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Executives

C. Randal Mills – President and CEO

Phil Jacoby – CFO and Corporate Secretary

Analysts

Duane Nash – Wedbush Securities

Edward Tenthoff – Piper Jaffray

Charles Duncan – JMP Securities

Lunaan Zee [ph] – Jefferies

Osiris Therapeutics, Inc. (OSIR) Q1 2010 Earnings Call Transcript May 7, 2010 9:00 AM ET

Operator

Good morning, everyone. Welcome to the Osiris Therapeutics first quarter 2010 earnings conference call. Before we begin, I would like to remind everyone that this conference may include forward-looking statements that involve uncertainties and risks. Actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in the section entitled Risk Factors in our filings with the Securities and Exchange Commission. As a reminder, today's call is being recorded.

I would now like to introduce – turn the call over to Dr. C. Randal Mills, President and CEO of Osiris Therapeutics. Please go ahead, sir.

C. Randal Mills

Thank you. Good morning and thank you for joining us on our first quarter 2010 conference call. I will start with some focused comments around the progress we are making advancing our lead stem cell therapy Prochymal in the United States and around the world for the treatment of graft versus host disease. I will also be providing an update of our Crohn’s, Type 1 diabetes, and acute MI programs as well. Our CFO, Phil Jacoby, will provide a summary of our financial performance for the first quarter. And finally, I will have a few closing comments regarding our priorities for the coming months and we will then take questions.

Let me start with our GVHD program. As I mentioned on our last call, our priority has been to work with the FDA to come to agreement on the outstanding elements required for a successful submission. Central to these efforts was to gain consensus around the statistical analysis plan or SAP that has been used to evaluate the data from Protocol 275, our program for pediatric patients with treatment resistant graft versus host disease.

We have now been given the go-ahead from FDA to execute the SAP. The SAP will be performed by our contract research organization and the results will form the basis on a pivotal clinical study report. To help people understand where this piece fits into the overall process, executing the SAP provides us with the final major data set that will be used in support of the clinical section of the Common Technical Document and in the case of the United States Food and Drug Administration, the Biological License Application, or BLA.

Since the execution of this SAP, Protocol 275 adds new content to the overall scope of our BLA. We will be holding another pre-BLA meeting with the FDA consistent with their internal procedures. It is important to understand that we will not complete the BLA submission until after this meeting. Our aim is to build consensus for the specific indication we are requesting approval for, by providing FDA with compelling data in a manner they request. We do not intend to submit a BLA to the agency before we have reached this consensus. There are no shortcuts just because Prochymal is a stem cell product.

FDA is holding us to the standard of proving Prochymal as safe and effective. So that is where our focus remains. We are going to continue to be very conservative and limited our comments about the ongoing submission process. Please note that during this time, we will continue to make Prochymal available to children and adults with refractory GVHD who are in need of our help. We appreciate your understanding and we will provide update on our progress as circumstances warrant.

We continue to make progress in territories outside the United States with our partners, Genzyme and JCR Pharmaceuticals. A clear indication of this progress is the $1 million milestone we received from our Japanese partner JCR for regulatory progress in Japan. This milestone demonstrates JCR’s commitment to the development of Prochymal for GVHD, and we are proud to stand with them.

Now let me turn to our other programs. We recently provided an update on our Crohn’s program. Recall that the program originally consisted of two linked trials; one, which evaluated Prochymal’s ability to induce remission in Crohn’s patients who had failed other available treatments for the disease. This was Protocol 603. The second trial, Protocol 610, was a maintenance trial that re-randomized only those patients responding to the induction therapy.

We suspended enrollment in 2009 due to concerns that the entry criteria for the maintenance trial influenced patients to over-report response to therapy in the induction trial, thereby making it difficult to detect a true treatment effect. Essentially, the trial design was bleeding off power. In fact, one dose arm had crossed a predetermined futility boundary. Meaning, it was unlikely to show a significant benefit at the end of the trial.

At that time, we made the decision to keep the trial blinded and to keep the clinical sites active so that patients can continue to be followed. When all 207 patients who were initially enrolled in the trial completed the study, our contract research organization began their procedures to collect and analyze the full dataset, which ultimately led to the announcement we made a few days ago.

