemical signals to each other all the time. Normal
cells obey signals that tell them when they have reached
their limit and will cause damage if they grow any further.
But something in cancer cells stops the normal signalling
system from working;
•
Cancer cells invade nearby tissues. Normal cells respond
to signals from other cells which tell them they have reached
a boundary. Cancer cells do not respond to these signals and
extend into nearby tissues often with finger-like projections.
This is one reason why it is difficult at times to surgically
remove a tumour. The word cancer, in fact, is derived from
the Greek word carcinos for crab, referring to these claw-like
extensions into neighbouring tissues;
•
Cancer cells can spread to other regions of the body
via the circulatory or lymphatic systems (metastasis).
Unlike normal cells which make substances called adhesion
molecules that cause them to stick to nearby cells, cancer
cells can break free and float to other regions of the body.
Only malignant tumours are properly referred to as cancers,
and it is their ability to invade and metastasise that makes
cancer so dangerous. Whereas benign tumours – which
remain confined to their original location, neither invading
surrounding normal tissue nor spreading to distant body
sites – can usually be removed surgically, the spread of
malignant tumours to distant body sites frequently makes
them resistant to such localised treatment;
•
Cancer cells do not repair themselves or die. Normal cells
can repair themselves if their genes become damaged. This
is known as DNA repair. Cells self-destruct if the damage is
too bad in a process called apoptosis. In cancer cells, the
molecules that decide whether a cell should repair itself are
faulty;
•
Cancer cells have specific tumour markers. They can
express proteins, called antigens, on the cell surface, which
makes them different from normal, healthy cells.
Cancer is a devastating disease that
takes an enormous emotional toll.
Not only on the patient, but on the
patient's loved ones, as well. It is a
battle that humans have been fighting
for centuries. And while we have made
some advancements, we still have not
beaten it. Two out of five people in the
US will develop cancer in their lifetime.
Of those, 90 percent will succumb to the
disease due to metastases.
15
ANNUAL REPORT 2021
Source: IHME, Global Burden of Disease
Prevalence of cancer by age, World, 1990 to 2017
70-year-olds
50-69-year-olds
15-49-year-olds
5-14-year-olds
Under-5s
1990
2000
2010
1995
2005
2017
0%
40%
80%
20%
60%
100%
Cancer can affect people of any age but occurs more often in older people, most likely from cumulative exposure to
carcinogens, agents that are known to increase cancer risk. Cancer comes from our own cells; however, our chances
of being affected by the disease can be linked to factors that come from both within and outside of our bodies.
Every time cells divide; they make a
copy of the genetic code contained
within them. This copying process is
not always perfect and occasionally
results in typos, or errors in the DNA,
which are called mutations. Cells
have ways to detect and fix these
mistakes, but they do not always
work. If a cell develops a mutation, it
may start to act differently to a normal
cell.
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ADVANCED ONCOTHERAPY PLC
Compared to cardiovascular diseases, neurological/mental disorders and diabetes, cancer is associated with the
highest disease burden (20.8% of DALYs across all diseases) but the second-lowest healthcare expenditure levels
(4.8% of total healthcare expenditure) among the studied major chronic diseases.
Despite advances, the number of cancer patients is set to climb over the coming decades
Cancer is not always a death sentence. In many countries more people are surviving cancer than ever before. In fact, there
are now 28 million people living with or beyond cancer worldwide, a number that has increased nearly five-fold since the
70’s. Cancer’s death rate has been reduced by 27 percent over the past 25 years, giving cancer patients increased hope for
survival. This is largely due to the emergence of new treatments and technologies as well as earlier detection.
Yet, this should not obscure three important challenges.
•
GLOBOCAN
2020
made
a
staggering
prediction:
with
an
aging population, it expects the
number of new cancer cases to rise
markedly, reaching an astounding
28 million cases annually by 2040,
a 47 percent rise from 2020. The
U.S. Cancer Society estimates
that almost 40 percent of men
and women will be diagnosed with
cancer during their lifetime;
•
Despite the upward trajectory of
cancer survival rates, it remains
chillingly apparent that there is still
a huge, unmet need in the fight
against cancer. Several forms
of cancer are almost completely
unresponsive to treatments that
have been developed over the last
40 years: for example, the five-
year survival rate from pancreatic
cancer
remains
barely
above
five percent at five years after
diagnosis. Brain tumours probably
cause more “years of life lost” than
any other sub-type of disease, and
the most aggressive forms of this
disorder offer some of the greatest
challenges
within
medicine.
Despite the disease burden, the
level of investment and healthcare
expenditures in cancer remains
below major chronic diseases.
•
For patients and their families,
the costs associated with direct
cancer care are staggering. In
the UK, young people (under 35)
and people approaching pension
age (55-64) are most likely to see
a decline in their financial health
because of cancer, at 67 and 60
percent
respectively.
Drawing
on this, the total economic cost
of cancer to the UK economy in
terms of lost wages and benefits
is estimated at approximately £1.4
billion a year or £7.6 billion a year
when considering mortality.
Average proportion of mortality, DALYs and healthcare expenditure, by disease (2015)
Note: DALY = Disability Adjusted Life Years; this represents the number of years lost due to ill-health, disability or early death
Schlueter M, Chan K, Lasry R, Price M (2020) The cost of cancer – A comparative analysis of the direct medical costs of cancer
and other major chronic diseases in Europe. PLOS ONE 15(11): e0241354. https://doi.org/10.1371/journal.pone.0241354
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0241354
Cancer
Diabetes
Cardiovascular
Neurological disorders
All other
0%
40%
20%
60%
10%
50%
30%
70%
80%
Proportion of total disease deaths
Proportion of total disease DALYs
Proportion of total healthcare spend
30.2%
33.8%
2.1%
12.9%
21.1%
20.8%
17.1%
3.3%
5.8%
53.1%
4.8%
9.0%
6.6%
4.4%
75.2%
17
ANNUAL REPORT 2021
CANCER, SET TO BECOME THE NUMBER-ONE
CAUSE OF DEATH IN MOST
SOCIETIES_Continued
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ADVANCED ONCOTHERAPY PLC
Cancer is complex, so approaches to its
treatment must match that complexity
Once a cancer has formed, the cells do not remain the
same, but rather continued mutations may occur. This,
in fact, is why resistance develops to chemotherapy and
targeted therapy drugs in time. The cancer cell develops
a mutation that allows it to bypass the damaging effects
of these treatments. That cancer cells change is very
important in treatment. For example, a breast cancer that
is oestrogen-receptor positive may be oestrogen-receptor
negative when it recurs or spreads. It also helps explain
why cancer cells in different parts of a tumour may be
different. This is referred to as "heterogenicity" and is
important in diagnosis and treatment as well.
Consequently, clinicians must have an array of treatment
options for their cancer patients.
•
Surgery is aimed at removing tissue from the body.
It remains a mainstay in the cure and control of most
solid cancers; it is often the first treatment offered to
patients. Surgery can have different purposes: cure;
prevent; diagnose; uncover the extent of cancer
(staging surgery); remove a portion, though not all,
of a cancerous tumour (debulking surgery), relieve
discomfort and pain, etc. Surgery is not used for some
types of cancer of the blood system (leukaemia), or
lymphatic system (lymphoma), because cancer cells
might spread throughout the body. Surgery may also
not be possible because of its location near delicate
tissues or blood vessels.
•
Chemotherapy is a drug treatment that uses powerful
chemicals to kill fast-growing cells. Chemotherapeutic
agents are cytotoxic that harm malignant as well as
healthy cells in cancer patients. There are different
drug types of chemotherapy drugs available which
includes alkylating agents, plant alkaloids, antitumour
antibiotics,
antimetabolites
and
topoisomerase
inhibitors. To improve patients’ quality of life,
chemotherapy is often used as an adjuvant to other
therapeutic modalities such as radiation therapy and
surgery.
•
Targeted therapy is a cancer treatment that uses
drugs to target specific genes and proteins that are
involved in the growth and survival of cancer cells.
Targeted therapy can affect the tissue environment
that helps cancer grow and survive or it can target
cells related to cancer growth, like blood vessel cells.
•
Immunotherapy is a type of cancer treatment that
helps the immune system fight cancer. The immune
system helps fight infections and other diseases. It is
made up of white blood cells and organs and tissues
of the lymph system. There are different categories of
immunotherapy which includes immune checkpoint
inhibitors, T-cell transfer therapy and monoclonal
antibodies. Immunotherapy is one of the most recent
advancements in cancer therapy that has improved
the effectiveness of overall cancer therapy. This
treatment option is based on a commonly accepted
hypothesis that the immune system is an effective
tool for combating various diseases. Researchers
have developed certain approaches for the use
of immunotherapeutics in cancer treatment that
include stimulating the immune system externally
so that it would act forcefully or destroy the tumours
with tumour specific proteins. Immunotherapy, most
often, is used in combination with surgery, radiation,
or chemotherapy to augment the therapeutic
effectiveness of the cancer treatment.
•
Hormonal therapy is a treatment that adds, blocks
or removes hormones to slow or stop the growth of
cancer cells that need hormones to grow.
•
Radiation therapy is an important technique for
shrinking and killing tumours. High energy waves
are targeted at the cancerous cells. The waves stop
certain internal functions of the cell that are involved
in cell division, so the cells eventually die.
19
ANNUAL REPORT 2021
CANCER, SET TO BECOME THE NUMBER-ONE
CAUSE OF DEATH IN MOST
SOCIETIES_Continued
Over the past decade, we have witnessed the evolution from evidence-based medicine
to precision medicine, making it clear that ‘one-size-fits-all’ treatment protocols are not
the way to conquer cancer.
• Chemotherapy
• Targeted therapy
• Immunotherapy
• Hormonal therapy
• X-rays
• Proton
• Ion therapy
• Conventional
surgery
• Cryosurgery
• Laser surgery
• Electrosurgery
• Microscopically
controlled
surgery
Therapeutics
Surgery
Radiation
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ADVANCED ONCOTHERAPY PLC
Radiotherapy, a well-proven technology with a
longstanding history of treating cancer patients
Today, radiotherapy is provided to up to two-thirds of cancer
patients, either on its own or alongside other forms of therapy.
It has won a place as a mainstay of modern cancer treatment,
coming a long way since Wilhelm Conrad Roentgen, a
German physics professor, presented in 1896 a lecture
entitled “Concerning a New Kind of Ray.” Roentgen called
it the “X-rays”, with “x” being the algebraic symbol for an
unknown quantity; he received the first Nobel Prize awarded in
physics in 1901. Three years after Roentgen’s breakthrough,
the physicist Marie Curie discovered the chemical element
radium, another source of radiation. Scientists in the US and
Europe then began studying the use of radium and X-rays
to treat cancer. They also discovered that daily doses of
radiation over several weeks greatly improved the patient’s
chance for a cure. Soon, it became clear that radiation was
a highly effective tool against cancer, but it was also harmful
for patients and clinicians. Early radiologists developed
leukaemia after testing their machines on their own arms:
they were estimating the daily fraction of radiation by looking
for a dose that would produce on their skins a pink reaction
(erythema) which looked like sunburn.
Further advances were made in the first half of the 20th
century following the work of the English physicist Hal Gray
– after whom the radiation unit of measurement (the Gray)
is named – on how cells respond to radiation. High-energy
X-rays were also introduced, providing improved treatment of
deep-seated tumours. In the 1990s, the advent of computers,
CT scanners and the use of CT for radiation planning were
dramatic breakthroughs in radiation treatment because they
allowed the ability to design radiation beams to directly target
the tumour and for the first time accurately calculate doses
received by nearby healthy organs. Conformal Radiation
Therapy ("CRT") – which uses CT images and special
computers to map the location of a cancer very precisely
in three dimensions – was deployed in hospitals. Although
3D-CRT was a significant improvement over conventional
2D planning, it had limitations: 3D-CRT beams deposit a
uniform strength of radiation (intensity) across specific field(s),
thus they cannot conform to concave structures. Concave
conformality requires the ability to modulate radiation beam
intensity across a field. With the development of Intensity-
Modulated Radiation Therapy ("IMRT"), it became possible
to adjust the intensity, giving more control in decreasing the
radiation reaching normal tissue while delivering a high dose
to the cancer.
Since then, new techniques have been introduced such as
stereotactic radiosurgery and stereotactic radiation therapy
which are used to deliver a large, precise radiation dose to
a small tumour. The term surgery may be confusing because
no cutting is done. The most common site treated with this
radiation technique is the brain. A significant attention is also
currently placed on the development of chemical modifiers
or radiosensitisers which are substances that make cancer
more sensitive to radiation. The goal of research is to develop
agents that will make the tumour more sensitive without
affecting normal tissues. Researchers are also looking for
substances that may help protect normal cells from radiation.
However, there is a general consensus that the development
of X-rays techniques has now reached a limit, which is due to
the physics of photons.
X-rays were discovered by accident. Roentgen had
been doing experiments with cathode rays—streams
of electrons in vacuum tubes. He had prepared a
glass cathode ray tube completely covered with black
cardboard, and noticed that even though the cardboard
completely covered the tube, a glow still appeared on
a fluorescent screen several feet away. After Roentgen
prepared one of the earliest X-ray images of the bones
in the hand of his wife, she remarked: “Now I have seen
my death!”
RADIATION, THE CHEAPEST AND
MOST WIDELY USED CANCER
MODALITY
21
ANNUAL REPORT 2021
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22
ADVANCED ONCOTHERAPY PLC
23
ANNUAL REPORT 2021
Photons are subatomic particles which are
always in motion, travelling at the speed of
light in empty space. The energy of a photon
depends on radiation frequency; there are
photons of all energies from high-energy
gamma- and X-rays, through visible light, to
low-energy infrared and radio waves. Photons
have no electric charge and zero mass
Einstein proved that light is a
flow of photons, the energy of the
light being directly related to the
wavelength. Shorter wavelengths
are higher energy. Therefore,
X-rays and ultraviolet can be
harmful, unlike radio wave and
infrared light. In the case of an
X-rays, its wavelength is 0.01 to
10 nanometres. As a comparison,
fingernails grow about one
nanometer per second. Photons
possess enough energy (100 eV
to 100 keV) to disrupt molecular
bonds and ionise atoms making it,
by definition, ionising radiation.
X-rays, using the basic unit of all light (photons) to damage
cancer cells
Approximately 98% of radiation is currently delivered through X-rays.
X-rays are packets of electromagnetic energy – also called photons – that
originate from the electron cloud of an atom. X-rays photons are created
through an energy change in electrons, which are excited, causing the
excess energy to be released. This change of energy is generated in a
vacuum-sealed X-ray tube, using a high voltage potential to accelerate
electrons from a cathode to a spinning anode, often comprised of tungsten.
Radiation therapy works by exposing clusters of cancer cells to a dose
of high energy radiation sufficient to damage their genetic information,
the DNA which contains the information used to control cell growth and
division. When cancer cells are exposed to radiation, they cannot divide
successfully and die.
Radiation therapy damages both healthy cells and cancer cells in the
treatment area. Therefore, the clinician’s goal is to target radiation delivery
to the tumour as precisely as possible to maximise the radiation dose
delivered to cancerous tissue and minimise the exposure of healthy tissue.
Still, radiation affects cancer cells more than normal cells. Cancer cells
reproduce faster than normal cells and lack the controls found in normal
cells. Because of this, it is harder for cancer cells to repair the damage done
by radiation. So, cancer cells are more easily destroyed by radiation, while
healthy cells are better able to repair themselves and survive the treatment.
Radiation can be used alone or in addition with other treatments to cure or
stabilise cancer. Like other therapies, the choice to use radiation to treat a
particular cancer depends on a wide range of factors. These include, but
are not limited to, the type of cancer, the physical state of the patient, the
stage of the cancer, and the location of the tumour.
Lowest photon energy
Radio waves
Microwaves
Infrared
Light spectrum
Ultraviolet
X-rays
Gamma rays
Red
Violet
Highest photon energy
Types of electromagnetic radiation
RADIATION, THE CHEAPEST AND
MOST WIDELY USED CANCER
MODALITY_Continued
24
ADVANCED ONCOTHERAPY PLC
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Allowing healthy cells to recover between treatments through fractionation
Radiation therapy is delivered in small doses called fractions, which are measured in centigray or cGy. These fractions are given
each day, most often Monday to Friday, for a period of five to seven weeks. This fractionation seeks to maximise the destruction of
malignant cells while minimising damage to healthy tissues: splitting the total radiation dose allows healthy cells an opportunity to
repair this sublethal damage between fractions. Meanwhile, malignant with impaired DNA repair pathways are less able to recover
from radiation damage to their DNA. The effect of fractionation is further supported by two fundamental cellular mechanisms:
•
The radiosensitivity of cells depends on their stage in the cell cycle. Cells are most sensitive to radiation in the M and late
G2 phase of their cycle and most resistant in the late S phase. Since a group of malignant cells are at various points in
their cell cycle, delivering the entire dose of radiation in a single fraction is ineffective against a proportion of the tumour
cells. Dividing the total dose of radiation into multiple fractions maximises the probability of irradiating cells when they are
in the most radiosensitive period of their cell cycle; and
•
The concentration of oxygen in the body ranges from 14% in the alveoli to 5% in peripheral tissues, a proportion that
may be significantly lower in tumours. Cancer cells with a low oxygen concentration are less susceptible to the effect
of radiation. Therefore, fractionation allows cells which are closer to sources of oxygen to be killed first whilst the other
malignant cells will become more sensitive to subsequent doses of radiation once they receive a greater oxygen supply.
Cell Cycle
Conventional
fractionation
Hypofractionation
Dose
From 180cGy to
200cGy
Higher doses per
fraction
Typical
treatment
Once a day, 5 days a
week, over 6-7 weeks
Shorter schedule,
usually 3 to 4 weeks;
treatment sometimes
not given every day
Cancer
types
Most common type of
fractionation; used in
many types of cancer
Not appropriate for
all cancer types
The intensity can be found by taking the energy
density (energy per unit volume) at a point
in space and multiplying it by the velocity at
which the energy is moving. In other words, the
intensity is related to the number of photons.
A1
A2
Large area less intensity
Radiation spreads out from a source
Spotlight
Introduction
Product and market positioning
Business delivery
Fundamental facts around protons and their relevance in
a medical setting
The physical property of protons, the key for a superior medical
outcome in cancer treatment
Protons are particles with a positive electric charge which are, along
with neutrons, in the nucleus of an atom. The rest of the atom consists
of electrons with a negative electric charge that orbit the nucleus.
Therefore, the atoms of elements are neutral, all the positive charges
cancelling out all the negative charges. Atoms differ from one another
in the number of protons, neutrons and electrons they contain. Atoms
of hydrogen have a single proton in their center and a single electron
whilst helium atoms, on the other hand, have two protons and two
electrons. Protons used in proton therapy are typically extracted from
hydrogen through electrolysis, a process aimed at separating the
proton and the electron.
When protons are accelerated in a particle accelerator, they acquire an
energy: the more they get accelerated, the more energy they acquire,
the higher their speed and the deepest in the body they stop. Once
protons are accelerated and hence, they are “energised”, then they
lose their gained energy based on the Bragg peak curve: the amount
of energy lost by protons is inversely proportional to the square of their
velocity; this explains why protons release their maximum energy –
which damages the DNA of cancer cells – just before they come to a complete stop. This point corresponds to the Bragg peak; this
is the spot where the maximum damage is made to a tumour. Therefore, and due to this physical property, proton beam radiation
can deliver more radiation to the cancer while reducing damage to nearby normal tissues. This is in stark contrast with X-rays
photons which gradually lose their energy, hence damaging the tumour but also the healthy tissues before and after the target. This
is further compounded by the fact that protons are significantly heavier than photons, hence the rays of proton therapy scatter less
easily than photons X-rays, thereby preventing radiation risk to healthy tissues beyond the cancerous cells.
Proton therapy’s greatest
advantage over conventional
radiation therapy is its accuracy
and its ability to powerfully
treat cancerous tissues while
avoiding healthy ones.
Conventional X-rays are made
of photons that pass through the
body and deposit considerable
energy before and after the
tumour. Proton therapy offers
great promise in the treatment of
a wide variety of cancers owing
to the sharp drop-off in radiation
dose at a defined point, known
as the Bragg peak, beyond
which there is no appreciable
dose. Therefore, it deposits less
energy on its way to the tumour
and does not affect tissues
beyond it. This confines the
radiation dose to the tumour and
decreases the risk of injury to
surrounding healthy tissues.
Damage occurring
to surrounding tissue
Tumour
Depth (cm)
Dose (%)
100
80
60
40
20
0
10
20
30
40
Bragg Peak
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.
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
exponentially decreasing energy deposition
with increasing depth in tissue.
Protons are positively charged and therefore
attract negative charges. When a proton – as
a positively charged particle – is launched near
a molecule such as DNA, negatively charged
regions of the molecule will be attracted to the
proton, thus interfering with that molecule's
normal orientation and function. The result of this
process is ultimately the death of cancer cells.
PROTON THERAPY,
THE MOST ADVANCED RADIATION
TECHNIQUE
25
ANNUAL REPORT 2021
Putting things in perspective: The energy of a particle is
measured in electronvolts. One electronvolt is the energy
gained by an electron that accelerates through a one-volt
electrical across a distance of 1 metre. As they race around
the Large Hadron Collider ("LHC"), the protons acquire
an energy of 6.5 million million electronvolts, known
as 6.5 tera-electronvolts or TeV. It is the highest energy
reached by an accelerator, but in everyday terms, this is
a ridiculously tiny energy; roughly the energy of a safety
pin dropped from a height of just two centimetres. But an
accelerator concentrates that energy at the infinitesimal
scale – protons have radius of under a millionth of a
billionth of a metre – to obtain very high concentrations of
energy close to those that existed just after the Big Bang.
Advanced Oncotherapy’s LIGHT accelerator is designed
to accelerate protons to 230 million electronvolts or 230
Mega electronvolts ("MeV"); this is equivalent to 0.004%
of the energy of protons accelerated in the LHC.
Steve Myers
Executive Chairman of ADAM
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ADVANCED ONCOTHERAPY PLC
Essentially, proton therapy is minimally invasive, provides a better quality of life for cancer survivors, and therefore is
the most economic and efficient cancer treatment available today, sparing the cancer survivor repeated post-treatment
complications that are common with more traditional options.
Key indications targeted by proton
therapy
Proton therapy is being used to treat
tumours in these areas of the body:
•
Brain;
•
Breast;
•
Eye melanomas;
•
Head and neck;
•
Liver;
•
Lung;
•
Oesophagus;
•
Paediatric brain tumours;
•
Prostate;
•
Rectum;
•
Skull base sarcomas.
Protocols are being developed to explore
the use of protons in other parts of the
body.
1
1
3
3
5
5
7
7
9
9
2
2
4
4
6
6
8
8
10
10
11
11
The advantages of proton therapy over conventional X-rays
With a success rate of up to 96%, proton therapy is unique in its accuracy
and in its heightened ability to avoid damage to healthy cells or tissues
during treatment. This results in a wide range of benefits for patients.
More specifically:
•
Proton therapy is ideally suited for treating hard-to-treat tumours such
as tumours located near critical organs (e.g., brain, head, and neck,
etc.) as well as children and young adults who are more susceptible
to injury from standard X-rays radiation because their tissues and
organs are growing more rapidly. This is due to the higher precision
of proton therapy and the reduced scattering effect of protons. It is
estimated that on average proton therapy will damage 60% less
healthy tissues when compared to conventional radiation therapy;
•
Proton therapy is a highly preferred radiation treatment option for
the elderly and weakened people due to its attractive safety and
tolerability profile;
•
By targeting the tumour precisely, side effects can be reduced.
Patients experience fewer side effects with proton therapy because
damage to healthy tissue and surrounding organs can be limited.
Studies have shown that proton therapy can significantly decrease
the estimated risk of developing secondary malignancies;
•
Radiation oncologists have more flexibility in the way they can treat
patients. Due to fewer complications and side effects, physicians
can deliver higher curative doses of radiation to the tumour. They
can also more safely escalate the level of radiation to the tumour,
if needed;
•
Proton therapy may be used for early cancers that in theory should
be operable, but are deemed inoperable due to their location near
vital structures or when a patient is not a good candidate for surgery;
•
Generally, proton therapy does not require hospitalisation and
allows for daily treatment on an outpatient basis. Depending on the
specific treatment plan, patients typically receive daily treatments for
several weeks. Treatments vary according to tumour type, location,
size, and the patient’s overall health and diagnosis;
•
Because proton therapy is a more accurate method for delivering
radiation to the site of a tumour, it is the only radiation treatment
available that can treat recurrent tumours that have previously been
treated with radiation. Lung cancer dominates this group of patients,
although the same logic applies to other groups;
•
Proton therapy can be used in conjunction with other cancer
treatment modalities;
•
Proton therapy is well-proven and has been used around the world
for decades. It was pioneered in the United States more than 50
years ago. By 2020, it had been used to treat more than 250,000
patients. Over the last few years, proton therapy has emerged as
the most effective treatment method for a variety of cancers. This
is supported by a growing body of clinical evidence showing that
proton therapy is effective while reducing side- effects for many
cancers.
PROTON THERAPY,
THE MOST ADVANCED RADIATION
TECHNIQUE_Continued
27
ANNUAL REPORT 2021
Cancers treated with proton therapy
Currently over 120 clinical trials open across a wide variety of disease sites.
2 Melanoma of the eye
Brain tumours 7
35 Lung cancer
Breast cancer 20
40 Prostate cancer
Paediatric cancers 15
20 Base-of-skull tumours
Head and neck tumours 30
58 GI cancer
Tumours near the spine 12
4 GU cancer
Sarcoma 23
Most studies are comparative as opposed to randomised studies due to the fact that patient acceptance(1) and
insurance coverage are needed. Most studies are coming out of academic centres rather than from free standing
community-based proton centres.
120 clinical trials
Growing body of clinical evidence supporting the effectiveness of proton therapy
Retrospective and prospective studies have shown promising outcomes with proton therapy for children and young adults with
cancers, and for sites such as tumours near skull base and spine, CNS tumours, head and neck, oesophageal, hepatocellular,
and thoracic cancers.
The past few years have seen a noticeable spurt in prospective and randomised studies, including trials for several sites such
as breast, prostate, lung, head and neck, hepatocellular, oesophageal and brain cancers. This is expected to result in a wider
scope of clinical application and acceptance amongst clinicians.
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ADVANCED ONCOTHERAPY PLC
(1) i.e. patient willingness to be randomised can be challenging to obtain, given the advantages of protons over photons
Experiencing proton therapy, from the patient’s
point of view
Proton therapy is delivered in brief outpatient sessions
which last on average between 15 to 30 minutes, although
the delivery of the proton beam only takes a few minutes.
Most of the time spent relates to the patient positioning and
adjustments to the equipment settings. During each visit,
the patient receives a “fraction” of the entire radiation dose
that must be delivered over the entire treatment cycle.
Typically, a patient receives 30 fractions over a period of
45 days. Proton therapy treatment is painless. Children
under 6-year-old might need to get general anaesthesia to
keep them completely still during the treatment.
Several preparation steps are needed before the patient
begins proton therapy. The first step is a procedure
referred to as "simulation," in which the patient is fitted
into a specialised immobilisation device to ensure the
person maintains the same exact position for every visit.
Sometimes, placing a metallic marker – a fiducial marker – in
or around the tumour is needed to help guide the treatment.
If necessary, these procedures are usually performed a few
days before the simulation. Images of the tumour are also
taken, using various techniques such as CT, MRI, PET-
CT, or 4D-CT. These images are often “fused” together to
give physicians more detailed information about the extent
of a tumour and the surrounding organs. The purpose
of this simulation is to create a virtual 3-D reconstruction
model of the tumour and normal tissues around it as well
as determine its exact shape and location. Data gathered
by radiation oncologists and physicists are then used to
assess the most effective treatment plan.
Following this simulation phase and for each visit, the
patient is fitted with the same personal immobilisation
device that has been constructed during this first stage.
The patient is positioned with the aid of laser lights to
within a few millimetres of the needed position to ensure
the tumour is properly aligned with the proton beam. In
some cases, a CT system will be used to image the target
before each treatment. During that process, temporary ink
on the patient’s body can also be used to help position
the patient. This special alignment and imaging process
is repeated before each treatment to assure the highest
precision.
Once positioning and treatment parameters are verified,
the medical team leaves the treatment room to avoid
radiation and steps out into the control room; the treatment
starts, and the patient is monitored to ensure his/her safety
and comfort. Once the prescribed radiation dose has been
delivered, the computer shuts off the proton beam and the
technologists re-enter the room to assist the patient in
removing the immobilisation device.
Post-treatment, the patient is escorted out of the room
and returns home until the next daily fraction where the
treatment process is repeated until the total planned dose
is reached.
PERSPECTIVES OF KEY
STAKEHOLDERS ON PROTON
THERAPY
29
ANNUAL REPORT 2021
Experiencing proton therapy, from the hospital’s point of view
Hospitals and cancer centres are facing several urgent imperatives: to strengthen clinical quality; increase the delivery of
personalised, patient-centred care; improve the patient experience; and enhance their efficiency and productivity. Consequently,
they must introduce innovations in care delivery, often to achieve multiple aims. These innovations include purchasing new
technologies to deliver better-quality care, adopting lean and standardised processes to improve quality and optimise productivity,
increasing the use of automation to change how the clinical workforce is deployed, and harnessing patient-generated data to
personalise treatments.
In response to these strategic imperatives, medical technology providers must adapt themselves and offer the right product
offering. This is particularly relevant for the proton therapy industry.
Strategic imperative
What proton therapy brings
Strengthen clinical
quality
•
Proton therapy offers unique medical advantages; it is the latest advancement in radiation
oncology;
•
Having proton therapy in the service offering is a magnet for hospitals when attracting key talents
and patients.
Deliver a more
personalised
treatment
•
Proton therapy is the most targeted radiation-based technique; the opportunity to deliver
minibeams and provide a fast rate of deposition of protons onto the target is essential in sculpting
radiation doses based on the irregular shape of the tumour and treating moving targets;
•
Preliminary scientific data suggests a strong synergistic potential for combining proton therapy
and developing approaches, such as immunotherapy, making personalised treatment a more
tangible and effective reality. This combination – which leverages the unique features of LIGHT,
including its high precision and ultra-fast delivery – offers the opportunity to treat cancer types
which can not be treated today.
Improve the patient
experience
•
Proton therapy is painless;
•
Reducing the number of patients’ visits through hypofractionation and installing proton therapy
systems at proximity to patients represent a breakthrough in terms of patient experience and
comfort.
