So, it’s not surprising to see investors take an interest in this little enterprise. But the question is, at around 15p, is it among the best penny stocks to buy right now?

A year of progress

As a quick crash course, Scancell is an immunotherapy drug research business focused on various forms of cancer. Its primary development pipeline currently consists of four vaccines, two of which are in Phase 2 trials, and four antibodies.

Over the last few months, the board of directors has been getting some fresh talent. In July, Dr Florian Reinaud joined as a non-executive director. A few weeks later, Dr Nermeen Varawalla joined the group as chief medical officer. And shortly after that, Dr Phil L’Huillier was appointed as the new chief executive officer.

Each appointee has an impressive amount of experience within the healthcare industry, both from a medical and managerial perspective. And with L’Huillier having already served as CEO at another biotech group in Germany, steering the business to success, there’s reason for optimism, in my opinion.

Meanwhile, the latest clinical trial results continue to look promising. Its flagship SCIB1 drug, which targets unresectable melanoma, has delivered encouraging results from its ongoing Phase 2 trials so far. Its Modi-1 drug, which targets a variety of other cancers, is also showing good safety, with the expansion of cohorts on track.

In other words, the drugs are seemingly meeting expectations so far. And should these trends continue, Scancell could be getting primed to reap enormous future revenue.

Taking a step back

Seeing solid progress being made in the fight against cancer is terrific. But from an investment perspective, it’s impossible to ignore the risks associated with Scancell. Penny stocks are already high-risk opportunities. But this risk skyrockets when entering into the world of biotech.

Based on current timelines, SCIB1 isn’t expected to complete Phase 2 trials until 2026. And looking at industry averages, it could be as late as 2030 before Phase 3 trials are completed.

In the meantime, Scancell has no revenue stream, which makes it entirely dependent on external financing. Right now, there’s around £15m in cash on its balance sheet, helping keep the lights on. But sadly, that won’t be nearly enough to fund research and development over the next six+ years.

What does this mean for investors? Most likely, shareholders can expect a lot of equity dilution moving forward as Scancell looks to raise capital. We’ve already seen a 50% dilution over the last five years, with the number of shares outstanding rising from 476m in 2020 to 929m today.

In the long run, this may not matter. After all, if Scancell is successful, even after dilution, shareholders could reap enormous returns. However, clinical trials are notoriously difficult. And with the firm’s fate entirely dependent on external investors offering capital, all it takes is one bad result to send the share price plummeting.

That’s why, despite the explosive opportunity, this isn’t a penny stock I’m rushing to buy right now.

The post Is Scancell the best penny stock for me to buy today? appeared first on The Motley Fool UK.

So, what’s beyond this big share price rise? And should I buy the penny stock for my own portfolio?

What does Scancell do?

First, a little bit of information on this under-the-radar company.

Scancell is a clinical-stage biopharmaceutical company that’s focused on developing novel medicines to treat significant unmet needs in cancer and infectious disease treatment.

Listed on London’s Stock Exchange’s Alternative Investment Market (AIM), it currently has a market cap of around £137m, meaning it’s a very small company.

Why is the share price soaring?

As for why the share price has jumped recently, it’s all down to excitement around the company’s ImmunoBody® cancer vaccine, SCIB1, which is being developed for the treatment of patients with metastatic melanoma.

In September, the company released the results from the first stage of its Phase 2 SCOPE trial with the vaccine and they were very good, with an 82% response rate from 11 patients.

The trial has now successfully transitioned into the second stage, which will involve an additional 27 patients. The company believes that there is a 90%+ probability that the second phase will also be successful.

If the data is validated in the second-stage trial, it will give Scancell the confidence to initiate a randomised phase 2/3 adapted registration programme in patients with unresectable melanoma (melanoma that cannot be completely removed) – a potential $1.5bn per year market.

Should I invest?

There’s no doubt that Scancell’s cancer vaccine sounds promising. If it gets to market, investors here could see huge returns.

But the thing about these kinds of clinical-stage biopharmaceutical companies, from an investment point of view, is that they are very risky.

Ultimately, their projects tend to be very hit or miss. As a result, they often turn out to be poor long-term investments.