Regarding the trial and its outcome, the first thing that is important to appreciate is just how sick the patients are at the time of entry into the study. Most of these patients have been suffering from their disease for more than 13 years. The majority of patients have failed at least two immunomodulators and two biologic agents and had an average Crohn’s Disease Activity Index or CDAI of greater than 350 in all three arms prior to treatment.

As a reminder, the primary endpoint for the trial is the proportion of patients experiencing disease remission within 28 days of initiation of therapy with Prochymal compared to those receiving placebo. For a patient to reach the primary endpoint of disease remission, their CDAI score must fall to below 150. In this trial, this meant that they would have to have on average a 200-point drop in CDAI to be considered treatment success, making this endpoint very robust. For context, Remicade was originally approved on a 70-point drop in CDAI.

Surprisingly, we were notified that despite our initial concerns regarding the trial design, the effect size for one of the Prochymal dose arms is consistent with the original statistical assumptions of the protocol and is significantly outperforming placebo in the protocol population and is approaching statistical significance in the intent to treat or ITT population. Keep in mind that these results are from a trial that is only partially enrolled.

Additionally, the analysis showed that Prochymal continued to demonstrate a benign safety profile with no significant differences in any of the pre-defined safety outcomes compared to placebo. Because these results were so striking, we held discussions with our clinical and biostat colleagues at Genzyme as well as the FDA. The outcome of which was a decision to keep the trial blinded and to resume enrollment with the best performing Prochymal dose arm and the placebo arm.

The trial has been repowered to compensate for the statistical penalty incurred by the interim analysis of the ITT population and the maintenance trial has been discontinued to remove the potential for bias. Once the trial has been fully enrollment, the complete unblinded dataset will be available. At this time, we are not able to forecast when the enrollment will be complete. But we believe, given our prior experience enrolling Biologics Refractory Crohn’s patients, that the enrollment period is expected to continue through at least 2010.

Now to Type 1 diabetes. We recently completed an enrollment in our 63-patient Phase II clinical trial evaluating Prochymal in patients with new onset Type 1 diabetes. This important double-blind placebo controlled trial will produce the first well-controlled clinical data on a stem cell treatment for Type 1 diabetes. The trial is being conducted in partnership with the Juvenile Diabetes Research Foundation.

Most recently, we received orphan drug designation from FDA for this indication. Orphan drug status provides us with market exclusivity and the indication for up to seven years following approval irrespective of patent life. Orphan drug designation also eliminates FDA filing and registration fees and provides tax incentives for as much as 50% of the clinical development costs of the product. Recall Osiris currently holds orphan drug designation for Prochymal used in this treatment of GVHD as well.

I will conclude with few comments on our acute myocardial infarction program. We are currently enrollment a 220-patient placebo-controlled Phase II trial to evaluate Prochymal for the treatment of severe MI. This program is the national progression from our highly successful double-blind, placebo-controlled Phase I trial on acute MI, which showed that Prochymal was not only well tolerated in this population but produced significant improvements in several key endpoints over patients receiving placebo.

With approximately 1 million patients each year experiencing a heart attack in the United States alone, this program represents the largest single market opportunity for Prochymal currently in human clinical trials. Our goal is to use the data from this high quality, well controlled trial to appropriately design and power pivotal, which would be the first of its kind for stem cell product in this indication.

With that, I’ll turn the call over to Phil Jacoby, our CFO, to cover the financial highlights.

Phil Jacoby

Thanks, Randy. Good morning, everyone. I will now briefly discuss the company’s first quarter financial results. We finished the first quarter with $91 million in cash, receivables, and short-term investments. Our balance sheet continues to be very strong without any debt. During this quarter, we earned a $1 million milestone payment from JCR Pharmaceuticals, as they continue their development progress of Prochymal for the treatment of GVHD in Japan.

Our revenues for the first quarter were $11.4 million this year compared to $12.7 million in the comparable period of 2009. Our first quarter 2010 revenues consisted of $10 million recognized from the Genzyme collaboration agreement, the $1 million milestone payment from JCR, as well as smaller amounts from our collaboration with the Juvenile Diabetes Research Foundation, and our government contract. Our first quarter 2009 revenue included $10 million from the Genzyme agreement and $2.6 million from our government contract.