Enhance efficiency
and productivity in a
cost-effective way
•
Setting up a proton therapy facility is complex and time-consuming; reducing this complexity
is essential to limit disruption of the management teams of hospitals as well as accelerate the
returns on investment;
•
Ensuring a smooth integration between the proton therapy department and the other existing
functions helps generating synergies and efficiency;
•
Proton therapy systems must include the latest software developments, including the optimisation
of the patient workflow and facility management;
•
The proton therapy equipment must be affordable, both in terms of upfront and running costs.
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ADVANCED ONCOTHERAPY PLC
Experiencing proton therapy, from the payer’s
point of view
It is widely accepted that proton therapy is more effective
than conventional radiation for treating certain cancers,
such as paediatric, spine, and head and neck tumours.
Proton therapy is more likely to cause less damage to
surrounding healthy tissue and organs and its precise
delivery can mean fewer complications for patients,
especially in the long term; that precision also means
protons can be delivered in higher doses requiring fewer
treatments than conventional radiation therapy. Therefore,
proton therapy is widely reimbursed for the above cancer
types across the world.
Yet, particularly in today's healthcare landscape, the cost
of any care is a large and growing focus for physicians,
hospitals, patients, insurers, and governments. Proton
therapy is no exception. It is generally viewed as an
expensive radiation technique – around two to three
times the cost of Intensity Modulated Radiation Therapy
("IMRT"), the latest technological advancement in
delivering X-rays. Building and operating a proton therapy
centre with a legacy system is a costly proposition. Against
that background, the questions around pricing and payers’
acceptance for new indications must be taken in a broad
context:
•
Radiation therapy remains the most established
cancer modality, with up to two-thirds of cancer
patients in the US receiving radiation. It is also the
most economical cancer therapy. A study published
in October 2021 by a team of Penn State College
of Medicine researchers showed that drug costs
represent the most expensive category for treating
cancer patients, about twice as much as surgery
or radiation. As an illustration, recent developed
agents, such as CAR T-cell therapy, may cost up
to almost $500,000 per year per patient and many
new immunotherapies have price tags in excess of
£100,000 per patient per year;
•
Given the benefits of proton therapy, many patients
self-refer;
•
With high treatment costs and limited capacity,
decisions on which adult patients to treat with proton
therapy must be based on the relative value compared
to the current standard of care. Cost-benefits analyses
are the gold-standard method for doing this. Benefits
of proton therapy are evident when considering that
both proton and standard photon radiation achieve
the same goal of damaging tumour cell DNA, but
the former is associated with significantly fewer side
effects. From a cost perspective, one must consider
the treatment tariff, but also the cost for managing
the side effects and the financial impact associated
with a lower quality of life post-treatment. Significant
research activity is ongoing with a growing body of
evidence supporting the use of proton therapy and its
clear financial benefits when addressing side effects
and quality of life. Preliminary data bodes well for the
expansion of the reimbursement schedule to new
cancer types;
•
Briefer
courses
–
with
the
emergence
of
hypofractionation (refer to pages 47 and 50-51)
– have resulted in greater acceptance and wider
reimbursement schemes. Radiation oncologists have
embraced this trend, which is expected to continue
and further contribute to the increasing value of proton
therapy to health systems and payers, particularly as
the cost per treatment – and not the cost per fraction
– is set to decrease.
PERSPECTIVES OF KEY
STAKEHOLDERS ON PROTON
THERAPY_Continued
31
ANNUAL REPORT 2021
It costs about $70,000 to avoid one DALY in very high Socio-Demographic Index countries
Proton therapy as a highly targeted cancer modality is key to reduce side-effects for
patients as well as the number of Disability-Adjusted Life-Years and their associated costs
Source: JAMA Oncology
Liver
Cervix
Stomach
Breast
Prostate
Lung
Colon/
Rectum
NH
Lymphoma
Bladder
Skin
12.0
8.0
4.0
10.0
6.0
2.0
0.0
10.3
8.7
7.5
6.8
6.3
5.0
4.2
3.6
2.6
0.5
Number of Disability-Adjusted Life-Years ("DALYs") lost per cancer patient in countries with a high Socio-Demographic Index
As prices to complete proton therapy treatment (at lower fractionation) approach conventional radiation therapy rates,
reimbursement policies are expected to become more favourable towards proton therapy
Changes in treatment protocols like hypofractionation will reduce the cost of proton therapy
Source: Company
Variable costs based on number of fractions
60
50
40
30
20
10
40
30
20
10
35
25
15
5
0
£20k average IMRT cost + ancillaries
Fixed ancillary costs
Number of fractions per treatment
Total cost
of treatment (£)
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ADVANCED ONCOTHERAPY PLC
PROTON THERAPY LOWERS
RISK OF SIDE EFFECTS
33
ANNUAL REPORT 2021
Past, present and future of proton therapy
for head and neck cancer
Proton therapy in head and neck cancer has a
unique advantage given the complex anatomy and
proximity of targets to vital organs.
Oral Oncology
Volume 110,
November 2020, 104879
Intensity Modulated Proton Therapy Better
Spares Non-Adjacent Organs and Reduces
the Risk of Secondary Malignant Neoplasms
in the Treatment of Sinonasal Cancers
(…) For the treatment of SC, IMPT spares OARs that are
not immediately adjacent to the treatment volume and
reduces the risk of SMNs when compared to VMAT (…)
Medical Dosimetry
Available online
21 December 2021
Proton therapy lowers risk of side effects in
cancer compared to traditional radiation
Study found protons led to two-thirds reduction
in unplanned hospitalizations
Proton therapy leads to significantly lower risk of
side effects severe enough to lead to unplanned
hospitalizations for cancer patients when compared
with traditional radiation
December 26, 2019
University of Pennsylvania
School of Medicine
In a First, Proton Therapy Bests Radiotherapy in an RCT
Less Toxicity in Esophageal Cancer
In a first, proton beam therapy has demonstrated significantly reduced toxicity when compared with conventional
radiotherapy in a randomized controlled trial (RCT) in patients with esophageal cancer.
Nick Mulcahy
July 28, 2020
Comparative
Effectiveness
of
Proton
vs
Photon Therapy as Part of Concurrent
Chemoradiotherapy for Locally Advanced Cancer
In this comparative effectiveness study of 1483
adults with nonmetastatic cancer and treated with
curative intent, proton therapy was associated with
a two-thirds reduction in adverse events associated
with unplanned hospitalizations, with no difference
in disease-free or overall survival.
The comparison of acute toxicities
associated
with
craniospinal
irradiation between photon beam
therapy and proton beam therapy
in children with brain tumors
(…) In conclusion, in the present study,
although the P-CSI group received higher CSI doses
than the X-CSI group, the incidence rates of more
than grade 2 nausea and vomiting in the P-CSI group
were lower than in the X-CSI group. The present study
suggests that P-CSI reduces the incidence of acute
gastrointestinal toxicities associated with irradiation.
Volume11, Issue6
March 2022 Pages 1502-1510
Acute Hematological Toxicity during Cranio-
Spinal Proton Therapy in Pediatric Brain
Embryonal Tumors
(…) In our study, we demonstrated that the proton
technique was proven to be safe in CSI, even in brain
cancer patients with significant baseline hematologic
toxicity due to previous chemotherapy. Moreover, patients
did not require supportive therapy with transfusions or
HGFs, and there were no delays in treatment. Finally,
it saves patients additional therapies and time spent as
inpatients, which can also be very important in improving
the patient’s quality of life during medical care.
March 2022 Cancers
14(7):1653
The body of clinical evidence is rapidly growing, also caused by the increasing
number of facilities and therefore greater capacity to perform clinical studies.
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ADVANCED ONCOTHERAPY PLC
Consensus Statement on Proton Therapy for Prostate Cancer
Several prospective and retrospective studies have been published documenting the safety and
efficacy of proton therapy in the management of prostate cancer and some long-term follow-up
data are available and are accumulating. Consequently, proton therapy should not be considered
experimental in the management of prostate cancer.
Issues
Volume 8, Issue 2
Fall 2021
Proton therapy for cancer lowers risk of side effects
Proton therapy was associated with a substantial reduction in the rates of severe acute side effects —
those that cause unplanned hospitalizations or trips to the emergency room — compared with conventional
photon, or X-ray, radiation for patients treated with concurrent radiation and chemotherapy […] While there
have been other studies suggesting that proton therapy may have fewer side effects, we were somewhat
surprised by the large magnitude of the benefit.
Second Cancer Risk in Childhood Cancer Survivors Treated with Intensity-Modulated
Radiation Therapy (IMRT): An Updated Analysis of More Than 10 Years of Follow-Up
With a median follow-up of 11 years, there was an increased Cumulative Incidence of solid second
malignant neoplasms (SMNs) after IMRT in childhood cancer survivors. SMNs developed both
in and out of the high dose region. These data serve as a foundation for comparison with other
modalities of radiation treatment, namely proton therapy.
International Journal of Radiation
Oncology*Biology*Physics
Volume 111, Issue 3,
Supplement, 1 November
2021, Pages e170-e171
Proton beam therapy makes cancer radiotherapy safer
(…) Dr. Li Jinxiang said: “Children’s tumors can benefit from proton beam therapy because it can significantly reduce acute and long-
term side effects, such as abnormal growth, neurological complications, lower IQ, heart, lung and intestinal side effects, and second
malignant tumors." In addition, it also includes central nervous system tumors, sinus tumors, skull base and sacral chordomas (sacral
chordomas) and so on. Re-treatment of tumors that have undergone radiotherapy can also benefit from proton beam therapy. Dr. Li
pointed out that clinical research and trials on tumors in the head and neck, esophagus, lungs, breasts, liver, pancreas, and prostate
are still ongoing. The current challenge is how to obtain mature data to make objective comparisons between proton beam therapy
and modern advanced radiotherapy techniques, such as intensity-modulated radiation therapy.
Acute Toxicity in Patients Treated With Proton vs. Photon
Chemoradiotherapy for Locally Advanced Head and Neck Cancer
(…) Concurrent chemoradiotherapy with proton therapy for head and neck cancers was associated with
lower dose to nontarget structures and significantly reduced acute grade ≥3 toxicity and acute grade 2 oral
cavity toxicity compared to photon therapy (…)
International Journal of Radiation
Oncology*Biology*Physics
Volume 111, Issue 3,
Supplement, 1 November
2021, Pages e371-e372
OUR COMMITMENT TO
CHILDREN
35
ANNUAL REPORT 2021
Cancer in children and young people is
thankfully much rarer than cancer in adults.
Survival is higher too: more than eight in
ten children and young people in the UK,
aged 0 to 24, survive their cancer for ten
years or more, compared to one in two
adults in England and Wales aged 15+.
Important
differences
exist
between
childhood and adult cancers in terms of the
type of cancer, how far it spreads, and how
it is treated. For example, by the time they
are diagnosed, 80% of paediatric cancers
have already spread to other parts of the
body, compared to about 20% of adult
cancers.
Up to 30% of children who survive
experience serious, long-term side effects
from their treatment. Proton therapy is
ideally suited for paediatric cancers.
However, cancer remains the principal
cause of death by disease in children
beyond the age of one. Without additional
investment in childhood cancer care,
over 11 million children aged 0 to 14 are
expected to die from cancer over the next
30 years worldwide. The vast majority of
those – more than 9 million deaths (84%)
– will be in low-income and lower-middle-
income countries. In 2020, over 15,500
children and adolescents in the European
Union were diagnosed with cancer, with
over 2,000 young patients losing their lives
to it.
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ADVANCED ONCOTHERAPY PLC
At Advanced Oncotherapy, we feel it is our responsibility to support children. We are committed to do so by democratising
access to proton therapy.
The availability of and the demand for proton therapy is growing exponentially. However, in absolute terms, the availability is
still very low. There are currently only 114 operational proton therapy facilities in the world, addressing less than 5% of clinical
demand. Only less than 1% of all radiation therapy patients receive proton therapy, even though between 15% and 50%
would benefit from it. The reason for this discrepancy is the high cost and the large size of the equipment, which does not fit in
conventional treatment spaces. The primary factor contributing to this is the use of legacy circular proton accelerators which
bring significant challenges and constraints in terms of cost and size.
THE MARKET UPTAKE AND
THE NEED
Originally, most patient treatments with high energy protons have been carried out at large-scale research facilities such as
the Harvard Cyclotron Lab or Paul Scherrer Institute, by installing an extra treatment room besides several experimental
target stations used for fundamental research in nuclear physics. In the 1990s, first stand-alone centres have been built
and dedicated to treat cancer patients with proton therapy. One of the first was the cancer centre in Loma Linda in the US,
a centre set-up by Optivus with the installation and servicing activities led by Ed Lee, the COO of Advanced Oncotherapy.
Rooms in operation
Rooms in construction
Patients per year
2005
0
0
200
15
100
8
10
300
20
50
3
5
250
18
150
13
350
23
400
25
2009
2013
2007
2011
2015
2018
2006
2010
2014
2017
2008
2012
2016
2019
Rooms
Patients
(000 p.a.)
Cumulative number of patients treated with proton therapy
37
ANNUAL REPORT 2021
More than 250,000 patients
treated (by 2020)
Since then and with an increasing number of companies offering turn-key solutions for proton therapy systems, the number of proton
therapy centres has increased rapidly since the beginning of the 21st century, but much more remains to be done.
Health spending per capita
Treatment rooms
Unmet need (no of treatment rooms)
Indicative estimate of proton therapy treatment rooms needed to treat 20% of radio-sensitive tumours
Source: https://www.livepopulation.com/, DIRAC, PTCOG
China
Germany
India
UK
USA
France
Russia
Canada
12,000
2,500
4,000
8,000
1,500
-
-
10,000
2,000
2,000
500
6,000
1,000
Health spending per capita ( in USD)
No of rooms - current base and demand
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ADVANCED ONCOTHERAPY PLC
39
ANNUAL REPORT 2021
We have developed the LIGHT system to address the
key limitations of conventional and circular proton therapy
machines; it has been designed to deliver superior medical
outcome whilst providing a proton treatment environment at
a fraction of the cost, footprint, and operational complexity of
legacy systems. We believe this enables the deployment of
proton therapy into a broader variety of cancer care facilities,
creating greater access for more patients.
The LIGHT system has been designed to enable delivering
most of the treatments in a comfortable seated patient
position. The comfortable patient position ensures better
patient immobilisation, the critical factor in delivering
radiation treatments both safely and effectively. It also allows
treating patients with impaired breathing who cannot lie
down due to asthmatic attacks. In addition to ergonomic
benefits, patient’s accommodation before treatment in a
seated position stabilises the motion of internal organs.
The seated positioning minimises the motion magnitude
by a factor of 4 and shifts the heart toward the diaphragm.
Such anatomical and physiological characteristics ensure
effective and safe irradiation of lung, breast, chest wall, and
upper gastrointestinal tissues sparing the damage of the
critical healthy organs like heart. The treatment setup also
guarantees better treatment outcomes in treating tumours in
liver, pancreas, kidney, as well as head and neck and brain.
The heart of our LIGHT system is our proprietary linear
proton accelerator that integrates with an in-room sliding
Computerised Tomography (CT) scanner, a robotic
positioning system, and the patient support system, real
time X-rays modules, the room control system, and a full
suite of medical software.
The LIGHT accelerator
The LIGHT accelerator accelerates protons to a high
speed by subjecting them to a series of oscillating electric
potentials along the linear beam line. What makes LIGHT
as a linear proton accelerator preferable to circular
accelerators is that the energies of the accelerated protons
OUR LIGHT
SYSTEM
can be adjusted rapidly, i.e., in milliseconds, and without loss
of beam intensity. The beam energy determines how deeply
the protons penetrate tissue, so this ultra-fast tunability is
useful for adjusting the beam position within the body as the
patient breathes or to precisely hit different spots on a tumour.
The in-room sliding CT scanner
The LIGHT system includes a big Bore CT scanner that is
integrated into a uniquely designed sliding platform. The setup
enables scanning a patient in the treatment position while
keeping the patient stationary. The scanner has 85 cm opening
size suitable for scanning, and then treating, oncology patients.
The scanner is installed with the special software capabilities
for low dose scanning. The mode enables generation of
high-quality images while exposing the patients to only 20%
of the standard radiation level. The scanning supports both
helical and axial modes with fast image acquisition. The
images can be used for treatment planning, for positioning,
and for adaptive therapy. Other key features include 4D CT
capabilities; low dose image acquisition; up to 204 kg patient
load; and additional pendant operating panel.
Treatment planning at a correct phase of the breathing
cycle is crucial for delivering the treatment dose accurately.
Having the 4D CT integrated in the treatment room allows
verifying the breathing cycle pattern prior to each treatment
event, particularly for treatment of breast, lung, and upper
gastrointestinal tumours. The 4D capability is possible with
helical and axial scanning modes. To accurately “position”
the beam on the target, the belt-based approach is used.
Synchronisation between the belt motion and multiple CT
dataset enables acquisition of ten separate scans defining
the most appropriate target for treatment.
The robotic positioning system and the patient
support system
The robotic arm is the robotic patient positioning system,
with 6 degrees of freedom. The base of the robot is
placed on the floor. The reach of the distal arm enables
the positioning of the patient in both seated and laying
40
ADVANCED ONCOTHERAPY PLC
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positions at imaging setup, and at treatment isocentre.
The real time X-rays module
In order to visualise the patient anatomy in real time, the set of
orthogonal X-rays sources and detectors are integrated into
the system. The system is static and enables to image the
patient at treatment isocentre during the actual treatment.
The system can image the patient in both seated and
laying positions. The imaging information serves for precise
patient positioning with 0.5 mm accuracy. The imaging is
based on registration of digitally reconstructed radiographs
generated from treatment planning CT and actual X-ray
images received prior to or during the treatment.
The room control system
The room control system is responsible for delivery and
monitoring of the LIGHT particle beam: The LIGHT Room
Control System is the system that controls and monitors the
delivery of proton irradiation to the tumour, and provides a
user interface for the radiographer to start, stop, or interrupt
the beam delivery. It consists of sub-systems, including the
LIGHT Enhanced Nozzle System, traditionally referred to
as the nozzle, that controls and monitors irradiation; and
the Light Redundant Charge Recorder, which provides the
direct hardware interface to the radiographer.
The computing medical software suite
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 data. To respond to one of the key challenges
currently faced by end users – namely 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.
The major components of the medical software package
include:
•
Treatment session manager (TSM). The TSM
software developed by Raysearch, acts as the control
system to connect and manage various sub-systems
of the LIGHT system. It allows the management of
the daily proton treatment for patient delivery.
•
Treatment planning system (TPS). The TPS software
provides superior functionality for treatment planning,
encompassing
patient
positioning
through
to
treatment solutions. The software is well established
and familiar to oncologists.
•
Oncology information system (OIS). The OIS is the
software, developed in partnership with Raysearch, which
integrates with the TPS to offer managed workflows and
to enable patient treatment to be modified daily.
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Business delivery
OUR LIGHT
SYSTEM_Continued
The Medical Treatment Room (MTR) required for the clinical treatment of patients with the LIGHT system has been
completed at the Company's Daresbury integration site. Subsequently, the necessary permissions have been received to
use the MTR with ionising radiation.
Proton therapy requires high accuracy placement (positioning) of the patient, typically with 1 mm tolerance or less. As such,
the Company has developed and installed in the MTR a bespoke LIGHT Patient Positioning System (PPS) to provide
the required accuracy in a compact and efficient system. The PPS comprises of a robotic patient positioner for aligning
patients in the upright position in a treatment chair, a CT imaging subsystem, an X-Ray imaging subsystem, and computing
software and hardware which are important components as proton therapy requires highly accurate placement, imaging,
and image processing of patients.
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Introduction
Product and market positioning
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LIGHT Medical Technical System
The LIGHT Clinical Workflow starts with patient admission, intake appointments, and creating images
for treatment planning. The treatment plan is verified, approved, and delivered to the patient, typically
over multiple sessions. The MTS is responsible for planning, execution, and recording of the patient
treatments with the LIGHT System. It also serves as a patient database and appointment scheduler.
1) Patient Intake
• Administrative details (including patient ID
and demographics, insurance, etc) are
collected and recorded in RayCare, the
LIGHT Oncology Information System (OIS)
• Appointment with Radiation Oncologist
scheduled using the OIS
2) Medical Appointment
• Clinical details discussed and
recorded in the OIS
• Imaging appointment
scheduled using the OIS
• Treatment prescription defined
and recorded in the OIS
5) Patient-specific QA
• Treatment plan verified using LIGHT System of Dosimetry
(SD) equipment and/or using mathematical simulation
• Results analysed and treatment sessions approved in the OIS
3) Imaging Appointment
• Patient immobilised in seated position on the
LIGHT Patient Positioning System (PPS)
• Patient moved to imaging position
• CT images acquired
• Data sent to and stored in the OIS
• Coordinated by RayCommand, the
LIGHT Treatment Control System (TCS)
• Patient immobilised in same position on
PPS as defined in planning CT imaging
session
• Image guidance steps for accurate patient
positioning using PPS and TCS
• Proton beam delivered via the LIGHT
Enhanced Nozzle System (ENS)
• The LIGHT Patient Observation &
Communication System (POC) provides a
level of safety and comfort during treatment
• The LIGHT Medical Interlock Device
(MID) ensures safe and accurate beam
delivery
6) Treatment Delivery
4) Treatment Planning
• Planning CT images analysed in
RayStation, the LIGHT Treatment
Planning System (TPS)
• Target volumes and organs at risk
delineated
• Treatment geometry designed
• Dose distribution optimised
• Plan approved for treatment
The LIGHT Proton Therapy System (PTS) is a comprehensive package including all hardware and
software needed for delivering proton beam treatment to patients. The LIGHT PTS is a "Product
Family," incorporating medical devices collaboratively developed by AVO-ADAM and its main suppliers.
LIGHT’s unique proton therapy solution comprises a compact, modular Beam Production System
(BPS) for proton acceleration up to 230 MeV; the Medical Technical System (MTS), encompassing all
the clinical components to facilitate treatment of seated patients, without need for a large, costly gantry;
and the Computing Infrastructure, which coordinates all components of the PTS.
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OUR LIGHT
SYSTEM_Continued
LIGHT Patient Positioning System
The LIGHT Patient Positioning System (PPS) is a medical device used for volumetric imaging in the
upright position for treatment planning, and the safe and accurate positioning of the patient during
treatment delivery. Components of the PPS include the CT and X-ray imaging systems, as well as a
Patient Positioning Device (PPD), comprised of a chair mounted on a robotic arm. These components
are controlled by software, which communicates with the Treatment Control System (TCS). Use of the
LIGHT PPS, along with a fixed-beam delivery system, is both space and cost-effective, facilitating
instalment with less infrastructure than conventional proton therapy systems.
The LIGHT PPS allows patient imaging and treatment in the upright position (Figure 3) within a fixed-
beam treatment room. Accuracy and reproducibility of the PPS devices are very important in their
design and development. The compact nature of the LIGHT PPS reduces cost and space
requirements for new Proton Therapy Facilities.
Clinical Capabilities of the PPS:
• Set up patient
• Move to imaging position
• Acquire images
• Image registration
• Move to treatment position
• Move to beam position
• Verify and correct position
• Treatment delivery
• Unload patient
• Imaging for treatment planning
• Clinical QA
• Clinical system commissioning
Fixed-beam treatment room, showing components of the LIGHT PPS.
The high cost for gantry installations is a major limitation
to the expansion of proton therapy facilities. An
alternative technical option is provided by fixed-beam
treatment rooms (see Figure 1), where the patient is
rotated and translated in space by a robotic arm to
enable beam incidence from various angles.
Lasers in the Treatment Room are used for initial patient
setup.
The LIGHT Patient Positioning System (PPS) includes a
chair mounted on a robotic arm, and a CT scanner
mounted on a vertical sliding platform (Figure 2a), which
allow for imaging in the upright position (acquiring the CT
for treatment planning or for image guidance during
treatment delivery).
The robotic arm can then move the patient to the
treatment position, where orthogonal images of the
patient can be acquired by the X-ray system (Figure 2b)
for comparison with images digitally generated from the
treatment planning CT image, allowing for position
adjustments to be made (if required) prior to treatment
delivery.
Imaging components of the PPS
A) Vertically mounted CT scanner
B) Orthogonal X-ray system;
robotic-arm/chair in position
A
B
Roles of the PPS:
• Patient Positioning Device (PPD)
• moves patient to required positions
• Patient Positioning Acquisition System (PPAS)
• acquires data on patient position prior to beam delivery
• Patient Position Registration System (PPRS)
• registers
acquired
data,
(i.e.,
actual
patient
position)
against reference data containing information about the
intended patient position, prior to beam delivery
• Patient Position Definition System (PPDS)
• determines the correction needed (if any) to reach the
intended treatment position
Patient imaging in the upright position.
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Why does that matter?
Absorbers are mechanical devices of varying
thickness found in the beam path at the exit of
legacy circular accelerators. They are used to slow
down the maximum energy of protons, in such
a way that the killing effect of radiation occurs at
the right depth in the patient’s body. They 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.
LIGHT vs legacy circular accelerators
LIGHT does not include absorbers unlike legacy
circular accelerators because the energy of protons
is controlled electronically.
Why does that matter?
The destructive effect of radiation occurs when
accelerated and energised protons stop. Therefore,
a proton therapy equipment must be able to change
the energy of protons, so that radiation is deposited
onto the tumour at different spots and depths. At
an energy of 230 MeV, 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. A proton therapy which has a fast
energy change is more suited for adaptive treatment
and addressing the issue of organ movements.
LIGHT vs legacy circular accelerators
Legacy circular accelerators use slow-moving
mechanical devices at the exit of the proton
therapy system. In contrast, the energy of protons
is controlled electronically with a LIGHT system.
LIGHT and its rapid electronic energy changes at a
repetition rate of up to 200 times per second – up to
200 times faster than legacy systems – provide the
opportunity to deliver a more conformal treatment
and a better treatment of moving organs.
Use of absorbers
Energy changes
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THE UNIQUE ADVANTAGES OF
THE LIGHT ACCELERATOR
Why does that matter?
Modularity offers advantages for installation,
commissioning, transportation, maintenance, and
dismantling.
LIGHT vs legacy circular accelerators
LIGHT is made up of a series of modules which
can all be assembled at the customer site.
This is contrast with legacy circular accelerator.
Consequently, LIGHT can be retrofitted into existing
buildings through the assembly of individual
components directly at the customer’s site.
Why does that matter?
Protons are charged particles. They can be
deflected and directed to a target through magnets.
A large cross section requires large and expensive
magnets, making the installation process more
challenging. Clinically, a small beam cross sections
allows to deliver a more targeted treatment to
patients.
LIGHT vs legacy circular accelerators
Legacy circular accelerators have a large cross
section, approximately between 4 and 36 times
bigger than the LIGHT mini-beam cross section.
Modularity
Proton beam cross section
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ADVANCED ONCOTHERAPY PLC
THE UNIQUE MEDICAL
ADVANTAGES OF THE
LIGHT SYSTEM
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ANNUAL REPORT 2021
THE ONLY SYSTEM INTEGRATED
WITH AN IMAGING SYSTEM
The LIGHT system is fully integrated
with a diagnostic grade, fan beam, wide-
bore CT scanner in the treatment room.
The seamless integration between the
treatment planning, treatment control,
and CT scanner provides unparalleled
versatility for on the fly adaptive proton
therapy, the next step in personalised
medicine.
THE SIZE OF THE BEAM
The LIGHT system can have a
significantly smaller proton beam than
legacy systems. Fundamentally, IMPT
(intensity-modulated proton beam therapy)
systems depend on conformity's spot size
(emittance). Having the smallest beam
size, minibeams provides the utmost
conformity, expected to improve outcomes
for many indications.
THE OPPORTUNITY TO DELIVER
FLASH TREATMENT
LIGHT is the ideal system to deliver
FLASH because the LIGHT system proton
output does not vary with energy. Hence,
instead of "shooting thru" the patient as
with legacy FLASH deliveries, the FLASH
LIGHT treatments resemble current proton
therapy treatments, except they go much
faster. Unlike other proton systems, this
allows both conformal and FLASH in the
same treatment with the LIGHT system.
THE CONSTANT SPOT SIZE
The LIGHT system features a constant,
small spot size from 150-230 MeV. The
spot size increases with decreasing
energy for all other systems. The
LIGHT constant spot size has been
shown to improve treatment plan quality
(conformity) in comparison to legacy
systems.
UPRIGHT TREATMENTS
LIGHT's capacity for upright seated treatment
can improve cost, quality, and patient
comfort. Lung volume is greater (averaging
27%) in the upright position, resulting in less
tissue density within the radiation field and
potentially less irradiated normal tissue mass.
Upright positioning can be more reproducible
for breast patients and pelvic patients. It is
also expected to be more comfortable for
head and neck patients, many of whom
have difficulty swallowing. The accumulation
of saliva can make breathing difficult in the
supine position. Because of gravity, upright
positioning is more comfortable for the head
and neck patient.
THE CHANGE OF ENERGY
Due to fast energy changes, LIGHT
rescans much quicker than any other
proton therapy system. This rapid energy
change means LIGHT is ideally suited
for volumetric repainting of tumours,
conformity of the radiation dose, and
tracking moving tumours.
The medical advantages of the LIGHT System: from a
uniquely designed accelerator to a state-of-the-art treatment
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ADVANCED ONCOTHERAPY PLC
OUR INNOVATION
ROADMAP
49
ANNUAL REPORT 2021
Creating innovative concepts to meet the needs of patients
is a prerequisite to strengthening our market position and
a premise to sustaining our competitive advantages whilst
leveraging our CERN roots. We therefore remain highly
committed to maintaining a full and innovative pipeline
of new ideas, bringing new groundbreaking LIGHT
technologies to life, and investing into sustainable enablers.
True to the vision of creative collaboration, our innovation
approach is widely based on our unique mindset.
Meeting the needs and expectations of patients
and customers
The modern innovation landscape extends beyond
product development and increasingly requires innovation
teams to consider the development of experiences and
services, as well as the provision of greater levels of
transparency and direct integration of our current and
prospective customers through co-creation.
In partnership with our commercial, medical and engineering
teams, trends, insights and foresight are shared on an
ongoing basis through our innovation panel. This provides
the starting point to build concepts of relevance.
At Advanced Oncotherapy, we have set-up a dedicated
team tasked to develop a strong portfolio of innovation
capabilities and provide a platform for meaningful patient-
centric concept development. Projects are incubated within
our Company and aligned to the strategic imperative of
creating long-term value, ensuring a robust and impactful
innovation pipeline.
