ViaCyte raises $80 million for diabetes therapy

Diabetes therapy developer ViaCyte has raised $80 million, its largest financing to date, ­the San Diego biomedical company said Wednesday.

ViaCyte will use the money to advance its stem cell-derived therapies, said Paul Laikind, president and CEO of the privately held company. ViaCyte is combining a variety of technologies for its quest, including stem cell biology, materials science, and ultimately, even genetic editing.

If successful, the therapies will supply insulin as needed from insulin-making “beta” cells, grown from the stem cells. This has the potential of providing a functional cure, the company says. It’s intended for patients with type 1 diabetes, who lack beta cells, and for some insulin-requiring patients with type 2 diabetes,.

ViaCyte grows human embryonic stem cells into precursors of pancreatic “islet” cells. These cells are encapsulated in a thin implant, which is inserted under a patient’s skin. Once in place, the cells are expected to mature into functional beta cells, as well as other cells of the pancreatic islet.

The implant is being tested in two versions. Both use the same cells, but differ in the way the precursor cells are encapsulated. ViaCyte may get initial evidence on efficacy for one version by as early as the middle of next year, Laikind said.

ViaCyte said the financing will meet the company’s needs for at least a couple of years as it develops these versions. By that time, more definitive evidence of efficacy should be available. At that point, Laikind said the company can consider its options, such as being acquired, doing a partnership with a larger company, or holding an initial public offering.

ViaCyte received the funding from venture capital firms led by Bain Capital Life Sciences, along with TPG and RA Capital Management, as well as existing investor, Sanderling Ventures, and several individuals.

The company has now secured financing commitments of more than $100 million in the second half of this year, Laikind said. This includes $15 million from a collaboration with CRISPR Therapeutics, to genetically edit cells so they don’t cause an immune reaction when implanted into patients. This is a long-term project.

Another $10 million came from W.L. Gore & Associates, the maker of Gore-Tex. It is helping ViaCyte refine an implanted encapsulating device that holds the implanted cells.

In addition, over the last 10 years ViaCyte has been awarded about $72 million from the California Institute for Regenerative Medicine, the state’s stem cell agency. It has also received about $14 million from JDRF, an advocacy group for those with type 1 diabetes.

ViaCyte originally began clinical testing with a product candidate called PEC-Encap, which protects the beta cells from direct contact with the patient’s cells. PEC-Encap requires blood vessels to form on the surface of the cell delivery device. It allows insulin and waste to filter out and nutrients to filter in, but avoids provoking the patient’s immune system.

The other product candidate, called PEC-Direct, allows direct contact between the cells and blood vessels. But this exposes the cells to the immune system, so patients must take immune-suppressing drugs to avoid rejection. PEC-Direct is intended for high-risk type 1 diabetes patients. For these, the risk from the drugs is less than that from poorly controlled blood sugar levels.

ViaCyte is now enrolling patients for a midstage study of PEC-Direct, which will examine safety and efficacy.

ViaCyte turned to PEC-Direct after encountering difficulties with PEC-Encap which first entered the clinic several years ago. The body treated that implant as a foreign object, essentially obstructing it with scar-like tissue that interfered with the ability of blood vessels to form on the surface of the cell delivery device. Without sufficient access to nutrients, the beta cells couldn’t thrive.

Thanks to the collaboration with W.L. Gore, modifications of the encapsulating material appear to have conquered the obstruction problem, at least in a relevant animal model, Laikind said. Clinical testing with PEC-Encap is expected to resume next year, Laikind said.

The gene-editing work with CRISPR Therapeutics is a longer-term project, but could have wider implications, Laikind said.

“Having an immune-evasive source of cells that you can then drive to become other types of cells for cell replacement therapy would open up many opportunities,” Laikind said.

ViaCyte was founded over a decade ago, shortly after human embryonic stem cells were successfully cultured in the laboratory for the first time. For all of that time, the company’s goal has been to restore natural control over blood sugar by replacing the beta cells.

The company employs 55 people, all in San Diego.

For information on all of ViaCyte’s clinical trials, go to and search for the company’s name.

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