Osiris shares hold up in IPO


Shares of Baltimore stem cell company Osiris Therapeutics Inc. didn't move much in their first day of trading, reaching a high of $11.48 five minutes after sales began, then closing exactly where they started at $11 on the Nasdaq. But simply treading water is still considered something of a feat.

For the past two years, biotech businesses have gone public at much lower prices than they had hoped for. Since October 2004, Osiris is only the second such company to have its initial public offering priced in the range underwriters anticipated.

The $11 price values the company at about $300 million, putting it in the No. 2 spot among public stem cell companies. The leader, Geron Corp. of California, had a market capitalization of about $394 million as of yesterday.

The executive of one stem cell company hoping to take his firm public this fall said Osiris' debut seemed to signal acceptance of a science that is often mired in controversy.

"For [Osiris] to come out and have a valuation at that price and to maintain that [is] very encouraging," said I. Richard Garr, chief executive of Neuralstem Inc., a Rockville biotech working with fetal stem cells to treat central nervous system diseases.

"It is sort of a reflection of a mood of the public," he said. "The time for stem cells has come, despite what the [Bush] administration thinks."

Stem cells, which have the ability to regenerate and develop into various other cells, hold potential for curing scourges like diabetes and paralysis. President Bush and others consider the use of embryonic stem cells unethical.

Osiris is developing tissue-regenerating drugs from adult stem cells from the bone marrow of volunteer donors.

Whatever the merits of the stem cell arguments, the reality is that stocks of companies developing them "have been horrible performers," said a note issued yesterday from Briefing.com.

Four other stem cell companies are trading at or near their lows for the year, the note said, among them Geron, which is using embryonic cells to create treatments for diseases that include diabetes and Parkinson's. Its stock closed at $5.99 yesterday, a fraction of its high of $69.81 in 2000.

"I think it's going to take a few more days to decide whether there's anything very good about [Osiris' performance]," said Mark F. Pittenger, a former vice president of research at Osiris who owns shares in the business. He left the company last year and is now a visiting professor in cardiology at Johns Hopkins. "It really is hard to read anything from [one day's data]."

Osiris is thought to be the closest in the country to bringing a pure stem-cell product to market, and already sells a hybrid treatment that contains stem cells. The 14-year-old company owns or licenses 45 U.S. and 153 foreign patents, which gives it an intellectual property portfolio beyond some competitors, Pittenger said.

For the moment, Osiris' performance is good news for company officials. Chief executive C. Randal Mills' 125,000 Osiris shares are now worth about $1.4 million - and he holds 250,000 stock options that he's yet to exercise. Co-founder and Chairman Peter Friedli, whose Swiss venture capital firm has been Osiris' primary financier, personally holds 7.8 million shares, which are now worth $85.8 million.

"Mr. Friedli put a lot of money into Osiris and he got the job done, and that's amazing. Most people give up long before then," said Jeffrey Rice, a retired investor and former Osiris director. "He put his money where his mouth is."

Rice owns an undisclosed number of shares in the company, and though he thinks the debut price was modest, he said he's still satisfied: "For a Baltimore company, it's a job well done in a very difficult industry."


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