Innovation approach based on a unique mindset
Our approach to innovation reflects our mindset, where
we seek to build value together with our partners as well
as national and international governments and research
organisations. In addition to opening up our doors to
valuable feedback, we also get inspired by the input from
knowledgeable partners, including our suppliers and
customers.
Commercialisation of innovations
We believe developing industry-leading technologies is
only one aspect of being an innovation leader. Equally
important is the successful commercialisation of those
innovative concepts.
Proton
Minibeams
FLASH
Motion mitigation
Upright
treatment
Non-
cancerous
indications
The democratisation of proton therapy is a way to accelerate the acceptance of proton therapy towards new
cancer types.
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Further development has progressed this year with applications of the LIGHT system. Our LIGHT application developments
are primarily based on the disruptive LIGHT system generated proton beam properties: beam size and 3D spot position
delivery speed. Secondarily, our developments focus on revolutionary imaging and treatment in the upright (seated) position.
We are also exploring new applications for the LIGHT system in a non-cancerous medical treatment context.
Proton Minibeams
The LIGHT system produces a class-leading proton beam quality designed to deliver spot sizes less than one mm Gaussian
sigma, called proton minibeams (“MB”), which are much smaller than beam sizes produced by legacy circular accelerators.
This year, together with our research partner, the Cleveland Clinic, we investigated the potential clinical advantages of proton
minibeams compared to photon and cyclotron beams (“CB”). We have reached more than 60 patients with brain, head and
neck, and lung cancers. The results are presented at scientific conferences such as the American Society for Radiation
Oncology ("ASTRO") and the American Association of Physicists in Medicine ("AAPM"). Below is a resulting comparison from
our work "Can proton linear accelerator beams and minibeams achieve superior plan quality over cyclotron generated proton
beams and photons in treating multiple brain metastases?"
FLASH
Recent in vivo studies in mice1 demonstrated that electrons delivered to
cancerous tissues at high dose rates within 0.5 second (FLASH), inhibit
tumour growth equally as in conventional therapy, but with significantly
more sparing of surrounding healthy tissues. Normal tissue sparing with
FLASH enables a dose increase without additional complications, widening
the therapeutic window and virtually reducing the number of fractions to
one single fraction/visit.
Hence, FLASH radiotherapy, where the entire patient treatment is
administered in less than 0.5 second, shows great promise in sparing
patients from the toxicity burden of radiation therapy.
Proton FLASH, compared to other types, should have no exit dose. Proton
FLASH has been investigated using cyclotrons. These machines can
produce FLASH at their extraction (maximum) energy. However, at shallow
and medium depths, the dose rate is significantly reduced due to degraders
and range shifters. Moreover, these passive scattering methods to irradiate
the target generate a higher number of neutrons and unwanted scattering,
which could hinder FLASH's advantages. FLASH may not be possible with
synchrotrons or synchro-cyclotrons.
1Favaudon, V., et al. 2014. Ultrahigh dose-rate FLASH irradiation increases the differential response between normal and tumor tissue in mice. Science
Translational Medicine. 6 (245):245ra93. https://www.science.org/doi/10.1126/scitranslmed.3008973
Source: Favaudon et al. 2014
Note: From the pioneering work, it was demonstrated
that high dose rate doses (17-Gy FLASH 4.5 MeV) may
have a strong tissue sparing effect, compare the 17-Gy
FLASH 4.5MeV column with the unirradiated Control, they
appear the same. This may also permit dose escalation,
improving the therapeutic index (Figure 1). Compare the
FLASH dose of 30-Gy, at about 2x with the 17-Gy non-
FLASH (CONVentional) column, the FLASH irradiation still
looks less damaging.
Comparison of LIGHT minibeams, cyclotron beam, and photon GammaKnife treatment quality for patients with multiple brain metastases. The colour wash
represents the desired radiation dose to the target and the undesirable amount to normal brain tissue.
Compared to photons and CB, the LIGHT MB provides the greatest conformity to the target whilst maximally sparging normal brain tissue.
LIGHT MB
Cyclotron
GammaKnife
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ANNUAL REPORT 2021
Two aspects of the LIGHT system performance are uniquely suited to FLASH. Unlike legacy systems, the proton beam
intensity (current) does not vary on the energy, and energy changes are ultra-fast. These advantages support LIGHT in
delivering FLASH conformally to any site in the body.
This year, we pioneered further developments in "scanned conformal FLASH" (SCF). In comparison to legacy technology, SCF
presents a major advantage with the LIGHT system. This is because, due to the associated thick energy absorbers, cyclotrons
can only produce FLASH at a single, maximum energy, making their FLASH treatment like X-rays, i.e. their proton beam
must penetrate the entire patient and exit outside of the patient. This “shoot-through” technique is called Transmission Beam
(TB). TB is “not how protons are meant to work,” i.e. it looses the advantage of the proton beam stopping the Bragg peak in
the tumour. Cyclotron systems seek to avoid this by using further custom patient absorbers, but this approach is also inferior.
Superiorly, only LIGHT, due to its ultra-fast energy changes and high beam output, can deliver SCF, retaining the advantage
of proton therapy conformity, with the proton beam stopping in the tumour (Stopping Beam SB), and adding FLASH on top.
OUR INNOVATION
ROADMAP_Continued
Transmission of FLASH beams from cyclotrons cause excess dose (in the colour wash) to healthy tissues compared to Stopping FLASH beams from LIGHT.
Cyclotron
Transmission Beam (TB)
LIGHT
Stopping Beam (SB)
Upright treatment
The LIGHT system features upright (seated) treatments. Most current radiotherapy is performed with the patient laying on
a treatment “bed”, called the supine position. Because upright is different from supine positioning, we have investigated the
possible benefits of upright vs supine patient positioning. Our upright positioning investigations have progressed. This year,
the LIGHT Patient Positioning System (L-PPS) was installed at the Daresbury Integration Site. We are preparing to scan
the first human patients in the upright position with the L-PPS. The below shows the L-PPS installed with an artificial human
mannequin prepared for CT imaging in the upright position.
The LIGHT PPS under test for the upright position in Daresbury.
Modified upright human figure.
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Last year, we partnered with the UK National Physical Laboratory (NPL) to assess the accuracy of our L-PPS "cubic
phantom," used for the calibration of our system. The study results indicated excellent L-PPS cubic phantom accuracy.
According to the NPL, "the standard deviation of the centre-to-centre distance of spheres was less than 20 μm".
The LIGHT potential beyond cancer
A promising topic is a consideration of using LIGHT to treat non-cancerous diseases. The indications we are exploring include
the treatment of cardiac arrhythmias, hypertension, epilepsy, age-related macular degeneration (ARMD), and addictive
behaviours, naming a few non-cancer areas we intend to study. For example, cardiac arrhythmias are a significant contributor
to sudden cardiac death and are commonly treated by catheter ablation. However, the success rates of catheter ablation in
these diseases are limited, and catheter ablation is linked to several complications. By employing LIGHT proton minibeams
and split-second beam energy changes, Advanced Oncotherapy intends to develop a non-invasive treatment.
Similarly, the LIGHT System has the potential to be used for non-invasive ablation of arteriovenous malformations associated
with epilepsy and renal nerve ablation to help regulate blood pressure in unregulatable patients. The below demonstrates how
the LIGHT mini beams will be used to target the renal nerve nexus. The LIGHT mini beams are minimally invasive, avoiding
the spinal cord, and such treatment may free patients from pharmaceutical dependence for hypertension.
Another opportunity for future growth is the use of LIGHT to reduce or eliminate the frequency of anti-VEGF treatments
for ARMD patients. Furthermore, pre-clinical activity is expected to establish the feasibility of using LIGHT mini-beams to
modulate dopamine transmission from the nucleus accumbens to treat opiate addiction.
LIGHT Minibeam plan for renal nerve ablation
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ANNUAL REPORT 2021
What made you join Advanced Oncotherapy?
I came to radiotherapy wanting to make a difference to
improve patient outcomes. Early in my 20+ year career,
I learned that I had the aptitude to develop and improve
advanced radiotherapy systems, specifically particle
therapy systems, thereby benefiting many patients. Joining
Advanced Oncotherapy and assisting in developing the
first proton therapy linear accelerator system is the ultimate
expression of this goal. And the first day I met the Advanced
Oncotherapy team, I knew it was where I wanted to be.
Collaborating with my colleagues, all world-class experts in
their respective fields, we deliver the future of radiotherapy
and make it more accessible than ever before.
As a medical physicist, what do you find
particularly exciting about LIGHT?
As the new platform for proton therapy, LIGHT is poised
to realise the true promise of proton therapy. I say this
because two aspects holding us back from that ideal
today are uncertainties with target motion management
in proton therapy and the need to improve the high dose
conformity for some clinical indications. The LIGHT
system is uniquely capable of ultra-fast energy changes,
and the smallest beam size is called proton minibeams; it
is designed to address the two challenges directly.
What is motion management and how important
is it?
Motion management is more vital in proton therapy than
with the more common X-ray therapy. This is because
proton therapy is more accurate than X-ray therapy.
Consequently, the "fuzzy" X-ray beams are not as strongly
affected for moving targets if a tumour briefly moves away
from the ideal treatment location, whereas a proton beam
might completely miss it. Hence, motion management is
obligatory for proton therapy. There are different types of
motion management; the most basic enlarges the treatment
region, thereby assuring coverage, but this is not ideal for
patients, as it irradiates more healthy tissue than necessary,
potentially limiting the efficacy of the treatment or causing
later treatment-related complications. The LIGHT system
is designed to provide improved motion management by
tracking the tumour during treatment and staying "locked
on" to it like a smart bomb. We expect this could result in
improved clinical outcomes for some indications.
What about size of the beam?
The size of a proton beam spot is a critical treatment quality
parameter. The most advanced type of proton therapy, pencil
beam scanning, actively moves the beam across the tumour
during treatment. And the regular beam diameter in proton
therapy is about the width of a pencil, hence the name. But if
you made a drawing with such a dull pencil, it would look very
blurry, which is directly analogous to what happens inside the
patient. Instead, if you had a very sharp pencil, say a 0.5 mm
mechanical pencil, for example, the drawing would be razor-
sharp. Incidentally, 0.5 mm is about the size of the LIGHT proton
beam as it exits the linear accelerator, a unique aspect of LIGHT.
Jonathan Farr,
Chief Clinical Officer
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CLINICAL OFFICER
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Using this sharp beam size, called minibeams, our calculations
indicate a potential patient benefit for many indications. We are
currently exploring this advantage together with the Cleveland
Clinic, evaluating the potential for many of their patients.
For which cancer types do you expect these
clinical aspects will be most appropriate?
The LIGHT system is designed to treat all clinical indications
suitable for proton therapy. But the unique aspects of LIGHT,
such as motion management and minibeams, are ideal for
specific uses. Specifically, LIGHT minibeams may provide
the most significant benefit where the ultimate normal tissue
sparing is needed, such as with brain tumours abutting the
brainstem or optic nerves. But LIGHT minibeams also show
great promise for radiosurgery in the lung. The LIGHT motion
management features are naturally associated with tumours
that have motion during treatment; these are found in the
thoracic cavity near the diaphragm, such as the lungs and
liver organs. We see the most significant potential to expand
the treatment of thoracic tumours with the LIGHT system and
expect it is only a question of time before the adoption grows.
How
do
you
see
the
journey
towards
commercialisation as the physicians tend to be
conservative when new technologies hit the market?
Advanced Oncotherapy's LIGHT system offering has
advantages in two broad areas, commercial and clinical.
The greatest hindrances to the broader global penetration
of proton therapy are its cost and complexity: not only
complexity in terms of its use but also complexity in terms
of a proton therapy endeavour realisation. To lower the
entry bar, our Company has developed an appealing
solution from the ground up. Examples of our solution
are that no individual LIGHT component is larger than
a "Class C" shipping container. Each of the modular
linear accelerator components can fit on a tabletop. This
dramatically simplifies shipping and installation. Hospitals
are designed to accommodate the installation of CT
scanners and MRI units; the installation of LIGHT is more
akin to those than legacy proton equipment which requires
road closures and giant overhead cranes.
In terms of LIGHT system usability, this is another area we
have developed to ease the transition to proton therapy for
centres. The LIGHT system use is "workflow-driven," hence
the new user is not wondering what the next step is. The
management software directs and supports their work.
Also, we tend to focus on the technical innovations at
Advanced Oncotherapy, but our financial and commercial
developments are equally as innovative. In addition to
offering Turn-key proton therapy facilities, together with
our partners, we have sophisticated financial solutions we
can offer our customers. This key Advanced Oncotherapy
solution can make the difference between realising a new
proton therapy centre or not.
I have already touched on some of LIGHT's differentiating
clinical design aspects, focused on additional healthy tissue
preservation and reducing the toxicity burden sometimes
associated with radiation therapy. Every clinician is keen to
improve the care of their patients. Even if it requires change,
physicians are convinced by the opportunity to change
practise for patient benefit. The LIGHT system keenly appeals
to this desire. In summary, I am confident that the unique
combination of best-in-class treatment and our commercial
advantages, Advanced Oncotherapy and LIGHT, are bringing
life-sparing proton therapy to more people in need.
What are you and your team currently working on in
the clinical space?
Together with my team, my role is roughly split into bringing
our first LIGHT system into clinical use and exploring and
developing applications of the LIGHT system.
Naturally, our top priority is beginning patient treatments
at our Daresbury integration site, in the UK, something
I personally pushed very hard for. We were delighted to
receive the approval of the UK Science and Technology
Facilities Council to use the facility at Daresbury for patients.
There is much to prepare, roughly divided into hardware
and software. We are engaged in realising the Medical
Treatment Room ("MTR") and Area. The MTR has been
constructed, and we are actively completing its fit-out and
testing with the necessary LIGHT sub-components such
as the CT scanner, robotic treatment chair, and X-ray
positioning systems. We are also preparing for the required
proton beam measurements before first use. There is a great
deal of software control systems to complete and integrate.
This is typically the Achilles' heel of new proton therapy
systems, as the effort can be underestimated compared to
the hardware. With this awareness, Advanced Oncotherapy
started our LIGHT software development early on. We rely
on a treatment planning system, a patient database system,
and a therapy control system. All three systems have been
running on our servers since 2020. Indeed, there remains
more work to do, but we are on the straight path to success
with these systems. The final step is bringing all sub-systems
together in a coordinated way, resulting in a system ready
for patient treatment. I have done it before a few times and
greatly look forward to this result for our company, staff, and
primarily for the patients that will benefit.
I am also engaged with our current clinical partners, such
as the University Hospital Birmingham and The London
Clinic, UK. Together, we are preparing the needed clinical
treatment protocols for our first patients. Also, we perform
extensive planning for staffing, training, insurance billing,
and operations. The Cleveland Clinic, USA, is our close
research partner. We work together directly to determine
how the LIGHT system could benefit their patients.
Exploring LIGHT developments is some of the exciting work
we are engaged in. It is so rewarding because the LIGHT
system has boundless potential that responds to our ideas in
the most positive manner. We are pushing into unchartered
waters, and that is keenly exciting. An example is with our
FLASH-LIGHT development. The type of treatment called
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FLASH is a biological effect where a differential response is
observed between normal and tumour tissue when exposed
to ultra-high dose rates. This means that if the entire radiation
treatment can be given incredibly fast, in less than half of a
second, the tumour cells are killed, but the healthy tissue
is almost completely spared from damage. The underlying
science is still being worked out, but FLASH is the most
exciting development in radiation therapy in decades. The
LIGHT system was largely designed when I first became
aware of FLASH a few years ago. I immediately wondered
what FLASH might be like with the LIGHT system. I was
astounded to learn from my colleagues that the proton output
of our machine does not depend on energy. As we say in
physics, it is "invariant." As we discovered, the invariant output
of LIGHT is fundamental to enabling what we call scanned,
conformal, FLASH, radiotherapy, something no other system
can perform. There are many other similar examples, some
we have mentioned, of how the LIGHT system "rises to the
challenge" of what we ask it. One is left with the impression
that it was meant to be.
You mentioned FLASH. How do you define the
opportunity?
FLASH is both a clinical and commercial opportunity.
Clinically, the reduction of healthy tissue damage can be
used to "open the therapeutic window." This can be realised
in either of two ways: either patients can be treated to
higher tumour doses than are currently possible, or lower
side effects can be realised from existing dose treatments.
As different examples, certain lung tumours might benefit
from higher doses than are presently used. In contrast,
other tumours such as the prostate are well controlled with
current doses, and there, the goal is less toxicity to the
surrounding tissues, such as the rectum. In all cases, the
goal is to have fewer treatment sessions, ideally just one,
compared to the multiple weeks of radiotherapy typical of
treatments today. The patients prefer fewer treatments,
leading to a win-win commercial opportunity. Treating more
patients annually produces more revenue, as usually,
patient treatment is compensated on a per capita basis.
Proton treatment centres are costly to build and operate.
Here, FLASH may further make the endeavour attainable
by more minor concerns, improving community access.
In conclusion, what is driving you?
My personal wish is to have more time in the week. Our
patients are waiting, depending on the LIGHT system's
completion and readiness. Whenever the obstacles seem
high, I think of the patients waiting to be cured with our
LIGHT machine, patients who live in areas not accessible
to proton therapy today. The faster we can complete LIGHT,
the more lives that can be saved. Our company is working
at the maximum rate. If we could bend time, we could get
to the goal sooner. We are approaching the end goal now.
Again, the greatest wish must be for the suffering cancer
patients without access to proton therapy. So, my motivation
and my pride are to help these people. This is very much in
the DNA and culture of our Company, and this is why I get
up every day with full energy, racing to the goal.
INTERVIEW WITH OUR
CHIEF CLINICAL OFFICER_Continued
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
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56
Introduction
Product and market positioning
Business delivery
OUR DELIVERY
PLAN
Contract signing
Outsourced production launched
Preparation phase: Planning,
training, marketing, budgeting, etc.
Working capital requirements
•
Upfront commitment from the customer
•
“Pre-hire” facility provided by a third-
party financing source (i.e., Kineo) to
Advanced Oncotherapy for covering
the cost of manufacturing
•
Lead times to reduce to 6/12 months
•
Significant cost savings expected
on the first machines
•
Suppliers incentivised to reduce
costs and times
The relevance
•
Limits cash requirements of
Advanced Oncotherapy
•
Accelerates the delivery of the
commercial pipeline
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Financing
Customer / Centre
LIGHT
Patient
Introduction
Product and market positioning
Business delivery
Roll-over of the “pre-hire” facility
Building, IT integration, etc.
Operational centre
Delivery
LIGHT Installation
Operation, maintenance and upgrades
•
Financial obligations transferred from Advanced
Oncotherapy to the customers; repayment through a
leasing model
•
Terms subject to the credit quality of the customers
The relevance
•
Limits cash requirements of the customer
•
Allows Advanced Oncotherapy to receive
a share of the profit of the centre; aligned
interests
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You worked at the proton therapy center in Loma
Linda in California before joining Advanced
Oncotherapy in Geneva. Why did you move?
The first hospital-based proton treatment centre was
offered by Loma Linda University Medical Center which is
in Loma Linda, California. The proton therapy centre has
treated over 17,500 patients and has been in operation
for over 25 years. I learned a lot about cancer treatment
and got to see in person what patients and their family
experience during their journey of beating cancer: tragedy,
hope, as well as the tangible benefits and effectiveness of
proton therapy. After seeing many patients come through
the Loma Linda Proton Center, I am convinced that proton
therapy is the best radiation treatment option readily
available to patients. The challenge is to lower treatment
cost whereby the oncologist can confidently prescribe
proton therapy without any pushback from insurance firms
due to cost factors. LIGHT has the potential to do this.
I decided to join Advanced Oncotherapy because of a few
reasons. The first was the next-generation technology in
proton therapy. Advanced Oncotherapy’s LIGHT System
provides the capability to control the radiation dose
delivered at each single "point" of the tumour. This has
the potential to dramatically lessen collateral damage of
healthy tissues, lower the number of treatment sessions
and hence reduce the treatment cost to patients and clinics,
increase treatment capacity from a patient throughput
perspective with upside of increasing treatment center
revenue to name a few key factors. The second reason
was the modularity of the design. The LIGHT design
simplifies the installation by segmenting the system to
manageable “modules”. For the most part, we only need a
conventional forklift or equivalent lifting capability to install
our heaviest module – it can even be manually moved
by four strong men. The modularity also offers repetition
during installation. Repetition is a key enabling factor in
high-volume production. With repetition, we can then
focus on efficiency and reduction of cost and time. The
third reason is to participate in a technology that has never
been done before. Of course, we had our own challenges
but this is also what motivates me when getting up every
morning with driven ambition toward helping cancer
patients realise the best radiation therapy possible.
What are the biggest challenges you are facing?
Our challenge can be summarised into one phrase: we are
producing, for the first time, a very complex and cutting-
edge proton accelerator-based treatment system which will
be certified and cleared for patient treatment by governing
authorities such as the FDA. The technology has been proven
since the data and result of the prototype announcement in
2018. Hence, the technology is not a concern based on the
data from the technical team. The remaining challenges are
Ed Lee,
Chief Operating Officer
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related to implementation (learning curve of doing something
for the first time) and cultural evolution. Doing something
for the first time includes complex design documentation
with full traceability and technical rationale, documented
evidence of a business process which is certified per
ISO 13485, our supply chain partners, and the rigours of
installation, validation, and verification. We, collectively, have
implemented many lessons learned toward continuous
improvement of quality, delivery, and cost during our first
system deployment journey. There is no one single issue
but a collection of many low-level technical or logistical
issues which were overcome through excellent collaboration
and teamwork. During installation, milestones which first
took weeks are down to days. These improvements have
not been easy but with resolve, commitment, and grit, the
team have proven to be effective, and we are continually
accelerating our progress. The topical areas include
personnel skill and knowledge base improvement, continually
improving installation documentation and processes, early
identification of faulty components coupled with effective and
efficient countermeasures, applying pre-assembled kits and
assemblies to minimise critical path activities, and applying
rigours test and inspection processes to name a few.
The organisational culture evolution is transitioning from a
pure R&D organisation towards a commercial organisation
while still maintaining our roots in R&D and with our affiliation
with CERN and STFC. Our staff are responding well as time
progresses. Since I joined five years ago, we are continually
shaping our organisation to have the right balance between
commercial and R&D mindset. The second challenge is
the “nuts & bolts” of the business which is the technical file.
The technical file provides the full detailed documentation
package which traces from requirements (clinical and
business-case) all the way down to the specifications of wires,
nuts, and bolts. The documentation package includes design
selection rationale, conceptual design related data, detailed
design documentations, risk assessments at all levels, all
aspects related to supply chain and logistics management,
manufacturing, installation, test, and inspection data. This
rigour is applied to the LIGHT system, sub-systems, sub-
sub-systems, assemblies, sub-assemblies, and components
related to the LIGHT system. The similar discipline is also
equally applied to the building and infrastructure at our first
system deployment site in STFC-Daresbury Laboratory
whereby we have received patient treatment approval. In a
nutshell, doing “this” for the first time, there is no published
manual we can refer; we are creating the manual and we will
be the experts. I am very proud of our team’s progress.
Is that the reason why the Company has decided
to outsource the manufacturing process and
focus on the assembly processes?
As a key business strategy to minimise financial costs,
we outsource all manufacturing activities but perform the
necessary assemblies. We can leverage the immense supply
chain network, their capital equipment, and component and
assembly know-how to produce the components while we
focus on the assembly and integration of the system. This is also
possible because we have ample knowledge and expertise in
the manufacturing realm. Without our manufacturing expertise,
we would not be able to outsource the manufacturing of our key
components. Further to this point, we rely on our relationship-
building capability to transform a traditional customer-supplier
relationship to a partnership. The key enabler is doing what we
say and saying what we do, which relies upon integrity and
transparency. The announcements with VDL and CosyLab
are evidence of our transformation from a supplier-customer
relationship to a supply chain partnership. Our aim is to
advance our existing partners toward a higher tiered platform,
for example by advancing from a component provider to a sub-
system provider. There is much work to be done to realise this
strategy; however, we believe this is key toward meeting the
future pent-up demand of our LIGHT system. Coupling supply
chain partnerships with strategic tiered platforms will provide
capacity expansion as well as adapting to the everchanging
geopolitical and environmental variations. We will maintain our
manufacturing and integration know-how while partnering with
our suppliers to foster and maintain a win-win relationship.
How do you manage your supply chain?
We apply the robust supply chain management based
on the experiences of our staff who come from radiation
therapy medical device, automotive, aerospace, defence,
nuclear, high-energy physics, utilities, and construction to
name a few. This starts with a clear scope of work, detailed
and clear requirement and specifications, progressive
Q&A review session to ensure input information are clearly
understood by our supply chain partners, rigorous contract
negotiation to ensure the interests of the Company are at the
centre of all negotiations while maintaining our partnership
spirit, robust audits related to quality and business systems,
identification and management of deliverable milestones,
strategic supplier visits to “kick the tires” and verifying
milestones in progress as well as certificate of conformance,
factory acceptance testing and inspection, site acceptance
test and inspection, and compliance review of our suppliers’
traceable documentation packet.
We also have implemented and plan to bolster the supply
chain management practice of commodity assignments,
supply chain project engineering practices which include
expertise in specific areas to complement our supply
chain partners, performance measurements coupled with
routine feedback and reviews, standardised quality and
regulatory compliance agreements, and recurring supplier
audits to name several key initiatives.
Which initiatives do you foresee for future
machines?
We aim to launch several key initiatives to reduce cost,
lead time, and further improve quality. Our partnership
model will extend to recurring cost reduction initiatives
with measurable goals. We have, even now, realised cost
savings of our first treatment system compared to the
first prototype which include but are not limited to value
engineering; we will continue this practice. The aim of cost
reductions is not only to increase profitability but, most
importantly, improve the affordability of the LIGHT system
and lower the treatment cost to cancer patients. We
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Product and market positioning
Business delivery
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ANNUAL REPORT 2021
earnestly look forward to leveraging material purchases,
utilising alternate materials which are less expensive but
meet performance requirements, manufacturing cycle
time reduction resulting in reduced labour cost and lead
time, and improving first-pass yield through thorough
data analysis and process improvements. A key enabling
foundation to act on cost, quality and lead times is through
implementing lean manufacturing coupled with six sigma
and statistical process control, which involves reducing
waste, eliminating variations, and maximising the ratio of
value-added activities versus non-value-added activities.
We are also addressing the need to increase capacity. We
have already identified the maximum capacity per our key
supply chain partners based on various market demand
scenarios. Further to a very positive market demand,
we have strategically established various deployment
scenarios at various geographic locations. This strategy
also includes leveraging our existing staff’s expertise with
local clinical site personnel. We look forward to our next
challenge once we complete the first system deployment
to help improve lives through democratising cancer
treatment with a much more affordable LIGHT system.
How are you working with your suppliers to deal
with Covid-19, Brexit and other challenges?
Brexit has certainly been a logistical challenge. With no
clear advanced prescriptions from EU and UK, we incurred
unexpected or unnecessary shipping delays at the UK border
as well as additional costs related to custom duties. As time
progressed, more shipping lead times were added to the
overall delivery contract and program management processes.
We have also had to contract custom brokers as necessary
to ensure reliable custom clearance and transportation of our
goods. Combination of these two categorical actions have
now virtually negated shipping delays.
COVID-19, during the last two years, have compounded
the complexity of our endeavour. Nevertheless, I am proud
of the achievements made by our staff and our supply
chain partners. Though the temporary shutdown due to
COVID-19 caused start-up delays, the team have quickly
demonstrated immense improvements as momentum
progressed. To ensure continual operation once the very
strict shutdown was lifted, we implemented COVID-19
protocol policy and procedures to ensure the utmost safety
of our staff. We applied recommended Personnel Protective
Equipment coupled with sanitisers and tests on a daily basis
to ensure zero infection at our workplace. Nevertheless, we
had to deal with the residual impacts of the shutdown at our
supply chain partners. They too experienced raw material
shortages, personnel shortages, production capacity
significantly below pre-COVID which led to delayed receipt
of vital components. Nonetheless, we creatively assessed
how to minimally impact the program critical path.
INTERVIEW WITH OUR
CHIEF OPERATING OFFICER_Continued
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Product and market positioning
Business delivery
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ANNUAL REPORT 2021
What is needed for market authorisation?
Our LIGHT medical device is subject to extensive
regulation by numerous agencies, such as the FDA
in the US or the MHRA in the UK. To varying degrees,
each of the agencies requires us to comply with laws
and regulations governing the development, testing,
manufacturing, labelling, approval, marketing, reporting,
record keeping, tracking, etc. Our regulatory strategy is
also shaped by environmental health and safety laws and
regulations worldwide.
To be distributed in the US, our LIGHT product must
receive a 510(k) clearance from the FDA. 510(k) is a
process that requires us to demonstrate that our system
is substantially equivalent to a legally marketed medical
device in the field we operate. In the EU, LIGHT must carry
a Conformité Européenne ("CE") mark indicating that
it conforms to the European Medical Device Regulation
as well as the associated enforced EU guidelines and
essential conformity standards. Upon its CE marking, it
can be marketed in any EU member state.
Thankfully, the approval of medical devices such as our
LIGHT system in both the EU and the US share many
similarities. To obtain certification, our product must meet
minimum standards of performance, safety and quality
as well as comply with one or more of a selection of
conformity assessment routes, which depends on the
classification of our product.
What is the classification of your LIGHT product
and how relevant is this?
In the EU, the LIGHT system – as a radiotherapy
equipment – is a class IIb medical device. It is positioned
in the proton therapy market that has a long history
of treating patients. The level of evidence required
for approval is largely focused on demonstrating that
LIGHT is safe and performs as expected. We must also
demonstrate the effectiveness of LIGHT by making our
system available for the entire treatment course over more
or less 25 consecutive irradiation days and by ensuring
the necessary up-time requirements.
In EU and UK, we must perform a Clinical Investigation Plan
to receive our conformity approval, the CE in EU and the UK-
CA in UK. This comes from the fact that our Class IIb medical
device differs from the existing Proton therapy systems
INTERVIEW WITH OUR
DIRECTOR OF REGULATORY
AFFAIRS
Michel Baelen,
Director Regulatory Affairs, Quality
& HSE of Advanced Oncotherapy
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in the way the energy of the protons used for treatment is
electronically modified without the need to use degraders for
energy changes between 70 MeV and 230 MeV.
In the US, our LIGHT System is also a class II device. In
China it is a class III device as any other proton therapy
equipment. While clinical trials are necessary in China – as
for any other proton therapy equipment – this is not the case
in the US since we follow the similar equivalence route.