I actually remember discussing Scancell with a friend all the way back in 2012. At the time, the shares were on fire (they were a ‘12-bagger’ in 2012) due to enthusiasm over the same vaccine – SCIB1.

But with the company generating minimal revenues and no earnings since then, its share price has just gone backwards.

Personally, I think a better approach to small-cap investing is to focus on companies that are already profitable and growing their revenues and earnings at a fast pace.

A good example of such a company is software firm Cerillion.

It has been a fantastic investment in recent years (outperforming Scancell by a significant margin) due to the fact its earnings have been steadily climbing.

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Of course, not every small-cap company with growing revenues and earnings will turn out to be a good investment. There are plenty of variables that can impact investment returns including market conditions and valuations.

But with a bit of research, it’s possible to find high-quality small-cap companies that have the potential to be winning long-term investments.

You can find plenty of information on these kinds of companies right here at The Motley Fool.

The post Scancell shares are on fire! Should I buy? appeared first on The Motley Fool UK.

The potential to print profits

In early July, I flagged up the 46% jump in a week for De La Rue (LSE:DLAR). The currency printing and money authentication business released results that were better than the market was anticipating. Added to the mix were comments that it’s seeing a recovery in demand in some divisions.

Over the past year, the stock is still down 45%, so there’s plenty of potential to rally. It’s also worth noting that the share price has traded above 100p during the past year, even though it’s currently at 45p. This is one reason why the company is on my watchlist.

Financial results haven’t been the best recently but I think there’s a strong chance the worst is behind it following the full-year results from last month. New initiatives could add significant long-term value. This includes new Government Revenue Solutions projects with the Middle East, including Bahrain, Qatar and Oman.

The need for cash in society is dwindling, which is an ongoing concern for De La Rue. Yet revenue is growing in other divisions, such as authentication. If the company can continue in the pivot to a more sustainable business model, I don’t see why the pessimism around the stock can’t evaporate.

Waiting for a move

The other penny stock that I’m looking at is Scancell Holdings (LSE:SCLP). The stock has fallen by 24% over the past year, with a share price of just 9.5p.

The company is a clinical stage biopharmaceutical company. Ideally, it needs to be able to take products from research stage, through clinical trials and get them all approved in order to generate sizeable profits.

Currently, the business is loss-making. It doesn’t have any revenue coming in through the door, but has sizeable expenses to fund the research and trials. Although this is a risk, it’s the same practice that all in the same business line go through.

Yet on the other hand, it has £24m cash on hand (as of the latest report). It burned through £4.4m in the previous six months, so it has a big buffer to keep running operations for a while.

In the meantime, I believe it has a good shot at taking either Modi-1 or SCIB1 products to the market in 2024. Modi-1 had a recent 44% disease control rate with test patients of aggressive cancer that had exhausted other options. This shows me that the potential take-up of the product if it reaches the market could be very large. As soon as investors get a smell that this could be the case, I’d expect the share price to rally.

I’m considering investing a small amount of money in both stocks in coming weeks. I’m using a small amount due to the high risk involved. Yet if either replicate the performance of RC365, even a modest sum would be able to generate a healthy return.

The post I’d forget RC365 shares! I think these 2 penny stocks could be next appeared first on The Motley Fool UK.

I wonder if I could double my money over the next five years?

The fight against cancer

Scancell is a biopharmaceutical company that’s developing medicines to treat cancer and certain infectious diseases, including Covid-19. The company is researching vaccines in an attempt to induce an immune response in patients. It’s also working on redirecting immune cells through the stimulation of antibodies.

According to Cancer Research UK, one in two of us will develop cancer at some stage. This frightening statistic shows the size of the potential market for Scancell’s products.

Ignoring the devastating personal consequences of the disease, cancer treatment costs the National Health Service over £6bn each year. The economic cost is estimated to be several times higher.

Progress to date

Since its formation, Scancell has yet to generate any revenue and has racked up £49m of losses.

Many of its products are undergoing clinical trials, with those seeking to treat pancreatic cancer and melanoma being the most advanced. Given the uncertainty surrounding the development of any new medicine, it’s not surprising that the directors remain silent as to when the first revenue will be earned.

