Ahead of the Bell: Osiris sells Prochymal

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Associated Press

Posted on October 11, 2013 at 11:01 AM

Updated Friday, Oct 11 at 11:01 AM

NEW YORK (AP) — Osiris Therapeutics shares rose Friday morning after the company said it is selling some of its stem cell therapy technology, including its transplant treatment Prochymal, to Mesoblast Ltd. in a deal that could be worth more than $100 million.

Prochymal treats bone marrow transplant cells that attack the recipient's body, and it is approved in Canada and New Zealand but isn't being sold. Osiris said it wants to focus on businesses with the greatest commercial potential. Its remaining products include Grafix, which is used to treat chronic and acute wounds, Ovation, which is used in tissue repair, and Cartiform, a treatment for acute cartilage injury.

Shares of Osiris Therapeutics gained $1.42, or 8.3 percent, to $18.55 in premarket trading.

Osiris said it had about $12.5 million in costs related to Prochymal over the last year.

Osiris will get $50 million upfront from Mesoblast, which is based in Australia, and could get another $50 million based on development and regulatory review of therapies that use culture-expanded mesenchymal stem cells. Osiris said $35 million of the upfront payment will be made in cash. It will get $15 million more when the assets are delivered to Mesoblast.

The Columbia, Md., company will also get royalties on sales of any approved products. Mesoblast will decide if it wants to make the remaining upfront payment and any milestone payments in cash or stock.

Osiris Therapeutics Inc. develops treatments using adult human mesenchymal stem cells. It says those cells have anti-inflammatory properties and can prevent fibrosis and scarring, and they can tell the difference between different types of tissue, like muscle, bone, and cartilage. The company said the manufacturing of Prochymal includes a process that isolates and expands the stem cells. That process is not used in the making of its other products.

Shares of Osiris closed at $17.13 on Thursday, up 91 percent since the start of the year. They have traded between $6.55 and $27.40 in the last 12 months.

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