Osiris Therapeutics, Inc. OSIR reported second-quarter 2015 earnings of 3 cents per share, well above the year-ago loss of 4 cents per share. Total revenues in the quarter shot up 78.2% year over year to $23.7 million.
Quarterly Details
Osiris Therapeutics’ wound care business continued to perform well in the second quarter. The company reported that Grafix coverage has increased to 123 million lives, up from 25 million in the first quarter. The company also reported a significant increase in the number of accounts ordering and the number of patients treated. Osiris Therapeutics said that it remains on track to have 1,000 high volume wound care clinics ordering Grafix this year. Grafix repeat usage also remains high.
Research and development (R&D) expenses increased 116.8% from the year-ago period to $2.3 million. R&D spend is expected to increase this year due to additional studies being conducted on Grafix to support the planned Biologics License Application (BLA), the development of new products and continued product improvement efforts. Osiris Therapeutics said that it has started preparing for the initiation of the phase III confirmatory study on Grafix for venous ulcers. The company has plans to conduct two phase III studies (one in venous foot ulcers and the other in venous leg ulcers) with the goal to gain approval for both chronic wound indications.
Moreover, the company has a study ongoing evaluating the efficacy of Grafix for the treatment of complex diabetic wounds with exposed tendon or bone with data expected by year end.
Selling, general and administrative expenses jumped 54.9% from the year-ago period to $14.5 million reflecting increased commercial activities. The company has a dedicated OR sales force which will not only sell Grafix but is also preparing for the launch of a new product specifically designed for surgical applications. The product launch is expected by year end. While the company did not provide details about the product, it mentioned that it is biologically similar to Grafix but comes with increased tensile strength making it more suitable for surgical applications. The new product is expected to overcome current challenges associated with placental derived products used in surgical applications.
Our Take
Osiris Therapeutics continues to perform well – the Biosurgery segment has been gaining traction over the past few quarters with the increased sales effort starting to pay off. Revenues are growing significantly – the sales force effort, improving Medicare and private reimbursement coverage should continue driving revenues. BIO4 and Cartiform should also start driving revenues in the coming quarters.
Osiris Therapeutics is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the health care sector include Actelion Ltd. ALIOF, AMAG Pharmaceuticals, Inc. AMAG and Gilead Sciences, Inc. GILD . All three are Zacks Rank #1 (Strong Buy) stocks.
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