Canadian Biotech Targets Massive Cell Technology Gains
Research Report

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Disclosures for Leede Financial Inc., Sernova Biotherapeutics Inc., July 10, 2025

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On July 10, 2025, Leede Financial Inc. analyst Dr. Douglas W. Loe maintained a Speculative Buy rating on Sernova Biotherapeutics Inc. (SVA:TSX.V; SEOVF:OTCQB; PSH:XETRA) with a CA$1.50 price target, representing 1,000% upside from the share price at the time of the report of CA$0.15.

The analyst cited the company's new alliance with Eledon Pharmaceuticals Inc. (ELDN:NASDAQ) to explore the utility of a novel immunosuppressive agent in extending the functional duration of Cell Pouch-residing pancreatic islets.

Strategic Alliance and Immunosuppression Development

Sernova announced an alliance with Eledon Pharmaceuticals Inc. to explore the utility of Eledon's clinical-stage anti-CD40L monoclonal antibody tegoprubart/AT-1501 for conferring sustainable immune evasion of pancreatic islets deployed into Sernova's Cell Pouch device. The collaboration leverages existing clinical infrastructure at the University of Chicago, where transplantation surgeon Dr. Piotr Witkowski is conducting both companies' respective trials.

Eledon has demonstrated tegoprubart's immunosuppressive capabilities in xenotransplantation studies, with published data in the New England Journal of Medicine and Nature Medicine showing successful medium-term outcomes in porcine kidney and heart transplantation cases. Loe noted that "in both cases, survival duration thereafter was attenuated by secondary symptoms unrelated to tegoprubart's immunosuppressive power & tegoprubart actually performed well at least over a medium-term follow-up."

Clinical Trial Timeline and Regulatory Progress

Eledon stated at its R&D Day that it "expects first patient to be enrolled in a Cell Pouch/tegoprubart/AT-1501 collaborative study by FH225" (first half 2025).

The collaboration builds upon Dr. Witkowski's independent clinical program testing tegoprubart as an agent for mitigating islet immunologic rejection, which recently enrolled its first patient in a nine-patient trial expected to generate three-year data by early 2029.

Competitive Landscape and Market Position

The analyst highlighted Sernova's position relative to established competitors including Vertex Pharmaceuticals Inc. (NASDAQ: VRTX), which continues advancing its VX-880/zimislecel platform through Phase II/III trials with results expected in the second half of 2027. Vertex recently published data in the New England Journal of Medicine showing all VX-880 patients generated detectable C-peptide with no hypoglycemia episodes and achieved insulin independence during one-year follow-up.

Sana Biotechnology Inc. (NASDAQ: SANA) represents another competitor advancing its UP421 primary pancreatic islet platform incorporating hypoimmune technology. Sana reported data at the American Diabetes Association meeting showing C-peptide production in UP421 type I diabetic recipients for at least six months post-transplantation, with histological data demonstrating that modified islets evaded multiple immune responses.

Financial Position and Projections

Sernova maintains CA$2.0 million in pro forma cash and CA$0.8 million in total debt, with 328.5 million basic shares outstanding resulting in a market capitalization of CA$51 million and enterprise value of CA$54 million. The company reported minimal revenue, with projected revenue growth from CA$2.983 million in 2028 to CA$224.962 million by 2030 driven by Cell Pouch commercialization across multiple indications.

Loe's financial model projects the company achieving positive EBITDA of CA$134.667 million by 2030, with earnings per share of CA$0.35 and corresponding valuation multiples of 0.4x price-to-earnings and 0.4x EV/EBITDA ratios.

Technology Platform and Development Pipeline

The Cell Pouch technology serves as a subcutaneously-implanted, well-vascularized, minimally-fibrosed cell reservoir designed to sustain long-term blood glucose modulation of transplanted islets.

Beyond type 1 diabetes, the platform addresses hemophilia A through collaboration with HemAcure and thyroid disease in partnership with the University of British Columbia, with an IND filing expected in the first quarter of 2025.

Investment Thesis and Risk Assessment

Loe emphasized that substituting tegoprubart for traditional immunosuppressive agents could mitigate adverse side effects associated with current standard-of-care treatments. Traditional agents like cyclosporin A and tacrolimus are associated with renal toxicity, tremors, and paradoxically, blood glucose dysregulation in the case of tacrolimus, "the indication that islet transplantation is of course trying to alleviate."

The analyst's CA$1.50 price target is based on net present value analysis using a 35% discount rate and multiples of 2030 EBITDA and earnings forecasts. Key risks include partnership and capital constraints, though Loe noted that Cell Pouch "has met every technical specification that we predicted of the device since we initiated coverage back in 2016."

Market Opportunity and Strategic Outlook

The analyst believes Cell Pouch technology should gain widespread adoption as "a function-preserving reservoir like Cell Pouch should be widely partnered and deployed to facilitate advances in regenerative medicine going forward."

The technology addresses the fundamental challenge of islet transplantation by potentially eliminating or reducing immunosuppression requirements while maintaining therapeutic efficacy.