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ViaCyte Reports on Stem Cell Diabetes Trial, Absorbs BetaLogics

Xconomy San Diego — 

[Corrected 2/8/16, 11:20 am. See below.] In a deal that consolidates its position as a leader in developing a stem cell-derived treatment for diabetes, San Diego’s ViaCyte says today it is absorbing its chief rival, New Jersey-based Janssen BetaLogics.

[Clarifies that the packet is filled with engineered stem cells, not embryonic stem cells] The asset deal comes in conjunction with the first clinical data from ViaCyte’s lead product, an implanted packet filled with pancreatic progenitor cells (stem cells that ViaCyte has engineered to develop into fully differentiated pancreatic cells) that sits under the skin of a patient with type 1 diabetes and produces the insulin the patient’s own body cannot produce.

While others have undertaken similar efforts in recent years (Cambridge, MA-based Semma Therapeutics raised $44 million last year to advance its own approach through proof-of-concept), ViaCyte is believed to be the first to reach clinical trials with a stem cell-derived therapy for patients with type 1 diabetes.

“There really is only one competitor in this field who has been working as long as we have, and have made similar innovations, and that is BetaLogics,” ViaCyte CEO Paul Laikind said yesterday in an interview.

“Besides removing a competitor,” Laikind said the consolidation with BetaLogics “does bring a lot of expertise that will help us as we work through the inevitable challenges” of advancing the technology.

ViaCyte says its agreement with Janssen Biotech, which is part of Johnson & Johnson, gives ViaCyte rights to all BetaLogics’ assets, patents, and “know-how” in the field of metabolic disease, including diabetes. Key BetaLogics scientists also will be invited to work for ViaCyte, although Janssen will keep them on its payroll for two years under a “secondment agreement,” ViaCyte CEO Paul Laikind said.

Combining BetaLogics with ViaCyte also consolidates Johnson & Johnson’s investments in both companies. ViaCyte has received a total of $20 million in financing from Janssen and J&J, or nearly a quarter of the $81 million the San Diego company has raised in venture capital. The California Institute for Regenerative Medicine has committed another $56 million to ViaCyte, and the Juvenile Diabetes Researach Fund (JDRF) has awarded $13 million in grants, Laikind said.

ViaCyte also disclosed preliminary results from its initial phase 1 trial.

Data from the study, which began at UC San Diego in late 2014, show that stem cells, engineered to become pancreatic cells in ViaCyte’s bio-engineered packet, can grow into insulin-producing beta cells 12 weeks after the packet has been implanted.

ViaCyte’s preliminary results are encouraging, according to Thomas J. Kieffer, a professor of molecular and cellular medicine at the University of British Columbia in Vancouver who is not involved with ViaCyte, but has worked with BetaLogics and specializes in developing innovative therapeutic approaches for diabetes.

In an e-mail yesterday, Kieffer wrote, “I see this as a very important milestone and am very excited regarding the potential of this approach.”

Kieffer’s view was echoed by Derek Rapp, president and CEO of the JDRF, which has supported ViaCyte’s R&D. In a statement, Rapp said the data, “while preliminary, are encouraging, and move us closer to our goal of a world without type 1 diabetes.”

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