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Cash, Partners, Advanced Trials; Osiris Therapeutics

Osiris Therapeutics (NASDAQ: OSIR) has focused on the advancement of mesenchymal stem cell (MSC) technologies and is focused on developing and marketing products to treat medical conditions in the inflammatory, orthopedic, and cardiovascular areas.

Focus: OSIR’s principal product(s) include Prochymal, for the treatment of steroid refractory Graft versus Host Disease (GvHD), acute GvHD, Crohn’s disease, and acute radiation syndrome; treatment of Type I diabetes mellitus, acute myocardial infarction, chronic obstructive pulmonary disease and Chondrogen, a treatment of osteoarthritis and the reduction of pain in the knee.

Market Opportunity: MSC’s offer the opportunity to treat patients in acute settings potentially within hours of the onset of symptoms; for example, a patient with an acute heart attack could be treated upon arrival at the emergency room, rather than waiting as individually customized cells are prepared over weeks or months, as is the case with other cell technologies.  In both animal and human clinical studies, OSIR’s scientists and academic researchers have found that MSC’s are generally not rejected by the host immune system.  This unique feature eliminates the need to tailor MSC’s based on donor matching and means that patients can forgo the harmful side effects of immune suppression.

Collaborators: Agreements include Genzyme Corporation (GENZ) for the development and commercialization of Prochymal and Chondrogen; Juvenile Diabetes Research Foundation (JDRF) for the development of Prochymal as a treatment for the preservation of insulin production in patients with newly diagnosed type 1 diabetes; and JCR Pharmaceuticals Co., Ltd. for distributing Prochymal for the treatment of GvHD in Japan.

Regulatory Status: Two (2) product candidates in clinical trials for a number of indications. Prochymal, an intravenously administered formulation of mesenchymal stem cells, is being evaluated in Phase III clinical trials for 3 indications, including acute and steroid refractory graft versus host disease (GvHD) and also Crohn’s disease. It is the only stem cell therapeutic currently designated by FDA as both an Orphan Drug and Fast Track product.

Bottom Line: Past history; Q3/09 reflected revenues  from collaborative agreements, research licenses, and government contracts. Revenues included the recognition of $10 M in revenue from agreement with GENZ for the development and commercialization of Prochymal and Chondrogen. Osiris earned $0.4 M   from collaborative agreement with the JDRF for the development of Prochymal for type I diabetes, $0.1 M from its contract with the DoD to develop Prochymal for the treatment of acute radiation syndrome, and $0.1 M in royalties from the sale of mesenchymal stem cells (MSCs) sold for research purposes. R&D expenses were $16.2 M .  The completion of enrollment in 3 phase III clinical trials and the associated reduction in site and patient costs led to the decline in R&D spending. G&A expenses declined to $1.5 M ( primarily attributable to reductions in non cash share-based compensation expense which was partially offset by increases in the company’s professional staff in the areas of intellectual property and business development and increases in legal costs related to the intellectual property portfolio).

  • OSIR has developed an extensive intellectual property portfolio to protect our technology in the United States and a number of foreign countries, including 49 U.S. and 268 foreign patents owned or licensed,
  • OSIR trades at $7.39 (52 week range of $5.35 to $21.01) with a market cap of $242.19 M, an enterprise value of $144.17 M with 32.77 M shares outstanding, a 15.11 M share float, a short interest ratio of 2.54 M (14.20 % of float) … $102.89 M in cash, 2.58M in debt and cash of $3.14 a share,
  • PROCHYMAL has already been granted both Orphan Drug and Fast Track status by the  FDA, expediting the development of the stem cell treatment for acute GVHD,
  • OSIR in 11/09 received a payment from NuVasive; the final milestone fee linked to the sale of Osiris’ bone graft stem cell business. NuVasive agreed to buy the Osteocel business in 5/08 for approximately $85 M. The payment was triggered when NuVasive reached $35 M in total Osteocel revenue,
  • 53.67% held by Insiders and 17.50% held by Institutions,
  • OSIR’s Corporate Governance Quotient is better than 19.6% of Russell 3000 companies and 24.4% of Pharmaceuticals, Biotechnology & Life Sciences companies,
  • 38 % of Float Held by 73 Institutional & Mutual Funds including Barclays Global Investors, Vanguard,  Dimensional Funds, Morgan Stanley, State Street, Northern Trust, Portolan Capital Mngt, PanAgora Asset, Padco Advisors and Credit Suisse,
  • In a better position than most of the stem cell companies; cash, regulatory status, solid insider holdings, relatively good for institutional holdings … need I go on,
  • Surprised by SELL by WBB in 1/10… probably due to no news in the near term future,
  • Definitely a BUY, this market will be good to stem cell companies in 2010,
  • 2 key resistance levels to watch out for are $7.50 and $7.54, a break above that levels would be very bullish.