Sernova Corp. (SVA:TSX.V; SEOVF:OTCQB; XETRA:PSH) and its medical device technology, Cell Pouch, could be the solution to existing challenges involving delivery of medical treatments to patients, such as the ones described here.
Diabetic patients in resource-limited settings are having to revert back to one of the less favored, alternative ways to take insulin, via syringes or glass vials, because Danish pharmaceutical company, Novo Nordisk A/S (NVO:NYSE), will stop making its insulin pens, The Guardian reported. Patients generally prefer this method for dosing themselves with insulin, as shown in a 2024 survey, because it is more convenient and more accurate.
Type 1 diabetic patients already are being impacted as Novo stopped supplying its insulin pens to certain regions, South Africa for instance. Patients there have switched back to using glass vials.
In a second situation, Novo Nordisk needs a way to get stem cell-based therapies to patients more efficiently and in seeking a solution, formed a partnership with Evotec SE (EVO:NASDAQ) to develop technologies that will achieve this, noted a news release. Evotec is a Germany-based global biotech firm with its own cell therapy and partnered cell types all in preclinical development for various indications, including diabetes, oncology, cardiology and ophthalmology.
Per the agreement, Novo Nordisk is to provide research and development funding and potentially monetary incentives to Evotec, and Evotec is to develop the desired new technologies. Novo has the option to obtain exclusive rights to use, in a predefined medical indication, the product(s) born out of this collaboration agreement. Novo's areas of focus, along with diabetes, are cardiovascular diseases, rare diseases, growth hormone-related diseases, hemophilia, nonalcoholic steatohepatitis and weight management.
Safe, Effective Therapeutic Cell Delivery
Sernova Corp.'s Cell Pouch is a vehicle for deliverying various types of therapeutic cells to patients, such as donor islet cells to insulin-dependent diabetics.
When used, the Cell Pouch's containment channels are filled with the appropriate therapeutic cells then the device is implanted in the patient. In situ, the cells release therapeutic proteins or hormones the patient's body completely or partially lacks. The device creates a vascularized, organ-like environment that protects the therapeutic cells from immune system attacks, keeping them alive and functioning.
"The Cell Pouch is the most advanced encapsulation device in development," Ventum Capital Markets Analyst Stefan Quenneville wrote in a Sept. 12 research report.
Sernova is testing its Cell Pouch in the clinic, specifically in Type 1 diabetes. In its ongoing Phase 1/2 study, the Canadian company is evaluating treatment of insulin-dependent diabetes with donor islets implanted via the Cell Pouch, with added immunosuppression therapy. Study data so far have shown the Cell Pouch to be safe and well tolerated and the treatment, effective, reported Dr. Joseph Pantginis, analyst at H.C. Wainwright & Co., in a Sept. 12 research report.
Seven patients, all six of Cohort A and one in Cohort B, achieved sustained insulin independence, between 5.5 and 50 months in duration, free of hypoglycemic episodes. Their blood sugar levels were controlled in the nondiabetic range (i.e.,) HbA1c less than 6.5%.
A Cell Pouch removed from one of the study patients showed it still contained, functioning insulin, glucagon and somatostatin-producing cells. No evidence was seen of detrimental fibrotic tissue, too many T-cells, material degradation or changes in the device architecture.
"We believe the impressive response rates and observed durability support Sernova's strategy and justify further investigation while positioning the technology for potential commercial success," noted Pantginis.
The results add to an expanding collection of evidence that the Cell Pouch is functioning as it should. The data also support the "impressive" results already reported from this study and help derisk future related trials.
"If Sernova is successful in bringing its functional cure for insulin-dependent diabetes to the stage where it can go into commercial production, the global market for it will be massive," wrote Technical Analyst Clive Maund in a Sept. 16 note.
In another of its programs, Sernova, in collaboration with Evotec, is developing an implantable off-the-shelf, induced pluripotent stem cell (iPSC)-based islet replacement therapy, Maund reported.
"This partnership provides Sernova a potentially unlimited supply of insulin-producing cells to treat millions of patients with insulin-dependent diabetes (Type 1 and Type 2)," he added.
