Finding profits in adult stem cells

Osiris inks adult stem cell therapeutic deal with Genzyme potentially worth $1.3 billion

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COLUMBIA, Md.—In a deal that makes Osiris Therapeutics Inc. profitable for the first time, the company announced last week it forged a strategic alliance with Cambridge, Mass.-based Genzyme Corp. for the development and commercialization of Prochymal and Chondrogen, two late-stage adult stem cell therapies that hold promise to treat a broad swath of diseases.

"This deal has turned us into a profitable stem cell company, and that is unusual," says C. Randal Mills, president and CEO of Osiris. "This is a transformational deal for the company from a cash standpoint and represents a very serious commitment from Genzyme."

That commitment will garner Osiris $130 million in upfront payments—$75 million initially, with the remaining $55 million to be paid by July 1, next year. In addition, the deal includes a number of development and regulatory milestone payments that could push the total value of the deal to $1.3 billion.

Under the terms of the deal, Osiris will commercialize Prochymal and Chondorgen in the United States and Canada, with Genzyme assuming responsibility to commercialize the treatments in all other countries.

Of the two therapies, Prochymal is the most advanced with two Phase III trials for bone versus host disease (GvHD) and a third Phase III trail for Crohn's disease currently in enrollment. Prochymal is also in Phase II studies for type 1 diabetes and chronic obstructive pulmonary disease (COPD). In addition, Osiris is expecting a Phase II trail of Prochymal for acute myocardial infarction to begin soon, along with a Phase II study of Chondrogen for osteoarthritis of the knee.

For Genzyme, pairing with Osiris builds upon its longstanding position as a leader in cell therapies, says Stephen Potter, senior VP of corporate development at Genzyme.

"About two years ago, Osiris [released] some interesting data on the GvHD program and there was a sense back then that the companies were an obvious fit and could do some good things together. We know we can help add value to both of these programs," Potter says.

What may have ultimately sealed the deal, however, was a different collaboration—the first between the two companies—announced last July for the co-development of Prochymal as a treatment for acute radiation syndrome (ARS). The collaboration subsequently resulted in a $224 million government contract from the Department of Defense to create a stockpile of Prochymal for the armed forces.

"As a result of the work we did, Genzyme became very familiar with Prochymal and they also became familiar with us as a company," notes Mills. "Of course, it was a very successful collaboration since we won the contract from the Department of Defense, but this really opened the door for this deal."

Granted fast-track status by the FDA for the treatment of GvHD, Mills says Osiris intends to start submitting its biological license application for Prochymal as early as next month. With rolling submissions of its Phase III data commencing in early 2009, Mills anticipates its application for Prochymal as a therapy for GvHD will be in FDA hands by mid-year. DDN

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