Y Combinator startup pursuing 'scarless' pouch for cell transplants in diabetes

The transplantation of insulin-producing cells could free people with Type 1 diabetes from daily insulin injections, but this approach has run into hurdles such as a limited treatment benefit and the need for lifelong immunosuppression.

Encapsulating the cells in an insulating pouch can eliminate the need for immune suppression, but that creates another problem: the formation of scar tissue around the implant that impedes the cells’ work.

“Scar tissue or fibrosis is a known failure point around implants. It creates a barrier for the cells, and can lead to poor survival of the cells around the implant,” Crystal Nyitray, Ph.D., told FierceBiotech. Nyitray is the CEO and co-founder of Encellin, a University of California, San Francisco (UCSF) spinout looking to solve these problems with nanotechnology.

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“If we can reduce fibrosis, it really helps the cells get nutrients better, survive better and signal more effectively. It’s really critical to their success,” Nyitray said.

The company was born in 2016 to advance the cell encapsulation technology Nyitray worked on in the lab of Tejal Desai, Ph.D., a professor of bioengineering at UCSF and chair of the department of bioengineering and therapeutic sciences in the university’s schools of pharmacy and medicine.

Rather than adding a whole host of bells and whistles to an implant material to boost its acceptance by the body, Desai’s lab zeroed in on the material itself, Nyitray said. Thinking about the way that surfaces interact, the team came up with a pouch, roughly the size of a quarter, made of an ultrathin nanoporous membrane. It’s designed to hold insulin-producing islets just under the skin, where the cells will respond to changes in blood glucose levels by secreting insulin.

Desai’s lab published two papers demonstrating its use in animals, but it wasn’t until Nyitray forayed into the biopharma industry that she realized the team might have something, she said.

“In my Ph.D., I was lucky to enough to spend some time at Sanofi,” she said. “Sanofi was looking for somebody in the diabetes space, specifically in cell encapsulation.”

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Nyitray spent just under a year at the Big Pharma, looking at technology in the translational space.

“During that time, I started to realize we really had something, that everything that pharma or biotech was looking at was something we had been developing from the ground up with those specific questions in mind,” she said.

Nyitray knew she wanted to spin the research out into a company, but as a first-time founder, didn’t know how best to go about it. So, she went out to get that experience by taking a position at QB3, UCSF’s accelerator for life sciences startups.

“I was helping others start their companies while working on spinning out my own company at the same time,” Nyitray said.

Eventually, Encellin found its way to Y Combinator, receiving some funding and “feedback in regard to thinking about how we can build a new therapeutic approach,” she said.

Since spinning out of UCSF, Encellin has compared its implant material to other commonly used materials in scientific literature.

“We took a snapshot of what the field looked like in regard to fibrosis. We took commonly used implant materials and looked at papers people had published with encapsulated cells,” Nyitray said.

Encellin looked at its material at the same time points after implantation as those other studies, measuring with a ruler how much scarring formed around the implants. Its pouch had virtually no scarring compared to other materials, the difference being 10 to 100-fold, Nyitray said, though the data have not been published in a peer-reviewed journal.

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“Compared side-by-side, we see a dramatic decrease in the amount of foreign body response you see with our implant material,” she said. “It’s important, because cells want to be as close to the outside world as possible, but at the same time, we want to provide an encapsulation system, so they are protected in a tissue-like environment.”

Creating and maintaining that tissuelike environment keeps the islets happy, healthy and working their best. It’s one advantage that sets Encellin’s approach apart from current islet transplantation methods—delivering the cells to blood in the hepatic portal vein, which carries them to their new home in the liver.

The problem with infusing cells into the portal vein is that they are carried away and dispersed, said Grace Wei, Ph.D., chief operating officer and co-founder of Encellin. “Where the cells end up implanting is unpredictable, and that likely contributes to loss of function over time.”

“It’s hard to predict how well any given procedure may work over time, as seen in cure rates of 90% in the first year and 50% in the second year. Dropping rates or loss of activity suggest cells are dying,” Wei said.

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Encellin’s pouch gives the cells a “home” that helps them work better and keeps them in the right place. It also makes treatments more predictable, reproducible and retrievable, Nyitray said.

These qualities make the pouch applicable to a range of other diseases with a give-and-take mechanism, similar to that of blood sugar and insulin in diabetes. It’s still the early days for Encellin, and the company hasn’t committed to any of these ideas, but Nyitray believes the tech would do well in inborn errors of metabolism “where you’re missing a fundamental function of a cell.”

“If we have a system to contain cells to secrete, degrade or metabolize some molecule, we could safely put those cells into a pouch and restore function,” she said.

It could work for phenylketonuria. People with this condition can’t break down the amino acid phenylalanine, so they are treated with enzyme replacement therapy. Another option could be hemophilia, a disease in which patients produce little to no clotting factors, putting them at risk of potentially life-threatening bleeding.

The pouch could even change the way certain medicines are delivered. For example, it may be an alternative to delivering gene therapies, which are currently administered through a viral vector.

All of that said, Encellin is going full steam ahead on getting its pouch into human trials for diabetes.

“Immediately on the to-do list is focusing on demonstrating safety of this in humans so we can get one step closer to helping patients,” Nyitray said. The company hopes to move into the clinic in 2020.

“The big question,” Nyitray said, “is how many types transplants could become available with this new technology, as we start to explore opening up a new path to treating chronic diseases.” 

“I feel very confident that our pouch can match the lifetime of the cells that are going to be implanted. The question is how long different cell types and sources will be functional. I don’t think we have that answer yet,” she said.