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Encelle testing diabetes remedy 

The company has raised money to expand tests of its treatment that could make insulin shots unnecessary.

By DAVID RANII, Staff Writer
     RALEIGH -- A fledgling biotechnology company has raised $5 million to expand testing of what it hopes will some day become a revolutionary treatment for diabetes, eliminating the need for insulin shots.
     Encelle Inc.'s bioartificial pancreas has functioned successfully in diabetic dogs and rabbits for up to four months. Bioartificial means using living cells from a source other than the patient; in this case, the company's Encellin XP uses cells from a pig's pancreas to produce insulin.
     Encelle, which has its one-man headquarters in Raleigh and its 19-person scientific operations in Greenville, received a total of $4.5 million in venture-capital financing last week. It also expects to close on another $500,000 from private investors next month.
     The venture-capital funds participating in the funding include: Intersouth Partners of Morrisville; Cordova Ventures of Atlanta; the N.C. Bioscience Investment Fund managed by Durham's Eno River Capital; and the Raleigh-based N.C. Enterprise Fund. All are new investors, with the exception of N.C. Enterprise, which participated in the nearly $6 million in first-round financing Encelle raised.
     Scientists have been trying to produce a bioartificial pancreas for years, without success, to aid diabetics. The problem is that when a person or animal dies, their pancreas releases enzymes that quickly begin to digest the pancreas itself. In addition to creating a roadblock to creating a bioartificial pancreas, that process explains why very few human pancreases are transplanted each year.
     But Anton-Lewis Usala, a physician who is Encelle's founder and chief technical officer, has blazed a new path. Usala is a former head of the pediatric endocrinology section at East Carolina University School of Medicine. He incorporated Encelle in 1991, but it was a part-time endeavor until he and three colleagues left ECU in 1996.
     "Anton has approached this from a totally fresh point of view," says Jim Woodward, a veteran of biotechnology start-ups and the company's president and chief executive officer. "There is nothing we do that is conventional, technologically."
     Encelle uses a proprietary process to mechanically separate the tissues of a swine pancreas. Then it injects an artificial connective substance, called a hydrogel matrix, that enables storage of the insulin-producing cells at low temperatures without degrading them. Others haven't been able to do this, according to Usala, because as water cools it expands and damages the pancreatic tissue.
     "We've kept pancreatic tissue alive for two years in a refrigerator," he says. "No one else can keep it alive for 14 days."
     Second, in order to transplant these swine cells into a patient's pancreas, Encelle needed a way to prevent the human immune system from recognizing the cells and attacking them. Encelle believes it has accomplished this by coating the cells with a patented, microscopically thin, permeable polymer coating that prevents the immune system from binding with the swine cells.
     The ultimate goal for Encelle is to enable patients to avoid insulin injections altogether. But in the short term it is more likely that the company's first Encellin XPs would let diabetics get by with just one shot of low-dose insulin daily, rather than the multiple shots many diabetics face today. 
     "If this works, and be sure you underline and bold[face] that 'if,' this is going to be a new form of medical therapy," says Usala.
     In addition to having what Usala calls "a profound impact on the quality of life" of diabetics, it also could have a tremendous impact on health-care expenditures.
     There are more than 1 million insulin-dependent diabetics in the United States, and $1 of every $7 in health-care expenditures is diabetes-related, according to Encelle. The reason: the vast majority of diabetes patients suffer from complications including amputation, blindness, kidney failure and coronary artery disease.
     Usala himself has been a diabetic since infancy, and that has been a powerful motivating force for him. 
     The big if, of course, is whether the Encellin XP will work in humans. 
     But before Encelle reaches that hurdle, the Encellin XP needs to be tested in dozens more diabetic animals. If those tests go well, Encelle expects to submit an application to test the product in humans to the Food and Drug Administration in the second half of 1999.

David Ranii can be reached at 829-4877 or