After a long, hard slog to the clinic, stem cell player ViaCyte fuels up with $105M for its next big attack on diabetes

Over the 14 years since 3 companies merged together to create the stem cell player we now call ViaCyte in San Diego, the biotech has been operating on a steady stream of cash from the California Institute of Regenerative Medicine as well as the non-profit JDRF organization. 

But with one stem cell product in the clinic and a next-gen product about to go back into human testing after a revamp — plus a newly formed collaboration with the gene editing specialists at CRISPR Therapeutics — CEO Paul Laikind is ready to double down on a strategic bet that the crew at ViaCyte can make some major clinical progress over the next 2 to 3 years.

Paul Laikind, ViaCyte

Today Laikind is unveiling an $80 million venture round, the first in years, that brings together a set of new investors — Bain Capital Life Sciences and joined by TPG and RA Capital Management —who are joining Sanderling and some individual backers on the next leg of the journey. Together with the $15 million CRISPR paid them to forge their tie-up and another $10 million from partners at WL Gore and Associates, Laikind’s team now has $105 million to fund this next leg of product development.

“With this new funding we’re really opening the gate, saying ‘lets get this done,’” says the CEO.

“We stuck to our guns of what we want to accomplish here,” adds Laikind. “It’s taken 7-8 years to develop the technology for differentiating the cells in a regulatory-compliant way.” 

Peter Kolchinsky

Laikind has been wooing RA’s Peter Kolchinsky for some time now. And Kolchinsky and Bain’s Adam Koppel have a longstanding relationship forging deals together, which helped get this syndicate to gel.

Like a lot of the stem cell survivors in California, ViaCyte has seen the burst of glory and hype succeeded by the bleakness of the marathon run that stem cell R&D has proven to be — just like many other new technologies in biotech. And it’s managed to keep plugging away at it to get to the renewed era of optimism that has been lifting the survivor’s prospects over the last couple of years.

Adam Koppel

The lead product at ViaCyte is called PEC-Direct, designed to ferry pancreatic progenitor cells from stem cells that can secrete insulin. It’s problematic, though, triggering the kind of immune response that requires immunosuppression — which necessarily limits its uses to 10% of high-risk Type 1 diabetes patients willing to put up with the risks.

PEC-Encap is an encapsulated product that uses Gore-tex like material to deliver the same pancreatic progenitor cells without sparking the foreign body response that spurs the body to coat their device with cells. And this can be used without immune suppression, which would significantly expand the market for ViaCyte.

CRISPR Therapeutics $CRSP, one of the leaders in CRISPR/Cas9 gene editing with a big interest in regenerative medicine, is stepping in to use their immune-evasive tech to create a new line of off-the-shelf cells that can do the job without kicking in the rejection response.

There are 55 staffers at the biotech, which the CEO says will grow now that he has his big financing package completed. ViaCyte does its own manufacturing work, and that team will need to expand along with a special group dedicated to the partnership with CRISPR.

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