Earnings Beat for Osiris - Analyst Blog


Osiris Therapeutics Inc. ( OSIR ) reported fourth quarter earnings of 15 cents per share, beating the Zacks Consensus Estimate of 11 cents and the year-ago earnings of 13 cents. Revenues for the quarter came in at $10.3 million, below the Zacks Consensus Estimate of $11 million and the year-ago revenues of $10.7 million.

Full year earnings came in at 45 cents per share, above the year-ago earnings of 40 cents and the Zacks Consensus Estimate of 41 cents. Revenues came in at $41.1 million, below the Zacks Consensus Estimate of $42 million and the year-ago revenues of $43 million.

Quarterly Highlights

Fourth quarter 2011 revenues included the amortization of license fees under the company's collaboration agreements. Biosurgery product sales came in at $0.8 million.

Research and development (R&D) expenses declined 16% during the quarter to $4.2 million. General and administrative expenses declined 16.7% to $1.5 million

Pipeline Update

Osiris has made significant progress with stem cell therapies. The upside potential to lead candidate Prochymal could be enormous. Osiris is studying Prochymal for several indications including acute and steroid refractory graft versus host disease (GvHD), Crohn's disease, acute myocardial infarction, and type I diabetes, most of which are blockbuster indications.

Osiris is working on submitting an application to the US Food and Drug Administration (FDA) for the approval of Prochymal as a treatment for GvHD. The company is also looking to develop a confirmatory program that will increase the chances of meeting the requirements of all regulatory agencies.

Meanwhile, Osiris is seeking approval for Prochymal in Canada for GvHD. Last year, Health Canada had informed Osiris that it had a few questions on the candidate for the said indication. The agency had also raised questions regarding post-marketing commitments. Osiris has filed a complete response to the inquiries from the Canadian regulatory authority. The company said that Health Canada is seeking external advice and has appointed an expert advisory panel to assist them with the review. The panel is close to completing its work - a decision should be out soon.

As far as the Crohn's disease indication is concerned, Osiris said that enrolment for a phase III study continues. An interim analysis of the study showed that one of the Prochymal dosage arms achieved statistical significance in the primary endpoint.

Meanwhile, the company completed enrolling patients in a phase II trial that is studying Prochymal for the treatment of severe myocardial infarction. Osiris expects to report data from this trial soon. As far as the new onset type I diabetes study is concerned, Osiris provided an update on the phase II study earlier this year. An interim analysis showed that systemic infusions of Prochymal were well tolerated at one year by the patients with no differences in adverse event rates in the Prochymal and placebo arms. The patients will be followed for two years at which time a full analysis will be conducted.

Update on Sanofi Agreement

Last month, Osiris had provided an update on its development and commercialization agreement with Genzyme, a Sanofi ( SNY ) company, for Prochymal. The update was triggered by Sanofi's R&D update in its fourth quarter press release. Sanofi, in its press release, had said that it has discontinued the development of Prochymal. Osiris said that the announcement was made without its knowledge or advice.

Osiris had clarified that Prochymal's development has not been discontinued. Although Osiris had not received any communication from Sanofi regarding the termination of their agreement, Osiris notified Sanofi that it is treating Sanofi's statement as an intention to terminate the agreement.

According to Osiris, all rights to Prochymal will return to Osiris without the company being required to compensate Sanofi. Osiris believes it can now pursue commercialization agreements for Prochymal with other parties.

However, following this announcement, Sanofi informed Osiris that it is not in agreement with Osiris' interpretation of its fourth quarter R&D update. Osiris has asked Sanofi for a clarification regarding the matter.

The collaboration agreement with Genzyme was signed in October 2008 for the development and commercialization of Prochymal and another pipeline candidate, Chondrogen. While Osiris retained the rights to commercialize the candidates in the US and Canada, Genzyme gained exclusive rights to commercialize Prochymal and Chondrogen in all other countries, except Japan, where Osiris has an agreement with JCR Pharmaceuticals. JCR Pharmaceuticals holds rights to Prochymal for the treatment of patients with hematological malignancies.

Neutral on Osiris

We currently have a Neutral recommendation on Osiris, which carries a Zacks #3 Rank (short-term "Hold" rating). We expect investor focus to remain on the outcome of the Sanofi collaboration.

OSIRIS THERAPTC ( OSIR ): Free Stock Analysis Report
SANOFI-AVENTIS ( SNY ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: OSIR , SNY



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