Mesoblast to buy stem cell business from Osiris

Mesoblast (ASX:MSB) will acquire the culture-expanded mesenchymal precursor cell (MPC) business of US-based Osiris Therapeutics in a deal worth up to US$100 million ($105.7 million).

With the purchase, Mesoblast is acquiring two regenerative medicine products in phase III trials - treatments for Crohn’s disease and for acute graft versus host disease (aGvHD) respectively.

aGvHD treatment Prochymal has already received conditional approval in Canada and New Zealand for the treatment of children and is designated by the US FDA as an orphan drug and fast track product.

Under the terms of the transaction, Mesoblast will pay Osiris US$20 million on transaction close and transfer US$15 million in Mesoblast shares once the assets are transferred.

Osiris will receive an additional $15 million in cash after six months and will be eligible for up to US$50 million in clinical development and regulatory milestone payments. Mesoblast may also pay royalties on any sales of acquired products.

Along with the products in development, the transaction will buy Mesoblast a portfolio of 110 MPC-related patents, including 48 in the US.

“The many commercial and strategic benefits of this transaction firm Mesoblast’s leadership position in the global regenerative medicine industry,” Mesoblast CEO Professor Silviu Itescu said.

“Importantly, in 2014 we plan to have active products in Phase 3 clinical trials in all four core major therapeutic areas of focus: cardiovascular medicine (congestive heart failure); inflammatory/immune diseases (Crohn’s disease); orthopaedics (spinal fusion and intervertebral disc repair); and oncology (acute graft versus host disease and cord blood expansion in bone marrow transplantation).”

In March, Mesoblast raised $170 million to support its various clinical trial programs.

Mesoblast (ASX:MSB) shares were trading 5.66% higher at $5.79 as of around 1 pm on Friday.