Interview – Viacyte aims to improve on the artificial pancreas


With artificial pancreases the subject of mounting excitement one company is developing a new spin on the technology. Viacyte is working on a device seeded with pancreatic progenitor cells derived from stem cells, with the intention of allowing the long-term production of insulin without triggering an immune response.

“It’s often referred to as a bio-artificial pancreas,” says Paul Laikind, Viacyte’s chief executive. “It’s more elegant in that it’s similar to the native way we manage our blood glucose – we’re basically replacing what’s lost to the disease.” There are two products in development, delivering the same cells but in different devices – and for one of these, Viacyte has just snared W. L. Gore as a development partner.

The first product Viacyte is developing is called PEC-Encap. A plastic device, called Encaptra, contains the cells to shield them from the patient’s immune system, while the compounds they produce, including insulin and glucagon, diffuse across a semi-permeable membrane into the patient’s blood. It could treat all patients with type 1 diabetes, Mr Laikind says, and possibly also those with insulin-dependent type 2.

Viacyte’s second candidate is a less enclosed variant called PEC-Direct. This is intended for higher risk patients – those who have a greater chance of acute complications, mainly severe hypoglycaemic events which can lead to coma and death. Many of these patients are hypoglycaemic unaware, Mr Laikind says – they do not experience physiological signs that they’re dropping into a hypoglycaemic crisis, so the episode can overtake them without their noticing, and they cannot correct it on their own.

PEC-Encap was the first to go into the clinic, but enrolment in the first trial, which has seen Encaptra implanted in 19 patients to date, has been paused. 

“What we learned in the trial of PEC-Encap was that the product was safe and well tolerated, and the Encaptra device was doing its job, we saw no evidence of any allogeneic or autoimmune rejection of the cells,” Mr Laikind says. The cells themselves, he says, had the potential to function well in patients, further differentiating over the course of three months to become islet-like tissue including beta cells capable of producing insulin.

“However, to be fair, we didn’t see the kind of robust and consistent engraftment that we needed to see. The devices were not becoming sufficiently well vascularised to sustain those cells over the long term,” says Mr Laikind. “We knew that this was a possibility which is why we had PEC-Direct waiting in the wings.” The company is now going to make some changes to the Encaptra device’s design.

And to that end it has recruited W. L. Gore as a partner – after all, who better to help develop a membrane technology than the creator of Gore-Tex? It is a fairly straightforward co-development deal, the company says, though financial terms and rights to the final device have not been disclosed. Viacyte hopes to bring the improved version of PEC-Encap back to the clinic next year.

Direct action

In the meantime its focus has switched to PEC-Direct, which uses a more open design of Encaptra with pores in the surface that allow direct vascularisation. While this is expected to significantly improve engraftment, it will relinquish much of the immune protection aspect of PEC-Encap, necessitating immunosuppression.

Human trials of PEC-Direct ought to start within the next couple of months, Mr Laikind says, and will hopefully show vastly improved, consistent engraftment over the first product. The first PEC-Direct study will concern safety, but will also have endpoints focused on insulin production as measured by C-peptide levels.

“In addition we’ll be looking at things like insulin utilisation – what we’d like to see is, as these cells mature, these patients will be able to throw their syringes out the window and be insulin independent,” Mr Laikind says. Viacyte does not expect to have to conduct any long-term complication studies for approval.

As PEC-Direct is aimed at the sickest patients – Mr Laikind says there are up to 150,000 US patients in the high-risk category – the company believes it could move fairly rapidly. Viacyte plans to submit a proposal for having PEC-Direct designated a breakthrough therapy and potentially also an orphan drug, potentially speeding the approval process.

In the US both products are regulated by CBER as biologics, with consultation from the FDA’s device group. Approval, if it comes, will be under a BLA.

And then the company will have to carefully negotiate pricing. Viacyte is not certain how long the devices will last before having to be replaced – perhaps one to three years for PEC-Encap and around five years with PEC-Direct – and will benchmark pricing against the current costs of treating patients over a similar period.


With approval still a few years away and costly trials to conduct, Viacyte intends to raise more venture cash soon. Current investors include the type 1 diabetes patient advocacy group the JDRF, which has committed $14.6m, and a similar organisation, the California Institute for Regenerative Medicine, has ponied up $59.5m.

But Viacyte’s largest equity investor is Johnson & Johnson Development Corporation, by far the most prolific corporate VC and generally a pretty good name to have as a backer (Corporate venture capital – saviour of medtech?, March 16, 2017). J&J itself owns over 20% of the company, Mr Laikind says, and a couple of years ago obtained a right of first refusal on a takeover. “We agreed that if someone tried to buy us we’d at least talk to them first.”

Mr Laikind demurs when asked if a buyout is on the cards – but does admit that he has sold three companies in the past. “Build a company to be successful and typically it will get bought,” he says. Doubtless J&J is watching its protégé closely.

To contact the writer of this story email Elizabeth Cairns in London at or follow @LizVantage on Twitter

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