Long journey, but Living Cell Technologies finally nears market

Cell therapy company Living Cell Technologies (LCT) is planning to list on the ASX in the next few months, after completing a rights issue which will provide it with AUD$4.8 million cash and the ability to upgrade from its current listing on the Newcastle Stock Exchange (NSX:LCT).

The company floated on the over-the-counter NSX earlier this year in a backdoor listing through former mining and exploration company Waymouth Resources -- a move LCT executive director Roger Coats said was a stepping-stone to obtaining an ASX listing.

The firm was originally started in New Zealand 16 years ago to look at living cell therapies for diabetes. The company, which operated under the name Diatranz, became one of the world's leaders in pancreatic islet xenotransplantation, focusing on the use of encapsulated porcine islets to deliver insulin to diabetics. In 2002, the company became mired in controversy when it announced plans to conduct clinical trials of the xenotransplantation technique in the Cook Islands, after failing to get approval from the NZ government, and almost went under.

Now the company is making a comeback, with a structure encompassing three geographical locations: its corporate headquarters are located in Adelaide, research facilities in Auckland, where the company was founded, and product development operations in the US state of Rhode Island through subsidiary LCT Bio Pharma.

It has three projects in various stages of pre-clinical development, including its flagship DiabeCell porcine islets treatment for diabetes, as well as NeurotrophinCell, which is targeting Huntington's disease and stroke through delivery of choroid plexus cells to the brain, and Fac8Cell, which delivers Factor VIII producing liver cells to patients with haemophilia.

The company's platform technologies include a specific-pathogen-free herd of pigs for sourcing porcine cells and islets, methods for preparation of cells to a high level of characterisation and purity, and proprietary encapsulation technologies, the most advanced of which is an alginate encapsulation developed in alliance with Italy's University of Perugia.

The alginate, a carbohydrate gel, protects the cells from attack by the host's immune system, while allowing the cell to access small molecule nutrients and release secreted factors such as insulin or Factor VIII. According to executive director David Collinson, transplanted encapsulated cells could potentially last for up to two years in the host although the company expects that in practice new cells will need to be transplanted every few months, without the need for immunosuppressive drugs.

Collinson said the company expected to get all three products into clinical trials next year, with primate studies about to begin for the NeurotrophinCell product and already in progress for the DiabeCell diabetes product. The former is expected to move quickly, with the company already in contact with the FDA about establishing orphan drug status for the therapy, which is based on cells from the choroid plexus -- cells in the brain that produce the cerebrospinal fluid and associated nutrients.

"Our priority is to focus on NeurotrophinCell -- partnering and trials," Collinson said. "We're hoping that if the Huntington's primate studies go well, we'll be in discussion with potential partners before the end of the year."

Collinson said the DiabeCell product would take longer to get to the market, in part because children will be a primary market for the product. While a limited trial of porcine islet transplantations has been carried out, more animal studies are being performed prior to larger scale clinical trials, which are expected to begin in the latter half of 2005. In the meantime though, the company hopes that its cell purification and encapsulation services, including encapsulation of human islets for use in the Edmonton protocol, will bring in revenue for the company from early next year.

In the meantime, Collinson, fellow executive director Coats and new CEO Michael Yates will concentrate on taking the company into the next phase of growth.

Coats said the fundraising should take the company through the next 12 months, allowing it to complete the next phase of pre-clinical development and prepare to apply for regulatory approval from the TGA and FDA for clinical trials.

"We're closer to commercialisation than a lot of other biotechnology companies in this space," he said.