Total R&D expenditures for the first quarter were $6.6 million this year compared to $18.6 million for the same period last year. The decrease in R&D when compared to the prior year reflects the completion of our patient treatments in our GVHD and Crohn files.

General and administrative expenses for the quarter were $1.8 million compared to $2.9 million of G&A expenses incurred in the first quarter of last year. The decrease in G&A is primarily attributable to reductions in our non-cash share-based compensation expense related to the deferral of issuance of stock for Board compensation until the second quarter of this year.

Share-based compensation allocated to G&A during the first quarter of this year was $184,000 compared to $774,000 in the same period of 2009. We expect it would be subject to the federal alternative minimum tax in 2010 and it provide us with income taxes at the annual effective rate of 22% during the first quarter of this year.

We reported net income for the first quarter of 2010 of $2.4 million compared to a loss from continuing operations of $7.9 million in the first quarter of 2009. This represents basic and diluted earnings per share of $0.07. Net cash used in operating activities for the first quarter of 2010 was approximately $11 million, which reflects a net decrease in our year-end account payable of about $3.6 million.

With that, Randy, I’ll turn the call back to you.

C. Randal Mills

Thanks, Phil. In closing, I’d like to reiterate our commitment to bringing this critically important technology to market, with our initial focus on the devastating under-served patients with GVHD, but with our ultimate goal of having a much broader impact by treating conditions like Crohn’s, diabetes and heart disease.

To that end, our priorities remain unchanged. We will continue to work diligently with the regulatory agencies here in the United States and in key markets around the world to gain approval of Prochymal for GVHD. We will continue to expand the value of the technology by proving the clinical benefit of Prochymal in diseases beyond GVHD. And finally, we will take full advantage of our biosurgery platform to develop a new pipeline of high value products for surgical applications.

I want to express my appreciation to everyone involved, the Osiris team, our physician investigators, and our partners at Genzyme, JCR and JDRF for their support, dedication and hard work in helping us to fulfill our commitment of making a positive impact in patients’ lives. I would also like to thank you, our shareholders, for your commitment to our company and our mission of winning approval for the first stem cell therapy.

With that, I’d like to open up the call to questions.

Question-and-Answer Session

Operator

(Operator instructions) Our first question comes from Duane Nash of Wedbush Securities.

Duane Nash – Wedbush Securities

Good morning, Randy, and thanks for taking the questions.

C. Randal Mills

Absolutely, Duane.

Duane Nash – Wedbush Securities

Can you give any color on which indications you will pursue in GVHD, for example, all of GVHD or subsets such as pediatric or liver?

C. Randal Mills

Right. Well, we’re not – so one of the things that we want to make sure we do and part of our reason for not over-disclosing or disclosing the specific indications is we haven’t specifically now got down with FDA and other regulatory agencies around the world that we’re working on. And so clearly there are certain areas of GVHD where the drug seems to have a significant clinical benefit. Those being patients with steroid-refractory GVHD, particularly of the liver and gastrointestinal track, which are the cumulous deadly forms, as well as children with refractory GVHD.

Conversely, we also don’t want to develop a drug and bring a drug to market that doesn’t fit an unmet medical need. And so we are not pursuing at this time using Prochymal for the treatment of new onset, mild, skin-only GVHD where that form of the disease seems to be very well managed with conventional steroid therapy alone. But we will have more specifics around the actual indications for the individual territories once those specific negotiations are complete. But until that time, I really don’t want to speculate, instead I want to – I don’t want to limit ourselves or over-describe where and what indications specifically the drug will be used for.

Duane Nash – Wedbush Securities

One related question, which you may not want to answer, but the – earlier there was somewhat of a debate as to whether the drug could be approved in any indication, whether total GVHD or even a subset without running additional clinical trials. That seems to be an open question historically. Is there any more clarity there yet?

C. Randal Mills

We’ve had regulatory – we've had discussions of regulatory agencies both in the United States and around the world. And I would say, we believe there is an opportunity to have the drug approved off of the data that we have now. We will not be able to say that with any certainty until the drug is approved. But from our discussions, we believe that the opportunity to do that clearly exists and there is a receptivity by regulatory agencies to receive and evaluate the data in the form of CTD submissions and regulatory filings.

