Osiris sells Osteocel to NuVasive, in deal that could total $85 million

n a move designed to add cash to its coffers in advance of an expected 2009 launch of its Phase III product Prochymal, stem-cell therapeutics company Osiris Therapeutics Inc. announced on Friday that it would sell its bone matrix product Osteocel to spine specialist NuVasive Inc.

Chris Anderson
COLUMBIA, Md.—Ina move designed to add cash to its coffers in advance of an expected 2009launch of its Phase III product Prochymal, stem-cell therapeutics company OsirisTherapeutics Inc. announced on Friday thatit would sell its bone matrix product Osteocel to spine specialist NuVasiveInc.
 
Under the terms of the sale agreement, Osiris will get anupfront payment of $35 million at closing, and can earn an additional $50million in milestone payments based on sales of Osteocel and the transfer ofthe Osteocel manufacturing facility. In addition, Osiris can earn an additional$52 million from NuVasive under and 18-month manufacturing ans supplyagreement.
 
"This is a landmark transaction for Osiris as it underscoresthe ability of Osiris to generate substantial revenue through our proprietarytechnology platform and underscores the commercial value of our products," saysC. Randal Mills, Ph.D., president and CEO of Osiris. "Given NuVasive'simpressive growth in the spine market, we expect them to be very successfulwith Osteocel and look forward to working with their team."
  
While the sales trajectory for Osteocel is expected toprovide roughly $10 million in revenue for NuVasive this year and an additional$25 million in 2009, the decision by Osiris to sell was based on its intent tofocus on its lead stem-cell based therapeutic Prochymal, which it anticipateswill be launched commercially in 2009. Prochynal is currently in Phase IIIclinical trials for acute and steroid refractory Graft versus Host Disease andalso Crohn's disease. According to the company, it is the only stem celltherapeutic that has been granted both Orphan Drug and Fast Track status by theFDA.
 
For San Diego-based NuVasive, the opportunity to acquire theOsteocel product line was too good to pass up and plays directly into thecompany's strategy of strengthening its position in the spine market.
  
"This acquisition represents a significant milestone ofNuVasive becoming a major competitive force in spine," says Alex Lukianov,chairman and CEO of NuVasive. "Osteocel provides what believe to be one of themore powerful biologic platforms on the market today."
 
Osteocel, which is similar to autograft in terms of boneformation and is used in spinal fusion therapy, has the opportunity to addincremental revenues of $2,000 to $3,000 per procedure, Lukianov notes.
  
In addition to acquiring the rights to Osteocel, NuVasivegained options on the second generation product, Osteocel XC, currently indevelopment by Osiris. NuVasive also sees other extension opportunities for theproduct based on the proprietary technology and manufacturing facility it willacquire as part of the deal and the company intends to pursue these for otherapplications in the market, according to Lukianov. 
Closing for the deal is expected in the third quarter thisyear.

Chris Anderson

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