Sernova Biotherapeutics Inc. (SVA:TSX.V; SEOVF:OTCQB; PSH:XETRA) may benefit from the recent discontinuation of a competing type 1 diabetes regenerative medicine program in which islets were being delivered via an implantable device, reported Dr. Douglas Loe, Leede Financial Inc. analyst, in a March 31 research note.
The implications for Sernova and its Cell Pouch implantable cell delivery device are "on balance positive for Sernova, in our view," wrote Loe.
868% Return Implied
Sernova was trading at the time of the report at about CA$0.16 per share, and Leede Financial's target price on the biotech is CA$1.50 per share, noted Loe. This suggests a return potential for investors of 868%.
Sernova remains a Speculative Buy.
Islets Platform Still Alive
Sernova's peer, Vertex Pharmaceuticals Inc. (VRTX:NASDAQ), curtailed its VX-264 (cells plus device) program in type 1 diabetes after its Phase 2 trial failed, costing it about US$400 million (US$400M), Loe estimated.
However, Vertex intends to continue developing its VX-880 platform. The biopharma indicated it will move forward with a pivotal Phase 3 of a Phase 1/2/3 program, also in type 1 diabetes and also using the same VX-880 stem cell-derived, fully differentiated pancreatic islets as VX-264, co-administered with standard immunosuppression into the portal vein, not through a delivery device. This reinforces Vertex's confidence in the stem cell-based islet platform, Loe pointed out. This trial is expected to generate one-year insulin independence data by mid-2027.
"We do interpret Vertex's decision to continue VX-880 Phase 3 testing as a positive endorsement by the firm on the long-term prospects of regenerative medicine in type 1 diabetes, an endorsement we separately share through the lens of Cell Pouch and the already-documented physiological cell function it preserves," Loe clarified.
Vertex is to start enrollment soon for a different study of VX-880, this one a secondary, 10-patient, Phase 3 pivotal trial in patients with type 1 diabetes and a history of a prior kidney transplant. One-year insulin independence data could be ready from this trial by Q4/26.
Device to Blame, Not Cells
Vertex abandoning its VX-264 program is positive for Sernova and Cell Pouch for a couple of reasons, wrote Loe. One, the end of the program eliminated a competing technology that could have captured market share.
Vertex's VX-264 trial failed because C-peptide production did not meet its efficacy threshold, and Vertex has not explained why. However, based on information available to date and Vertex's seeming sincerity about continuing to develop its VX-880 islet cell platform, it is likely the VX-264 trial failed not because of performance problems with the islets but, rather, with the cell reservoir/delivery device, good news for Sernova.
Ultimately, these problems prevented the islet-plus-device combination to sustain C-peptide production at levels needed to support insulin independence and be clinically meaningful.
Share Structure
Loe reported that Sernova has 324.1 million (324.1M) basic shares outstanding and 384.3M fully diluted shares outstanding. The regenerative medicine company's market cap is CA$50.2M. Its 52-week range is CA$0.15–0.60 per share.
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Important Disclosures:
- Sernova Biotherapeutics Inc. 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 Biotherapeutics Inc.
- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- 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.
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Disclosures for Leede Financial Inc., Sernova Biotherapeutics Inc., March 31, 2025
Disclosures 2
Important Information and Legal Disclaimers Leede Financial Inc. (Leede) is a member of the Canadian Investment Regulatory Organization (CIRO) and a member of the Canadian Investor Protection Fund (CIPF). This document is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. All information is as of the date of publication and is subject to change without notice. Any opinions or recommendations expressed herein do not necessarily reflect those of Leede. Leede cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. 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