UPDATE 1-Genzyme, Osiris to develop stem cell products

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Nov 4 (Reuters) - Genzyme Corp (GENZ.O: Cotización) said it would co-develop and market two adult stem cell products of Osiris Therapeutics (OSIR.O: Cotización) that are being tested for several indications and pay $130 million to Osiris.

Osiris shares were up 16 percent in pre-market trade from its Monday's close of $15.50 on Nasdaq. Genzyme shares were almost flat at Monday's close of $73.54.

According to the deal, Genzyme will pay $75 million of the upfront payment initially, while $55 million will be paid on July 1. Additionally, Osiris may also receive up to $1.25 billion in milestone payments.

Osiris would bear the clinical development costs for all ongoing trials for the products, Prochymal and Chondrogen, as well as future trials for additional indications through completion of mid-stage studies.

However, Osiris and Genzyme will share the cost of future late-stage trials.

Prochymal is currently being evaluated in late-stage trials for three indications -- steroid refractory acute Graft vs. Host Disease (GvHD), newly diagnosed acute GvHD and Crohn's disease.

GvHD is a potentially fatal condition that can affect cancer patients who have received a bone marrow transplant.

Osiris would soon start a mid-stage trial on Chondrogen for the treatment of osteoarthritis in the knee. Based on the results of the planned trial, Genzyme may also elect to opt out of further Chondrogen development, reverting all rights to Osiris.

Both the products would be marketed by Osiris in the United States and Canada, while Genzyme will market them in all other countries. (Reporting by Esha Dey in Bangalore; Editing by Anil D'Silva)