ViaCyte announces clinical trial plans for PEC-Direct and $10 million in financing, including support from JDRF – May 22, 2017

In a series of three announcements this morning, ViaCyte shared that (i) the FDA and Health Canada have greenlit clinical studies of stem cell-derived islet cell replacement therapy PEC-Direct; (ii) JDRF is providing additional support to advance PEC-Direct; and (ii) the company has raised an additional $10 million in financing (including a portion of the JDRF funding). PEC-Direct is ViaCyte’s second islet cell replacement therapy in development – unlike the company’s phase 1/2 PEC-Encap, PEC-Direct promotes direct vascularization of ViaCyte’s stem cell-derived insulin-producing cells and requires concomitant immunosuppressive therapy.

Today, ViaCyte announced plans for an open-label label trial of PEC-Direct – the first clinical trial of this candidate – following the FDA allowance of its Investigational New Drug Application (IND) and Health Canada’s No Objection Letter, which granted clearance for clinical investigation of PEC-Direct in the US and Canada. The trial hopes to enroll 40 participants initially across three sites (University of Alberta, University of Minnesota, and UC San Diego). Both University of Alberta and UC San Diego are trial sites in the ongoing phase 1/2 study of PEC-Encap, and the University of Minnesota appears to be a new trial site for ViaCyte. ClinicalTrials.gov lists an estimated enrollment of up to 15 participants for the phase 1 portion of the phase 1/2 trial of PEC-Direct and lists an expected completion date of June 2018. However, ViaCyte’s management shared that the first 12 months would focus on showing safety and initial efficacy with definitive efficacy potentially being demonstrated as early as the second half of 2018. According to ViaCyte’s announcement, the primary efficacy endpoint of the trial will be clinically relevant insulin production, as measured by C-peptide. Injectable insulin usage and hypoglycemia rate will also be evaluated.

To support the preclinical and clinical studies for PEC-Direct, ViaCyte and JDRF jointly announced a new  funding agreement. JDRF is a long-time supporter of ViaCyte, previously funding preclinical PEC-Encap efforts in 2011. Under the terms of the new agreement, the JDRF will provide funding of undisclosed size to ViaCyte to support preclinical studies of PEC-Direct in preparation for the initiation of the clinical trial. Additionally, the agreement re-allocates a portion of JDRF’s previously awarded grant for PEC-Encap to milestone payments for PEC-Direct. The total value of the new agreement was not shared.

That said, ViaCyte shared that the new JDRF funding is part of a total $10 million in new financing. Other participants in the financing included Asset Management Partners and W.L. Gore & Associates. Notably, this financing will be used to both advance PEC-Direct into clinical development and to support continued development of PEC-Encap. Gore recently entered into a partnership with ViaCyte to assist with the development of a next-generation encapsulation device that is better able to promote vascularization along the device semipermeable membrane to support cell survival and engraftmen and avoid the need for immunosuppression. We’re glad to see ViaCyte’s continued commitment to developing an immunosuppressant-free islet cell replacement therapy for type 1 diabetes, though it appears that this goal may be eventually realized in a “next-generation” therapy rather than the current PEC-Encap configuration. We think it’s unlikely that PEC-Encap in its current form will reach the market and look forward to the more incremental – but still very important – advance of PEC-Direct in the meantime.

• With the funding and regulatory approval in place, ViaCyte is well-positioned to move full steam ahead with the preclinical PEC-Direct candidate. PEC-Direct is somewhat less challenging than its PEC-Encap, which is still being investigated in a phase 1/2 trial. PEC-Encap fully encapsulates ViaCyte’s stem cell-derived pancreatic progenitor cells and is meant to eliminate the need for chronic immunosuppression following transplantation. Unfortunately, PEC-Encap has faced some challenges related to the foreign body response to the implant. PEC-Direct, on the other hand, allows for direct vascularization of the implanted pancreatic progenitor cells thus allowing better engraftment and cell growth that is expected to be unaffected by a foreign body response, though patients would be required to take immunosuppressive therapies. As such, PEC-Direct is aimed at a smaller, extremely high-risk subset of the type 1 diabetes population (with impaired awareness of hypoglycemia, recurrent severe hypoglycemia, etc.) and is unlikely to be a general “cure.” ViaCyte has been de-prioritizing PEC-Encap relative to PEC-Direct for some time now and has suggested that PEC-Direct may reach the market sooner than PEC-Encap, despite it being second to the clinic. The reallocation of JDRF funding from PEC-Encap to PEC-Direct further underscores ViaCyte’s shifting priorities in our view.
  
  • Despite the smaller target patient population for PEC-Direct, JDRF emphasized to us that the PEC-Direct program is valuable in terms of both the patients that will benefit and in terms of knowledge gleaned. JDRF characterized the reallocation of its resources to PEC-Direct as “the best possible use of our resources at this time” with the goal of quickly advancing PEC-Direct into clinical evaluation. Ultimately, JDRF hopes that lessons learned from the clinical trial of PEC-Direct will inform modifications to the PEC-Encap approach and bring the more ambitious project to fruition. Additionally, the organization suggested that PEC-Direct’s success would validate use of ViaCyte’s cells for use in other therapies in the future – including therapies that do not require immunosuppression. In the meantime, JDRF believes – as do we – that PEC-Direct can make a meaningful difference in the lives of a smaller group of patients with type 1 diabetes and life-threatening impaired awareness of hypoglycemia.
• Through the JDRF Encapsulation Consortium, JDRF is currently funding more than 50 different approaches to beta cell encapsulation. Recently, JDRF has funded Sernova, Defymed, and Semma Therapeutics (through the T1D Fund), to name a few. Overall, it appears that JDRF is remaining fairly agnostic as to which approach might succeed and is committed to advancing the field as a whole at this point. The organization defines “success” in a first generation beta cell replacement product as one that offers a demonstrable clinical benefit to patients with type 1 diabetes (in the form of insulin independence or elimination of hypoglycemia), even if it’s only a subset of patients (such as those targeted by PEC-Direct). We’re certainly glad to see so many organizations developing beta cell replacement therapies and we’re pleased to see some level of collaboration in this clearly incredibly complex area. The hype is high in this arena and we do think expectations of success are high. See our type 1 diabetes cure and prevention competitive landscape for an overview of efforts in this area.

-- by Helen Gao and Kelly Close