TranCel Joins Race to Build a ‘Pancreas’ : Medicine: Santa Ana-based company teams up with Baxter HealthCare in $10-million venture. If successful, the artificial organ could make insulin injections obsolete.

A start-up research firm in Orange County has joined forces with medical giant Baxter HealthCare Corp. in the race to produce a marketable artificial pancreas, the companies announced Thursday.

The $10-million joint venture would give TranCel Corp. a two-year jump in developing an artificial pancreas, an implantable biomechanical device that could actually produce insulin in the bloodstreams of diabetics.

Development of such a device would be a major breakthrough in the fight against diabetes, which afflicts more than 16 million Americans and is the nation’s leading cause of blindness and amputation. The condition is also the third leading cause of death.

Diabetes occurs when the body’s pancreas fails to produce the hormone insulin, which is needed to convert food into energy.

TranCel Chief Executive Floyd Benjamin said that the deal to dissolve the 4-year-old Santa Ana company and create a new research firm, called Neocrin Co., will be completed July 1.

Human clinical testing on an artificial pancreas could begin as early as late 1993. The product could receive Food and Drug Administration approval and be ready for sale by 1995. There is no artificial pancreas available for sale, although nearly a dozen companies are feverishly working on various stages of research and development, Benjamin said.

“We don’t know exactly what other companies are doing,” he said, “but we are well positioned to be one of the first companies to move this through the (FDA approval) process.”

Indeed, an artificial pancreas would mean a billion-dollar business for whichever company successfully markets the product.

A consortium of venture capital companies has already spent millions to keep TranCel’s research laboratory operating, since it has no revenue.

Under the agreement, the Neocrin Co. will be initially funded with $10 million, half paid by Baxter HealthCare, which is headquartered in Deerfield, Ill. Baxter HealthCare is the chief subsidiary of Baxter International Inc., which had 1991 revenue of $8.9 billion. The remainder of the research money would come from TranCel’s investors, company officials said.

The deal was proposed, company officials said, because both Baxter HealthCare and TranCel researchers have been struggling to produce the same artificial pancreas from different approaches.

After five years of research, Baxter HealthCare is close to developing a thin membrane that, used as a capsule-like device, would allow insulin to flow from this capsule unimpeded into the bloodstream.

But Baxter has done almost no work on developing insulin-producing cells, which are called islets and are usually taken from a pig’s pancreas.

TranCel, on the other hand, has worked on producing a pig islet pure enough to be used in humans, but has not done any research in developing a suitable device that could be implanted in the body.

By marrying the two technologies, company officials visualize an artificial pancreas that would be inserted into the body during an outpatient visit. Blood flowing through the device would stimulate the islets to produce insulin, making daily insulin injections obsolete.

Since it employs natural insulin-making cells, the tiny device would automatically sense the amount of insulin needed in the depleted bloodstream and produce the right amount needed to survive, much like the body’s own pancreas.

William D. Johnston, vice president of Baxter HealthCare’s Applied Sciences Division, said his company approached TranCel in September and made the offer to create the new research firm.

“We knew that we (the companies) were very complementary,” Johnston said. “We had the same goals and the two pieces required to put it all together.”

Johnston said that Baxter HealthCare decided against an offer for a direct purchase of TranCel because “we did not want to look like a monster gobbling up small companies. TranCel presents a great opportunity to develop a joint venture.”

Although Baxter HealthCare Inc. has minor interests in several other start-up research firms, this transaction is the first time the manufacturer and marketer of health care products and services has created an equal partnership, Johnston said.

An alternative treatment--a mechanical artificial pancreas using no cell cultures--is currently being developed at UC Irvine and has been successfully implanted into 20 patients, said Dr. Arthur Charles, director of the university’s diabetes research program.

Pfizer Infusaid, a subsidiary of Pfizer Inc. and MiniMed Inc. of Sylmar, are participating in the research, Charles said.

The mechanical pancreas, filled with insulin, is surgically implanted into the body’s stomach wall. The patient, using a hand-held programmer, keys in the proper amount of insulin to be released into the body, Charles said. It is refilled each month by a doctor using a syringe.

Charles said FDA approval could come as early as next year.

The ultimate goal of diabetes researchers, Charles said, is to either cure the pancreas or implant the insulin-producing islets directly into the patient’s pancreas. Although the implant procedure has been accomplished in several labs around the world, the marketability of the procedure is years away.

No research has yet turned up a way to cure a pancreas.

Until then, researchers are pinning their hopes on the artificial pancreas to fight the disease. Charles said that the biomechanical pancreas could be just as effective, if not more, than his mechanical device.