LCT upgrades technology through deal with Theracyte

Kiwi-born cell-therapy company Living Cell Technologies (ASX:LCT) is to acquire the technology and IP rights of a potential competitor, US-based cell-therapy company Theracyte.

LCT announced today that it has signed a letter of intent with Theracyte and Baxter for Theracyte's technology and patents, which cover a family of thin, pillow-shaped devices that can be filled with living cells and implanted beneath the skin to deliver therapeutics for a wide range of diseases.

According to LCT, it took Theracyte's pharma parent, Baxter, several decades to develop the capsules, at a cost of at least US$90 million.

LCT managing director David Collinson said the letter of intent provides for the cashless transfer of Theracyte's assets to LCT, in return for LCT issuing 300,000 of its shares to Theracyte shareholders. In addition, 3 million options to purchase unissued shares in LCT will vest upon the future regulatory approval for the first Theracyte product.

"[Baxter] get a shareholding in LCT, and a small royalty stream from any product sales. And when we develop something promising, they have the option to buy into it - or buy us out," said Collinson.

The assets include potential collaborations for treating multiple sclerosis, cancer and diabetes - the latter by using encapsulated, insulin-secreting islet cells.

Why would Baxter and its Theracyte spinoff sell their cell-therapy assets so cheaply?

The simple answer, Collinson said, is that LCT has succeeded where Baxter and Theracyte failed: it has used its proprietary technology to create a valuable stable of therapeutic cell lines for its own alginate-encapsulated implants - and now, Theracyte's mini-pillows.

"Baxter probably spent US$100 million developing the implant technology before it spun out Theracyte, and suddenly, they now have a use for their product - we've got cell lines that work quite successfully."

Collinson said Theracyte technology differed from LCT's, in that the pillow-like capsules are permanently sealed and do not degrade after long exposure, providing extra safety.

LCT's capsules, made from a biocompatible alginate extract from seaweed, eventually break down and are infiltrated by immune-system cells.

Collinson said there were some concerns about the possibility of cells escaping from capsules - especially stem cells, which have cancerous potential.

"The technology has a huge number of potential uses, and it gives us a strong hold over the implantable cell-therapy device market," he said.

The Theracyte technology would complement and extend the therapeutic applications of LCT's cell lines- LCT has developed alginate microcapsules containing cell lines secreting insulin to treat Type 1 (insulin diabetes) and neural growth factors to treat the neurological disorder Huntingdon's disease.