Duane Nash – Wedbush Securities

Great. And one last question, you’ve often given updates on survival on the continuous access program in children. Do you have any update this quarter?

C. Randal Mills

We just didn’t, because we put out at our most recent conference we went to, the American Society of Hematology, we had two presenters give out fairly comprehensive uptick. And in preparing for today’s call, we actually just didn’t go and do it. It wasn’t in our mission for any reason, just other than we had recently spoken on the topic. Just so and I would tell you then that I just don’t have it in front of me.

Duane Nash – Wedbush Securities

Sure. I’ll look it up. Thank you.

C. Randal Mills

Thank you.

Operator

Thank you. Our next question comes from Edward Tenthoff of Piper Jaffray.

Edward Tenthoff – Piper Jaffray

Thank you very much, and congratulations on the exciting news on the Crohn’s side. That’s a very nice pleasant surprise. I guess when it comes to – can you share any more detail about how many incremental patients you will enroll in that study?

C. Randal Mills

Sure. So we put – we have 207 on it now, and we are targeting enrollment, I think, of around 300 patients total in that trial. So, about 45 more or so.

Edward Tenthoff – Piper Jaffray

Great. And how does – can you tell us anything about the statistical powering changes?

C. Randal Mills

I’m not great at doing it, but the statistical powering doesn’t change a lot. So a couple of things to keep in mind. The effect size for the trial was pre-established as a ratio. So whatever placebo is doing, the protocol assumption was that the Prochymal arm – Prochymal would have to do 75% better or 1.75 times placebo. And so one of the issues we had and really our essential concern about having higher than expected placebo response rate, and as placebo goes up, you have to have disproportionately higher and higher Prochymal response rate, and that became a problem.

What we’ve learned is that the Prochymal and placebo – at least the Prochymal effect size is consistent with the original protocol design. So the original trial was designed for a power greater than 80%. And so we really didn’t have to adjust too much for that because everything is in line and consistent with our expectations for effect size. There was a – there was some repowering done about the interim analysis hit that we take – it's pre-specified in the protocol there is no Brian Flemming [ph] spending at a function for us that was pre-defined in the protocol for success of interim analyses. And that was what was employed. But beyond that, I don’t know the actual specific numbers. But that’s how that was done.

Edward Tenthoff – Piper Jaffray

And that’s really helpful. Thanks very much.

Operator

Thank you. (Operator instructions) Our next question comes from Charles Duncan of JP Morgan Securities.

Charles Duncan – JMP Securities

It’s Charles from JMP Securities, just to clarify. Thanks for taking my questions, Randy.

C. Randal Mills

We know where you are from, Charles.

Charles Duncan – JMP Securities

Thanks. With regard to the statistical analysis plan, you are making some progress there. Could you give us some sense as to when you will be able to start that analysis and complete it and when you anticipate being able to have data, which you have a top-line release or which you just submitted to the FDA?

C. Randal Mills

Right. So good questions and probably worth a little bit more detail, so people have an understanding. First thing that’s important to understand about this is, we don’t do it. It’s not something that we run. We come to agreement on the statistical analysis plan with the United States. We also did it with the regulatory agencies around the world. And the regulatory agencies gave an opinion mark [ph]. So we had to come up with a consensus just for the analysis plan. Once we have that done, we get it signed off. So it’s formally locked. And then that is given to our contract research organization, which has the datasets and the databases. Those datasets get locked, and then that statistical analysis plan gets run. There is a series of QC functions, which then have to take place and then a clinical study report as well as tables for years of listings gets generated off of that. And so that process takes a little bit of time.

And then as I mentioned in the call, once we have that, the next step for us is at the request of the agency is to go back and then hold a pre-BLA meeting again with the FDA regarding this specific content. And so because we will need that information for the briefing package, for the pre-BLA meeting, those two things necessarily have to happen in series and can’t happen in parallel. Typically, it can take a few months to generate a full CSR, including running the SAP and the quality control checks and then the subsequent report generation. And then it will be – it really then will be determination of how quickly we get slotted in to the FDA to hold the meeting.

