Neutral on Osiris Therapeutics - Analyst Blog

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We recently reiterated our Neutral recommendation on Osiris Therapeutics, Inc. ( OSIR ). Osiris Therapeutics, a stem cell therapeutic company, is focused on the development and marketing of products for the treatment of medical conditions in the inflammatory, orthopedic, wound healing and cardiovascular areas.

Osiris Therapeutics' lead candidate, Prochymal, is being developed for multiple indications including acute myocardial infarction, type I diabetes, the treatment of steroid refractory acute graft versus host disease (GvHD), Crohn's disease and the repair of gastrointestinal injury resulting from radiation exposure. We think Prochymal could be a blockbuster drug with a full label.

While we are impressed with the company's progress in developing stem cell based therapies, we note that any pipeline development has attendant risks. With Osiris Therapeutics depending on Prochymal for growth, disappointing clinical trial results or regulatory setbacks would be a major blow for the company.

Meanwhile, Osiris Therapeutics' collaboration agreement with Genzyme, a subsidiary of Sanofi ( SNY ), remains under a cloud. In February 2012, Osiris Therapeutics had provided an update on its development and commercialization agreement with Genzyme. 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 Therapeutics said that the announcement was made without its knowledge or advice. Osiris Therapeutics' President and CEO clarified that Prochymal's development has not been discontinued. Although Osiris Therapeutics had not received any communication from Sanofi regarding the termination of their agreement, the company notified Sanofi that it is treating Sanofi's statement as an intention to terminate the agreement.

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

However, following this announcement, Sanofi informed Osiris Therapeutics that it is not in agreement with Osiris Therapeutics' interpretation of its fourth quarter R&D update. Osiris Therapeutics has asked Sanofi for a clarification regarding the matter. The lack of visibility regarding the status of the deal concerns us and we expect this issue to remain an overhang on the shares. 


 
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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