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A Cure for Diabetes?

Islet Cell Transplants Offer Best Chance

By David Mendosa

Last Update: February 23, 2006

The companies in the islet cell industry are racing to be the first to market a cure for diabetes. The race is for one the biggest untapped markets for biomedical technology.

Drugs for life is no cure.

The revenue potential from existing type 1 diabetics alone is $20 billion, according to Frost & Sullivan, a market research firm in Mountain View, California. They estimate that the market will bear a cost of $20,000 per successful islet cell transplant. The continuing review stream from newly diagnosed people could amount to $600 million annually.

But as enormous as the opportunities are, the risks are equally great. Private investors have sunk millions of dollars into fruitless ventures, and many companies in this field have come and gone.

The first products to market will probably be one of the bio-artificial pancreases under development by several companies. These hybrids will combine living islet cells with an artificial device. But few if any industry observers expect that any revenues will begin to flow in the next two or three years.

The great promise of these hybrids is that they may give people with diabetes normal blood glucose levels without immunosuppression, the best definition of a cure for diabetes. Until last year, drugs to suppress the body's natural rejection mechanism were required in all pancreas and islet cell transplants.

In 1966 a team of doctors at the University of Minnesota performed the first successful pancreas transplant. Since then, more than 11,000 patients worldwide have received them, according to the International Pancreas Transplant Registry at the University of Minnesota in Minneapolis.

Almost all pancreas transplants are performed simultaneously with kidney transplants (88% in the U.S. and 87% elsewhere) or a pancreas transplant following a kidney transplant (10% in the U.S. and 9% elsewhere). Pancreas transplants without kidney transplants accounted for only 2% in the U.S. and 4% elsewhere.

Pancreas transplants have become increasingly successful. For example, after one year in simultaneous pancreas-kidney transplants, pancreas graft survival in U.S. cases improved from 74% in 1987-89 to 86% in 1994-97.

To prevent their bodies from rejecting these organs all of these patients have to take immune system suppressors for the rest of their life. But these anti-rejection drugs pose many serious health risks—including cancer. These risks are considered acceptable only if the transplant is needed to save the patient's life.

Likewise, islet cell transplants, which have been performed at least since 1974, also require immunosuppressive drugs. Since only about 2% of the total weight of a pancreas is made up of the insulin-producing islet or beta cells, an islet cell transplant is a much simpler operation than a pancreas transplant. Nevertheless, they have been much less successful.

From 1990 through 1998 some 405 allograft transplants (obtained from another human) have been performed worldwide, according to the International Islet Transplant Registry at the University of Giessen in Germany. But only three of these patients were insulin independent 48 months after the operation.

Since for most people with diabetes taking immunosuppression drugs for the rest of their lives is more dangerous than living with the disease, neither pancreas nor islet cell transplants offer much hope. And few would define this as a cure.

Consequently, the entire diabetes community and the world's press took notice when the University of Miami's Diabetes Research Institute (DRI) announced that on September 11, 1998, the first diabetic patient in this country had been infused with islets without also having to receive an organ transplant at the same time. Previously, the announcement continued, islets had been available only to patients who also required a life-saving organ transplant, such as a kidney or liver.

Their first patient was Jackie Warren Demijohn, a domestic violence outreach counselor from Farwell, Michigan, who has had type 1 diabetes since she was 5. The hope was that by using enriched bone marrow from someone who had just died and a new genetically-engineered drug, called anti IL-2 receptor antibody, her immune system would become tolerant of the transplanted islet cells and that after a year they could taper off the medication.

However, Ms. Demijohn said recently that after more than a year she remains on the antirejection medication and expects to remain on it for a few more months. And she is still taking insulin.

If the DRI was excited last year about Ms. Demijohn, it was positively ecstatic over another study they had underway. Researchers there removed the pancreases of six rhesus monkeys and then gave them a new, far less toxic antirejection drug along with islet cells from unrelated monkeys.

