Sernova Corp.'s (SVA:TSX.V; SEOVF:OTCMKTS; XETRA:PSH) new Phase 1/2 study data showed its Cell Pouch has a "good efficacy and safety profile," reported Ventum Capital Markets analyst Stefan Quenneville in a Sept. 12 research note. Interim trial results were presented at the recent 2024 EASD (European Association for the Study of Diabetes) Annual Meeting.
"We view the company's update as encouraging," Quenneville wrote.
Offering 733% Upside
The analyst maintained his Buy rating and gave the company a target price of CA$2.50.
Given Sernova's price at the time of the report of about CA$0.30 per share, the target implies a 733% return on investment.
Efficacy and Safety Demonstrated
In this Phase 1/2 trial, Sernova's Cell Pouch, containing human donor islets, is being evaluated in patients with insulin-dependent Type 1 diabetes. Cohort A patients were implanted with an eight-chamber Cell Pouch, and Cohort B patients received a larger, 10-chamber Cell Pouch. Both cohorts were treated with concurrent immunosuppression as well.
Interim data show all six patients in Cohort A achieved and sustained insulin independence. In the first patient the device remained implanted for five years, and for four of them the patient had insulin independence with blood sugar levels in the nondiabetic range.
"The Cell Pouch is the most advanced encapsulation device in development," Quenneville wrote.
This patient, however, had to have the Cell Pouch removed due to a nondiabetic medical problem. After its removal, the contents were studied histologically.
The histological data showed healthy, well-vascularized, and functioning islets in all eight chambers, representing "a good efficacy and safety profile five years post-implantation," Quenneville wrote. "This represents the longest-lasting implanted encapsulation device containing functioning islets without fibrosis."
Problem Among Cohort B
Of the Cohort B patients, only one achieved insulin independence. Five experienced engraftment of the transplanted islets due to problems with their immunosuppressive regimens, Quenneville reported.
Because of this, Sernova intends to add and evaluate a third cohort, implanted with the larger pouch and given an "optimized immunosuppressive regimen that it believes will confer an improved efficacy/side effect profile," the analyst described. Enrollment of this third cohort is expected to start around year-end 2024. Thus, commercialization will be pushed back.
With a New CEO
In other news, Jonathan Rigby, previously the executive chairman of Sernova, recently became its chief executive officer via appointment. With 30 years of experience in leadership in the biotech and medtech industries, Rigby has led companies through significant equity capital raises and initial public offerings, for instance.
"Mr. Rigby's skill set and track record give us confidence in the company's ability to develop its best-in-class Type 1 diabetes Cell Pouch data and, importantly, raise the capital it requires to continue pursuing its Type 1 diabetes program and other key initiatives," wrote Quenneville.
Well-Positioned Financially
The analyst also reported that Sernova recently closed its nonbrokered private placement, oversubscribed by CA$1.2 million (CA$1.2M) and generating gross proceeds of CA$5.2M.
"The equity raise provides Sernova with a much-needed cash injection and, on about a CA$3M per quarter burn rate, extends the company's cash runway through Q1/25," Quenneville wrote.
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Important Disclosures:
- Sernova Corp. has a consulting relationship with Street Smart an affiliate of Streetwise Reports. Street Smart Clients pay a monthly consulting fee between US$8,000 and US$20,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sernova Corp.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor/employee.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
- This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.
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Disclosures for Ventum Capital, Sernova Corp., September 12, 2024
Analyst Certification I, Stefan Quenneville, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this report. I am the research analyst primarily responsible for preparing this report.
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