Scancell Holdings (AIM: SCLP) - thesis intact, but trial enrollment slow going
SCLP.L
Comment by Objective Capital , Dec 16, 2010
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In advance of its Annual General Meeting (AGM) on December 14, 2010, Scancell released a statement earlier this week that described the status of its ongoing Phase I trial for SCIB1, a cancer vaccine for melanoma. In reviewing the progress of the trial, it noted that, to date, four patients have been enrolled in the trial which is currently taking place at three centres. This represents a slower pace of enrollment than had originally been anticipated. The study design requires patients with advanced melanoma. However, this group of patients is often either being recruited into B-raf studies or offered ipilimumab on a compassionate use basis. When and if these patients fail to respond to these therapies, the disease has progressed to a point that disqualifies them for entry into the Scancell study.

Objective's view:

While the news of slower patient enrollment in the SCIB1 trial is disappointing, the investment thesis of Scancell is still intact. The delays appear to be entirely related to the competition for trial subjects in the marketplace, a challenge that is neither unique nor at all indicative of the efficacy of the drug. In probing further on this topic with management, we learned that the fourth patient enrolled in the trial is the final member of the first cohort and is receiving delivery of the vaccine via electroporation. The safety committee is scheduled to meet at the end of January to review the data from the first cohort and allow for the dosing of the second cohort to commence.

We had originally expected the second cohort of patients to receive dosing by the end of the year. As the press release noted, the Company is now seeking to accelerate the advancement of the current Phase I trial by opening two additional centres and filing protocol amendments to recruit patients with less severe disease. In the Phase II trial, the protocol is for the inclusion of less severely ill patients which should significantly mitigate the challenges in patient recruitment seen to date.

The Company also acknowledged the potential financial impact of the delays in patient recruitment. The plan had been to parlay the strength of the Phase I clinical results in to a revenue-generating commercial deal late next year. Now, the risk is that the Company will experience a funding gap at the end of 2011 as it awaits the Phase I results most likely necessary to ink a commercial deal. While dilution is the obvious cost of raising additional funds, the financing risk inherent in such a need should be minimal given the vested interest of the current shareholder base.

The bottom line is that the timeline for completion of the Phase I study of SCIB1 has been stretched out by approximately one quarter. The Phase II study is now expected to begin in Q3 of 2011 and the Phase I study, which originally was expected to end in mid-2011, is now anticipated to wrap up in Q4 of next year. However, the Phase II trial is still expected to be completed by the end of 2012.

Challenges related to patient enrollment in a cancer trial are the norm, not the exception. We will continue to monitor the pace of enrollment and seek updates on the actions made by the Company to help in the effort. Scancell intends to release its interim financial results at the end of January. At that time, we will assess the potential financial impact of these delays on the business.