Which evidence do you have to provide?
Following the new Medical Device Regulations ("MDR"),
we must meet two requirements: the submission of our
technical file and the demonstration that we can operate to
a high standard of quality through a Quality Management
System. The latter is evidenced through our ISO 13485
certification, which is regularly audited and re-validated.
The former must contain sufficient effectiveness, safety,
and quality data, in particular the verification and validation
test results, along with traceability back to clinical user
needs, product requirements, and design specifications.
Verification, validation, traceability, requirements,
specifications, etc. Tell us more…
Verification and validation – also called V&V – are critical
activities that confirm that LIGHT as the "contracted for"
product provides the required operational capability. The
validation is the process by which we prove that our product
works for the end-user as intended. Therefore, the user
needs must be broken down into product requirements and
design specifications to design and build the right product.
Validation testing is needed to prove that our product, as
built, operates according to the users’ expectations under
the conditions where they intend to use it. Verification, on
the other hand, is the process aimed at confirming that the
specified requirements have been fulfilled. Put it simply,
we must demonstrate that the product we built is the
product we said we would build.
In that context, traceability is important because it is the
link between user needs and test cases. A trace matrix
provides part of the V&V evidence that the certification
agencies require.
Is this a difficult process?
No, it is not. Personally, I have been through 13 certification
processes with the US-FDA, 13 certification processes
with the European Notified Body, two certification
processes with the Chinese Food and Drug Administration
("NMPA") and other processes in other geographic areas.
Therefore, my confidence comes from the fact that the
process of getting the conformity approval of LIGHT is not
that different, whilst we must remember that regulators
can always ask for additional data.
A critical success in our regulatory strategy is to ensure we
do not leave any stone unturned. Our regulatory plan follows
a very thorough process that requires the right tool and the
right mindset across the whole organisation. It is a time-
consuming activity because each of the subcomponents
and components that make up the LIGHT product must
be verified, integrated, and tested. This operational testing
is the venue that gathers data to validate that the ultimate
product satisfies the required operational capabilities.
If you consider the validation activities as an example, we must
undertake various activities ranging from the comparison
of LIGHT against the equivalent equipment performing for
similar purposes, the simulation of functionalities through
mathematical modelling, the testing of the final design to
prove the system operates as defined in the user needs, the
preparation, implementation and reporting of test plan, test
cases, test execution records which must be documented
and maintained as a part of design records. So, validation,
in its entirety, is not the result of a single activity, but the
collection of results from all validation activities.
You are talking about having the “right mindset”.
Can you explain this further?
The product certification is an important milestone in the
journey of a company, but this is not the end of the road.
On the contrary, this is rather the beginning… To go far
and have a long product life cycle, quality – one of our
key corporate values – must be embedded in everything
we do. This is based on the premise that no single tool,
test, or person can guarantee quality. For quality to be a
solid part of our culture, everyone needs to support and
contribute to it – from management and sales teams
to developers, architects, and product managers. At
Advanced Oncotherapy, we have this mindset, a pre-
requisite for a sustainable success.
Who are your points of contact to ensure your
regulatory strategy does not result in surprises
and delays?
In Europe, our approval application must be reviewed by a
Notified Body which is authorised by the health agency. Its
role is to assess and assure conformity with requirements
of the relevant EU directive. Notified Bodies are accredited
private companies that contract with manufacturers such
as ourselves to supply product certifications for a fee.
At the highest level of the European Commission Medical
device
regulatory
organisation,
the
Medical
Device
Coordination Group ("MDCG") is the instancy delivering the
accreditation to the Notified Bodies and it is also the authority
defining special enforced guidelines. The Proton Therapy
medical equipment is classified as class IIb for which a
mechanism for scrutiny of conformity assessments is in place.
This is applied for certain class III and class IIb devices.
Because of this applicable mechanism for scrutiny of
conformity assessments, once our Notified Body agrees
that our product meets requirements for conformity, it must
submit its report to the EU-MDCG for approval and only
after this it can issue a certificate of approval for conformity
requirements of the Medical Device Regulation. Once
we get this certificate, we are then authorised to issue a
Introduction
Product and market positioning
Business delivery
65
ANNUAL REPORT 2021
CE mark conformity certificate, and LIGHT can then be
marketed in the EU member states and delivered to our
clinical customers for clinical use.
In the US, the counterpart is the FDA. As part of our pre-
submission process – called Q-Sub process – the FDA
has and continues to provide constructive comments on
our filing strategy. This Q-Sub process applies because
LIGHT is considered as an innovative proton therapy
system. The FDA favours an interactive dialogue through
the development process which aims to facilitate the
approval once our dossier is submitted.
What is driving you?
I am very proud to be part of this journey. Playing a role
in offering physicians the opportunity to treat tumours in
organs that cannot be immobilised during treatment and
improve patient access to proton therapy treatments is
extremely rewarding.
The LIGHT system is a world first for the advanced
treatment of cancers integrating imaging equipment
combined with a pulsed proton beam that will be able to
modulate the energy and the protons current of the beam
in real time. After the introduction of the cyclotron-based
proton therapy systems in the 50s, the new generation of
proton therapy systems is almost there now!
Throughout my career, I have seen the enormous
challenges of using and getting approved cyclotrons.
Their proton beams must be degraded with poorly efficient
transmission absorbers, which is generating a significant
number of neutrons in the bunker, further impacting
the equipment and the building as well as creating
decommissioning problems. I am a believer that we all
have a duty to protect our planet. So, introducing LIGHT
to the market is a major step forward in this commitment. I
also find the opportunity to manufacture LIGHT in a high-
volume production setting particularly compelling, thanks
to its design that largely relies on very pure copper units.
I see this as a fundamental difference against cyclotrons
which require a large amount of steel and necessitate
magnetic field mapping and correction of steel defects
during each production cycle.
Put it simply, what is keeping my passion intact after all
these years dedicated to get cyclotrons and synchrotrons
on the market is the opportunity to solve many of the
limitations of current proton therapy systems.
INTERVIEW WITH OUR
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Introduction
Product and market positioning
Business delivery
We have laid out the key foundations of our business model. This is to ensure
LIGHT has the market reach and penetration, giving cancer patients and
physicians the tool to defeat cancer and providing returns to our shareholders.
Through strategic long-term customer-centric and innovative partnerships, we
believe we have a balanced and robust business model to address customer’s
needs, drive our commercial growth and democratise proton therapy.
OUR BUSINESS
MODEL
Clinical, engineering and scientific
excellence
•
Technology originated from
CERN, the world-leading centre
of physics and engineering
excellence that develops and
operates some of the world’s
largest and most complex
scientific instruments
•
Significant barriers to entry
•
Know-how and patent protection
Commercial agility
•
Intimate knowledge of the
customers’ mindset and the
key success factors relevant
to radiation- and proton-based
technologies
•
Lean organisation built upon
outsourcing the manufacturing
activity and assembling in-house
the LIGHT components
•
Strong results driven culture and
teamwork
The team
•
Highly experienced and motivated
team focused on innovative
solutions
•
Team with a successful track-
record in launching new products,
in particular in the medical
equipment industry
•
Project endorsed by key
opinion leaders and eminent
scientists whose reputation is
unquestionable
Partnerships with key stakeholders
across the entire value chain
•
Suppliers incentivised as business
partners for excellent delivery
•
Financing partnership in place
to support working capital
requirements and customers
•
Commercial customer-centric
partnerships
How we create value
Enablers
What is in the mindset of customers when contemplating a proton therapy project
Offering an entire solution,
not just a product
Addressing today what the
market needs tomorrow
Breaking the
conventional
supplier/
customer
model and
aligning
interests
Innovation, a
commitment
to sustain the
competitive
edge of the
Company
1
3
2
4
Project
execution
and
set-up
Financing
Patient
mix
L
o
n
g
-t
e
r
m
v
is
io
n
S
o
l
u
ti
o
n
p
r
o
v
id
e
r
F
o
r
w
a
r
d-
t
hi
n
k
in
g
a
p
p
r
o
a
c
h
P
a
r
t
n
e
r
s
h
ip
s
w
it
h
c
u
s
to
m
e
r
s
67
ANNUAL REPORT 2021
The LIGHT system is the only solution that integrates the delivery
of protons with a state-of-the-art imaging system directly in the
treatment room; it 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. Given the modularity of
LIGHT, a unique feature in proton therapy, the package provided
to customers is also complemented with tailor-made financing
solutions. This is the basis of the partnership between Kineo and
the Company, a major source of differentiation and a key stepping-
stone in accelerating the market adoption.
Commercial partnerships are built upon a participation of the
Company to the operations of the clinical centre through a
risk-reward strategy. This aligns interest, provides Advanced
Oncotherapy with unique insights in terms of future engineering
and clinical developments, increases responsiveness, and
provides a long-term source of revenues for the Company. Further
details can be found on pages 69 and 70.
Given the investment needed for building proton therapy centres,
long-term servicing contracts (typically 20 years +) are the norm.
This must be accompanied with a clear understanding of the
market dynamics and the cancer centres aspirations. This must
consider the long-term need to integrate and optimise the proton
therapy operations with the other cancer services of the operators
as they seek to continually differentiate their product offering.
Staying at the forefront of innovation is predicated on the Company’s
ability to leverage the versatility of the LIGHT platform and deploy
the series of future technical upgrades which have already been
identified, such as FLASH LIGHT. This is done through scientific
partnerships as well as clear internal processes with well-defined
KPIs. This forward-thinking approach is essential when planning
and installing new LIGHT systems, so that customers always
benefit from the latest technological advancements.
Creating value for our key
stakeholders
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Product and market positioning
Business delivery
68
ADVANCED ONCOTHERAPY PLC
1
3
2
4
Patients
Regulators
Commercial
partners
Supply chain
Investors
Please refer to Section 172 for
further information
OUR PARTNERSHIP
FINANCING
MODEL
(1) Formally DiaMedCare
Background
•
Leasing company specialising
in MedTech
•
Founded
by
ex-CEO
of
Siemens Healthcare
•
Based in Basel, Switzerland
•
Funded by large family offices
and institutional investors
Objectives:
•
Provides leasing arrangements to customers
•
Provides working capital for the manufacturing of LIGHT
In Practice:
•
Funding partner to cover 50/100% of the cost of LIGHT
•
Finished machine transferred to Funding Partner balance sheet and
leased to customer
•
Customer guarantees a minimum throughput of patients, equal to
the value of the lease obligations
•
Customer enters into operating services agreement whereby
Advanced Oncotherapy provides maintenance services
•
Advanced Oncotherapy receives % of profits from the project in perpetuity
Outcomes:
•
Sustainable revenues, increased returns over time, and strong
commercial alignment with customers
In January 2021, Advanced Oncotherapy announced a partnership with medtech financing specialists, Kineo(1)
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ANNUAL REPORT 2021
Modularity
Cost to Treat
Cost to Build
Modularity and movability of devices makes LIGHT system
securable under financing package
Lower treatment cost enables customer to service lease
obligations
Lower machine cost brings project risk in line with financing
partners appetite
Conventional Business Model
•
100% of 45m selling price paid on day of installation at
40% gross margin
•
Maintenance of £4m paid per year
Partnership Business Model
•
Advanced Oncotherapy receives portion of the centre’s
£15m p.a profit (25% and 50% cases considered)
•
Profit calculated after lease payments, which cover
upfront cost of machine
•
Maintenance of £4m paid per year
1
1
2
3
2
3
(2) Indicative 3 room system. NPV calculated using a discount rate of 10% over a period of 20 years (no terminal value)
Figures are for illustrative purposes only and do not intend to reflect the real economics of a project
Why this opportunity is unique to Advanced Oncotherapy?
Indicative Value of One Commercial Order(2)
£m NPV
Conventional
Partnership 25%
Partnership 50%
50
66
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GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
Introduction
Product and market positioning
Business delivery
70
ADVANCED ONCOTHERAPY PLC
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ANNUAL REPORT 2021
SECTION
172 STATEMENT
Effective engagement with our key stakeholders
and managing our impact on stakeholder
interests
Effective engagement with our stakeholders is critical
to the business. It helps us to appreciate the impact
our decisions have on stakeholder interests and better
understand their needs and concerns. It strengthens our
relationship with them, is an ongoing part of the operational
management and governance of the Company and is key
for long-term sustainable growth.
As required by Section 172 of the Companies Act 2006, the
Directors must act in the way they consider, in good faith,
would most likely promote the success of the Company for
the benefit of its shareholders. In so doing, the Directors
must have regards, amongst other matters, to the:
•
Likely consequences of any decision in the long-term;
•
Interests of the Company’s employees;
•
Need to foster the Company’s business relationships
with suppliers, customers and others;
•
Impact of the Company’s actions on the community
and environment;
•
Desirability of the Company maintaining a reputation
for high standards of business conduct;
•
Need to act fairly between members of the Company.
Our Stakeholders
Patients
Our purpose is clear: help patients afford access to the
latest technology in the cancer treatment and proton
therapy. Through the LIGHT system and services, the
Group is looking to provide large and small 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.
Because patients are at the heart of everything we do and
because their needs are fundamental to our success, we
consult with Key Opinion Leaders regularly and conduct
market research to help us with patient insights.
Employees
We are a people-centric, equal opportunity business
driven by our values and – as of December 2021 – employ
174 people, aiming to develop them to the best of their
abilities whilst maintaining their safety and well-being. The
Board, and especially the Remuneration Committee, have
also had particular regards to employees as they reviewed
and revised the long-term incentive arrangements as part
of its strategy to attract, retain and motivate employees
in order to deliver value for shareholders. These actions
were consistent with the Board’s commitment to investing
in and responsibly rewarding employees as they deliver
the Company’s strategy.
Regulators
Safety and quality are two of our four key values. We
are committed to do the right thing to ensure the safety
of patients, our users, and our staff. We focus on patient
outcomes, reliability and consistency. To do so, we
engage with competent authorities and our Notified Body;
this ensures we operate within the appropriate regulatory
and legal framework, further accelerating our plan for the
certification of the LIGHT system in the targeted markets.
Safety is also linked to data protection; 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.
Commercial partners
The Board places great emphasis on selecting the most
suitable commercial partners who share the Company’s
vision and do not accept proton therapy is reserved to
a minority of patients. The Board keeps itself aware of
changes in the industry by fostering existing relationships
and through extensive networking. Furthermore, the
Company has appointed specialist advisers – in support to
its commercial team – to identify and target the right potential
partners and facilitate discussions and negotiations.
Supply chain
Centred on an outsourced manufacturing model, the
Company 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
and Cosylab 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 Company uses automated purchasing
and approvals processes, coupled with robust service
level agreements.
Investors
Effective communication with shareholders on strategy
and governance is critical. The Board naturally considers
its shareholders to be key stakeholders of the Company
and is focused upon delivering long-term value for their
benefit. The Company engages with its shareholders
and potential investors on a regular basis with meetings
throughout the year. External strategic communications
advisors provide further support to manage the
relationship with investors and analysts and assist with
market interactions and announcements. The results of
this investor engagement are reported to the Board to help
inform our strategy and communications.
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ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
INVESTORS
•
Regular investor meetings covering areas such as technology, market developments, business model,
etc.
•
Consulted with major shareholders
•
Timely market updates, financial results and AIM compliant website kept shareholders informed regularly
on performance
•
The use of social media by the Company is an opportunity to reach a broader network of investors and
stakeholders
•
The resolutions for 2021 were passed based on acceptance levels of more than 97%
EMPLOYEES
•
Focused on providing a Covid-19 safe workplace
•
Enhanced environment, health, and safety
•
Increased the focus on making a positive impact on the environment
•
Employee portal to achieve closer engagement with employees and allow regular access to HR
•
Communication with employees through intranet, industry newsletters, staff meetings
•
Updated training and information for employees regarding Covid-19; implemented ways of supporting
employees, including home working
•
Undertook a talent review and business process mapping to nurture future talents and ensure an effective
succession plan across the whole organisation
•
Of eligible employees, 80 employees participated in the SAYE Option Plan at the end of the year.
REGULATORS
•
Committed to being open and transparent with regulators and to work closely with them
•
Continued to work with our Notified Body to get LIGHT approval; worked in partnership with our Notified
Body to ensure we understand the latest regulatory developments and that our LIGHT system is approved
as quickly as possible
•
Ongoing dialogue with the MHRA and the FDA – through the Q-submission – to garner feedback and
accelerate certification process
•
Gained increased understanding of regulatory requirements during the extended MDR transition period
•
Significantly increased resources available to support the Verification and Validation activities
•
New controls and procedures were defined to ensure sufficient data backup and decreased cyber risk.
This resulted in new control definitions and guidance for cloud security to support secure growth across
the businesses
SUPPLY CHAIN
•
Met with key suppliers and sub-contractors to ensure we receive the level of service expected, contracting
on favourable commercial terms
•
Held update calls and meetings to ensure critical suppliers are aware of our plans
•
Reviewed mitigation and continuity plans
•
Robust supplier audit schedule to enhance regulatory compliance
COMMERCIAL PARTNERS
•
Reviewed the care pathways with health insurance companies
•
Engaged with existing commercial partners on supporting activities, including marketing activities,
integration of IT systems, patient referral strategies, etc.
•
Attended trade and research conferences
PATIENTS
•
Worked closely with Key Opinion Leaders and attended industry events to enable us to keep informed on
any trends or changes that will affect how proton therapy is delivered to cancer patients
•
Gained real world knowledge on the mindset of both patients and customers
•
Consolidated views on future opportunities and positioning of LIGHT
Engagement and achievements
Introduction
Product and market positioning
Business delivery
73
ANNUAL REPORT 2021
PRINCIPAL RISKS AND
RISK MANAGEMENT
At Advanced Oncotherapy, we adopt a sensible risk-
taking approach, which cannot be defined by one figure
or formula. We set our risk boundaries to align with our
strategy, values, policies and corporate directives. Our
approach depends on the type of risks, as follows:
•
Strategic risks: Strategic risks are risks that can
significantly impact the execution of our business
strategies and our ability to achieve our objectives.
We include external and emerging risks in this risk
area, such as industry shifts and technological
shifts. These risks can all impact our business
negatively long term but often also create business
opportunities if managed well. Our approach to
managing these risks differs from other categories as
it includes evaluation of which strategic risks to take
and improving the business ability to manage them
by establishing risk tolerance, predicting the impact
of possible risks and monitoring key risk indicators.
•
Financial risks: The Company is exposed to
multiple financial risks such as macroeconomic risks
and execution risks associated with the Company’s
AVO's risk appetite
financing plan. The Board of Directors establishes the
principles for the Group’s financial risk management,
which comprises guidelines, objectives, and limits for
financial management as well as the management of
financial risks within the Group.
•
Business risks: In this risk area we include operational
and commercial risks. These types of risks can often
impact the financial performance of the business
negatively or can have a negative reputational impact
on Company. Examples are sustainability risks, such
as compliance risks, and operational risks, such as
IT failures as well as talent attraction and retention.
The approach to managing these risks is through
active prevention and by designing and implementing
mitigation actions and controls.
We have implemented a risk management cycle whereby
all key risks are identified, discussed, assessed and
monitored. In 2021, we identified approximately 136
risks. They were classified and consolidated using a
quantification method to weigh potential impacts and
likelihoods of the various risks.
Strategic risks
Averse
Cautious
Minimalist
Open
Hungry
Financial risks
Business risks
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ADVANCED ONCOTHERAPY PLC
Introduction
Product and market positioning
Business delivery
The successful execution of the financing strategy of
the Company depends on a variety of factors and risks
Description: The financial risks faced by the Company include
the ability to cover working capital needs, raise sufficient funds
to support the Company through to profitability and failure to
secure further contracts. The financing requirements of the
Group also depend on numerous factors, including the rate of
market acceptance of the LIGHT System and the ability to attract
and retain customers. This means the Company often faces
uncertainties in its cash flow till the installed base is large enough.
Mitigation: The Company 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 £146 million between December 2017 and December
2021. It continually monitors opportunities which provide
financing flexibility to deliver on its strategic priorities. The
Company also prepares short term and medium cash
flows to ensure that the business has adequate funding to
execute its business strategy.
Exposure to international markets and risks
Description: The Company’s strategy is focused on
marketing LIGHT in various countries. Its international
operations are therefore subject to a variety of risks,
including difficulties in staffing and managing foreign and
geographically dispersed operations, differing regulatory
requirements for obtaining clearances or approvals to
market LIGHT; fluctuations in foreign currency exchange
rates; imposition of limitations on production, sale or export
of proton therapy systems in foreign countries, etc.
The cancer market and proton therapy industry are
subject to rapid changes and the light technology
could be replicated
Description: The industry is characterised by rapid
technological changes, new product introductions and
enhancements and evolving industry standards, all of which
could impact the commercial success of the LIGHT System.
New alternative cancer treatment modalities could also be
introduced, which would hinder the commercial prospects
of the Company. A competitor could attempt to replicate a
linear proton accelerator technology for medical use.
Mitigation: The Company understands that future success will
depend on its ability to keep pace with the evolving needs of
its customers and the medical profession on a timely and cost-
effective basis and to pursue new market opportunities that
develop as a result of technological and scientific advances.
To keep pace with evolving standards of care, the Company
has identified new opportunities and established an innovation
roadmap, which is expected to enhance the product technology
offering and develop new product features. 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.
The development and introduction of a linear-based turn-key
Mitigation: The Company’s structure across the UK,
Europe and the US creates a diversified base and a natural
“hedge”. Furthermore, and in the context of exchange rates
fluctuations, 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. The Company has a
strong commitment to anti-corruption, anti-bribery and ethical
behaviours, as reflected in its current policies. 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.
Macro-economic or business instability
Description: Geopolitical issues and continuing concerns
over Covid-19 have contributed to volatility for the global
economy. If the economic climate does not improve, the
operations of the Company, its customers and suppliers
could be adversely affected. Additionally, the instability
has resulted in diminished liquidity and high market
volatility, which could impair the ability of the Company to
access capital if required. In the event of further economic
slowdown, investment in medical device companies may
also experience a corresponding slowdown.
Mitigation: The Company 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 considers 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.
system requires a combination of technology and specialised
skills which is hard to replicate. 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 market for proton therapy equipment is characterised
by intense competition
Description: The Company faces competition from
numerous companies, many of whom have large
resources, which may make it more difficult for LIGHT to
achieve significant market penetration. Competitors may be
better positioned to spend more aggressively on marketing,
sales, intellectual property and other product initiatives and
research and development activities.
Mitigation: The Company strives to be a trusted partner to
customers. To do so, it relies on a business model uniquely
designed to leverage the features of LIGHT and focused
on aligning interests with customers. The Company
has established the key foundations of a new financing
approach with Kineo; this plays a crucial role in removing
the upfront costs of acquiring and installing LIGHT by
converting CapEx to OpEx; in addition, this reduces the
reliance on the Company’s balance sheet, hence further
unlocking significant additional upside and accelerating
Financial risks and mitigation strategies
Strategic risks and mitigation strategies
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
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ANNUAL REPORT 2021
PRINCIPAL RISKS AND
RISK MANAGEMENT_Continued
The launch of light and its market acceptance are
subject to risks
Description: LIGHT is subject to market clearance and
there is no certainty that it may receive market acceptance
from regulators. If there is any delays to obtain market
clearance, the Company may require further working
capital. This means that it faces uncertainties in its cash
flow until the installed base is large enough.
Mitigation: The research and development team – whose
outputs rely on a validated technology (LIBO) – has identified
the main technological risks and performed focused studies to
ensure the underlying concepts remain viable with improved
clinical outcomes. The Company’s technology strategy
is also regularly reviewed to ensure that the systems it
operates across the Company support its strategic direction.
The Directors shall seek to minimise the risk of delays by
careful management of projects by working with accredited
experts, suppliers and building companies.
The Company operates in an industry characterised by
strict legal, regulatory and compliance requirements
Description: Changes to regulation as a result of Brexit,
evolving political landscapes and more stringent norms in
the medical industry could have an impact on the approval
process of the LIGHT System and the Company’s ability
to sell and install future machines. 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.
Mitigation: The Company proactively monitors changes in
regulation and legislation and ensures that all obligations are
complied with, and forthcoming legislation is appropriately
planned for. It ensures that employees understand legal
risks and how to comply via anti-bribery and corruption
policies, reinforced by the Company’s Code of Conduct.
Furthermore, targeted audit reviews are undertaken to
ensure policies and training are embedded. When required,
external advice is also taken, particularly for situation where
capabilities are not available in-house.
The commercial prospects of the Company may
fluctuate
Description: The Company relies solely on the
commercialisation of its LIGHT System to generate revenue.
Any factor materially adversely affecting the Company’s
ability to market and sell its LIGHT System, its pricing
and demand would have a material adverse effect on our
financial condition and results of operations. Demand may
not increase as quickly as planned. Sales cycles in proton
therapy tend to be long, which may contribute to substantial
fluctuations in the operating and financial results.
Mitigation: The Company is dedicated to understanding
the requirements of customers and pre-empting their
needs. As a result, it is seeking feedback from existing and
prospective customers, which is key to accelerate their
decision process and ensuring customers’ satisfaction.
The initiatives to provide vendor financing and leasing
arrangements to customers as well as developing new
product features such as FLASH and minibeams are
consistent with the Company’s commitment of building a
flexible customer-centric model.
The Company has a limited history of assembling light
systems in commercial quantities
Description: The Company has only a limited history of
assembling and installing the LIGHT System and, as a
result, it may have difficulty delivering LIGHT in sufficient
quantities in a timely manner or may not have enough data
to accurately predict future component demand. Following
market disruptions post Brexit and Covid-19, the Company
experienced delays in obtaining components from suppliers,
which may delay its ability to assemble future systems.
Accordingly, the Company may encounter difficulties in
scaling up production, including problems with quality control
and assurance, component supply shortages, increased
costs, and shortages of qualified personnel.
Mitigation: The Company 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.
Hiring and retaining talents is a necessity but is not
without risks
Description: The Company’s success depends on the
skills, experience and performance of key members of the
senior management team. The individual and collective
efforts of these employees are important as the Company
continues to develop its LIGHT System, and as it expands
its commercial activities. The loss or incapacity of existing
members of the executive management team could
adversely affect the Company’s operations if the Company
experiences difficulties in hiring qualified successors.
Success also depends on the Company’s ability to
attract and retain highly skilled engineers, scientists, and
technicians. The Company may not be able to attract
or retain qualified managers, engineers, scientists, and
technicians in the future due to the competition for qualified
personnel among medical device businesses,
Mitigation: The Company seeks to attract and retain high
quality personnel by providing employees with a rewarding
package of salary and benefits which include share option
scheme, private medical insurance, and flexible working.
Maintaining a high level of employee satisfaction and
engagement is also key. This is done through an investment
in appropriate quality resources and infrastructure to
support the staff and efficient working practices. This
includes focus on providing learning and development
opportunities, training, and career paths to enable people
to fulfil their potential.
Business risks and mitigation strategies
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ADVANCED ONCOTHERAPY PLC
Introduction
Product and market positioning
Business delivery
Reliance on information technology systems and
infrastructure is impacting how the Company operates
Description: The Company’s success depends on
its infrastructure and set-up as well as its information
technology systems. The LIGHT System is also equipped
with the latest generation of propriety software packages
developed by third-parties. Information technology systems
are vulnerable to damage from a variety of sources,
including network failures, malicious human acts and
natural disasters. Moreover, despite network security and
back-up measures, some of the servers are potentially
vulnerable to physical or electronic break-ins, computer
viruses and similar disruptive problems.
Mitigation: The Company has taken precautionary
measures to prevent unanticipated problems, including the
implementation of a system of data storage, offsite backup
and monitoring of key coding and modelling data. Following
the disruption caused by Covid-19 and the necessary need
to support remote operations, the Company has invested
in servers dedicated to highspeed computation which has
significantly reduced the time required to run operations
and reduce risks.
Reliance on third parties requires a carefull risk
assessment
Description: The Company relies on arrangement with
third-parties for manufacturing components of the LIGHT
System. As a result, the Company is subject to disruptions,
delays, and potential increased costs due to factors beyond
its control. Any failure to deliver, install or service future
LIGHT Systems in a timely manner may damage the
Company’s reputation, with the risk of losing customers.
Mitigation: Wherever possible, the Company seeks to have
duplicate suppliers to lessen the reliance on a particular
vendor. Arrangements with third-parties also encompass
an array of protective clauses in favour of the Company.
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
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ANNUAL REPORT 2021
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
GOVERNANCE REPORT
ADVANCED ONCOTHERAPY TEAM
CORPORATE GOVERNANCE REPORT
STATEMENT OF DIRECTORS' RESPONSIBILITIES
AUDIT COMMITTEE REPORT
REMUNERATION COMMITTEE REPORT
GROUP DIRECTORS' REPORT
INDEPENDENT AUDITOR’S REPORT
79
85
93
95
97
101
105
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ADVANCED ONCOTHERAPY PLC
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ANNUAL REPORT 2021
ADVANCED ONCOTHERAPY
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.
Dr. Michel Baelen
Director, Regulatory Affairs
•
Over 20 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
Dr. Manuel Gallas
Technical and Engineering Director
•
15 years’ experience managing
complex technology product design,
innovation, and R&D projects
•
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), Higgssearching experiment
Mr. Wim Hulsbergen
Vice-President, IT Services
•
Over 20 years experience
building IT organisations enabling
businesses to drive and enable
their strategy
•
Specialises in digital
transformation, optimising
and automating business
processes, ERP deployment and
organisational transformation
Dr. Jonathan Farr
Chief Clinical Officer
•
Over 15 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 on advances in
proton, other particles and photon
radiotherapy
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 years as an employer
representative on the Employment
Tribunal Board of England and
Wales; has been an HR Director in
various start-ups
Mrs. Louise Harley-Smeur
Senior Vice-President, Intellectual
Property
•
European Patent Attorney and
Head of the Intellectual Property
Department
•
Specialising in IP since 2001, with
a focus on medical technology,
devices, and business
•
Previously worked in various UK
hospitals as a medical physicist,
specialising in radiotherapy and
imaging
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GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
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
excellence award for quality &
customer satisfaction industry wide
Mr. Graham Pughe
Senior Vice-President, Accounting
•
Seasoned finance professional with a
strong technical grounding within all
areas of the finance spectrum
•
Implemented robust and pragmatic
solutions for various industries
including newspaper publishing, food
manufacturing and building materials
Mrs. Berengere Pons-Chabord
Senior Vice-President, Corporate Finance
•
Strong experience in financial
analysis, business planning and
Board/management reporting
•
Previously worked for Lazard as a
Vice-President in M&A
•
Transaction experience covers a
wide range of private and public
transactions, including acquisitions,
divestitures, and more complex
structures
Mr. Julian Tokuta
Director, Supply Chain
•
More than 20 years of professional
procurement experience at Proxima
Group and Accenture
•
Substantial expertise delivering
supply chain and procurement
strategies that address unanticipated
business challenges
Mr. Ed Lee
Chief Operating Officer, President Europe
•
Former Production and Technical
Field Service Director at Optivus
Proton Therapy (Loma Linda
University Medical Center)
•
30 years manufacturing and
operations experience spanning
from high-volume/low-mix to low-
volume/high-mix industries such as
Automotive, Aerospace, Military/
Defence, Nuclear, and Medical
Devices
Mr. Benoit Raskin
Programme Director
•
More than 20 years’ experience in
proton therapy as project manager
and Director at IBA
•
Considerable experience of site
installation, commissioning, contract
acquisition and customer acceptance
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
81
ANNUAL REPORT 2021
BOARD OF
DIRECTORS
S
A
R
Member of the Audit Committee
Member of the Remuneration Committee
Member of the Strategic Committee
Chairman
C
As a Board we have collective responsibility for the long-term success
of Advanced Oncotherapy and are accountable to all stakeholders of
the Company.
