Sernova Corp. (SVA:TSX.V; SEOVF:OTCMKTS; XETRA:PSH) reported positive interim data from its Phase 1 islet implantation trial in insulin-dependent type 1 diabetics, reported Dr. Douglas Loe, managing director and analyst at Leede Financial Inc., in a Sept. 12 research note.
Lead investigator Piotr Witkowsky, at the University of Chicago, presented the results at the recent 2024 EASD (European Association for the Study of Diabetes) Annual Meeting.
400% return implied
Upon news of the just released results, Loe refined his valuation of the regenerative medicine device firm, he noted. This resulted in a lower price target of CA$1.50 per share, down from CA$3.30.
Sernova, in comparison is currently trading at about CA$0.30 per share. Thus, from this price, return to the new target represents 400% upside.
The Canadian life sciences company remains a Speculative Buy.
Insulin independence achieved
The Phase 1 study's first cohort of patients, all with insulin-dependent diabetes, had been implanted five years ago with Sernova's cell therapy reservoir, our Cell Pouch, containing transplant islets. Patients also received parallel immunosuppression, per University of Chicago protocol and current standard of care.
All six patients achieved insulin independence and had stable blood levels of glycosylated hemoglobin.
Function of islets supported
One patient recently had to have the Cell Pouch removed when an unrelated medical problem arose requiring immunosuppression be stopped, reported Loe. Subsequently, the device's cellular components were studied histologically and biochemically.
It was determined that the islets and their cellular subcomponents survived the five years of being implanted, a duration far beyond what would be considered curative of disease, Loe wrote. This pancreatic islets were still functional in all ways, not just producing C-peptide/insulin. Thus, the Cell Pouch preserved the biological function of all cells deployed within it.
Sernova intends to add a third cohort to this trial to test what management referred to as an "optimized immune suppression regimen," reported Loe, but the details of this are unknown.
Issue of immunosuppression
Sernova knows that eliminating the need for concurrent immunosuppression "would be key to Cell Pouch adoption," Loe pointed out, and technologies to achieve this "blue sky objective" are being developed through partnerships the company has. Any advances in this regard could be incorporated into future Cell Pouch studies.
"We do not consider the need for such therapy to be relevant to Cell Pouch function itself," wrote Loe.
Current financial picture
Having just closed a CA$5.2 million equity offering, Sernova is sufficiently funded to take operations into early 2025, Loe wrote. However, it will need supplemental capital to fund additional objectives.
They include Phase 1/2 testing with regeneratively produced islets in partnership with German cell therapy firm Evotec SE and tailoring Cell Pouch for secondary indications such as hypothyroidism and hemophilia.
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