Heading into important 2024 clinical catalysts
Update | 31 January 2024
Scancell has a number of important clinical catalysts upcoming in 2024 for its lead cancer vaccines, which are the strategic focus. Readouts include further Phase II data for SCIB1 in advanced skin cancer, first clinical data with second-generation iSCIB1+, and key CPI combination data for Modi-1 in multiple solid tumours. Commercial prospects for these will likely be maximised through partnerships, and positive data could catalyse interest and discussions, in our view. In addition, Scancell’s antibody platforms, GlyMab and AvidiMab, provide attractive out-licensing opportunities. Cash has been boosted through the December fundraise, with a runway now comfortably into late 2025. Our updated Scancell rNPV valuation is £304m, or 33p per share.
|Year-end: April 30
|Adj. PBT (£m)
|Net Income (£m)
31 January 2024
|Shares in issue
|12 month range
Scancell is a clinical-stage immuno-oncology specialist that has four broadly applicable technology platforms. Two are therapeutic vaccines, Moditope and ImmunoBody, and two are antibody based, GlyMab and AvidiMab.
+44 (0) 20 3637 5043
+44 20 3637 5042
Table of Contents
Scancell is a clinical stage biotechnology company focused on the adaptive immune system, with four distinct technology platforms: two promising oncology vaccine platforms (Moditope and ImmunoBody), and two antibody technologies (GlyMab and AvidiMab). These have the potential to treat many solid cancers, either as monotherapy or in combination with other agents. Modi-1, the first Moditope programme, is progressing in a Phase I/II trial targeting hard-to-treat solid tumours, and further efficacy data, notably in combination regimens, are due during 2024. The lead ImmunoBody programme, currently SCIB1, has already demonstrated impressive response data in the ongoing Phase II study in metastatic melanoma, with a transition to the next-generation iSCIB1+ expected in coming months. The broad acting GlyMab antibodies are generating exciting preclinical data; a first partnering deal with antibody expert Genmab was executed in October 2022, and further deals are possible. AvidiMab technology could be increasingly employed to enhance avidity and potency. Our risk adjusted NPV valuation for Scancell is £304m, or 33p per share, with significant upside from multiple upcoming catalysts.
Scancell has four distinct technology platforms that address oncology vaccines and antibodies: (1) Moditope vaccine effects are mediated via CD4 pathways; (2) ImmunoBody vaccines employ CD8 T cell pathways; (3) the GlyMab platform generates high affinity anti-glycan antibodies; and (4) AvidiMab can enhance the avidity of most antibodies. Scancell’s pipeline is summarised in Exhibit 1 and more details on each platform are available in our February 2023 Outlook.
The near-term focus is on progressing the clinical development of SCIB1/iSCIB1+ and Modi-1, with data for both expected during 2024. Meanwhile, for the GlyMab platform, the Genmab deal is an example of the partnering optionality, and we expect other programmes could also be partnered for future clinical development. The recent December £11.9m (gross) fundraise has provided Scancell with a runway into late 2025, beyond key near-term inflection points. We provide a summary of recent data and upcoming catalysts for the focus programmes below.
The lead ImmunoBody programme is currently SCIB1, which is being developed for the treatment of advanced unresectable melanoma. The open label Phase II SCOPE study is ongoing, which is examining SCIB1 in combination with checkpoint inhibitor (CPI) doublet therapy, consisting of Yervoy (ipilimumab) plus Opdivo (nivolumab). Based on preclinical data which suggest a synergistic effect when SCIB1 is combined with a relevant CPI, the SCOPE study rationale is that such a combination could improve efficacy, based on the SCIB1 ImmunoBody vaccine priming an immune response against the tumour, with the CPI reducing the immune-suppressant effect seen in the tumour microenvironment.
In September, initial top-line data from the first stage of the SCOPE trial demonstrated that SCIB1 plus doublet therapy achieved an objective response rate (ORR) of 82%, based on nine responses in 11 patients (September 2023 Lighthouse), with no increase in toxicity. At this timepoint, the tumour reduction at 13 weeks was 31-94%, with four patients reaching week 25 achieving 69-94%, and two patients at 37-weeks achieving 87-94%. In November, a further two responses were recorded (11 out of 13 patients), bringing the ORR to 85%. Importantly, this included one complete response, plus nine confirmed partial responses (waterfall plots shown in Exhibit 2).
