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Osiris Therapeutics, Inc. (OSIR - Analyst Report) recently reported encouraging data from a study that evaluated its stem cell therapy, Prochymal, in patients who have experienced a heart attack (myocardial infarction) for the first time.

Interim one-year data showed that cardiac hypertrophy was significantly lower in patients on Prochymal compared to patients on placebo. Stress-induced ventricular arrhythmia was also lower in the Prochymal arm compared to placebo.

A statistically significant reduction in heart failure was also observed in the Prochymal arm. Moreover, patients in the Prochymal arm required re-hospitalization for cardiac issues much later compared to patients in the placebo arm (85.5 days versus 27.5 days).

Prochymal was also found to be safe with no infusional toxicities being observed. Serious adverse events were similar for both Prochymal and placebo. However, the number of deaths was higher in the Prochymal arm compared to the placebo arm (5 versus 3).

Prochymal has been in the news recently with the product gaining approval in Canada and New Zealand for the treatment of acute graft-vs-host disease (GvHD) in children.

Prochymal is the first manufactured stem cell product to gain approval and the first treatment to gain approval for GvHD.

Besides being approved in Canada and New Zealand, we note that the product is available under an Expanded Access Program (EAP) in seven countries including the US.

In addition to the phase II myocardial infarction study, Prochymal is being evaluated for other indications including refractory Crohn’s disease (phase III) and type I diabetes.

We currently have low visibility on the status of Osiris’ development and commercialization agreement with Genzyme, a Sanofi (SNY - Analyst Report) 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 and clarified that Prochymal’s development has not been discontinued. Although Osiris 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 now pursue commercialization agreements for the product with other parties.

We currently have a Neutral recommendation on Osiris, which carries a Zacks #3 Rank (short-term Hold rating). While Prochymal’s approval in Canada was a major milestone for the company, the lack of visibility regarding the Sanofi deal concerns us.

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