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With $114M Injection, Semma Continues Quest for Diabetes Cell Therapy

Xconomy Boston — 

For all the excitement surrounding stem-cell based therapies in the early 2000s, the field still has little to show for it in terms of approved therapies. The many technical challenges of working with stem cells have not, however, deterred Semma Therapeutics, which today announced a whopping $114 million Series B round from a sizable list of investors.

The company, based in Cambridge, MA, and Providence, RI, says it will use the funding to move its experimental cell therapy into human testing. Its goal is to free people with type 1 diabetes from daily insulin injections. To do so, Semma plans to use embryonic stem cells to make insulin-producing cells, and transplant them into patients in a long-lasting treatment.

The company was founded in 2014 by leading Harvard University stem cell biologist Douglas Melton, who switched his research focus to diabetes and stem cells about two decades ago after his children were diagnosed with type 1 diabetes. Mark Fishman, who retired last year  from Novartis’s huge research operation in Cambridge after running it for 13 years, is Semma’s chairman. Fishman is back at Harvard teaching and doing research, and initially thought he would be too busy to sit on any boards. But “Semma is just so exciting that this is the only board I’ve agreed to serve on,” says Fishman.

Semma’s cell therapy is aimed at type 1 diabetes, in which the immune system kills off insulin-producing cells in the pancreas called beta cells. Patients need to monitor their blood sugar levels and get insulin injections multiple times a day. Some have benefited from transplants of pancreatic cells from cadavers, but that supply is limited, given that an estimated 1.25 million Americans have type 1 diabetes, according to JDRF (formerly known as the Juvenile Diabetes Research Foundation). And patients receiving those implants have to take immune-suppressing drugs to keep their bodies from attacking the new cells.

Enter pluripotent stem cells, which can, in theory, develop into any cell type and promise to provide a potentially limitless supply of beta cells. More than a decade ago, at the height of stem cell hype, diabetes was touted as one of the diseases that could be treated, or even cured, with cell therapies derived from stem cells. Then the field faded from the headlines as researchers, including Melton, quietly toiled in the lab for years to figure out how to coax stem cells into developing, or “differentiating” into beta and other specialized cells of interest.

In 2014, the work paid off for Melton and his lab, who published a paper outlining a way to make hundreds of millions of functional beta cells from human stem cells. The lead author of that paper, Felicia Pagliuca, co-founded Semma with Melton and now leads cell biology R&D for the company.

In 2015, Semma announced a $44 million Series A round. Then in 2016, Melton’s research group took another big step, this time by tackling a major challenge that has dogged the field: protecting the implanted cells from being rejected by the immune system. The team showed in a paper in Nature Medicine that it could control blood sugar levels in diabetic mice using implanted, stem cell-derived beta cells during the six-month long experiment. The key was that the researchers, in collaboration with MIT drug delivery experts Bob Langer and Daniel Anderson, encapsulated the cells with chemically modified alginates, which are sugar-based, gel-forming molecules commonly used in medical devices. Results from the 2016 paper showed that alginate capsules shielded the cells from various immune responses, and the cells survived, without the need for immune suppression.

Semma aims to develop a cell therapy that doesn’t require patients to take immune-suppressing drugs, but it decided that to move into human testing, it was better off packaging its cells in an implantable device that would protect the cells from immune attack, rather than using the cell-encapsulation technology. The advantage of the device, says Fishman, is that it can be easily removed from patients so that researchers can see how the cells are doing. The device, smaller than a credit card but about as thin, can hold hundreds of millions of cells, while allowing oxygen, insulin, and other important molecules to pass through.

So far, Fishman says Semma has shown that its implant can control blood sugar levels for a few months in diabetic animals with functioning immune systems. Now the company is working on scaling up its cell manufacturing process as it prepares for human tests. “The hope is that the device will cure diabetes over many years, but we won’t know that until we go into humans,” says Fishman.

One thing Semma will need to watch for in clinical testing is an inflammatory reaction called the foreign body response, in which fibrous tissue grows around implants. Semma competitor Viacyte, of San Diego, CA, has already had to contend with this in a clinical trial of its own stem-cell derived cell therapy for diabetes. The company began this trial in 2014 to test cells that are also packaged in a semi-permeable device. The packet contains pancreatic progenitor cells, which then morph into insulin-producing pancreatic cells, including beta cells, after implantation.

However, according to the San Diego Tribune, Viacyte president and CEO Paul Laikind reported at a meeting in October that the implanted cells in most patients died after three months in the body, because of the foreign body response. A layer of cells grew on the implant, blocking the flow of nutrients needed by the insulin-making cells to survive.

Earlier this year, Viacyte started a clinical trial for its second experimental cell therapy, which will require patients to be on immune-suppressing drugs. The company expects this second treatment to be its first one to market, for a subset of type 1 diabetes patients at high risk of complications, while Viacyte works on improving its other treatment.

Fishman says that so far Semma scientists haven’t seen much in the way of inflammatory responses to their device in lab animals. Still, with all the technical challenges of stem cell-based therapies, Semma may have a long road ahead towards commercialization. But recent changes at the FDA promise to make at least the regulatory review of new regenerative medicines a little easier. Earlier this month, the FDA issued draft documents outlining how cell therapies like Semma’s could get the new Regenerative Medicine Advanced Therapies designation and be eligible for faster review by the agency.

Fishman says that with the success of CAR-T cell therapies for cancer (one of which is an FDA approved blood cancer treatment Fishman once oversaw while at Novartis), along with advances in cell manufacturing, the time is right for cell therapies like Semma’s to make progress. “We’re at the right time now to be in this business,” says Fishman.

Semma’s latest funding round was co-led by Eight Roads Ventures and Cowen Healthcare Investments, with participation from all existing investors including MPM Capital, F-Prime Capital Partners and Arch Venture Partners, existing strategic partners Novartis, Medtronic and the JDRF T1D Fund, and well as new investors including ORI Healthcare Fund, Wu Capital, 6 Dimensions Capital and SinoPharm Capital.