COLUMBIA, Md. ( TheStreet) -- Osiris Therapeutics ( OSIR) announced that its stem cell drug Prochymal failed both pivotal, phase III studies in patients with graft-versus-host-disease.

The stock is currently halted with shares at $12.21.

More details to follow.

Update: The response rate data from the two Prochymal studies are horrible, despite Osiris' attempts a data-mining for something positive to say.

In the study of patients with steroid-refractory GVHD, the Prochymal response rate was 35% compared to a 30% response rate for placebo – a result that wasn't statistically significant.

The phase III study in first-line GVHD patients was even uglier, with Prochymal patients doing worse than placebo patients (a 45% response rate for Prochymal versus 46% response rate for placebo.)

Osiris data mines the study for something positive to say, finding a couple of retrospective subsets of patients who seem to do better on Prochymal, but that's not going to matter. Bottom line: Prochymal failed, as I predicted long ago.

Osiris shares are down 43% to $6.97 in pre-market trading.

Cell Therapeutics Gets Standard Review

(at 6:59 AM EDT)

Cell Therapeutics ( CTIC) spokesman Dan Eramian says the company was not aware that FDA had decided to refuse the company's request for a priority, six-month review of its lymphoma drug pixantrone on Aug. 19, the day it entered into a sale of preferred stock and warrant to a single investor.

On Friday, Aug. 21, two days after the $30 million stock sale, a regulatory consultant working for Cell Therapeutics made a phone call to FDA for an update on the pixantrone review. The consultant was told that FDA had decided to grant pixantrone a standard, 10-month review, not the six-month review the company had planned for, according Eramian.

Cell Therapeutics announced the FDA's decision via press release on Monday, Aug. 24. The company appealed the FDA's decision, but the agency wouldn't budge. Pixantrone's approval decision date is set for April 24, 2010; Cell Therapeutics was hoping for a speedier review wrapping on Dec. 24 of this year.

Perhaps there is nothing to the timing of that Aug. 19 stock sale -- a coincidence coming just before the FDA's decision on the pixantrone review. Yet, the deal was fortuitous for Cell Therapeutics, which arguably raised more money than it could have post FDA decision. The unnamed investor who bought the deal may not be as happy. His preferred shares convert to common stock at $1.59 a share. Cell Therapeutics closed Friday at $1.49.

With pixantrone's approval a Spring 2010 event, investor attention will likely turn now to the European review of Cell Therapeutics' lung cancer drug Opaxio (nee Xyotax.) The company is supposed to be meeting with European regulators this month to discuss Opaxio, with the possibility of an approval decision before year's end, according to the company. I've had my say on Opaxio and its chances for approval already.

Whether the longer pixantrone review will impact Cell Therapeutics guidance for reaching break even by the fourth quarter and a possible licensing deal with Novartis ( NVS) is also unclear.

Cell Therapeutics is scheduled to present at the Rodman & Renshaw Global Investment Conference Wednesday, so perhaps a significant update is coming.

The Summer's Best and Worst Biotech Stocks

It's been a remarkable summer for stocks and biotech was no exception. The Nasdaq Biotechnology Index rose 21% between Memorial Day and Labor Day, exceeding the 15% gain in the S&P 500 for the same time period.

The biggest story of the summer, of course, was the monster gains in small- and mid-cap biotech and drug stocks. Here are the top-10 biggest returns from Memorial to Labor Day, according to Capital IQ:

Jazz Pharmaceuticals ( JAZZ): 1,017%
Human Genome Sciences ( HGSI): 938%
Targacept ( TRGT): 466%
Inovio Biomedical ( INO): 364%
Helicos Biosciences ( HLCS): 355%
Gentium ( GENT): 317%
IsoRay ( ISR): 311%
Opexa Therapeutics ( OPXA): 292%
Somaxon Pharmaceuticals ( SOMX): 284%
Sinovac Biotech ( SVA): 278%

The summer's biggest losers: Repros Therapeutics ( RPRX): -88%
Star Scientific ( STSI): -75%
Matrixx Initiatives ( MTXX): -65%
ARCA Biopharma ( ABIO): -59%
Catalyst Pharmaceutical Partners ( CPRX): -59%
RXi Pharmaceuticals ( RXII): -57%
Discovery Labs ( DSCO): -55%
Quigley ( QGLY): -53%
GTC Biotherapeutics ( GTCB): -51%
Insmed ( INSM): -49%

-- Reported by Adam Feuerstein in Boston
Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.