The company raised £46m in 2021, and had £28m in the bank at 30 April 2022. Based on its cash burn for the last two financial years, this should enable work to keep going for another three years.

For a loss-making company, its current market cap of around £200m seems high. But this is based on its future prospects. If any of the trials are a success, the earnings potential is huge.

Pharmaceutical companies can be highly profitable. Take GSK as an example. Between 2017 and 2021, it made operating profits in excess of £30bn!

A risky business

But, investing in Scancell is not without risk. The clinical trials may not be successful.

Also, the company might need to raise additional funds to bring its medicines to market. This is often the case with companies in the development stage of growth, and would lead to shareholder dilution.

I’m also conscious of advice from Warren Buffett. He once said: “Never invest in a business you cannot understand“. I don’t have a medical degree, which makes reading Scancell’s annual reports and investor presentations particularly difficult.

I’m also nervous about getting caught up in investor hype. The company is the subject of frenzied debate on some investor forums. Several years ago, I invested in another AIM share as it was causing something of a stir. But I didn’t do my research properly, and will probably never get my money back.

What would I do?

Despite all these negative thoughts, if I had a spare £1,000 available, I would buy Scancell shares.

The company recently signed a deal with Genmab, a Nasdaq company, to licence and commercialise one of its antibodies. If successful, Scancell could earn up to $624m from the deal.

The board is also full of highly qualified individuals with wide experience of the health, biotech and pharmaceutical industries.

Imagine owning a slice of a company that helped defeat cancer. I’d love to be part of that.

The post If I had a spare £1,000 I’d buy this penny stock right now! appeared first on The Motley Fool UK.

But interestingly, that has been driven by the shares more than doubling since around the middle of October. Until that point, the shares had been around 37% down on the year.

Looking at that chart, clearly the shares have been on a tear lately. Could that very strong positive momentum continue in 2023 – and should I load up now in anticipation?

Promising news

There are several reasons for the recent surge in the Scancell share price.

In October, the company announced that it had licensed its technology to US biotech company Genmab, which specialises in cancer antibody therapies. It also announced its annual results, with losses falling from £15.4m the prior year to £2.1m last year.

The deal with Genmab could help to validate Scancell’s technology. That could be good for the Scancell share price in the long term.

I also think a much smaller loss is good news. Having said that, the fall was driven by financing-related costs. An operating loss of £8.8m the prior year actually rose to £13.3m last year, driven by higher expenditures on both development and administration.

This is also a good example of why as an investor one needs to look at cash flows, not only earnings. While the loss was £2.1m, the company ended its financial year with £12.4m less in cash than it started with.

How to value Scancell

Scancell has a market capitalisation of over £200m. What is it worth?

One thing missing from last year’s results was revenue. Scancell does not generate meaningful revenue at the moment, while its drugs are in a development phase. It has also been heavily loss-making for many years in a row.

So, clearly, investors are not valuing this growth company based on its current business performance. Instead, they are trying to estimate the potential value of the company’s drug portfolio if Scancell is able to bring them to market successfully, either on its own or by licensing them out.

How can we know whether a company’s vaccines or antibodies are effective? The ultimate answer lies in looking at the results of clinical trials. But Scancell is still at this trial stage. I therefore think it is unclear whether its products will end up having a viable commercial market of any scale. Meanwhile, research and development costs will continue to mount up.

Could the Scancell share price keep soaring?

So putting money into Scancell shares right now is investing in the hope of clinical trial success and commercialisation. In reality I do not think investors are able to tell the likelihood of such success until trial results are published.

If good news comes through, in the form of successful trial results, more licensing deals or a takeover bid by a bigger pharma rival, I think Scancell shares could rocket in 2023. But equally, if there is disappointing news from a trial, the Scancell share price could crash.

This strikes me more as speculation than investment. I have no way to know how efficacious Scancell’s products will turn out to be. So I have no basis on which to assess the company’s prospects. I am therefore not investing in it.

The post Is the Scancell share price set to rocket in 2023? appeared first on The Motley Fool UK.

Since late October, it’s more than doubled, reversing a weak year in general and propelling the stock to a 12-month gain of 30%. And over the past five years, we’re looking at a 118% rise.