And then after that meeting is held, then I think we will probably have a lot to say. There are some specific analyses that have taken place. But largely, the data – I mean, the most important aspects of the data from Protocol 275, I think, are pretty well understood. It’s a multi-line refractory patient population, which would not show an improvement. And in fact a vast majority of patients were either were progressing or had maximal GVHD prior to entry, but no patients – literally no patients were improving prior to initiation of therapy. And then within 28 days we have a 64% response rate, and that ended up being predictably survival. So that’s the gist of the data that’s being formulated in the SAP.

Specifically, the discussions with the FDA were specifically around the content of that, specifically like tables, figures and listings would be generated, a lot of interest around the demographics of the patients in describing what types of patients they are. Central to this dataset is the fact that these patients are very treatment resistant. They are refractory patient populations with essentially no good alternative and an incredibly poor prognosis. And so a lot of the SAP centered around the demographics of these patients go to make that point as clear as possible.

Charles Duncan – JMP Securities

That’s helpful. It does seem like a big jump. But would you anticipate this to be a six-week or a six-month kind of turnaround?

C. Randal Mills

Probably a little bit longer than six weeks. And I would hope to have it done before six months. So in between those two. I would hope but – we can’t control, but we certainly – I think the part of this process is more known as how quickly we can generate the SAP – how quickly (inaudible) can execute the SAP and generate the study reports. The second part of it is putting it into a briefing package for FDA and then just scheduling the meeting, which we would hope to have sometime this summer. But with summer, it can often be difficult to get – when we hold the meeting with FDA, it usually draws a pretty large crowd. And so, to get all the right players at the meeting in the summer may be a little bit difficult. So that part is out of our hands. And so that’s every reason on updating – some update on when it could happen.

Charles Duncan – JMP Securities

Yes. I mean, that makes sense. But it is reasonably near term. It’s not end of the year kind of thing.

C. Randal Mills

We would (inaudible) hope that.

Charles Duncan – JMP Securities

With regard to the SAP, I know that you really can’t talk about the details of the analyses at this point, but could you give us some color on some of the – perhaps the consultants or things that you are looking at? Did you, for example – not to name anyone’s name, but did you happen to use, for example, Tom Fleming from the University of Washington in that process?

C. Randal Mills

For generating the SAP?

Charles Duncan – JMP Securities

Yes. For – yes. Essentially you –

C. Randal Mills

Yes. Most of the discussion around the SAP was actually – was reasonably technical questions that the FDA had primarily, and then some other regulatory agencies in a more minor way, around how they wanted to see demographics presented. It sounds – it's kind of an interesting process, but how certain demographic tables are presented, how patients were shown? Specifically, we create what’s called shells when we’re working on an SAP, which basically shows a mockup of every table that’s going to be created and a mockup of all of the listings that are going to be created out of the SAP, which can be thousands of pages. And they were just trying to go through questions and comments around.

The FDA wanted to see things in particular ways, and they want a particular disease dates called out and broken out. So it would allow them – and I think what it centers around is allowing FDA and other regulatory agencies to put our data into context with patients of like disease states. And so – an important thing to remember, and maybe this is where your question is going, GVHD really isn’t GVHD. The patient with Grade B GVHD of the skin-only has had it for three days. That’s (inaudible) same product doses as a six-month old with stage IV liver, gut and skin GVHD. That’s failed following the therapy. So – and because there are so many different variables that affect outcomes, how long you had the disease, the number of organs involved, the number of treatments tried, whether you were malignant or non-malignant before transplant, meaning were you transplanted for generic disease or for malignancy. A lot of things go into prognostic –significant prognostic factors. And so the FDA wanted those broken out very clearly. So they could evaluate these results in context of how sick these patients are.

Charles Duncan – JMP Securities

That makes sense to me. Now the other – my last question is, the process with the pre-BLA meeting, at that point will you be able to give some color on ex-US regulatory plans specifically in your – and what do you think those would be?

C. Randal Mills

It will be a good – that's a good question. Not very linked, FDA and our ex-US regulatory efforts. There are some things though that we were waiting for the FDA to get comfortable with before we went ahead and did another regulatory specific. Just to give you a specific example. We didn’t want to run the SAP for other countries until we got consensus on the SAP from the Food and Drug Administration. In case they wanted it changed, we didn’t want to have essentially multiple SAPs running or multiple analyses running on the same dataset. So we were on some things allowing the FDA to leave. Our hope is that we will have, out of the pre-BLA meeting, clarity from FDA around what’s going on. And by that time, hopefully, we will also be in a position to disclose more specifically some of our activities with regards international regulatory filings.

