BioWorld International Correspondent

LONDON - ReNeuron Group plc is acquiring fellow cell therapy specialist AmCyte Inc. in a $4 million all-share deal, and raising $3.1 million in a placing to fund development of the company's encapsulated islet cell therapy for Type 1 diabetes over the next year.

AmCyte, of Santa Monica, Calif., has developed an encapsulation technology that minimizes the immunological response to allogeneic cell therapy, which ReNeuron intends to combine with its pancreatic cells.

"The technology has lain fallow for some time, and things have not moved forward," Michael Hunt, CEO of ReNeuron, told BioWorld International. "It needs more commercial impetus, which we can bring."

ReNeuron is acquiring the encapsulation technology, together with U.S. laboratories and 12 staff members.

Apart from getting a foothold in California, the deal allows the Guildford, UK-based company to explore other areas where its cell expansion technology could be combined with AmCyte's alginate-based encapsulation system.

The technology has been shown to maintain cell function in animal models, and Amcyte has carried out Phase I safety studies in the U.S. and Canada in a small number of severely diabetic patients using islets from human cadavers, with no safety or rejection issues.

ReNeuron recently announced success in generating insulin-producing islet cell clusters using its c-mycER cell expansion technology. Hunt said the combination of those cells with the encapsulation technology could overcome both the lack of suitable donated pancreatic tissue and the immune rejection typically seen when transplanting raw islets into diabetes patients.

"Diabetes is an obvious example of where encapsulating cells is the only way to get results," Hunt said. "Apart from immune rejection, one of the prime issues is getting consistent, good-quality islet cells. We think we can do that."

The Phase I trials were very limited, but Hunt said there was some evidence of efficacy. "It helps that the encapsulation technology has been before the regulators before, but our cells need to go through the regulatory process, and then we have got to combine the technologies and take them through a proper preclinical program."

The money raised will fund the work over the next year. "We raised no more than we needed to fund the diabetes program and leave the rest of the business no worse off," Hunt said.

The encapsulation is applicable to other cells types, and AmCyte has an early stage liver program. ReNeuron's cell expression technology has been shown to work with hepatocytes, again potentially providing a source of cells. Hunt said ReNeuron also would look to license the encapsulation technology.

The $4 million for the acquisition will be satisfied by issuing 9.3 million shares, while 7.2 million shares will be issued in the placing. Hunt said he was pleased to have struck the deal during a period of relative strength of sterling against the dollar.

AmCyte's technology allows small molecules and peptides produced by the encapsulated cells to transfer out of the capsule. At the same time, nutrients can pass through the capsule to reach the cells. As a result, cell function is preserved. The encapsulated cells are implanted surgically and can be retrieved easily, if necessary.