Osiris Therapeutics (OSIR) reported a net loss of a cent in the fourth quarter of 2009, well below the Zacks Consensus Estimate of a net income of 23 cents per share. However, net loss in the year ago period was higher at 37 cents, mainly due to lower revenues and higher clinical trial expenses.
Revenues in the reported quarter increased to $10.8 million compared to $6.2 million for the same period of the prior year. Osiris generates revenues from collaborative agreements, research licenses, and government contracts.
For 2009, the company reported a loss of 72 cents, well below the loss of $2.18 reported in 2008. Revenues jumped to $44.5 million, significantly above $10 million reported in 2008.
Revenues in the reported quarter included the recognition of $10 million in revenues under the company’s agreement with Genzyme Corporation (GENZ) for the development and commercialization of Prochymal and Chondrogen.
Osiris also derives revenues under its collaborative agreement with the Juvenile Diabetes Research Foundation (JDRF) for the development of Prochymal for type I diabetes and its contract with the Department of Defense (DoD) for the development of Prochymal for the treatment of acute radiation syndrome.
Research and development expenses were $9.9 million, down 37% from the year-ago period. The completion of substantial clinical work associated with the company’s phase III clinical trials led to the decline in R&D spend. General and administrative expenses declined to $2.1 million for the fourth quarter of 2009, down from $2.3 million recorded in the prior year period.
Osiris exited the year with $100.7 million in cash and short-term investments. The company announced that it received a $15 million milestone payment from NuVasive in November related to Osteocel sales.
Osiris has made significant progress with stem cell therapies. The upside potential for Prochymal, Osiris’ lead candidate, could be enormous. The company 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 (COPD), and type I diabetes, most of which are blockbuster indications.
Osiris recently presented results from a study that showed that Prochymal achieved an overall response rate of 63% when used as a rescue therapy in children suffering from severe treatment resistant GvHD. Data also showed that response to Prochymal significantly improved survival.
Osiris is currently in the process of submitting different sections of a Biologic License Application (BLA) for Prochymal to the US Food and Drug Administration (FDA) for the GvHD indication. The company is also working on gaining approval in ex-US countries.
We currently have a Neutral recommendation on Osiris. More than earnings results, we expect investor focus to remain on the company’s progress with its pipeline. The successful completion of the BLA submission for Prochymal would be a major milestone for the stock.
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