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Diabetes affects people in two forms: diabetes type 1and type 2 diabetes. In the first form, the immune system obliterates beta cells (responsible for producing insulin), whereas in the second form people face insulin resistance along with diminishing b-cell functions. This leads to a condition where the beta cells are not able to produce enough insulin to overcome insulin resistance.

As the beta cell plays a very important role in insulin production and in diabetes treatment, researchers are working the strategy of transplanting the beta cells. New beta cells will take the place of lost cells in patients with type-1 diabetes, and can enhance the insulin production ability in type-2 diabetic patients.

Diabetes stem cell research enhances life expectancy, minimize symptoms and complications related to diabetes, and controls levels of blood glucose at the same time; recent trials and reports show this can actually become a clinical reality very soon.
Presently, researchers across the world are working to find out ways of expanding the number of beta cells, including the replacement of beta cells through transplantation, increasing the replication power of beta cells, minimizing the death of beta cells, whilst making new cells from progenitor cells.

In earlier cases, pancreatic islet tissues supplied by donors were transplanted into patients with type 1 diabetes. However, lack of donor tissues and huge dosage of immunosuppressive medicines were a huge challenge in this kind of diabetes treatment. Other problems include the process of isolation, which damages the tissues to be transplanted and function declining of the islets after the transplant.

One theory is to introduce stem cells into human body where they can differentiate to become beta cells through molecular signals in the pancreas. Stem cells are expected to travel to the tissues that are damaged and then differentiate to maintain the mass of beta cells. Another theory is to induce cells that are grown in lab conditions to become beta cells that produce insulin. Furthermore, these cells are isolated and the differentiated stem cell can then be transplanted to treat diabetes.

Doctors are also studying the use of induced pluripotent cells as well as reprogramming differentiated cells (such as cells from adult skin) to turn them back into a pluripotent state so that they can work like embryonic cells. Researchers are also exploring the use of embryonic cells, though ethical concerns limit the use of such cells for diabetes stem cell research.

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