Final Results for the year ended 31 December 2019

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain

29 June 2020

ADVANCED ONCOTHERAPY PLC

("Advanced Oncotherapy" or the "Company")

Final Results for the year ended 31 December 2019

Significant progress towards installing the Company's first commercial LIGHT system

Advanced Oncotherapy (AIM: AVO), the developer of next generation proton therapy systems for cancer treatment, announces audited results for the year ended 31 December 2019.

Key highlights (including post-period):

·      Completed the structural building work at Harley Street and moved into the fit-out phase; continued assembly of the first commercial LIGHT system in Daresbury.

·      Manufactured the key hardware, including the proton accelerating structures to accelerate protons to 230 MeV and patient positioning system.

·      Completed equity investments totalling £44m from both existing and new shareholders.

·      Announced a strategic funding partnership with an existing supplier of the Company and a debt facility which provide access to up to approximately £42m in funding.

·      Following the financing agreements announced separately today, the Company is now in a good position to assemble its first commercial system and treat patients in 2021.

·      Signed agreement with University Hospitals Birmingham NHS Foundation Trust to install a LIGHT system and engage with the development of further advanced technical and clinical features.

·      Signed a purchase order for the LIGHT system with the Mediterranean Hospital of Limassol; Advanced Oncotherapy to receive €50m and share of profits from clinical services.

·      Signed a memorandum of understanding with The London Clinic to operate Advanced Oncotherapy's first commercial LIGHT facility on Harley Street in London, including the addition of a second treatment room.

·      Started a two-year study with Cleveland Clinic to evaluate the target conformity of proton mini-beams in comparison with X-ray stereotactic body radiation therapy and stereotactic radiosurgery.

·      Received the ISO 13485:2016 certification, the internationally recognised quality standard to ensure the consistency and the safety of the design, development, production, installation and sale of medical devices.

·      Performed comparative studies confirming the competitive advantages of the LIGHT system in terms of cost and expected improved medical outcomes as well as its breakthrough potential for FLASH therapy.

·      Appointed Moataz Karmalawy (who previously led the proton therapy business of Varian) as Chief Commercial Officer and President of the US division.

·      As a result of the impact of COVID-19, the core team of the Company has shifted to focusing on finalising the documentation and software development required for the LIGHT system to gain regulatory approval.

Nicolas Serandour, CEO of Advanced Oncotherapy, said:

"We are pleased with the progress that we have made over the past 12 months to develop a more affordable proton-based radiotherapy system which will ultimately facilitate the wider use of radiation with protons for treating radio-sensitive tumours.

"During 2019 we have continued the technical development of our LIGHT system as well as bolstering our financial position. We have signed strategic partnerships with UHB, the Mediterranean Hospital of Limassol and The London Clinic and established a research project with Cleveland Clinic. Following the financing agreements announced separately today, the Company is now in a good position to assemble its first commercial system and treat patients in 2021.

"We have made tremendous progress with the LIGHT system over the past 12 months as we remain focussed on our vision of democratising access to proton therapy for patients across the world by lowering the cost of providing this treatment modality and so improving cancer patient outcomes. Following the impact of COVID-19, we are now in the progress of restarting work with social distancing implemented at our Daresbury facility, and will update the market in due course on progress made."

Posting of Annual Report and Notice of Annual General Meeting

The annual report for the year ended 31 December 2019, which includes notes to the financial statements, will be available shortly from the Company's website at www.advancedoncotherapy.com and will shortly be posted or emailed to shareholders together with a notice of Annual General Meeting to be held at 2pm on Wednesday, 29 July 2020 at the offices of Advanced Oncotherapy plc, Third Floor, 4 Tenterden Street, London W1S 1TE.

The Notice of Annual General Meeting sets out arrangements in light of the current British government restrictions placed on public gatherings in response to the COVID-19 outbreak. Under the current prohibition on non-essential travel and public gatherings, it will not be possible for Shareholders to attend the General Meeting in person. Shareholders are strongly urged to vote by proxy in advance of the deadline by completing their form of proxy in accordance with the instructions and further details are set out in the form of proxy.

- ENDS -

Notes for Editors

About Advanced Oncotherapy Plc www.avoplc.com

Advanced Oncotherapy, a UK headquartered company with offices in London, Geneva, The Netherlands and in the USA, 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.

STATEMENT FROM THE EXECUTIVE CHAIRMAN AND THE CHIEF EXECUTIVE OFFICER

At Advanced Oncotherapy we have a unique opportunity to help democratise proton therapy. We believe the Company's technology is truly disruptive with the ability to bring profound change to the treatment paradigm within the radiation oncology market. That said, we remain cognisant that success in achieving this also requires us to navigate a highly regulated and fast- changing environment.

Over the past year, Advanced Oncotherapy has made significant progress towards achieving our corporate goals. We reflect on these, as well as our financial results for the period, below.

