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Osiris (OSIR) Stock Soars After Giving First Glimpse of Its Financials Since Last Year

11/9/2016 6:28:54 AM

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By Mark Terry, Breaking News Staff

Columbia, Md.-based Osiris Therapeutics (OSIR) announced this week that it had preliminary revenue estimates for both 2014 and 2015, as well as anticipated 2016 revenue.

The last time Osiris filed a financial report was November 2015. At that time it reported a $685,000 third-quarter loss. Then its auditor resigned in December 2015, and the company began reviewing its 2014 and 2015 financial statements. The U.S. government then opened investigations of the company’s internal controls over financial reporting, as well as the revenue recognition timing of specific contracts.

According to the Baltimore Business Journal, “In March, Osiris received a subpoena from the Securities and Exchange Commission and in May the company said the U.S. Attorney’s Office for the Southern District of New York is conducting a criminal investigation into the company’s accounting practices.”

Osiris indicates it is working to completely restate its 2014 financial filings, and once that is done, will “transition to a new independent registered accounting firm and begin work on the 2015 financial statements.”

The company estimates that 2014 revenue will be in the range of $46 to $50 million, less than the previously reported $58.8 million. For 2015, it is projecting revenue of $85 to $90 million, and for 2016, from $100 to $110 million.

Osiris was at risk of being delisted by the Nasdaq Stock Exchange. On September 21 it requested a meeting before the Nasdaq hearings panel, and expects a hearing to be scheduled within 30 to 45 days.

In February, the company’s president and chief executive officer, Lode Debrabandere, resigned for personal reasons. Dwayne Montgomery, the company’s chief business officer, took over as interim chief executive officer. He left the company in June after being appointed president and chief executive officer in February, citing medical reasons. The company’s current interim president and chief executive officer is David Dresner. Dresner is co-founder and chief financial officer of the Dresner Group, an IT company that was hired by Osiris to consult on accounting and financial matters.
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The company was the first biopharma company to receive market approval for a manufactured stem cell product, remestemcel-L. The company’s BioSmart technical platform is a process for cell and tissue preservation that maintains biological integrity. It has several products on the market, including Grafix, a cryopreserved placental membrane used to treat chronic wounds, Cartiform, for cartilage restoration, Bio4, for bone repair and regeneration, Stravix, for surgical procedures, TruSkin, for human skin allografts.

Bio4 has a complicated background. Previously marketed as Ovation, the U.S. Food and Drug Administration (FDA), according to Seeking Alpha, “ruled against the production of Ovation and required Osiris to stop producing and marketing the product. Rather than destroy the remaining inventory, Osiris took a very unusual step.”

The company gave its remaining inventory to a number of distributors and asked for payment once it was sold. The company then made changes to the product, primarily making it from bone tissue instead of placental tissue, and renamed it Bio4. It also got into trouble from its main competitor, MiMedx, which accused Osiris of overstating its revenues.

Osiris stock is currently trading up for $5.28.

Newburgh Press indicated today that the company’s one-year target estimate is $4. The company has a market cap of $178.47 million. The stock’s 52-week high was $14.93 and 52-week low was $3.55.

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