COMPANY PROFILE
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Novocell, Inc.
Alan J Lewis†,
Novocell, Inc. is a stem cell engineering company creating, delivering and commercializing
Melissa Carpenter,
cell and drug therapies for diabetes and other chronic diseases. The use of human
Allan Robins &
embryonic stem cells provides a scalable source of any differentiated lineage that has
Emmanuel Baetge
potential for cell replacement therapy, as well as tools for drug discovery to create
†Author for correspondence
regenerative medicines.
Novocell, Inc., 3550 General
Atomics Court, Building 2,
Drug discovery
Throughout the 1960s and 1970s, the pharma-
Room 503, San Diego, CA
ceutical industry focused almost exclusively on Novocell is developing defined media conditions
92121, USA
Tel.: +1 858 455 3708 small-molecule drugs to treat diseases. The for the growth and expansion of cancer stem cells
Fax: +1 858 455 3962
1980s and 1990s witnessed the era of genetic (CSCs). These CSCs are being used to identify spe-
E-mail: alewis@novocell.com
engineering, resulting in the development of cific druggable targets for cancer treatment. Novo-
innovative biologics such as monoclonal anti- cell is also developing drug discovery assays for
bodies and recombinant proteins, as well as the regenerative medicine and for drug ADME/toxicity
development of new tools to identify small mol- prediction using liver and intestinal cells.
ecule drugs. These transformational technologies
Novocell: a history
helped start the biotechnology industry. As we
enter the ‘Century of the Cell’, the advent of Novocell was formed in August 1999 by acquiring
stem cell engineering offers the potential to pro- all of the assets and liabilities of Neocrin Company,
duce cellular replacement disease-modifying including key licenses to cell encapsulation tech-
treatments and potential cures for many debili- nology invented by Jeffrey Hubbell and assigned to
tating, degenerative disorders, including diabetes the University of Texas, USA. In August 2004,
and cancer. To embrace this revolution Novocell Novocell merged with CyThera, Inc., San Diego,
has three primary technology platforms, CA, USA to combine the delivery technology with
discussed below. a potential for renewable islet cell sources derived
from stem cells. CyThera, focused on developing
Stem cell-directed lineage human stem cells for the treatment of human
Novocell is the first company to efficiently degenerative disease, merged in July 2004 with
engineer human embryonic stem cells (hESCs) Bresagen, Inc., Athens, GA, USA. Bresagen is one
into definitive endoderm (DE), the gatekeeper of the few suppliers of ‘presidentially approved’
cells that differentiate into pancreas, liver, lung hESC lines and has access to NIH-funds to distrib-
and many other cells, tissues and organs. This ute and characterize these lines. Novocell’s primary
provides a platform to create cell therapies, therapeutic target is diabetes and our proprietary
develop drug discovery opportunities in regen- technology platform has the potential to provide a
erative medicines, and assays for ADME/toxic- renewable supply of functional human insulin-pro-
ity, as well as find therapies that target key ducing cells for the treatment of diabetes, thereby
cancer stem cells. overcoming the major obstacle of islet supply.
Cell encapsulation Novocell’s unique accomplishments
Novocell utilizes a biocompatible polyethylene
• Demonstrated, in small and large animal stud-
glycol (PEG) conformal coating that enables
ies, that encapsulated cells are protected from
transplanted cells to survive and function by
immune rejection after implantation,
protecting them from immune rejection. It is
enabling the development of a new therapy
designed to eliminate the need for continuous
for major diseases such as diabetes.
immunosuppressant drugs that are necessary
for allograft transplants. The technology is • Demonstrated preliminary evidence of safety
being used in the current proof-of-principle and function in a Phase I/II proof-of-principle
primary islet transplant Phase I/II clinical trial clinical trial in patients with Type 1 diabetes
part of
in Type 1 diabetics. using encapsulated primary islets.
