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Scancell Holdings a recovery buy at 27p

By Doc Holiday | Thursday 11 July 2013

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

The other day Scancell (SCLP) saw its market value halve as it announced a conditional Firm Placing of 20,000,000 new Ordinary Shares at 22.5 pence each to raise gross funds of approximately £4.5 million. Its new backers are various EIS and VCT funds managed by Calculus Capital. In addition, and in order to provide Qualifying Shareholders with an opportunity to subscribe for new Ordinary Shares at the same price, the Company announced an Open Offer to raise up to a further £2.0 million (before expenses).


The fall looks overdone as the new issue of equity and its value should not have wiped £50m off the market cap. I concede the pricing of the offer may have soured sentiment but that should only be a short term issue.


Why raise cash now? Simple – Scancell was running on a near empty tank and needs to cushion to further validate its technology so that it can secure the best possible sale price later this year.


The outcome for these patients prepared to go into clinical trials of its product has been to extend life. There were a few minor remarks made on time lines (Nothing new) and the company has clearly stated its desire not to take the platform too far as it is looking to sell the science rather than spend decades fine tuning it.

Post the funding Scancell clearly has sufficient funds needed to carry the company into 2014 and into a position to divest its proven platform and reward its shareholders.


The company’s well regarded and battle proved chairman David Evans noted this week:

The board of directors is firmly committed to a trade sale and believes that successful results from the clinical trials for SCIB1 together with the development of the ModitopeÔ platform will make Scancell an even more attractive acquisition opportunity to Pharmaceutical companies and provide a further significant boost to shareholder value.

I agree. Target price 40p.

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