This week my comments are on Scancell, in which both I and Hygea VCT are shareholders (Hygea is a fund of which I am both a director and a shareholder). Scancell announced good news about its imminent receipt of deferred consideration of £2.85 million from the sale of its antibody portfolio in 2006. Whilst the cash is welcome, I think of greater interest from a long term investment standpoint is the event which triggered the payment.

The trigger for the payment was the first patient being treated with a drug derived from any of the antibodies which were the subject of the sale, provided that it occurred prior to 6th December 2011. Background to reaching the stage of Phase 1 clinical trial is as follows:

  • the sale of the antibody business was to Arana Therapeutics, which was subsequently acquired by Cephalon Inc, which in turn was acquired by NASDAQ listed Teva Pharmaceutical Industries (market cap $36 billion).
  • the trial which triggered the payment is sponsored by Kyowa Hakko Kirin Pharma, Inc.(the parent company of which is listed on the Tokyo Exchange), with Cephalon as collaborator.
  • the trial is on 74 patients and will therefore be costly.

It is a great testament to the quality of the scientific work led by Professor Lindy Durrant, the founder of Scancell, that it should have navigated the above M&A minefield and ended up finding its way into a clinical trial involving two significant pharmaceutical companies.

Another aspect which interests me about Scancell is that the principles underlying its approach are similar to those used by NASDAQ listed Dendreon Corporation. A key difference is that Scancell's proposed approach to delivering the treatment is expected to be able to be achieved at significantly lower cost than Dendreon's approach. Dendreon's market cap is $996 million vs. Scancell's market cap of £13.8 million!

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