Charles Duncan – JMP Securities

And then my final question – I said the last one was my final, but it occurred to me – on Crohn’s, your strategy on Crohn’s seems like it is both a viable regulatory strategy, but it also may be a way to grab an adult population, some additional experience in an adult population should be – drug be approved only in GVHD for peds. Do you think that that could be something that you pursue in terms of just, call it, I know that you guys aren’t pursuing off-label use, but providing data in an adult population? Or is that something that you will pursue from a regulatory standpoint?

C. Randal Mills

Well, for our Crohn’s program from a regulatory standpoint, I think this is important for everybody to understand, is being conducted in conjunction with in our position too, the thoughts and which is the Food and Drug Administration. So when we receive the news about the trial, our first step was to consult Genzyme, as they have experience in these things, which is beyond ours. The next step after that was to contact the FDA over the next steps. And we had a series of conversations with the FDA about not just what was the appropriate next step, but specifically how to do it and making sure things were kept blinded and the numbers of patients and all of those types of decisions.

And so that I think – as we talk about the regulatory standpoint, it’s important to know our strategy centers around the FDA and it really doesn’t matter whether it’s GVHD or Crohn’s, diabetes or acute MI. We, in simple terms, don’t want to be forcing something down the FDA throat. We want to be in a position where if we file something with the FDA, we know that the FDA wants that file. We know that they want that submission. And we won’t file something with the FDA until we’ve done that. And so we go to the extremes almost to bring them along in the process in all phases of these things. And an ultimate brand, I think that strategy has served us well. We have tremendous respect for the agency, and I think as a result, the agency has been very responsive to our questions and our concerns. And I think their consideration (inaudible) has been quite thoughtful throughout all of this.

Regarding adult patient population, Crohn’s is a disease state, which clearly affects pediatric patients as well as the adult patients. This trial is an adult-only trial. Our second – upon completion to this and assuming the data continues to be successful in the remaining patients as it was in the first 207. Our plans are to sit down with FDA and design a pivotal Crohn’s program. And at that time, I think it is quite possible that we would be able to have either in parallel or contain within the same trial a pediatric arm. But primarily our goal with the Crohn’s program – our initial focus on the Crohn’s program are going after the biologic refractory adults. That data will be made available when this is all over and done. But obviously we cannot and will not use any of that data for off-label promotion of Prochymal that’s inconsistent with FDA law.

Charles Duncan – JMP Securities

That makes sense to me, Randy. Thanks for the color. Good luck with the analysis in peds and I look forward to additional visibility on those results and the progress with the FDA.

C. Randal Mills

Great. Thank you.

Operator

Thank you. Our final question comes from Lunaan Zee [ph] of Jefferies.

Lunaan Zee – Jefferies

Hi, thanks for taking my question. Randy, when you guys cross the futility boundary for one of the arms in the Crohn’s study last year, you even disclosed which arm that was. Can you tell us at this point if those are just low dose or the high dose arm that cross that boundary?

C. Randal Mills

No. All dosing and all specific data remains blinded.

Lunaan Zee – Jefferies

And during the analysis you guys just ran on the data, have you looked at absolute drop in CDAI? The reason I’m asking this question is, and you guys did not previously installed pretty high response in the placebo arms. I’m just wondering if you get into a situation where the percentage of patients below 150 hit when you look at the absolute between placebo and the treatment arm that the difference to be minimal in just the [ph] high placebo response.

C. Randal Mills

Right. I’m not sure that I understand the question. But I think I do. So let me take a shot at, sort of explain this. I think you’re hitting on something where – I think that’s important – that's important to understand and why the primary endpoint of disease remission appears to be holding up despite what we believe is a trial design, which caused overall patient reported responses to be higher across all groups. The high placebo response rate information that we have comes from the fact that we knew the percentage of patients that were reaching 100-point drop from the induction trial, which made them eligible to go into the maintenance trial. And percentage, and this goes back to when the trial was stopped, was something along the lines of 56%. So 56% of all of our patients going into the induction trial were experiencing a 100-point drop, and that was high.

