Advanced Oncotherapy PLC (LON:AVO), which is developing a breakthrough new proton therapy system for cancer sufferers, could have a “fast head-start” in the race to replace other forms of treatment in the market, according to analysts at broker goetzpartners.
In a note to clients, the broker said that the company’s proton beam treatment system, known as Linac Image Guided Hadron Technology (LIGHT), could help it take “the entire growth” from its cyclotron competitors, a technology that will become obsolete by the end of 2023.
Cyclotron technology involves lengthy and complicated building preparation, with heavy cyclotrons and large concrete bunkers make the installation a major building project, which is, regardless of pricing, often a big hurdle.
However, the broker says the LIGHT system, which is “faster and less complicated combined with a cheaper production process”, could give the company a step up against both cyclotrons and more conventional LINAC (linear accelerator) systems.
The proton therapy industry, in which AVO operates, offers “significant structural growth”, goetz said, with its own numbers forecasting a US$8bn market by the end of 2030.
LIGHT tech backed by world-leading physicists
AVO’s beam technology is currently being worked on by the team at ADAM, a spin-off from renowned Swiss physics lab CERN, which includes some of the world leading physicists.
The firm recently announced that it had successfully integrated the four sections of its LIGHT proton accelerator, the proton source, the Radiofrequency Quadrupole (RFQ), four Side Coupled Drift Tube Linacs (SCDTLs), and two high-energy accelerating structures, the Coupled Cavity Linacs (CCLs), at the lab and had achieved an energy of 52 mega-electron volts (MeV), double the amount needed to treat superficial cancer tumours.
However, the company isn’t stopping and is aiming to add 13 more CCL modules which would increase the energy level to 230MeV, the level required to treat deep-seated tumours.
goetzpartners expects the company to achieve this energy level in 2019, adding that they saw “limited” risks to the set up of the company’s LIGHT system for its first customer at a clinic in Harley Street, the renowned private medical district in London.
First player in ‘holistic’ oncology process
AVO’s partnership with Swedish radiotherapy software firm, RaySearch, also gives it a potential first-mover advantage in developing “a fully integrated and holistic oncology treatment process”, says goetz.
The broker says that the combination of the LIGHT system and RaySearch’s treatment planning and oncology information systems would go “far beyond an optimal use of proton therapy systems”.
goetzpartners has Advanced Oncotherapy pegged with an ‘Outperform’ rating and a price target of 155p, a premium of over 255% on its current share price of 43.5p.
With a current market cap of £55.9mln, the broker is targeting a potential value of around £143mln.