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I’d buy this Covid-19-related penny stock

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Nadia Yaqub
·3-min read
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Coronavirus 2019-nCoV Blood Samples Medical Concept
Coronavirus 2019-nCoV Blood Samples Medical Concept

I’ve recently come across the penny stock Scancell (LSE: SCLP) and I believe it has lots of potential. But would I buy? Here’s my take on the company.

Scancell: an overview

In a nutshell, Scancell is an immuno-oncology company. That’s a fancy way of saying it develops treatments that stimulate the body’s own immune system to treat or prevent cancer.

Scancell isn’t just a company with an idea. It has four types of scientific technology. These include: ImmunoBody, Moditope, AvidiMab and COVIDITY. It’s very early days for the firm, but some of its products are undergoing clinical trials.

Scancell’s lead ImmunoBody cancer vaccine, SCIB1, is being developed for the treatment of patients with metastatic melanoma. That’s skin cancer that has spread to other parts of the body. SCIB 1 has completed Phase 1 trials and will be moving to Phase 2.

I think things look promising for Scancell and would buy the penny stock today.

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While treating and preventing certain types of cancer is Scancell’s bread and butter, I think the real star of the show is its COVIDITY programme.

In April 2020, the company decided to initiate a research programme called, COVIDITY to develop a vaccine for Covid-19. It’s being worked on with scientists at the University of Nottingham.

What I like about Scancell’s version of a vaccine is that it’s intended to be a second-generation jab. That means it could be effective against many of the coronavirus variants. It comes after concerns that the Pfizer and AstraZeneca vaccines may offer limited protection against the mutated versions of the virus.

The science bit

I’ll try and explain the science part.

Most of the current vaccines target the surface spike (S) protein, which allows the virus to infect the cell. Scancell’s vaccine not only targets the S protein but also the nucleocapsid (N) protein, which makes the bulk of the virus particle.

Scancell says that the N-protein is “highly conserved”, which means it’s less likely to mutate. In summary, the fact that Scancell is targeting the N-protein means that it could create long-term immunity against the coronavirus and its variants.

Do we need another vaccine?

I think another Covid-19 vaccine is important. Given the concerns about currently available vaccines, I feel there is always room for improvement. Especially around effectiveness, safety and longevity of response of a vaccine.

I also like that Scancell’s version is relatively simple to manufacture and doesn’t need to be stored in ultra-low temperatures. This means transportation is likely to be easier.

The risks

Big pharma companies with a lot more resources are also working on jabs to treat coronavirus variants. Scancell is at an early stage and there’s no guarantee its treatments will be successful in testing trials. It’s a pre-revenue, loss-making company. Research and development costs are likely to persist and hit profitability. This penny stock is not for the faint hearted. So I’d only buy what I could afford to lose.

While Scancell has raised the necessary funding to trials its products, any delays or setbacks may require the company to raise additional funds. This could also impact the share price.

But as a long-term investor, I feel the potential rewards outweigh these risks and I’d buy the penny stock in my portfolio.

The post I’d buy this Covid-19-related penny stock appeared first on The Motley Fool UK.

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Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2021