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COMPANY PROFILE – Lewis, Carpenter, Robins & Baetge
• Established six human ESC lines, including a engraftment of human primary islets can provide
clinical-grade line. relief from daily insulin therapy and lead to nor-
malization of blood glucose with predicted long-
• Developed DE cells from hESCs.
term amelioration of diabetes-related complica-
• Developed insulin-producing cells from hESC- tions. All Type I and insulin-requiring Type II
derived DE. diabetics (up to 40% of Type II patients) are can-
didates for islet cell transplantation. Neverthe-
Differentiation of hESCs to endoderm less, there remains a severe shortage of functional
A unique property of hESCs obtained from the primary human islet cells for these proven trans-
inner cell mass of blastocysts is their ability to plantation treatments. One possible means for
differentiate into all the cell types that comprise alleviating this paucity of transplantable insulin-
the human body. producing cells would be to produce such cells
The generation of fully differentiated cells from hESCs, which are functionally immortal
throughout the body occurs by a series of develop- and are considered to have the potential to gen-
mental stages. The first stage, known as gastrula- erate every cell type found in the human body.
tion, results in the generation of the three somatic hESCs are unique amongst stem cells with
lineages (Figure 1): the ectoderm, mesoderm and regard to these properties.
endoderm. The endoderm subsequently gives rise Novocell’s milestones for its stem cell engi-
to a number of therapeutically important struc- neering programs include:
tures including the lungs, liver, thyroids, thymus, • Establishment of hESC lines according to
intestine, stomach, bladder and pancreas. clinical standards for application to cell-
The development of cell therapies involving replacement therapies such as diabetes;
these organs has been hampered by the inability to • Development of ways to efficiently differen-
control and direct differentiation of hESCs to tiate hESCs into functioning insulin-produc-
DE. The Novocell team accomplished this ing cells that can ultimately be implanted
ground-breaking feat by developing a reproduc- into humans;
ible and efficient protocol [1–4] that has been repli-
• Application of the company’s encapsulation
cated in numerous laboratories around the world.
technology to allow delivery of cells without
This work provided a solution that now opens the
immunosuppression in diabetic patients;
door to generation of the endoderm-derived
• Development of methods to scale-up
mature cell types, such as insulin-producing cells
production of cells to allow efficient
and hepatocytes.
commercialization of the technology;
• Identification of targets for the discovery of
Diabetes program
novel anticancer agents to treat those cancers
Novocell’s encapsulation and stem cell technolo-
linked to endoderm organs such as pancreas,
gies have the potential to treat many human cellu-
colon and lung.
lar degenerative diseases and disorders. The first
application of these technologies uses proprietary Novocell’s strategy for the generation of func-
cell encapsulation of insulin-producing cells to tional insulin-producing cells is to guide the
treat diabetes. The product will be biocompatible hESCs through a step-by-step process that mimics
and allows subcutaneous implantation without early embryological development of the pancreas.
requirement for long-term immunosuppression. The differentiation of hESCs to insulin-produc-
Diabetes is the fifth leading cause of death by ing cells occurs through a series of specifying and
disease in the USA alone. According to the Ameri- patterning events whereby hESCs transition
can Diabetes Association (ADA) the total annual through mesendoderm, endoderm and foregut
economic cost of diabetes in 2002 for the USA was endoderm to form pancreatic endoderm and
estimated to be US$132 billion. According to the endocrine precursor cells. We observe the tempo-
International Diabetes Federation (IDF), it is esti- ral expression of the principal markers specifying
mated that currently some 194 million people each transition including HNF1B, HNF4a,
worldwide, or 5.1% in the adult population, have HNF6, PDX1, PTF1A, HLXB9, NKX6.1,
diabetes and that this will increase to 333 million, NKX2.2, PAX4, PAX6, NEUROD1, ISL1 and
or 6.3%, by 2025. IAAP. As a result of this directed differentiation
The efforts of James Shapiro and colleagues, strategy Novocell has generated cell populations
creators of the Edmonton Protocol for islet in which the principal islet hormones, including
transplantation, demonstrate that hepatic insulin, glucagon, ghrelin, pancreatic polypeptide
974 Regen. Med. (2007) 2(6) future science group

Novocell, Inc. – COMPANY PROFILE
Figure 1. hESC differentiate into endoderm lineages that have enormous potential
for cell therapy and drug discovery.
