A sweet source of financing

Update | 4 September 2019

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Scancell has formed a non-exclusive collaboration with a leading antibody technology company, with a view to out-licensing its glycan antibodies and AvidiMab technology. Antibodies against glycans (carbohydrates on proteins or lipids) are difficult to make but have much potential in oncology as many are highly specific to tumour cells. AvidiMab enables an antibody to kill cancer cells directly, without mediation by other elements of the immune system. The potential of the glycan antibodies and AvidiMab platform, although they are still preclinical, is such that we believe Scancell could receive significant upfront and milestone payments, providing material non-dilutive funding for the core ImmunoBody and Moditope platforms.

Year-end: April 30201820192020E2021E
Sales (£m)
Adj. PBT (£m)(4.9)(6.7)(7.7)(8.8)
Net Income (£m)(4.2)(5.6)(6.4)(7.2)
Adj. EPS (p)(1.3)(1.5)(1.4)(1.6)
Cash (£m)*
EBITDA (£m)(4.9)(6.7)(7.7)(8.8)
Source: Trinity Delta Note: Adjusted numbers exclude exceptionals; * Cash in FY21 includes a capital increase of £10m
  • Partnering process for glycan-antibody technology has begun  Scancell acquired a panel of monoclonal antibodies that bind to glycans and the related IP from Nottingham University in April 2018, and has now started the partnering process for the antibodies and technology, having developed the data packages. Tumour-associated glycans (TaGs) are an attractive, but virtually untapped, pool of oncology targets as they are often highly tumour-specific. Scancell’s AvidiMab technology enables antibodies to kill tumours directly, without the intervention of the immune system, which could be particularly valuable in patients with “cold” tumours.
  • Potential for material non-dilutive funding  Licensing deals for the glycan antibodies and AvidiMab technology could provide Scancell with meaningful, non-dilutive funding for its key technology platforms, ImmunoBody and Moditope. For reference, Scancell out-licensed some related antibodies to the Australian biotech, Peptech, in 2006 receiving an upfront payment of £2.0m and a £2.85m milestone. While a royalty will be payable to Nottingham University, any deal should deliver an impressive return on investment and improve Scancell’s cash position.
  • Important clinical data from ImmunoBody and Moditope in H220  Initial clinical data from the recently-started Phase II melanoma study with ImmunoBody SCIB1 in combination with pembrolizumab, and the Phase I/II trial in various solid tumours with Moditope Modi-1 are due in H220. Promising results from either trial could transform the prospects of the company.
  • Valuation maintained at 17.6p/share  We value Scancell at £82.0m (17.6p/share) based on a rNPV and sum-of-the-parts methodology, with conservative assumptions. Licensing deal(s) would improve Scancell’s cash position. It had cash of £4.6m on 30 April 2018, and subsequently received c £4.8m in total from a R&D tax credit receipt and the private placement to Vulpes Life Sciences Fund.


4 September 2019

Market Cap£32.8m
Enterprise Value£26.5m
Shares in issue465.4m
12 month range3.0-13.9p
Free float79%
Primary exchangeAIM London
Other exchangesN/A
Company CodeSCLP.L
Corporate clientYes

Company description

Scancell is a clinical-stage immuno-oncology specialist that is developing two innovative and flexible therapeutic vaccine platforms. ImmunoBody and Moditope induce high avidity cytotoxic CD8 and CD4 responses, respectively, with the potential to treat various cancers.


Mick Cooper PhD
+44 (0) 20 3637 5042

Lala Gregorek
+44 20 3637 5043

Scancell acquired a panel of antibodies that target glycans and the IP connected to the AvidiMab technology in April 2018 from Nottingham University. The company has since strengthened the data package around both the antibodies and the AvidiMab platform, with greater preclinical validation of their potential and additional IP. The aim is now to out-license the antibodies and the AvidiMab technology, with the proceeds from any deal used to support the further development of the ImmunoBody and Moditope platforms. This process has already begun with the formation of a non-exclusive research collaboration with a leading antibody technology company, during which the antibodies and AvidiMab technology will be assessed.