Ms. Lori Cross
Non-Executive Director
Appointed: September 2020
Skills and Experience
Lori brings extensive experience in strategy, innovation,
operational scaling, and leadership development, building on a
career transforming leading global organisations in the medical
technology and life sciences sectors.
Prior to Advanced Oncotherapy, 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
Lori has a BS in Biomedical Engineering, MBA and Masters of
Engineering Biomedical Systems.
External Appointments
Lori currently serves as the President and founder of MindSpan
Consulting; and is a Board member of Fastems and Electrosonic.
S
Dr. Michael Sinclair
Executive Chairman
Appointed: June 2006
Skills and Experience
Michael brings extensive expertise and experience to the board,
drawing on over 40 years founding, building and leading hospitals
and healthcare institutions worldwide.
Prior to Advanced Oncotherapy, Michael was the founder and
former CEO of Nestor Healthcare and Allied Medical Group
Limited; the Chairman and founder of Lifetime Corporation Inc.
and US based Atlantic Medical Management LLP; and a Former
member of the Board of Overseers of Tufts University Medical
School. Michael also previously held a number of appointments
at teaching hospitals in London.
Michael has an MB, BS in Medicine and physiology.
External Appointments
Michael currently serves as a Trustee of The London Clinic, Non-
Executive Chairman of Symthera Inc, a Non-Executive Director
of Opiant Pharmaceuticals Inc., and is a Board member of a
number of educational non-profits.
A
R
Mr. Michael Bradfield
Non-Executive Director
Appointed: April 2013
Skills and Experience
Michael brings significant corporate leadership experience, with
particular expertise in marketing and insurance.
Prior to Advanced Oncotherapy, Michael founded and was the
CEO of Hospital Plan Insurance Services, a company sold to AIG
in 2000. He was also the Chairman and CEO of Acacia Asset
Management Ltd, Hamilton.
Michael has a law degree from LSE.
External Appointments
Michael currently serves as the 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.
He is also on the board of Stockgain Asset Management,
Henstridge Properties Ltd, the Vail Foundation, and the Covenant
& Conversation Trust (registered charity).
Mr. Hans von Celsing
Non-Executive Director
Appointed: January 2017
Skills and Experience
Hans brings over 35 years of experience launching, managing
and developing medical technology businesses with a focus on
radiation therapy, as well as developing corporate governance
practices for scaling businesses.
Prior to Advanced Oncotherapy, Hans worked in the radiation
oncology market where he was an Advisor to Mevion Medical
Systems and Executive Vice President of Elekta. In these roles,
he was responsible for global operations and international
expansion, including Europe and Asia.
Hans has an MBA from Harvard School of Economics.
External Appointments
Hans currently serves as the Executive Chairman of Clinical
Laser Thermia Systems AB; Chairman of Gelexir Healthcare Ltd,
Peptonic Medical and Partner Fondkommission AB; and part-
time consultant at Berkshire Investment Management.
C
A
R
S
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STRATEGIC REPORT
Prof. Steve Myers
Executive Director and ADAM Executive Chairman
Appointed: November 2015
Skills and Experience
Steve is a world renowned and leading expert on accelerator
physics, bringing extensive experience in delivering complex
physics projects over 40 years at CERN.
Steve joined CERN in 1972, becoming the leader of the
CERN Accelerator Beams Division in 2000 and the Director of
Accelerators and Technology in 2009. From 2014 to 2016 he was
the Head of CERN Medical Applications.
He has been awarded the IOP Duddell (renamed Gabor) medal
and prize, a lifetime achievement award from the Internal Particle
Accelerators Committee and shared the EPS Edison Volta Prize.
External Appointments
Steve is an Honorary Member of the European Physical Society
and of the Royal Irish Academy.
Dr. Nick Plowman
Non-Executive Director and Chairman of the Medical Advisory Board
Appointed: February 2017
Skills and Experience
Nick has unparalleled clinical experience in using new radiation
techniques for paediatric and adult oncology, bringing invaluable
expertise regarding the deployment of Advanced Oncotherapy’s
LIGHT system. Nick has pioneered uses of lens sparing, Gamma
Knife, IMRT, Cyberknife, and linac based radiosurgery. He has written
over 300 research papers in radiotherapy and clinical oncology and
part-funds a laboratory project at Brunel University exploring DNA
repair mechanisms, including those relating to irradiated tumours.
His academic qualifications include an MA, MD, FRCP, FRCR.
External Appointments
Nick currently also serves as the Senior Clinical Oncologist to St
Bartholomew's Hospital and The Hospital for Sick Children Great
Ormond Street, London.
Mr. Nicolas Serandour
Chief Executive Officer
Appointed: September 2014
Skills and Experience
Nicolas was appointed CEO in October 2016, having previously
held the roles of Group Finance Director and Chief Operating
Officer.
He brings extensive financial management and strategic advisory
experience, drawing on 15 years spent at Lazard, Lehman
Brothers and JPMorgan where he specialised in advising
healthcare businesses worldwide.
He attended ESSEC Management school and has a masters in
risk management.
External Appointments
n/a
Mrs. Renhua Zhang*
Non-Executive Director
Appointed: August 2018
Skills and Experience
Renhua brings considerable healthcare experience and expertise,
with a focus on the Chinese medical and pharmaceutical market.
She co-founded and was CEO of Realcan Pharmaceutical, a
large distributor of medical drugs and equipment in China with
access to more than 8,000 hospitals and 33,000 primary medical
institutions. Renhua was also 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.
External Appointments
Renhua is also currently 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.
Dr. Enrico Vanni
Non-Executive Director
Appointed: October 2013
Skills and Experience
Enrico brings extensive advisory and consulting experience,
having previously led McKinsey & Co’s European pharmaceutical
practice, where he advised boards on strategic healthcare
transformation and governance matters. He was also a Director
of Eclosion2 SA, Alcon Inc. and Actavis Plc.
In his earlier career, Enrico was a research engineer at IBM and
an assistant in Chemistry at University of Frankfurt.
Since retiring in 2007, Enrico has continued to support leaders of
pharmaceutical and biotechnology companies on core strategic
challenges facing the healthcare industry.
External Appointments
Enrico is also Vice-chairman of Novartis; and Board member of
Lombard Odier & Cie SA.
A
R
S
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
* Mr Chunlin Han is an alternate director (unremunerated) for Mrs. Zhang so that he may attend board meetings when Mrs. Renhua Zhang is unable to do so
83
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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.
Prof. Ugo Amaldi
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. Margaret Spittle, OBE
Adviser
•
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. 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
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
GOVERNANCE REPORT
OTHER INFORMATION
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STRATEGIC REPORT
84
ADVANCED ONCOTHERAPY PLC
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
85
ANNUAL REPORT 2021
The Directors recognise the importance of
sound corporate governance and are committed
to maintaining high standards of corporate
governance.
Introduction
The Board of the Company is collectively accountable
to the Company’s shareholders for good corporate
governance, with the Chairman taking a lead on corporate
governance matters. Accordingly, and in accordance with
the London Stock Exchange’s requirement for all AIM-
quoted companies to comply with a recognised corporate
governance code, the Board of Directors of the Company
adopted the Quoted Companies Alliance (QCA) Corporate
Governance Code (Code). The Board considered that the
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 Code is constructed around 10 principles, taking key
elements of good governance and applying them in a manner
which is workable for the needs of a growing company in
pursuit of medium to long-term value creation for shareholders.
The Board is of the unanimous opinion that the Company
complies with the Code and any divergence from the Code
are, in the circumstances, reasonable, appropriate and in the
best interests of the stakeholders of the Company as a whole.
This statement sets out how we currently comply with the
provisions of the QCA Code and – when relevant – the
reasons for any departures from it. A full copy of the QCA
Code is available from the QCA’s website: www.theqca.com
The QCA Code contains the following 10 principles:
•
Principle 1 – establish a strategy and business model
which promote long-term value for shareholders;
•
Principle 2 – seek to understand and meet
shareholder needs and expectations;
•
Principle 3 – take into account wider stakeholder and
social responsibilities and their implications for long-
term success;
•
Principle 4 – embed effective risk management,
considering
both
opportunities
and
threats,
throughout the organisation;
•
Principle 5 – maintain the board as a well-functioning,
balanced team led by the chair;
•
Principle 6 – ensure that between them the Directors
have the necessary up-to-date experience, skills and
capabilities;
•
Principle 7 – evaluate board performance based on
clear and relevant objectives, seeking continuous
improvement;
•
Principle 8 – promote a corporate culture that is
based on ethical values and behaviours;
•
Principle 9 – maintain governance structures and
processes that are fit for purpose and support good
decision-making by the Board;
•
Principle 10 – communicate how the company is
governed and is performing by maintaining a dialogue
with shareholders and other relevant stakeholders.
Principle 1 – Establish a strategy and business
model which promote long-term value for
shareholders
The Company’s ambition and growth prospects are
underpinned by a vast unmet medical need, the development
of a proton-based medical system that has been tailored
CORPORATE GOVERNANCE
REPORT
86
ADVANCED ONCOTHERAPY PLC
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OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
to meet the needs of physicians, an innovative business
model and a lean and robust infrastructure to meet future
demand and introduce future product upgrades.
The Company’s vision is to democratise proton therapy,
which – as explained within the previous Strategic Report
section, on pages 13 and 14 – is driven through five
strategic priorities:
•
solve customers’ need by introducing a turn-key
solution that delivers the best outcome for patients
whilst making treatments more affordable;
•
support customers through long-term servicing
contracts;
•
scale the Company’s infrastructure to reduce future
cost and lead times and increase throughput, the
foundation for delivering a fast-growing pipeline;
•
share a common vision of doing good and well with
all stakeholders, including customers and suppliers,
in the spirit of aligning interest in the long-term;
•
sustain the Company’s competitive advantages through
innovation, investment in talents and a commitment to
make a positive impact on society and environment.
Its business model is further detailed on pages 67 and 68.
The Company operates in a highly regulated sector, and
this is reflected in the principal risks and uncertainties that
may affect the business, which are set out in more detail
on pages 73 to 76.
Principle 2 – Seek to understand and meet
shareholder needs and expectations
The Board of the Company endeavours to engage in clear
and consistent dialogue with both existing and potential
shareholders to assess their needs, expectations, and any
concerns they may have as well as ensure that the Company’s
strategy, business model and progress are clearly understood.
This active communication is maintained through a planned
programme of investor relations which includes formal
presentations, meetings with investors and analysts on
a regular basis. Regular communication also takes place
through the Company’s annual report and website, which
contain up-to-date information on the Group’s activities.
This is complemented with the use of a Regulatory
Information Service and social media. 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). There is also a designated email address for
shareholder liaison – ir@advancedoncotherapy.com
– and all contact details are included on the investor
relations website.
The Board also recognises that the Annual General Meeting
(AGM) provides an opportunity to meet shareholders and
it values their feedback. All shareholders are given the
opportunity to ask questions and raise issues; this can be
done formally during the meeting or in writing prior to the
meeting. The Notice of the AGM is sent to shareholders
at least 21 days before the date of the meeting and all
Directors routinely attend the AGM and are available to
answer questions raised by shareholders.
Copies of the annual report (which includes the notice of
AGM) and the interim report are available to all shareholders
and can be downloaded from the investors’ section https://
www.avoplc.com/en-gb/Investors/Company-Documents.
Alternatively, they are available on request by writing to
the Company Secretary at Henry.Clarke@avo-adam.
com. Other information for shareholders – including the
results of the resolutions of the AGM results and the share
price performance of the Company – is also provided on
the Group’s website.
Principle 3 – Take into account wider stakeholder
and social responsibilities and their implications
for long-term success
The Company recognises that the introduction of LIGHT
and more broadly the implementation of innovative
health solutions for cancer patients are more likely to
be successful when a broad range of stakeholders and
decision-makers are part of the process. Involving medical,
technical, and other experts to ensure that all aspects of
the patient pathway are covered from the outset creates
ownership and contributes to the long-term success for
the Company as a whole. Therefore, the Board places
utmost importance on the feedback from all stakeholders,
which is key to frame and adjust the Company’s strategy.
The Company is also aware of its corporate social and
environmental responsibilities. 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. This
commitment is evidenced and underpinned by the vision
and values of the Company, described in pages 7 and 8 of
the Strategic Report. The Board is committed to harness
this mindset to bring the right stakeholders together and
connect healthcare providers, patients and information
systems in a way that is scalable and sustainable. It
remains grounded in the Company’s purpose of delivering
quality, patient-centred care and the delivery of better
outcome for patients. How the Board seeks to engage with
all stakeholders and ascertain their feedback is set out in
our section 172 statement on pages 71 and 72.
Principle 4 – Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
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
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
87
ANNUAL REPORT 2021
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. Any such system of financial and
operational controls can provide reasonable, but not absolute
assurance, against material misstatement or loss. The Board
considers that the internal controls in place are appropriate for
the size, complexity, and risk profile of the Company. The Group
receives regular feedback from its external auditors on the
state of its risk management and internal controls, monitoring
and reporting to the Board on the Groups performance.
The Company maintains a risk register which is reviewed
regularly, and which covers a variety of financial, operational,
economic, and regulatory uncertainties. This register allows
the Board to appraise external and internal threats to the
business and to plan and mitigate accordingly. Principal
risks and uncertainties that may affect the business are
set out in more detail on pages 73 to 76. Notes 1 and 19
within the Financial Report also expands on the Company’s
exposure to risk and the steps to control and manage
exposure to risk. The Board has a conservative approach
to financial risk management and the Group does not use
any speculative or non-basic financial instruments.
The Company has adopted a Code of Conduct which
Further details on the governance structure are set out at
Principle 9.
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
sets out the standards that it expects all employees and
representatives of the Company to meet. It is the Board’s
view that encouraging these high working standards helps
to mitigate against risks arising in the day-to-day activities.
BNF Insurance Services in the UK and Kessler & Co SA in
Switzerland provided insurance services to the Company.
Under their guidance, the Company has put in place a scheme
of insurance which reflects both the current and medium-term
needs of the business and this is continually monitored through
periodic reviews with our advisers and our underwriters.
Principle 5 – Maintain the board as a well-
functioning, balanced team led by the chair
The Board
The Board currently comprises of six Non-Executive
Directors and three Executive Directors. The biographies
on pages 81 and 82 include further disclosures in relation
to the Directors, their relevant experience, skills and
personal qualities and capabilities.
Duties
The Board is collectively responsible for the success of
Advanced Oncotherapy and provides entrepreneurial
leadership of the Company within the framework of effective
controls, which enable tasks to be assessed and managed.
It sets out the Company’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 the following:
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.
CORPORATE GOVERNANCE
REPORT_Continued
Duty
Further information
Act within their powers
-
Promote the success of the Company
This duty is set out in section 172 of the Act (see pages 71 and 72) and provides
that Directors “must act in the way he considers, in good faith, would be most likely
to promote the success of the company for the benefit of its members as a whole”
Exercise independent judgement
See further details below on Independence
Exercise reasonable care, skill and
diligence
See further details below on Reasonable care, skill and diligence, Time commitment
and Attendance
Avoid conflicts of interest
See further details below on Conflicts of interest and Remuneration
Avoid benefits from third parties
Id.
Declare any interest in a proposed
transaction or arrangement
Id.
88
ADVANCED ONCOTHERAPY PLC
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OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
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. Mrs. Renhua Zhang (Non-
Executive Director) is not considered to be independent
as she represents a large shareholder, Liquid Harmony.
The Board does not consider the shareholdings of the
other Non-Executive Directors as detailed on page 102
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.
Reasonable care, skill, and diligence
Directors have a duty of reasonable care, skill, and
diligence. To do so, they take the following into
consideration in any decision-making process:
•
the likely consequences of any decision in the long term;
•
the interests of the Company's employees;
•
the need to foster the Company's business
relationships with suppliers, customers and others;
•
the impact of the Company's operations on the
community and the environment;
•
the desirability of the Company maintaining a
reputation for high standards of business conduct;
•
the need to act fairly as between members of the
Company;
Further information on the knowledge, skill and experience
of Directors can be found on pages 81 and 82.
Time commitment
Each board member commits sufficient time to fulfil their
duties and obligations to the Board and the Company.
They attend regular board meetings and join ad-hoc board
calls and offer availability for consultation when needed.
The contractual arrangements between the Directors and
the Company specify the minimum time commitments
which are considered sufficient for the proper discharge of
their duties. The time commitment is commensurate with
the size and complexity of a quoted company. However, in
exceptional circumstances all board members understand
the need to commit additional time.
Attendance
The Board met six times in 2021, excluding separate ad-
hoc meetings and calls. Due to COVID-19 restrictions,
the Board and committees have been restricted in their
ability to physically meet and have utilised virtual meeting
rooms to ensure dialogue, challenge and support has
been provided throughout. The record of each Director’s
attendance at Board meetings is set out thereafter.
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.
Conflicts of interest
To address the provisions of Section 175 of the Companies
Act 2006 relating to conflicts of interest, the Company’s
Articles of Association allow the Board to authorise situations
in which a Director has, or may have, a conflict of interest.
Directors are required to give notice of any potential situations
or transactional conflicts that are to be considered at the next
Board meeting and, if considered appropriate, conflicts are
authorised. Directors are not permitted to participate in such
considerations or to vote regarding their own conflicts.
Remuneration
The Board considers and determines the remuneration of
the Executive and Non-Executive Directors. No Director is
involved in setting his or her own remuneration.
Principle 6 – Ensure that between them the
Directors
have
the
necessary
up-to-date
experience, skills and capabilities
The Directors’ biographies appear on pages 81 and 82.
The Board feels that it has an appropriate balance between
independence, knowledge of the Company’s technology,
sector experience and professional standing to allow it to
discharge its duties and responsibilities well. All Directors
are encouraged to constructively challenge strategy,
scrutinise performance and use independent judgement
based on their respective knowledge and experience on
all matters affecting the business.
The Board keeps abreast of ongoing changes relating to
governance and compliance, the AIM Rules for Companies,
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
Director
Scheduled
Board
meetings
Ad hoc
Board
meetings
Audit and
Remuneration
Committees
Dr. Michael Sinclair
6/6
9
-
Mr. Michael Bradfield
4/6
4
2/5
Mr. Hans von Celsing
6/6
7
5/5
Ms. Lori Cross
6/6
4
-
Prof. Steve Myers, OBE
6/6
7
-
Dr. Nick Plowman
4/6
3
-
Mr. Nicolas Serandour
6/6
10
-
Dr. Enrico Vanni
6/6
6
5/5
Mrs. Renhua Zhang*
4/6
2
-
* Mr Chunlin Han is an alternate director for Mrs. Zhang
so that he may attend board meetings when Mrs. Renhua
Zhang is unable to do so
89
ANNUAL REPORT 2021
QCA Code, the Market Abuse Regulation and other statutory
and regulatory developments. In that regard, all Directors
have access to the Company’s NOMAD, Company Secretary,
lawyers and auditors 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 151 of the annual report.
Principle 7 – Evaluate board performance
based on clear and relevant objectives, seeking
continuous improvement
The Board seeks to improve the ways in which it interacts, and
the way information is presented to it. The processes that have
been put in place allow for a consistent approach to reporting,
thus aiding analysis by the Board of all matters at hand.
In May 2021, 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 may utilise the results of the evaluation process
when considering the adequacy of the composition of the
Board, to identify any training and development needs and
for succession planning. Separately to this, the executive
Chairman and non-Executive Directors regularly meet and
discuss performance with members of the Executive team.
In the context of evaluating the Board performance and
aligning this review exercise with the expectations of
shareholders, each Director stands for re-election at the AGM
and significant emphasis is placed on new appointments:
•
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 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;
•
New appointments – When a new appointment to
the Board is made or a removal is being considered,
thought is given to the 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, regarding
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.
Principle 8 – Promote a corporate culture that is
based on ethical values and behaviours
The core principle of the Company is clear: to democratise
proton therapy. As such, ethical values – life, safety, quality
and innovation – and behaviours are at the heart of what
each employee and Director does. The Board seeks to
enshrine such ethical values and behaviours throughout
the conduct of all of activities of the Company. These
values – further outlined in pages 7 and 8 – together with
our commitment to provide a positive impact on society and
environment – as detailed in pages 11 and 12 – are set out
in the Company’s policies, working practices and systems.
The Board leads by example. The Board seeks to:
•
treat all persons fairly and equitably with a focus on
openness and well-being, through clearly defined
parameters of operation;
•
take the welfare of all employees extremely seriously
and invest in people;
•
promote diversity;
•
ensure values are embedded in a positive and
supportive environment through full compliance with
norms and certification and the implementation of
clear policies.
Treating all persons fairly and equitably with a focus
on openness and well-being, through clearly defined
parameters of operation
In dealing with each of the Company’s principal stakeholders,
the Board encourages staff to operate in an honest and
respectful manner; it believes that achieving a common
awareness across all employees plays a major role in
maintaining good employee relations. This culture of honesty
and respect – reflected in the continued support and dedication
shown by staff to execute the strategic plan – is promoted by
listening to and actioning feedback given during the 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.
Taking the welfare of all employees extremely
seriously and investing in people
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. The
Company's commitment to staff is shown in the significant
investment made to upgrade facilities and the working
CORPORATE GOVERNANCE
REPORT_Continued
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OTHER INFORMATION
FINANCIAL REPORT
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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.
Promoting 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
2021, women made up 38% of the workforce, 22% of those
being managers and 40% in technical roles. The management
team is represented by 30% women and 5 nationalities.
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 he/she is employed, his/her employment can continue.
It continues to review both performance and potential as a
key part of the 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. 31 different nationalities
are represented in the Group as of 31st December 2021.
Ensuring values are embedded in a positive and
supportive environment through full compliance with
norms and certification and the implementation of
clear policies
The commercialisation of the LIGHT system requires the
business to have a robust quality management system
which is third-party audited to ISO: 13485 standards.
Underpinning this quality management system are
processes to ensure that necessary safeguards are in
place to ensure the integrity of this system and accordingly
the quality of the products under development. Further
information can be found on pages 63 to 65.
Policies are also in place covering key matters such as
bribery, protection of intellectual property and sensitive
information, conflicts of interest, whistleblowing. These
are vigorously enforced and monitored. These are further
outlined at principle 9.
Principle 9 – Maintain governance structures
and processes that are fit for purpose and
support good decision-making by the Board
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 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.
Key processes and structures in place include the following:
•
clear segmentation of roles and responsibilities with a
formal list of matters reserved to the Board’s approval;
•
internal control focused on safeguarding the
Company’s assets;
•
clear guidelines to support healthy and open debates;
•
dedicated Board Committees;
•
share dealing policies;
•
whistleblowing procedures;
•
anti-bribery and corruption policies;
•
appointment of a Company Secretary to support the
Board and ensure processes are being followed.
Clear segmentation of roles and responsibilities
with a formal list of matters reserved to the Board’s
approval Operational and reserved matters
Day-to-day operational decisions are taken initially by
the Executive Directors, in accordance with the Group’s
strategy. The Executive Directors are also responsible
for initiating commercial transactions and approving
payments, save for those relating to their own employment.
The Board has a formal 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. Key
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
91
ANNUAL REPORT 2021
matters include:
•
reviewing,
approving
and
guiding
corporate
strategy, major plans of action, risk appetite and
policies, annual budgets and business plans; setting
performance objectives; monitoring, implementation
and corporate performance; and overseeing major
capital expenditures, acquisitions and disposals;
•
monitoring the effectiveness of the Company’s governance
arrangements and practices, making changes as needed
to ensure the alignment of the Company’s governance
framework with current best practices;
•
ensuring that appointments to the Board or its
Committees are made in accordance with the
appropriate governance process;
•
monitoring and managing potential conflicts of interest
of management, Board members, shareholders,
external advisors, and other service providers,
including misuse of corporate assets and abuse in
related party transactions; and
•
overseeing the process of external disclosure and
communications. The Board is also responsible for all
other matters of such importance as to be of significance
to the Group as a whole because of their strategic,
financial, or reputational implications or consequences.
Internal control focused on safeguarding the
Company’s assets
The Board is responsible for ensuring that the Company
maintains a system of internal financial controls. The
objective of the system is to safeguard assets, ensure
proper accounting records are maintained and that the
financial information used within the business and for
publication is timely and reliable. Given the size of the
Group, the Board does not consider it appropriate to have
its own internal audit function.
Clear guidelines to support healthy and open debates
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.
Dedicated Board Committees
There are three Board Committees – Audit, Remuneration
and Strategic committees (which also cover ESG
considerations). The roles and responsibilities of each are
detailed on page 92. 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.
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.
Whistleblowing procedures
The Company has a whistleblowing policy to allow and
encourage all employees to bring matters which cause them
concern and in strict confidence to the attention of certain
persons within the Company and, ultimately, to the attention
of the Chairman. These matters include but are not limited to
unethical business practices, fraud, misconduct, or wrongdoing.
Anti-bribery and corruption policies
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.
Appointment of a Company Secretary to support the
Board and ensure processes are being followed
The Company Secretary, Henry Clarke, ensures that
the Board procedures are followed, and that applicable
rules and regulations are complied with. The Company
Secretary attends the Board meetings and reports directly
to the Executive Chairman.
Principle 10 – Communicate how the company
is governed and is performing by maintaining a
dialogue with shareholders and other relevant
stakeholders
The importance of engaging with shareholders underpins
the essence of the business.
As outlined at principle 2, the Company maintains an active
dialogue with its shareholders through a planned programme
of investor relations. It 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. This is done through a
number of channels: The primary communication tool with
shareholders is the Company’s website, https://www.avoplc.
com. This is further supplemented by regular and appropriate
Regulatory News Service (“RNS”) announcements as
well as the release of the annual and interim report. 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 prospects. The
CORPORATE GOVERNANCE
REPORT_Continued
92
ADVANCED ONCOTHERAPY PLC
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STRATEGIC REPORT
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.
Audit Committee
Remuneration Committee
Strategic Committee
Primary
responsibility
•
Review the financial
statements and the accounting
principles and practice
underlying them; the ultimate
responsibility for approving the
annual financial statements
and interim statements remains
with the Board
•
Liaise with the external auditors
•
Review the effectiveness of
internal controls
•
Determine and recommend to
the Board the remuneration of
Executive Directors, the Chair
and the other members of the
Executive Committee
•
Monitor, review and approve
the levels and structure of
remuneration for other senior
managers and employees
•
Determine the headline targets
for any performance-related
bonus or pay schemes
•
Determine specific targets and
objectives for any performance-
related bonus or pay schemes
for the Executive Directors
and the other members of the
Executive Committee
•
Review and approve any
material termination payment
•
Review and deliver a concrete
strategic 3-year base plan and
7-year growth plan
•
Prepare for next-tier growth
catalysts
•
Invest in best high-return
initiative assessments
Members
•
Mr. Hans von Celsing
•
Mr. Michael Bradfield
•
Dr. Enrico Vanni
•
Dr. Enrico Vanni
•
Mr. Michael Bradfield
•
Mr. Hans von Celsing
•
Ms. Lori Cross
•
Mr. Hans von Celsing
•
Dr. Enrico Vanni
Number of
meetings in
2021
3
2
1
Matters
considered
•
Reviewed and approved the
annual report and financial
statements for the year and half-
year end, including the results
announcements
•
Considered the reports from
the external auditors identifying
any accounting or judgemental
issues requiring the Board’s
attention and the auditors’
assessment of internal controls
•
Reviewed any changes to
accounting policies
•
Discussed with the external
auditors to confirm their
independence and scope for
audit work
•
Considered the adequacy of the
whistleblowing facility and the
anti-bribery policy
•
Determined the Company’s
policy on the remuneration
for the Executive Chairman,
Executive Directors and any
senior management
•
Supervised the Company’s
share incentive and SAYE
schemes and set performance
conditions
•
Reviewed the Company’s
competitive value propositions
•
Prepared a recommended
prioritised list of clinical targets
based on the clinical and
technical advantages of LIGHT
•
Reviewed the product
development roadmap options
– new capabilities and possible
timeframes
•
Set-up a roadmap for operations/
manufacturing/ cost strategies as
well as IP and business model
Note: Attendance is expressed by the number of meetings attended / number eligible to attend. Attendance of Directors at other
Board Committees – as outlined at Principle 9 – can be found on page 88
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
93
ANNUAL REPORT 2021
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the consolidated financial
statements in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European
Union (IFRSs as adopted by the EU) and have elected to
prepare the Company financial statements in accordance
with UK Generally Accepted Accounting Practice
(Accounting Standards and applicable law, comprising
FRS 101 ‘Reduced Disclosure Framework’).
In preparing the Group financial statements, International
Accounting Standard 1 requires that Directors:
•
properly select and apply accounting policies;
•
make judgements and estimates that are reasonable,
relevant, reliable and prudent;
•
for the Group financial statements, state whether
they have been prepared in accordance with IFRSs
as adopted by the EU;
•
for the parent Company financial statements, state
whether applicable UK accounting standards have
been followed, subject to any material departures
disclosed and explained in the parent company
financial statements;
•
use the going concern basis of accounting unless
they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the parent Company's transactions and disclose with
reasonable accuracy at any time the financial position of
the parent Company and enable them to ensure that its
financial statements comply with the Companies Act 2006.
