As a general rule, the most successful man in life is the man who has the best information.

With two out of three people in the US overweight and one in three obese it's not surprising that one in four Americans is either pre-diabetic or has Type 2 diabetes.

The International Diabetes Federation estimates that 285 million people around the world have diabetes and...

This total is expected to rise to 438 million within 20 years. Each year a further 7 million people develop diabetes.

Exactly what is Diabetes?

The foods you eat are broken down into a simple sugar called glucose. In response to a rise in glucose after a meal your pancreas secretes insulin. Insulin acts to move the glucose from your blood stream into the cells where it can be utilized for energy. Diabetes is a condition in which normal blood sugar levels are too high.

A Type 1 diabetes diagnosis means your pancreatic beta cells that secrete insulin have been damaged or destroyed - glucose cannot move from the bloodstream into the cells.

A Type 2 (insulin resistance) diabetes diagnosis is a far more common verdict for people than Type 1. Insulin resistance happens because of chronically elevated blood sugar and insulin. These elevated levels of sugar and insulin have the effect of "numbing" the cellular processes which moves the sugar from the blood stream to the cells - the body cannot respond to the insulin "requests" to move blood sugar into the cells. Roughly 27% of the people who start out as Type 2 diabetics, will, in the future, require insulin injections similar to Type 1 diabetics.

Short-term complications:

• Hypoglycaemia - low blood sugar which can lead to coma and death
• Diabetic Ketoacidosis (DKA) - results from absolutely no insulin, the body switches to burning fatty acids instead of glucose and low PH ketone bodies are produced which turns blood acidic.
• Lactic acidosis
• Bacterial/fungal infections

Long-term complications:

• Retinopathy - eye disease
• Nephropathy - kidney disease
• Neuropathy - nerve disease
• Diseases of the circulatory system
• Amputation

The cost of Diabetes

• Healthcare expenditures on diabetes are expected to account for 11.6% of the total healthcare expenditure in the world in 2010.
• Estimated global healthcare expenditures to treat and prevent diabetes and its complications are expected to total at least US $376 billion in 2010. By 2030, this number is projected to exceed some US $490 billion.
• More than 80% of the estimated global expenditures on diabetes are made in the world's economically richest countries, not in the low- and middle-income countries where over 70% of people with diabetes live.
• The US is projected to spend US $198 billion or 52.7% of global expenditure in 2010
• India, the country with the largest population of people living with diabetes, is expected to spend an estimated US $2.8 billion - less than 1% of the global total.
• The American Diabetes Association estimated that the US economy lost US $58 billion, equivalent to almost half of the direct healthcare expenditure on diabetes in 2007, as a result of lost earnings due to lost work days, restricted activity days, lower productivity at work, mortality and permanent disability caused by diabetes.

In this article I'm going to introduce you to two companies actively working towards making life better for diabetes sufferers - socially responsible investments and also two investments, capable, in my opinion, of returning many times your invested capital. Quite simply put, I believe we can maximize our financial return while also doing some social good.

iCo Therapeutics ICO-TSX.v

Shares Issued: 41,057,301
Warrants: 334,334 agent warrants @ .60
Options: 2,521,429 average weighted price .49
Fully Diluted: 43,612,164
Insider Ownership: 11.77%
Institutional Ownership:
ISIS Pharmaceuticals - 12.3%, Special Situation fund - 14.3%, others - 5-6%

iCo has exclusive worldwide rights to three products:

iCo-007 is for the treatment of Diabetic Macular Edema (DME). DME is the swelling of the retina in diabetes patients due to leaking blood vessels within the macula, the central portion of the retina that is critical for daytime vision. Diabetic macular edema (DME) is a serious manifestation of diabetic retinopathy that involves retinal swelling brought on by the leaking of fluid from small blood vessels within the macula. As the condition develops, central vision becomes blurred. DME can progress fairly rapidly and over just a few years can lead to permanent visual loss. There is a significant unmet need to both reverse the visual loss associated with DME and to help delay the progression of this condition.

