This is why investors are so excited about biotech

A medical breakthrough can utterly transform the fortunes of a small-cap biotech over night, says Tom Bulford – as this exciting penny share is finding out.

A lady agreed to take part in a cancer clinical trial that uses the body’s own immune system to beat this killer disease. And she has demonstrated some very encouraging results.

This patient “had a long history of metastatic disease (ie spreading cancer) and multiple tumour lesions were present at the start of treatment (including several in her lungs). But following six months of treatment all of these decreased in size or disappeared completely except for one abdominal tumour nodule which increased in size and which will be surgically removed”.

This cancer trial was conducted by Scancel Holdings (SCLP). I first mentioned Scancell to Penny Sleuthers on 20 March when its share price was 8.5p, today it is 51p – a good example of the money that can be made from investing in biotechnology. Today I want to give you an update on its progress and tell you a bit more about the type of medical research Scancell are carrying out.

Killing only cancerous cells

Scancell are using a type of medical research called immunotherapy. This is where a patient’s own immune system is stimulated to recognise and destroy cancer cells. Rather than using chemotherapy or radiotherapy in a process that destroys not only cancerous tumours but much else at the same time, why not simply educate the immune system to seek out these tumours and kill them in just the same way that it kills viruses?

A recent note from Cenkos Securities explains why cancer vaccines have attracted widespread interest throughout the industry, and looks forward to some important milestones in 2013. GlaxoSmithKline (LSE: GSK) is expected to announce clinical data for its cancer vaccine aimed at lung cancer and melanoma, while Biovex, which was bought for $1bn by Amgen (NASDAQ: AMGN) last year, will report on its vaccine treatment for head and neck cancer as well as melanoma.

Scancell is also targeting melanoma, which is a type of skin cancer that can develop from abnormal moles. In the UK alone about 12,800 people each year are diagnosed with this form of skin cancer. Although this particular version represents only 4% of all skin cancers it is responsible for three quarters of skin cancer deaths. It is caused by harmful rays from the sun, so affects sun-worshippers and is the most common type of cancer within the 15-34 age group.


Attack when the enemy is weakened

The good news about melanoma is that it can be beaten so long as it is spotted early. The usual treatment involves simply cutting out the tumour and so long as the cancer has not spread that usually does the trick. But there is a strong case for delivering a cancer vaccine at the same time, to guard against a recurrence. It is commonly thought that vaccines work best when the enemy has already been weakened.

Scancell’s ImmunoBody vaccine technology platform stimulates the activity of T-cells which then roam around the body killing cancer cells. It can be programmed to treat different types of cancer and, because the immune system can be turned against chronic infectious diseases, it could be effective for more than just cancer. ImmunoBody also generates T-cells with ‘high avidity’ which is medical parlance meaning they bind strongly.

Patients whose cancer has spontaneously regressed have been found to have T-cells with high avidity and since these can be one thousand times more effective than regular T-cells this is crucial to this immunological approach.

Some evidence the drug can overcome cancer

In August, Scancell announced the development of Moditope TM, a new platform technology that stimulates the production of a type of T-cell called CD4. These are an important component of the immune system but hitherto have been hard to stimulate. According to Scancell, Moditope can produce killer CD4 T-cells that destroy tumours without toxicity and it says that “this could have a profound effect on the way that cancer vaccines are developed”.

However the immediate focus is on the melanoma vaccine. Scancell announced first results on 6 December, and while they were a mixed bag they provided evidence that the vaccine can help the body to overcome cancer.

As is usual with phase 1/2 trials the main focus was on safety and in this respect Scancell reported “very few side effects, none of which were serious”. Patients were given three different levels of dosage and although the results were inconsistent they showed some evidence both that the drug can overcome cancer and also prevent its recurrence. According to joint chief executive Richard Goodfellow the results were “about as good as we could have hoped for” and Scancell has now been given permission to increase the dose on a new group of patients in the New Year.

As to valuation Scancell is, as Cenkos describes, “a loss-making business with no revenues” despite which it is already valued at £100m. But Cenkos reckons that the melanoma treatment alone could be worth £250m. It will be interesting to see if further trial results can support such optimism.

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