Osiris exits stem cell business, sells unit to Mesoblast in $100M deal

Over the past year Columbia, MD-based Osiris Therapeutics ($OSIR) has struggled to expand on its marketing foothold in Canada for the off-the-shelf stem cell product Prochymal. But Thursday night the biotech company offloaded the product, and its mesenchymal stem cell platform in regenerative medicine, to Australia's Mesoblast for $50 million in near-term cash and stock and up to $50 million more in milestones.

Osiris laid claim to making breakthrough therapeutic history with Canada's approval of the first such regenerative medicine treatment. New Zealand followed with another marginal market OK, but the biotech was still dreaming of glory and a U.S. approval when Sanofi ($SNY) opted to dump the partnership deal it inherited with its buyout of Genzyme.

Osiris, which has been consumed by Prochymal development projects, says it will now focus on other businesses. And Mesoblast, which raised $175 million earlier this year, says it will have four late-stage programs underway in 2014 for heart failure, Crohn's disease, orthopedics and acute Graft versus Host Disease, where Mesoblast plans to launch a bid for FDA approval.

In the deal Osiris gets $20 million upfront, $15 million in cash on the transfer of assets, and then $15 million in cash 6 months down the road. Another $50 million in clinical and regulatory milestones is on the table, along with sales royalties.

Once heralded as a major new initiative in medicine, stem cell research has waxed and waned in recent years with little encouragement from Big Pharma players. Sanofi just shrugged off its $1.25 billion collaboration with Osiris, which cost Genzyme $130 million upfront. But a number of smaller players remain committed to the long-term success of the field.

"The many commercial and strategic benefits of this transaction firm Mesoblast's leadership position in the global regenerative medicine industry," said Mesoblast Chief Executive Officer Silviu Itescu.

- here's the press release from Mesoblast

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