Osiris Therapeutics Inc. announced today it entered in a deal with NuVasive Inc. to sell its business Osteocel for up to $85 million in upfront and milestone payments.

NuVasive will pay $35 million in cash and pay additional milestone-based payments of up to $50 million in cash or stock.

"We are very excited about this landmark transaction and believe it underscores the ability of Osiris to generate substantial value through our proprietary technology platform." said C. Randal Mills, Ph.D., President and Chief Executive Officer of Osiris Therapeutics in a press release.

Osteocel is a viable bone matrix product that preserves the native stem cell population that resides in marrow rich bone and is intended for use in orthopedic

"This acquisition is synergistic for both of our companies. This proven stem cell technology directly supports our strategy of expanding our offering of innovative and proprietary products. " said Alex Lukianov, Chairman and Chief Executive Officer of NuVasive.

NuVasive said it expects the deal to be dilutive to its 2008 earnings per share.

In addition, Osiris said it will process and supply NuVasive with Osteocel for up to 18 months.

Shares of Osiris Therapeutics rose 10.45 percent to $13 on after hours electronic trade Thursday in Nasdaq.