Osiris Shares Skyrocket on Clinical Study Results

You know a company has great news when its shares rocket more than 125% within an hour after the market opens. That's exactly what happened today with Osiris Therapeutics (NASDAQ: OSIR  ) . Here are the highlights.

Grafix overwhelms
Osiris' great news came from a clinical study of Grafix in treating diabetes-related foot ulcers. Grafix contains living human cells that are applied directly to wounds to help repair them. In the study, Grafix closed three times as many wounds as the current standard of care.

Grafix's efficacy was so overwhelmingly positive that the the pre-specified stopping rules for the study were met. For the primary endpoint, Grafix achieved 62% complete wound closure at 12 weeks, compared with only 21% doing so with conventional treatment.

All secondary endpoints were also met. Particularly impressive was that 80% of patients with wounds that didn't close taking the standard of care treatment saw their wounds close after taking Grafix.

Grafix's safety profile looked good as well, as 66% of patients taking the standard of care treatment experienced at least one adverse event while only 38% of patients taking Grafix had an adverse event.

Dr. C. Randal Mills, CEO of Grafix, summed the success up well "Osiris has established a new standard in diabetic wound care," he sad, and it has "shown that Grafix can heal more patients, in less time, and with fewer complications."

Looking ahead
Here are a few numbers to consider as you contemplate what these results could mean for Osiris. The U.S. has 25 million diabetics, and around 25% of them develop foot ulcers as a result of their diabetes. These foot ulcers result in more hospitalizations than any other diabetic complication. To say that Grafix has tremendous market potential would be a huge understatement.

Grafix isn't the only arrow in Osiris' quiver, either. The company received orphan drug status and fast track designation from the Food and Drug Administration for Prochymal for acute Graft-versus-host disease, or GvHD, and for Crohn's disease. The drug is in phase 3 studies for both indications. Osiris also is in phase 2 development for arthritis drug Chondrogen.

The challenge for Prochymal and Chondrogen is that, even if they ultimately gain approval, the drugs would truly face giants. AbbVie's (NYSE: ABBV  ) Humira, which treats rheumatoid arthritis and Crohn's disease among other indications, currently stands as the world's top-selling drug. Johnson & Johnson (NYSE: JNJ  ) also competes in several of the same markets with Remicade, another blockbuster near the top in terms of sales.In GvHD, Osiris would battle Novartis (NYSE: NVS  ) if it wins approval for Prochymal in that indication.

While Osiris' path to success would probably be difficult trying to gain share from AbbVie, J&J, and Novartis, the good news announced today for Grafix paints a different picture. Assuming Grafix gains regulatory approval (which seems like a really good bet), Osiris would almost certainly leap into the pole position in treating diabetic foot ulcers.

The U.S. market for diabetic foot ulcer treatments now stands at $2 billion annually. With Grafix performing three times better than the current standard of care, I expect Osiris will be able to gain a large chunk of that market. Even after today's massive gains, the company's market cap is still under $800 million. I think the stock could keep climbing.

Most stocks don't double in a single day like Osiris. You can hit the jackpot sometimes, but the best investing approach is still to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.


Read/Post Comments (3) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 13, 2013, at 7:39 PM, mmashal1 wrote:

    It is great news for the patients who needs it,

    there are similar treatments performed by KCI:

    Regenerative medicine plays a significant role in the practice of wound healing, and KCI stands at the forefront of that breakthrough," said Mike Genau, global president, KCI Active Healing Solutions™. "By bringing GRAFTJACKET® Matrix to the clinical community for the repair of challenging chronic wounds such as diabetic foot ulcers, KCI is responding to the physician's need to customize treatment options for patients' individual wounds."

    In published clinical studies, GRAFTJACKET® Matrix provided physicians and their patients a treatment option that showed a higher probability of healing when used as part of the standard treatment regimen. A study showed that most diabetic foot ulcers can be successfully treated with one application of GRAFTJACKET® Matrix, offering significant potential savings for the patient and the health care system. Equally important, many insurers, including Medicare, cover the use of GRAFTJACKET® Matrix for chronic wounds.

    see the link below:

    http://www.kci1.com/cs/Satellite?c=KCI_News_C&childpagen...

  • Report this Comment On August 13, 2013, at 8:33 PM, jacksmart wrote:

    Keith,

    You have completely overlooked a company called Mimedx (MDXG for you home gamers)

    MDXG already has a product called Epifix which also ran a similar study and which was found even MORE effective than Grafix.

    Even better Epifix does not have to be frozen before use and has a shelf life of 5 years. Not so for Grafix,

    Finally MDXG has MONETIZED this product and is a company with explosive growth and an 80+% profit margin.

    Dr. Mills made it clear that this is a trial and it will be some time before they can monetize this product ... by then it will be a dinosaur compared to Epifix.

    Please do your own due diligence and you'll see the big opportunity clearly missed here.

  • Report this Comment On August 15, 2013, at 4:22 AM, vegaX wrote:

    jacksmart,

    The clinical study of Epifix involved only 25 patients. The result is not statistically significant because of small sample size (you can check the study PDF in its website). Hospitals and insurance companies would not recognise this test result.

    Please do your own due diligence and you'll see the big risk clearly presented in your investment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2593921, ~/Articles/ArticleHandler.aspx, 10/24/2014 8:00:04 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement