Biotech Partnership to Revolutionize Diabetes Treatment

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Sernova Biotherapeutics Inc. (SVA:TSX.V; SEOVF:OTCQB; PSH:XETRA) announced it has signed a collaborative research agreement with Eledon Pharmaceuticals Inc. (ELDN:NASDAQ) to assess Eledon's immunosuppressive drug, tegoprubart (AT-1501), in Sernova's ongoing phase 1/2 clinical trial of its Cell Pouch Bio-hybrid Organ for patients with T1D.

As part of the agreement, Eledon will provide tegoprubart, an investigational anti-CD40L antibody currently under evaluation for its ability to prevent transplant rejection in various transplantation scenarios, including islet cell, kidney, and xeno transplantation. This agent will replace tacrolimus in the upcoming Cohort C of Sernova's phase 1/2 clinical trial.

Tacrolimus, while commonly used to prevent organ rejection, is known for its potential toxicity, especially towards insulin-producing beta cells, and its adverse side effects, making it less than ideal for islet cell therapy in T1D.

"Our anti-CD40L antibody, tegoprubart, has demonstrated strong potential to protect transplanted cells without the toxicities of standard immunosuppression, and we believe combining it with Sernova's technology and cells could transform the treatment landscape for patients living with type 1 diabetes," said Eledon Chief Executive Officer David-dAlexandre C. Gros.

In a study spearheaded by Dr. Piotr Witkowski, a prominent figure in islet transplantation at the University of Chicago, T1D patients who received islet transplants along with tegoprubart maintained normal, stable blood sugar levels and achieved insulin independence, Sernova said in a release. The engraftment of islets, gauged by graft function relative to the number of islets infused, was three to five times higher compared to subjects who received tacrolimus-based immunosuppression.

This suggests that treatment with tegoprubart may better protect transplanted islets, thereby enhancing graft survival and function, the company said. The treatment was generally well-received, with no unexpected adverse events or severe hypoglycemic episodes reported.

"As a person living with type 1 diabetes, I am very excited by the promising results demonstrated in recent clinical trials of tegoprubart," Sernova CEO Jonathan Rigby said. "These data suggest that combining our Cell Pouch Bio-hybrid Organ technology with Eledon's innovative immunosuppression could enable patients to achieve insulin independence more rapidly and with significantly less toxicity to islet cells."

Rigby continued, "By transitioning to Evotec's stem cell-derived islet-like clusters in our fully retrievable biohybrid organ and using tegoprubart as a key part of immunosuppression, we believe we will offer the leading product in the field and enhance our potential to deliver a functional cure for T1D."

An Alternative to Daily Injections

Sernova's Cell Pouch is an innovative, implantable bio-hybrid organ designed to accommodate therapeutic cells and help restore hormonal balance in patients with T1D. This device offers an alternative to the daily injections required by conventional insulin therapy, aiming instead to naturally resume insulin production through transplanted islet cells.

The ongoing Phase 1/2 clinical trial by the company has yielded promising outcomes. In Cohort A, all six participants who received islet cell transplants into their Cell Pouches achieved insulin independence, with durations ranging from 18 months to over four years. Follow-up observations have confirmed sustained cell survival and functionality up to five years after implantation.

Leede Financial Inc. analyst Dr. Douglas W. Loe maintained a Speculative Buy rating on Sernova 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.

Sernova is advancing this technology by collaborating with Evotec to develop a next-generation therapy that integrates the Cell Pouch with induced pluripotent stem cell (iPSC)-derived islet-like clusters. These clusters are engineered to mimic the functions of natural pancreatic islets, crucially secreting insulin, glucagon, and somatostatin, which are vital for regulating blood sugar levels.

According to Sernova's H1 2025 investor presentation, several upcoming catalysts could significantly influence its short-term direction. The company is close to completing Cohort B of its Phase 1/2 trial and anticipates initiating Cohort C in 2025. Each cohort builds upon the insights gained from the previous, with modifications in immune suppression protocols and device configurations to enhance outcomes.

A notable achievement from the study includes all Cohort A patients achieving documented insulin independence, a breakthrough for the approximately nine million people globally living with T1D. Sernova reported that these patients maintained hemoglobin A1c (HbA1c) levels — a benchmark for long-term glucose management — within the non-diabetic range (≤ 6.5 percent) without the need for external insulin.

Looking forward, Sernova plans to start a clinical program in 2026 for its iPSC-based Cell Pouch product, developed in partnership with Evotec. Preclinical trials in diabetic mice have demonstrated effective glycemic normalization and excellent intra-graft vascularization, indicating significant therapeutic promise. Additionally, Sernova has secured a letter of intent with GoldTrack Ventures and the Kingdom of Saudi Arabia to fund the T1D program, further propelling its path to commercialization.

Alliance Could Improve Treatment Side Effects

On July 10, 2025, Leede Financial Inc. analyst Dr. Douglas W. Loe maintained a Speculative Buy rating on Sernova 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 and said substituting tegoprubart for traditional immunosuppressive agents could mitigate adverse side effects associated with current standard-of-care treatments.

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."

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 Catalyst: A Growing and Diversifying Market

According to a report by Fortune Business Insights on May 5, the global diabetes drugs market was valued at US$88.32 billion in 2024 and is anticipated to grow to US$233.84 billion by 2032, with a CAGR of 12.7% during the forecast period. Leading players such as Novo Nordisk A/S, Eli Lilly & Company, and Sanofi are prominent in this space, capturing significant market shares. In 2024, North America held a dominant 49.95% share of the diabetes drugs market.

Companies like Sernova Biotherapeutics are exploring device-based treatments for diabetes, introducing new strategies into the sector.

A May 12 column in Clinical Leader discussed the impact of U.S. tariffs on the biotechnology industry, referencing a survey by the Biotechnology Innovation Organization (BIO). The survey highlighted that nearly 90% of U.S. biotech firms rely on imported components for at least half of their FDA-approved products. The recent tariffs on imports from the European Union, China, and Canada have sparked concerns about increased manufacturing costs and supply chain disruptions. According to the survey, 94% of biotech companies anticipated cost increases due to the April 2 tariffs on EU goods, and 80% indicated they would need at least a year to find alternative suppliers. These supply challenges are also contributing to investor caution, as rising manufacturing costs and regulatory uncertainties put pressure on R&D budgets.

DataHorizon Research reported on May 19 that the global market for oral anti-diabetes drugs was valued at approximately USD 51.3 billion in 2023 and is projected to reach USD 90.2 billion by 2033, growing at a CAGR of 5.8%. The report attributes this growth to the increasing prevalence of diabetes and the demand for convenient, non-invasive treatment options. Innovations in sustained-release technologies, combination therapies, and precision medicine are driving changes in the therapeutic landscape.

These trends suggest that the diabetes drugs market is not only growing but also diversifying in its approaches. As patient preferences evolve and healthcare systems emphasize comprehensive, long-term diabetes management, the integration of biologics, devices, and digital health tools is poised to define the future of treatment options.

Ownership and Share Structure

According to Refinitiv, about 4.1% of the company is held by insiders and management and approximately 0.05% by institutions. The rest is retail.

Top shareholders include Director Steven Sangha with 3.97%, Chief Financial Officer James Parsons with 0.12%, CATAM Asset Management AG with 0.05%, and Chief Business Officer Modestus Obochi with 0.02%.

Sernova has 328.48 million outstanding shares and 315.01 million free float traded shares. Its market cap is CA$52.44 million. Its 52-week range is CA$0.15−CA$0.34 per share.