The glycan technology and opportunity

Glycans are carbohydrates that are attached to proteins or lipids, which modify their behaviour. Glycosylation is the process of attaching a glycan to a protein or lipid. In the case of proteins, it is a form of post-translational modification, like phosphorylation, and is critical to the final function of a protein. Glycans are known to be involved in cell-cell interactions, protein folding and trafficking, and cell signalling. There are also significant changes in glycosylation patterns of proteins and lipids in tumour cells.

In many ways, glycans can make ideal antibody targets for cancer treatment. Some glycans are highly specific for tumour cells, where they may be expressed at high levels. The potential of glycan antibodies in oncology has been validated by dinutuximab (United Therapeutics’ Unituxin), which binds to the glycan GD2 and is used to treat children with high-risk neuroblastoma.

However, it is challenging to produce antibodies with therapeutic potential that bind to glycans. The carbohydrate structures are not highly immunogenic, unlike most proteins, and tend to result in the formation of IgM antibodies with low binding affinities that are not suitable for therapeutic use. It is also more difficult to identify those glycan antibodies that bind specifically to a glycan of interest, than it is with an antibody that binds to a protein epitope. The net result is that there is a largely untapped pool of glycans that could make good antibody targets in the field of oncology.

Scancell has in-licensed a panel of preclinical antibodies that bind specifically to tumour-associated glycans (TaGs). The company has also discovered that these antibodies have many features that make them attractive as potential therapeutic agents, including:

  • Sub-nanomolar binding affinities;
  • High specificity for target TaG;
  • Target TaGs have very limited expression in normal tissues;
  • High rates of internalisation for drug delivery;
  • Ability to kill tumour cells efficiently (directly or via the immune system).

By selecting TaG targets that are not in generally expressed in normal tissues and then producing highly specific antibodies, Scancell has developed antibodies that essentially only bind strongly to tumour cells. As an example, Exhibit 1 shows the limited binding on normal tissues of the antibody FG88.2, which recognises the glycan Lewisacx on glycoproteins and glycolipids, and Exhibit 2 indicates the high levels of binding that can occur on tumour cells.

Exhibit 1: Lack of binding of glycan antibody FG88.2 to a broad range of normal tissues
Source: Chua J. X. et al, Clinical Cancer Research, March 2015;  Notes: 1 placenta; 2 bladder; 3 adipose; 4 brain; 5 oesophagus; 6 colon; 7 cervix; 8 diaphragm; 9 skin; 10 gall bladder; 11 heart; 12 ileum; 13 rectum; 14 skeletal muscle; 15 spleen; 16 stomach; 17 breast; 18 cerebellum; 19 thyroid; 20 uterus; 21 duodenum; 22 pancreas; 23 ovary; 24 tonsil; 25 jejunum; 26 kidney; 27 liver; 28 lung; 29 testis; 30 thymus; and 31 small intestine.
Exhibit 2: The binding of glycan antibody FG88.2 to different tumours with (i) no, (ii) weak, (iii) moderate or (iv) strong expression of tumour-associated glycan Lewisacx
Source: Chua J. X. et al, Clinical Cancer Research, March 2015

As with all tumour-associated antigens, the expression of a TaG is to a degree dependent on the tumour type and will vary between patients. For example, FG129 binds to 74% of pancreatic tumours, 50% of gastric cancers and 36% of colorectal cancers.

The highly targeted binding of Scancell’s TaG antibodies to tumour tissue means that these antibodies could be used as the starting point for the development of potent therapies, such as bispecific antibodies with a T-cell engager or CAR-T therapies, for solid tumours. A major issue with developing such novel therapies in these indications is on-target/off-tumour effects.

