Holy Grail of Diabetes and Hemophilia

Richard (Rick) Mills
Ahead of the Herd

As a general rule, the most successful man in life is the man who has the best information

Paul Lacey was a researcher at Washington University when, in 1972, he cured some diabetic rats by transplanting the islet cells from healthy rats into diabetic ones.

Over the next two decades researchers made hundreds of attempts to apply the procedure to humans. Unfortunately no one was successful and by the early 1990’s most scientists had come to the conclusion that islet-cell transplantation was a lost cause.

Edmonton Protocol

Dr. James Shapiro, Dr. Jonathan Lakey and colleagues from the University of Alberta in Edmonton developed the Edmonton protocol in the late 1990s.

The Edmonton Protocol is a method of implantation of pancreatic islets into the portal vein of the recipient’s pancreas. These pancreatic islets are sourced/extracted from pancreases removed from recently deceased adults.

Each recipient receives islets from one to three donors. The islets are infused into the patient’s portal vein, and are then kept from being destroyed by the recipient’s immune system through the use of two immunosuppressant drugs as well as an antibody drug specifically used in transplant patients.

Dr. Shapiro and Dr. Lakey reported Edmonton Protocol patient outcomes in the September 28, 2006, issue of the New England Journal of Medicine (NEJM): out of thirty-six patients transplanted, sixteen or 44 percent were insulin-independent after one year. Another 10 percent of patients were able to reduce the number of insulin injections they needed each day and the remaining 10 patients had totally rejected the transplant islet cells.

Since 2000 several hundred people have received islet transplants – but by five years after the procedure, fewer than 10% of all patients are free of daily insulin supplementation.

Islet cell transplantation is the only known therapy that can reduce or eliminate the side effects associated with diabetes. A search has been on for an alternative site for islet transplantation as well as for an optimal medical device in which to implant the islets. Several subcutaneous devices have previously been developed for islet transplantation but from a preclinical and clinical perspective the results from these products have been generally disappointing.

Currently there is no approved device to house and protect therapeutic cells in the body – cell therapy is limited to expensive procedures, poor cell survival and inappropriate delivery as well as a lack of available donors.

Sernova Corp. TSX.V – SVA

Sernova Corp. has developed the subcutaneous Cell Pouch™ specifically designed to overcome the issues with previous implanted devices for cell transplantation. Sernova’s extensive preclinical safety and efficacy studies have shown this device to be both safe and effective, while being sparing of islets, supporting its design and function.

Sernova’s Cell Pouch System™ is a versatile and scalable, first-in-class implantable medical device made entirely of FDA approved materials. The Cell Pouch System™ provides a natural “organ-like” environment rich in tissue matrix and micro-vessels. This is the ideal environment for therapeutic cells to thrive which then release proteins and/or hormones as required. The Cell Pouch System™, being thin and typically smaller than a business card, fits easily under the skin with virtually no visibility.

On August 16th 2012 Sernova, and the University of Alberta, announced the treatment of the first patient with insulin-producing islets transplanted into Sernova’s Cell Pouch System™ in a Phase I/II clinical study to treat Type-1 diabetes.

The clinical study is being led by Dr. James Shapiro, Professor of Surgery and Medicine, University of Alberta and Director, Clinical Islet Transplant Program.

Encouraging early results up to 30 days post-islet transplant were presented at the International Pancreas and Islet Transplantation Congress in September, 2013. These results showed after implantation under the skin, the Cell Pouch is safe and biocompatible. Following islet transplantation, the islets living within a natural tissue matrix were supported with a rich supply of blood vessels, similar to the pancreas. Of further importance, the islets were shown to make insulin, somatostatin and glucagon – key hormones in the control of blood sugar levels.

On April 22nd 2014, Sernova announced interim results from the ongoing type 1 diabetes human clinical trial with the Company’s Cell Pouch System™.

Interim study results in the first group of patients support that the implanted Cell Pouch, transplanted with insulin-producing islets is showing longer-term safety and biocompatibility with one of the patients already beyond the 180 day time point.

Sernova’s second proprietary platform technology is Sertolin™ – a cell-based technology providing an immune-privileged environment for donor cells which reduces or eliminates the need for toxic and expensive anti-rejection drugs (US $10-15,000/yr).

Sertolin, when combined with therapeutic cells, protects them from attack by the immune system. The combination of these protector and therapeutic cells leads to long-term functional survival of the therapeutic cells without drug therapy. The Sertolin™ technology has the potential to reduce or eliminate the need for expensive lifelong daily anti-rejection drug cocktails that make subjects susceptible to serious infections.

Applications

The Cell Pouch™ could be used for any chronic disease where a deficient or missing protein or hormone can be replaced by therapeutic cell transplantation.

Diabetes

Sernova’s first application of its proprietary Cell Pouch System™ is islet transplantation for treatment of insulin-dependent diabetes – think of the Cell Pouch System™ as a potential natural insulin pump with the added benefit of fine-tuned glucose control. The Cell Pouch System™ is expected to prevent IBMIR (which is believed to rapidly destroy up to an estimated 90% of the transplanted islets) and in addition eliminate serious complications such as islet-induced blood clotting and liver thrombosis. The reduction in islet loss could lead to improved safety and efficacy of islet transplantation and the potential of treating multiple patients from a single pancreas donation.

Globally there are more than one billion overweight adults and at least 400 million of these are considered obese. More than 40 million children under the age of five were overweight in 2010.

Obesity and being overweight pose a major risk for chronic diseases including Type 2 diabetes, cardiovascular disease, hypertension and stroke and certain forms of cancer.

The World Health Organization (WHO) says 347 million people worldwide have diabetes.

