Scancell Holdings (SCLP.PLUS) - fully-underwritten offering to net £2.3m
SCLP.PLUS
Comment by Objective Capital , Mar 09, 2010
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Scancell has announced an Open Offer of 5,137,775 shares at 45 pence per share. The fully-underwritten offering is priced 10.89% below the closing price of the stock on March 4, 2010, the last business day before the announcement. The latest time and date for receipt of the completed application forms and payment from participating shareholders is 1:00 pm on March 26th. The net proceeds of the offering to Scancell are expected to be £2.26 million and are expected to be sufficient to fund the Phase I and Phase IIa clinical trials for SCIB1, the Company’s lead melanoma vaccine.

Objective's view:

Scancell has put together an offering to its existing shareholders that is fully underwritten and should result in the funding needed by the Company to complete its upcoming Phase I and Phase IIa clinical studies for SCIB1. The recently announced offering should result in proceeds of approximately £2.3 million, delivered in time to keep the initiation of the Phase I trial on schedule for Q2. Scancell had originally gone to market seeking between £1.5 million and £2 million, but strong interest in the market enabled the Company to bring in additional capital.

Scancell has received irrevocable undertakings from certain existing shareholders for 333,333 open offer shares and has fully underwritten the remaining shares in the offering with David Evans, the Company’s Chairman, and three institutional investors – Hygea VCT plc, Helium Special Situations Fund Limited and Calculus Capital Limited. The Helium Fund, managed by David Newton, is a new shareholder with an excellent track record and specialises in small, listed technology enterprises whereas Hygea and Calculus are both existing shareholders.

Any shares remaining at the end of the open offer will be subscribed for by the underwriters at an agreed upon allotment. We view the issue price of 45 pence per share, a 10.89% discount to the share price at the time of the announcement, along with the underwriting fee of £52,360 to be attractive terms for an early stage company raising capital in the current environment.

Additionally, Scancell is in discussions with a government backed fund to potentially bring in an £200,000 in additional funding to the Company. We view the recent news as particularly encouraging, understanding that the development of an early-stage biotech company is often predicated on the successful capitalisation of the company.

The next several weeks will be important ones at Scancell as the open offering proceeds and the Company awaits regulatory approval for the initiation of its clinical trials. As we detailed in a note back in early February, Scancell has submitted the applications to the regulatory authorities required for initiation of those trials and we continue to expect that the Company will receive clearance soon.