Genzyme, Osiris enter stem cell treatment deal

Shares of Columbia, Md.-based Osiris surged in morning trading, gaining $3.23, or 21.7 percent, to $18.91. The stock has traded between $9.98 and $20.20 over the last 52 weeks.

Meanwhile, shares of Cambridge, Mass.-based Genzyme rose 18 cents to $73.69.

Under the deal, Genzyme will make an upfront $130 million payment to Osiris for rights to the company's developing Prochymal and Chondrogen treatments. Prochymal is currently in a late-stage study as a possible treatment for graft vs. host disease, a side effect of a bone marrow transplant. It is also in late-stage development for Crohn's Disease, which is an inflammatory condition of the digestive tract, and in midstage development for type 1 diabetes.

Osiris would sell the drugs in the U.S. and Canada, while Genzyme would have sales rights in all other countries. Overall, Osiris could receive up to $1.25 billion in milestone payments, based on the drugs' development and eventual sales.

Meanwhile, Osiris is responsible for the clinical development costs of all ongoing trials, along with future studies up to midstage development. In the future, Osiris will fund 60 percent of late-stage study costs with Genzyme funding 40 percent.