They are responsible for such internal control as they
determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of
the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the Directors are
also responsible for preparing a strategic report, Directors'
report, Directors' remuneration report and corporate
governance statement that complies with that law and
those regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the company's website. Legislation in the UK governing
the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Provision of information to the auditor
Each Director in office at the date the Directors’ Report is
approved confirms that:
•
so far as the Director is aware, there is no relevant
audit information of which the Company’s auditor is
unaware; and
•
he/she has taken all the steps that he/she ought to
have taken as Director to make himself/herself aware
of any relevant audit information and to establish that
the Company’s auditor is aware of that information.
Responsibility statement of the Directors in respect of
the annual financial report
We confirm that to the best of our knowledge:
•
the financial statements, prepared in accordance
with the applicable set of accounting standards, give
a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company; and
•
the strategic report includes a fair review of the
development and performance of the business,
together with a description of the principal risks and
uncertainties that they face.
We consider the annual report and accounts, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the
Group's position and performance, business model and
strategy.
By order of the board
Dr Michael Sinclair
Executive Chairman
30 June 2022
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
94
ADVANCED ONCOTHERAPY PLC
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
95
ANNUAL REPORT 2021
Introduction
As Chairman of the Audit Committee, I am pleased to
present the report of the Audit Committee for the year
ended 31 December 2021.
This report sets out the work of the Audit Committee
over the past year and offers insight into how the Audit
Committee has discharged the responsibilities delegated
to it by the Board and the key areas of focus is has
considered in doing so.
In meeting its responsibilities, the Audit Committee
continues to consider the provisions of the UK Corporate
Governance Code and the FRC Guidance on Audit
Committees. The Audit Committee’s Terms of Reference
are available on www.avoplc.com.
Composition and meetings
The composition of the Audit Committee and attendance is
shown on page 92. 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 pages 81 and 82. 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.
Representatives of the external auditors meet with the
Audit Committee at least once a year without Executive
Directors or management being present.
Primary responsibility and matters considered
This is further outlined on page 92.
Fair, balanced and understandable
The Audit Committee undertook an assessment as to
whether, in its view, the Annual Report and Accounts
were fair, balanced and understandable, and provided
the necessary information for shareholders to assess the
position, performance, business model and strategy of
the Company. In forming its opinion, the Audit Committee
considered the results of management’s assessment of
going concern, reviewed the Annual Report and Accounts
as a whole, and assessed the results of processes
undertaken by management to provide assurance that the
Group’s financial statements were fairly presented. These
processes included, but were not limited to:
•
Review by senior management of the Annual
Report to ensure that the information presented was
accurate and that the narrative was consistent with
the fact pattern, including appropriate disclosure
of material or significant items necessary to aid a
reader’s understanding and appropriate balance of
reported and adjusted performance measures;
•
Board meetings where the financial projections were
reviewed to ensure that the business performance
was appropriately assessed and understood.
•
Discussion with senior management and a review
of any significant judgements or estimates made by
management in preparing the Annual Report.
The views of the external auditors on this matter were also
considered by the Audit Committee. Having completed its
assessment, the Audit Committee reported to the Board
that it was able to make the corresponding confirmation in
its Directors’ responsibility statement.
In conclusion, the Audit Committee reported to the Board
that it considers the Annual Report for the year ended 31
December 2021 to be fair, balanced and understandable.
Risks
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.
In relation to financial reporting, the Audit Committee has
discussed areas of risk with the auditors and agreed for
AUDIT COMMITTEE
REPORT
Hans von Celsing
Chairman of the Audit Committee
the following areas of heightened risk to be reviewed and
assessed in the audit of the Group’s performance in the
financial year to 31 December 2021:
•
Carrying value of intangibles;
•
Carrying value of inventory;
•
Accounting for convertible loan agreements; and
•
Going concern.
For each of the above areas the Audit Committee
considered the key facts and judgements outlined
by management. Key findings are provided in the
Independent Auditor's Report on pages 105 to 108. 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.
External auditors
Role of the external auditors
The Audit Committee monitors the relationship with its
external auditors, RPG Crouch Chapman LLP, to ensure
that auditor independence and objectivity are maintained.
Audit process
The external auditors prepare an audit plan for review of
the full-year financial statements. The audit plan sets out
the scope of the audit, specific areas of risk to target and
the audit timetable. This plan is reviewed and agreed in
advance by the Audit Committee. Following completion
of audit fieldwork the external auditors present their
findings to the Audit Committee for discussion, including
accounting judgements undertaken in respect of various
matters such as research and development capitalisation.
Non-audit fees
Any non-audit services require approval by the Audit
Committee. Non-audit fees comprised predominantly fees
for tax compliance and ad hoc tax work. Non-audit fees
amounted to £8,750 (2020: £8,500) compared to £56,350
(2020: £54,750) of audit fees.
Tax compliance services provided by RPG Crouch
Chapman LLP do not involve the making of any decisions
and are carried out by a separate team not involved with
the audit work. The company has informed management
in place that make all tax related decisions. The tax
disclosures are also drafted before the completion of the
tax compliance work and RPG Crouch Chapman LLP play
no part in the drafting of these disclosures.
Auditor effectiveness and appointment
RPG Crouch Chapman LLP has served as external
auditors of the Company since 2011. Periodic rotation of
key audit partners is also required. This is the first year
that Mark Wilson has acted as the audit partner for the
group. Mark brings his experience of working with listed
groups and reporting under IFRS.
In line with its Terms of Reference, the Audit Committee
undertakes an annual assessment of the effectiveness,
value and independence of the external auditors. This
assessment incorporates the views of management
in addition to the Non-Executive Directors to facilitate
continued improvement in the external audit process.
The assessment considered:
•
Audit risk identification whereby this is a key factor in
the delivery of a thorough, robust and efficient global
audit in accordance with pre-set timescales. These
risks remained broadly consistent with the prior
financial year;
•
Provision of accurate, robust and perceptive advice
on key accounting and audit judgements, technical
issues and best practice;
•
The level of professionalism and technical expertise
consistently demonstrated and maintenance of
continuity within the core audit team; and
•
Strict adherence to independence policies and other
regulatory requirements.
RPG Crouch Chapman’s objectivity, independence and
performance are considered to remain strong and the
Audit Committee has recommended to the Board that
RPG Crouch Chapman’s be re-appointed as external
auditors for the next financial year, subject to approval at
the AGM.
Internal audit
At present the Company does not have a formal 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. The Audit Committee will keep this
matter under review as the Group’s activities expand.
Conclusions
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 next financial
year as the Company grows and develops in line with its
strategy.
The Audit Committee remains focused on ensuring that
finance and risk capability is enhanced appropriately
to manage in an increasingly complex business and 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
30 June 2022
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
96
ADVANCED ONCOTHERAPY PLC
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
97
ANNUAL REPORT 2021
Introduction
As Chairman of the Remuneration Committee, I am
pleased to present the report of the Remuneration
Committee for the year ended 31 December 2021.
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, the Remuneration
Committee is committed to complying with the principles
of good corporate governance in relation to the design
of the Directors’ remuneration policy. As such, our policy
takes account of the UK Corporate Governance Code
and the QCA Corporate Governance Code (against
which the Company formally reports compliance). The
Remuneration Committee also considers other best
practice guidance (for example, the QCA Remuneration
Committee Guide and the Investment Association’s
Principles of Remuneration), as far as is appropriate to
the Company’s management structure, size and listing.
The Remuneration Committee’s Terms of Reference are
available on www.avoplc.com.
Composition and meetings
During the past year, the Remuneration Committee,
chaired by Enrico Vanni, was exclusively composed of
independent Non-Executive Directors. The Executive
Chairman and the Chief Executive Officer are invited to
attend meetings where appropriate. The Remuneration
Committee met three times in 2021. The composition of
the Remuneration Committee and attendance can be
found on page 92.
Primary responsibility and matters considered
This is further outlined on page 92.
Remuneration policy
The remuneration policy of the Company is to:
•
provide a suitable remuneration package to attract,
motivate and retain Executive Directors and the wider
Executive team who will run the Group successfully;
and
•
ensure that all long-term incentive schemes for
the Directors are consistent with the shareholders’
interests.
The Remuneration Committee reviews overall levels of
pay and the operation of the incentive arrangements for
Executive Directors to ensure they remain appropriate in
light of the current business strategy and the interests of
shareholders. More specifically, these reviews are 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.
No Director or senior manager is involved in any decisions
about their own remuneration. The Remuneration
Committee
is,
however,
responsible
for
making
recommendations to the Directors on matters relating to
the Company’s remuneration structure, including pension
rights, the policy on compensation for Executive Directors
and their terms of employment. In order to achieve the
overall aim of attracting and retaining high-quality people,
the Remuneration Committee has continued to provide a
suitable balance of short-term and long-term incentives.
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
Base salary is based on a number of factors, including
market rates, benchmarking to peers, as well as the
individual Director’s experience, responsibilities and
performance. Individual salaries are subject to annual
review.
All Executive Directors, along with other employees, are
able to take part in the Company’s pension scheme,
where they receive a pension contribution from the Group
of up to 10% of salary together with employer’s National
REMUNERATION
COMMITTEE REPORT
Enrico Vanni
Chairman of the Remuneration Committee
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
98
ADVANCED ONCOTHERAPY PLC
Insurance saved on employee pension contributions. This
complies with legal requirements, with both the employee
and employer making contributions under automatic
enrolment provisions.
Other benefits
All employees benefit from life assurance and medical
health insurance. Other benefits may also be provided to
employees once they have met eligibility criteria.
Discretionary bonus
The purpose of the annual bonus is to incentivise the
Executive Directors, members of the Executive team
and senior management to deliver strategic and financial
success, as well as long-term growth to the benefit of
the Company and its shareholders. Bonus awards take
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. The extent
of such discretions and the maximum opportunity for
performance metrics is set out on page 99. To ensure
the efficient administration of the variable incentive plans
outlined, the Remuneration Committee applies certain
operational discretions which include the following:
•
selecting the participants in the plans on an annual
basis;
•
determining the timing of grants of awards and/or
payments;
•
determining the quantum of awards and/or payments;
•
determining the extent of vesting based on the
assessment of performance as well as taking into
account the experience of shareholders and other
stakeholders over the vesting period;
•
determining ‘good leaver’ status for incentive plan
purposes and applying the appropriate treatment;
and
•
undertaking the annual review of weighting of
performance measures and setting targets for the
annual bonus plan and other incentive schemes,
where applicable, from year to year.
Long-term incentive plan and save as you earn
scheme
In 2020 the Remuneration Committee established a Long-
Term Incentive Plan (“LTIP”). In 2018 the Remuneration
Committee set-up a Save As You Earn (“SAYE”) scheme.
The Executive team and certain key individuals in the
Company were invited to join the LTIP and SAYE scheme.
The purpose of the LTIP and the SAYE scheme are to
provide a long-term performance and retention incentive,
linking long-term share rewards to the creation of long-
term sustainable shareholder value by delivering on the
Company’s agreed strategic objectives.
Details can be found on page 99.
Differences in the remuneration policy of the
executive directors and the general employees
There are no material differences in the structure of
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.
Non-executive Directors
Fees for Non-Executive Directors are determined by
the Board on the recommendation of the Remuneration
Committee, based on market comparisons with positions
of similar responsibility and scope in companies of a
similar size and in comparable industries. Non-Executive
Directors are not eligible for pension scheme membership
or to participate in the Company’s LTIP; and do not
participate in any of the Company’s bonus schemes or
receive any other benefits.
As with the Executive Directors, Non-Executive Directors’
fees are designed to attract and retain individuals
who have the expertise, responsibility and the time
commitment to be able to contribute to an effective Board
and deliver long-term sustainable shareholder value.
The Company reimburses Non-Executive Directors for
reasonable expenses incurred such as travel and hotel
accommodation.
Most Non-Executive Directors have historically elected to
receive their fees in shares of the Company. Please refer
to Directors' shareholding on page 102 and options on
page 124.
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
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.
Enrico Vanni
Chairman of the Remuneration Committee
30 June 2022
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
99
ANNUAL REPORT 2021
REMUNERATION
COMMITTEE REPORT_Continued
Element of
pay
Link to
remuneration
policy and strategy
Key features/operation
Potential value
Performance metrics
Base salary
To provide an
appropriate level of
fixed basic income
To aid recruitment
and retention
Normally reviewed annually
Set initially at a level required to recruit
suitable executives, reflecting their
experience and expertise
Any subsequent increase influenced
by scope of the role, experience and
personal performance in the role,
average change in total workforce salary,
performance of the Company, external
economic conditions, such as inflation
Account taken of practice in
comparable companies (e.g. those of a
similar size and complexity)
Annual increases will generally be
restricted to those of the average
of the wider workforce
Increases beyond those
awarded to the wider workforce
(in percentage of salary terms)
may be awarded in certain
circumstances, such as where
there is a change in responsibility
or experience, or a significant
increase in the scale or
complexity of the role and/or size
and value of the Company
None
Benefits
To provide a
competitive benefits
package
Executive Directors may receive benefits
including healthcare, income protection
and life assurance, as well as other
standard group-wide benefits offered by
the Company from time to time
The value of benefits may vary
from year to year depending on
the cost to the company
None
Pensions
To aid recruitment
and retention
To provide an
appropriate level of
fixed income
The Company contributes to
executives’ existing personal pension
schemes
Cash payments in lieu of pension are
available in the event an executive
has exceeded his/her personal
pension allowance
Between 7% and 10% of basic
salary
None
Performance
related
bonus
To reward the annual
delivery of short
to medium-term
objectives relating to
the business strategy
All bonus payments are at the
discretion of the Remuneration
Committee
Not pensionable
Targets are set and/or reviewed
annually
Bonus can be settled in shares
or share options in lieu of cash
considerations
Payments capped at 100% of
salary
Additional discretionary bonus
can be awarded subject to
specific contributions, roles and
performance of individuals
Takes into account Company
and individual performance,
which are related to the
achievement of personal,
departmental and/ or Group
targets/milestones
Long-Term
Incen-
tive Plan
(“LTIP”)
Intended to align the
long-term interests
of senior executives
with those of
shareholders
To incentivise the
delivery of key
strategic objectives
over the longer term
Awards are normally granted in the
form of nominal cost options
Ability to exercise can be dependent
on performance targets being met
n.a.
Awards vest based on
challenging targets measured
over a multi-year period
Prior to each award, the
Remuneration Committee will
set threshold and stretch targets
along with an intermediate
vesting range.
Latest grant of LTIP options
announced in October
2020; options to vest at the
discretion of the Remuneration
Committee, based on four
vesting conditions: (i) the
LIGHT system is fully; (ii)
operational at 230MeV; (iii) the
first patient has been treated;
(iv) the LIGHT system has
been certified; and (v) 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
Participants can make monthly
contributions of up to £500 on a three-
year savings account
Maximum monthly savings of
£500
As per this SAYE plan, the Board
granted options over a total of
908,150 new shares
None
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
100
ADVANCED ONCOTHERAPY PLC
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
101
ANNUAL REPORT 2021
81 and 82. Information on the election and re-election of
Directors can be found in Principle 7 of the QCA Code on
page 89.
Powers
The Directors are responsible for the management of
the business of the Company and may exercise all
powers of the Company subject to 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).
Qualifying third-party indemnity provisions
The Company has entered into indemnity deeds with
all its current Directors containing qualifying indemnity
provisions, as defined in Section 234 of the Companies
Act 2006, under which the Company has agreed to
indemnify each Director in respect of certain liabilities,
which may be attached to them as Directors or as former
Directors of the Company or any of its subsidiaries. All
such indemnity provisions are in force as at the date of
this Directors’ report.
Directors’ and Officers’ insurance
The Company maintains liability insurance for its Directors
and Officers to cover any claim for wrongful acts in
connection with their positions with the exceptions of
events whereby a Director or Officer is proved to have
acted fraudulently or dishonestly.
Interests
The beneficial interests of the Directors in the Ordinary
Shares of the Company on 31st December 2021 and 31st
GROUP DIRECTORS'
REPORT
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.
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 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.
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.
Directors – power, protection and interests
Description
The Directors and brief biographies are detailed on pages
December 2020 are set out below:
In the financial year, the Company expensed through the
income statement £140,000 (2020: £40,000) in relation
to research and development costs; these largely relate
to ADAM physics consultancy costs not capitalised as an
intangible asset. Additionally, £12.5 million (2020: £5.8
million) of development costs were capitalised.
At the date of this report, there is no contract or arrangement
with the Company or any of its subsidiaries that is
significant in relation to the business of the Company in
which a Director of the Company is materially interested.
Further information – including details on non-beneficial
interests and Directors’ share options – are contained in
the Directors’ remuneration report set out on pages 97 to
99 and in Note 8 on page 124.
The Directors have a statutory duty under the Companies
Act 2006 to avoid situations in which they have, or can have,
a direct or indirect interest that conflicts, or may conflict, with
the interests of the Company. Details on conflict of interests
can be found on page 87 (Principle 5 of the QCA Code).
Business activity and review
Business review
The Company is still pre-revenue and continues to invest in
the development and assembly of the first LIGHT machine
through expenditure on intangible assets and inventory. It
recorded a comprehensive loss of £30.2 million in the year
ended 31st December 2021 (2020: £23.4 million), with
shareholder funds as at 31st December 2021 of £61.4 million
(2020: £44.1 million). Cash and cash equivalents at the year-
end were £4.3million (2020: £2.3 million), although these year-
end figures do not take into account post period financing
agreements. The Company has funded its operations through
borrowings and equity raises.Further details of the results for
the year are set out in the Consolidated Income Statement and
in the related notes forming part of the Consolidated Financial
Statements. The Chairman’s letter and the Chief Executive
Officer’s Review – which are included in the Strategic Report –
report on the performance of the Group’s business during the
year and on future developments.
Dividends
The Directors do not recommend the payment of a dividend
(2020: no dividend) so that cash is retained in the Company for
assembling the first LIGHT machine and capital expenditures
that are required for the rapid growth of the business.
Donations
During the year, the Company made no charitable
donations (2020: nil).
Likely future developments
The outlook is available on pages 6, 37, 38 and 49 to 52.
Going concern
The Group has made a loss before tax of £29.5m (2021:
£23.4m) 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 £11.5m in equity and £1.5m in short
term loans as detailed further in Note 29.
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.
Share structure
Share capital
As at 31st December 2021, the Company had an allotted
and fully paid up share capital of 451,612,211 ordinary
shares of 25 pence each with an aggregate nominal value
of £113 million. Further 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
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
102
ADVANCED ONCOTHERAPY PLC
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
Holdings by Directors or
Holdings Under Their Control
31st
December
2021
31st
December
2020
Mrs. Renhua Zhang*
45,503,765 45,000,000
Dr. Michael Sinclair & Family
8,810,814
8,280,604
Mr. Michael Bradfield
7,558,240
7,443,240
Dr. Nick Plowman
4,515,304
4,412,804
Dr. Enrico Vanni
3,396,361
2,796,361
Mr. Nicolas Serandour
2,177,134
1,760,467
Prof. Steve Myers
1,400,569
983,902
Mr. Hans von Celsing
689,167
512,500
Ms. Lori Cross
60,417
0
* Includes shares owned by Liquid Harmony and related
parties
103
ANNUAL REPORT 2021
set out in Note 20 to the consolidated financial statements.
The Company has one class of ordinary shares which are
listed on the Alternative Investment Market (“AIM”) and
trade under the ticker symbol: LON: AVO.
Rights of shareholders
The rights attached to the ordinary shares of the Company
are defined in the Company’s Articles. Each share carries
the right to one vote at general meetings of the Company
but has no right to fixed income.
Shareholders are entitled to attend and vote at any general
meeting of the Company. It is the Company’s practice to
hold a poll on every resolution at general meetings. Every
member present in person or by proxy has, upon a poll, one
vote for every share held. In the case of joint holders of a
share the vote of the senior who tenders a vote, whether in
person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders and, for this purpose, seniority
shall be determined by the order in which the names stand in
the Register of Members in respect of the joint holding.
No person has any special rights of control over the
Company’s share capital.
Transfer of shares
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 Company’s Articles and
prevailing legislation.
Shareholder agreement
The Directors are not aware of any agreements between
holders of the Company’s shares that may result in
restrictions on the transfer of securities or on voting rights
at any meeting of the Company.
Major shareholdings
As at 30th March 2022, the Company had been notified under
the FCA’s Disclosure, Guidance and Transparency Rule of the
following interests in its total voting rights of 3% or more:
On 27th May 2022, the Company was informed that Odey
Asset Management LLP had a total beneficial interest in
20,281,159 ordinary shares in the Company, representing
4.3% of the Company's issued share capital at that time.
Employees
Diversity
The Company is committed to encouraging diversity,
promoting a diverse culture where everyone is treated
with respect and valued for their individual contribution
and creating a work environment free of bullying,
harassment, victimisation, and unlawful discrimination.
The Company has policies in place to ensure that
selection for employment, promotion, development,
or any other benefit is on the basis of merit and ability
and does not impact negatively upon diversity. It is a key
objective to ensure that all employees are helped and
encouraged to fulfil their potential.
Equal opportunities
It is the Company’s policy to ensure equal opportunity
in
recruitment,
selection,
promotion,
employee
development, training and reward policies and we have
an equal opportunity and diversity policy in place. It is a
key objective to ensure that successful candidates for
appointment and promotion are selected taking account
of individual ability, skills, and competencies without
regard to age, gender, race, religion, disability 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.
Involvement of employees
Employees are key to the Company’s success, and the
Company relies on a committed workforce to help achieve
the business objectives. Employees are encouraged to
operate in an open environment, embracing teamwork
and aligning personal development with the strategy of
the business and their behaviours with Company values.
Directors are keen to engage Company’s employees by
providing an environment where they can contribute their
own ideas and challenge those of others. Directors are
committed to involving employees and consider that good
communication helps to achieve this. Further information
– including the way in which Directors discharge the duty
of taking into consideration the interests of employees and
other stakeholders – can be found on page 86 (Principle
3 of the QCA Code) and on pages 71 and 72.
Employee share plans
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. Discretionary bonus scheme can also
be available subject to the satisfaction of any applicable
performance conditions at the time. The Company
operates several employee share plans, details of which
are set out on page 99.
GROUP DIRECTORS'
REPORT_Continued
Holder
Number of
Shares
% of Total in
Issue
Mr Philippe Glatz
45,659,162
9.9%
Liquid Harmony Limited(1)
45,503,765
9.8%
Celeste Mgt SA
28,333,333
6.1%
DNCA Investments
22,625,000
4.9%
Nerano Capital Limited(2)
22,500,000
4.9%
Odey Asset Management
20,126,443
4.3%
Lombard Odier AM(3)
18,127,584
3.9%
Jarvis Investment Mgt
18,063,026
3.9%
(1) Includes shares owned by Mrs Renhua Zhang and
related parties
(2) 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
(3) Lombard Odier Darier Hentsch & Cie
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.
Please refer to pages 11 and 63 to 65 for further
information.
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 73 and 76.
Cautionary
statement
regarding
forward-
looking information
Forward-looking statements are subject to assumptions,
inherent risks and uncertainties, many of which relate to
factors that are beyond the Company’s control or precise
estimate. Directors caution investors that a number
of important factors, including those referred to in the
Company’s annual report, could cause actual results to
differ materially from those expressed or implied in any
forward-looking statement. Such factors include, but are
not limited to, those discussed in the Risk section on
pages 73 and 76. Any forward-looking statements made
by or on behalf of the Company speak only as of the date
they are made and are based upon the knowledge and
information available to the Directors on the date of this
report.
Events after the reporting period
Since the year end, the Group has raised additional
equity through the issue of shares:
On 23 March 2022, the Company entered into a new
short term loan agreement of £1.5 million with Nerano
Pharma Ltd, a company owned and controlled by Seamus
Mulligan, a significant shareholder in the Company, with
an interest rate of 1.25 per cent per month (the "Loan").
The Loan is repayable by the Company on 24 June 2022.
As part of the agreement, the Company issued 6,382,978
warrants to Nerano Pharma Ltd with an exercise price
of 28.20 pence per share, exercisable up until 24 March
2025.
As at the date of publication of the annual accounts,
the Loan remains outstanding. Nerano Pharma has
agreed to not seek repayment at the current time and
are in discussions with the Company surrounding the
potential to convert the Loan into New Ordinary Shares.
At the current time no agreement has been entered into
in relation to varying the terms of the Loan nor have the
terms of any variation been, as yet, agreed. In the event
that the terms cannot be agreed between Nerano Pharma
and the Company, the Company would seek to repay the
amounts owed pursuant to the Loan.
Independent auditor
RPG Crouch Chapman LLP have expressed willingness
to continue in office for the year ending 31st December
2021 and a resolution to re-appoint them will be proposed
at the forthcoming AGM.
Articles of association, annual general meeting
and recommendation
The Company’s Articles of Association may only be
amended by special resolution at a general meeting of
the shareholders.
The Company’s Annual General Meeting (AGM) will be
held on Friday, 29 July 2022 at 2.00pm at the offices
of Advanced Oncotherapy plc, Third Floor, 4 Tenterden
Street, London W1S 1TE. Full details of the business to
be transacted at the AGM can be found in the Notice of
the AGM on pages 147 to 149 of this report.
The Board are of the opinion that all resolutions which
are to be proposed at the 2021 AGM 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.
Cross references
All information cross referenced in this report forms part
of the Report of the Directors.
This Directors’ Report was approved by the Board and
was signed on its behalf on 30 June 2022.
Dr Michael Sinclair
Executive Chairman
Registered Office: Level 17, Dashwood House, 69 Old
Broad Street, London EC2M 1QS
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
104
ADVANCED ONCOTHERAPY PLC
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
Number of
Shares
Equity
(£)
January
500,000 125,000
February
3,100,000 775,000
March
8,000,000 2,000,000
April
3,400,000 850,000
May
3,540,000 885,000
June
3,200,000 800,000
Announced June
24,090,000
6,022,500
Total
45,830,000
11,457,500
105
ANNUAL REPORT 2021
Opinion
We have audited the financial statements of Advanced
Oncotherapy plc (the ‘Company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2021 which
comprise the Consolidated statement of comprehensive
income, the Consolidated statement of financial position,
the Consolidated statement of changes in equity, the
Consolidated statement of cash flows, the Company
statement of financial position, the Company statement of
changes in equity, and notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied
in the preparation of the Group financial statements is
applicable law and International Financial Reporting
Standards as adopted in the United Kingdom (IFRS).
The Company financial statements have been prepared
in accordance with applicable law and United Kingdom
Accounting Standards, including FRS 101 Reduced
Disclosure Framework (UK GAAP).
In our opinion:
•
the financial statements give a true and fair view of
the state of the Group’s and of the Company’s affairs
as at 31 December 2021 and of the Group’s loss for
the year then ended;
•
the Group financial statements have been properly
prepared in accordance with IFRS;
•
the Company financial statements have been
properly prepared in accordance with UK GAAP; and
•
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for audit opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report.
We are independent of the group in accordance with the
ethical requirements 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 1b in the accounting policies,
concerning the Group’s ability to continue as a going
concern. The matters explained in Note 1b 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 1b 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.
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;
INDEPENDENT AUDITOR’S
REPORT
•
Testing the integrity of the cashflow 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;
•
We reviewed loan agreements and ensured the
repayments 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;
•
Sensitising the cash flows for changes in key
assumptions and considering the impact on
headroom; 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.
Our approach to the audit
In planning our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the Directors
made subjective judgements, for example in respect of
significant accounting estimates. As in all of our audits,
we also addressed the risk of management override of
internal controls, including evaluating whether there was
evidence of bias by the Directors that represented a risk of
material misstatement due to fraud.
We tailored the scope of our audit to ensure that we
performed sufficient work to be able to issue an opinion
on the financial statements as a whole, taking into
account the structure of the Group and the Company, the
accounting processes and controls, and the industry in
which they operate.
We performed full-scope audits of the material
components of the Group, being Advanced Oncotherapy
Plc and ADAM S.A.. The remaining components of the
Group were considered nonsignificant and we performed
limited review procedures as deemed necessary.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, 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 we identified (whether or not due to fraud),
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.
The matter identified was 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. The use of the Going Concern
basis of accounting was assessed as a key audit matter
and has already been covered in the previous section of
this report. The other key audit matters identified are listed
below.
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
106
ADVANCED ONCOTHERAPY PLC
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
Key audit matter
Our audit work included:
Intangible asset valuation
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.
Our audit work included:
•
Reviewing the impairment model provided and checking
that the value in use model is appropriate;
•
Testing the integrity of the cashflow model;
•
Discussing with Management the assumptions used and
obtaining details to support the key assumptions; and
•
Sensitising the cash flow for assumptions and considering
if the disclosures in the financial statements reflect
appropriately the requirement to disclosure key judgements
and estimates.
Carrying value of inventories
Inventory comprise the costs incurred to date to assemble
machines being constructed for sale. There is judgement
involved in the assessment of whether the carrying value is the
lower of cost or net realisable value. We therefore consider this
to be a key audit matter.
Our audit work included:
•
Confirming costs to date are accurate by reference to
invoices;
•
Confirming costs to complete to budgets and supporting
documents;
•
Considering whether the budget is reasonable based on
costs to date against original budget; and
•
Considering sales price of similar equipment or indicated
sales price in correspondence with potential customers.
107
ANNUAL REPORT 2021
Our application of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude
by which misstatements, including omissions, could
influence the economic decisions of reasonable users that
are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the
probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality,
to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily
be evaluated as immaterial as we also take account of
the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
We have based materiality on 1.25% of reported gross
assets for the significant components, which is consistent
with the prior year. This benchmark is considered the
most appropriate because assets are the key item for an
entity in the development phase. Overall materiality for the
Group was therefore set at £1.7m (2020: £1.5m). For each
component, the materiality set was lower than the overall
group materiality. For the Company, materiality was set at
£1.3m (2020: £1.2m).
We agreed with the Audit Committee that we would report
on all differences in excess of 5% of materiality relating to
the Group financial statements. We also report to the Audit
Committee on financial statement disclosure matters
identified when assessing the overall consistency and
presentation of the consolidated financial statements.
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
In our opinion, based on the work undertaken in the
course of the audit:
•
the information given in the strategic report and the
Directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
•
the strategic report and the Directors’ report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
Group and 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 Group or the Company, or returns adequate for
our audit have not been received from branches not
visited by us; or
•
the Group or the Company financial statements 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 93 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 parent
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
parent 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 our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
INDEPENDENT AUDITOR’S
REPORT
guarantee that an audit conducted in accordance with ISAs
(UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions
of users taken on the basis of the financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below:
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 included but were
not limited to compliance with Companies Act 2006 and
applicable accounting standards.
