Osiris Surges After Inking Genzyme Pact

The companies plan to collaborate on two late-stage adult stem-cell treatments.
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Genzyme

(GENZ)

and

Osiris

(OSIR) - Get Report

said Tuesday that they will collaborate on two late-stage adult stem-cell treatments.

Genzyme said it will make an upfront payment of $130 million for the rights to the Osiris products Prochyma and Chondrogen outside of the U.S. and Canada. Osiris could also receive potential milestones of up to $1.25 billion and royalties on sales for the therapies, which are designed to control inflammation, promote tissue regrowth and prevent scars from forming.

Columbia, Md.-based Osiris specializes in stem-cell therapies derived from adult bone marrow.

"The collaboration will leverage Osiris' leadership position developing novel stem cell therapies, and Genzyme's regulatory and marketing infrastructure outside of the United States, as well as its expertise commercializing cell therapies," the companies wrote in a release.

Osiris will pick up the clinical development costs for all ongoing studies and will fund future indications for the products through midstage development. Genzyme will pay for 40% of the costs for future phase III and IV trials.

Last year, the companies agreed to work together to develop Prochymal for acute radiation syndrome.

Prochymal is currently being studied in late-stage trials for graft vs. host disease, a side effect of bone marrow transplants in which the body rejects the bone marrow, and as a therapy for patients with Crohn's disease. Data from those studies are expected in 2009.

The product is also in midstage studies for type I diabetes and chronic obstructive pulmonary disease. Additionally, Osiris expects a midstage study on Prochymal for heart attack patients, and a mid-to-late stage trial on Chrondrogen for osteoarthritis of the knee to begin shortly.

Genzyme can opt out of further development of Chrondogen based on the results of the osteoarthritis study, in which case the rights would revert back to Osiris.

Genzyme's shares were up 1% at $74.24, and Osiris was jumping 21% to $18.76.