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Osiris Therapeutics (OSIR)

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Osiris Therapeutics (OSIR) reported third quarter earnings of $0.14 per share, well above the Zacks Consensus Estimate of a profit of $0.04 and the year-ago loss of $0.21. Results were mainly driven by lower operating expenses. Revenues of $10.8 million were just above the Zacks Consensus Estimate of $10 million.

Lead pipeline candidate Prochymal has the potential to be a sort of a wonder drug for various inflammatory or tissue damage indications. Prochymal could be a billion-dollar blockbuster product if all development goes well. Meanwhile, the sales opportunity for Chondrogen, the company's second pipeline candidate, could also be significant.

We view the company's collaboration agreement with large-cap biotech Genzyme as a positive. We believe the current share price represents an attractive entry point and maintain our Outperform rating on the stock. Based on third quarter results, we have increased our 2010 and 2011 earnings estimates.

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