A just-announced R&D collaboration involving Sernova Corporation (Sernova Corporation Stock Quote, Chart TSXV:SVA) is a solid advance for the regenerative medicine tech company, says Echelon Wealth Partners analyst Douglas Loe.
In an update to clients on Wednesday, Loe reiterated his “Speculative Buy” rating and $1.00 target price for SVA.
Ontario-based medical tech and cell therapy developer Sernova recently announced the collaboration with UBC-affiliated and St. Paul’s Hospital-based surgical oncologist Sam Wiseman, which will be funded by BC’s Transplant Research Foundation and will focus on how Sernova’s flagship cell therapy reservoir platform Cell Pouch might be used as a thyroid cell reservoir for patients undergoing surgical thyroid gland removal.
Loe says that the collaboration could eventually lead to thyroid therapies that might tap into the market for thyroxine supplementation, where Synthroid is currently among the better recognized formulations at US$776 million in 2018 sales.
“We believe that truly curative regenerative medicine alternatives to sustaining normal endocrinologic function in thyroidectomy patients could resonate in medical markets if demonstrated to confer long-term thyroxine-producing activity in future human studies. We believe that supportive data from the UBC/Wiseman collaboration if positive could support thyroid disease-targeted clinical activities as early as F2021,” says Loe.
“Our model already incorporated thyroid disease as a target market for Cell Pouch and so while we are highly positive about Sernova kick-starting development efforts initially with the UBC/Wiseman collaboration, our valuation and financial forecasts are unchanged,” he says.
Regarding company milestones, Loe says that he is watching for results from a human feasibility study in islet cell transplantation, saying that he is optimistic that the study should lead to a more substantive Phase II study by the second half of 2020.
Loe’s $1.00 target is based on net present value (40 per cent discount rate) and multiples of his fiscal 2024 adjusted EBITDA/EPS forecasts and represented a return of 335 per cent at the time of publication.