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TOPIC: Mesoblast, Osiris deal

Mesoblast, Osiris deal 10 Oct 2013 20:43 #956

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Credit to WST from the YMB for originally posting.

Osiris Therapeutics, Inc. (OSIR), announced today that it has entered into an agreement with a wholly-owned subsidiary of Mesoblast Limited (ASX:MSB; USOTC:MBLTY) for the sale of Osiris’ culture-expanded mesenchymal stem cell (ceMSC) business, including Prochymal, in a transaction worth up to $100 million in initial consideration and milestone payments. Additionally, Osiris will receive royalty payments on sales of Prochymal and other products utilizing the acquired ceMSC technology.

Summary of the Transaction

Mesoblast has acquired the assets related to Osiris’ ceMSC business.
Osiris will receive $50 million in consideration for closing and delivery of its ceMSC assets.
Osiris is eligible to receive up to an additional $50 million in payments upon Mesoblast achieving certain clinical and regulatory milestones.
Mesoblast will assume all future development costs for the ceMSC business.
Osiris will receive single to low double-digit royalties on product sales derived from the ceMSC technology.
Osiris and Mesoblast have entered into a separate services agreement for continued product advancement and to ensure a seamless transition.
Osiris has retained a license to all transferred intellectual property necessary to run its other businesses.
For Osiris, the transaction results in pro forma cash, investments and receivables of approximately $82 million.
“With this transaction, we will focus our business on those areas that are of greatest commercial value to Osiris moving forward,” said Peter Friedli, Chairman of Osiris Therapeutics. “Furthermore, we have substantially strengthened our balance sheet, reduced R&D expense and preserved future value from Prochymal through a series of milestone and royalty payments.”

Osiris expects to record the closing and asset transfer consideration of $51 million in the fourth quarter of fiscal 2013. The company has previously expensed the research and development costs of its ceMSC business as incurred, therefore most of the consideration will be recognized as a gain on the sale of the business segment. For the preceding 12 months, Osiris incurred $12.5 million in Prochymal-related expenses, which may be eliminated going forward.

Osiris expects to release approximately $14 million of the valuation allowance on its deferred tax assets. As a result, Osiris expects to report a profit for the nine months ended September 30, 2013 as well as for the current fiscal year.

The pro forma unaudited condensed balance sheet as of June 30, 2013, as shown below, indicates cash, investments and receivable of approximately $82 million. This statement purports to show the impact of this transaction on the assets, liabilities and stockholder’s equity of the Company, as if it took place on January 1, 2013.

Of the $50 million in initial consideration, $35 million will be paid in cash. A $15 million payment to be received upon delivery of the ceMSC assets, and any future milestone payments, will be made in cash or stock at Mesoblast’s election. All equity payments will come with customary downside protection to guard against an unforeseen drop in Mesoblast share price. Mesoblast LTD has guaranteed the obligations of its subsidiary.

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Mesoblast, Osiris deal 11 Oct 2013 03:50 #957

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This is what I posted at LinkedIn a few hours ago- whilst watching Verlander almost pitching a no-hitter- :cry:

I am not really all that surprised that OSIR is willing to divest the program, but rather astonished that MSB was willing to buy it, albeit with a pretty low price tag. Elimination of competition probably. I presume they will continue to develop the GvHD and Chrohn´s applications and will dump the rest including cardiac in favor of Revascor. Anybody can tell me, why Chondrogen/Prochymal was not very effective in treating arthritis in knees?


The price for a (rough guess)- 300-400 Mio development program is peanuts of course- so safe to assume- it does NOT work very well, which I have known for a long time. This must be the result of a probability risk/benefit analysis and its result came out very low.
The actions of Boston Scientific and Genzyme/Sanofi therefore in hindsight are no surprise.

So why does MSB want it- even at this super low price? My guess is eliminating competition as stated above. Question of course- why would Revascor be a lot better than Prochymal????? :yawn:
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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

Mesoblast, Osiris deal 11 Oct 2013 06:52 #958

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I wonder what both companies were thinking with regard to Pluristem and GvHD ?

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Mesoblast, Osiris deal 11 Oct 2013 07:26 #959

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What is with Pluristem and GvHD?

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

Mesoblast, Osiris deal 11 Oct 2013 08:51 #960

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To be honest Fas I really havent followed PSTI much...I just know they also have a GvHD product and a patent.

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Mesoblast, Osiris deal 11 Oct 2013 08:58 #961

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Hedge- after you mentioned that, I googled briefly.

There is a Seeking Alpha article comparing that- Osiris- PSTI- GvHD

To me there is a 8-10 year difference between a pre-clinical model and completion of a Phase III (even for an orphan disease)

So I guess the answer is- no they did not consider that.

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:
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