Sernova Biotherapeutics Inc. (SVA:TSX.V; SEOVF:OTCQB; PSH:XETRA) received a green light from the U.S. Food and Drug Administration (FDA) to proceed with Phase 1 testing of its Cell Pouch in certain patients with thyroid disease, reported Leede Financial Inc. Analyst Dr. Douglas Loe in a March 3 research note.
"We are optimistic [about] Cell Pouch's ability to preserve thyroid stimulating hormone (TSH)-responsive thyroglobulin production of thyroid cells within it, just as it preserved function of pancreatic islets already well-advanced in separate Phase 1 studies," Loe wrote.
650% Return Potential
On the news, Leede Financial maintained its Speculative Buy rating and CA$1.50 per share target price on Sernova. Given the biotech is trading currently at about CA$0.20 per share, the target implies a 650% return for investors.
Sernova has 324.1 million shares outstanding. Its market cap is CA$64.8 million. Its 52 week high and low are CA$0.63 and CA$0.17 per share.
Key Points About Study
This FDA-approved Phase 1 study, the design of which Sernova has not yet revealed, is to be done in patients undergoing a partial or total removal of their thyroid gland, Loe reported. Patients needing this often have advanced thyroid disease, such as thyroid cancer or Graves' disease. Typically after a thyroidectomy, patients produce little to no thyroxine, making them hypothyroid.
In the trial, Sernova's cell reservoir device called Cell Pouch will be filled with the patient's own thyroid cells and implanted in their body subcutaneously. This treatment will be evaluated for whether or not it leads to restoration of physiological thyroxine production.
Loe explained that TSH regulates the production of thyroxine with the help of the protein thyroglobulin. As such, the trial would need to show that autologous thyroid cells deployed via Cell Pouch can "produce thyroglobulin in a TSH-responsive way," as a healthy thyroid gland would. Were this shown in the trial to be the case over at least three to six months, it would be a positive outcome that would justify subsequent Phase 2 testing, Loe purported.
Positive Preclinical Data
Loe pointed out that Sernova, in 2022, published preclinical data from a three-month collaborative study. They showed that thyroid tissue, incorporated into the Cell Pouch that was subcutaneously implanted into a mouse, remained viable and able to release thyroglobulin in a TSH-responsive manner.
"We assume that this study, conducted in collaboration with University of British Columbia researcher Sam Wiseman, formed the basis for the FDA's positive views on Cell Pouch's prospects in thyroid disease and thus its rationale for being tested in the pending Phase 1 study," Loe commented.
Estimated Timeline
Sernova could receive feedback on the design for this Phase 1 study by the end of this quarter, Loe noted. If so, with sufficient capital, the biotech could start Phase 1/2 testing in thyroid disease by Q3/25.
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