What we didn’t know at the time was that our average CDAI score was 350 for these patients entering. Meaning – so, for a patient to be eligible to go from the induction trial to the remission trial, they needed a 100-point drop, but they only needed a 100-point drop. So they needed to get from 350 to 250. And 56% of the patients did that. But in order for them to hit the primary endpoints, they would need to be less than 150. So they would need to have a 200-point drop.

And so while it seems like patients were over-reporting the criteria to get into the maintenance trial, the 100-point drop, it seems like it may have ended there and that the disease remission endpoint was robust enough that the bar was high enough to where it separated out those that were just over-responding versus those who are actually having treatment effect. That is the hypothesis. We don’t know that for sure. But it would certainly explain why we would have such a high across the board placebo – just across the board response rate of 100-point drops, but still being able to get resolution on the endpoint in disease remission, which at the end of the day they are far more important endpoint and the primary endpoint for the trial.

Lunaan Zee – Jefferies

Okay. And just to clarify, you guys are not planning to file for Crohn’s based on this study? Or if I heard you correctly, you guys are looking to run another pivotal study. Can you just give us a little more color on the potential timeline of that study and when you guys might be possibly file sort of for this indication?

C. Randal Mills

So – we would be more conservative. So the conservative statement is, we don’t anticipate filing on this. We say that now though in advance of having the full dataset. We did not anticipate these patients to be as sick as these patients are. At the end of this trial when we have the full dataset, if we’re talking about a very sick disease state – a population (inaudible) offset their therapeutic options and if the results show to be very robust in a very – in a relatively large trial – we're talking about a trial now with over 300 patients in it. And the drug continues to demonstrate a benign safety profile at all the other indications going on. Keep in mind, we’ve now treated over 1,200 patients with the drug. It’s in the realm of possibility that we could file. But we are not planning on that. That’s not – we're not sort of – we're not hoping that that’s what happens. We are planning on having to do a pivotal trial for this. But I would say the potential exists that we could have some sort of accelerated program. Again, the data in totality warrants that approach. But we won’t know that until we see the data.

Lunaan Zee – Jefferies

And when might we see the data for the trend setting [ph]?

C. Randal Mills

Well, yes. I mean that – we're going to – we will take some time to have a clear understanding. We anticipate that getting to 300 patients is going to take us at least this year. There are similarity and that means that will need to flow through and unless it started training biologics refractory Crohn’s patients, based on our previous experience, it does take some time to get these patients into a trial. Keep in mind there is a pretty substantial watch-out period prior to enrollment. So there will be a little delay for the patients to actually get up on treatment. But we will do it as fast as we can. When we have some more color around it, then we will let you know.

Lunaan Zee – Jefferies

All right. Thanks so much.

C. Randal Mills

Thanks.

Operator

Thank you. Our final question comes from Edward Tenthoff of Piper Jaffray.

Edward Tenthoff – Piper Jaffray

Great. Thank you very much. I’m just looking at some data coming out of a cardiac study over in Europe today with adipose-derived stem cells. And I was wondering if you guys had anyone over at the (inaudible) study and we’re seeing anything interesting come out of that.

C. Randal Mills

That unfortunately I don’t know about. So I’ll look into it and – we don’t have anybody there. I would tell you, some of the other studies out of here, particularly the bone marrow studies, (inaudible) which is from a business model standpoint not something we really love, but has been fairly impressive and I think quite encouraging. And obviously we’re very pleased with the placebo-controlled dataset we’ve generated so far and are quite hopeful that our current trial is going to be pretty significant. Again, I would also point out a very large trial, the double-blind placebo-controlled trial. So we are certainly excited about that. No, I’m not familiar with that data, but we’ll take a look at it.

Edward Tenthoff – Piper Jaffray

Great.

Operator

Thank you. That concludes our Q&A. I would like to turn the call back to Dr. Mills for closing remarks.

C. Randal Mills

Great. Well, thanks, everybody. This concludes our conference call for today, and hope you have a great day. Bye.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect.

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Source: Osiris Therapeutics, Inc. Q1 2010 Earnings Call Transcript
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