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:
•
agreement of the financial statement disclosures to
underlying supporting documentation;
•
enquiries of management;
•
review of minutes of board meetings throughout the
period; and
•
obtaining an understanding of the control environment
in monitoring compliance with laws and regulations.
Because of the inherent limitations of an audit, there
is a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial
statements or non-compliance with regulation. This risk
increases the more that compliance with a law or regulation
is removed from the events and transactions reflected in
the financial statements, as we will be less likely to become
aware of instances of non-compliance. The risk is also
greater regarding irregularities occurring due to fraud
rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
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 our 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.
Mark Wilson MA FCA
Senior Statutory Auditor
For and on behalf of RPG Crouch Chapman LLP
Chartered Accountants
Statutory Auditor
5th Floor, 14-16 Dowgate Hill
London
EC4R 2SU
30 June 2022
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
108
ADVANCED ONCOTHERAPY PLC
Advanced oncotherapy team
Corporate governance report
Statement of Directors' responsibilities
Audit committee report
Remuneration committee report
Group Directors' report
Independent auditor’s report
109
ANNUAL REPORT 2021
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the year ended 31 December 2021 - Financials in £
Note
Group
2021
Group
2020
Revenue
-
-
Cost of sales
2
-
-
Gross loss
-
-
Administrative expenses
2
(23,736,754)
(20,269,788)
Operating loss
3
(23,736,754)
(20,269,788)
Finance income
2,4
-
3,297
Finance costs
2,5
(5,755,981)
(5,032,981)
Loss on ordinary activities before taxation
(29,492,735)
(25,299,472)
Taxation
6
-
-
Loss after taxation
(29,492,735)
(25,299,472)
Loss for the period
Equity of shareholders of the parent company
(29,492,735)
(25,299,472)
Non-controlling interests
-
-
(29,492,735)
(25,299,472)
Other comprehensive income
Items that will or may be subsequently re-classified as to profit or loss:
Exchange differences on translation of foreign operations
(772,061)
1,902,660
Total comprehensive loss for the year net of tax
(30,264,796)
(23,396,812)
Total comprehensive loss attributable to:
Equity of shareholders of the parent Company
(30,264,796)
(23,396,812)
Non-controlling interests
-
-
(30,264,796)
(23,396,812)
Loss per ordinary share
Basic and diluted
10
(7.71)p
(8.75)p
Weighted average number of shares (000's)
10
382,479
288,981
The accompanying Notes on pages 115 to 138 form part of the financial statements.
110
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 31 December 2021 - Financials in £
Note
Group
2021
Group
2020
Non-current assets
Intangible assets
11
68,577,370
56,869,415
Property, plant and equipment
12
7,871,939
6,710,777
Right of use assets
13
33,183,516
31,437,161
Trade and other receivables
14
927,414
934,834
110,560,239
95,952,187
Current assets
Inventories
16
25,826,665
22,138,323
Trade and other receivables
14
643,319
1,885,224
Cash and cash equivalents
15
4,260,490
2,317,451
30,730,474
26,340,998
Total assets
141,290,713
122,293,185
Current liabilities
Trade and other payables
17
(5,347,169)
(6,438,217)
Lease liabilities
13
(745,315)
(1,407,853)
Borrowings
18
(10,025,497)
(10,039,316)
(16,117,981)
(17,885,386)
Non-current liabilities
Licence fee received
17
(16,500,000)
(16,500,000)
Lease liabilities
13
(32,201,824)
(30,928,876)
Borrowings
18
(10,382,520)
(8,258,435)
Embedded derivative
18
(4,718,960)
(4,578,210)
(63,803,304)
(60,265,521)
Total liabilities
(79,921,284)
(78,150,907)
Net assets
61,369,428
44,142,278
Equity
Share capital
20
112,903,053
83,359,894
Share premium reserve
22
71,087,838
61,442,782
Share option reserve
23
15,722,018
7,675,332
Reverse acquisition reserve
24
11,038,204
11,038,204
Exchange movements reserve
25
2,120,125
2,892,186
Accumulated losses
(151,501,810)
(122,266,120)
Equity attributable to shareholders of the Parent Company
61,369,428
44,142,278
Total equity funds
61,369,428
44,142,278
These consolidated financial statements have been approved and were authorised for issue by the Board of Directors on 30 June
2022.
Nicolas Serandour
Chief Executive Officer
Dr Michael Sinclair
Executive Chairman
111
ANNUAL REPORT 2021
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 31 December 2021 - Financials in £
Share
capital
Share
premium
reserve
Share
option
reserve
Reverse
acquisition
reserve
Exchange
movement
reserve
Accumulated
losses
Total equity
share holders
interest
Balance at
01 January 2020
61,105,852
60,452,065
7,853,803
11,038,204
989,526
(98,504,386)
42,935,064
Loss for the year
-
-
-
-
-
(25,299,472)
(25,299,472)
other comprehensive income
exchange movement
-
-
-
-
1,902,660 -
1,902,660
Total comprehensive
income
-
-
-
-
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
-
(1,012,386)
-
-
- -
(1,012,386)
Lapsed options
-
-
(510,950)
-
-
510,950
-
Lapsed warrants
-
-
(1,026,788)
-
-
1,026,788
-
Share based payments
- Share option charge
-
-
704,533
-
-
-
704,533
- Share warrants charge
-
-
654,734
-
- -
654,734
Balance at
31 December 2020
83,359,894
61,442,782
7,675,332
11,038,204
2,892,186
(122,266,120)
44,142,278
Balance at
01 January 2021
83,359,894
61,442,782
7,675,332
11,038,204
2,892,186
(122,266,120)
44,142,278
Loss for the year
-
-
-
-
-
(29,492,735)
(29,492,735)
other comprehensive income
exchange movement
- - -
-
(772,061) -
(772,061)
Total comprehensive
income
- - -
-
(772,061)
(29,492,735)
(30,264,796)
Shares Issued in the period
29,543,159
16,514,884
-
-
- -
46,058,043
Expenses deducted from
share premium
-
(1,194,556)
-
-
- -
(1,194,556)
Cost of warrants deducted
from share premium
-
(5,675,272)
5,675,272
-
- -
-
Lapsed options
-
-
-
-
- -
-
Lapsed warrants
-
-
(257,045)
-
-
257,045
-
Share based payments
- Share option charge
-
-
2,421,599
-
-
-
2,421,599
- Share warrants charge
-
-
206,859
-
- -
206,859
Balance at
31 December 2021
112,903,053
71,087,838
15,722,018
11,038,204
2,120,125
(151,501,810)
61,369,429
The accompanying Notes on pages 115 to 138 form part of the financial statements.
112
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
CONSOLIDATED STATEMENT OF
CASH FLOWS
As at 31 December 2021 - Financials in £
Group
2021
Group
2020
Cash flow from operating activities
Loss after taxation
(29,492,735)
(25,299,472)
Adjustments to cash flows from non-cash items
Depreciation of property, plant and equipment
1,044,530
1,000,115
Amortisation of right of use assets
1,294,725
1,331,698
Finance income
-
(3,297)
Finance expense
3,603,480
5,032,981
Taxation
-
-
Share based payment expense
2,628,458
1,340,949
Foreign exchange
3,272,736
471,204
Cash flows from operations before
changes in working capital
(17,648,807)
(16,125,822)
Changes in inventories
(9,188,342)
(7,090,095)
Change in trade and other receivables
1,249,325
235,537
Change in trade and other payables
(3,982,181)
968,798
Cash (used) / generated from operations
(29,570,005)
(22,011,582)
Corporation tax receipt
-
1,768,591
Cash flows from operating activities
(29,570,005)
(20,242,991)
Cash flows from investing activities
Interest received
-
3,297
Purchase of buildings, plant and equipment
(2,222,647)
(1,656,335)
Capital expenditure on intangible assets
(12,572,083)
(5,781,884)
Proceeds from disposal of investment property
-
-
Cash flows from investment activities
(9,294,730)
(7,434,922)
Cash flows from financing activities
Proceeds from issue of ordinary shares
43,564,416
18,040,021
Costs of share issue
1,299,072
(728,853)
Interest paid
(294,494)
(327,086)
Long term loan receipts
-
7,621,951
Lease payments
(3,781,009)
(1,865,946)
Short term loan receipts
7,850,000
4,000,000
Short term loan repayments
(7,850,000)
-
Cash flows from financing activities
40,787,985
26,740,087
Increase/(decrease) in cash and cash equivalents
1,923,249
(937,825)
Exchange gain/(loss) on cash and cash equivalents
19,789
20,109
Cash and cash equivalents at 01 January 2021
2,317,451
3,235,167
Cash and cash equivalents at 31 December 2021
4,260,490
2,317,451
The accompanying Notes on pages 115 to 138 form part of the financial statements.
113
ANNUAL REPORT 2021
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
Consolidated
Company
NOTES FORMING PART OF THE FINANCIAL
STATEMENTS
Page
1. Principal accounting policies – Group
115
2. Segment reporting
120
3. Operating loss
121
4. Finance income
121
5. Finance costs
121
6. Taxation on profit for ordinary activities
122
7. Staff costs
123
8. Directors' remuneration
123
9. Pensions
125
10. Loss per share
125
11. Intangible assets
126
12. Plant and equipment
127
13. Leases
127
14. Trade and other receivables
128
15. Cash and cash equivalents
128
16. Inventories
129
17. Trade and other payables
129
18. Borrowings
129
19. Financial instruments
131
20. Equity share capital
133
21. Share based payments
134
22. Share premium reserve
136
23. Share option reserve
136
24. Reverse acquisition reserve
136
25. Exchange movement reserve
136
26. Capital commitments
136
27. Contingent liabilities
136
28. Related party transactions
137
29. Post balance sheet events
138
30. Supporting statements of cash flows - Analysis of net debt
138
Page
Company statement of financial position
139
Company statement of changes in equity
140
A. Principal accounting policies
141
B. Intantible assets
141
C. Property, plant & equipment
141
D. Leases
142
E. Investment in subsidiaries
143
F. Trade and other receivables
143
G. Trade and other payables
144
H. Inventories
144
I. Borrowings
144
J. Related party transactions
145
K. Financial instruments
146
114
ADVANCED ONCOTHERAPY PLC
115
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
Continued - Financials in £
1. Principal accounting policies – Group
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 1 to 76 and the Directors’ report on pages 101 to 104. 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 2021, 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.
2.
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
(2020: £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.
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
2020. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2020 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 1b 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 21.
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 18.
116
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
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 2021 and these have been adopted in the financial statements.
b. Going concern
The Group has made a loss before tax of £29.5m (2021: £23.4m) 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 £11.5m in equity and £1.5m
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 2021.
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.
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 2021 the proton therapy machines are still in the development phase and therefore no amortisation has been recognised
1. Principal accounting policies – Group continued
117
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
Continued - Financials in £
1. Principal accounting policies – Group continued
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
20% of cost
Plant - equipment
14 % to 20% of cost
Plant - LIGHT development equipment
20% of cost
Computer equipment
33.3% to 50% of cost
Leasehold Improvements
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.
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
118
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OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
1. Principal accounting policies – Group continued
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 21 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.
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
119
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
Continued - Financials in £
1. Principal accounting policies – Group continued
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
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 2020. The weighted average lessee’s incremental borrowing
rate applied to the lease liabilities on 1 January 2020 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 are detailed below:
•
Amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial
Instruments: Disclosures, and IFRS 16 Leases – Interest Rate Benchmark Reform (Phase 2)
•
Amendments to IFRS 16 Leases – Covid-19-Related Rent concessions beyond 30 June 2021.
No material impact has arisen as a result of applying these standards.
(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
Effective date
IFRS 1
Amendments resulting from Annual Improvements to IFRS Standards 2018–2020 (subsidiary
as a first-time adopter)
01 January 2022
IFRS 3
Amendments updating a reference to the Conceptual Framework
01 January 2022
IFRS 9
Amendments resulting from Annual Improvements to IFRS Standards 2018–2020 (fees in the
‘10 per cent’ test for derecognition of financial liabilities)
01 January 2022
IAS 1
Amendments regarding the classification of liabilities
01 January 2023
IAS 1
Amendment to defer the effective date of the January 2020 amendments
01 January 2023
IAS 1
Amendments regarding the disclosure of accounting policies
01 January 2023
IAS 8
Amendments regarding the definition of accounting estimates
01 January 2023
IAS 12
Amendments regarding deferred tax on leases and decommissioning obligations
01 January 2023
IAS 16
Amendments prohibiting a company from deducting from the cost of property, plant and
equipment amounts received from selling items produced while the company is preparing the
asset for its intended use
01 January 2022
IAS 37
Amendments regarding the costs to include when assessing whether a contract is onerous
01 January 2022
In reviewing the above standards, the Company does not believe that there will be a material impact on the financial statements.
120
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OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
2021
Notes
Development
of Proton
Therapy -
UK
Development
of Proton
Therapy -
Switzerland
Development
of Proton
Therapy -
USA
Group
Revenue
-
-
-
-
Cost of sales
-
-
-
-
Gross Loss
-
-
-
-
Administrative expenses
(14,192,526)
(8,446,846)
(1,097,382)
(23,736,754)
Operating loss
(14,192,526)
(8,446,846)
(1,097,382)
(23,736,754)
Finance income
4
-
-
-
-
Finance costs
5
(5,742,537)
(13,444)
-
(5,755,981)
Loss on ordinary activities
before taxation
(19,935,063)
(8,460,290)
(1,097,382)
(29,492,735)
Capital Expenditure
Intangible assets
11
1,872,420
5,199,663
-
7,072,083
Property, plant and equipment
12
2,021,294
201,353
-
2,222,647
Total assets
97,194,588
43,887,118
209,007
141,290,713
Total liabilities
(76,632,688)
(3,246,897)
(41,699)
(79,921,284)
Net assets/(liabilities)
20,561,900
40,640,221
167,308
61,369,428
2. Segment reporting
During 2021 the Group operated in one business segment: Proton Therapy.
2020
Notes
Development
of Proton
Therapy -
UK
Development
of Proton
Therapy -
Switzerland
Development
of Proton
Therapy -
USA
Group
Revenue
-
-
-
-
Cost of sales
-
-
-
-
Gross Loss
-
-
-
-
Administrative expenses
(11,104,749)
(8,279,694)
(885,345)
(20,269,788)
Operating loss
(11,104,749)
(8,279,694)
(885,345)
(20,269,788)
Finance income
4
3,297
-
-
3,297
Finance costs
5
(5,032,884)
(97)
-
(5,032,981)
Loss on ordinary activities
before taxation
(16,134,336)
(8,279,791)
(885,345)
(25,299,472)
Capital Expenditure
Intangible Assets
11
501,546
5,280,338
-
5,781,884
Property, Plant and Equipment
12
1,315,203
340,282
850
1,656,335
Total assets
82,073,874
40,194,549
24,762
122,293,185
Total liabilities
(74,862,311)
(3,246,897)
(41,699)
(78,150,907)
Net assets/(liabilities)
7,211,563
36,947,652
(16,937)
44,142,278
121
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
For the year ended 31 December 2021 - Financials in £
3. Operating loss
Note
2021
2020
Operating loss is arrived at after charging:
Depreciation
12
1,044,530
1,000,115
Amortisation of right of use assets
13
1,294,725
1,331,698
Foreign exchange loss or (gain)
139,915
471,204
Amounts payable to the Group's Auditor and their associates for:
- audit of the Group's annual accounts
22,875
22,250
- audit of the Group's subsidiaries
33,475
32,500
- taxation compliance
8,750
8,500
4. Finance income
2021
2020
Interest receivable on deposits
-
3,297
Total
-
3,297
5. Finance costs
2021
2020
Interest expense on unsecured facilities
264,552
291,408
Interest expense on secured loans
3,448,116
2,557,025
Interest expense on lease liabilities
1,349,247
1,322,763
Costs of raising finance
553,316
-
Embedded derivative cost
140,750
861,785
Total
5,755,981
5,032,981
Refer to Note 18 for information on the secured loan interest rates.
122
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OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
(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%) (2020: 19.0%)
The differences are explained below:
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.
(c) Unprovided deferred tax assets at 19.0% (2020: 19.0%)
2021
2020
Losses carried forward
(34,903,630)
(20,915,823)
R&D tax credit on Intangible assets
11,198,869
7,545,825
Accelerated capital allowances
1,363,307
1,083,814
Total
(22,341,454)
(12,286,184)
2021
2020
Loss on ordinary activities before tax
(29,492,735)
(25,299,472)
Loss on ordinary activities multiplied by the standard rate
of corporation tax in the UK at 19.00% (2020: 19.0%)
(5,603,620)
(4,806,900)
Effects of:
Permanent differences
273,572
360,518
Capital allowances in excess of depreciation
(31,827)
90,655
Short term timing differences
491,814
573,215
Unprovided losses carried forward
4,870,061
3,782,511
Tax credit for the year
-
-
6. Taxation on profit for ordinary activities
(a) Tax (credit) / charge comprises
2021
2020
Current tax
UK corporation tax charge/(credit) for the year
-
-
UK corporation tax charge/(credit) for the previous year
-
-
Deferred tax
Origination and reversal of temporary differences
-
-
Total tax credit
-
-
123
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
Continued - Financials in £
Staff costs include amounts of £5,080,607 (2020:£5,240,672) which have been capitalised within development projects during
the year.
Government grants of £ nil (2020: 89,535) have been included in Wages and Salaries. The amounts in 2020 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 21.
The monthly average number of persons employed during 2021 was 157 (2020: 139), categorised as follows:
7. Staff costs
2021
2020
Wages and salaries
13,444,972
12,917,614
Social security costs
1,378,526
1,130,903
Pension costs
1,005,420
933,981
Other benefits
345,108
350,672
Share based payments
1,051,754
1,340,949
Total
17,225,781
16,674,119
2021
2020
Managerial
10
10
Operational
24
18
Product Development
62
60
Technical
36
31
Administrative
25
20
Total
157
139
Mchael Bradfield, Lori Cross, Nick Plowman, Enrico Vanni, Renhua Zhang and Hans von Celsing elected to take their remuneration
to June 2021 in shares. Amounts due for July to December 2021 are included in creditors. Dr Sinclair took part of his salary in shares.
Chunlin Han, a former Director, represents Renhua Zhang at Board Meetings and is, therefore, registered at Companies House as
a Director. He receives no remuneration.
8. 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 2021 were as follows:
2021
Appointed
Resigned
Base
salary (£)
Bonus (£)
Committee
Membership (£)
Pension (£)
Other
benefits (£)
Total (£)
Dr Michael Sinclair, Executive Chairman
16 Jun 06
252,240
166,667*
-
-
15,509
434,416
Nicolas Serandour, CEO
27 Aug 14
300,000
166,667*
-
30,000
6,298
502,965
Prof Steve Myers
26 Jan 17
229,256
166,667*
-
-
1,794
397,716
Michael Bradfield
26 Apr 13
30,000
-
20,000
-
-
50,000
Lori Cross
29 Sep 20
30,000
-
15,000
-
-
45,000
Dr Nick Plowman
09 Feb 17
30,000
-
10,000
-
-
40,000
Dr Enrico Vanni
01 Oct 13
30,000
-
32,500
-
-
62,500
Hans Von Celsing
26 Jan 17
30,000
-
37,500
-
-
67,500
Renhua Zhang
28 Aug 18
30,000
-
-
-
-
30,000
Total
961,496
500,000
115,000
30,000
23,601 1,630,097
* As per the market announcement dated 11 August 2021
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STRATEGIC REPORT
8. Directors' remuneration continued
2020
Appointed
Resigned
Base
salary (£)
Bonus
payment (£)
Pension (£)
Medical
Board Fees (£)
Other
benefits (£)
Total (£)
Dr Michael Sinclair, Executive Chairman
16 Jun 06
270,147
-
-
-
18,623
288,770
Nicolas Serandour, CEO
27 Aug 14
300,000
-
-
30,000
6,298
336,298
Prof Steve Myers
26 Jan 17
264,599
-
-
-
2,914
267,513
Michael Bradfield
26 Apr 13
26,400
96,100
-
-
-
122,500
Lori Cross
29 Sep 20
7,500
-
-
-
-
7,500
Dr Nick Plowman
09 Feb 17
30,000
96,100
6,000
-
-
132,100
Dr Enrico Vanni
01 Oct 13
30,000
96,100
-
-
126,100
Hans Von Celsing
26 Jan 17
30,000
96,100
-
-
-
126,100
Renhua Zhang
28 Aug 18
29,113
-
-
-
-
29,113
Chunlin Han^
28 Aug 18
31 Jul 20
17,863
-
-
-
-
17,863
Yuelong Huang
28 Aug 18
31 Jul 20
17,863
-
-
-
-
17,863
Peter Sjöstrand
28 Aug 18
31 Jul 20
17,500
-
-
-
-
17,500
Gabriel Urwitz
28 Aug 18
31 Jul 20
16,800
-
-
-
-
16,800
Total
1,057,785
384,400
6,000
30,000
27,835 1,506,020
The fair value of these options has been charged to the Consolidated Statement of Comprehensive Income.
Note¹ See vesting conditions in Note 21
As disclosed above no warrants have been issued to the Directors during in the year (2020: nil).
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. This estimate is based upon a Black-Scholes model or Monte Carlo simulations based on the
terms of options. The inputs into the Black-Scholes model for Options and Warrants granted in the year are shown in Note 21.
At
01 Jan
2021
Granted
during
the year
Lapsed or
expired during
the year
Exercised
during
the year
At
31 Dec
2021
Option
price
pence
Date
of
grant
Earliest
exercise
date
Expiry
date
Prof Steve Myers
215,000
-
-
-
215,000
100.0p
20 Feb 19
20 Feb 19
20 Feb 24
1,500,000
-
-
-
1,500,000
50.0p
01 Oct 20
Note¹
04 Oct 25
Nicolas Serandour
1,400,000
-
-
-
1,400,000
100.0p
20 Feb 19
20 Feb 19
20 Feb 24
6,500,000
-
-
-
6,500,000
50.0p
01 Oct 20
Note¹
04 Oct 25
Dr Michael Sinclair
545,000
-
-
-
545,000
100.0p
20 Feb 19
20 Feb 19
20 Feb 24
5,500,000
-
-
-
5,500,000
50.0p
01 Oct 20
Note¹
04 Oct 25
Total
15,660,000
-
-
- 15,660,000
56.9p
At
01 Jan
2021
Granted
during
the year
Lapsed or
expired during
the year
Exercised
during
the year
At
31 Dec
2021
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
Directors' share options
Directors' share warrants
^ Mr Chunlin Han is an alternate director (unremunerated) for Mrs. Zhang so that he may attend board meetings when Mrs. Renhua Zhang
is unable to do so
125
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
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 109 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.
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 30 June 2022 the Company had 473,352,211 ordinary shares in issue. Assuming the same loss for the year ended 31
December 2021 the basic loss per share for the year ended 31 December 2021 divided by the current number of shares in issue
would decrease to (6.23)p per share.
10. Loss per share
2021
2020
Loss attributable to equity holders of the Group (£'s)
(29,492,735)
(25,299,472)
Weighted average number of ordinary shares in issue (000s)
382,479
288,981
Loss per share (pence per share)
(7.71)p
(8.75)p
Continued - Financials in £
9. Pensions
The Group operates a defined contribution pension scheme. Contributions payable for the period of £1,005,420 (2020: £901,485)
are charged in the statement of comprehensive income. One Director (2020: One) accrued retirement benefits during the year.
A charge of £30,000 (2020: £30,000) has been included in the year for the Directors.
126
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
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% (2020: 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
2021, 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.
LIGHT
Accelerator
Treatment
Software
Total
Development costs
At 01 January 2020
33,644,841
15,538,587
49,183,428
Foreign exchange difference
1,301,955
602,148
1,904,103
Additions
3,938,402
1,843,482
5,781,884
At 31 December 2020
38,885,198
17,984,217
56,869,415
Development costs
At 01 January 2021
38,885,198
17,984,217
56,869,415
Foreign exchange difference
(590,859)
(273,269)
(864,128)
Reclassification of assets - Inventory
5,500,000 -
5,500,000
Additions
3,712,622
3,359,461
7,072,083
At 31 December 2021
47,506,961
21,070,408
68,577,370
11. Intangible assets
127
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
Continued - Financials in £
13. Leases
2021
2020
Right-of-Use Assets
At the beginning of the period
31,437,161
32,528,667
Additions
3,062,048
144,664
Amortisation
(1,294,725)
(1,331,698)
Foreign exchange movements
(20,969)
95,528
At the end of the period
33,183,516
31,437,161
12. Plant and equipment
Leasehold
property
Computer
hardware and
software
Fixtures,
fittings and
equipment
Total
Cost
At 01 January 2020
5,377,959
456,351
2,015,835
7,850,145
Foreign exchange difference
12,360
14,886
104,957
132,203
Additions
543,583
274,895
837,857
1,656,335
At 31 December 2020
5,933,902
746,132
2,958,649
9,638,683
Depreciation
At 01 January 2020
296,536
306,743
1,244,366
1,847,645
Foreign exchange difference
234
9,249
70,663
80,146
Charge for the year
415,638
131,806
452,671
1,000,115
At 31 December 2020
712,408
447,799
1,767,699
2,927,906
Net book value
At 01 January 2020
5,081,423
149,608
771,469
6,002,500
At 31 December 2020
5,221,494
298,333
1,190,950
6,710,777
Cost
At 01 January 2021
5,933,902
746,132
2,958,649
9,638,683
Foreign exchange difference
(5,040)
(11,029)
(43,324)
(59,393)
Additions
1,737,099
86,112
399,436
2,222,647
At 31 December 2021
7,665,961
821,214
3,314,761
11,801,937
Depreciation
At 01 January 2021
712,408
447,799
1,767,699
2,927,906
Foreign exchange difference
(566)
(5,873)
(35,998)
(42,437)
Charge for the year
545,007
153,944
345,579
1,044,530
At 31 December 2021
1,256,849
595,869
2,077,280
3,929,998
Net book value
At 01 January 2021
5,221,494
298,333
1,190,950
6,710,777
At 31 December 2021
6,409,112
225,345
1,237,481
7,871,939
Land & Buildings
128
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
13. Leases continued
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 does not intend to exercise this break option.
2021
2020
Lease liabilities
At the beginning of the period
32,336,729
32,641,518
Additions
3,062,048
145,195
Interest expense
1,349,647
1,322,763
Lease payments
(2,781,009)
(1,865,946)
Lease incentive payments
(1,000,000)
-
Foreign exchange movements
(20,276)
93,199
At the end of the period
32,947,138
32,336,729
The maturity profile of discounted lease payments
Repayable within one year
745,315
1,407,853
Current liabiities
745,315
1,407,853
Repayable in two to five years
2,545,242
2,570,751
Repayable in more than five years
29,656,582
28,358,125
Non-current liabilities
32,201,824
29,604,809
Total borrowings
32,947,138
32,336,729
14. Trade and other receivables
2021
2020
Due greater than 1 year
Property rent deposits
577,414
584,834
Property decommissioning deposits
350,000
350,000
Total due greater than 1 year
927,414
934,834
Current receivables
VAT recoverable
185,061
661,286
Advance payments to suppliers
-
238,848
Employee loans
4,462
-
Property and other deposits
35,500
9,943
Prepayments
418,296
975,147
643,319
1,885,224
Total current receivables
643,319
1,885,224
15. Cash and cash equivalents
2021
2020
Cash and cash equivalents
4,260,490
2,317,451
Amounts in foreign exchange denominated by
Swiss Franc
184,440
122,280
Euro
34,341
234,527
US Dollar
229,949
32,481
Sterling
3,811,760
1,928,163
Cash included above which is pledged as security. See Note 18.
500,000
500,000
129
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
Continued - Financials in £
All of the above items of Inventory have been valued at cost.
Costs included in Inventory are for finished components of the LIGHT machine that will be sold as part of future LIGHT installations.
16. Inventories
2021
2020
Work in progress - LIGHT
At the beginning of the period
22,138,323
15,048,228
Reclassification of assets to Intangible Assets
(5,500,000)
-
Purchases - Work in progress - LIGHT
9,188,342
7,090,095
Total
25,826,665
22,138,323
The agreement under which the license fee was received in 2018 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.
17. Trade and other payables
2021
2020
Due greater than 1 year
Licence Fee Received
16,500,000
16,500,000
Total due greater than 1 year
16,500,000
16,500,000
2021
2020
Current
Trade payables
2,450,064
1,598,315
Other taxes and social security
1,938,942
1,358,372
Accruals and deferred income
958,163
3,481,530
Total
5,347,169
6,438,217
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 percent above SONIA (Sterling Overnight
18. Borrowings
2021
2020
Amounts falling due within one year
Secured loans
10,025,497
10,039,316
Leases
745,315
2,731,920
Total amounts falling due within one year
10,770,812
12,771,236
Amounts falling due over one year
Secured loans
10,382,520
8,258,435
Leases
32,201,824
29,604,809
Total amounts falling due over one year
42,584,344
37,863,244
Total borrowings
53,355,155
50,634,480
The maturity profile of gross debt is as follows
Repayable within one year
10,770,812
12,771,236
Repayable in two to five years
12,927,762
15,724,559
Repayable in more than five years
29,656,582
22,138,684
Total borrowings
53,355,155
50,634,480
130
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
Index Average) per annum. In May 2021, the Company extended the repayment date of the £10 million loan facility on a rolling
quarterly basis at the sole discretion of Advanced Oncotherapy through to 11 November 2022. The loan is repayable in cash.
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 a 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.
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.
On 17 August 2020 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.
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:
18. Borrowings continued
2021
2020
Host Loan
At the beginning of the period
3,506,862
-
Proceeds received
-
7,621,951
Recognition of embedded derivative
-
(3,716,425)
Costs including warrants
-
(654,734)
Interest accrued
1,462,537
399,243
Foreign exchange
(51,536)
(143,173)
At the end of the period
4,917,863
3,506,862
Embedded Derivative
At the beginning of the period
4,578,210
-
Recognition of embedded derivative
-
3,716,425
Fair value adjustment
140,750
861,785
Total amounts falling due within one year
4,718,960
4,578,210
2021
2020
Assumptions
Share price
38.0p
36.0p
Exchange rate
1.354
1.366
Volatility share price
42%
50%
Volatility exchange rate
7.5%
9.5%
Time period
1.49
2.49
A change in foreign exchange rates of -/+ 5% would move the derivative valuation by
approximately
235,948
200,000
Whilst a -/+ 5% movement on the share price would move the valuation by approximately
7,038
400,000
131
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
The Group’s principal financial instruments comprise short-term receivables and payables, lease liabilities and borrowings, short-
term bank deposits and cash. 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 £4,260,490 of cash as at 31 December 2021. During
2021 the Group utilised a number of short and longer term debt facilities in order to provide liquidity to the Group.
