COLUMBIA, MD, USA I October 11, 2013 I Osiris Therapeutics, Inc. (OSIR), announced today that it has entered into an agreement with a wholly-owned subsidiary of Mesoblast Limited (ASX:MSB; USOTC:MBLTY) for the sale of Osiris’ culture-expanded mesenchymal stem cell (ceMSC) business, including Prochymal, in a transaction worth up to $100 million in initial consideration and milestone payments. Additionally, Osiris will receive royalty payments on sales of Prochymal and other products utilizing the acquired ceMSC technology.
Summary of the Transaction
- Mesoblast has acquired the assets related to Osiris’ ceMSC business.
- Osiris will receive $50 million in consideration for closing and delivery of its ceMSC assets.
- Osiris is eligible to receive up to an additional $50 million in payments upon Mesoblast achieving certain clinical and regulatory milestones.
- Mesoblast will assume all future development costs for the ceMSC business.
- Osiris will receive single to low double-digit royalties on product sales derived from the ceMSC technology.
- Osiris and Mesoblast have entered into a separate services agreement for continued product advancement and to ensure a seamless transition.
- Osiris has retained a license to all transferred intellectual property necessary to run its other businesses.
- For Osiris, the transaction results in pro forma cash, investments and receivables of approximately $82 million.
“With this transaction, we will focus our business on those areas that are of greatest commercial value to Osiris moving forward,” said Peter Friedli, Chairman of Osiris Therapeutics. “Furthermore, we have substantially strengthened our balance sheet, reduced R&D expense and preserved future value from Prochymal through a series of milestone and royalty payments.”
Osiris expects to record the closing and asset transfer consideration of $51 million in the fourth quarter of fiscal 2013. The company has previously expensed the research and development costs of its ceMSC business as incurred, therefore most of the consideration will be recognized as a gain on the sale of the business segment. For the preceding 12 months, Osiris incurred $12.5 million in Prochymal-related expenses, which may be eliminated going forward.
Osiris expects to release approximately $14 million of the valuation allowance on its deferred tax assets. As a result, Osiris expects to report a profit for the nine months ended September 30, 2013 as well as for the current fiscal year.
The pro forma unaudited condensed balance sheet as of June 30, 2013, as shown below, indicates cash, investments and receivable of approximately $82 million. This statement purports to show the impact of this transaction on the assets, liabilities and stockholder’s equity of the Company, as if it took place on January 1, 2013.
Of the $50 million in initial consideration, $35 million will be paid in cash. A $15 million payment to be received upon delivery of the ceMSC assets, and any future milestone payments, will be made in cash or stock at Mesoblast’s election. All equity payments will come with customary downside protection to guard against an unforeseen drop in Mesoblast share price. Mesoblast LTD has guaranteed the obligations of its subsidiary.
About Osiris Therapeutics
Osiris Therapeutics, Inc., is the leading stem cell company, having developed the world’s first approved stem cell drug, Prochymal. Osiris currently markets Grafix® and Ovation® for wound and tissue repair, and Cartiform® for cartilage repair. Osiris is a fully integrated company with capabilities in research, development, manufacturing and distribution of cell therapy products. Osiris has developed an extensive intellectual property portfolio to protect the company’s technology and commercial interests.
SOURCE: Osiris Therapeutics
Post Views: 234
COLUMBIA, MD, USA I October 11, 2013 I Osiris Therapeutics, Inc. (OSIR), announced today that it has entered into an agreement with a wholly-owned subsidiary of Mesoblast Limited (ASX:MSB; USOTC:MBLTY) for the sale of Osiris’ culture-expanded mesenchymal stem cell (ceMSC) business, including Prochymal, in a transaction worth up to $100 million in initial consideration and milestone payments. Additionally, Osiris will receive royalty payments on sales of Prochymal and other products utilizing the acquired ceMSC technology.
Summary of the Transaction
- Mesoblast has acquired the assets related to Osiris’ ceMSC business.
- Osiris will receive $50 million in consideration for closing and delivery of its ceMSC assets.
- Osiris is eligible to receive up to an additional $50 million in payments upon Mesoblast achieving certain clinical and regulatory milestones.
- Mesoblast will assume all future development costs for the ceMSC business.
- Osiris will receive single to low double-digit royalties on product sales derived from the ceMSC technology.
- Osiris and Mesoblast have entered into a separate services agreement for continued product advancement and to ensure a seamless transition.
- Osiris has retained a license to all transferred intellectual property necessary to run its other businesses.
- For Osiris, the transaction results in pro forma cash, investments and receivables of approximately $82 million.
“With this transaction, we will focus our business on those areas that are of greatest commercial value to Osiris moving forward,” said Peter Friedli, Chairman of Osiris Therapeutics. “Furthermore, we have substantially strengthened our balance sheet, reduced R&D expense and preserved future value from Prochymal through a series of milestone and royalty payments.”
Osiris expects to record the closing and asset transfer consideration of $51 million in the fourth quarter of fiscal 2013. The company has previously expensed the research and development costs of its ceMSC business as incurred, therefore most of the consideration will be recognized as a gain on the sale of the business segment. For the preceding 12 months, Osiris incurred $12.5 million in Prochymal-related expenses, which may be eliminated going forward.
Osiris expects to release approximately $14 million of the valuation allowance on its deferred tax assets. As a result, Osiris expects to report a profit for the nine months ended September 30, 2013 as well as for the current fiscal year.
The pro forma unaudited condensed balance sheet as of June 30, 2013, as shown below, indicates cash, investments and receivable of approximately $82 million. This statement purports to show the impact of this transaction on the assets, liabilities and stockholder’s equity of the Company, as if it took place on January 1, 2013.
Of the $50 million in initial consideration, $35 million will be paid in cash. A $15 million payment to be received upon delivery of the ceMSC assets, and any future milestone payments, will be made in cash or stock at Mesoblast’s election. All equity payments will come with customary downside protection to guard against an unforeseen drop in Mesoblast share price. Mesoblast LTD has guaranteed the obligations of its subsidiary.
About Osiris Therapeutics
Osiris Therapeutics, Inc., is the leading stem cell company, having developed the world’s first approved stem cell drug, Prochymal. Osiris currently markets Grafix® and Ovation® for wound and tissue repair, and Cartiform® for cartilage repair. Osiris is a fully integrated company with capabilities in research, development, manufacturing and distribution of cell therapy products. Osiris has developed an extensive intellectual property portfolio to protect the company’s technology and commercial interests.
SOURCE: Osiris Therapeutics
Post Views: 234