In June of this year the DRI announced that the monkey were essentially cured of diabetes. They no longer needed either the drug or insulin. One magazine serving the diabetes community hailed the apparently successful trials as "the Holy Grail of islet research."

The drug, developed by Biogen Inc. (NASDAQ:BGEN) of Cambridge, Massachusetts, goes by a bewildering variety of names. Usually called anti-CD154, it is also known as hu5C8, humanized anti-CD40 ligand, and most recently Antova TM .

But whatever you call it, the drug seems to have run into even more serious trouble than anti IL-2. In late October Biogen halted its trials, included the one at DRI because of "a substantially elevated risk for thrombo-embolic events."

"We are concerned about the delay in this trial, as we still strongly believe that this drug is the best agent we have tested so far in islet transplantation," Camillo Ricordi, M.D., the DRI's scientific director states. "But we agree that patient safety must be an absolute priority. The institute will continue pilot trials with other drug combinations that have been already approved by FDA, including the infusion of donor bone marrow stem cells and other emerging anti-rejection strategies."

Leading islet cell researchers based in universities, including Dr. Ricordi, met in late September in St. Louis at a seminar sponsored by the Insulin-Free World Foundation. This foundation, headed by Executive Director Deb Butterfield, is the independent organization with the closest ties to the experts in this field.

"Only 10% of [diabetic] patients can achieve insulin independence today with an islet transplant using the current immunosuppressive drugs," Dr. Ricordi noted in his seminar talk, a transcript of which the foundation made available to me. "Only one-third actually have functioning islets during the first year."

While Dr. Ricordi's work is directed at finding a cure for type 1 diabetes, he noted in response to a question that islet transplants can be of use to those type 2 diabetics who have beta cell dysfunction and require insulin. Since 90-95% of all diabetics are type 2, this would mean a much bigger market.

A 1989 U.S. government survey—the most recent and best data—showed that 39% of type 2 diabetics take daily insulin shots. This would represent the outer limit of candidates for islet cell transplants. Up to 15% of those diagnosed with type 2 diabetes actually have slowly developing type 1—where their diabetes appears to be caused by beta cell destruction—who would be potential candidates, according to an estimate by John Walsh, a diabetes clinical specialist and author of several books on diabetes.

A further problem with islet transplants, addressed by another seminar speaker, is that no one knows yet how long they could remain viable. "In the worst case, it's a procedure that would need to be done every couple of years," says Alberto Hayek, M.D., chairman and acting director of the Whittier Institute for Diabetes in San Diego. "Any person with diabetes would be happy to undergo an outpatient procedure that shouldn't be too complicated—like having to go to the gas station and fill up with islets."

Unlike these university-based research organizations, the companies working in this field have been much quieter. All of these companies are privately owned. All of the leading companies in the field use bio-artificial devices that they hope will circumvent the need for immunosuppression. And all encapsulate the islets in one way or another to form an immunobarrier.

The immunobarrier approach works like a screen door, says is Alastair Gordon, president of The Islet Foundation in Toronto, Ontario, Canada, the independent observer with the closest ties to the islet cell industry. "It physically protects the transplanted islets from the host's immune system without having any systemic effect on the immune system, the way immunosuppressants would have. Like a screen door, where the holes are big enough to let through the fresh air but small enough to keep out the flies and mosquitoes, the holes in the capsule are big enough to let in oxygen and glucose molecules and let out insulin molecules, but are small enough to block the larger components of the immune system from getting in and destroying the islets."

A businessman, Gordon also has type 1 diabetes and started The Islet Foundation three years ago. It has an extensive Web site at www.islet.org . The industry's four leading companies, he believes, are:

● Islet Sheet Medical LLC (subsequently renamed Cerco Medical) of San Francisco, Scott R. King, president

● Diatranz Ltd. of Auckland, New Zealand, David Collinson, managing director

● Encelle Inc. of Raleigh, North Carolina, James D. Woodward, president and CEO

● BetaGene Inc. of Dallas, Christopher Newgard, founding scientist and chief consultant.