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.
Continued - Financials in £
19. Financial instruments
2021
2020
Assets
Total assets
141,290,713
122,293,185
Debt
Secured loans
20,408,017
18,297,751
Lease liabilities
71,625,650
69,363,818
92,033,667
87,661,569
Equity
Share capital and share premium
183,990,891
144,802,676
Reserves
(122,621,463)
(100,660,398)
61,369,428
44,142,278
Total capital
153,403,095
131,803,847
Debt as a % of total capital
60.0%
66.5%
Debt as a % of total assets
65.1%
71.7%
132
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
19 . Financial instruments continued
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 2021, the Group's net monetary assets by functional currency of the Group’s entities were as follows:
Functional currency of entity
Currency denomination of monetary
assets/liabilities
GBP
CHF
EUR
USD
Total
GBP
(8,793,970)
(12,868) -
(1,985)
(8,808,823)
CHF
17,253
(1,233,799) - -
(1,216,546)
Euro
(264,455)
26,511
8,543 -
(229,401)
USD
(9,675,119)
(11,968) -
17,895
(9,669,192)
Total
(18,716,291)
(1,232,124)
8,543
15,910
(19,923,962)
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.
Due in less than
one year
Due between
two and five years
Due over
five years
Trade and other payables
5,347,169
-
-
Borrowings
10,025,497
10,382,520
-
Lease liabilities (undiscounted)
2,089,378
7,730,573
61,805,699
Total
17,462,044
18,113,093
61,805,699
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 November 2022.
The Licence Fee received will only be repayable if certain milestones, as indicated in Note 17, are not met.
The maturity of Liabilities is:
133
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
Continued - Financials in £
In January 2021, 15,101,040 shares were issued under authority from the July 2020 AGM, raising £5.7 million of equity.
In February 2021, 500,000 shares were issued under authority from the July 2020 AGM, raising £0.1 million of equity.
In March 2021, 361,111 shares were issued under authority from the July 2020 AGM, raising £0.1 million of equity.
In April 2021, 7,296 shares were issued under authority from the July 2020 AGM, raising £2,627 of equity.
In May 2021, 425,709 shares were issued under authority from the July 2020 AGM, raising £131,970 of equity.
In August 2021, 500,000 shares were issued under authority from the July 2021 AGM, raising £125,000 of equity.
The Directors were authorised at a General Meeting in July 2021 to allot and issue up to 104,950,419 shares.
The Directors were further authorised at a General Meeting in August 2021 to allot and issue up to 184,883,807 shares. 100,000,046
were issued as shares in October 2020 raising £32.6 million of equity. In September 2021 84,883,761 were issued as warrants.
In September 2021, 300,000 shares were issued under authority from the July 2021 AGM, raising £75,000 of equity.
In November 2021, 500,000 shares were issued under authority from the July 2021 AGM, raising £125,000 of equity.
In December 2021, 477,435 shares were issued under authority from the July 2021 AGM, for advisory services received by the
Company.
20. Equity share capital
Ordinary shares of 25p each
Number
Share Capital
Share Premium
Total
p/Share
As at 01 January 2020
244,423,407
61,105,852
60,452,065
121,557,917
49.73p
Shares Issued in the period
89,016,167
22,254,042
2,003,103
24,257,145
27.25p
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
26.11p
As at 31 December 2020
333,439,574
83,359,894
61,442,782
144,802,676
43.43p
Shares Issued in the period
118,172,637
29,543,159
16,514,884
46,058,043
38.98p
Warrants cost deducted from Share Premium
- -
(5,675,272)
(5,675,272)
-
Expenses deducted from Share Premium
- -
(1,194,556)
(1,194,556)
-
Total for year 2021
118,172,637
29,543,159
9,645,056
39,188,215
33.16p
As at 31 December 2021
451,612,211
112,903,053
71,087,838
183,990,891
40.74p
Shares issued in the period
Jan-21
15,101,040
3,775,260
1,905,369
5,680,629
37.62p
Feb-21
500,000
125,000
-
125,000
25.00p
Mar-21
361,111
90,278
39,722
130,000
36.00p
Apr-21
7,296
1,824
803
2,627
36.00p
May-21
425,709
106,427
25,543
131,970
31.00p
Aug-21
500,000
125,000
-
125,000
25.00p
Sep-21
100,300,046
25,075,012 7,612,978 32,687,989
32.59p
Nov-21
500,000
125,000 - 125,000
25.00p
Dec-21
477,435
119,359 60,641 180,000
37.70p
Total
118,172,637
29,543,159 9,645,056 39,188,215
33.16p
Shares issued in the prior period
May-20
61,947,835
15,486,959
108,470
15,595,429
25.18p
Oct-20
27,068,332
6,767,083
882,247
7,649,330
28.26p
Total
89,016,167
22,254,042
990,717
23,244,759
26.11p
134
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
21. 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 8. The total number of options outstanding at the year end are as follows:
(b) Warrants
Warrants held by Directors are disclosed in Note 8. The total number of warrants outstanding at the year end are as follows:
2021
2020
Weighted average
exercise price
Number
of options
Weighted average
exercise price
Number
of options
Outstanding at the beginning of the period
59.63p
30,524,324
107.36p
7,304,324
Lapsed during the period
55.19p
(552,860)
162.32p
(1,380,000)
Exercised during the period
-
-
-
-
Issued during the period
40.00p
962,162
51.22p
24,600,000
Outstanding at the end of the period
59.10p
30,933,626
59.63p
30,524,324
Exercisable at the end of the period
111.50p
4,520,000
110.16p
5,120,000
Grant
date
Maximum date
of exercise
Exercise
price
Outstanding at start
of period 01 January
2021
Issued in
the period
Lapsed in
the period
Share options as at
31 December 2021
13-Feb-17
12-Feb-22
200.00p
400,000
- -
400,000
29-Aug-17
28-Aug-22
130.00p
400,000
- -
400,000
20-Feb-19
20-Feb-24
100.00p
3,720,000
-
(140,000)
3,580,000
01-Mar-19
31-Aug-22
40.00p
1,404,324
-
(358,848)
1,045,476
01-Oct-20
31-Oct-25
50.00p
24,000,000
- -
24,000,000
01-Oct-20
31-Oct-25
100.00p
600,000
- -
600,000
01-Feb-21
31-Jul-24
40.00p
-
962,162
(54,012)
908,150
Total
30,524,324
962,162
(552,860)
30,933,626
Exercise
period
Note
Maximum date
of exercise
Exercise
price
Share warrants
held at 01 January
2021
Issued in
the period
Lapsed in
the period
Exercised in
the period
Share warrants
held at 31
December 2021
22-Feb-17
21-Feb-21
86.00p
302,325 -
(302,325)
-
-
26-Apr-17
25-Apr-21
36.00p
722,223 -
(353,816)
(368,407)
-
24-May-17
23-May-21
31.00p
834,474 -
(408,765)
(425,709)
-
24-May-17
23-May-22
25.00p
21,768,687 - -
(2,100,000)
19,668,687
26-Apr-18
25-Apr-23
70.00p
1,000,000 - - -
1,000,000
31-May-18
11-Jun-22
50.00p
450,000 - - -
450,000
31-Aug-18
31-Aug-23
100.00p
2,617,312 - - -
2,617,312
07-May-19
07-May-24
100.00p
3,500,000 - - -
3,500,000
31-Oct-19
31-Aug-24
100.00p
385,000 - - -
385,000
28-Jun-20
28-Jun-25
50.00p
5,000,000 - - -
5,000,000
03-Mar-22
28-Feb-25
60.00p
-
82,383,761 - -
82,383,761
01-Apr-22
Note1
31-Mar-25
60.00p
-
2,500,000
- -
2,500,000
11-Nov-21
Note1
11-Nov-24
60.00p
-
3,750,000
-
-
3,750,000
Total
36,580,021
88,633,761
(1,064,906)
(2,894,116)
121,254,760
The number and weighted average exercise prices of share options are as follows:
Note¹ Warrants were attached to a shares issue in September 2021 share issue, one warrant for every one share subscribed to be awarded to
the subscriber provided that they still hold the subscribed shares six months after the admission of the shares to AIM, and as such are accounted
for in 2021.
135
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
Continued - Financials in £
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:
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
2021
2020
Expense arising from fair value of share options currently in issue
2,421,599
704,533
Expense arising from fair value of warrants currently in issue
206,859
-
Expense arising on employee services paid in shares
1,612,319
636,416
Expense arising on third party services paid in shares
180,000
-
Expense on settlement of financial liability
-
1,297,174
Total charge to the profit and loss account
4,420,777
2,638,123
Charged to long term loans
2021
2020
Expense arising from fair value of warrants currently in issue
-
654,734
Total
-
654,734
21. Share based payments continued
2021
2020
Weighted average
exercise price
Number
of warrants
Weighted average
exercise price
Number
of warrants
Outstanding at the beginning of the period
44.14p
36,580,021
53.73p
34,159,896
Lapsed during the period
48.28p
(1,064,906)
184.59p
(2,544,326)
Exercised during the period
27.28p
(2,894,116)
25.71p
(35,549)
Issued during the period
60.00p
88,633,761
50.00p
5,000,000
Outstanding at the end of the period
56.10p
121,254,760
44.14p
36,580,021
Exercisable at the end of the period
47.00p
36,370,999
44.14p
36,580,021
Expected
life
First vesting
date
Risk
free rate
Exercise
price
Share
price
Volatility of
share price
Warrants
Vested
Warrants
Granted
Expiry
Fair
Value
3
11-Nov-21
0.10%
60p
36.0p
88.89%
-
3,750,060
11-Nov-24
206,859
3
03-Mar-22
0.10%
60p
40
88.30%
-
82,383,761
28-Feb-25
5,504,217
3
01-Apr-22
0.10%
60p
40
88.30%
-
2,500,000
31-Mar-25
171,055
Total
88,633,821
5,882,131
Expected
life
First vesting
date
Risk
free rate
Exercise
price
Share
price
Volatility of
share price
Options
Vested
Options
Granted
Expiry
Fair
Value
Black-Scholes
3
01-Feb-24
0.10%
40p
41.5p
56.10%
-
962,162
31-Jul-24
23,133
Total
962,162
23,133
The number and weighted average exercise prices of share warrants are as follows:
Options
Warrants
136
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
23. Share option reserve
The share option reserve of £15,722,018 (2020: £7,675,332) arises owing to the provision in respect of IFRS 2 "Share based
payments".
24. 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.
22. Share premium reserve
Company law restricts the use of the share premium reserve of £71,087,838 (2020:£61,442,782), 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.
25. 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.
26. Capital commitments
The Group and its subsidiaries had capital commitments of £4,060,397 (2020: £1,554,283). This was in respect of building
modifications and equipping of the Daresbury site.
27. Contingent liabilities
The Directors are not aware of any contingent liabilities at the 31 December 2021 (2020: £nil).
137
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – GROUP
Continued - Financials in £
Price
Quantity
In September 2021, the following shares were issued:
Michael Sinclair (Director)
Subscription
40.00p
50,000
Michael Sinclair (Director)
Salary
40.00p
63,543
Michael Sinclair (Director)
Bonus payment
40.00p
416,667
Nicolas Serandour (Director)
Bonus payment
40.00p
416,667
Prof Steve Myers (Director)
Bonus payment
40.00p
416,667
Michael Bradfield (Director)
NED Fees
40.00p
115,000
Lori Cross (Director)
NED Fees
40.00p
60,417
Dr Nick Plowman (Director)
NED Fees
40.00p
102,500
Enrico Vanni (Director)
NED Fees
40.00p
100,000
Enrico Vanni (Director)
Subscription
40.00p
500,000
Hans von Celsing (Director)
NED Fees
40.00p
176,667
Renhua Zhang (Director)
NED Fees
40.00p
214,449
Chunlin Han (Former Director)
NED Fees
40.00p
144,658
Yuelong Huang (Former Director)
NED Fees
40.00p
144,658
28. Related party transactions
The following related party transactions are required to be disclosed in accordance with IAS24.
2021
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:
183,547
198,440
The Group received services from Berkshire Investment Management Limited, a company controlled
by Hans von Celsing, a Group Director
-
54,955
The balance due to Berkshire Investment Management Limited as at 31 December 2020 was:
-
24,000
Directors' remuneration is detailed in Note 8.
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.
2021
2020
Remuneration of key management personnel
2,375,159
1,924,007
138
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
29. Post balance sheet events
Since the year end, the Group has raised additional equity through the issue of shares:
On 23 March 2022, the Company entered into a three-month loan agreement of £1.5 million with Nerano Pharma Ltd, a company
owned and controlled by Seamus Mulligan, a significant shareholder in the Company, with an interest rate of 1.25 per cent per month
(the "Loan"). The Loan is repayable by the Company on 24 June 2022. As part of the agreement, the Company issued 6,382,978
warrants to Nerano Pharma Ltd with an exercise price of 28.20 pence per share, exercisable up until 24 March 2025.
As at the date of publication of the annual accounts, the Loan remains outstanding. Nerano Pharma has agreed to not seek repayment
at the current time and are in discussions with the Company surrounding the potential to convert the Loan into New Ordinary Shares.
At the current time no agreement has been entered into in relation to varying the terms of the Loan nor have the terms of any variation
been, as yet, agreed. In the event that the terms cannot be agreed between Nerano Pharma and the Company, the Company would
seek to repay the amounts owed pursuant to the Loan.
30. 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 1
January 2020
At 31
December 2020
Cash at bank and in hand
3,235,167
(937,825)
-
-
-
-
-
-
20,109
2,317,451
Lease liabilities
(32,641,518)
1,865,946
-
-
-
-
(145,195) (1,322,763)
(93,199)
(32,336,729)
Borrowings
(13,864,384) (11,294,865)
4,000,000
-
654,734
3,716,425
- (1,652,834)
143,173 (18,297,751)
Total
(43,270,735) (10,366,744)
4,000,000
-
654,734
3,716,425
(145,195) (2,975,597)
70,083 (48,317,029)
At 1
January 2021
At 31
December 2021
Cash at bank and in hand
2,317,451
1,923,250
-
-
-
-
-
-
19,789
4,260,490
Lease liabilities
(32,336,729)
3,781,009
-
-
-
-
(3,062,048) (1,349,647)
20,276 (32,947,138)
Borrowings
(18,297,751)
-
-
-
-
-
(2,110,266)
(51,536)
(20,459,553)
Short term borrowings
-
7,850,000
-
-
-
-
-
-
-
7,850,000
Short term borrowing
repayments
-
(7,850,000)
-
-
-
-
-
-
-
(7,850,000)
Total
(48,317,029)
5,704,259
-
-
-
-
(3,062,048) (3,459,913)
(11,470)
(49,146,201)
No of Shares
Equity
January
500,000
125,000
February
3,100,000
775,000
March
8,000,000
2,000,000
April
3,400,000
850,000
May
3,540,000
885,000
June
3,200,000
800,000
Announced June
24,090,000
6,022,500
Total
45,830,000
11,457,500
139
ANNUAL REPORT 2021
COMPANY STATEMENT
OF FINANCIAL POSITION
As at 31 December 2021 - Financials in £
The Company's loss for the financial year was £19,976,416 (2020: £15,105,395 loss)
These financial statements have been approved and were authorised for issue by the Board of Directors on 30 June 2022.
Signed on behalf on the Board of Directors by
Registered number: 05564418
The accompanying Notes on pages 141 to 146 form part of the financial statements.
Notes
2021
2020
Non-current assets
Intangible assets
B
27,141,345
19,768,925
Property, plant and equipment
C
7,202,948
5,964,648
Right of use assets
D
32,966,270
30,515,239
Investment in subsidiaries
E
81,921,564
8,052,458
Trade and other receivables
F
608,461
59,214,302
149,840,589
123,515,572
Current assets
Inventories
H
25,791,157
22,139,087
Trade and other receivables
F
508,908
1,765,183
Corportion tax R&D refund
F
-
-
Cash and cash equivalents
3,856,807
2,193,430
30,156,872
26,097,700
Total assets
179,997,461
149,613,272
Current liabilities
Trade and other payables
G
(3,282,451)
(4,015,017)
Lease liabilities
D
(603,647)
(1,968,945)
Borrowings
I
(10,025,497)
(10,039,316)
(13,911,595)
(16,023,278)
Non-current liabilities
Licence fee received
G
(16,500,000)
(16,500,000)
Lease liabilities
D
(32,191,481)
(29,475,974)
Borrowings
I
(10,382,520)
(8,258,435)
Embedded derivative
18
(4,718,960)
(4,578,210)
(63,792,961)
(58,812,619)
Total liabilities
(77,704,556)
(74,835,897)
Net assets
102,292,905
74,777,376
Equity
Share capital
112,903,053
83,359,894
Share premium reserve
71,087,838
61,442,782
Share option reserve
15,722,018
7,675,332
Accumulated losses
(97,420,004)
(77,700,632)
Total equity
102,292,905
74,777,376
Nicolas Serandour
Chief Executive Officer
Dr Michael Sinclair
Executive Chairman
140
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
COMPANY STATEMENT
OF CHANGES IN EQUITY
The accompanying Notes on pages 141 to 146 form part of the financial statements.
For the year ended 31 December 2021 - Financials in £
Share
capital
Share
premium
reserve
Share
options
reserve
Accumulated
losses
Total
Balance as 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
- -
24,257,145
Expenses deducted from share premium
-
(1,012,386)
- -
(1,012,386)
Lapsed options
-
-
(510,950)
510,950
-
Lapsed warrants
-
-
(1,026,788)
1,026,788
-
Share based payments
- Share option charge
-
-
704,533 -
704,533
- Share warrants charge
-
-
654,734 -
654,734
Balance at 31 December 2020
83,359,894
61,442,782
7,675,332
(77,700,632)
74,777,376
Balance at 01 January 2021
83,359,894
61,442,782
7,675,332
(77,700,632)
74,777,376
Loss for the year
-
-
-
(19,976,416)
(19,976,416)
Total comprehensive income
-
-
-
(19,976,416)
(19,976,416)
Shares Issued in the period
29,543,159
16,514,884
-
(0)
46,058,043
Expenses deducted from share premium
-
(1,194,556)
-
-
(1,194,556)
Cost of warrants dedicted from share premium
-
(5,675,272)
5,675,272
-
-
Lapsed options
- -
-
(0)
(0)
Lapsed warrants
- -
(257,045)
257,045
-
Share based payments
- Share option charge
- -
2,421,599
-
2,421,599
- Share warrants charge
- -
206,859
-
206,859
Balance as at 31 December 2021
112,903,053
71,087,838
15,722,018
(97,420,004)
102,292,905
141
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – COMPANY
As at 31 December 2021 - Financials in £
C. Property, plant and equipment
Leasehold
property
Computer
hardware and
software
Fixtures,
fittings and
equipment
Total
2020
Cost
At 01 January 2020
5,177,881
207,439
316,783
5,702,103
Additions
534,353
44,425
736,424
1,315,203
At 31 December 2020
5,712,234
251,864
1,053,207
7,017,306
Depreciation
At 01 January 2020
292,737
149,698
100,524
542,959
Charge for the year
393,822
31,781
84,096
509,699
At 31 December 2020
686,559
181,479
184,620
1,052,658
Net book value
At 01 January 2020
4,885,144
57,741
216,259
5,159,144
At 31 December 2020
5,025,675
70,385
868,588
5,964,648
(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.
A. Principal accounting policies
In accordance with IAS 38, £1,872,420 (2020: £501,546) of costs relating to the development of the LIGHT proton therapy
machine were capitalised during the year.
Development Costs
B. Intangible assets
At 01 January 2020
19,267,379
Additions
501,546
At 31 December 2020
19,768,925
At 01 January 2021
19,768,925
Reclassification of assets - inventory
5,500,000
Additions
1,872,420
At 31 December 2021
27,141,345
142
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
C. Property, plant and equipment continued
Leasehold
property
Computer
hardware and
software
Fixtures,
fittings and
equipment
Total
2021
Cost
At 01 January 2021
5,712,234
251,864
1,053,207
7,017,306
Additions
1,737,099
47,108
237,087
2,021,294
At 31 December 2021
7,449,333
298,972
1,290,294
9,038,600
Depreciation
At 01 January 2021
686,559
181,479
184,620
1,052,658
Charge for the year
523,344
45,972
213,678
782,994
At 31 December 2021
1,209,903
227,451
398,298
1,835,652
Net book value
At 01 January 2021
5,025,675
70,385
868,588
5,964,648
At 31 December 2021
6,239,430
71,521
891,997
7,202,948
D. Leases
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.
Land and buildings
2021
2020
Right-of-Use Assets
At the start of the period
30,515,239
30,982,270
Additions
3,062,047
144,664
Amortisation
(611,016)
(611,695)
At the end of the period
32,966,270
30,515,239
Lease liabilities
At the start of the period
31,444,919
31,123,470
Additions
3,062,048
144,664
Interest expense
1,333,546
1,284,749
Lease payments
(2,045,385)
(1,107,964)
Lease incentive payments
(1,000,000)
-
At the end of the period
32,795,128
31,444,919
The maturity profile of discounted lease payments
Repayable within one year
603,647
1,968,945
Current liabilities
603,647
1,968,945
Repayable in two to five years
2,535,220
7,332,380
Repayable in more than five years
29,656,261
22,143,594
Non-current liabilities
32,191,481
29,475,974
Total borrowings
32,795,128
31,444,919
143
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – COMPANY
As at 31 December 2021 - Financials in £
2020
At 01 January
8,052,458
At 31 December
8,052,458
2021
At 01 January
8,052,458
Transfer from amounts owed by subsidiary undertakings
73,869,106
At 31 December
81,921,564
The Company owned the following principal subsidiary companies as at 31 December 2021:
Notes
1 Dormant
2 Indirectly held
Subsidiary Company
Country of Incorporation
Share class
% Holding
ADAM S.A.
Switzerland
Ordinary
100%
Advanced Oncotherapy Americas Inc
USA
Ordinary
100%
Advanced Oncotherapy B.V.
1
The Netherlands
Ordinary
100%
Advanced Oncotherapy Resources Ltd
1
United Kingdom
Ordinary
100%
APTS Harley Street Ltd
1
United Kingdom
Ordinary
100%
Advanced Oncotherapy (China) Ltd
1
United Kingdom
Ordinary
100%
Advanced Oncotherapy Proton Therapy Services Ltd
1
United Kingdom
Ordinary
100%
Oncotherapy UK Ltd
1
United Kingdom
Ordinary
100%
The London Proton Therapy Centre Ltd
1
United Kingdom
Ordinary
100%
CareCapital Ltd
1
United Kingdom
Ordinary
100%
CareCapital (Southampton) Ltd
1 2
United Kingdom
Ordinary
100%
The Women's Cancer Centre Ltd
1 2
United Kingdom
Ordinary
100%
CareCapital Gesundheitsimmobilien GmbH
1 2
Germany
Ordinary
90%
CareCapital Gesundheitsimmobilien Vervaltungs GmbH
1 2
Germany
Ordinary
90%
GESUNDHEITSZENTRUM ADLERSHOF 2 MINDERHEITSBETEILIGUNGS GMBH
1 2
Germany
Ordinary
100%
Gesundheitszentrum Königs Wusterhausen 2 GmbH & Co. KG
1 2
Germany
Ordinary
100%
E. Investment in subsidiaries
In accordance with IFRS 9, the Company has considered the impairment of loans due from its primary subsidiary company.
During the year amounts due were transferred to the investment cost as show in Note E above. There were no amounts due
from subsidiaries at the year end.
F. Trade and other receivables
2021
2020
Due greater than 1 year
Property rent deposits
258,461
258,461
Property decommissioning deposits
350,000
350,000
Amounts owed by subsidiary undertakings
-
58,605,841
Total
608,461
59,214,302
2021
2020
Current
VAT recoverable
135,030
581,723
Advance payments to suppliers
-
238,848
Property rent deposits
4,462
2,819
Other debtors
5,574
103,910
Prepayments
363,842
837,883
508,908
1,765,183
Corporation Tax
-
-
Total
508,908
1,765,183
2021
2020
Increase in provision during the year
-
-
144
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
G. Trade and other payables
2021
2020
Non current
Licence fee received
16,500,000
16,500,000
Total
16,500,000
16,500,000
Current
Trade payables
2,249,419
1,339,126
Social security and other taxes
286,465
225,788
Other creditors
255,364
183,410
Accruals and deferred income
491,203
2,266,693
Total
3,282,451
4,015,017
H. Inventories
2021
2020
Inventories
Work in progress - LIGHT
22,139,087
15,048,228
Reclassification of assets to Intangible Assets
(5,500,000)
-
Purchases - Work in progress - LIGHT
9,152,070
7,090,859
Total
25,791,157
22,139,087
All of the above items of Inventory have been valued at cost.
Costs included in Inventory are for finished components of the LIGHT machine that will be sold as part of future LIGHT
installations.
I. Borrowings
2021
2020
Amounts falling due within one year
Secured loans
10,025,497
10,039,316
Total
10,025,497
10,039,316
2021
2020
Amounts falling due over one year
Secured loans
See Note 18
10,382,520
8,258,435
Total
10,382,520
8,258,435
See Note 18 for details of liabilities and securities given.
145
ANNUAL REPORT 2021
NOTES TO
THE ACCOUNTS – COMPANY
As at 31 December 2021 - Financials in £
J. Related party transactions
2021
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:
183,547
198,440
The Company received services from Berkshire Investment Management Limited, a
company controlled by Hans von Celsing, a Group Director.
-
54,955
The balance due to Berkshire Investment Management Limited as at 31 December 2021 was:
-
24,000
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 8.
Price
Quantity
In October 2020, as disclosed in Note 7, the following options were issued:
Michael Sinclair (Director)
50.00p
5,500,000
Nicolas Serandour (Director)
50.00p
6,500,000
Steve Myers (Director)
50.00p
1,500,000
In September 2021, the following shares were issued:
Michael Sinclair (Director)
Subscription
40.00p
50,000
Michael Sinclair (Director)
Salary
40.00p
63,543
Michael Sinclair (Director)
Bonus payment
40.00p
416,667
Nicolas Serandour (Director)
Bonus payment
40.00p
416,667
Prof Steve Myers (Director)
Bonus payment
40.00p
416,667
Michael Bradfield (Director)
NED Fees
40.00p
115,000
Lori Cross (Director)
NED Fees
40.00p
60,417
Dr Nick Plowman (Director)
NED Fees
40.00p
102,500
Enrico Vanni (Director)
NED Fees
40.00p
100,000
Enrico Vanni (Director)
Subscription
40.00p
500,000
Hans von Celsing (Director)
NED Fees
40.00p
176,667
Renhua Zhang (Director)
NED Fees
40.00p
214,449
Chunlin Han (Former Director)
NED Fees
40.00p
144,658
Yuelong Huang (Former Director)
NED Fees
40.00p
144,658
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.
146
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
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:
Regarding liquidity risk, the Company, in the future, may need to raise further equity or debt funds to fulfil its objectives and/or
finance working capital requirements through future stages of development.
K. Financial instruments
Amortised cost
2021
2020
Trade and other payables
(3,282,451)
(4,015,017)
Trade and other receivables
508,908
1,765,183
Cash and cash equivalents
3,856,807
2,193,430
Borrowings
(20,408,017)
(18,297,751)
Total
(19,324,753)
(18,354,155)
Fair value
2021
2020
Trade and other payables
(3,282,451)
(4,015,017)
Trade and other receivables
508,908
1,765,183
Cash and cash equivalents
3,856,807
2,193,430
Borrowings
(20,408,017)
(18,297,751)
Embedded derivative
(4,718,960)
(4,578,210)
Total
(24,043,713)
(22,932,365)
147
ANNUAL REPORT 2021
NOTICE OF
ANNUAL GENERAL MEETING
securities or in accordance with the rights attached thereto
but subject to such exclusions or other arrangements as the
Directors may 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 £37,292,063 (the equivalent of up to 149,168,252
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 2023 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.
By order of the Board
Dr Michael Sinclair
Executive Chairman
Registered Office: Level 17, Dashwood House,
69 Old Broad Street, London EC2M 1QS
30 June 2022
NOTES
1.
COVID-19
The board takes its responsibility to safeguard the health of
its shareholders, stakeholders and employees very seriously.
At the time of preparing this document, there are no legal
COVID-19 restrictions in place in England. We therefore look
forward to welcoming shareholders to our AGM in person again.
We encourage shareholders who wish to attend the AGM in
person to wear face coverings while inside the meeting venue,
including for the duration of the meeting.
Due to the constantly evolving nature of the pandemic, it is
possible that physical participation may be restricted. We will
notify any changes post-publication of this document via our
website. Shareholders are encouraged to check our website in
the days leading up to the AGM to ensure they are informed of
any changes.
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
- update your address
- select your communication preference.
It is strongly recommended that the Chairman of the 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, 29 July 2022 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 2021.
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.
6.
To re-appoint Dr Nick Plowman as a Director of the Company.
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 £37,292,063 (the equivalent of
up to 149,168,252 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 2023 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
148
ADVANCED ONCOTHERAPY PLC
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
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.
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.
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.
5.
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 19 July 2022 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
19 July 2022 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.
Notice
Explanatory notes
Information
149
ANNUAL REPORT 2021
EXPLANATORY NOTES TO
THE NOTICE OF ANNUAL GENERAL
MEETING
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 37,292,063. 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 2023 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 2021, 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, and for them 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 30 July 2021 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 37,292,063. 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 2023 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
shareholders. In certain circumstances, it may be in the interest
of the Company for the Directors to be able to allot some
GOVERNANCE REPORT
OTHER INFORMATION
FINANCIAL REPORT
STRATEGIC REPORT
Notice
Explanatory notes
Information
150
ADVANCED ONCOTHERAPY PLC
151
ANNUAL REPORT 2021
COMPANY
INFORMATION
DIRECTORS
Mr. Michael Bradfield * †
Non-Executive Director
Mr. Hans von Celsing * † §
Non-Executive Director
Ms. Lori Cross §
Non-Executive Director
Prof. Steve Myers
Executive Chairman of ADAM
Dr. Nick Plowman
Non-Executive Director
Mr. Nicolas Serandour
Chief Executive Officer
Dr. Michael Sinclair
Executive Chairman
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 Strategic 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
Annual report 2021
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