There are currently no approved therapeutics for DME, the leading cause of blindness in working age adults. DME affects approximately 1.6 million people in the U.S. alone, a number that is expected to grow as Diabetes is forecast to increase by almost 50% in the US by 2025.

iCo licensed the worldwide exclusive rights to all therapeutic applications of iCo-007 from ISIS in 2005. Drug products that prevent the growth of new blood vessels and inhibit increased vascular permeability may have the potential to treat neovascular diseases, including diabetic retinopathy and diabetic macular edema.

iCo has just released its Phase 1 clinical trial results for iCo-007 in patients with diffuse diabetic macular edema. The primary objective of the phase I trial was to evaluate the ocular safety and tolerability of iCo-007. Secondary objectives included assessment of systemic pharmacokinetics, retinal thickness using optical coherence tomography (OCT) measurements and visual acuity.

"We are extremely pleased that iCo-007 successfully met the primary endpoint for our Phase I trial. In addition, we have seen signs of biological activity in a very difficult to treat patient population refractory to many other treatments, including anti-VEGF agents in some cases. The safety and secondary endpoint information we have gleaned from this trial, including the biological activity we have seen at various dose levels, will be extremely useful and fully supports advancing to a Phase II clinical trial program which is currently in the planning stage." President and CEO, Andrew Rae

iCo-008 is being developed for severe ocular allergies. During an allergic response the levels of eotaxin-1 are elevated. This attracts eosinophils, a type of white blood cell, into tissues where they can degranulate causing tissue damage that occurs in a variety of allergic disorders. This condition, known as eosinophilia, can occur in a number of disorders, such as allergic ocular disease of conjunctiva and cornea (conjunctivitis and keratoconjunctivitis), asthma, allergic rhinitis, atopic dermatitis, and other inflammatory disorders, such as inflammatory bowel disease and Crohn's disease.

Blocking eotaxin-1 was shown to be effective in inhibiting early phase mast cell activation as well as late phase eosinophilia. This broad spectrum mechanism of action is unique and differentiates iCo-008 from other available agents.

Recent evidence suggests re-orientating the strategic direction of this drug towards targeting Wet Age-related Macular Degeneration (AMD) would be appropriate.

AMD is the leading cause of visual loss in the western world. This disease of the aging eye results in loss of the sharp, central vision that is necessary for clearly seeing objects and undertaking routine tasks including reading and driving. AMD occurs in both wet and dry forms, with the wet form accounting for the vast majority of cases of AMD-related blindness and progressing much more rapidly than dry. Partnering discussions are ongoing.

iCo-009 is an oral reformulation of Amphotericin B for sight and life threatening diseases. iCo-009 also represents a new drug delivery technology with the potential to re-profile other IV administered drugs to the oral route of administration.

June 25, 2009 - iCo Therapeutics Inc. (TSX-V: ICO) is pleased to announce that iCo's oral Amphotericin B (AmpB) oral formulation "iCo-009" has been published in a leading journal, The Journal of Infectious Diseases. The article represents the first ever publication of an oral AmpB eradicating the parasite responsible for Visceral Leishmaniasis (VL), which affects 12 million people worldwide. Administration of the highest dose of iCo-009 resulted in 99.8% inhibition of the parasite.

AmpB has for many years been the gold standard for systemic antifungal drugs. AmpB formulated for IV use remains one of the most effective agents in the treatment of systemic fungal infections, yet no oral formulations are currently commercially available. Over the past 50 years, many attempts have been made to formulate AmpB for oral administration, with limited success. The article indicates that with iCo-009, a self-administered, oral formulation of AmpB is attainable.

iCo is continuing with preclinical work.

Sernova Corp. SVA - TSX.v

Common Shares: 78,899,024
Options: 3,693,875 average exercise price of $0.29
Warrants: 5,703,467 average exercise price of $0.19
Fully Diluted: 88,296,366
Insider Ownership: 6%

Sernova is developing two, novel, closely integrated, proprietary platform technologies. The first is the Cell Pouch System™ - a medical device providing a natural "organ-like" environment for therapeutic cells - such as insulin producing islets for diabetics. The second is Sertolin™ - a cell-based technology providing an immune-privileged environment for donor cells which reduces or eliminates the need for anti-rejection drugs.

The Standard of Care for patients with reduced or missing critical hormones or proteins, such as insulin, is often monitoring and injecting these proteins multiple times a day. This has lead to a patient track record of missing dosages and serious side effects resulting in US $150 billion a year hospital costs for diabetes alone.

