Stem cell biologist William Rust has been quietly working on a cure for diabetes for more than a decade. Later this year, surgeons will implant his company’s pancreatic organoids in people with type 1 diabetes in hopes of restoring their ability to make insulin, Rust told Endpoints News in an interview.
William RustRust’s company, Seraxis, recently received authorization from the FDA to begin the trial. The Germantown, MD-based biotech will recruit six to nine people with type 1 diabetes and severe hypoglycemia. Rust expects to have the first glimpse of whether the approach is working early next year.
“The output is easy to measure. Either they have insulin in their blood, or they don’t,” Rust said.
The therapy is made from pancreatic stem cells derived from the organ of a single donor collected several years ago. It’s the latest addition to a small but growing number of efforts centered on using stem cells to grow pancreatic islets that could possibly cure diabetes.
Vertex Pharmaceuticals, the leader of the pack, drew attention from doctors with its experimental islet cell therapy that reduced or eliminated the need for insulin injections in nearly a dozen patients in its ongoing clinical trial. Eli Lilly and Novo Nordisk, the biggest sellers of insulin, are also in the early stages of designing their own stem cell-derived therapies.
Seraxis has kept a relatively low profile in the field. Rust founded the company in 2013 and survived on about $10 million from two small rounds of funding before landing a $40 million Series C financing in 2021 from Eli Lilly, Frazier Healthcare Partners, Polaris Ventures and T1D Fund. The clinical trial clearance triggered the third tranche of that financing, worth $14 million, Rust said.
An alternative path to stem cells
Seraxis was born out of Rust’s frustration with the field’s fixation on embryonic stem cells. In the 2000s, these cells held promise to grow human tissues in the lab or replace them directly in the body. But their very ability to turn into any cell of the body also made them hard to control.
“It was very difficult to convince them to become just one cell type,” Rust said. “They could make those cells, but only in small proportions. It was hard to imagine making a product out of that.”
Some scientists, including Harvard biologist Douglas Melton, have found ways to make insulin-secreting beta cells using stem cells originally derived from a single human embryo. That research became the basis of Melton’s biotech company Semma Therapeutics, which Vertex bought for $950 million in 2019.
But well before that acquisition, Rust was working on his own method that would use a single human pancreas as the starting point. At Seraxis, he found a way to take those adult cells and partially rewind their development to create a pancreas stem cell line.
Rust claims the approach is more efficient, with fewer unwanted cells arising during manufacturing than the embryo-derived approach. He even shared the company’s cells with Lilly scientists and T1D Fund’s academic partners to evaluate in their own labs, before locking down the $40 million financing in 2021.
“We couldn’t do anything on reputation alone,” Rust said.
While Vertex infuses its islet cells into the liver, where they embed themselves in the organ, Seraxis plans to implant the islets into the omentum, a flap of fatty tissue neighboring the stomach. A small number of people with type 1 diabetes have had pancreatic islets implanted from cadavers into their omentum.
“We piggybacked on that idea,” Rust said. “We can monitor it by regular medical imaging, and if there is ever a problem, you can remove it with simple resection, just snip it off.”
Patients will have to take immunosuppressants to prevent the immune system from destroying the islets.
Seraxis is also developing a second cell line that is gene-edited to remove proteins that expose the cell’s foreign identity to the immune system. If all goes well, a clinical study of that approach could begin in 2026.
Rust said the company’s funding will last through 2025, long enough to get data from its first clinical trial. If the results are positive, he will start raising a crossover round to fund bigger studies as well as an initial trial of the gene-edited therapy.
“The next steps will be much more expensive,” Rust said. “And right now, the winds seem to be pushing us to IPO.”