Osiris Therapeutics in October offloaded its signature product, Prochymal, one of the first stem cell therapies to win government approval, to Melbourne-based Mesoblast. The Columbia, Maryland–based biotech will receive $50 million for the drug and the technology behind it, plus $50 million more if the drug passes additional clinical trials and regulatory reviews, the companies say. The price tag is “quite a discount,” says Lee Buckler, founder of Cell Therapy Group, a consulting firm in Vancouver. Prochymal, a bone marrow–derived mesenchymal stem cell therapy, has seen limited success, but overall has been a disappointment to many people in the regenerative medicine sector. The drug in 2009 failed two phase 3 clinical trials in severe refractory graft-versus-host disease (GvHD) and didn't fare much better in testing in people with Crohn's disease and chronic obstructive pulmonary disease (Nat. Biotechnol. 27, 966–967, 2009). Finally in 2012 the drug received conditional regulatory approval in Canada and New Zealand to treat GvHD in children. Mesoblast's purchase of Prochymal gives the company a new revenue stream and Osiris' entire mesenchymal stem cell intellectual property estate. More importantly, the deal may also give Mesoblast a foot in the door in the US, says Graig Suvannevejh, an analyst at MLV & Co. in New York. Prochymal is available in the US through expanded access programs and has been given fast track designation and orphan drug status by the US Food and Drug Administration (FDA). Phase 3 studies in Crohn's disease and acute GvHD are underway, and Mesoblast intends to move forward on those with the FDA. “There's good data there,” says Buckler. “There are pockets of things that work.” The value of what's left at Osiris following the sale is a matter of debate. The stem cell company retained biosurgery products Ovation and Grafix, for wound and tissue repair, and Cartiform, for cartilage repair. But on September 26, two weeks before the sale of Prochymal, Osiris received an untitled letter from the FDA saying Ovation and Grafix violated federal regulations, and that valid biologics licenses must be in effect in order to lawfully market the drugs. Osiris withheld the information from the public until, on October 21, it announced it had “reached an agreement” with the FDA that Grafix could continue to be on the market for acute and chronic wounds, including diabetic foot ulcers, its largest market. CEO Randy Mills said the company resolved the Ovation problem by transitioning the product line to a new formulation. FDA said federal rules prohibit it from confirming or denying the company's characterization of the agreement. Analysts say they are not sure how to interpret the news. Says Buckler: “The company has credibility challenges among many analysts and industry insiders because they believe the company has a consistent pattern of putting a spin on its news in ways in which many suggest less transparent or forthright than is expected.”