Sernova's Cell Pouch System is a versatile, credit card-sized device made of FDA approved materials. Placed under the skin in a simple inexpensive procedure it develops organ-like characteristics for delivery and natural housing of therapeutic cells. A key feature of the device is its ability to stimulate natural microvessel development, thought to be essential for long-term survival and function of therapeutic cells.

Cell therapy (a projected yearly US $8 billion market) is a new and increasing alternative for patients with severe disease.

At this time there is no approved device to house and protect therapeutic cells in the body. Instead, cells are often injected into vessels in an extremely expensive and risky procedure - most of the injected cells die from inflammation and clotting, an instant blood-mediated inflammatory reaction (IBMIR) - resulting in the need for reoperations. Currently cell therapy is limited to expensive procedures, poor cell survival and inappropriate delivery as well as lack of available donors.

Sernova's first application of its proprietary Cell Pouch System is islet transplantation for treatment of insulin-dependent diabetes - think of the Cell Pouch System™ as a potential natural insulin pump with the added benefit of fine-tuned glucose control. The Cell Pouch System is expected to prevent IBMIR (which is believed to rapidly destroy up to an estimated 90% of the transplanted islets) and in addition eliminate serious complications such as islet-induced blood clotting and liver thrombosis. The reduction in islet loss, once verified, could lead to improved safety and efficacy of islet transplantation and the potential of treating multiple patients from a single pancreas donation.

While the initial primary focus of the Company's development efforts will be assessment of the Cell Pouch System for insulin-dependent diabetes (which includes all Type-I diabetics and about 27% of Type-2 diabetics), the Company is planning to develop partnerships with academic and corporate collaborators to further develop the Cell Pouch for other applications including:

• Chronic metabolic, hematologic and neurological diseases - Parkinson's disease and Haemophilia are two candidates

• Implantation of multiple cell types including natural cells, stem cells and genetically engineered cells

• The Cell Pouch System may be used for autograft cellular transplants

• Allograft cellular transplants with the use of immunosuppressive drugs or in conjunction with co-transplantation of islets and Sertoli cells

Sernova recently released interim results from a key porcine (pig) diabetes study evaluating the safety and efficacy of the cell pouch system.

These interim results were presented at the American Society of Artificial Internal Organs 56th annual conference, Baltimore, Md., May 2009 and confirm that:

• Sernova's Cell Pouch system establishes a biological environment capable of preserving the functionality of therapeutic cells

• The Cell Pouch system allows for safe and efficacious cell-based therapy and may offer a revolutionary improvement over the current practice of injecting therapeutic cells into blood vessels

• The Cell Pouch can provide glucose control with only about 10% of the equivalent functioning islets that are used to achieve normal blood glucose levels in the current standard of care involving injection of cells into the veins suggesting that the device may be islet-sparing

Sernova's second technology, Sertolin, is for patients who have had therapeutic cell therapy and who want to avoid toxic and expensive anti-rejection drugs (US $10-15,000/yr). Sertolin, when combined with therapeutic cells protects them from attack by the immune system. Animal models have shown that the combination of these protector and therapeutic cells leads to long-term functional survival of the therapeutic cells without drug therapy.

Conclusion

There is no market cycle for bio-technology drug or device stocks. The need is always there and demand is growing at an alarming rate. More and more people are receiving medical coverage while at the same time big pharma's number of patents and pipeline of new drugs has been drastically reduced.

Both iCo Therapeutics and Sernova Corp. management teams have very realistic end game plans - their objective is to add substantial value to existing assets and subsequently monetize them for the benefit of shareholders. This could take the form of an acquisition or such other mechanism whereby the value can be transferred to shareholders. It is not the objective of either company to build a large permanent, integrated pharmaceutical company. I'm in complete agreement, build as much value into each product as is reasonable, then sell, let your shareholders reap the rewards and move on.

Both these companies should be on every investor's radar screens.

Are they on yours?

Richard Mills owns shares in iCo Therapeutics and Sernova Corp.
iCo Therapeutics and Sernova Corp. are advertisers on www.aheadoftheherd.com

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