Three years ago, Harvard’s Doug Melton published a landmark study outlining how he had successfully used stem cells to create insulin-producing pancreatic beta cells that were inserted in bulk into mice and successfully protected from an immune response — a breakthrough in regenerative medicine that bore real promise to provide a curative approach for Type 1 diabetes that could conceivably end a lifetime of insulin shots.
It was the culmination of 23 years of lab work, launched when his son was diagnosed with Type 1 diabetes. And that achievement marked the beginning of something new in biotech.
That same year Semma Therapeutics would be launched — with a $44 million A round landing in 2015 — in pursuit of a mission to complete one of the most ambitious preclinical programs in the regenerative med field. And after working on all the nitty gritty research needed to see if this tech could be scaled up to human size, an expanded syndicate of venture investors have put together a whopping $114 million round with plans to take this into humans for a first-of-its-kind proof-of-concept study.
One of the big challenges Semma faced in scaling up, Melton tells me, was to create a membrane specifically designed with pores that were large enough for molecules to pass through but too small for immune cells to penetrate. Using some calculations from the lab, Melton and his colleagues estimated that they would need some 150 million cells — possibly ranging up to three times that amount — in order to provide the natural insulin needed to eliminate the shots.
Melton compares the membrane to a tea bag, but one that couldn’t be overloaded. The replacement cells, he said, “will only secrete the right amount depending on the level of sugar in the blood.”
The big round marks an inflection point for the 35 staffers at Semma, says chairman Mark Fishman, who joined Harvard after a 13-year stint running the Novartis Institutes for BioMedical Research.
“Until you get this kind of funding,” says Fishman, “you don’t know how broad your strategy can be. With this funding, we can get through a proof-of-concept trial, with enough information to know whether this works.” They can follow parallel tracks and also start thinking through some new directions to pursue as their diabetes treatment proceeds.
Typically, you never see VCs backing a diabetes play. A few major multinationals control the bulk of the development work because the regulatory requirements for approval are daunting. But that’s in Type 2, which is spreading at epidemic proportions. Inherited Type 1 diabetes has a much smaller population, adds Fishman, which makes it possible to consider pushing ahead into late-stage development alone.
As for timelines, Fishman is playing his cards close to the vest. Early-stage research, as he knows all too well, has a lot of variables that can affect timelines. An IND is coming, he says, and the company will see how it plays out, with a special focus in starting to look at how durable a single treatment can be — one of the the big issues that Melton is most intrigued by.
The mega-round in play also underscores the willingness of venture backers to go big these days when they’re focused on making a pioneering advance.
Eight Roads Ventures and Cowen Healthcare Investments co-led the financing with help from MPM Capital, F-Prime Capital Partners and Arch Venture Partners. Existing strategic partners include Novartis, Medtronic and the JDRF T1D Fund, and new investors jumping in include ORI Healthcare Fund, Wu Capital, 6 Dimensions Capital and SinoPharm Capital. Semma named Daniel Auerbach from Eight Roads and Kevin Raidy from Cowen to its board of directors.
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