CSC: Cancer stem cells; hESC: Human embryonic stem cells.
and somatostatin, are expressed at the mRNA and The biocompatible substance, PEG, can be
protein levels. The cells generated have many of effectively and evenly applied to the surface of
the properties of fetal pancreatic islets. A manu- islets, allowing insulin and glucose to pass freely
script detailing these results has been recently in and out of the capsule while preventing the
published [5]. Novocell is currently working on body’s immune system from destroying the islets
scale-up technologies to generate sufficient quan- within (Figure 2).
tities of insulin-producing cells for clinical entry. After definitive nonhuman primate studies
evaluating encapsulated primary islets in experi-
Cell encapsulation mentally induced diabetes were successfully
While there have been many different completed, an Investigational New Drug (IND)
approaches to encapsulating cells, including was submitted to the FDA requesting a com-
insulin-producing islets, none of these have been bined Phase I/II clinical trial. The FDA
successful in humans to date. approved the IND and trial design and a Phase
Novocell’s conformally coated islet allografts I/II trial began in patients with insulin-requiring
make the technology clinically and commercially diabetes in December 2005. The islets used in
relevant [6]: this trial were sourced from approved procure-
ment agencies and donors in collaboration with
• Content of biodegradable-PEG
other islet isolation facilitates in the USA. A total
• Conformal coating (25–50 µm)
of two Type 1 diabetic patients were transplanted
• Immunologically nonreactive and no significant adverse events have been
• Adjustable lifespan and permselectivity observed to date (12 months post-transplant).
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COMPANY PROFILE – Lewis, Carpenter, Robins & Baetge
Figure 2. PEG encapsulated human islet is biocompatible, permeable to nutrients
including glucose but not large molecules and immune cells
Complement
O2
PEG
INSULIN
C-peptide
Amylin
Human
GLUCOSE
Ghrelin
islet
Glucagon
25–50 µm
Nutrients Immune cells
PEG: Polyethylene glycol.
In summary, this study has shown: Novocell has discovered a novel cell surface
molecule on these cells that is believed to be
• No safety concerns to date
involved in the self renewal of CSCs. This mol-
• No evidence of autoimmune destruction or ecule represents a good target for future drug
allograft rejection to date – no apparent development for cancer treatment and Novocell
induction of autoantibodies and no precipi- is currently developing monoclonal antibodies
tous loss of islet function to this cell surface molecule.
• Evidence of function – C-peptide responses to Novocell believes that CSCs represent novel
oral glucose tolerance testing without immun- targets for the development of cancer treatments
osuppression for more than 12 months and envisions a change in the way cancer is
treated. This will involve both agents that target
Drug discovery CSC in addition to chemotherapeutic regimens
Cancer stem cells that target normal tumor cells making up the
CSCs have recently been identified as self- bulk of a tumor.
