Additional funding from Secured Convertible Note

Advanced Oncotherapy PLC

05 May 2023

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310. MARKET SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS PREVIOUSLY BECAME AWARE OF SUCH INSIDE INFORMATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND ALL SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.

5 May 2023

ADVANCED ONCOTHERAPY PLC

("Advanced Oncotherapy", "AVO" or the "Company")

Additional funding from Secured Convertible Note Facility

Further to the Company's announcements released on 1 March 2023, 20 March 2023 and 18 April 2023, Advanced Oncotherapy (AIM:AVO), the developer of LIGHT, the next-generation proton therapy system for cancer treatment, announces that is has raised a further £1.37 million under its secured convertible loan note agreement (the "Secured Convertible Note") from existing investors including a total of £420,000 from certain Directors of the Company as detailed below (together, the "Lenders"). This brings the total amount of funds raised under the Secured Convertible Note to £6.345 million.

Of the additional funds raised under the Secured Convertible Note, £1.245 million has been received as at the date of this announcement. The balance of funds totalling £125,000 are due to be received shortly.

The additional funding received from the Secured Convertible Note aims to provide the Company with a cash runway until towards the end of May 2023. The Company continues to take steps to raise additional financing, including through raising further funds pursuant to the Secured Convertible Note. Whilst the terms of the Secured Convertible Note increase the cost to the Company of the overall facility, the Directors of Advanced Oncotherapy believe that the Secured Convertible Note is the most attractive available fundraising option to the Company at the current time and is therefore in the best interests of the Company and its shareholders.

Dr. Mike Sinclair, Executive Chairman of Advanced Oncotherapy, commented:

"Previously achieving a world first in accelerating protons in a linear manner to reach clinical energy levels validated the talent, dedication and skill of our team. That this has not been reflected in the market value of our Company speaks volumes about the market for early stage medtech stocks in our current jurisdiction. Your Board is determined to address this challenging paradox."

Further updates on fundraising will be provided as appropriate.

As announced on 1 March 2023, the key terms of the Secured Convertible Note are as set out in the table below:

Maturity Date	9 months from the date of the secured convertible loan note agreement
Conversion	Option to convert prior to the Maturity Date at 20% discount to the next equity fund raising of the Company
Interest Rate	Fixed interest of 1.25% per month until the earliest of the full redemption or the conversion of the loan
Revenue share entitlement for the Harley Street machine	The Operator of the Harley Street Centre shall pay to the Lenders a pro rata portion of the revenue generated by the Proton Therapy machine which is to be installed in Harley Street. The total revenue amount will be capped at £2.5 million per annum and the portion each Lender will receive will be calculated on a pro rata basis according to each Lender's loan amount of the total Secured Convertible Note. The first payment shall be made at the end of the first full calendar year of operations of the proton centre located on Harley Street (London, UK). An annual payment shall be made for 10 consecutive years. Even if the Secured Convertible Note is redeemed prior to the maturity date or converted into Ordinary Shares, the revenue share entitlement will continue for the full 10 years.

A summary of the other material terms of the Secured Convertible Note is set out in the Appendix of this announcement.

Director participation

Certain of the Directors (the "Participating Directors"), detailed below, are increasing their subscription in the Secured Convertible Note, which is deemed to be a Related Party Transaction pursuant to AIM Rule 13.

Secured Convertible Note

Director	Existing participation of the Secured Convertible Note	Additional participation of the Secured Convertible Note	Total Participation
Michael Sinclair (Executive Chairman)	£563,000	£270,000	£833,000
Michael Bradfield (Non-Executive Director)	£80,000	£50,000	£130,000
Enrico Vanni (Non-Executive Director)	£30,000	£50,000	£80,000
Prof. Stephen Myers (Executive Director and ADAM Executive Chairman)	£25,000	£50,000	£75,000

Revenue share entitlement

Director	Existing revenue share entitlement p.a.**	Additional revenue share entitlement p.a.**	Total revenue share entitlement p.a.**
Michael Sinclair (Executive Chairman)	£140,750	£67,500	£208,250
Michael Bradfield (Non-Executive Director)	£20,000	£12,500	£32,500
Enrico Vanni (Non-Executive Director)	£7,500	£12,500	£20,000
Prof. Stephen Myers (Executive Director and ADAM Executive Chairman)	£6,250	£12,500	£18,750

**Revenue share entitlement and pro rata calculations are based on £10 million being raised under the Secured Convertible Note. Revenue share entitlement is calculated pro rata the aggregate amount raised. Should additional funds be raised the revenue share entitlements will decrease and be based pro rata on the higher amount raised.

