NEW YORK (AP) — Osiris Therapeutics Inc. said Thursday that Canadian regulators approved its stem cell therapy Prochymal, which is intended to treat a deadly side effect of bone marrow transplants.

The company said Health Canada approved Prochymal for use against graft vs. host disease, a condition in which transplanted bone marrow cells attack the body of the patient. Prochymal is approved for use in children who are not responding to steroid therapy. Osiris said about 80 percent of child who contract graft vs. host disease die.

Osiris is still running clinical trials of Prochymal to support full marketing approval, but the drug was granted a type of conditional approval because of the lack of effective treatments for graft vs. host disease. Osiris is required to run additional studies to confirm the treatment works.

Marketing of Prochymal has not been approved in the U.S., but patients can get the treatment under certain conditions. The Food and Drug Administration allows the use of Prochymal in treatment of both adults and children with graft vs. host disease after steroids have failed.

Osiris, based in Columbia, Md., was developing Prochymal and a second stem cell treatment, Chondrogen, as part of a partnership with Genzyme, a unit of French drugmaker Sanofi. But in February Sanofi said it discontinued late-stage testing of Prochymal. Osiris said it believes Sanofi has terminated the collaboration and that it should regain all rights to Prochymal. Osiris said Sanofi disagrees and the companies are discussing their status.

Prochymal is also being studied as a treatment for Crohn’s disease and other conditions.

Shares of Osiris Therapeutics dipped 5 cents to $5.26 on Thursday and climbed 74 cents, or 14.1 percent, to $6 in after-hours trading.