A London company may be on the verge of a groundbreaking treatment for diabetes — and an infusion of federal money announced yesterday in London may help it get there.

Gary Goodyear, minister for FedDev Ontario, announced the economic development agency for southern Ontario is giving $45 million to fund research at several businesses, including Sernova Corp. at the Stiller Centre.

“We need another study that will take us to the next level of clinical work,” said Philip Tosleikis, chief executive of Sernova.

Sernova received nearly $500,000 last year to fund its research. The funding announced Thursday will allow the company to apply for $5 million next year to fund clinical trials, the next stage in bringing its medial device to market.

“With that federal funding, we were able to go out and secure $2 million in private money and that has all come back to London,” Tosleikis said.

The Industrial Research Assistance Program (IRAP) gave money to 25 businesses last year in London.

“We are supporting and encouraging business to innovate and maximize potential, to create jobs,” said Goodyear, who made the announcement at the Stiller Centre for Technology Commercialization.

“These are our job creators, these are our community builders and they are businesses like Sernova. Sernova is a great example of what we can do. It is truly a Canadian success story.”

Officials with the Industrial Research Assistance Program determine who gets funding. Business and industry must apply for grants. Businesses are funded based on potential, but the funding is geared to help take ideas to the development stage and then to consumers.

“It means more companies can do more innovation (and) bring more products to market. Businesses in Southwestern Ontario can expand, and better, long-term jobs are created here,” Goodyear said. “This will help strengthen Ontario in the global economy.”

In Ontario, the research program has funded 1,000 firms and 1,500 projects.

The budget for the program was $80 million, and in 2009 increased by $200 million. When FedDev Ontario was launched, the program received another $45 million last year and another $45 million this year.

London West MP Ed Holder said it confirms London as a life sciences research hub.

“Government believes in the importance of London as a medical research hub, and that is truly what we are,” said Holder. “We are in a knowledge economy and the competition is huge.”

As for the Sernova’s work, Goodyear described it as a potential global product, with nine million people in North America alone as possible customers.

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How the pouch works

Sernova Corporation’s diabetes treatment

• A “cell pouch” is implanted under the skin in the belly of the patient.
• Islets planted in the pouch ­produce insulin naturally, in response to the blood sugar levels in the patient.
• Islets are cells from the pancreas, extracted from a donor, creating a mini pancreas.
• The pouch is not visible on the patient.
• Animals tests have seen the device work well for six months.
• Human clinical trials may begin in about one year.