Memorandum

Melton group announces $44 million financing round, partnerships with Novartis and AZ related to stem cell protocol for diabetes – April 2, 2015

Executive Highlights

  • Semma Therapeutics, a Cambridge-based startup co-founded by Dr. Doug Melton (Harvard Stem Cell Institute, Cambridge, MA) announced that it has raised $44 million in Series A financing and formed an agreement with Novartis to advance its stem cell therapy for type 1 diabetes.
  • AstraZeneca announced the formation of a five-year collaboration with the Harvard Stem Cell Institute to use the Melton protocol for drug discovery screens and research into beta cell function.

The past few weeks have brought several exciting developments for the team led by Dr. Doug Melton (Harvard Stem Cell Institute, Cambridge, MA), which published a paper in Cell last October outlining a new process for generating large quantities of insulin-producing cells from human stem cells – read our in-depth coverage for full details on the program.

Semma Therapeutics (a Cambridge-based startup co-founded by Dr. Melton to translate the approach into a clinical therapy) recently announced that it has raised $44 million in a Series A financing round and formed an agreement with Novartis to advance development of the therapy. According to the press release, the Novartis agreement (details have not been disclosed) and the funds from the Series A round (led by MPM Capital with contributions from Fidelity Biosciences, ARCH Venture Partners, and Medtronic) should be sufficient to advance the program through clinical proof-of-concept trials. The Melton group has also received substantial support from JDRF at earlier stages of the process.

Then,  AstraZeneca just announced the formation of a five-year collaboration with the Harvard Stem Cell Institute to use the Melton lab’s protocol for drug discovery screens and research into beta cell function. Under the agreement, AZ will fund additional research in the Melton lab and establish its own in-house research team in Sweden; the research will focus on identifying ways to restore beta cell function and insulin sensitivity in patients with diabetes. The more in-house drug development component of the project involves screening new therapeutic candidates for diabetes against beta cells produced using the Melton protocol. A second aspect of the collaboration will focus on the decline of beta cells in diabetes; these results will be published in the scientific literature. We are glad to see the Harvard group and Semma Therapeutics capitalizing on the major wave of attention they received in the aftermath of the Cell publication, although setting realistic expectations for when a therapy like this could reach the market (not for many years) will remain important. 

  • Novartis is a natural partner for the Melton et al. group. For one, a partnership between JDRF and the Genomics Institute of the Novartis Research Foundation (which bridges basic science and preclinical drug discovery) already aims to develop therapies that promote beta cell regeneration and survival. Each April the partnership hosts a one-day conference on beta cell biology (read our report from last year’s meeting; this year’s conference will be held on April 29th). We see this established history in beta cell biology research as a good fit to unlock the potential of the Melton lab’s protocol. Additionally, beta cell therapies involve both cell and device components, and Novartis has interest and experience in both sides. Novartis’ licensing of Google[x]’s “smart lens” glucose sensing contact lens project demonstrates the company’s willingness to develop new medical technology.   
    • It was definitely notable in our view that Medtronic took part in the $44 million round of financing. We imagine the device engineering expertise here could be big for Semma.
  • AZ’s diabetes pipeline is emptying as candidates approach or receive regulatory clearance, and we are glad to see the company taking strides to rejuvenate its early-stage diabetes pipeline. Just a few days ago, AZ’s biologics research arm MedImmune announced a three-year research collaboration with the Joslin Diabetes Center, with protection and regeneration of beta cells as one of three focus areas. Given that Joslin is also affiliated with Harvard, it is hard to see the closely-timed pair of partnerships as coincidental.  
  • For background, the Melton group’s protocol can generate hundreds of millions or even billions of human insulin-producing cells from stem cells in four to five weeks. In preclinical studies, the cells demonstrated morphological and functional similarity to human beta cells, secreting insulin in a glucose-responsive manner and rescuing rodent models of type 1 diabetes from hyperglycemia. While years of work and many technical challenges (particularly the need to protect the cells from autoimmune attack) remain before this therapy could be clinically applicable, we believe that this and other cell-based therapies have the potential to truly transform the treatment of type 1 diabetes.
  • As we noted in our initial coverage of the Melton group’s publication in Cell, stem cell-derived beta cells offer exciting possibilities for high-throughput drug screening or disease modeling research – areas that have been significantly hampered up to this point by the shortage of human islet cells. We are particularly glad to see a pair of partnerships to carry each of the potential applications of this technology forward (Novartis working on the cells as a therapy, and AZ investigating the cells as research tools).
  • The Melton/Harvard group has received a great deal of attention recently, but they are far from the only ones developing cell-based diabetes therapies. ViaCyte recently provided an update on the phase 1/2 trial of its cell replacement therapy VC-01 at the UC San Diego Diabetes Public Forum. Initially we had wondered whether there could be potential for collaboration between ViaCyte and the Melton group, but that seems less likely now that both have formed partnerships with major pharmaceutical companies (ViaCyte signed a rights agreement with Janssen this past summer). BetaLogics and a team led by Dr. Tim Kieffer (University of British Columbia, Vancouver, British Columbia, Canada) also published a similar beta cell differentiation protocol last November in Nature Biotechnology; the cells produced by that procedure also successfully ameliorated hyperglycemia in mouse models of type 1 diabetes. That group also recently published an intriguing paper in Stem Cell Reports demonstrating improvements in weight and metabolic dysfunction with stem cell-derived pancreatic progenitor cells in a mouse model of type 2 diabetes, particularly when combined with sitagliptin or metformin.

-- by Emily Regier, Manu Venkat, and Kelly Close