The 85% ORR observed in SCOPE is higher than the planned study assumption of 70% for the SCIB1/doublet therapy combination (and the assumed 50% response rate for doublet therapy alone). As we have previously outlined (September 2023 Update), doublet therapy response rates are around 48-58%, which to date have been the highest observed in advanced melanoma.
SCOPE is now in the second stage, and will recruit up to a total of 43 patients (including those already recruited in the first stage), with data now expected in Q324 based on the current recruitment rate. The aim is to achieve at least 27 responses in total to demonstrate SCIB1 can exceed currently achievable ORRs. The strength of the initial top-line data mean this second stage has a 90% probability of success. SCOPE will also transition in Q124 to the improved second-generation iSCIB1+ construct, which is enhanced with AvidiMab with first data expected Q324. This could broaden the target market by addressing 100% of melanoma patients, and is also more potent. A potentially registrational Phase II/III trial is currently being planned, assuming Q324 data are positive.
The Phase I/II ModiFY study of Modi-1 is multi-cohort, adaptive trial, which has already completed the initial dose escalation and safety phase, and is ongoing in a number of specific expansion cohorts that explore Modi-1 in four different hard-to-treat solid tumours (triple-negative breast cancer (TNBC), ovarian cancer, head & neck cancer, and renal cancer) as monotherapy, in combination with CPIs, as well as in the neoadjuvant (pre-surgical) setting. A new cohort including renal cell carcinoma in combination with double CPI therapy (Yervoy+ Opdivo) is also being added. The trial design is in Exhibit 3.
Modi-1 was well tolerated at both low and high doses as monotherapy and in combination with a CPI in the initial dose escalation and safety phase. There has also been encouraging early efficacy as monotherapy in various hard-to-treat cancers, including head and neck, ovarian and breast cancer. Despite failing prior treatments, 60% of patients receiving Modi-1 achieved stable disease for at least eight weeks, and some patients experienced longer periods of stabilisation.
The combination of Modi-1 with CPIs could potentially improve these observed response rates, and data are expected during 2024. Recruitment is focused on Modi-1 in combination with a CPI in head & neck and renal cancers, and will now also include a new cohort in renal cell carcinoma in combination with double CPI therapy, and in the neoadjuvant (pre-surgery) setting in head & neck cancer. Together, these will provide supporting data for use of Modi-1 in combination with CPIs, particularly with double CPI treatment.
We value Scancell as a classic drug discovery and development play, using a sum of the parts rNPV-based model for the key platforms, with each incorporating associated costs. These are summed together with cash. As is usual, we have rolled forwards our valuation in time, have updated for FY23 and interim results including cash, and have incorporated the £11.9m (gross) December fundraise. These result in a valuation of £304m (from £300m), which has been diluted to 33p per share (from prior 37p) owing to the increased number of shares issued as part of the fundraise. Our updated valuation is shown in Exhibit 4.
Our ImmunoBody valuation combines a placeholder for the platform, where we assume peak sales of $1bn at 5% probability, and also includes a standalone valuation for SCIB1/iSCIB1+ at 10% probability (as it is more advanced in development) with peak sales of $1bn; SCIB1/iSCIB1+ is worth c £36m in rNPV, representing c 70% of the entire ImmunoBody valuation. We maintain a blended royalty rate of 17.5% for the product-based elements (apart from for the Genmab deal where we include more specific deal terms), reflecting the typical upfronts and progress milestones that could form part of any future partnering deals. For AvidiMab we use a more modest 8% blended rate, which reflects the lower relative value-add, but offset to a degree by a broader applicability.
The current limited visibility means we have adopted conservative assumptions, arguably overly so, regarding market sizes and growth rates, net pricing, adoption curves, and peak market penetration. This leaves the potential for future upside if progress materialises as management expects. There are a number of likely catalysts expected over the next 12-18 months, notably data for both SCIB1/iSCIB1+ and Modi-1, with successful outcomes likely leading to upward revisions to our valuation.
Scancell did not report any H124 revenues (6 months to 31 October 2023), whilst H123 revenues of £5.3m related entirely to the non-recurring $6m upfront received from partner Genmab for the October 2022 GlyMab deal (October 2022 Lighthouse), which was recognised in full at the time of the deal. Scancell is entitled to future potential development, regulatory and commercial milestones of up to $624m for development across all modalities, with $208m for each product, plus single digit royalties on net sales. Despite the potential for future milestones, either from Genmab or from new partnering agreements, we conservatively do not include any near-term significant income in our financial forecasts.
