Transformational £15m capital raise closes

Update | 12 August 2020

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Scancell has raised c £15m (gross) in aggregate through the issue of new shares (via a placing, subscription, and open offer) and £6m in convertible loan notes (CLNs). The raise was underpinned by the £10m investment (£5m in equity, £5m CLNs) from new investor, Redmile Group LLC, a specialist healthcare and life sciences fund group. Redmile’s investment, coupled to support from existing cornerstone investor, Vulpes (£1m in equity, £1m CLN) provides important validation of Scancell’s technology platforms, and the clinical and commercial value they represent. Scancell now has the financial resources to enable it to progress the clinical opportunities outlined in our May 2020 Outlook. Following confirmation of shareholder approvals at the August 11th General Meeting, we update our rNPV model and reinstate our Scancell valuation. This is now £83.7m, equivalent to 13.3p/share (11.5p/share fully diluted).

Year-end: April 30201820192020E2021E
Revenues (£m)
Adj. PBT (£m)(4.9)(6.7)(6.8)(7.7)
Net Income (£m)(4.2)(5.6)(5.7)(6.4)
Adj. EPS (p)(1.3)(1.5)(1.2)(1.1)
Cash (£m)
EBITDA (£m)(4.9)(6.7)(6.8)(7.6)
Source: Trinity Delta Note: Adjusted numbers exclude exceptionals
  • Four elements to raise  £9m (gross) was raised in aggregate from the issuance of 163.77m new shares at 5.5p through: (1) the £5m Redmile subscription, (2) the c £2m placing with new and existing institutional investors (including £1m with Vulpes), and (3) the significantly oversubscribed open offer for £2m in new shares (on the basis of 4 new share per 51 shares held). The fourth element are CLNs with an aggregate principal amount of £6m, two-year term, and a 6.2p conversion price.
  • Use of proceeds  Funds from this transformational raise have been earmarked for: (1) supporting potential partnering discussions for the antibody technology platform; (2) progressing clinical development of Modi-1 (Phase I/II trial) and SCIB1 (Phase II study), and (3) continuing work on the COVIDITY COVID-19 programme until non-dilutive funding or partnering support is secured.
  • Proforma FY20 cash of £17.6m  Scancell ended H119/20 (period ending October 31, 2019) with a cash balance of £5.79m. FY20 results (to April 30, 2020) are due to report in September. Our FY20e cash estimate is £3.5m, which coupled to assumed net proceeds of £14.1m provides a £17.6m proforma cash position, and a cash runway into 2022.
  • Reinstated rNPV valuation of £83.7m or 13.3p/share  We value Scancell using a rNPV and sum-of-the-parts methodology, with conservative assumptions. Updating our model for the fund raise generates a valuation of £83.7m, equivalent to 13.3p/share (or 11.5p/share fully diluted). Scancell has multiple likely catalysts over the coming year: including further AvidiMab collaborations, the start of the SCIB1 trial, and the initiation of enrolment of the first Moditope study.


12 August 2020

Market Cap£43.5m
Enterprise Value£25.9m
Shares in issue629.1m
12 month range4.15-9.80p
Free float59.2%
Primary exchangeAIM London
Other exchangesN/A
Company CodeSCLP.L
Corporate clientYes

Company description

Scancell is a clinical-stage immuno-oncology specialist that is developing three 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.


Lala Gregorek
+44 (0) 20 3637 5043

Franc Gregori
+44 20 3637 5041

Scancell: funded to the next value inflection points

We have revisited our Scancell valuation model following the shareholder vote confirming approval of the capital raise at the General Meeting on August 11. To recap, in line with our policy, we had suspended our valuation and forecasts on the announcement of the proposed raise on July 22. For context, this previous valuation was £72.4m, equivalent to 15.6p share.

Our new Scancell valuation is £83.7m, equivalent to 13.3p/share or 11.5p/share fully diluted. The various components of the valuation are summarised in Exhibit 1. We continue to value Scancell using an DCF model, where the rNPV of each of the three most advanced oncology projects (adjusted for the likely success probabilities) is summed and netted against the costs of running the operation. The success probabilities are based on standard industry criteria for the respective stage of the clinical development process, but are flexed to reflect the inherent risks of the individual programme, the indication targeted, and the trial design.

Exhibit 1: rNPV-based valuation of Scancell.
Source: Trinity Delta  Note: NSCLC = non-small cell lung cancer, TNBC = triple negative breast cancer

The key update vs our previous valuation model is the inclusion of the capital raise (ie cash position, number of shares). Given the CLN component, which introduces potential future dilution, we now also calculate a fully diluted per share valuation. This figure also includes outstanding share options, assuming that only those with an exercise price lower than our undiluted per share value are exercised.

We continue to employ conservative assumptions regarding market sizes and growth rates, net pricing, adoption curves, and peak market penetration. Importantly, we have valued only the clinical programmes (including those ready to enter the clinic) with nothing currently attributed to the technology platforms themselves and their use in other clinical applications. We accept that this is arguably overly conservative, especially as the platforms do have an inherent value. Nonetheless, we would counter that the approach leaves us with ample headroom and scope to revisit our assumptions should the need arise.

We reiterate our view that there are a number of likely catalysts over the coming year; including further AvidiMab collaborations, the SCIB1 Phase II trial recruiting patients more actively, the first Moditope Phase I/II study initiating enrolment, and potential increased visibility of progress with the COVID-19 vaccine collaboration.

At this stage we have made no changes to our forecasts (summarised in Exhibit 2). We expect to revisit our financial model following the reporting of FY20 results in September, when we anticipate management will provide further guidance on financial and clinical plans.

Exhibit 2: Summary of financials
Source: Scancell, Trinity Delta  Note: Adjusted numbers exclude exceptionals.



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