Osiris Therapeutics, Inc.'s
) shares continued to gain ever since the company announced its
agreement for the sale of its culture-expanded mesenchymal stem
cell (ceMSC) business.
Last week, the company entered into an agreement with a
wholly-owned subsidiary of Mesoblast Limited under which Osiris
will sell its ceMSC business including Prochymal for up to $100
million. Osiris will be entitled to royalty payments as well.
Shares are up about 5.8% since the agreement was announced.
$50 million will be received by Osiris on the closing of the
deal with the remaining $50 million falling due as and when
milestones (development and regulatory) are achieved by
Mesoblast. Mesoblast will be responsible for all future
development costs for the ceMSC business.
While a part ($35 million) of the initial $50 million payment
will be made in cash, the balance ($15 million) and other
milestone payments may be made in cash or stock.
Osiris will also be entitled to receive single to low
double-digit royalties on sales of products derived from the
ceMSC technology. Osiris has also retained a license to all
transferred intellectual property necessary to run its other
This deal will provide Osiris with pro forma cash, investments
and receivables of about $82 million and the company expects to
report a profit this year.
Osiris currently carries a Zacks Rank # 2 (Buy). The sale of
the ceMSC business will not only provide Osiris with cash, it
will also allow the company to focus on its Biosurgery segment,
which has been gaining traction over the past few quarters.
Currently marketed products include Grafix and Ovation for tissue
repair. Biosurgery product revenues came in at $7.8 million in
2012, significantly above $1.3 million in 2011. The company
intends to continue increasing its focus on the development and
commercialization of products in this segment.
Other stocks that currently look attractive include
Isis Pharmaceuticals, Inc.
Cornerstone Therapeutics Inc.
). All three are Zacks Rank # 1 (Strong Buy) stocks.
ACTELION LTD (ALIOF): Get Free Report
CORNERSTONE THR (CRTX): Get Free Report
ISIS PHARMACEUT (ISIS): Free Stock Analysis
OSIRIS THERAPTC (OSIR): Free Stock Analysis
To read this article on Zacks.com click here.