California's $72 Million Diabetes/Stem Cell Bet: A New Partner from Massachusetts

CRISPR Therapeutics is the latest firm to become involved in a California-
backed stem cell research effort. It uses gene-editing techniques to devise cures.

The California stem cell agency has invested $72 million in a San Diego firm that is pursuing a a functional cure for diabetes and which announced this week it was moving to dodge a major obstacle facing its potential therapy. 

The firm is Viacyte, Inc., a privately held enterprise that has received more funding by far than any other state-backed stem cell firm. It announced on Monday that it had hooked up with publicly traded CRISPR Therapeutics, Inc., of Cambridge, Mass., to collaborate on a gene-editing treatment that would evade the body's immune response to earlier Viacyte therapies.

In a Q&A with UC Davis researcher Paul Knoepfler, Paul Laikind, CEO of Viacyte, said,

"The advantage of an islet cell replacement therapy that has been gene-edited for immune evasion is simply that patients would not need to take immunosuppressive drugs, which can have side effects. Our main mission is to improve the lives of patients with insulin-requiring diabetes by delivering transformative new therapeutic options. The work we are doing on PEC-Direct, PEC-Encap, and now an immune-evasive approach, known as PEC-QT, are all a part of that mission."

The treatment is principally aimed at type 1 diabetes, which afflicts 1.25 million persons in this country, the stem cell agency said in a piece on its blog about the new collaboration.

Viacyte was one of the earliest firms to receive cash from the agency, officially known as the California Institute for Regenerative Medicine (CIRM). The awards began with only $48,950 in 2008 when Viacyte was known as Novocell.

The arrangement with CRISPR will provide more funding for Viacyte, $15 million from its new partner and possibly another $10 million in the form of a convertible promissory note.

CRISPR's stock closed at $48.99 yesterday, down from $55.36 last Friday. Its 52-week high was $73.90 and its 52-week low $16.16.  The firm announced on Wednesday that it was planning to sell $200 million in common stock.  (Here is a detailed presentation on the firm's strategy and research. Here is a link to one analysis of the firm as an investment.)

In the piece on Knoepfler's blog, Laikind also provided an update on Viacyte's other related research. He said,

"(T)he PEC-Encap (also known as VC-01) product candidate has a bright future! We remain enthusiastic regarding the prospects of PEC-Encap, and are actively working on it. In June, two-year data from ViaCyte’s STEP ONE clinical trial were presented at ADA 2018. Although consistent and robust engraftment has been limited in this study to date, results showed that when engraftment does occur, viable mature insulin-expressing endocrine islet cells can be formed. In some cases, insulin-expressing cells have persisted for up to two years after implantation, the longest time point investigated in the study.

"Building on insights gained during the STEP ONE study, ViaCyte is working with W.L. Gore & Associates, one of the world’s top materials science companies with expertise in medical device development and drug delivery technologies, to modify the Encaptra Cell Delivery System and improve the potential for long-term engraftment. This work has yielded positive results in non-clinical models that, based on clinical experience, have been selected to reflect the response in patients. If the progress continues as expected, we plan to resume STEP ONE trial enrollment in 2019.

"As for PEC-Direct (also known as VC-02), the Phase 1/2 clinical evaluation of that product candidate is also continuing. We are now evaluating patients in the second cohort of the trial. As you know, PEC-Direct has the potential to help the patients with type 1 diabetes with the greatest need."

Big Money and Big Science: The Battle Over CRISPR

CRISPR: It’s simply a billion dollar matter of learning more or earning more. At least that’s the view of a Pulitzer Prize-winning columnist at the Los Angeles Times.

“A case of big money shaping science” said the headline on Michael Hiltzik’s piece on the website of California’s largest circulation newspaper. He said the tussle over the patent may be the 21st century’s “era-defining patent fight.”

Hiltzik wrote:

“The contestants are the University of California and the Broad Institute, a Harvard- and MIT-affiliated research foundation endowed by Los Angeles billionaire Eli Broad. At stake are the rights to a breakthrough gene-editing technology known as CRISPR — and more precisely, to billions of dollars in royalties and license fees likely to flow to whichever claimant prevails before the U.S. Patent and Trademark Office (and in the almost inevitable appeals in court).”

CRISPR is a new technique that allows relatively easy editing of human genes. Its potential use, with the possibility of permanent changes in the human race, has triggered an international hooha. Many leading scientists are calling for a moratorium until all the ramifications are fully explored.

The $3 billion California stem cell agency last Thursday held a day-long conference on the issue and announced it would hold a series of hearings into the matter, raising the likelihood of changes in research standards for California stem cell researchers.

The patent dispute, replete with the use of what Hiltzik notes are “outdated legal standards,” involves who was first with CRISPR -- Jennifer Doudna of UC Berkeley or Feng Zhang from Broad.

Both researchers say the patent fight is a distraction. But Hiltzik also wrote,

“Other scientists see the battle as a distasteful example of the influence of big money — and the race for Nobel credit — on basic research. ‘Having prizes and patents involved has transformed what should be one of the greatest success stories for basic research into this nasty, catty fight in which people are behaving poorly,’ says Berkeley biologist Michael Eisen, a colleague of Doudna's and the head of a lab that stands to gain resources if UC wins the patent fight.

“He added on his blog: ‘Neither Berkeley nor MIT should have patents on CRISPR, since it is a disservice to science and the public for academic scientists to ever claim intellectual property in their work.’ Indeed, neither the Doudna nor Zhang teams were the first to identify CRISPR or to use it; the history dates back as far as 1987 and involves researchers in Japan, Spain, Chicago, Quebec and other places’”

Hiltzik, author of the well-received book, "Big Science," said the real question involving CRISPR is whether "the future of the technology will be guided by the need to learn more or the opportunity to earn more."

Hiltzik’s column illuminated the enormous financial imperatives involved in the use of the CRISPR, which are publicly largely a side issue at sessions involving such agencies as California’s stem cell research effort and some international groups. However, the National Academy of Sciences is holding a session next Wednesday that includes a panel devoted to the CRISPR industry. Alta Charo, chair of the academy meeting, told the stem cell agency last week that she hopes that the scope of the market and its financial implications will be explored in more detail at the session, which will be webcast live.

Charo said she hopes for recommendations from her group by the end of the year concerning genetic modification of human embryos. The stem cell agency appears to be moving at the same sort of speed. All of which is a good thing since the lure of huge revenues will certainly stimulate even faster action by profit-hungry companies.