Is Scancell one of those things many investors hope for at least once in their careers? A penny stock set to become a multibagger? First, though, what’s it all about?

Scancell describes itself as a “clinical stage biopharmaceutical company.” It uses its immune system expertise to develop “truly novel medicines” targeting cancer and infectious diseases.

The company’s approach results in the development of vaccines and monoclonal antibodies. And it seems there’s been a fair bit of progress over the course of 2022.

Novel immunology

We’ve seen how novel approaches to vaccines can get us quick results during the Covid pandemic. The research cycle was greatly accelerated due to the urgency. But the unprecedented vaccine success has shown the things that could be possible with this kind of technology.

At this point, though, the risk-spotting side of me is tapping my shoulder and trying to give me a warning. It’s very easy to get caught up in new biotech developments, and assume every company doing research in the same field will be successful.

Just because one gold prospector has struck it rich doesn’t mean the one in the next valley will do so too.

Optimism

With that caution aside, Scancell has been sharing upbeat news with investors. Most recently, the company has licensed technology that should allow it to reach a Phase 1 clinical study of its Modi-2 cancer candidate by 2024.

Prior to that, we heard that the first patient in the firm’s ModiFY Phase 1 trial has been dosed.

Scancell has also recently signed a licence agreement for US biotech company Genmab to use its GlyMab development technology. Scancell could receive up to $624m depending on Genmab’s success with it.

Bottom line

This all sounds promising to me — though I have to remind myself that I don’t know anywhere near enough to understand all the clever biotech details. But we need to get down to the hard cold facts of cash.

For the year ended 30 April 2022, Scancell posted an operating loss of £13.3m. That’s up from the previous year’s £8.8m, and reflects the cost of the company’s three ongoing clinical trials. There are no profits forecast for at least the next two years, so it looks like we’ll be in the cash burn phase for a while yet.

The £28.7m on the balance sheet in April (down from £41.1m) should last for now. But it looks to me like more cash will probably be needed before Scancell turns a profit. And that could mean dilution for existing shareholders.

Verdict?

I’m seeing a potential biotech growth stock, but not yet profitable and still burning cash. I’ve seen plenty before in the same situation. But I’ve never had any way to tell which ones would turn into good buys, and which would mean goodbye to cash.

The post Why is the Scancell share price climbing? appeared first on The Motley Fool UK.

Yet its share price has continued to trade basically sideways for the past six months. An update on testing in the second half could light a fire under the pharma play’s share price again.

Of course, buying drugs developers can be high risk. There’s no guarantee trials will come back positive, in this case neither for the testing of said vaccine later in 2021, nor for its other products used to treat cancer and infectious diseases.

But at the moment, news flow surrounding its Covid-19 battler for one continues moving in the right direction. South Africa signed off for Phase 1 clinical trials to begin late last month.

Packed with potential

I think Scancell could be considered to be a very speculative buy. But if it gets things right, the rewards for investors could be considerable. As for Covid-19, analysts at McKinsey & Company predict the pandemic will drag on for the next few years, at least. And, pleasingly for the likes of Scancell, they anticipate “it is likely that some measures such as booster vaccines are likely to be required indefinitely.”

Scancell’s work in the fast-growing fields of oncology and infectious diseases also offers plenty to be encouraged by. Although it’s worth noting City brokers don’t expect the penny stock to turn a profit for the next few years at least. Drugs R&D is expensive business, and Scancell may well be forced to tap shareholders for cash before too long.

Another exciting penny stock

Powerhouse Energy Group’s (LSE: PHG) another penny stock packed with potential. The escalating climate crisis means legislators are accelerating plans to further their green agendas. And this plays into the hands of this UK energy share.

Powerhouse has developed proprietary technology than turns discarded plastic, tyres and other waste items into clean energy, in this case a hydrogen-rich gas.

Hydrogen is one area of energy in which lawmakers are stepping up investment. In the UK, for instance, the government plans to develop 5 gigawatts of low-carbon hydrogen production capacity by 2030. Analysts at Bank of America think hydrogen will take 25% of global oil demand by 2050.