A DIFFERENTIATED APPROACH TO THE GROWING DEMAND FOR PROTON THERAPY

Market dynamics

Life expectancy around the globe continues to rise. The World Health Organization estimates that there will be more than 800 million people aged 65 or older in the world by 2025. It is well established that accessing provisions for healthcare increases with age. Innovation in healthcare, therefore, needs to be focused on enabling both wider affordability and more efficient delivery. While infrastructure investments, technological advancements and evolving care models all have a role, clinical quality and patient experience also need to be considered.

Nowhere are these challenges more evident than in the radiation oncology market. The World Health Organization has predicted a 60 percent global rise in the incidence of cancer by 2040, with more than 80 percent of that growth expected to occur in low and middle- income countries, where survival rates are currently lowest. Increasing cancer cases and adoption of new procedures in emerging countries are expected to fuel the growth of the radiation oncology market, including the proton therapy market.

At Advanced Oncotherapy we believe that in the next 20 years the industry will need more than 10,000 proton therapy treatment rooms, representing a 50-fold increase over the current global capacity. This, we think, will be driven by the increasing realisation and demonstration that proton therapy allows radiographers to effectively irradiate tumours whilst sparing up to 60 percent of the surrounding healthy tissue. We want to play a fundamental role in the transformation of this market. To truly unlock this potential, the industry needs more precise and cost-efficient proton therapy systems. We believe proton therapy systems based on our proprietary LIGHT technology can achieve this.

LIGHT: A disruptive technology

The core strengths of Advanced Oncotherapy lie in the unique design of our LIGHT system and its versatility. Its technical properties have profound implications for both clinical efficacy as well as affordability. All these attributes are appreciated by both our customers and partners. Our order book is growing, and we believe LIGHT ideally positions us, over time, to gain a significant share of the growing proton therapy market, which in turns bodes well for the creation of sustainable future shareholder value.

The LIGHT system is designed to allow easy installation directly into clinical facilities. It produces proton beams at the required energy level for treatment therefore greatly reducing the need for absorbers and the associated high levels of shielding and cost required for proton beams produced by cyclotrons. By only producing proton beams at the required energy level, the generation of stray radiation is minimised, decreasing the need for expensive shielding and reducing the building and installation cost, which can represent up to two-thirds of the cost of setting up a proton therapy centre.

The LIGHT system allows an ultra-fast delivery of radiation into the tumour, which is designed to be 100-fold quicker than competing systems. This is a particularly attractive medical feature when treating moving organs.

Another feature of LIGHT is that it is intended to provide a smaller proton beam, also called a mini- beam, which can be one tenth of the cross-sectional diameter of a currently available proton beam. This is the basis of the collaboration we announced in December 2019 with the Cleveland Clinic which aims to evaluate the target conformity of proton mini-beams in comparison with X-ray stereotactic body radiation therapy (SBRT) and stereotactic radiosurgery (SRS).

The LIGHT system can easily be used for hypofractionation, a technique in which the treatment is delivered in fewer larger doses, and FLASH, a new technique in which an ultra-high dose of radiation is given in a fraction of a second, for all radio-sensitive tumours irrespective of their location in the body. As a result, LIGHT is well positioned to reduce the number of treatment visits, hence taking advantage of new reimbursement models that favour reimbursement per treatment course as opposed to reimbursement per visit.

Potential future applications

Advanced Oncotherapy's primary business focus continues to be the successful commercial launch of LIGHT. However, our strategy also encompasses several longer-term initiatives including: FLASH, the combination of proton therapy with immuno-therapeutic modalities and the use of protons in a broader range of non- oncological diseases.

FLASH radiotherapy is expected to provide benefits for both patients and clinics. Patients will benefit from being treated in a single visit to a clinic, and clinics can benefit from a higher throughput of patients through their facility. Another advantage of the LIGHT system is that unlike legacy proton therapy systems, there is no need for absorbers to control the energy of the protons; LIGHT accelerates the protons to the required energy level independently of the location of the tumour. The results we have published to date on FLASH are exciting and bode very well for our ambition to provide FLASH on our machines.

Another area of great interest is the combination of proton therapy with drugs triggering the immune system to attack cancer cells. There is a growing body of research supporting this synergistic effect, which could pave the way for a more effective and efficient treatment of the primary tumour as well as any metastases.

We expect LIGHT to facilitate a wider adoption of proton therapy not only beyond the currently reimbursed cancer indications to other tumour types, but also outside of cancer. For instance, the successful treatment of a patient in Italy for a severe form of arrhythmia in early 2020 highlighted the potential versatility of proton therapy. LIGHT is ideally positioned to meet further medical needs thanks to its differentiating features, including its smaller beam size and greater flexibility to deliver protons at a fast rate.

