Human embryonic stem cells were differentiated into cells of the pancreas (blue). These cells give rise to insulin-producing cells (red). When implanted into mice, the stem cell-derived pancreatic cells effectively replace the insulin lost in type 1 diabetes. San Diego-based ViaCyte is developing an implantable artificial pancreas derived from human embryonic stem cells. Its work is funded in part by grants from the California Institute for Regenerative Medicine.

San Diego's ViaCyte has received $20 million from a drug company to advance its stem cell-based therapy for type 1 diabetes into clinical trials.

ViaCyte's agreement with Janssen Pharmaceuticals, a Johnson & Johnson company, comes days after the company announced receiving the go-ahead from the U.S. Food and Drug Administration to begin clinical trials. The agreement also includes the company's investment fund, Johnson & Johnson Development Corporation.

ViaCyte's experimental product, VC-01, is derived from human embryonic stem cells. These cells are matured into cells that regulate blood sugar levels. These includes cells that make insulin, which lowers blood sugar, in addition to cells that make glucagon, which raises blood sugar levels. It's believed that recreating this natural complement of hormones will be more effective than administering insulin alone.

The cells are encapsulated into a semi-permeable pouch that allows the hormones to enter the bloodstream, and nutrients from the bloodstream to enter cells, but keeps out the immune system, which would otherwise attack the cells.

The California Institute for Regenerative Medicine (CIRM), the states stem cell agency, has awarded ViaCyte more than $38 million to help develop the treatment over the past six years.

The money will mostly be used to advance clinical development of the product, ViaCyte said. The agreement also gives Janssen the right to "consider a longer-term transaction" related to the product.

This is excellent news as it demonstrates that pharmaceutical companies are recognizing stem cell therapies hold tremendous promise and need to be part of their development portfolio, CIRM president and CEO C. Randal Mills said in a statement. This kind of serious financial commitment from industry is vital in helping get promising therapies like this through all the phases of clinical trials and, most importantly, to the patients in need.

ViaCyte had also recently received $5.4 million in private equity financing.

These important transactions provide us with the additional resources we need to pursue the further development of the VC-01 product candidate as a potential new treatment option for patients with type 1 diabetes, said Paul Laikind, Ph.D., ViaCyte's president and CEO, in the statement. We are pleased to be extending our relationship with Janssen and JJDC is this area of mutual interest.

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ViaCyte gets $20M for diabetes therapy trials