Osiris Therapeutics, Inc. (OSIR)
Q4 2008 Earnings Call Transcript
February 27, 2009 9:00 am ET
Randall Mills – President and CEO
Rich Hunt – CFO
Bill Tanner – Leerink Swann
Charles Duncan – JMP Securities
Edward Tenthoff – Piper Jaffray
Eun Yang – Jefferies & Co.
Jason Napodano – Zacks
Previous Statements by OSIR
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I would now like to turn the call over to Dr. C. Randall Mills, President and CEO of Osiris Therapeutics. Please go ahead, sir.
Good morning and welcome to our fourth quarter and full-year 2008 conference call. Today, I will be providing an update of our business and Rich Hunt, our Chief Financial Officer, will provide an overview of our financial performance for the quarter and full-year 2008. I will then outline our priorities for the coming months and we will end with a question-and-answer session.
By any measure, 2008 was an extraordinary year for Osiris and the results speak for themselves, so I'll keep my comments brief today. But here are some of our key accomplishments: We started 2008 by winning a Department of Defense contract fully valued at $225 million to develop and stockpile Prochymal for acute radiation syndrome. We sold our Osteocel business to NuVasive for $85 million in upfront and milestone payments. This transaction not only provided us with significant non-dilutive capital, but importantly allowed us to focus on the commercial launch of Prochymal.
We received approval to initiate the first-ever expanded access program for stem cell product, making Prochymal available to children with life-threatening GvHD. Even while enrolment in our Phase III trial was still in progress, this significant step was followed by similar approval in Canada and more recently, by the inclusion of adult patients in the United States.
In 2008, we formed a major strategic alliance with Genzyme Corporation. The largest of its kind for a stem cell product worth up to $1.4 billion in development and commercialization for Prochymal and Chondrogen. What is even more impressive about this transaction is that we retained sole rights to these products in the United States and Canada. And we finished the year by completing enrolment in the first worldwide Phase III stem cell trial for the treatment of steroid-refractory GvHD and importantly reached agreement with FDA regarding the timing and content of the submission of the first marketing application for a stem cell product.
There is no shortage of attention on stem cell therapy right now, so it's reasonable to ask what makes Osiris different. First, it's our practical experience working with stem cell therapeutics which is unmatched in the industry. At Osiris, we have spent 17 years responsibly developing the mesenchymal stem cell for therapeutic use. In 1998, we treated our first human recipients in FDA sanctioned clinical trials. Since then, we have treated over 1000 patients with the therapy, completing seven different Phase I and Phase II trials. During this time, our company has learned many valuable lessons and gained the type of insight that can only come from repeated clinical use.
Another key point is our market approach. We are not trying to start with the largest potential markets for the technology. Instead, we are going after serious and significantly underserved indications that have no good treatment option today. Take GvHD for example; it's life-threatening. There are no approved treatments and the patients are concentrated in a manageable number of transplant centers.
We recognize the challenges inherent to bringing the world's first stem cell therapy to market and we recognize that we must crawl before we walk. Once on the market, the technology has vast potential. But the first priority needs to remain getting the technology on the market. And so, that is what we're going to do.
The third Osiris difference is our business model. Our stem cell products are mass produced from only the most-healthy young adults. They are shipped in inventory at the point of care where they are ready to be used when needed. The products are easily administered in the outpatient setting and importantly, can be given multiple times if necessary. This model is not only financially attractive but practical as well.
Quality matters when it comes to patient care. Selecting only the most suitable donors and adhering to strict GMP manufacturing processes ensure product consistency that is demanded by physicians and regulatory agencies alike. In 2008, Osiris was respected by the FDA's health officials from the states of Maryland and Florida, and the American Association of Tissue Banks, and we passed each inspection without significant findings.
And lastly, our resources make Osiris different. We ended the year with over $123 million in cash, investments, and receivables. We expect an additional $45 million this year from our Osteocel transaction. We have a great partnership with Genzyme that provides us with additional financial resources; but importantly, also the expertise necessary to get the job done from a regulatory and commercial standpoint. And of course, we have our own internal resources; the most experienced team in this industry, an outstanding group of hardworking professionals that share the same beliefs, values, and mission.