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If California voters are ever going to be happy with the $3 billion stem cell bond they passed overwhelmingly in 2004, it might be due to a company called ViaCyte. By next year, the modest lab in San Diego hopes to begin human trials for a treatment that could essentially cure type 1 diabetes.
The scientific review panel that recommended it last fall said this could be the "holy grail of diabetes treatment." And the president of the state stem cell agency, Alan Trounson, declared at a recent board meeting: "This is verification of our program. I think this will resound in California, I think it will resound in the United States and I think it will resound in the whole world."
Nearly a decade after the California bond passed, stem cell science is starting to emerge from the laboratories with potential treatments that might approach the high hopes raised by a campaign of celebrities and Nobel laureates.
The California bond is currently supporting 24 experiments targeting chronic and costly conditions like Alzheimer's, cancer, blindness, HIV and spinal cord injury that are expected to be in human trials during the next four years.
And at an annual State of the Industry conference in January, scientists and investors who often disagree said publicly for the first time that the field has reached an "inflection point" where years of promise are "starting to live up to that potential."
"The first big success will be a major deal," Jonathan Thomas, chairman of the stem cell agency, told me. "Whether it's ViaCyte or whatever, once you've established stem cell technology as the route to a cure, you'll see a shift in public perception, in investor perception, in the regulatory folks.
"I think 15, 20 years from now, when stem cell-related therapies or cures are routine, you'll look back at this as being a pivotal period really in medical history."
Keeping research afloat
As the state agency approaches the end of its bond funding four years from now, ViaCyte may be the best hope of satisfying the high expectations raised by Proposition 71. No project has won more of the bond money than ViaCyte nearly $40 million total. Without it, the struggling company may not have survived. With it, scientists see the possibility of a historic achievement for medical science.
As many as 3 million people in the United States suffer from type 1 diabetes at a cost of nearly $15 billion per year nationally and more than $2 billion annually in California. For those suffering from the condition, scientists hope ViaCyte's treatment will end the need for daily insulin injections and blood monitoring as well as the long-term risk of life-threatening conditions such as blindness, heart disease and kidney damage.
ViaCyte estimated the potential U.S. market for a type 1 diabetes treatment at about $30 billion, which could expand to a market worldwide and to some type 2 patients.
"Obviously we're hoping that we can hit it out of the park and that this is essentially a cure for patients with type 1 diabetes," ViaCyte President Paul Laikind told me. "One of the nice things about this program is that the end points are really clear. We're bringing in patients that don't make insulin. So if we put this in and they start producing insulin, it's pretty clear why."
ViaCyte is located near the University of California, San Diego, just off Torrey Pines Road, a longtime corridor of cutting-edge research that is now a concentration of biotech labs. The company does not have one of the many new laboratories, where stunning, modern architecture perched on a panoramic ocean bluff conveys the big money and futuristic treatments at stake in biotechnology today.
ViaCyte is about two blocks away on the urban-facing side of the bluff in a cramped cinder-block office that was built by the military to study peaceful uses for nuclear power soon after the first atomic bomb was dropped. Today, those labs are a nursery for human embryonic stem cells.
Stem cells in an envelope
The power of embryonic stem cells is that they can grow into any cell in the body. In this case, the recipe and schedule of nutrients provided to the cells is designed to mimic the growth of the human pancreas. After about two weeks of precise and patented nurture, the stem cells develop into precursor pancreas cells, which are expected to produce insulin in response to blood sugar levels when they're placed in a human body.
Part of the excitement about ViaCyte's approach is that the cells would be contained in a porous and synthetic envelope that is inserted just under the skin. The circulatory system plugs into the device, called Encaptra, which is smaller than a business card and performs like an artificial pancreas. It would contain insulin-producing beta cells while it allows blood to flow in and insulin to flow out. With the cells inside, it also can be frozen and stored or shipped to doctors anywhere.
The device resolves two of the greatest challenges facing most stem cell treatments. First, it protects the cells from the body's immune system, which often rejects stem cell treatments. Second, regulators are expected to be more comfortable and perhaps quicker to approve a treatment that contains the experimental cells in a retrievable package instead of letting them roam around the body.
In hundreds of experiments with mice and rats over the last few years, the device has successfully managed the blood sugar levels of animals with experimentally induced diabetes. They've shown that it will release insulin in proportion to the body's need even when scientists triggered extreme high or low blood sugar levels.
Type 1 diabetes is the best application for the ViaCyte device because it is a disorder in which the immune system attacks and kills insulin-producing beta cells in the pancreas. About 90 percent of diabetics suffer from type 2, where the device might be helpful to those who need insulin treatments. For most, however, type 2 diabetes means that cells have grown resistant to insulin, requiring a different type of treatment.
Still a funding gap
ViaCyte has had two meetings with federal regulators as it prepares for Phase I human trials, which are expected to include about 50 patients and last for up to two years. If all goes well, Laikind said, the treatment could be commercially available in five to 10 years.
The biggest challenge is obviously to prove that the treatment will work in humans as it did in animals. But another is funding. Surprisingly, even with a promising treatment in a state that passed a bond for stem cell research, ViaCyte is scrambling to pay its bills.
Last fall, pharmaceutical giant GlaxoSmithKline indicated that it would shepherd the project through the expensive and uncertain human trials. Unexpectedly, however, the company dropped its interest in December, pointing again to the increasingly risk-averse posture of private investors that has become a major threat to biotech research.
In response to an email question, GlaxoSmithKline said it "remains very interested in the ViaCyte technology. We made a business decision based on timing that was not related to scientific or technical issues."
The funding gap is well known to scientists as the "Valley of Death," a period of high cost and high risk before a treatment is proven to work. The failure rate of treatments that reach human trials is very high. At a conference last year about a variety of diabetes treatments under study, ViaCyte's project was called "extremely promising" with the caveat that "it's often the last mile that proves the most difficult."
As private investors have grown more reluctant to take such risks, the valley has widened. So, unexpectedly, the state bond that passed because of federal restrictions has instead become a critical replacement for disappearing private money.
Stakes are high
ViaCyte was at a pivotal point in 2009, the start of the Great Recession, when it won a $19 million grant from the state stem cell agency. Laikind said it's difficult to imagine another source for the money at that time, and without it the company was at risk. With the grant, the company doubled in size to about 50 employees and is now completing the safety tests required for human trials.
Those trials have high stakes for ViaCyte, of course, but also for the stem cell agency.
The California Institute for Regenerative Medicine, as the agency is known, has been under significant pressure to demonstrate success. Recently, it was stung by controversy once again when a report from the prestigious Institute of Medicine echoed earlier complaints that too many board members represent institutions that receive grants from the agency.
It's a conflict inherent in Proposition 71, which ordered that most of the 29 board members be selected from California universities and research institutions, the same places where most of the money must be sent. And it's another lesson about the inevitable flaws of California's ballot-box budgeting.
Three other initiatives that passed around the same time for mental health, preschool children and after-school programs have cost the state more than $20 billion and counting. None of them have received the kind of scrutiny paid to the stem cell agency. If they did, we'd likely find flaws.
Proposition 71 has yet to achieve its goals. But nobody doubts that it established California as a global leader in this emerging science. It also seeded two dozen treatments headed to human trials soon and many more under development in 12 new laboratories that the bond funded around the state.
There should be concern about conflicts of interest with public funds. But Californians should also know there is much more going on with their bold investment in a risky science. They passed a flawed ballot measure that created an imperfect organization that is expected to save lives and boost the economy through an unprecedented state industrial policy.
And it just might work.