OUR STRATEGY AND POSITIONING

Strategy

The key essence of our strategy is built on four key pillars:

1.   the manufacturing and assembly of a commercial instrument that can deliver our breakthrough technology and so penetrate the large radiation oncology market;

2.   the implementation of a differentiated customer-oriented business model;

3.   the establishment of a large network of stakeholders supporting our vision; and

4.   putting in place the financial infrastructure required to support the launch of LIGHT across the globe.

We have made great progress in achieving the first three elements. During the period, we have made significant progress in the commissioning and assembly of the various modules of LIGHT, building a fit-for-purpose assembly site, taking the necessary steps towards the regulatory certification of our system, whilst cementing new commercial and scientific collaborations with prominent hospitals globally.

When it comes to the fourth element of our strategy, laying the financial foundations to support the launch of LIGHT across the globe, we have made clear progress as evidenced by the support of existing and new investors for £44 million in equity and £14 million in debt since the beginning of 2019. That said, we have continued to consider a wide range of financing options to further underpin our balance sheet and enable us to create sustainable long-term value for our shareholders.

Innovating in sustainability

Being at the forefront of innovation means we also have a responsibility to take a lead in practically applying the technology to the world in which we live. All businesses need to generate value for their shareholders, of course, but a responsible business should also have a clear social purpose. We believe that Advanced Oncotherapy is here to ensure that proton therapy is accessible "by the many, not just a few". This strong sense of purpose and social impact is reflected in our commitment to install LIGHT near patients and their families, including in the heart of cities, working alongside hospitals to treat children in the relevant catchment area, free of charge. The LIGHT system also allows customers to treat patients in a facility that requires a lower environmental footprint and a reduced use of transportation of large equipment in comparison to what is necessary with traditional proton therapy systems during construction.

To ensure we can fulfil our purpose, both today and for the years to come, we depend on getting the fundamentals right. This means having a clear, well-executed strategy underpinned by a robust financial position, alongside strong values that help guide each of our decisions.

OUR PROGRESS

Technical developments

2019 was marked by the manufacturing of all critical hardware of our LIGHT system. All the accelerating structures required for accelerating protons to their maximal energy have now been manufactured. The patient positioning system, which includes the diagnostic quality CT scanner used to scan patients in a seated position, the real-time X-ray verification system which enables continuous imaging of a moving tumour, and the robotic chair which can move and rotate the patient with high accuracy and precision, have also all now been manufactured.

Whilst all these components have been commissioned, tested as part of our verification and validation process and assembled at our assembly site at the Science and Technology Facilities Council ("STFC") Daresbury Laboratory, UK, we continue to receive the software components and upgrades which are designed to ensure optimal operational and enhanced clinical performance.

Regulatory developments

Completing our regulatory plan requires the Board and management team's relentless focus and is an integral part of developing our infrastructure and the manufacture of our LIGHT system, so that it is safe, effective and reliable. The importance we place on quality requires robust processes across our entire organisation in accordance with the stringent requirements of the regulatory bodies that oversee clearance and approval for use of medical devices.

Our regulatory plan largely revolves around performing verification and validation activities, meaning that each individual part, system and sub-system of LIGHT must be tested and documented with the view of ensuring that our product not only meets all the requirements from a user's standpoint but also has been manufactured to the specifications provided to suppliers and relevant standards. These activities are being performed in accordance with the standards of excellence required for medical devices and the ISO-13485 certification which we successfully obtained in January 2019.

Proton therapy as a treatment modality has been used for many years. More than 213,000 patients have been treated up to December 2019, increasing by more than 20,000 per year. As we have developed a new way of delivering protons to patients, we have put in place a thorough verification and validation process. This effort is being led by our head of regulatory affairs, who has a wealth of relevant knowledge and experience gained through holding similar responsibilities for 17 years at IBA.

Financing developments

Thanks to the completion of equity investments totalling £44 million since the beginning of 2019, we have been able to continue to make progress with our activities. We have also been looking to secure additional funding for the next stages of this project, which include regulatory approval and commercial roll out.

In order to crystallise the market opportunity, we need to ensure our financing plan considers the needs of our suppliers and customers in the context of funding our working capital requirements and assisting hospitals in their purchase of our system. We believe that to date the industry has failed to do this. The modular design of LIGHT, which can be easily disassembled, means that it can be used as financing security for future partnerships and agreements, therefore putting Advanced Oncotherapy in a unique position to change the financing paradigm.

With that vision in mind, we have separately announced on 29th June 2020 a strategic funding partnership and a debt facility which provide access to up to approximately £42 million in funding:

·      Strategic €20 million funding partnership with VDL Groep, which expands our close partnership with our existing supplier, VDL ETG Precision; and

·      $30 million secured debt facility provided by Nerano Pharma, an existing shareholder in Advanced Oncotherapy.