renewing, immortal cells that are thought to be
Hepatocytes & ADME/TOX applications for
responsible for initiating cancerous tumor
drug discovery
growth and promoting metastasis. CSCs have
been isolated from a number of different tumor The liver hepatocyte is one of the principal epi-
types and it is now thought that successful treat- thelial cells arising from the ventral foregut
ment of various cancers will require targeting of DE. Currently, the supply of human liver
CSCs. While these CSCs have been isolated hepatocytes required for drug metabolism and
from a number of tissues, growing and expand- toxicology testing is quite limited. The
ing them in vitro has proved problematic. Novo- pharmaceutical need for replenishable and reli-
cell has expertise in the production of defined able sources of normal human hepatocytes for
media and has developed two proprietary media drug metabolism and toxicity testing is
for the growth of stem and progenitor cells [7]. considerable [8]. This market need could be
One of these proprietary media has been further met with hepatocytes derived from
licensed to Invitrogen, who launched the prod- hESCs having different genetic backgrounds
uct in August 2007. Novocell is using its media (i.e., Caucasian European, North American,
development expertise to formulate media for Asian, Indian, Arabic, and so on). Drug metab-
the expansion of CSCs. olism by liver hepatocytes occurs with different
In addition, Novocell has isolated a stable propensities in different genetic populations
hESC variant known as BG01v, which is tri- and therefore it would be of value to stratify
somic for chromosomes 12 and 17. These same the hepatocyte genotypes produced. We see the
trisomies are found in many solid tumors. production of human hepatocytes as the most
976 Regen. Med. (2007) 2(6) future science group

Novocell, Inc. – COMPANY PROFILE
practical way to leverage our know-how in the that can result from expanding Novocell’s plat-
endoderm area to produce cells for product form technologies into new products for the
sales on a nontherapeutic R&D basis. treatment of diverse human diseases and disor-
ders and for substantial R&D markets with spe-
Drug screening & endoderm neogenesis cialized human cell sources for drug screening
Neogenesis and survival assays for screening and toxicology testing.
small molecules to identify compounds to regen-
Financial & competing interests disclosure
erate pancreatic islet cells, liver cells, lung cells
and other cell types are of paramount impor- All authors are employees of Novocell, Inc. The authors have
tance. Novocell is currently interested in devel- no other relevant affiliations or financial involvement with
oping assays to identify small molecules/drugs any organization or entity with a financial interest in or
and biologics for cell survival and regeneration. financial conflict with the subject matter or materials dis-
In summary, in addition to the use of hESC- cussed in the manuscript apart from those disclosed.
derived β cells for the treatment of diabetes, No writing assistance was utlilized in the production of
there are many potentially important products this manuscript.
Principal officers
Senior Executive Officers
Alan J Lewis, PhD President & Chief Executive Officer
E Edward Baetge, PhD Chief Scientific Officer
Allan Robins, PhD Chief Technical Officer
Melissa Carpenter, PhD VP of Research & Development
Xiaojie Yu, PhD Sr Director of Biomaterials Science
Anne Sandan, CPA Controller, Sr Director of Corp. Admin.
Liz Bui JD, PhD Director of Intellectual Property
Board of Directors
Fred Middleton Managing Director of Sanderling & Novocell’s Chairman of the Board
Alan J Lewis, PhD President & Chief Executive Officer
Donald J Elmer Managing General Partner of Pacific Horizon Ventures
Franklin Johnson Founding Partner of Asset Management Co.
Asish K Xavier, PhD Vice President, Venture Investments, Johnson & Johnson Development Corp.
Orville G Kolterman, MD Senior Vice President, Clinical & Regulatory Affairs of Amylin Pharmaceuticals
Scientific Advisory Board
Matthias Hebrok, PhD Associate Professor, Diabetes Research Center, Department of Medicine, University of
California, San Francisco, USA
Mike German, MD Professor, Diabetes Center, University of California, San Francisco, USA
Jeffrey A Hubbell, PhD Director of the Institute for Biomedical Engineering and Biotechnology, Lausanne,
Switzerland
Marc R Montminy, MD, PhD Professor, Salk Institute for Biological Studies (Affiliate Membership), Biomedical Sciences
Graduate Program, University of California, San Diego, USA
Didier YR Stainier, PhD Professor, Department of Biochemistry and Biophysics, University of California, San
Francisco, USA
James M Wells, PhD Assistant Professor Division of Developmental Biology, Children’s Hospital Research
Foundation, Cincinnati, OH, USA
Jeffrey A Bluestone, MD AW Clausen Distinguished Professor, UCSF Diabetes Center, University of California,
San Francisco, USA
Alberto Hayek, MD Professor of Pediatrics, UCSD School of Medicine, Whittier Institute for Diabetes, La Jolla,
CA, USA
James Shapiro, MD, PhD Director, Clinical Islet Transplant Program University of Alberta, Canada
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COMPANY PROFILE – Lewis, Carpenter, Robins & Baetge
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