This doesn’t mean Powerhouse Energy is a slam dunk for those seeking to ride the green revolution, of course. Okay, the penny stock generated its first-ever revenues in 2020, thanks to initial engineering work on the Protos energy recovery facility in Cheshire.

But this line of work is naturally complex and expensive. So any problems with getting its technologies up and running (it’s hoped Protos will be working by 2022) could hammer its sales expectations and force it to ask investors for cash.

Still, like Scancell, I think this penny stock’s still worth serious attention today.

The post 2 speculative penny stocks I’m thinking about buying appeared first on The Motley Fool UK.

Here I explain why the shares have been dropping, and my next move.

Vaccine hopes

Scancell is primarily a developer of immunotherapies for cancer. But during the pandemic, it has pivoted towards Covid-19. The company has developed a vaccine it hopes is cheap, effective and scaleable. With massive global demand for vaccines to suit all budgets, the market warmed to this new focus by Scancell.

Last month the company announced that  it obtained local regulatory permission for a Phase 1 clinical trial of its COVIDITY vaccines in South Africa. That puts it well behind larger competitors, such as Pfizer and AstraZeneca, that long since completed the equivalent clinical trial phase of their vaccines and have been rolling them out commercially since last year. However, I don’t think that means Scancell is too late. There’s large global demand for vaccines. It could be that Scancell ends up offering a cost or availability advantage that makes its vaccine more appealing to developing countries, for example.

The company took advantage of improved sentiment about its prospects to boost its liquidity last year, issuing £15m of new shares.

Where next for the Scancell share price

I think this year’s pullback in the Scancell share price reflects investor impatience. An initial burst of enthusiasm at the prospect of the vaccine programme has started to ebb away over time.

But I still think the programme could unlock more value in future for the company. If clinical trials are successful, this modestly-sized UK company will have a vaccine in demand by the millions across the world. That could certainly help boost the share price.

But if the vaccine programme turns out to be disappointing, the premium that the Scancell share price has attracted during the pandemic could fall away completely. That isn’t the end of the road, though. Scancell had a long-standing immunotherapy programme before the pandemic. In the short term at least, COVIDITY failure could lead to the Scancell share price plummeting. But the company maintains its cancer immunotherapy programme. Further success in that could help support the price in future, independently of the Covid-19 vaccine workstream.

Some major risks

Clearly, a lot currently rides on the Covid-19 programme. Like many medical development companies, Scancell has been consistently loss-making for many years. That can only go on so long before a company needs to boost its liquidity. It was able to do that last year, but at the cost of diluting existing shareholders. There’s a risk that costly drug development and testing could create a similar need to boost liquidity in future.

My next move on the Scancell share price

With so much riding on the final outcome of the clinical trials, the stock feels highly speculative to me right now. A good result could push the share price to an all-time high. But equally, a disappointing outcome in the South African trial could lead to the share price crashing.

So while I will be following the clinical trials with interest, I won’t be adding Scancell to my portfolio.

The post As the Scancell (SCLP) share price falls, should I buy? appeared first on The Motley Fool UK.

The Scancell Holdings (LSE: SCLP) share price has risen strongly after it announced plans to run clinical trials for its COVIDITY vaccine programme. The UK medical share was recently 6% higher from Monday’s close, taking gains over the past 12 months to 303%.

Scancell said it intends to run Phase 1 trials for its novel Covid-19 vaccine during the second half. This follows the release of preclinical data on two of its lead bivalent vaccine candidates: SN15 (also known as SCOV1), and SN17 (known as SCOV2).

The COVIDITY programme is based on the UK healthcare share’s ImmunoBody DNA vaccine platform. It’s hoped its vaccine candidates will offer improved protection against new coronavirus variants of concern. This is “due to the inclusion of the highly conserved nucleocapsid N antigen in addition to the more variable spike (S) protein,” Scancell said.

Trials ready to begin

A regulatory application to begin Phase 1 trials on unvaccinated individuals has been submitted to the South African Health Products Regulatory Authority (SAHPRA). A study isn’t possible in the UK because of the rapid rollout of Covid-19 vaccines here.

