Osiris Therapeutics, Inc. (Osiris), a US based medical device company, has reported total revenue of $10 million for the full year of 2008, compared with the total revenue of $2 million in the previous year-end. It has also reported net loss of $33.5 million, or $1.05 per share, for the full year of 2008, compared with the net loss of $53.9 million, or $1.89 per share, in the previous year-end.
Recent and full year highlights
Formed major strategic alliance with Genzyme Corporation worth up to $1.4 billion for the development and commercialization of Prochymal and Chondrogen in countries outside the US and Canada.
Sold the Osteocel business to NuVasive, Inc. in a transaction worth up to $85 million in upfront and milestone payments.
Awarded Department of Defense contract fully valued at $224.7 million to develop and stockpile Prochymal for acute radiation syndrome (ARS).
Received approval to initiate Prochymal expanded access program in the US for adult and pediatric patients and in Canada for pediatric patients suffering from life-threatening Graft versus Host Disease (GvHD).
Completed enrollment in first worldwide Phase III stem cell clinical trial for the treatment of steroid-refractory GvHD.
Reported positive two-year data from Phase I clinical trial evaluating Prochymal in heart attack patients.
Completed enrollment of Phase II clinical trial evaluating Prochymal in patients with chronic obstructive pulmonary disease (COPD).
Reached agreement with the FDA regarding the timing and content of the submission of the first marketing application for a stem cell product.
Reported cash, short-term investments and receivables of $123.5 million at year-end.
“In 2008 we successfully executed our strategy to better position Osiris for commercialization of Prochymal,” said C. Randal Mills, president and chief executive officer of Osiris. “Receiving the first approval for a stem cell expanded access program was a significant step forward. Our leadership position in this exciting area of medicine comes from the practical experience and insight gained by having now treated over 1,000 patients in clinical trials. However, we know that our work is not finished. Along with our outstanding partners at Genzyme, we are committed to making Prochymal the world’s first approved stem cell therapy and by doing so, helping patients around the world.”
Fourth quarter financial results
In October 2008, Osiris entered into a strategic alliance with Genzyme Corp. for the development and commercialization of Prochymal and Chondrogen, two novel, late-stage adult stem cell treatments, outside of the United States and Canada. Under the Collaboration Agreement, Genzyme will make up-front non-contingent payments of $130 million ($75 million of which was received in November 2008 and $55 million of which is scheduled for receipt in July 2009), plus potential significant milestone and royalty payments. Accordingly, Osiris will recognize revenue from the up-front payments over the time period needed to complete the multiple deliverables required under the agreement, which is presently estimated to be approximately 39 months. Osiris recognized $6.7 million in revenue from the Genzyme agreement during 2008 and expects to recognize $40 million of revenue in both 2009 and 2010.
Osiris reported a net loss of $7.8 million for the fourth quarter of 2008 compared to a net loss of $21.6 million in the same period in 2007. Research and development (R&D) expenses were $15.6 million for the fourth quarter of 2008 compared to $17.4 million for the same period of the prior year. General and administrative (G&A) expenses were $2.3 million for the fourth quarter of 2008 compared to $1.8 million for the same period of the prior year. R&D expenses were lower in the fourth quarter of 2008 than the previous quarters of the current year, largely due to enrollment completion of the Phase III pivotal trial for steroid-refractory GvHD and the Phase II study for COPD.
Osiris reported a loss from continuing operations during the fourth quarter of 2008 of $11.9 million compared to $23.6 million in the same period of the prior year. The fourth quarter 2007 loss included a $4.8 million non-cash charge related to the induced conversion of $18.8 million of convertible promissory notes.
Income from discontinued operations of $4.1 million was recognized in the fourth quarter of 2008, which primarily reflects the achievement of the first $5 million production milestone under the Osteocel supply agreement with NuVasive, Inc. Income from discontinued operations during the fourth quarter of 2007 was $2.0 million.
At December 31, 2008, Osiris had $123.5 million of cash, short-term investments, and accounts receivable.
Full year 2008 financial highlights
Other sources of revenue in 2008 also included $2.5 million under the U.S. Department of Defense contract for the development of Prochymal to treat acute radiation syndrome, and $0.6 million under an agreement with the Juvenile Diabetes Research Foundation for the evaluation of Prochymal in patients recently diagnosed with type 1 diabetes.
R&D expenses for the full year 2008 were $69.9 million compared to $47.1 million in the prior year, representing the increased clinical trial activity, including increased supplies of Prochymal for use in clinical trials. G&A expenses for the full year 2008 were $8.6 million compared to $6.1 million in the prior year. The increase in G&A expenses reflect the Company’s increased spending on its intellectual property and investment in personnel and systems as it approaches the commercialization of Prochymal.
Loss from continuing operations was $69.4 million for the full year 2008 compared to $57.9 million in 2007. Income from discontinued operations was $35.9 million for the full year 2008, including $30.4 million of gain from the sale of discontinued operations. Income from discontinued operations for the full year 2007 was $3.9 million.