We recently reiterated our Neutral recommendation on
Osiris Therapeutics, Inc.
(
OSIR
). Osiris Therapeutics, 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 areas.
Osiris Therapeutics' lead candidate, Prochymal, is being
developed for multiple indications including acute myocardial
infarction, type I diabetes, the treatment of steroid refractory
acute graft versus host disease (GvHD), 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.
While we are impressed with the company's progress in developing
stem cell based therapies, we note that any pipeline development
has attendant risks. With Osiris Therapeutics depending on
Prochymal for growth, disappointing clinical trial results or
regulatory setbacks would be a major blow for the company.
Meanwhile, Osiris Therapeutics' collaboration agreement with
Genzyme, a subsidiary of
Sanofi
(
SNY
), remains under a cloud. In February 2012, Osiris Therapeutics had
provided an update on its development and commercialization
agreement with Genzyme. The update was triggered by Sanofi's
R&D update in its fourth quarter press release.
Sanofi, in its press release, had said that it has discontinued
the development of Prochymal. Osiris Therapeutics said that the
announcement was made without its knowledge or advice. Osiris
Therapeutics' President and CEO clarified that Prochymal's
development has not been discontinued. Although Osiris Therapeutics
had not received any communication from Sanofi regarding the
termination of their agreement, the company notified Sanofi that it
is treating Sanofi's statement as an intention to terminate the
agreement.
According to Osiris Therapeutics, all rights to Prochymal will
return to Osiris Therapeutics without the company being required to
compensate Sanofi. Osiris Therapeutics believes it can pursue
commercialization agreements for Prochymal with other parties.
However, following this announcement, Sanofi informed Osiris
Therapeutics that it is not in agreement with Osiris Therapeutics'
interpretation of its fourth quarter R&D update. Osiris
Therapeutics has asked Sanofi for a clarification regarding the
matter. The lack of visibility regarding the status of the deal
concerns us and we expect this issue to remain an overhang on the
shares.
OSIRIS THERAPTC (
OSIR
): Free Stock Analysis Report
SANOFI-AVENTIS (
SNY
): Free Stock Analysis Report
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