Scancell plans to gain approval from the Medicines & Healthcare products Regulatory Agency (MHRA) in the UK should Part 1 of the South African study demonstrate safety. Phase 1 trials here will see the SCOV2 vaccine given to recipients of two doses of an approved vaccine. The South African trials will be used to assess both SCOV1 and SCOV2.

Scancell chief executive Dr Cliff Holloway said: “There is a significant threat from future mutations of the SARS-CoV-2 virus, as we have seen with the rapid transmission of the Delta variant. Our next generation Covid-19 vaccine has the potential to work alongside currently approved vaccines by protecting the population against new variants of SARS-CoV-2.”

Another soaring UK share

The Morses Club (LSE: MCL) share price has also ballooned on Tuesday following the release of fresh trading numbers. It’s currently 8% higher on the day, and up 72% over the past 12 months.

Morses Club said it’s enjoyed “a steady increase in customer demand across all lending products in both its Home Collected Credit and digital divisions.”

Customer numbers at its digital arm ballooned 40% between March and May. And total loan book balances increased 99% versus the end of February. Meanwhile, new credit issued came in 33% above expectations, and collections performance was ahead of budget.

Elsewhere, customer numbers at its Home Collected Credit unit clocked in at 144,000 as of May. This was 7,000 fewer than the UK financial share reported three months earlier. However, collections at the division are more than double the number Morses Club had expected. And total new credit issued was also 16% ahead of company expectations.

The post UK shares: Scancell Holdings and Morses Club soar on fresh news! appeared first on The Motley Fool UK.

Scancell: an overview

In a nutshell, Scancell is an immuno-oncology  company. That’s a fancy way of saying it develops treatments that stimulate the body’s own immune system to treat or prevent cancer.

Scancell isn’t just a company with an idea. It has four types of scientific technology. These include: ImmunoBody, Moditope, AvidiMab and COVIDITY. It’s very early days for the firm, but some of its products are undergoing clinical trials.

Scancell’s lead ImmunoBody cancer vaccine, SCIB1, is being developed for the treatment of patients with metastatic melanoma. That’s skin cancer that has spread to other parts of the body. SCIB 1 has completed Phase 1 trials and will be moving to Phase 2.

I think things look promising for Scancell and would buy the penny stock today.

Coronavirus

While treating and preventing certain types of cancer is Scancell’s bread and butter, I think the real star of the show is its COVIDITY programme.

In April 2020, the company decided to initiate a research programme called, COVIDITY to develop a vaccine for Covid-19. It’s being worked on with scientists at the University of Nottingham.

What I like about Scancell’s version of a vaccine is that it’s intended to be a second-generation jab. That means it could be effective against many of the coronavirus variants. It comes after concerns that the Pfizer and AstraZeneca vaccines may offer limited protection against the mutated versions of the virus.

The science bit

I’ll try and explain the science part.

Most of the current vaccines target the surface spike (S) protein, which allows the virus to infect the cell. Scancell’s vaccine not only targets the S protein but also the nucleocapsid (N) protein, which makes the bulk of the virus particle.

Scancell says that the N-protein is “highly conserved”, which means it’s less likely to mutate. In summary, the fact that Scancell is targeting the N-protein means that it could create long-term immunity against the coronavirus and its variants.

Do we need another vaccine?

I think another Covid-19 vaccine is important. Given the concerns about currently available vaccines, I feel there is always room for improvement. Especially around effectiveness, safety and longevity of response of a vaccine. 

I also like that Scancell’s version is relatively simple to manufacture and doesn’t need to be stored in ultra-low temperatures. This means transportation is likely to be easier.

The risks

Big pharma companies with a lot more resources are also working on jabs to treat coronavirus variants. Scancell is at an early stage and there’s no guarantee its treatments will be successful in testing trials. It’s a pre-revenue, loss-making company. Research and development costs are likely to persist and hit profitability. This penny stock is not for the faint hearted. So I’d only buy what I could afford to lose.

While Scancell has raised the necessary funding to trials its products, any delays or setbacks may require the company to raise additional funds. This could also impact the share price.

But as a long-term investor, I feel the potential rewards outweigh these risks and I’d buy the penny stock in my portfolio.

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