Sernova Biotherapeutics Secures $4 Million Loan to Further Advance its Clinical Development Plans

Rhea-AI Summary

Sernova Biotherapeutics (SEOVF) has secured a CAD$4 million secured term loan from Navigate Private Yield Fund LP III, maturing on April 16, 2026. The company, which focuses on developing Cell Pouch Bio-hybrid Organ as a functional cure for type 1 diabetes (T1D), will use the proceeds for working capital and general corporate purposes.

The loan, supported by a secured guarantee from Sernova's U.S. subsidiary and board member Dr. Steven Sangha, comes after raising over CAD$10 million in recent months. The company is preparing to initiate its final human donor islet Cohort C clinical trial of their Cell Pouch Bio-hybrid Organ in T1D patients, positioning itself as the most advanced company in U.S. clinical trials with an implantable and retrievable product targeting type 1 diabetes cure.

Positive

• Secured CAD$4 million loan with minimal dilution
• Raised over CAD$10 million in recent months
• Leading position in U.S. clinical trials for type 1 diabetes treatment
• Advancing to final human donor islet Cohort C clinical trial

Negative

• Requires personal guarantee from board member for loan security
• Taking on debt instead of equity financing

LONDON, Ontario and BOSTON, April 17, 2025 (GLOBE NEWSWIRE) -- Sernova Biotherapeutics, (TSX: SVA) (OTCQB: SEOVF) (FSE/XETRA: PSH), a leading regenerative medicine company focused on developing it’s Cell Pouch Bio-hybrid Organ as a functional cure for type 1 diabetes (T1D), today announced that the Company has closed on a secured term loan in the amount of CAD$4,000,000 (the “Loan”) from Navigate Private Yield Fund LP III, a fund managed by Fraser Mackenzie Private Credit Inc. The Loan matures on April 16, 2026, or on the occurrence of certain specified monetization transactions, whichever is earlier. The Company will use the proceeds of the Loan for working capital and general corporate purposes.

“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. This loan comes with minimal dilution while we further our previously disclosed financing initiatives,” said Jonathan Rigby, CEO of Sernova. “We are working towards the initiation of our final human donor islet Cohort C clinical trial of our Cell Pouch Bio-hybrid Organ in patients with T1D. It is our understanding that we are now the most advanced Company in U.S. clinical trials with an implantable and retrievable product with the potential to be a functional cure for type 1 diabetes. Patients need this.”

The Loan is supported by a secured guarantee of the Company's U.S. subsidiary and by a member of Sernova’s board of directors, Dr. Steven Sangha.

“We are truly grateful to Dr. Sangha for his unwavering support of Sernova,” said Jonathan 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.”

ABOUT THE LOAN
The Loan is secured against the assets of the Company and the Company's U.S. subsidiary as well as against the assets of Dr. Steven Sangha (the “Director Guarantor”). The Company has entered into an indemnification agreement with Dr. Sangha in the event of a realization against his assets and granted him a security interest in Sernova’s assets (on the same terms as the security interest granted to the Lender), which is subordinated to the Lender’s security.

In consideration of the Director Guarantor’s support of the Loan and assumption of liability, subject to receipt of final approval of the TSX, the Company is granting to the Director Guarantor 9,000,000 common share purchase warrants ("Compensation Warrants"). Each Compensation Warrant is exercisable, once vested, at a price of $0.20 per share for a term of 36 months: 4,000,000 Compensation Warrants will vest on closing of the Loan and the remaining 5,000,000 will vest in monthly increments of 833,333 beginning after 6 months only while the Loan remains outstanding. The Compensation Warrants are subject to a trading hold period expiring four months from the date of issue under applicable securities laws.

The Loan has minimum fixed interest of $400,000 for the first six months and bears interest at 14.25% per annum thereafter. The Loan principal is due on the Maturity Date, and interest is due and payable monthly. The Company is entitled to pre-pay principal in increments of no less than $250,000 at any time prior to Maturity.

The issuance of the warrants and entering into the indemnification agreement with Dr. Sangha constitute "related party transactions" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on exemptions from the formal valuation requirements of MI 61-101 pursuant to section 5.5(a) and the minority shareholder approval requirements of MI 61-101 pursuant to section 5.7(1)(a) in respect of issuance of compensation warrants and the Indemnification as the fair market value of the transaction does not exceed 25% of the Company's market capitalization. The Company has closed this financing without filing a material change report beforehand as the Company wished to secure this financing as soon as terms were settled.

The transactions contemplated by the Credit Agreement, the Indemnification Agreement, and related documents, including the issuance of the Compensation Warrants, have been conditionally approved by the TSX.

ABOUT SERNOVA BIOTHERAPEUTICS

Sernova Biotherapeutics is a clinical-stage company developing regenerative medicine therapeutics combining its Cell Pouch with human donor cells or stem-cell derived islet like clusters in collaboration with Evotec to create bio-hybrid organs to treat T1D. A bio-hybrid organ is comprised of non-biomaterials, such as the Cell Pouch, integrated with living tissues to restore or enhance the function of a compromised organ. This innovative approach aims to deliver a potentially revolutionary treatment for patients with chronic diseases, initially focusing on T1D and thyroid disorders.

FOR FURTHER INFORMATION, PLEASE CONTACT:

David Burke VP, Investor Relations (917) 751-5713 Email: David.Burke@sernova.com Website: https://sernova.com/

The TSX has not reviewed this news release and does not accept responsibility for the accuracy or adequacy of this news release.

FORWARD-LOOKING INFORMATION

This press release contains forward-looking statements within the meaning of applicable Canadian securities laws. Forward-looking statements in this press release include our belief that Sernova has the most advanced implantable and retrievable product in U.S. clinical trials. With respect to the forward-looking statements contained in this press release, Sernova has made numerous assumptions regarding, among other things: the company’s ability to secure additional financing on reasonable terms, or at all; and the ability to conduct all required preclinical and clinical studies for the company’s Cell Pouch, including the timing and results of those trials. A more complete discussion of the risks and uncertainties facing Sernova appears in Sernova’s Annual Information Form for the year ended October 31, 2024, filed with Canadian securities authorities and available at www.sedarplus.ca, as updated by Sernova’s continuous disclosure filings, which are available at www.sedarplus.ca. All forward-looking statements herein are qualified in their entirety by this cautionary statement, and Sernova disclaims any obligation to revise or update any such forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments, except as required by law.

FAQ

What is the purpose of Sernova's (SEOVF) recent CAD$4 million loan?

The loan will be used for working capital and general corporate purposes while Sernova advances its Cell Pouch Bio-hybrid Organ clinical trials for type 1 diabetes.

When does Sernova's (SEOVF) CAD$4 million loan mature?

The loan matures on April 16, 2026, or earlier if certain specified monetization transactions occur.

What is the current status of Sernova's (SEOVF) type 1 diabetes clinical trials?

Sernova is preparing to initiate its final human donor islet Cohort C clinical trial, positioning itself as the most advanced company in U.S. trials with an implantable and retrievable product for type 1 diabetes.

How much total funding has Sernova (SEOVF) secured in recent months?

Sernova has raised over CAD$10 million in recent months, including the new CAD$4 million loan.