Osiris Therapeutics Inc.
) reported a second quarter loss of 13 cents per share, narrower
than the Zacks Consensus Estimate of a loss of 15 cents. However,
year-ago earnings were 5 cents per share. Revenues for the quarter
came in at $1.7 million, below the Zacks Consensus Estimate of $2
million and the year-ago revenues of $10.4 million.
Biosurgery product sales came in at $1.6 million, up 43% on a
Research and development (R&D) expenses declined 21.2% from
the year-ago period to $4.1 million, mainly due to the completion
of enrollment in the myocardial infarction study with Prochymal.
General and administrative expenses declined 57.6% from the
year-ago period to $1.4 million.
Osiris has made significant progress with stem-cell therapies.
The upside potential to lead candidate Prochymal could be enormous.
Prochymal gained approval in Canada and New Zealand in the second
quarter of 2012 for the treatment of acute graft-vs-host disease
(GvHD) in children. Prochymal is the first manufactured stem cell
product to gain approval and the first treatment to gain approval
Besides being approved in Canada and New Zealand, we note that
the product is available under an Expanded Access Program (EAP) in
seven countries, including the US. The company expects to launch
Prochymal with reimbursement in Canada later this year. Osiris is
working with regulatory agencies across the world to provide them
with the information needed to approve Prochymal.
Osiris is studying Prochymal for several indications including
Crohn's disease, acute myocardial infarction, and type I diabetes,
most of which are blockbuster indications.
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 presented encouraging interim data
from this trial in July 2012.
Low Visibility on Sanofi Agreement
We continue to have low visibility on the status of Osiris'
development and commercialization agreement with Genzyme, a
) company, for Prochymal. Earlier this year, Sanofi, in its fourth
quarter press release, had said that it has discontinued the
development of Prochymal for GvHD. Osiris said that the
announcement was made without its knowledge or advice.
Osiris' President and CEO 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 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.
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
On the second quarter call, Osiris said that the issue is now in
the hands of lawyers. We expect investor focus to remain on the
resolution of this issue.
Neutral on Osiris
We currently have a Neutral recommendation on Osiris, which
carries a Zacks $2 Rank (short-term Buy rating). While positive on
the approval of Prochymal in Canada and New Zealand, the lack of
visibility on the status of the Sanofi deal is concerning.
OSIRIS THERAPTC (OSIR): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
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