Today’s Daily Alert features a drug company developing novel therapies for serious conditions. Here’s the low-priced, high-potential new pick from Personal Finance.
“Applying stem cells to regenerate healthy human tissue has been the dream of scientists for more than a century. Osiris Therapeutics, Inc. (OSIR), based in Columbia, Maryland, is not only succeeding in this goal but it is the first company to commercialize the process.
“Osiris develops and brings to market compound drugs that incorporate stem cells. The company focuses on ‘living skin equivalents’ and therapies for diseases that have historically resisted all other types of treatment. Osiris takes its name from the ancient Egyptian god of the Afterlife, which is appropriate for a company that gives once hopeless patients new leases on life. ...
“Osiris uses adult ‘mesenchymal’ stem cells, which are especially resourceful for chronic wound treatment and creating living skin. This category of stem cell is akin to biological Legos, with the flexibility to differentiate into a particularly broad range of functioning cells. Since it was founded in 1992, Osiris has treated more patients with mesenchymal stem cells than the entire stem cell industry combined.
“Most stem cell companies are enmeshed in laboratory-based research and clinical trials, with the development of a product still years away, if at all. However, Osiris already is bringing mesenchymal stem cell products to market.
“In May, Osiris announced that it had received authorization from Health Canada, that country’s equivalent of the U.S. Food and Drug Administration, to sell its new stem cell therapy, Prochymal, for the treatment of acute graft-vs-host disease (GvHD) in children. Prochymal is an intravenous formulation of mesenchymal stem cells. The watershed decision marks the world’s first regulatory approval of a stem cell treatment for GvHD, a complication of bone marrow transplantation that kills up to 80% of children affected, often within weeks of diagnosis. Prochymal has the potential to be a blockbuster; Osiris could then use that revenue to develop its other products in the pipeline.
“Osiris’ other clinical development efforts for mesenchymal stem cells include treatments for Crohn’s disease, Type I diabetes and cardiac complications. Osiris produces another potential blockbuster called Grafix, a living skin equivalent that’s the stuff of science fiction. Doctors can peel it off a roll, as if it were Scotch tape, and put it to immediate use on the human body. ...
“In May, Osiris announced results for the first quarter of 2012, ending March 31. Revenue from biosurgery products, the company’s main division that makes stem cell treatments, rose 49% from the previous quarter to $1.1 million. Total revenues were $4.6 million, including license fees from the company’s various partnerships with other biotech firms, down from $10.4 million from the same period a year ago. Net loss for the first quarter of 2012 was $1.3 million, compared to net income of $4 million in the first quarter of 2011. ...
“Osiris has enough cash to cover operating expenses over a long period of time, to ensure survival during the often-protracted clinical trials process. Osiris boasts a market cap of $206.3 million, an operating profit margin of nearly 27% and a return on assets of 15.8% — more than enough to weather any storm.
“As a flood of patent expirations continue to shake up the drug industry, the future winners will be those with the strongest drug development pipelines and the most innovative treatments. Osiris is suitable for aggressive investors looking for a pure play in stem cell therapies. Buy Osiris Therapeutics up to 7.”
- Elliott H. Gue, Personal Finance, June 11, 2012