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Osiris Regains Rights from Sanofi

Zacks Equity Research

Osiris Therapeutics, Inc. (OSIR) recently announced that it has regained global rights to Prochymal and Chondrogen from Genzyme, a Sanofi (SNY) company.

Osiris and Genzyme’s association dates back to October 2008 when the companies entered into a collaboration agreement for the development and commercialization of Prochymal and Chondrogen. While Osiris had retained the rights to commercialize Prochymal and Chondrogen in the US and Canada, Genzyme gained exclusive rights to commercialize Prochymal and Chondrogen in all other countries, except with respect to graft versus host disease (GvHD) in Japan, where Osiris has an agreement with JCR Pharmaceuticals.

However, 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 the company’s President and CEO clarified that Prochymal’s development for GvHD has not been discontinued. Although the company 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.

Sanofi, in turn, informed Osiris that it is not in agreement with its interpretation of the fourth quarter R&D update. Osiris had asked Sanofi for a clarification regarding the matter.

The amicable ending of the dispute has removed a significant overhang for Osiris. We are positive on this development which will now allow the company to pursue collaboration agreements for Prochymal and Chondrogen with other parties.

Prochymal’s approval in Canada in May 2012 for the treatment of acute GvHD in children is a major milestone for Osiris. The company expects to launch Prochymal with reimbursement in Canada later this year. We currently have a Neutral recommendation on Osiris, which carries a Zacks #3 Rank (short-term ‘Hold’ rating).

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