Novartis Pharmaceuticals Corp., the world's No. 1 drug company, said yesterday that it will collaborate with Baltimore-based Osiris Therapeutics Inc. to develop new drugs and other therapies for treating bone diseases and injuries.
The deal is the first big pharmaceutical alliance for 4-year-old Osiris, which the state lured here from Ohio in 1995.
As part of the five-year deal, Novartis is providing Osiris with $3 million for research costs and making a $10 million equity investment, or about $8.50 a share, in the privately held company.
Osiris is developing ways to stimulate bone and cartilage regeneration through the use of what are known as mesenchymal stem cells. These cells play a key initial role in the formation of bone, cartilage and other structural and connective tissues.
"Mesenchymal stem cell technology promises to revolutionize the treatment of a number of common diseases such as arthritis and osteoporosis," Dr. Paul Herrling, Novartis' research chief, said in a statement.
Aside from wanting to taking advantage of the emerging science of tissue regeneration, Novartis, formed last year by the $27 billion merger of Swiss drug giants Sandoz and Ciba-Geigy, has been looking for ways to ensure that its lucrative drug business remains a leader as older products lose their patent protection.
The companies plan initially to target developing new therapies for osteoporosis, osteoarthritis and cartilage injuries. Osteoporosis and osteoarthritis are potentially huge markets. The two diseases affect 40 million people in the United States.
"Our goal is to develop therapies which regenerate tissue to its original architecture," said James S. Burns, president and chief executive officer of Osiris.
The collaboration will include attempting to develop three gene therapies that use stem cells as a way to deliver genes that play a role in bone growth to a damaged site, triggering regeneration.
In addition to the upfront payment of $3 million, Novartis will pay Osiris $50 million over five years for research and development work, the companies said.
Novartis also has agreed to foot the cost of all clinical trials, a potentially huge expense, in seeking regulatory approval for any treatments Osiris develops.
The Baltimore company also stands to reap royalties from those treatments that are commercialized, the companies said.
Osiris, which has a 30,000-square-foot research and development facility in Fells Point, would manufacture those products approved for marketing in the United States.
Should that day come, Burns said, he plans to build the manufacturing site in Baltimore.
The deal, Burns said, "probably represents just 20 percent of our opportunity for [research] collaborations."
The company, he said, believes other alliance opportunities for its technology exist in the fields of cancer and orthopedics.
Burns said he expects the deal to lead to a significant expansion of the company, boosting staffing to about 110 from the current 64 by the end of the year.
Maryland lured Osiris with a $4 million financial incentive package, including investing $700,000, or about $3.50 a share, in Osiris common stock. That investment just saw its value more than double as a result of the Novartis deal.
Pub Date: 6/18/97
