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Osiris Therapeutics Inc. (OSIR - Analyst Report) reported a fourth-quarter loss of 8 cents per share, narrower than the Zacks Consensus Estimate of a loss of 15 cents. However, year-ago earnings were 15 cents per share. Revenues for the quarter came in at $2.9 million, slightly below the Zacks Consensus Estimate of $3.1 million but well above the year-ago revenues of $0.8 million.

Full-year 2012 loss came in at 34 cents per share, narrower than the Zacks Consensus Estimate of a loss of 41 cents per share. Year-ago earnings were 45 cents per share. Full-year revenues came in at $7.8 million, missing the Zacks Consensus Estimate of $12 million but well above the year-ago revenues of $1.3 million.

Quarterly Highlights

Biosurgery product revenues came in at $2.9 million, significantly above the year-ago revenues of $0.8 million.

Research and development (R&D) expenses declined 26.2% from the year-ago period to $3.1 million, mainly due to the wrapping up of some of the trials being conducted with Prochymal. General and administrative expenses increased 20% from the year-ago period to $1.8 million due to higher commercial activities in the Biosurgery segment.

Pipeline Update

Osiris has made significant progress with stem cell therapies. The upside potential to lead candidate Prochymal could be enormous. Prochymal gained approval in Canada and New Zealand in the second quarter of 2012 for the treatment of acute graft-vs-host disease (GvHD) in children. Prochymal is the first manufactured stem cell product to gain approval and the first treatment to gain approval for GvHD.

Osiris is working with regulatory agencies across the world to provide them with the information needed to approve Prochymal.

Osiris is studying Prochymal for several indications including Crohn’s disease and acute myocardial infarction, which are blockbuster indications.

As far as the Crohn’s disease indication is concerned, Osiris said that enrolment for a phase III study continues. The company is actively looking for a partner for Prochymal. Last year, Osiris had regained commercial rights for Prochymal and Chrondogen from Sanofi (SNY - Analyst Report).

Osiris currently carries a Zacks Rank #3 (Hold). We are pleased with the performance of the company’s Biosurgery segment. However, while we are impressed with Osiris’ progress in cell-based therapies, we note that any pipeline setbacks would weigh heavily on the stock.

At present, companies like Cytokinetics, Inc. (CYTK - Snapshot Report) and Agenus Inc. (AGEN - Snapshot Report) look more attractive. While Cytokinetics is a Zacks Rank #1 (Strong Buy) stock, Agenus is a Zacks Rank #2 (Buy) stock.


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