Regenerative medicine company Sernova Biotherapeutics has secured CAD$5 million in financing through two separate transactions to advance its innovative Cell Pouch Bio-hybrid Organ technology for type 1 diabetes treatment.
The London, Ontario and Boston-based company announced on April 17, 2025, that it had closed a CAD$4 million secured term loan from Navigate Private Yield Fund LP III, managed by Fraser Mackenzie Private Credit Inc. This follows a CAD$1 million unsecured convertible debenture financing announced on March 5, 2025, with board member Dr. Steven Sangha.
"Our operational and strategic plans are coming together well with over CAD$10 million raised in recent months and significant progress being made by the Sernova team," said Jonathan Rigby, CEO of Sernova. "This loan comes with minimal dilution while we further our previously disclosed financing initiatives."
Clinical Development Progress
Sernova is preparing to initiate its final human donor islet Cohort C clinical trial of its Cell Pouch Bio-hybrid Organ in patients with type 1 diabetes. According to company statements, Sernova believes it is now the most advanced company in U.S. clinical trials with an implantable and retrievable product that could potentially provide a functional cure for type 1 diabetes.
The company's innovative approach involves creating bio-hybrid organs by combining its proprietary Cell Pouch with human donor cells or stem cell-derived cell therapies. This technology aims to restore or enhance the function of compromised organs, with initial focus on type 1 diabetes and thyroid disorders.
Financing Details
The CAD$4 million loan, which matures on April 16, 2026, is secured against the assets of the company and its U.S. subsidiary, as well as against the assets of Dr. Steven Sangha, who provided a personal guarantee. In consideration of Dr. Sangha's support, Sernova is granting him 9 million common share purchase warrants, exercisable at CAD$0.20 per share for a term of 36 months.
The earlier CAD$1 million convertible debenture financing with Dr. Sangha carries a 15% interest rate and is repayable on March 4, 2027, unless earlier converted or redeemed. The company also issued 5 million non-transferable share purchase warrants to Dr. Sangha, each exercisable at CAD$0.20 per share until March 4, 2028.
"We are truly grateful to Dr. Sangha for his unwavering support of Sernova," said Rigby. "As a board member and long-time shareholder, he truly understands the potential value of the opportunities we are pursuing and is fully aligned with our strategic plans."
Market Position and Technology
Sernova's Cell Pouch Bio-hybrid Organ represents a potentially transformative approach to treating type 1 diabetes. The condition affects approximately 1.6 million Americans, according to the American Diabetes Association, and current treatment options primarily focus on insulin therapy rather than addressing the underlying autoimmune destruction of insulin-producing beta cells.
The company's technology creates a vascularized environment for therapeutic cells, potentially allowing them to function as they would in a healthy pancreas. This approach aims to eliminate the need for daily insulin injections and continuous glucose monitoring, offering patients a potential functional cure.
Sernova is publicly traded on the Toronto Stock Exchange (TSX: SVA), the OTCQB (SEOVF), and the Frankfurt Stock Exchange (FSE/XETRA: PSH).
Strategic Outlook
The recent financing will support working capital and general corporate purposes as Sernova advances its clinical development plans. The company's focus on minimizing dilution while securing necessary funding reflects a strategic approach to maintaining shareholder value while progressing toward key clinical milestones.
As Sernova moves toward its final human donor islet clinical trial, the company is positioning itself at the forefront of regenerative medicine approaches to type 1 diabetes treatment. The significant financial backing from board member Dr. Sangha underscores confidence in the company's direction and technology platform.
"Patients need this," emphasized Rigby, highlighting the potential impact of Sernova's technology on individuals living with type 1 diabetes and the company's commitment to advancing a functional cure for this chronic condition.
