RE: Anyone got access to...28 Apr 2019 21:32
Part 2
The chart probably suggests that buying now might not be the best move as it is in a downtrend, but I think that we also have to consider the effects that the recent selling by City Financial has had on the company (with similar stories across the market where it held larger positions in fairly illiquid shares), and I believe that has created a buying opportunity.
I believe that means that if the phase 2 trials are successful, then you could very easily double your money here, even if you only held for that news – of course there is also risk from a negative outcome, but once the selling pressure clears I think the share price will bounce back to some extent anyway, so I can see good risk versus reward from the current price, and I’d consider Scancell to be a speculative buy.
This type of company does tend to burn through significant amounts of cash, and Scancell is no exception, but it also seems to be capable of raising decent amounts of capital when it needs to – its last major equity raise was for £6.9 million net, at 12p, although that was done at a big discount to the prevailing price. Plus, it raised a further £1.2 million via an open offer around the same time.
The rate of cash burn here means that it will need to raise more money towards the back end of the year I would expect, as it had £7.6 million in the bank at the end of October 2018, and has been going through more than £500,000 per month, with at least half of that being spent on research and development.
The only slight concern here is that it may need to raise more money before any data comes from the trial, although it will be a close-run thing and ongoing results from the first five patients in the trial could be released by then. But even if the equity raise comes first, given that selling pressure from City Financial will have disappeared, plus anticipation of trial results, there is a very good chance that would come at a higher level than the current share price anyway.
Aside from its own work on its treatments and the expected chain of events for that, there is always the chance of unexpected news coming, such as a partnership with a larger company.
Scancell shares are definitely something that I would class as a higher risk investment, but it has made progress and continues to do so, and ultimately I think that it does have a chance of succeeding, but do only invest an amount that you are happy to write-off if it does all go wrong – and the same applies to any company in this sector at a similar stage.
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