NEW YORK (AP) -- Shares of Osiris Therapeutics Inc. fell Monday after the company said it is still negotiating with French drugmaker Sanofi about the rights to its stem cell therapy Prochymal.
Osiris President and CEO Randal Mills said his company's dispute with Sanofi is "in the hands of lawyers" and that Osiris and Sanofi are trying to amicably resolve their disagreements over the status of Prochymal. The therapy is a treatment for graft vs. host disease, a condition in which transplanted bone marrow cells attack the body of the patient.
The Columbia, Md., company was developing Prochymal through a partnership with biotechnology company Genzyme. French drugmaker Sanofi later acquired Genzyme, and in February, Sanofi said it discontinued late-stage testing of Prochymal. Osiris said that means the collaboration is over and it should regain the rights to Prochymal, allowing it to market the drug or find another partner. Sanofi disagrees.
Shares of Osiris Therapeutics fell 82 cents, or 8.2 percent, to close at $9.21.
Canadian regulators granted conditional approval to Prochymal in May, and regulators in New Zealand gave full approval to Prochymal in June. In a conference call, Osiris said it expects Prochymal to be available in Canada later in 2012. The company is still negotiating with regulators about government reimbursement for the therapy.
The Food and Drug Administration has not approved Prochymal, but patients can get the treatment under certain conditions.
In a telephone interview, Piper Jaffray analyst Ted Tenthoff said investors may have wanted more information about the company's progress on Prochymal in the U.S. He added that shares of Osiris have performed well recently and have more than doubled in value since early May.
Osiris also reported its second-quarter results Monday. The company said it took a loss of $4.3 million, or 13 cents per share. A year ago it reported net income of $1.8 million, or 5 cents per share. Product revenue rose to $1.6 million from $130,000, but revenue from royalty payments and research and development collaborations declined to $98,000 from $10.2 million.
Analysts expected Osiris to report a loss of 15 cents per share and revenue of $1.6 million, according to FactSet.
Osiris reported greater sales of its stem cell biosurgery products Grafix and Ovation in the second quarter. However in the second quarter of 2011, Osiris turned a profit after recognizing more than $10 million in royalty payments and revenue from collaborative research and development agreements. The company also reported lower expenses for research and development and other costs in the most recent quarter.
Grafix is applied to acute and chronic wounds like burns or diabetic foot ulcers to promote healing, and Ovation is used in orthopedic procedures. Tenthoff added that the biosurgery business did well in the second quarter.