ViaCyte Snags $80 Million to Advance Its Stem-Cell Derived Diabetes Therapies

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Two months after striking a deal with CRISPR Therapeutics to tackle diabetes, San Diego-based ViaCyte, Inc. secured $80 million in a Series D financing round to advance the company’s novel stem cell-derived islet replacement therapies for diabetes patients.

The funding from this round, as well as $25 million in combined funding it received from its partnership with CRISPR and W. L. Gore & Associates, Inc., a global materials science company, ViaCyte said it is well-funded to drive forward with its cell therapy platform and its clinical-stage islet cell replacement product candidates. ViaCyte said its therapies have the potential to “provide a functional cure for patients with Type 1 diabetes,” as well as provide an important option for patients with Type 2 diabetes who depend on insulin to help control their disease.

Currently, ViaCyte has two stem cell-derived islet replacement therapy candidates in clinical development -- PEC-Direct and PEC-Encap. In a Phase I/II trial, PEC-Direct uses a non-immunoprotective delivery device to allow for direct vascularization of a cell therapy. Initial proof-of-efficacy data is expected as early as mid-2019, the company said. PEC-Direct is being developed to treat a subset of type 1 diabetes patients who are at high risk for acute complications due to the long-term immunosuppression required. PEC-Encap product is initially being developed for all patients with Type 1 diabetes. ViaCYte said enrollment had begun for a clinical trial, but it has been paused while the company makes product improvements as part of its collaboration with Gore. Device optimization has “yielded the recently announced positive data showing unprecedented engraftment and function of the PEC-Encap product candidate in a clinically relevant non-clinical ‘challenge’ model,” the company said. Clinical evaluation is expected to resume next year, ViaCyte added.

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Paul Laikind, president and chief executive officer of ViaCyte, said a “major part” of the financing will support the continued clinical development of both product candidates. He also pointed to the work the company will be doing with CRISPR to develop gene-edited allogeneic stem cell therapies as “next generation” treatments for diabetes. The research being conducted by ViaCyte and CRISPR will utilize CRISPR’s gene editing technology and ViaCyte’s PEC-Direct product to focus on Type 1 diabetes. It is believed that gene editing done through CRISPR can protect transplanted cells through “ex vivo editing immune-modulatory genes within the stem cell line used to produce the pancreatic-lineage cells.”

Laikind said the latest financing round is a strong indicator of the promise of his company’s technologies. The latest financing round was led by Bain Capital Life Sciences and joined by TPG and RA Capital Management, as well as existing investor, Sanderling Ventures, as well as other existing investors in the company.

Adam Koppel, a managing director at Bain, said ViaCyte is the clear leader in beta cell replacement and said Bain is excited about the “lasting impact that its stem cell-derived therapies can potentially have on improving treatment and quality of life for people living with insulin-requiring diabetes.”

Like Koppel, TPG’s Heath Lukatch praised the potential of ViaCyte’s therapeutic approach. Lukatch said ViaCyte’s cellular therapy approach is “at the vanguard of diabetes treatment and has the potential to dramatically reduce the near-term consequences and long-term complications associated with diabetes.” He added that the approach has the potential to reduce morbidity and mortality for diabetics.

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