Professor Bernie Tuch is not a man given to hyperbole, so if he thinks it a not unreasonable chance that human embryonic stem cells, differentiated into insulin-producing cells, will be in clinical trials to treat type 1 diabetes in the next four or five years, few are going to argue.

Tuch has directed the Diabetes Transplant Unit, based at Sydney's Prince of Wales Hospital, since 1991, and since then has been working steadily on finding a cell-based treatment for diabetes using a number of methods.

The Sydney Project is part of a global initiative to devise a cell therapy for diabetes in the shortest possible timeframe. The name is coined after the Chicago Project, an initiative led by Professor Jose Oberholzer, who runs the islet transplantation facility at the University of Illinois Medical Centre in Chicago.

Oberholzer is running trials of islet transplantation into the liver, one of many such trials around the world dedicated to finding a way to replace the insulin-producing cells destroyed in diabetes. More recently he has decided to extend these studies which use anti-rejection therapies into the more novel approach of placing the islets in microcapsules to avoid the need for such therapies. Clinical trials are pending.

For Tuch, who collaborates with Oberholzer, this is not a new project. In February 2006, he commenced a similar trial in Sydney, where resources are much fewer than those available in Chicago. Termed the seaweed diabetes trial, islets from donor pancreases were encapsulated in an alginate coating to prevent rejection and injected into the patient's peritoneal cavity, performed on an outpatient basis.

This phase 1 safety trial, which has been running since February 2006, has achieved modest results. Tuch's team presented data at an endocrinology conference in New Zealand late last year showing that the team had complete six transplants in three patients - one patient receiving four transplants - with an average of 172,000 islet equivalents per transplant.

"We showed some early function in those but it didn't have clinical benefit beyond the first week," Tuch says. "So what we are doing now is modifying the technology to enhance the function of the cells."

Tuch and his team at the DTU have been perfecting the technique of microencapsulation with sodium alginate, solidified in barium chloride, for the last eight years or so. It has applications in drug delivery and cell culture as well as transplantation studies, so the DTU has now decided to offer microencapsulation as a service to other research groups. The service is managed by Dr Jayne Foster, who is also involved in some of the unit's xenotransplantation work.

"The platform technology of microencapsulation is one we have developed with the assistance of a group in Germany, Karin Ulrichs' group in Wurzburg," Tuch says.

"Karin came out and taught us the procedure and we've worked with her in relation to it. So what we do is apply it specifically to encapsulating human islets as part of our seaweed diabetes trial, and we are encapsulating insulin-producing pig cells for use in mice and also encapsulating embryonic stem cells as part of a culture system."

Tuch says his group's expertise with microencapsulation, and speaking about it at conferences, led several groups to approach him to see if they could use the platform technology for their own purposes, mainly for growing cells in a 3D culture system and also for encapsulating structures so they are isolated when they are being transplanted. It is also aimed at drug delivery research.