Lilly goes cellular for $34m

 Cell therapies for diabetes are, as they say, having a moment. At the weekend both Vertex and Sernova released promising data on their investigational projects at the ADA meeting. Yesterday the FDA approved the first such product for a rare form of the condition. And this morning Lilly bought tiny Sigilon Therapeutics, which counts a similar project in its pipeline. 

Presumably this is mostly serendipitous – but the US regulator's green light for Lantidra, Celltrans’s donor-derived pancreatic islet cell therapy, could smooth the path for these other projects. 

Lilly has worked with Sigilon for five years now on the development of encapsulated cell therapies, including SIG-002, for the treatment of type 1 diabetes. This is Sigilon’s most advanced pipeline programme, though only by default. Sigilon used to be primarily focused on haemophilia A, but this programme was put on FDA hold in 2021 and ultimately terminated.

SIG-002 consists of insulin-producing islet cells encapsulated in Sigilon’s technology: spheres 1.5mm in diameter that are designed to reduce immune response in the patient. The intention is to do away with the systemic immunosuppression required by Celltrans’s Lantidra, as well as Vertex’s lead cell-based diabetes project.

Sigilon floated in late 2020 at $18 a share and a post-money market cap of $600m, but the implosion of its haemophilia project and the biotech bear market swiftly eroded that valuation. Before Lilly swooped its shares had dropped 99% from its IPO price, to less than four dollars.

So while the purchase price of $14.92 per share in cash, for an aggregate of around $34.6m, represents a considerable premium over Sigilon's recent stock price, this will still represent a big loss for any IPO investors that remain holders.

A back-end loaded contingent value right (CVR), that makes this transaction feel very much like a licensing deal, betrays the poor negotiating position that Sigilon found itself in. Shareholders also get one non-tradeable CVR worth up to $127 per share which will be triggered sequentially on: the start of a first-in-human trial; the start of a registrational trial; and the first regulatory approval of a specified product. 

The deal is of course a bagatelle for Lilly, even if its ends up paying out the full value of the CVR, which is worth up to another $310m. The US pharma giant currently has the largest market value of any drug developer, largely thanks to expectations for its other assets in the arena of diabetes and obesity.

Islets in the stream (of developments)

That CVR-triggering regulatory approval is a long way off for Sigilon and Lilly. But Celltrans is already there. 

Lantidra consists of unencapsulated donor-derived islet cells, and has been approved for patients with type 1 diabetes who can be unaware if they become hypoglycaemic. These patients are unable to approach target blood sugar levels because of repeated episodes of severe hypoglycaemia despite intensive diabetes management.

Across two trials in a total of 30 patients with type 1 diabetes and hypoglycaemia unawareness, one, two or three infusions of Lantidra enabled 21 patients to eschew insulin for a year or more, with 11 of these not needing insulin for one to five years and 10 not needing insulin for more than five years. Five participants did not achieve even a day’s insulin independence, however. 

Lantidra’s safety record is somewhat dubious. Most trial patients taking Celltrans’s therapy had at least one serious reaction to the infusion procedure or the use of immunosuppressants, the FDA said, and in the adcom vote back in 2021 some panellists expressed concern about the potential risks associated with long-term immunosuppression, though the vote was ultimately positive.

By comparison with Lantidra, Vertex’s recent data on one of its investigational cell therapies, show VX-880 to be promising but early. The first two patients to have been followed for a year were insulin independent at that time, the ADA meeting heard. 

Sernova also presented data at the ADA meeting this week. It is going after a similar population to Celltrans, and the new cut came from the ongoing phase 1/2 trial of its Cell Pouch system, which uses human donor-derived islets, in patients with type 1 diabetes and severe hypoglycaemia unawareness. 

Two of six patients implanted with the cell-device combo remained insulin independent after at least a year, the ADA meeting heard. Three were insulin independent at ten, two and one month post-implant, whereas the sixth had only just been implanted.

There is a major catch, however: the first five patients in this study had all received supplemental intraportal islet transplants. 

That Lilly bought Sigilon rather than the clinical-stage Sernova is interesting. Doubtless price played a part despite Lilly’s richesse – Sernova has a market cap of CAN$276m (US$208m). 

And while Vertex and Sernova are closer to market than Sigilon, that is not to say that they are actually close – even if the Lantidra approval does show there is a path to market in the US.

Selected cell therapies for type 1 diabetes
Company	Product	Description	Status
Celltrans	Lantidra	Islet cell infusion, requires systemic immunosuppression	Approved in US for T1D pts w hypoglycaemia unawareness. In 2 trials, 21/30 pts were insulin independent at 1yr
Vertex	VX-880	Islet cell infusion, requires systemic immunosuppression	First 2 pts in ongoing ph1/2 trial were insulin independent at 1yr
	VX-264	Islet cell-device combo, does not require systemic immunosuppression	Ph1/2 trial could report 2026
Sernova	Cell Pouch w human donor islets	Islet cell-device combo, does not require systemic immunosuppression	Ph1/2 in T1D pts w hypoglycaemia unawareness could report 2024
Sigilon	SIG-002	Encapsulated islet cells	Preclinical
Source: Evaluate Pharma, company websites, FDA, clinicaltrials.gov. https://www.evaluate.com/vantage/articles/news/deals/lilly-goes-cellular-34m