Market Growth Predicted to 2030
The global live cell encapsulation market, encompassing drug delivery, regenerative medicine and cell transplantation, is expected to continue growing through at least 2030, according to Grand View Research. The market's value, US$210.7 million in 2022, is forecasted to increase at a 3.97% compound annual growth rate between that year and 2030.
Along with diabetes, live cell encapsulation is being used to treat neurological disorders like Parkinson's disease, The market research firm noted. Further, it has been proven to be a suitable way to deliver treatment for other types of diseases, including cancer, anemia, heart failure and more.
Several factors are expected to keep driving market growth during the forecast period, Grand View noted. A significant one is the increasing use of live cell encapsulation in regenerative medicine, to replace disease or damaged tissues. A related contributor is rising public and private funding and investments in cell and gene therapies.
The advantages of live cell encapsulation in controlled drug delivery are boosting the market, too. They include enhanced therapeutic effects, lowered drug dose, reduced cytotoxicity, improved patient convenience and better patient compliance.
Novel new products and technological advancements are expected to add value to the market as well.
The Catalysts: Progress With Programs
Various potential stock-moving events are slated for Sernova, according to its September 2024 Corporate Presentation.
By year-end, two catalysts are expected, related to the company's in-progress Phase 1/2 clinical trial in Type 1 diabetes. One is results for the remaining Cohort B patients. The other is commencement of Cohort C, who will receive, along with the islet cells, an optimized immune suppression regimen.
Next year, Sernova plans to start a Phase 1/2 trial of the regeneratively produced islet cells to result from its partnership with Evotec, delivered via the Cell Pouch to Type 1 diabetes patients.
Other catalysts are expected to come as a result of Sernova advancing its preclinical programs. One is a personalized treatment with patient corrected cells via Cell Pouch for hypothyroidism. Another is a Cell Pouch-delivered, ex vivo lentiviral factor VIII gene therapy for hemophilia, being developed in partnership with the European Haemacure Consortium.
Also through partnerships, Sernova is developing technologies that would eliminate the need for concurrent immunosuppression during Cell Pouch-delivered cell treatment, a "blue sky objective," Douglas Loe, a Leede Financial Inc. analyst, noted in a Sept. 12 research report.
"Any advances in this regard could be incorporated into future Cell Pouch studies," he wrote. "We do not consider the need for such therapy to be relevant to Cell Pouch function itself."
Analyst: Company is "Very Undervalued"
Several analysts are bullish on Sernova. One of them is Loe, who rates it Speculative Buy. His price target on the life sciences firm implies a 455% return from its current share price.
According to H.C. Wainwright's Pantginis, the deepening responses of Type 1 diabetes patients in its Phase 1/2 trial continue to "crystallize Sernova stock's possible upside." The upside reflected in Pantginis' price target is 2,122%. The analyst recommends the company as a Buy.
Ventum's Quenneville also has a Buy on Sernova, and his target price reflects an 826% return on investment. In his report, the analyst highlighted the impressive efficacy and tolerability of the Cell Pouch up to five years post implantation, as shown in the Phase 1/2 clinical trial data.
"This represents the longest-lasting implanted encapsulation device containing functioning islets without fibrosis," Quenneville wrote.
According to Technical Analyst Maund, Sernova is "very undervalued here given its huge potential" in the Type 1 diabetes market, as indicated on the stock charts. The fundamental outlook for the company is improving, and evidence is strong that a reversal to the upside may be happening. SVA may appreciate significantly, soon.
"Sernova is therefore viewed as a good stock to accumulate in this area, between the current price and recent lows," Maund wrote on Sept. 16. At that time, Sernova's share price was about the same as it is now.
Ownership and Share Structure
According to Refinitiv, about 12.96% of the company is held by insiders and management and 0.05% by institutions. The rest is retail.
Top shareholders include Tomas Angel with 4.91%, Director Steven Sangha with 4.27%, Betty Anne Millar with 1.32%, Brett Alexander Whalen with 0.87%, and Garry Deol with 0.77%.
Its market cap is CA$62.5M. Its 52-week range is CA$0.20−0.82 per share.
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