These financing arrangements will allow us to further the development of our LIGHT system and to advance our pipeline of construction opportunities. Details on the key terms of the facilities are contained within the separate announcement released on 29 June 2020.

Commercial developments

Early in 2020 we announced commercial transactions with The London Clinic (TLC), the Mediterranean Hospital of Limassol in Cyprus and University Hospitals Birmingham NHS Foundation Trust (UHB).

In our partnership with TLC, Advanced Oncotherapy will provide the LIGHT proton accelerator and treatment room equipment while TLC will run the day- to-day operational activities for the LIGHT machine at the Harley Street site in London. This partnership has been structured around a profit share arrangement which incentivises both our company and TLC. Building work at the Harley Street site to accommodate our facility has been completed at a £10 million cost borne by the site's freeholder, the Howard de Walden Estate. We will now be working alongside TLC to add a second treatment room on TLCs premises in the adjacent building.

The Mediterranean Hospital of Limassol in Cyprus has agreed a contract valued at €50 million, for the installation of a LIGHT system supporting three treatment rooms. The Company will receive a share of the profit generated from this proton therapy service, the timing and the full execution of the agreement being subject to customary conditions.

We are also collaborating with UHB to install LIGHT on their campus. We have agreed an appropriate revenue sharing arrangement with UHB and we will also work with them to jointly develop further advanced technical and clinical features.

This commercial strategy is underpinned by our robust and highly differentiated business model centred around the needs of patients and clinical operators. Our model is built on developing profit-sharing arrangements with customers.

This model is a key differentiator for us with prospective customers and we expect it to provide us with a sustainable and profitable source of revenues, whilst accelerating the delivery of our pipeline. Furthermore, this will help us meet our vision of democratising proton therapy and treating more patients in a value-enhancing manner for our shareholders. Ultimately, this is expected to provide customers with a wider range of offerings leading eventually to a pay-per-patient (PPP) model similar to that utilised in the software industry. This is possible because the unique technical features of LIGHT will potentially allow more patients to be treated in fewer visits to the clinic and with more successful medical outcomes.

OUR PEOPLE

The success of an organisation is dependent on its culture and the people and talent within it. In addition, we believe that innovation and technology are only one part of the story. Our partners want more than our technology skills; they require our insight and business understanding too. That is why we have consistently added more talent to build even greater expertise and know- how. For example, in 2019, we hired Moataz Karmalawy as Chief Commercial Officer and President of US. In his previous role, Moataz led the proton therapy business of Varian, where he built an order book in excess of $1 billion and achieved a 50 percent market share of the global particle therapy products market.

We will continue to invest in the skills and development of our people. Importantly, we have taken steps to ensure that all our employees share in the success of our performance. In February 2019 we introduced and set the terms of a Save As You Earn plan which helps to align the interests of our employees with the company's stock performance and supports our ambition of having a high-performance culture within the Company.

This year's performance is testament to the hard work and dedication of our employees and partners. We are confident that our colleagues have the skills and commitment required to adapt to whatever 2020 has in store and to continue to deliver for our customers and our shareholders.

OUR OUTLOOK

2019 highlighted our resilience as a Company and our stature as a technology disruptor as we made significant progress. This resilience, but also our processes, our discipline and our continued ability to think outside of the box will be particularly important to navigate through some of the issues we will face during the year, such as the Covid-19 outbreak that led to the temporary closure of our assembly site in Daresbury and the Harley Street site during the first half of 2020. During these uncertain times, the support of our shareholders, evidenced by the equity fund raising transaction announced on 9th April 2020, showed how AVO and its eco- system see the future: with confidence in our ability to deliver a breakthrough solution, but also humility and a strong sense of responsibility for all our stakeholders. We believe 2020 will be an important year for Advanced Oncotherapy as we continue to assemble and test our LIGHT system, execute on our announced transactions and expand our order book and set the financing foundations to support our growth. The Company expects to achieve first patient treatment in 2021.

Our key priority remains the successful commercial introduction of a LIGHT-based system to treat patients. We believe this will enable, for the first time, the benefits of this treatment modality to be realised in a truly a cost-effective manner such that the full potential of proton therapy can be made available to all patients that could benefit.

We would like to thank all our customers, suppliers, investors and employees for their support and hard work in 2019 as we look forward to our continued partnership for an exciting year ahead.

Note to tables

It should be noted that the two financial periods are not directly comparable due to the adoption of IRFS 16 Leases from 01 January 2019 using the modified retrospective approach, with recognition of transitional adjustments on the date of initial application (1 January 2019), without restatement of comparative figures. The results for the year include a depreciation charge of £1.3 million and an interest charge of £0.6 million for leases now accounted for under IFRS 16. The prior year included a charge of £0.9 million for these leases, the comparable cost for 2019 would have been £1.4 million.