We are maintaining our Neutral recommendation on
Osiris Therapeutics, Inc.
), which carries a Zacks #3 Rank (short-term Hold rating). Osiris,
a stem cell therapeutic company, is focused on the development and
marketing of products for the treatment of medical conditions in
the inflammatory, orthopedic, wound healing and cardiovascular
The company achieved a major milestone earlier this year when
its lead stem cell therapy, Prochymal, gained approval in Canada
and New Zealand for the treatment of acute graft-vs-host disease
(GvHD) in children.
Prochymal is being developed for several other indications
including acute myocardial infarction, type I diabetes, Crohn's
disease and the repair of gastrointestinal injury resulting from
radiation exposure. We think Prochymal could be a blockbuster drug
with a full label. The company expects to launch Prochymal with
reimbursement in Canada later this year.
While we are impressed with Osiris' progress in developing stem
cell based therapies, we note that any pipeline development has
attendant risks. With the company depending on Prochymal for
growth, disappointing clinical trial results or regulatory setbacks
would be a major blow.
Meanwhile, we continue to have low visibility on the status of
Osiris' development and commercialization agreement with Genzyme, a
) company, for Prochymal. Earlier this year, Sanofi, in its fourth
quarter press release, had said that it has discontinued the
development of Prochymal for GvHD. Osiris said that the
announcement was made without its knowledge or advice.
Osiris clarified that Prochymal's development for the said
indication has not been discontinued. Although the company had not
received any communication from Sanofi regarding the termination of
their agreement, Osiris notified Sanofi that it is treating
Sanofi's statement as an intention to terminate the agreement.
According to Osiris, all rights to Prochymal will return to
Osiris without the company being required to compensate Sanofi.
Osiris believes it can pursue commercialization agreements for
Prochymal with other parties.
However, following this announcement, Sanofi informed Osiris
that it is not in agreement with Osiris' interpretation of its
fourth quarter R&D update.On the second quarter call, Osiris
said that the issue is now in the hands of lawyers.
The collaboration agreement with Genzyme was signed in October
2008 for the development and commercialization of Prochymal and
another pipeline candidate, Chondrogen. While Osiris retained the
rights to commercialize the candidates in the US and Canada,
Genzyme gained exclusive rights to commercialize Prochymal and
Chondrogen in all other countries, except Japan, where Osiris has
an agreement with JCR Pharmaceuticals. JCR Pharmaceuticals holds
rights to Prochymal for the treatment of patients with
We maintain our Neutral recommendation on Osiris as we await
more visibility on pipeline and regulatory progress in the US.
Moreover, the lack of visibility regarding the status of the Sanofi
deal concerns us.
OSIRIS THERAPTC (OSIR): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
To read this article on Zacks.com click here.