Eli Lilly and Sigilon Therapeutics have announced a global collaboration to develop encapsulated cell therapies for type I diabetes. Sigilon will create proprietary products made up of induced pluripotent stem cells, engineered into differentiated insulin-producing pancreatic beta cells and encapsulated using Sigilon’s Afibromer technology.

Encapsulated cell therapy aims to release the therapeutic potential of cells to treat serious diseases without the need for immunosuppression. The goal of these products will be to restore insulin production over sustained periods, without triggering an immune reaction.

The deal gives Lilly an exclusive worldwide license to Sigilon’s Afibromer technology for islet cell encapsulation, while Sigilon will receive an upfront payment of $63 million and potentially up to $410 million in development and commercialisation milestones, as well as single to double digit tiered royalties on future product sales. Lilly will also make an undisclosed equity investment in the privately-held US biotech.

“We are excited to be collaborating with, and investing in, Sigilon as they seek to develop encapsulated cell therapies, a potentially disruptive technology that could result in meaningful clinical advancements for chronic diseases such as type I diabetes,” noted Daniel Skovronsky, senior vice president for clinical and product development and incoming president of Lilly Research Labs.