Columbia biotechnology company Osiris Therapeutics has reached a deal to sell its marquee stem cell drug, the first to win government approval, for up to $100 million.
A subsidiary of Australian company Mesoblast Ltd. has agreed to pay $50 million for the technology behind Prochymal and the drug itself, and Osiris could receive up to $50 million more if the drug passes certain clinical trials and regulatory reviews, the companies said.
Prochymal is being evaluated in a final round of clinical trials for use in treating Crohn's disease as well as a disorder known as graft versus host disease that can occur after stem cell or bone marrow transplants. Osiris was founded in 1992 to develop stem cell therapies that can be used to stop inflammation and regenerate tissue.
The deal would mean Osiris moving on from what has been its key project for more than 20 years. Company officials said the sale allows them to focus on other projects with potential.
"With this transaction, we will focus our business on those areas that are of greatest commercial value to Osiris moving forward," Osiris chairman Peter Friedli said in a statement.
Other projects the company is working on include Chondrogen and Osteocel-XC, both drugs that stimulate bone regeneration.
Company officials were not available for comment Friday.
Osiris broke ground in the global stem cell research field in May 2012 when it announced it had received the world's first governmental approval to market a stem cell drug. Canada granted the first approval, and New Zealand soon followed.
Prochymal is made from adult stem cells, and while it was approved for marketing toward patients with the rare graft versus host disease, Osiris also has clinical trials underway testing the drug on patients with cardiac disease and Type 1 diabetes.
The company moved to Baltimore two years after being founded in Ohio. It later moved to Columbia.
Shares of Osiris, traded on the Nasdaq under the symbol OSIR, closed up 5 percent at $18.01 each on Friday.
Osiris will receive $35 million of the deal's initial $50 million in cash, with the rest to be paid in either cash or Mesoblast stock upon delivery of the Prochymal technology. Osiris also will receive what it called "single to low double-digit" royalties on any sales Mesoblast receives from the technology.
The sale is expected to close in the fourth quarter of this year.