R&D spend in H124 increased to £5.7m (H123: £4.3m) reflecting clinical trial progression, notably the ModiFY and SCOPE trials, whilst G&A was largely unchanged at £2.4m (H123: £2.4m). These led to an operating loss of £8.1m (H123: £2.0m). Development beyond current trials will depend on clinical data, potential partnering interest, and sufficient resources being available to reach value inflection points. Hence for now our R&D spend forecasts, which are largely illustrative pending data and future plans, are based on current trials which will be completing. Therefore we forecast small declines from £11.6m in FY23 to £10.5m in FY24e and to £9.2m in FY25e. For G&A we forecast very modest rises from £5.0m in FY23 to £5.1m in FY24e and £5.2m in FY25e.
Financial income in H124 was £4.5m (H123: loss of £4.0m), which included a non-cash finance gain of £4.9m (H123: expense of £3.5m) for revaluation of the derivative financial liability relating to the convertible loan notes. Altogether, this plus other elements led to a net loss in H124 of £2.5m (H123: £5.0m).
Cash at end October was £13.1m (end April 2023: £19.9m) and in December Scancell successfully raised £11.9m (gross) via a capital raise consisting of: (1) £10.7m (gross) through an upsized placing to new and existing institutional shareholders; and (2) £1.2m (gross) through an Open Offer to qualifying shareholders. A total of 108.2m new shares were issued at 11p per share, representing a discount of 10.2% to the middle market closing price on 29 November 2023, before the raise was announced. According to our updated forecasts (Exhibit 5) and outlined above, this should be sufficient to fund operations into late 2025.
Trinity Delta Research Limited (“TDRL”; firm reference number: 725161), which trades as Trinity Delta, is an appointed representative of Equity Development Limited (“ED”). The contents of this report, which has been prepared by and is the sole responsibility of TDRL, have been reviewed, but not independently verified, by ED which is authorised and regulated by the FCA, and whose reference number is 185325.
ED is acting for TDRL and not for any other person and will not be responsible for providing the protections provided to clients of TDRL nor for advising any other person in connection with the contents of this report and, except to the extent required by applicable law, including the rules of the FCA, owes no duty of care to any other such person. No reliance may be placed on ED for advice or recommendations with respect to the contents of this report and, to the extent it may do so under applicable law, ED makes no representation or warranty to the persons reading this report with regards to the information contained in it.
In the preparation of this report TDRL has used publicly available sources and taken reasonable efforts to ensure that the facts stated herein are clear, fair and not misleading, but make no guarantee or warranty as to the accuracy or completeness of the information or opinions contained herein, nor to provide updates should fresh information become available or opinions change.
Any person who is not a relevant person under section of Section 21(2) of the Financial Services & Markets Act 2000 of the United Kingdom should not act or rely on this document or any of its contents. Research on its client companies produced by TDRL is normally commissioned and paid for by those companies themselves (‘issuer financed research’) and as such is not deemed to be independent, as defined by the FCA, but is ‘objective’ in that the authors are stating their own opinions. The report should be considered a marketing communication for purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. TDRL does not hold any positions in any of the companies mentioned in the report, although directors, employees or consultants of TDRL may hold positions in the companies mentioned. TDRL does impose restrictions on personal dealings. TDRL might also provide services to companies mentioned or solicit business from them.
This report is being provided to relevant persons to provide background information about the subject matter of the note. This document does not constitute, nor form part of, and should not be construed as, any offer for sale or purchase of (or solicitation of, or invitation to make any offer to buy or sell) any Securities (which may rise and fall in value). Nor shall it, or any part of it, form the basis of, or be relied on in connection with, any contract or commitment whatsoever. The information that we provide is not intended to be, and should not in any manner whatsoever be, construed as personalised advice. Self-certification by investors can be completed free of charge at www.fisma.org. TDRL, its affiliates, officers, directors and employees, and ED will not be liable for any loss or damage arising from any use of this document, to the maximum extent that the law permits.
Copyright 2024 Trinity Delta Research Limited. All rights reserved.