Related party transaction disclosure

The Participating Directors are directors of AVO and therefore related parties of the Company for the purposes of the AIM Rules for Companies ("AIM Rules"). Participation in the Secured Convertible Note by the Participating Directors is a related party transaction under the AIM Rules. The independent Directors (being Lori Cross and Renhua Zhang) of AVO consider, having consulted with the Company's nominated adviser, Allenby Capital Limited, that the terms of the participation in the Secured Convertible Note by the Participating Directors are fair and reasonable insofar as the Company's shareholders are concerned.

Rule 2.9 disclosure

In accordance with Rule 2.9 of the Takeover Code, AVO confirms that, following this further raise under the Secured Convertible Note, it now has 6,220,125 senior secured fixed rate convertible loan notes ("Loan Notes") in issue (as at today's date), which have a maturity date of 11 January 2024 and are convertible into ordinary shares of 25p each in the Company at a conversion price representing a 20% discount to the next equity fund raising undertaken by the Company. The Loan Notes pay an interest rate of 1.25% per month and includes a revenue sharing agreement with Harley Street Centre.

AVO also confirms that as at the close of business on 4 May 2023 its issued share capital consisted of 537,481,209 ordinary shares of 25 pence each. The International Securities Identification Number for the Company's ordinary shares is GB00BD6SX109.

Advanced Oncotherapy plc	www.avoplc.com
Dr. Michael Sinclair, Executive Chairman	Tel: [phone]
Nicolas Serandour, CEO
WH Ireland Limited (Financial adviser)	Tel: [phone]
Antonio Bossi / James Bavister	[e-mail]
Allenby Capital Limited (Nomad and Joint Broker)
Nick Athanas / Piers Shimwell (Corporate Finance) Amrit Nahal / Matt Butlin (Sales & Corporate Broking)	Tel: [phone]
SI Capital Ltd (Joint Broker)
Nick Emerson	Tel: [phone]
Jon Levinson	Tel: [phone]

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.

Appendix

Secured Convertible Note

Financing instrument	Secured interest-bearing convertible facility
Principal	Up to £15 million
Maturity Date	9 months from  the date of the secured convertible loan note agreement
Conversion	Option to convert prior to the Maturity Date at 20% discount to the next equity fund raising of the Company
Interest Rate	Fixed interest of 1.25% per month until the earliest of the full redemption or the conversion of the loan
Revenue share entitlement for the Harley Street machine	The Operator of the Harley Street Centre shall pay to the Lenders a pro rata portion of the revenue the Operator will receive from the Proton Therapy machine which is to be installed in Harley Street. The total revenue amount will be capped at £2.5 million per annum and the portion each Lender will receive will be calculated on a pro rata basis according to each Lender's loan amount of the total Secured Convertible Note. The first payment shall be made at the end of the first full calendar year of operations of the proton centre located on Harley Street (London, UK). An annual payment shall be made for 10 consecutive years. Even if the Secured Convertible Note is redeemed prior to the maturity date or converted into Ordinary Shares, the revenue share entitlement will continue for the full 10 years.
Security	Secured against the same assets as the existing facilities in place with Nerano Pharma Ltd, on a pari passu basis, such as the LIGHT components being built in Daresbury and Geneva, associated intellectual property and the property at Harley St.
Assignment and transfer by the Lender	All transfers and assignments are subject to the Lender receiving the Company's prior consent not to be unreasonably withheld. Such proposed transfer or assignment will not be permitted when the proposed transferee or assignee is a person whose principal business or material activity is investing in distressed debt or the purchase of loans or other debt securities with the intention of (or view to) owning the equity (loan to own) or gaining control of a business or exploiting holdout or blocking positions.
AOB	In the event other investors wish to subscribe to this instrument up to a maximum aggregated amount of £15 million those investors would benefit from the same terms as detailed above, notably in relation to the interest rate and (on a pro rata basis) the security package and revenue share entitlement. Any subscription under the Secured Convertible Note is subject to the consent of the Lenders and Nerano Pharma Ltd ("Nerano") and disclosure to the Lenders and Nerano of the identity of such new subscriber.

 

END