Mills believes the FDA will grant the company's request for an expansion of its emergency use authorization for Prochymal. But it seems just as likely that FDA will look at data from two failed phase III trials and shut the entire thing down, or at least place more restrictions on the drug, like barring its use in patients with the common skin form of GVHD.

Mills, on his conference call, hedged and wouldn't say if he thought the results from the two phase III trials were strong enough for the company to seek FDA approval in GVHD. Of course they're not, since even Mills knows that FDA will not grant approval to a drug based on retrospective "positive" data gleaned from failed trials.

The only recourse for Osiris now is to design and run new phase III trials, trying to establish Prochymal's efficacy in severely ill patients with GVHD involvement in the liver and GI tract.

Osiris may choose to go down that long and expensive route, but it may be forced to do it solo. Conspicuously absent from today's Prochymal announcement was any word at all from Osiris' partner Genzyme ( GENZ).

-- 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.

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