Is this the pioneering DNA vaccine we’ve been waiting for?

Tom Bulford looks into a small-cap biotech company which is hoping to hit the big time with its cancer vaccine.

The clocks go forward at the end of the week- British Summer Time is finally upon us. In typical Brit fashion, many of us will rush outside to bask in the sun at every possible chance we get.

And while I don't want to be a spoilsport, the fact is that this can be dangerous. We all too often overlook the harmful impact the sun can have. The most lethal effect of over-exposure, of course, is melanoma. This can be a killer. If you ever discover a small, itchy, bleeding mole then you need to get down to the doctor quick, before it spreads. The latest figures from Cancer Research UK show that in 2008, 11,767 new cases of malignant melanoma were diagnosed, and more than 98,800 non-melanoma skin cancers were registered.

But here's the good news: one AIM-listed penny share company believes that it could beat not only melanoma, but other types of cancer too. And it's not the only company making serious advances in the treatment of cancer (more on that later).

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So to find out all about it, I headed up the offices of Scancell Holdings (AIM:SCLP), on the site of Nottingham's City Hospital to meet joint chief executives Richard Goodfellow and Professor Lindy Durrant, as well as chairman David Evans, whose many stock market successes in the field of healthcare include Epistem (EHP) and Immunodiagnostics (IDH).

Cancer research continues to make headway

Cancer is the foremost target of drug research, and progress is being made. Early drugs were highly toxic and roamed around the body looking for any cell that was rapidly sub-dividing. While these included fast growing cancer cells, they also included, for instance, hair follicles, which is why cancer patients suffered hair loss.

Today, though, we know of particular proteins, or pathways involved in cell reproduction that cause cancer, and having identified these with diagnostic tests we can target them specifically. The most celebrated example is the drug Herceptin, successfully used to treat women with a certain type of breast cancer.

The exciting discovery of the body's own protective mechanisms

Thanks to these advances, there are now more than 20 billion-dollar-selling cancer drugs. Scancell, though, thinks that vaccines could offer a more effective approach. By harnessing the body's own protective mechanisms, vaccines have virtually eliminated polio and smallpox, and the search is on for vaccines to beat cancer.

There are two types of vaccine. Prophylactic vaccines prevent the onset of disease. Examples are Gardasil and Cervarix, both human papillomavirus vaccines that are given to young women to protect them against the threat of cervical cancer. The other type is the therapeutic vaccine, delivered to the patient after a problem has emerged.

For therapeutic vaccines, the hunt is on. Oxford Biomedica (AIM: OXB) and Vernalis (LSE: VER) have raised money for cancer vaccine research. Roche has recently won EU approval for the launch of Zelboraf; this twice-daily pill for skin cancer is designed to be used alongside a companion diagnostic test that identifies a specific genetic mutation but, according to Scancell, it treats only some forms of skin cancer and may only have a temporary effect.

Meanwhile, in the United States, Provenge, a drug approved for prostate cancer, has seen its sales rise quickly to $100m but this involves taking blood from the patient, mixing it in a bespoke manner with proteins and then injecting it back to the patient. A course of three injections can cost $93,000.

How does it all work?

Scancell has developed a therapeutic DNA vaccine. These third-generation vaccines are made up of a small, circular piece of bacterial DNA (called a plasmid) that has been genetically engineered to produce one or two specific proteins.

Once injected, with the aid of rather nasty looking multi-pronged device that electrically stimulates the pulse at the moment of the drug injection, this DNA is then read by cells that consequently start to make specific proteins. The body recognises these proteins as foreign. This alerts and re-educates the immune system, which produces T cells' that zap the cancer tumours and prevent the spread of the disease.

Scancell could smash the $50bn market

Scancell tested this method in animal models in 2008 with "stunning" results, and has now embarked upon the first human trial. The first patient, suffering from severe melanoma, was recruited in 2010 and was given the DNA vaccine. Although patient recruitment has been a little slow, nine have now been enrolled and have been dosed with no serious side effects. Phase two will see an increase in the dose and recruitment of 13 more patients, and results should be seen at the end of 2013.

If it works, then Scancell believes that this 'ImmunoBody' platform could be used to treat many other forms of cancer, and has made no secret of its plan to sell out the business to an industry partner. That could net a healthy profit for its investors.

Worldwide sales of cancer drugs top $50bn, and are growing at 12% per year. Any therapy that looks as if it can beat this killer disease has enormous value.

With a patent being granted to Scancell up until 2028, as the results of Scancell's human trials draw near next year, this is certainly one to keep an eye on.

This article is taken from Tom Bulford's free twice-weekly small-cap investment email The Penny Sleuth. Sign up to The Penny Sleuth here.

Information in Penny Sleuth is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. Penny Sleuth is an unregulated product published by Fleet Street Publications Ltd.

Tom worked as a fund manager in the City of London and in Hong Kong for over 20 years. As a director with Schroder Investment Management International he was responsible for £2 billion of foreign clients' money, and launched what became Argentina's largest mutual fund. Now working from his home in Oxfordshire, Tom Bulford helps private investors with his premium tipping newsletter, Red Hot Biotech Alert.

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