Zimmer Holdings Inc has entered into an exclusive collaboration agreement with Isto Technologies Inc to develop and commercialize Isto's patented allograft tissue for the surgical repair of articular cartilage defects and potentially, for the regeneration of articular surfaces lost to osteoarthritis.

"Our agreement with Isto confirms our strategy of selectively entering areas such as orthobiologics where we can create benefits for patients, physicians, providers and payers," said Zimmer Chairman and Chief Executive Officer Ray Elliott. "We have said that we plan to enter new, high-growth markets, and with Isto we have a partner who brings world-class research capabilities and a technology that has the potential to be a breakthrough treatment for damaged or lost cartilage."

Under the terms of the agreement, Zimmer will be the exclusive, worldwide distributor of Isto's in vitro cultured cartilage grafts, called Neocartilage. In addition, Zimmer will provide financial and technical resources to accelerate the development and commercialization of this new regenerative cartilage approach. The long-term agreement allows Zimmer to establish and build an equity position in Isto as certain development milestones are reached.

Neocartilage, produced from human chondrocytes using a unique cell culture process, is biochemically and histologically very similar to normal articular cartilage, the resilient tissue that covers the ends of bones to provide both a low friction surface for smooth joint movement and a biomechanical buffer against weight-bearing stresses. Isto Technologies is developing two distinct, Neocartilage-based products to treat joint defects. The first is a chondral, or cartilage, graft that is comprised solely of Neocartilage tissue and is intended for cartilage defects that often occur following sports injuries. The second product is an osteochondral graft, consisting of Neocartilage cultured on a bony substrate. The osteochondral product could be implanted into major defects involving both bone and cartilage and, potentially, used to regenerate articular cartilage lost to osteoarthritis.

In 2001, Isto received a prestigious three-year Advanced Technology Program (ATP) award of $2 million from the National Institutes of Standards and Technology (NIST) to support the development of Neocartilage osteochondral allografts.