Mr. Jonathan Rigby reports

SERNOVA BIOTHERAPEUTICS SECURES $4 MILLION LOAN TO FURTHER ADVANCE ITS CLINICAL DEVELOPMENT PLANS

Sernova Biotherapeutics Inc. has closed on a secured term loan in the amount of $4-million 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 $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, chief executive officer of Sernova. "We are working towards the initiation of our final human donor islet Cohort C clinical trial of our Cell Pouch biohybrid 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 Mr. 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. Sangha. 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 Toronto Stock Exchange, the company is granting to the director guarantor nine million common share purchase warrants. Each compensation warrant is exercisable, once vested, at a price of 20 cents per share for a term of 36 months: Four million compensation warrants will vest on closing of the loan, and the remaining five million will vest in monthly increments of 833,333 beginning after six 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 cent per annum thereafter. The loan principal is due on the maturity date, and interest is due and payable monthly. The company is entitled to prepay 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). 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 per cent 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 Inc.

Sernova 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 biohybrid organs to treat T1D. A biohybrid organ is composed 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.

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