Two-year-old Cellular Transplants Inc. of Providence, R.I.,which is developing encapsulated cell transplants, said Tuesdaythat it named a seasoned biotechnology executive as thecompany's second permanent chief executive officer.

The president, Seth Rudnick, said that makingencapsulated cell transplants will prove to be more cost-effective than producing recombinant proteins fortreating such diseases as insulin-dependent diabetes andParkinson's disease. Because cell transplants can be grown insmaller volume, "the manufacturing should be cheaper thanthat of protein-based biotechnology companies," Rudnick said.

He takes over from acting CEO Mark Levin, a principal in theMayfield venture capital fund that provided Cellular's $2.5million seed financing in 1989. Levin became acting CEO lastMay, following the departure of the company's first permanentCEO, Jerry Karabelas.

Rudnick joins Cellular after serving as senior vice president atthe R.W. Johnson Pharmaceutical Research Institute of NewBrunswick, N.J., where he was responsible for all biotechnologydevelopment activities. He was previously vice president ofbiotechnology product development at Ortho PharmaceuticalCorp., a subsidiary of Johnson & Johnson, and senior vicepresident for pharmaceutical development at Biogen Inc.,where he was in charge of developing recombinant gammainterferon and interleukin-2.

Cellular holds a patent covering the use of encapsulatedneurotransmitter-secreting cells to treat central nervoussystem disorders. It has applied for patents on encapsulationpolymers and cell-coating techniques.

Its technology is based on encapsulation work conducted atBrown University in Providence and pancreas islet cell isolationtechniques developed at Washington University in St. Louis.Pierre Galletti and Patrick Aebischer of Brown, and Paul Laceyand David Sharp of Washington University, are scientificadvisers to the company.

Cellular grew in the past year from seven to 30 employees.Michael Lysaght, formerly vice president of renal therapyresearch at Baxter International, leads a 24-member scientificteam as vice president of research and development.

Cellular's first product, dopamine-secreting encapsulatedmouse cells for treating Parkinson's, is expected to enterclinical trials next year, Rudnick said. Trials should start soonafter that on Cellular's encapsulated porcine pancreatic isletcells for treating diabetes, he said.

Rudnick said he sees the use of better polymers to encase thecells as a means to sidestep the problems that stymiedattempts by Hana Biologics Inc. and others to transplant isletcells.

Cellular last month completed an $8.1 million second-roundfinancing. It seeks corporate partners with experience incentral nervous system and endocrine products, but wants toretain U.S. rights to its products. Rudnick said he hopes to makean announcement on a deal within the next few months.

-- Carol Ezzell Washington Bureau Chief

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