Celgene has agreed to buy a minority stake in Mesoblast valued at $45 million, Mesoblast said today. In return, the biotech giant has gained a six-month right of first refusal on Mesoblast's mesenchymal lineage adult stem cell product candidates designed to treat a variety of diseases and disorders.

The diseases and disorders include unspecified oncologic diseases, inflammatory bowel diseases, organ transplant rejection—as well as acute graft versus host disease (GVHD), for which Mesoblast in February trumpeted positive results from its Expanded Access Program (EAP) Protocol 275 study for one of its lead products, MSC-100-IV.

Back then, Mesoblast said MSC-100-IV achieved partial or complete response following 28 days of treatment in 64% of 160 children with severe steroid-resistant acute GVHD. The response, Mesoblast added, correlated with statistically significant improved survival compared to nonresponders 100 days after an MSC-100-IV infusion—81% versus 39% for nonresponders.

“The enrolled patients represent a very challenging population with severe graft versus host disease that was nonresponsive to treatments, including steroids and for many of these children, multiple immunosuppressive agents, so we believe these results are very promising,” Joanne Kurtzberg, M.D., the study’s lead investigator and director of the Pediatric Blood and Marrow Transplant Program at Duke University Medical Center.

A Phase III trial including about 60 pediatric patients with aGVHD, was recruiting patients as of January 7, according to ClinicalTrials.gov.

Mesoblast agreed to spend up to $85 million in October 2013 to acquire the entire culture-expanded mesenchymal stem cell (MSC) business of Osiris Therapeutics.

Celgene’s equity purchase will consist of 15.3 million ordinary shares of Mesoblast stock at A$3.82 ($2.90) per share—19% above the A$3.21 ($2.44) closing price on April 10. The deal will give Celgene an approximately 4.5% stake in Mesoblast, the Sydney Morning Herald reported.

Celgene has a “strong franchise and sales and marketing capability” in cancer and inflammatory diseases, and MSC-100-IV “fits perfectly well into their cancer and oncology franchise,” Mesoblast CEO Silviu Itescu told the Australian newspaper.

Investors appeared to agree with that assessment, sending Mesoblast share prices surging 24% in trading today on the Australian Stock Exchange.

“Today's agreement provides an opportunity for Celgene to add to its leading cellular and regenerative medicine pipeline,” Mark Alles, Celgene’s president and COO, said in a statement.

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