$8 million invested in Osiris Calif. firm Alexandria will be landlord for Baltimore company

Biotechnology

October 01, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

Osiris Therapeutics Inc., a Baltimore biotechnology company that is developing treatments for regenerating tissue and bone cells, has received $8 million in financing from a California real estate investment trust.

The privately held company also said yesterday that it's launched an early-stage human clinical trial of its experimental therapy to regenerate bone marrow cells in breast cancer patients after chemotherapy.

The company hopes the treatment becomes its first marketable product.

Under the deal with Alexandria Real Estate Equities Inc., a publicly held REIT in Pasadena, Calif., Alexandria acquired Osiris' option to purchase the 180,000-square-foot building that houses its research and development facilities and headquarters 2001 Aliceanna St. With help from the Maryland Economic Development Corp., Osiris leased space in the building from The Belt's Corp.

James S. Burns, president and chief executive officer of privately held Osiris, said the $8 million investment from Alexandria would be used to finance expansions of laboratory and production facilities.

Alexandria, which specializes in operating and developing laboratory-equipped office space, will now manage the building as Osiris' landlord under a new leasing agreement. It is one of the few, if not the sole, real estate investment trusts in the country that invests in the risky biotechnology sector, real estate experts said.

Said Osiris' Burns, "A company like ours would have a hard time getting a bank to lend us that kind of money. It'll be a big help in our growth plans."

He expects the company, which now occupies 40,000 square feet, to double its space in the next year and to boost employment from 115 to more than 300 within three years.

"This has a very positive implication for the Baltimore community," said Colliers Pinkard Vice President David M. Gillece, who brokered the deal. "REITs like to concentrate their -- acquisitions, so I think this is likely to stimulate future Alexandria purchases in this area."

Also, noted Gillece, Alexandria has an unusual strategy in the industry in that it will provide financing to its tenants for facilities expansion.

"One of the problems in the biotechnology industry has been finding financing for lab expansions, which are expensive," Gillece said. "Alexandria has shown a willingness to support good companies."

The Fells Point facility is the first property that Alexandria has bought in Baltimore, though the company owns and operates about 20 facilities comprising 1.5 million square feet in Maryland, said Joel S. Marcus, the REIT's founder and chief executive officer.

"This is a great property for us. It's a waterfront location, which is unusual, and it's close to Johns Hopkins [Hospital]," Marcus said. Alexandria hopes to attract additional bioscience-oriented tenants to the building, he said. The company hopes to expand (( its local portfolio.

"Baltimore has a growing life sciences community. It's our hope we can establish more of a presence there," Marcus said. "We don't mind helping companies with their expansion needs as long as they're strong companies. It helps us get a better tenant that's there for the long term."

On the clinical trial, Osiris said three medical centers have agreed to take part in the study of its experimental therapy, named Stromagen.

They include Roswell Park Cancer Center in Buffalo, N.Y.; Ireland Cancer Center in Cleveland and Karmanos Cancer Center in Detroit. The study will include about 30 volunteers. It seeks to assess the safety and effectiveness of the treatment on breast ++ cancer patients who are undergoing what is known as stem cell therapy to boost production of blood cells after chemotherapy.

Osiris' treatment is aimed at enhancing the environment inside stroma, the connective tissue inside bone marrow. Stroma plays an important role in blood cell production. High-dose chemotherapy can damage the structural integrity of the stroma and its production of blood cells.

Burns said Osiris will collect data on how well Stromagen protects the stroma from damage and helps blood cell production recover from chemotherapy.

Pub Date: 10/01/98

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