By Frances Bishopp

Regenerative tissue therapy company Osiris Therapeutics Inc. will partner with Novartis AG to develop new mesenchymal stem cell (MSC) products for use in the areas of osteoporosis, osteoarthritis and cartilage repair and in specific areas of gene therapy.

Terms of the collaboration include an equity investment by Novartis, of Basel, Switzerland, of $10 million in Osiris, for approximately 8 percent of the company, and an up-front payment of $3 million for research, James Burns, president and CEO of Osiris, told BioWorld Today. The agreement provides for up to $50 million in research funding over the next five years, and beyond that, milestone payments and royalties.

Osiris has retained the rights to manufacture stem cells in North America, Burns said, who added that a total figure on the deal, specifically the milestone payments, would not be disclosed at this time.

Privately held Osiris, of Baltimore, is engaged in the research and development of therapeutic products for the regeneration of human connective tissues through the use of MSCs.

MSCs are progenitor cells (pluripotent cells that progressively mature into specific adult cells) which can differentiate into multiple connective tissues, including bone marrow stroma, bone, cartilage, muscle, tendon, ligament and fat. Researchers believe the process of tissue regeneration in adults follows a sequence of events similar to that of embryonic tissue formation, and that throughout life, individuals maintain a reserve of MSCs capable of differentiating into new connective tissues.

For use in cell therapy, MSCs would be collected from patients, isolated, purified and culture-expanded (multiplied) under controlled manufacturing conditions and then either reinfused into patients or combined with a biodegradable matrix to regenerate bone, cartilage or other connective tissues.

Culture-expanded MSCs represent a new medical treatment for redirecting and/or reinforcing the body's normal reparative capacity, Burns said.

"This is a brand new multi-lineage stem cell, kind of like the hematopoietic stem cell [blood-forming cells, or HSCs], but different in that it can regenerate the various connective tissues," Burns explained. Both stem cells are located principally in bone marrow, the soft spongy tissue in the bone cavities.

MSCs represent a major new target for gene therapy, Burns said. MSCs are able to: incorporate a new gene efficiently (add a missing gene or insert a gene to make a therapeutic protein), be culture-expanded further so that all MSCs have copies of the new gene, and express the new gene either in undifferentiated MSCs or in differentiated cells of mature connective tissue.

The goal of the collaboration, Burns said, is to develop three MSC gene therapy products and to determine if MSCs can be used as a universal delivery cell for replacement genes or therapeutic drugs. The agreement gives Novartis to select three target genes over the next 90 days and the right to negotiate with Osiris for other target genes through the end of 1997.

The MSC technology originated at Case Western Reserve University, of Cleveland, Burns said, and was purchased by Osiris when the company was founded in Cleveland in 1993. The technology is currently in Phase I clinical trials, Burns said, adding the company plans to file an investigational new drug application by the end of the year.

Burns said Osiris, which currently has 62 employees, has plans for "a substantial expansion over the next six months" to meet the needs of the Novartis collaboration as well as others.

Osiris to date has raised approximately $22 million from private investors, both in the U.S. and Europe, and plans, subject to market conditions, to conduct an initial public offering of its shares within the next 12 months. *