http://www.businessweek.com/news/2010-05-12/stem-cell-developer-mesoblast-seeks-bone-marrow-therapy-by-2012.html

Mesoblast Ltd., an Australian developer of stem-cell therapies, aims to introduce its first product by 2012 after agreeing to buy the shares of Angioblast Systems Inc. it doesn’t already own.

Mesoblast will issue new shares to the unidentified owners of closely held Angioblast to acquire the remaining 67 percent of the company, Melbourne-based Mesoblast said in a statement today. Mesoblast also raised A$37 million ($33 million) selling shares to investors. The company will use the money to fund patient studies, Chief Executive Officer Silviu Itescu said.

The purchase, which values New York-based Angioblast at about A$250 million, gives Mesoblast full rights to treatments for heart failure, eye disease, diabetes and a stem cell treatment for leukemia patients requiring a bone marrow transplant. The market for such patients may be between $300 million and $500 million a year, Itescu said.

“Apart from the breadth of products that it gives Mesoblast, it gives us more mature programs that are moving their way through to conclusions and revenues,” Itescu said in a telephone interview today.

The shares rose 2.8 percent to A$1.99, reversing a 3.9 percent decline in earlier trading. They have more than doubled during the past 12 months, compared with an 18 percent advance in the All Ordinaries Index.

Cord Blood

Angioblast’s bone marrow treatment uses a type of stem cell called mesenchymal precursor cells to expand umbilical cord blood used in marrow transplants, while reducing the risk of the donor’s marrow attacking the patient, a potentially fatal complication.

In a trial of the technology in 18 patients last year, the stem cells expanded cord blood 40-fold. When transplanted, the marrow restored the number of infection-fighting white blood cells to normal levels in a median of 16 days and platelets in 38 days, compared with 30 days and 90 days in previously published reports of patients treated with unexpanded cord blood.

Mesoblast plans to study the treatment in the third and final stage of patient trials normally needed for U.S. regulatory approval later this year and is aiming to get approval in 2012, Itescu said.

Mesoblast also gains full rights over Angioblast’s Revascor, a stem-cell treatment designed to repair cardiovascular muscles in patients who have had a heart attack. In a trial of the treatment among 40 heart attack survivors last year, patients had an average 22 percent increase in the amount of blood their hearts pumped with each beat, compared with an 18 percent decrease among those who took a placebo.

‘Potential Game Plans’

The combined company, to be called Mesoblast Group, will have a market value of about A$455 million, excluding the sale of additional shares, Mesoblast said.

The company plans to sell some products, such as its bone marrow treatment, by itself and to license others to partners, Itescu said. Selling Mesoblast to a larger company is “one of the potential game plans,” he said.

“To maximize our commercial opportunities, we need to be able to rationally review the product suite so we can allocate resources to those products which make the most sense in terms of profitability,” he said. “We’re in a number of discussions with a variety of partners across several of our lead applications.”

Mesoblast, which reported cash reserves of A$12.6 million as of March 31, sold new shares to investors from the U.K. and Australia at A$1.70 apiece, 12 percent less than the company’s closing share price on May 3.

May 12 2010 (Bloomberg)