Osiris lifted by test results

Drug shows promise for treating Crohn's

October 21, 2006|By Tricia Bishop | Tricia Bishop,sun reporter

Shares of Osiris Therapeutics rose 13 percent yesterday to an all-time high for the newly public, adult stem-cell company on news that its lead drug shows promise as a treatment for moderate to severe Crohn's disease, an autoimmune disorder affecting half a million Americans.

The stock, first offered in August, closed up $2 to $17.02 from Thursday's closing price of $15.02. Its gain was the eighth-highest percentage increase on the Nasdaq yesterday, though half of it was achieved overnight as after-hours trading pushed the price up to $16.12 by yesterday morning.

After markets closed Thursday, the Baltimore biotech released data from a 10-person study suggesting Prochymal, which is made from stem cells found in adult bone marrow, may reduce Crohn's severity in people resistant to other treatments. The disease is characterized by chronic intestinal inflammation, with symptoms ranging from abdominal pain to internal ulcerations. Further studies are planned.

Prochymal, which Osiris says interacts with immune cells to reduce inflammation and aid tissue repair, already is in late-stage trials as a treatment for a rare inflammatory condition associated with bone marrow transplants. If approved, it would likely be the first pure stem cell product on the market.

Two of the three analysts following Osiris took the additional Crohn's data as a sign that the drug might have applications for other inflammatory conditions

"[It] supports/validates utility of Prochymal in broad anti-inflammatory diseases," Eun K. Yang, an analyst with Jefferies & Co., wrote in a report issued yesterday. J. William Tanner of Leerink Swann echoed the sentiment in his own report. Both analysts maintain buy-type ratings on the stock.

But Joel D. Sendek of Lazard Capital Markets questioned the Crohn's data in a note issued yesterday.

"Preliminary results appear less robust than competitive agents," he wrote.

Several drugs are in clinical testing as Crohn's treatments, with at least a half-dozen farther along than Prochymal. The current standard of care, an infusion treatment called Remicade, has been shown to cause remission at the five-year point in about half of those treated.

Prochymal was said to have caused temporary remission in three patients, though the measure of remission was slightly more lax than is typical.

"If Prochymal plans to compete effectively with these [other] treatments, we would need to see similar [to Remicade] remission efficacy data in the future," Sendek wrote.

All three analysts work for investment banks that led Osiris' initial public offering this summer.

In an interview this week, Osiris Chief Executive Officer C. Randal Mills said the company conducted the trial as a first step to see if there would be a correlation between Prochymal and reduced disease activity. He expects to fine-tune the dosage and administration in the next go-round to improve results.

tricia.bishop@baltsun.com

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