The International Diabetes Federation expects that number to rise to 520 million by 2030.

Globally diabetes cost $US465b in 2011. More than 80 percent of the estimated global expenditures on diabetes are made in the world’s economically richest countries, not in the low and middle income countries where over 70 percent of people with diabetes live.

WHO projects that diabetes will be the 7th leading cause of death in 2030.

Haemophilia

Patients with hemophilia A have a defective factor VIII gene. Currently, the number of people with hemophilia in the United States is estimated to be about 20,000, an estimated 400,000 people worldwide are living with hemophilia and only 25% receive adequate treatment.

Patients receive prophy-laxis factor replacement therapy two to three times a week. Prophylactic therapy (prevention therapy) involves three infusions of Factor VIII each week at the hospital at a cost of about $260,000 each year.

The broader hemophilia market was $8.5 billion in 2011 and is expected to grow to $11.4 billion in 2016.

Sernova has recently announced a collaboration with Medicyte GmbH to develop a product for Haemophilia.

Other Applications

Sernova is exploring the additional utility of the Cell Pouch System™ as an enabling platform for a range of therapeutic cell types (including natural cells, stem cells and genetically engineered cells) with the potential to treat a number of chronic debilitating diseases (Parkinson’s disease and Parathyroid are two other candidates) representing broad unmet medical needs.

Cell therapies can cost $10,000 each and the Cell Pouch™ is thought to have a cost of $10,000, more study is needed as trials progress but SVA’s total product combination could bring in as much as $30,000 to $50,000 a patient.

Management

A recent addition to Sernova’s already impressive management team is

Frank Holler, Director. Mr. Holler is the chairman and CEO of BC Advantage Funds (VCC) Ltd. Frank was President & CEO of ID Biomedical Corporation when it was sold to GlaxoSmithKline in 2005, and was a founding director of Angiotech Pharmaceuticals, a TSX/NASDAQ-listed biotechnology company. Frank is a former director of the British Columbia Biotechnology Association (now LifeSciences BC), and in 2003 received the BC Biotech Award for Vision and Leadership.

Conclusion

Sernova is currently conducting a Phase I/II clinical study in subjects with diabetes; measures of safety and efficacy are the primary and secondary endpoints.

Patient volunteers with insulin-dependent diabetes and hypoglycemia unawareness are being implanted with the Cell Pouch™ which is subsequently transplanted with human donor islets.

“We are really encouraged by the initial results of this ground-breaking study. The preliminary findings that human islets survive under the skin within the Cell Pouch pave the way for our ongoing studies in patients that will now test how effective this new approach will be. Importantly, the islets were shown to be residing within a natural tissue matrix in the device, and were nicely integrated with microvessels, and stained for insulin, glucagon, somatostatin and polypeptide at the 30 day time point.” Dr. James Shapiro

“The findings in these initial patients parallel the results in Sernova’s multiple small and large animal safety and efficacy studies of the Cell Pouch. These showed an exemplary safety profile, and that islets were well- vascularised with microvessels and produced insulin. In addition, the islet-rich Cell Pouches then went on to show long-term glucose control in the diabetic animals.” Dr. David White, Professor Emeritus and Chair of Sernova’s Scientific Advisory Board

If you break the ongoing clinical trial down into its objectives you find there really are four results we’re looking for:

1. Bio-compatability: basically safety, is it safe to have in you. CHECK

2. Are the islets being kept alive? CHECK

3. Are the islets producing glucagon, somatostatin and polypeptide? Glucagon raises blood glucose levels. Its effect is opposite that of insulin, which lowers blood glucose levels. Somatostatin regulates insulin and glucagon. Polypeptides are chains of amino acids. CHECK

4. Measuring and monitering blood levels of C-Peptide and insulin to see if blood sugar levels are being properly controlled – obviously a part of the trial which is going to take some time.

“We will now begin to assess both the longer-term safety and efficacy of islets placed in the Cell Pouch in patients with diabetes, and will follow them for up to three years. We look forward to presentation of additional results as the study progresses.” Dr. James Shapiro.

So far we have three of the four results I’m looking for out of this trial, the fourth result, or at least some indication of efficacy, is expected later this year – the first patient received the Cell Pouch System™ (with islets), in August 2012. And let’s all remember one point – Sernova’s Cell Pouch™ is NOT a drug, it is a device. If it works in one patient there is absolutely no reason to suspect it won’t work in everybody.

Here’s how I think things are going to play out for Sernova over 2014 and beyond:

• Additional board appointments
• Cell Pouch System™ Phase I/II clinical study efficacy results
• In-house licensing deals with major universities
• Regional licensing deal

There is no market cycle for drug, bio-technology and bio-med device stocks. The need is always there and demand is growing at an alarming rate while at the same time big pharma’s number of patents and pipeline of new devices and drugs has fallen off a cliff. This “patent cliff” has shifted the playing field so much so that any new and exciting drug or device will be snapped up at a much earlier stage than previously thought possible.

Sernova’s management team has a very realistic end game plan – their objective is to add substantial value to existing assets and subsequently monetize them for the benefit of shareholders. This could take the form of an acquisition or such other mechanism whereby the value can be transferred to shareholders. It is not the objective of the company to build a large permanent, integrated pharmaceutical company.

The holy grail of diabetes and hemophilia A treatment is for patients not to have to take injections or infusions. Sernova Corp. (TSX.V-SVA) and it’s Cell Pouch System™ human trial PhaseI/II clinical study efficacy results should be on everyone’s radar screen. It’s definitely on mine. Is Sernova on yours?

If not, it should be.

Richard (Rick) Mills

Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of Aheadoftheherd.com. His articles have been published on over 400 websites, including:

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This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified.

Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.