Scancell Holdings (LON: SCLP) (OTCPK: SCNLF) shares are up 20% in London this morning. SCLP shares are up on the news of an expansion of the ModiFY tests. To those not already into Scancell that might not mean much - it means that the early stages of the tests went well enough that they're now being expanded. It's worth spending the cash on the larger test.
More formally the announcement from Scancell: “Following the successful completion of Cohort 4, where three patients received at least two doses of Modi-1 combined with CPI, the safety review committee has approved expansion into two cohorts of patients with renal or head and neck cancer who receive CPI as standard of care. 21 patients will be recruited into each cohort. Patients with triple negative breast cancer will not be included in this part of the study as these patients receive checkpoints in combination with chemotherapy which may induce citrullination in normal cells and induce toxicity.”
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The thing to understand about pharma research is that the testing process is appallingly, horrendously, expensive. Therefore it is done in stages, one nibble at a time. Phase I is - in the vernacular, not formally - testing whether it kills people. Phase II is about whether it actually treats the disease being targetted. Phase III looks for wider side effects. There can - and often will be - subdivisions within those major classes.
For drugs that might go into widespread usage the Phase III tests can cost hundreds of millions of $. So, before committing to the next stage of testing it is usual to digest the results from the stage before then make the decision. No point in spending hundreds of million on something that poisons, or that doesn't work, after all.
But we can also run this information the other way around. A decision to increase testing - to move to the next stage, to widen the population being tested - is, by definition, an agreement that the previous stages of testing have been passed. So, Scancell is not up because it is widening testing. It's because of what doing more testing means - the previous tests have been passed.
This is just how the decade long process from idea to approved drug works. Anything might - and often does - fail at any one stage. Only those drugs which pass all stages gain approval and can thus be marketed. Therefore passing each stage becomes a valuation event - well, OK, so it's got this far, that's one fewer risk to have to worry about. So it is here with ModiFY at Scancell. Still a long way to go but that's another stage successfully negotiated.