Genzyme Elects $1.38B Stem Cell Deal with Osiris

Xconomy Boston — 

Making its own Election Day news, Cambridge, MA-based biotech powerhouse Genzyme (NASDAQ:GENZ) has struck a deal with Osiris Therapeutics (NASDAQ:OSIR), of Columbia, MD, to commercialize and develop two adult stem cell treatments in a variety of diseases.

If all goes as planned, one of the two, called Prochymal, could become the first stem-cell therapy to be approved by the FDA. The treatment is in late-stage clinical trials for graft-versus-host-disease, a complication of bone marrow and cord blood transplants, and for the bowel disorder Crohn’s disease. The results of those studies are expected in 2009. The other stem-cell treatment, Chondrogen, is in mid- to late-stage development for osteoarthritis of the knee. Both treatments are intended to control inflammation, regenerate damaged tissues, and to stymie scar formation, according to the companies.

Genzyme has agreed to pay Osiris $130 million ($75 million initially and $55 million in July 2009) in upfront fees and up to $1.25 billion in potential milestone payments to commercialize Prochymal and Chondrogen in markets outside the U.S. and Canada. Osiris retains rights to market the treatments in U.S. and Canada.

“I think we’ve reached a point in time where we had enough confidence where we thought there was an opportunity,” Stephen Potter, Genzyme senior vice president of corporate development, told me today. “They saw the kind of capabilities we could bring to maximize the potential if something gets approved.”

Genzyme says that Prochymal enhances its transplant franchise, which features such products anti-thymocyte globulin (Thymoglobulin) to prevent rejection of transplanted kidneys and plerixafor (Mozobil) to help cancer patients receive stem-cell transplants. (Erik wrote about how Genzyme expects to begin sales of plerixafor in 2009 for cancer patients whose bone marrow is damaged by chemotherapy.)

Chondrogen, meantime, would bolster Genzyme’s orthopedics business. The company already markets autologous cultured chondrocytes (Carticel), a cell-based therapy to help repair knee cartilage, and an injection (Synvisc) that lubricates knee joints to ease pain linked to osteoarthritis. Both Prochymal and Chondrogen are derived from so-called mesenchymal stem cells harvested from adult donors, and Potter noted that Genzyme has been studying this class of stem cells for seven years.

This isn’t Genzyme’s first deal with Osiris. Last year the two firms agreed to partner on the development of Prochymal to treat radiation sickness, and in January 2008 the U.S. Department of Defense awarded the two firms a $224.7 million contract to develop the treatment for this purpose, the companies said.