Osiris Therapeutics Inc. completed a $10 million financingWednesday to continue advancing its work in human mesenchymalstem cells (MSC).

Baltimore-based Osiris may be the only company developingproducts based on MSCs, which it described as multi-lineageprogenitor cells that give rise to all mesodermal tissues, such ascartilage, bone, ligament, tendon, muscle, bone marrow stroma andother connective tissues.

The company's plan is to use custom cell implants combining MSCswith carriers for regenerating damaged or degenerated tissues inorthopedic indications and osteoarthritis; to use stem cell therapy forreconstituting marrow stroma following high-dose chemotherapy incancer treatment; to use gene therapy for treating congenitalmusculoskeletal disorders; and using biopharmaceuticals for treatingosteoporosis and cancer.

The company was founded in 1993 based on discoveries made atCase Western Reserve University in Cleveland. It raised $30.6million in private financing and another $4.7 million in laboratoryfacility financing. The company was lured to Baltimore in July 1995when state officials provided a $3 million bond to help refurbish adowntown facility.

Osiris has three issued patents on MSCs covering method ofisolation, uses and composition of matter, which could limitcompetitors from coming into the area. Notices of allowance on twoother patents covering uses of the cells have been issued, and anumber of other applications are pending, said Daniel Marshak,Osiris' senior vice president of research and development and chieftechnology officer.

"The technologies required to effect the actual regeneration of apatient's own tissue have been demonstrated in both in vitro and invivo studies," said Osiris President and CEO James Burns. "Theserecent financings will help accomplish our scientific agenda andenable us to complete several preclinical studies and prepare foradditional clinical trials in 1997."

An investigator-sponsored study testing three doses of autologoushuman MSCs in 15 volunteers was successfully completed. A secondinvestigator-sponsored study is getting under way in breast cancerpatients undergoing high-dose chemotherapy.

An infusion of MSCs, Marshak said, is intended to regenerate bonemarrow stroma and support engraftment of hematopoieticprogenitors. The company hopes to be in position to submit aninvestigational new drug application in 1997 for trials in a similarcancer area, he said. "We are also working actively in orthopedicsand developing products in bone regeneration and articular cartilageregeneration."

Osiris' latest financing, involving Series E convertible preferredstock, was managed by Friedli Corporate Financing AG, of Zurich,Switzerland. Among the investors were the Immunology Fund ofZurich-based Lombard Odier and the Canton of Zurich PensionFund. Other principal investors include the Invesco Global HealthSciences Fund and Invesco Strategic Portfolios Inc., of Denver,Three Arch Bay Health Sciences Fund I L.P., and Bank SCSAlliances S.A. Dominion Ventures Inc. provided equipmentfinancing.

The company uses cells derived from bone marrow. They areisolated, purified and culture-expanded ex vivo. The cells then areformulated in matrix materials that allow for convenient implantationor infusion of the preparation, Marshak said. The cells then committo tissue where they are implanted or where they are directed andallow the patient's tissue to regenerate.

Osiris determined the cells go wherever they are directed bysurrounding tissue. If there is a bone defect, bone is formed; ifcartilage is damaged, cartilage is formed, and so on.

Osiris currently has a collaboration with Houghten PharmaceuticalsInc., of San Diego, to screen some of Houghten's peptide librariesagainst Osiris' MSCs. And it is in discussions with other potentialcorporate partners.

Marshak said partnering goals include getting help with late-stageclinical trials or large-scale studies, as well as facilitating sales andmarketing functions. Burns said the financing should fund operationsinto 1998. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.