Osiris Shares Increase on Approval for Stem-Cell Therapy

Osiris Therapeutics Inc. rose after the company said it won the world’s first approval for a stem-cell drug, gaining clearance in Canada to sell Prochymal for a disease that can attack patients who received bone-marrow transplants.

Osiris climbed 5.5 percent to $5.55 at 4 p.m. New York time. The shares have lost 24 percent in the last 12 months.

Prochymal was approved for the treatment of acute graft versus host disease in children for whom steroids haven’t worked, the Columbia, Maryland-based company said yesterday in a statement. Steroids have a 30 percent to 50 percent success rate, and severe GvHD can be fatal in 80 percent of cases, according to the company.

The therapy uses mesenchymal stem cells derived from bone marrow that can take on different forms to combat the immune reaction that causes patients to “literally peel out of their skin and shed their intestinal lining,” Osiris Chief Executive Officer Randal Mills said in a telephone interview. “The disease has no equal.”

The company hasn’t sought approval for this indication in the U.S., where regulators asked for more data before considering whether to allow sales of the drug, Mills said. Prochymal is used in eight countries, including the U.S., on an expanded-access program basis, which allows patients to receive experimental medicines without participating in clinical trials.

“This is the first regulatory approval of a stem-cell drug -- where the active ingredient of the drug is a stem cell -- in the world,” Mills said. “It’s a huge deal for us and a huge deal for the entire field of stem-cell therapy.”

Osiris Shares

Osiris shares declined from an all-time high of $28.56 in 2007 as the biotechnology company faced clinical setbacks, including two studies in 2009 that failed to show statistical improvement of Prochymal versus placebo.

The Canadian approval was based on data showing a “clinically meaningful response” 28 days after starting therapy for 61 percent to 64 percent of patients treated, Osiris said in the statement.

Prochymal may draw $16.7 million in revenue next year with Canadian approval, estimated Edward Tenthoff, an analyst with Piper Jaffray & Co., before the company’s announcement. He said that while Prochymal would be the first stem-cell drug to receive approval, other regenerative products used for wound-healing that employ stem cells are already on the market, such as Carticel from Sanofi’s Genzyme unit.

Bone Marrow Donations

Carticel uses a patient’s own cells to repair cartilage injuries in the knee, and is implanted with surgery, whereas Prochymal is an intravenous, off-the-shelf therapy. The stem cells are derived from bone marrow donations from healthy donors.

Progress in stem-cell research has been halting. Geron Corp., based in Menlo Park, California, started the first U.S.- approved trial of human embryonic stem cells before ending the program last year because of research costs and regulatory complexities.

Under the terms of the Canadian approval, Osiris will conduct confirmatory clinical testing. The company is also testing Prochymal in Crohn’s disease, heart attack and type 1 diabetes.

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