TranCel Corp. and Baxter Healthcare Corp. on Thursdayannounced that they have invested more than $10 million in anew company, Neocrin Co., that will focus on the treatment anddiagnosis of type I diabetes.

The new company is located in Santa Ana, Calif., and willinclude the assets and personnel of TranCel. TranCel's venturebackers, which include Aspen Venture Partners, DomainAssociates, The Sprout Group, Asset Management Co. and NewEnterprise Associates, contributed more than $5 million. Baxterof Deerfield, Ill., contributed a like amount.

Baxter and Neocrin will develop a cellular implant system, thecompany's initial product. The companies will share worldwidemarketing and distribution rights, although Baxter's marketingrights are non-exclusive and Neocrin has the right to makeother agreements, said Floyd Benjamin, president and chiefexecutive of Neocrin.

Type I diabetes is an autoimmune reaction that destroys theislets of Langerhans, the specialized group of cells in thepancreas that normally produce insulin. There are about 2.5million type I diabetics in the U.S. and Europe.

Both Baxter and TranCel have been developing "bio-artificial"pancreas technology that uses transplanted islets, with eachfocusing on different aspects of development. To work, a devicemust incorporate islet cells from a pig or other source and mustisolate the islets from the recipient's immune system whileallowing the exchange of insulin and nutrients between thepatient and the islets.

TranCel, which was formed in 1988, has been primarily focusedon porcine islet cell culturing and has developed techniques forisolating, purifying and encapsulating them, Benjamin said. Thecells are encapsulated using calcium algenate to immunoisolatethem.

Baxter has focused on a device being developed by WilliamJohnston, vice president of its applied sciences division. "Ourfocus and TranCel's focus were very complementary, withalmost no overlap," he said. "Both of us realized we'd eitherneed to develop or acquire the complementary pieces.

"We've come up with something we think is unique," Johnstontold BioWorld. The body wants to reject most implants andgrows a fibrotic capsule around them that is poorlyvascularized. This means that oxygen and nutrients can't get tothe cells within the implant, nor can insulin get out.

"Our membrane decreases the fibrotic capsule and allowsvessels to grow right on to the surface of the membrane,"Johnston said. "The result is that we get very good diffusion ofoxygen and nutrients, so we can pack the membrane withislets."

That means the implant can be small. Right now, extrapolatingfrom animal work, Johnston estimates that a human implantwould be about 11 cm by 11 cm and the thickness of a piece ofpaper. It is planned to be implanted subcutaneously in anoutpatient operation. Johnston is still working on its finaldesign.

Baxter has shown long-term vascularization of the membranefor up to 1.5 years in dogs and has shown correction ofdiabetes out to one year in rats, Johnston said.

In initial human trials in Europe, empty membranes have beenimplanted in patients to show vascularization of the membrane.Data from several of these trials will be presented at the FirstInternational Congress of Cellular Transplantation, whichbegins Sunday in Pittsburgh, Johnston said.

Other companies developing implants for diabetics includeCytoTherapeutics Inc. and BioHybrid Technologies Inc., asubsidiary of W.R. Grace & Co.

In December, CytoTherapeutics (NASDAQ:CTII) reported that itsimplant supplied enough insulin to keep rats' blood sugar atnormal levels for at least 60 days. BioHybrid's implant hasallowed tissue to survive in the peritoneal cavity and provideinsulin to diabetic rats for at least a month.

-- Karen Bernstein BioWorld Staff

(c) 1997 American Health Consultants. All rights reserved.