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.

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