Osiris Therapeutics Inc. (OSIR) reported second quarter earnings of 5 cents per share, flat from the year-ago period and well below the Zacks Consensus Estimate of 11 cents.
Revenues for the quarter came in at $10.4 million, shy of the Zacks Consensus Estimate of $11 million but slightly above the prior-year figure of $10.3 million.
Quarterly Highlights
Second quarter 2011 revenues included the recognition of $10 million under the company’s agreement with Genzyme, now a part of Sanofi-Aventis (SNY).
Research and development (R&D) expenses declined significantly during the quarter to $5.2 million mainly due to the completion of enrollment for phase III studies. General and administrative expenses increased to $3.3 million from $1.6 million recorded in the prior-year period.
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, chronic obstructive pulmonary disease, and type I diabetes, most of which are blockbuster indications.
Osiris submitted a statistical analysis plan (SAP) for Prochymal for the treatment-resistant GvHD indication in pediatric patients to the US Food and Drug Administration (FDA). The FDA has asked Osiris to submit additional information prior to filing for approval of Prochymal as a treatment for GvHD.
Osiris is working on providing the information required by the FDA. 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. In January, Health Canada informed Osiris that it had a few questions on the candidate for the said indication. The agency has also raised questions regarding post-marketing commitments. The company is working on answering these queries.
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 two of its phase II studies, one of which will evaluate Prochymal in patients with new onset type I diabetes. The second phase II trial is studying Prochymal for the treatment of severe myocardial infarction. Osiris expects to report data from this trial in the fourth quarter 2011/first quarter 2012. Meanwhile, data from the diabetes study should be out later this year.
Neutral on Osiris
We currently have a Neutral recommendation on Osiris, which carries a Zacks #3 Rank (short term Hold rating). While we are impressed with the company’s progress in cell-based therapies, we note that any pipeline setbacks would weigh heavily on the stock.
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