A drug derived from bone marrow cells has failed two late stage clinical trials, representing a major setback for stem cell medicine. The drug, developed by Osiris, a stem cell company based in Maryland, is considered the closest to market of all the stem cell-based products in human testing.

The announcement follows another significant setback for the field. Last month, Geron, an embryonic stem cell company based in California, announced that its clinical trial for spinal cord injury–set to become the first human trial of human embryonic stem cells–was put on hold by the Food and Drug Administration after animal studies showed that the treatment was linked to increased development of small cysts at the injury site.

Osiris’s drug, called prochymal, is a preparation of mesenchymal stem cells (MSCs) isolated from the bone marrow of healthy young adult donors. Research in animals suggests that these cells can reduce inflammation and spur tissue healing by stimulating the release of molecular growth factors.

The drug is also being tested in clinical trials for myocardial infarction, chronic obstructive pulmonary disease (COPD) and type 1 diabetes. Osiris halted a late-stage clinical trial of prochymal for Crohn’s disease, a form of inflammatory bowel disease, earlier this year because of the high placebo response rate.

According to an article in The New York Times:

Stem cells, particularly in the form of bone marrow transplants, are already used in medicine. Osiris is hoping that Prochymal will become the first stem cell product approved by the Food and Drug Administration and sold as a mass-produced pharmaceutical product.

But the failure in the two trials could make it hard to reach that goal. Both trials tested Prochymal as a treatment for graft-versus-host disease, which occurs when immune cells in donated marrow attack the recipient’s organs as foreign tissue.

In one trial, in which Prochymal was used along with steroids, 45 percent of patients responded to Prochymal and steroids compared with 46 percent who had a response to steroid and a placebo.

In a second trial, in which Prochymal was tested in patients who were not benefiting from steroids, 35 percent of those getting the drug had a resolution of graft-versus-host disease for at least 28 days, compared with 30 percent getting the placebo. The difference was not statistically significant.

Osiris said, however, that in the second trial, the drug did provide a statistically meaningful benefit in patients having graft-versus-host disease that specifically affected their livers or their gastrointestinal tracts.