Viacyte Adds $27M to Move Ahead Trio of Stem Cell Diabetes Treatments

Xconomy San Diego — 

Privately held biotech ViaCyte has banked $27 million, the majority an installment of cash from a tranched $80 million Series D financing round it closed in late 2018. The company says the money will go to further develop the three diabetes treatment programs it has underway, including enough prep work to enable it to bring the latest addition to its pipeline, which uses gene-editing, into clinical trials.

ViaCyte is a regenerative stem cell company that is pursuing a trio of avenues to help people with diabetes who require insulin to supplement what their body produces. If all goes according to plan, these treatments could act as functional cures.

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Most of the fresh financing that the San Diego-based firm announced Tuesday is a second cut of funds from that Series D round, part of a $50 million tranche tied to its programs’ progress, according to CEO Paul Laikind (pictured).

The company’s cell therapy candidates are being developed around cells engineered to produce insulin. Its most advanced product, called PEC-Direct, is intended for implantation along with immunosuppression drugs. Since raising the initial money, ViaCyte has shown clinical data indicating that the implanted cells can produce, in patients with type 1 diabetes, a biomarker for insulin known as circulating C-peptide.

“We now are very confident that the cells themselves do what they’re supposed to do when they’re effectively engrafted,” he said.

The therapy is intended for people with what’s known as high-risk type 1 diabetes, or those who don’t perceive the symptoms of a deep drop in blood sugar, have large swings in blood sugar levels, and/or repeated, severe episodes of low blood sugar.

ViaCyte’s next-generation version of that program, called PEC-Encap, uses a packet designed by W.L. Gore & Associates in an effort to avoid the need for long-term immunosuppressive drugs while allowing engraftment. ViaCycte and Gore continue to optimize that delivery technology, which is intended for all type 1 diabetes patients.

Both of those programs are in human testing.

Its latest program, PEC-QT, is a partnership with CRISPR Therapeutics (NASDAQ: CRSP) that aims to produce cells that have been genetically edited so they don’t prompt an immune system reaction. That program is ready for the studies needed to ask the FDA for authorization to proceed into the clinic, Laikind said. That therapy could potentially be used to treat people with type 2 diabetes as well as the inherited form of the disease.

The company also announced it appointed former Vertex Pharmaceuticals (NASDAQ: VRTX) executive Ian Smith as chairman of its board. Smith, who was fired from Vertex in January 2019 for unspecified “personal behavior” that violated the company’s code of conduct, joined the ViaCyte board last July.

Laikind told Xconomy that ViaCyte, given the circumstances surrounding Smith’s departure, conducted due diligence and “found no reason for concern in having Ian become part of our company.”

Smith succeeds longtime chairman Fred Middleton, a managing director at ViaCyte investor Sanderling Ventures. In addition to Sanderling, ViaCyte’s Series D backers include Bain Capital Life Sciences, TPG Capital, and RA Capital Management—crossover investors that indicate the company may consider an initial public offering.

In a statement, Middleton highlighted Smith’s experience with capital markets among the strengths he brings to the company as chairman.

“That next round [ViaCyte raises] could be private, it could be public,” Laikind said in an interview.

ViaCyte has also received funding from the California Institute for Regenerative Medicine and JDRF, a nonprofit that funds type 1 diabetes research.