University of Otago cell biologist, haematologist and project leader Dr Jim Faed said $1.4 million was needed to trial the use of bone marrow stem cells to stimulate insulin production in type 1 diabetics.
Fundraising is being co-ordinated by the Spinal Cord Society, which had started recruiting for a related trial for spinal cord injury sufferers, to be led by Dr Faed.
That trial, which would have used cells from the person's nose, is on hold, partly for lack of funds, and partly because the diabetes trial would lay the groundwork for better-designed spinal cord research.
The diabetes study would be carried out in the Spinal Cord Society Research Laboratory at Otago University's Centre for Innovation in Dunedin, taking about two years.
Dr Faed said recent research from the United States had "electrified" interest in using stem cells to treat type 1 diabetics.
In what is known as the Chicago study, umbilical cord stem cells were shown to increase insulin production in even the most severe diabetics.
Dr Faed said he hoped the Dunedin study, with a dozen participants, would replicate and expand the Chicago study by explaining the mechanism by which the stem cells promoted insulin production.
Pharmaceutical companies stood to make no money from stem cell research, as the product was generated by the patient's own body; thus the companies could not be tapped for funds.
Dr Faed acknowledged the disappointment of the several spinal cord injury sufferers who had to wait longer for their study.
However, the diabetes research would show much faster results, and its success would stimulate interest in the spinal cord injury research.
A new study in the United States was using stem cells for type 2 diabetes, which could have huge implications for a condition that posed a major challenge to New Zealand.
Dr Faed said the sooner New Zealand joined research efforts, the sooner benefits would accrue to New Zealand diabetes sufferers.
Assisting Dr Faed is research scientist Dr Paul Turner, who said the research was about New Zealanders taking responsibility for their health.
Dr Turner, who has type 1 diabetes, said the illness placed a huge burden both on people's lives, and the health system.
He had not yet decided whether to take part as a participant; as a researcher it posed ethical issues.
The pair were working with diabetes expert Prof Jim Mann, and immunologist Sarah Young, both of Dunedin.
