Osiris Therapeutics' net income for fourth-quarter 2009 increases to $15.7M

Osiris Therapeutics, Inc. (NASDAQ:OSIR), the leading stem cell therapeutic company focused on developing and marketing products to treat medical conditions in the inflammatory, cardiovascular and orthopedic areas, announced today its results for the fourth quarter and year ended December 31, 2009.

“While there will be obstacles along the way, we must move forward with courage, determination and urgency. Our partners, our investors, and most importantly our patients deserve nothing less.”

Recent and Full Year Highlights

• Reported data showing Prochymal achieved a 63% response rate when used as a rescue agent in children with end-stage GvHD.
• Achieved significant improvement in response rates over standard of care for both liver and gastrointestinal steroid-refractory GvHD – the two most deadly and difficult-to-treat forms of the disease.
• Submitted additional sections of the Biological License Application (BLA) for Prochymal to the Food and Drug Administration (FDA).
• Received $1.5 million in milestone payments from the Juvenile Diabetes Research Foundation (JDRF) and completed enrollment of the 63 patient Phase II type 1 diabetes trial.
• Expanded the Phase II trial evaluating Prochymal in type 1 diabetes to include pediatric patients.
• Created a new Biosurgery division focused on developing high-end biologic products for use in surgical procedures.
• Published positive data in the Journal of the American College of Cardiology demonstrating the safety and effectiveness of Prochymal in treating heart attack patients.
• Earned and received the full $85.0 million proceeds on the sale of Osteocel.
• Reported cash and short-term investments of $100.7 million at year-end.

“At Osiris, the medical problems we are tackling are some of the most challenging and complex facing healthcare today,” said C. Randal Mills, Ph.D., President and Chief Executive Officer of Osiris. “While there will be obstacles along the way, we must move forward with courage, determination and urgency. Our partners, our investors, and most importantly our patients deserve nothing less.”

Fourth Quarter Financial Results

Net income for the fourth quarter of 2009 was $15.7 million compared to a net loss of $7.8 million in the fourth quarter of 2008. Revenues were $10.8 million in the fourth quarter of 2009, consisting primarily of upfront license fees from the Genzyme agreement and our research, development and commercialization agreement with JDRF. Revenues during the fourth quarter of 2008 were $6.2 million. As of December 31, 2009, Osiris had $100.7 million of cash and short-term investments.

Loss from continuing operations during the fourth quarter of 2009 was $0.3 million compared to $11.9 million for the fourth quarter of 2008. Income from discontinued operations for the fourth quarter of 2009 was $16.0 million. This includes the $15.0 million final milestone payment received from NuVasive, Inc. after their cumulative sales of Osteocel reached the $35.0 million threshold. The creation of the Biosurgery Division in the fourth quarter of 2009 allowed the company to effectively utilize the manufacturing facilities previously used to produce Osteocel, resulting in the reduction of a lease impairment charge recorded in the first quarter of this year. Net income from discontinued operations in the fourth quarter of 2008 was $4.1 million, which reflected the recognition of a $5.0 million milestone payment from NuVasive.

Research and development expenses for the fourth quarter of 2009 were $9.9 million, compared to $15.6 million incurred in the fourth quarter of 2008. The 37% decline in R&D expenses reflects the completion of substantially all clinical work associated with our Phase III clinical trials. General and administrative expenses were $2.1 million for the fourth quarter of 2009 compared to $2.3 million for the same period of the prior year. Net cash used in continuing operations for the quarter was $14.8 million.

Full Year 2009 Financial Highlights

Net income was $14.6 million for the year ended December 31, 2009 compared to a net loss of $33.5 million in 2008. Loss from continuing operations was $23.6 million in 2009 compared to a loss from continuing operations in 2008 of $69.4 million. Income from discontinued operations in 2009 was $38.1 million compared to $35.9 million in the prior year.

Revenues of $44.5 million were recognized in 2009, including $40.0 million from the Genzyme collaboration agreement, $3.0 million from the U.S. Department of Defense (DoD) contract and $1.2 million from the research development and commercialization agreement with the JDRF. Revenues in 2008 were $10.0 million, which included $6.7 million from the Genzyme agreement, $2.5 million from the DoD contract and $0.6 million from the JDRF agreement.

R&D expenses for the 2009 fiscal year were $63.3 million compared to $69.9 million in the prior year. R&D expenses began to decrease in the second half of 2009 as work on Phase III clinical trials was being completed. G&A expenses in fiscal 2009 were $8.8 million compared to $8.6 million in the prior year.