"This discovery tells us that we have the potential to produce insulin from adult stem cells to help people with diabetes," said Dr Randall Urban of the University of Texas's Medical Branch at Galveston, who directed the study.

"It doesn't prove that we're going to be able to do this in people - it's just the first step up the rung of the ladder," Dr Urban said in a statement.

Writing in the journal Cell Proliferation, the researchers, who included a team at Britain's University of Newcastle, say they hope to eventually produce an alternative to using controversial embryonic stem cells.

In the United States, Congress has been fighting over whether to increase federal funding of embryonic stem cell research, with opponents saying it is wrong to experiment on human embryos and supporters saying the work is needed to transform many fields of medicine.

Most of the science aims to create a new field of regenerative medicine in which stem cells from a patient's blood are grown and tweaked in the laboratory and used to replace defective or damaged blood or tissue.

Other researchers are trying to learn how embryonic stem cells give rise to all the tissues and parts of the body, while remaining virtually immortal themselves, in the hope of eventually coaxing perhaps an ordinary skin cell to do the same.
The researchers in Texas and Newcastle used human umbilical cord blood because it is an especially rich source of fresh "adult" stem cells.  One big hope is to create new pancreatic tissue for people with diabetes. In type 1 diabetes, the body no longer produces insulin because those cells have been destroyed.

Larry Denner of the University of Texas, who worked on the study, says his team had addressed this issue because the cells also produced a compound called C-peptide, which is not found in the culture medium - the broth used to nourish cells in the lab.
"It is a part of the insulin precursor protein and is only present when cells produce insulin. So the state-of-the-art criteria for insulin production is the demonstration of the presence of C-peptide," Dr Denner said in an email.

Last week, Geron Corp said it had transformed human embryonic stem cells into the pancreatic cells that produce insulin.
Journal of Cell Proliferation May 2007

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