TaG antibodies are also well suited for potential development into antibody-drug conjugates (ADCs); they tend to be internalised more than those that bind to proteins (Exhibit 3). This in turn should result in more efficacious ADCs.

Exhibit 3: Images showing the internalisation of FG88 over time
Source: Chua J. X. et al, Clinical Cancer Research, March 2015

Glycan antibodies like others can result in tumour-cell killing mediated by the immune system via antibody dependent cell cytotoxicity (ADCC), antibody dependent cell phagocytosis (ADCP), or complement dependent cytotoxicity (CDC). But unusually, some glycan antibodies can kill cells directly by damaging the cell membrane (oncotic necrosis). This finding led to Prof Lindy Durrant and her team at Nottingham University developing the AvidiMab technology.

AvidiMab delivers direct killing of cells

AvidiMab antibodies have specific modifications made to the Fc domain, which confer increased avidity and direct-killing ability with certain targets to the antibody at nanomolar concentration in vitro. Exhibit 4 provides an illustration of the effect of the AvidiMab on tumour cells.

Many antibodies depend on ADCC or ADCP to kill tumour cells, which rely on the necessary effector cells (T-cells and NK-cells) being active within a tumour. However, many tumours develop immunosuppressive microenvironments (become “cold” tumours) to evade detection by the immune system, and in these tumours an AvidiMab antibody should be more efficacious than a standard antibody.

It is important to note that AvidiMabs can kill tumour cells efficiently both directly and indirectly (via ADCC, ADCP or CDC; Exhibit 5). Theoretically, this technology can be applied to any antibody and not just to glycan antibodies and could be used to enhance their potency in oncology.

Exhibit 4: The direct killing activity of FG88 antibodies with the AvidiMab technology
Source: Chua J. X. et al, Clinical Cancer Research, March 2015
Exhibit 5: Illustrations detailing the various killing mechanisms of glycan antibodies
Source: Vankemmelbeke M et al; OncoImmunology5:1; January 2016

Partnering potential

Scancell has started the partnering process, and has already formed a non-exclusive research collaboration with a leading antibody technology company so that the unnamed company can properly assess the antibodies and technology. The unique panel of glycan antibodies, and the ability of AvidiMabs to kill tumour cells could enhance the efficacy of many antibodies in oncology are likely to attract interest from other parties. So, we would not be surprised if other similar collaborations were formed ahead of a competitive, out-licensing discussions.

It should be noted that another company might have been reluctant to out-license such promising technologies, but sensibly Scancell is maintaining its focus on ImmunoBody and Moditope, and the funds received from any deal will be invested in the core technologies.

A summary of the characteristics of four of Scancell’s glycan antibodies is detailed in Exhibit 6. The data on these antibodies will be crucial for any licensor as they provide validation of the value of the technologies. Scancell has the option to out-license the antibodies, and the AvidiMab technology separately (and AvidiMab could be licensed to multiple parties on a non-exclusive basis), but in our opinion it is most likely that the greatest return for the company will be achieved by partnering these assets together.

It is always challenging estimating the potential value of early stage technologies. But as a reference, Scancell partnered some preclinical glycan antibodies (generated using an earlier version of the glycan antibody platform) to the Australian biotech company Peptech in 2006, whose CEO was at the time John Chiplin, for an upfront payment of £2m and a milestone payment of £2.85m (received in 2011). This suggests that Scancell could receive significant upfront and milestone payments, with a modest royalty being payable to Nottingham University, from out-licensing the glycan antibody platform and AvidiMab technology, with the potential to receive additional milestones.


No changes have been made to our estimates or valuation to be conservative.

Exhibit 6: A summary of the characteristics of four TaG antibodies that Scancell aims to partner
Source: Scancell
Exhibit 7: Summary of financials
Source: Scancell, Trinity Delta  Note: Adjusted numbers exclude exceptionals. The short-term debt in FY21 is indicative of the company’s funding requirement



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