Featured Company / Sernova Corp.

Diabetes is a chronic, incurable disease is which a person’s blood sugar (also called “blood glucose”) level is too high.  Insulin is a hormone produced in the pancreas by the islets of Langerhans that regulates the amount of glucose in the blood.  Owing in part to people’s ever-widening waistlines, diabetes is running rampant in the U.S. and globally.  The Centers for Disease Control and Prevention estimated in 2014 that 29 million Americans had diabetes, up from 26 million in 2010.  Known as a silent killer, the CDC said that 1 in 4 people are unaware they have diabetes.

Even more alarming, last July the CDC revised its estimate stating 30.3 million people, or 9.4% of the population, are living with diabetes and an alarming 84.1 million living with prediabetes, a condition where blood sugar is high and if no action is taken usually transitions into diabetes within five years.

Diabetes is the seventh leading cause of death in the U.S., but that number is truly difficult to discern because of the large number of co-morbidities that follow years of diabetes, such as cardiovascular and renal disease and stroke.

Globally, diabetes currently affects 246 million people worldwide. By 2025, it is expected to affect 380 million people, according to JDRF Canada.  That large of a patient population is obviously a huge drain on healthcare systems to the tune of 5%-10% of a country’s total health budget being spent on diabetes.

There are two types of diabetes, appropriately called Type 1 and Type 2.  Type 2 is the most common, accounting for about 95% of all cases.  With Type 2, the body produces at least some insulin, but either not an ample amount or the body doesn’t react to it properly.  Fortunately, Type 2 diabetes can be controlled through weight management, exercise and nutrition.  Unfortunately, Type 2 diabetes often does progress to where medication is necessary, including insulin injections.

Those with Type 1 diabetes often learn of their disease at a young age, earning it the nickname juvenile-onset diabetes.  One idea is that it is an autoimmune condition, where the body attacks its own pancreas with antibodies resulting in a complete lack of insulin production.  This is the reason that Type 1 is also called “insulin-dependent” diabetes because insulin must be injected daily to regulate blood glucose.  This is accomplished in a number of ways, including syringes, insulin pens, jet injectors and insulin pumps.

Sernova Corp. (TSX-Venture:SVA) (OTCQB:SEOVF) is a clinical stage company developing regenerative medicine technologies for the treatment of chronic diseases including diabetes and hemophilia.  The London, Ontario-based company is looking to shepherd in the next generation of diabetes management technology with its Cell Pouch System™, a novel implantable and scalable medical device which forms a favourable environment within its chambers for the housing and long-term survival and function of therapeutic cells.  These therapeutic cells release necessary proteins or hormones missing from the body to treat chronic diseases, such as diabetes, as an alternative to daily administration of drugs.

Sernova is led by President and CEO Dr. Philip Toleikis.  Dr. Toleikis was previously the VP Pharmacology R&D at Angiotech Pharmaceuticals where he was part of the team that developed the multi-billion dollar drug-eluting stent and other drug-eluting medical devices.

Roughly the size of a business card, research has shown the Cell Pouch is quickly and easily implanted under the skin.  Transplantation of the islets is an equally quick and easy procedure.  Importantly, the Cell Pouch™ is specifically designed and proven to incorporate with vascularized tissue, eliminating the concern of fibrosis and differentiating it from other implantable devices.

Sernova is also advancing local immune protection technologies to keep the immune system from recognizing the implanted cells as foreign and destroying them, which cuts back on the likelihood of any anti-rejection drugs being required.

Three different studies conducted in preclinical diabetes models transplanting the Cell Pouch™ with insulin-producing islets demonstrated efficacy in achieving sustained glucose control.  The ultimate goal would be for the system to replace the need to insulin injections, creating a better quality of life and ensuring full compliance to treatment protocol for Type 1 diabetes patients.

Sernova’s technology has captured the attention of large organizations eager to see progress in the field of diabetes care.  This includes receiving funding for research from agencies such as the National Research Council (IRAP) of Canada and the Juvenile Diabetes Research Foundation, who is contributing to help fund an upcoming clinical study in the U.S.

The company has already successfully completed an early study in humans through an approval from Health Canada that demonstrated safety and biocompatibility of the Cell Pouch™ with islets.  These data were presented at the 2015 International Pancreas and Islet Transplantation Conference.

The rubber is getting ready to meet the road for Sernova, as the U.S. Food and Drug Administration has allowed the company’s investigational new drug application to initiate human trials with the Cell Pouch System™ for the treatment of Type 1 diabetes in people with hypoglycemia unawareness.  The Phase 1/2 single-arm study will involve islets transplanted into the subcutaneously implanted Cell Pouch™.  Patients will be treated and followed for six months, with a decision made at that time whether a second islet dose will be administered.  Patients will then be followed for another year, with the primary endpoint being safety and secondary endpoint being signals of efficacy.

The trial will include Medtronic’s (NYSE:MDT) continuous glucose monitoring device, which involves placing a small sensor under the skin that transits critical glucose data to a extracorporeal monitoring device for accurate recording of the sensitive information that will provide key data on the effectiveness of Sernova’s system.

If successful, Sernova will move one step closer to an addressable market of approximately 40 million insulin-dependent Type 1 and Type 2 diabetes patients worldwide.  No product has ever been FDA approved to house and protect implanted therapeutic cells, which opens the window of possibilities outside the diabetes space, including Sernova’s focus on Hemophilia A.  For this disease, the company will place cells in the Cell Pouch™ that release at a constant rate the clotting protein Factor VIII that is missing or defective in the patient.  The current standard of care is three injections per week, creating a market size of $5.0 billion for Sernova to look to capture share.

Efforts on the hemophilia field are receiving overseas support.  Sernova is a member of HemAcure, a European Consortium that has received approximately 5.6 million euros ($8.5M CAD) in funding from the European Union with a successful, highly prestigious European Union Horizon 2020 grant.

As the company moves closer to the diabetes clinical trial in the U.S., investors have been rallying around the stock, taking shares from a low of 14.5 cents in August to a 52-week high of 51 cents in January.  Shares have pulled back some from the high, but are still holding the majority of the advance during the consolidation phase, as investors wait for the next catalysts from this innovative company.