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Osiris sells Osteocel to NuVasive, in deal that could total $85 million
05-14-2008
by Chris Anderson  |  Email the author
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COLUMBIA, Md.—In a move designed to add cash to its coffers in advance of an expected 2009 launch of its Phase III product Prochymal, stem-cell therapeutics company Osiris Therapeutics Inc. announced on Friday that it would sell its bone matrix product Osteocel to spine specialist NuVasive Inc.
 
Under the terms of the sale agreement, Osiris will get an upfront payment of $35 million at closing, and can earn an additional $50 million in milestone payments based on sales of Osteocel and the transfer of the Osteocel manufacturing facility. In addition, Osiris can earn an additional $52 million from NuVasive under and 18-month manufacturing ans supply agreement.
 
"This is a landmark transaction for Osiris as it underscores the ability of Osiris to generate substantial revenue through our proprietary technology platform and underscores the commercial value of our products," says C. Randal Mills, Ph.D., president and CEO of Osiris. "Given NuVasive's impressive growth in the spine market, we expect them to be very successful with Osteocel and look forward to working with their team."
  
While the sales trajectory for Osteocel is expected to provide roughly $10 million in revenue for NuVasive this year and an additional $25 million in 2009, the decision by Osiris to sell was based on its intent to focus on its lead stem-cell based therapeutic Prochymal, which it anticipates will be launched commercially in 2009. Prochynal is currently in Phase III clinical trials for acute and steroid refractory Graft versus Host Disease and also Crohn's disease. According to the company, it is the only stem cell therapeutic that has been granted both Orphan Drug and Fast Track status by the FDA.
 
For San Diego-based NuVasive, the opportunity to acquire the Osteocel product line was too good to pass up and plays directly into the company's strategy of strengthening its position in the spine market.
  
"This acquisition represents a significant milestone of NuVasive becoming a major competitive force in spine," says Alex Lukianov, chairman and CEO of NuVasive. "Osteocel provides what believe to be one of the more powerful biologic platforms on the market today."
 
Osteocel, which is similar to autograft in terms of bone formation and is used in spinal fusion therapy, has the opportunity to add incremental revenues of $2,000 to $3,000 per procedure, Lukianov notes.
  
In addition to acquiring the rights to Osteocel, NuVasive gained options on the second generation product, Osteocel XC, currently in development by Osiris. NuVasive also sees other extension opportunities for the product based on the proprietary technology and manufacturing facility it will acquire as part of the deal and the company intends to pursue these for other applications in the market, according to Lukianov.  Closing for the deal is expected in the third quarter this year.

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