By Meg Tirrell - 2012-05-18T13:44:15Z

Osiris Therapeutics Inc. (OSIR) surged the most in two years after the company said it won the worlds first approval for a stem-cell drug, gaining clearance in Canada to sell Prochymal for a disease that can attack patients who received bone-marrow transplants.

Osiris rose 8.8 percent to $5.72 at 9:40 a.m. New York time, after earlier reaching $6 for the biggest intraday increase since June 2010. The shares had fallen 28 percent in the 12 months before today.

Prochymal was approved for the treatment of acute graft versus host disease in children for whom steroids havent worked, the Columbia, Maryland-based company said yesterday in a statement. Steroids have a 30 percent to 50 percent success rate, and severe GvHD can be fatal in 80 percent of cases, according to the company.

The therapy uses mesenchymal stem cells derived from bone marrow that can take on different forms to combat the immune reaction that causes patients to literally peel out of their skin and shed their intestinal lining, Osiris Chief Executive Officer Randal Mills said in a telephone interview. The disease has no equal.

The company hasnt sought approval for this indication in the U.S., where regulators asked for more data before considering whether to allow sales of the drug, Mills said. Prochymal is used in eight countries, including the U.S., on an expanded-access program basis, which allows patients to receive experimental medicines without participating in clinical trials.

This is the first regulatory approval of a stem-cell drug -- where the active ingredient of the drug is a stem cell -- in the world, Mills said. Its a huge deal for us and a huge deal for the entire field of stem-cell therapy.

Osiris shares declined from an all-time high of $28.56 in 2007 as the biotechnology company faced clinical setbacks, including two studies in 2009 that failed to show statistical improvement of Prochymal versus placebo.

The Canadian approval was based on data showing a clinically meaningful response 28 days after starting therapy for 61 percent to 64 percent of patients treated, Osiris said in the statement.

Prochymal may draw $16.7 million in revenue next year with Canadian approval, estimated Edward Tenthoff, an analyst with Piper Jaffray & Co., before the companys announcement. He said that while Prochymal would be the first stem-cell drug to receive approval, other regenerative products used for wound- healing that employ stem cells are already on the market, such as Carticel from Sanofis Genzyme unit.

Excerpt from:
Osiris Wins Canadian Approval for First Stem-Cell Therapy