Islet Sheet Medical is one of the leaders of the race at this stage, according to both Gordon and Frost & Sullivan. "Scott [King] has been admirably open about each step that he is taking and about the problems that he is running into and the progress that he makes," Gordon says. "He stands an excellent chance of making it work. The configuration that he uses of a very thin sheet provides very good transport across the barrier. He may ultimately get somewhere. Investing in Islet Sheet Medical could pay off handsomely."

King, who has had type 1 diabetes for the past 22 years, says his plan is to optimize the islet sheet for dogs, with which they have begun to work. Then they will move into clinical trials using human allografts. Still later, they plan to begin working with xenografts—pig islets—and cells grown in culture.

Funding is one of King's biggest problems. "Among professional investors there is a lot of fatigue as a result of the money other companies have gone through without producing a single product. More than $200 million has been invested. People look at the field and count up the ventures that have failed, and ask, ëHow are you going to succeed?' And you say, ëWell, we are smarter than anybody else and we know what we are doing.' That is not a very persuasive argument."

King says that an IPO is certainly months, and if not years away. More likely would be "money from big pharma."

Likely to be the first into clinical trials, Gordon believes, is Diatranz. "We are getting ready to resume encapsulated porcine [pig] islet transplants in 24 humans and are hoping to start early next year," Collinson writes me. "We have already transplanted six diabetics over the last four years and are currently waiting for the New Zealand Government to produce their guidelines for xenotransplantation."

Like Diatranz, Encelle is working with pig islet cells, but unlike Diatranz, this company is still working with dogs. And like Diatranz and Islet Sheet Medical, Encelle is venture capital funded.

"We did a financing last year and are in the process of raising some more money," Woodward says. "We don't have any plans [to go public] at this point."

He says that the company hopes to get "into humans" next year. "Obviously that's dependent on what the FDA does and how they view the use of porcine tissue and is the testing adequate to insure that it is going to be virus-free."

Using pig islets remains controversial but perhaps essential to success in this field. The problem is that there aren't enough human pancreases to go around, as Karl Enevold, a scientist working in this field points out. Islet cells from no more than 4,000 pancreases become available annually.

"So the only commercial success will be encapsulated pig islet, because you can make an infinite number of pigs," he says. "I don't believe in any of the arguments out there about pigs. There are no problems to worry about. We have been using pig extracts for 80-90 years, and if anything could happen it would have happened. Pigs aren't the problem. It's the naysayers. The what-ifers."

The only leading company not using or planning to use pig islets is BetaGene. Newgard, a professor at the University of Texas Southwestern Medical Center in Dallas, founded BetaGene to take his discoveries to the marketplace. He has been working to engineer a cell line that will behave like human islets while being better equipped genetically to survive in the transplant environment. Cell lines are cancer cells that will continue to divide indefinitely until stopped.

BetaGene partners with Gore Hybrid Technologies, a subsidiary of W.L. Gore & Associates, a large privately owned—and very private—company. Gore makes the immunobarrier and clearly has the deepest pockets of any of the firms in this field.

Just how safe is it to use cancerous cells? "The device that Gore has engineered is a tough cell container," Newgard replies. "In addition, we at BetaGene have developed strategies to kill the cells by the addition of an external drug if necessary. We are very conscious of safety and have several backup safety systems in places."

When will BetaGene begin to work with humans? Newgard, like his partner Gore, is tight-lipped. "I don't wish to divulge that," he replies.

While Frost & Sullivan expects that one of these companies will have a product on the market within the next two to three years, it is interesting that Dr. Ricordi is much less optimistic. How long will it take until they don't have to use immunosuppressive drugs?

"That is the one million dollar question," he replies. "We would be very lucky to have a complete cure in the next two years. Five to ten years is a more realistic prediction." 


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