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Osiris Therapeutics (OSIR) |
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WIKI ANALYSIS
Osiris Therapeutics (NASADAQ: OSIR) is a stem cell therapeutic company. The company focuses on developing and marketing products that treat serious medical conditions such as the inflammatory, autoimmune, orthopedic and cardiovascular areas. By partnering with Genzyme (GENZ) to develop OSIR's leading drug candidate Prochymal, OSIR hopes to make money as a medical countermeasure to nuclear terrorism and other radiological emergencies.[1] Because OSIR's products treat severe medical conditions, they are more likely to receive faster approval from the FDA, which helps the company streamline the pipeline process.[2]
Business Growth
The greatest potential for business growth in OSIR remains in its Prochymal product with Genzyme (GENZ), which is currently being evaluated in Phase III clinical trials for four indications, including acute and steroid refractory graft versus host disease (GvHD), Crohn's disease and for the repair of gastrointestinal injury resulting from radiation exposure.[3]
To protect its pipeline, OSIR also has other internally developed biologic drug candidates such as Chondrogen, which attempts to treat osteoarthritis in the knee. By finding contracts with the government, such as its current contract with the U.S. Department of Defense, OSIR has a stable customer thereby translating to more stable cash flows.
Key Trends and Forces
Increased Support for Generics Wear Down OSIR's Profits
Traditionally, a pharmaceutical company such as OSIR makes money by investing heavily in R&D in hopes of a high payout. A blockbuster drug such as Lipitor for example can easily make over $1 billion in sales per year. Unfortunately, increased competition within generics as well as support for generics push down the profit margins. Usually, a branded drug's sales falls 80%, eaten up by generics competition, within the first year of patent expiration.[4] Once these patents expire, generic companies receive the authorization to develop same or similar products that often dilute the market share of the first developer. Because the Food and Drug Administration (FDA) give special privileges to the first generic manufacturer to submit an application, called Abbreviated New Drug Application (ANDA), for approval in order to encourage the generics industry, generics are highly incentivized to rush into drug as soon as the medicine is off-patent. Unfortunately, this prompts extremely high competition which erodes the profitability quickly such that generics have a tougher time to sustain the same gross profit margins experienced by the same pharmaceuticals under patent.
OSIR Operates in a High Risk and Niche Segment of the Pharma Market
While other drugs such as Lipitor or Viagra operate in a sphere that casts a wide net over customer base, OSIR operates in areas that serve serious medical conditions. Though a plus side is that the FDA is more keen to pass the phases of trials, given proper research, for these types of drugs, it is much harder for these drugs to become blockbuster hits given the much smaller sales base the company may sell to. Further, by developing drugs as a medical countermeasure to nuclear terrorism and other radiological emergencies, the company is sensitive to political climates and the overall global fear - in other words political instability will fuel a greater need for OSIR's Prochymal drug.
Competition
Though OSIR operates in a niche segment, it still competes in the pharma sphere for drug applications and approvals. The company also feels pressure from generics as it must time its patent wisely. As such, OSIR's competitors include:
- Wockhardt DS (BOM:532300) is an India-based integrated pharmaceutical, biotechnology and healthcare company, that covers lifestyle diseases such as diabetes and nephrology.
- Endo Pharmaceuticals Holdings (ENDP) is a specialty pharmaceutical company in pain management, as it researches diseases that cover pain, overactive bladder, prostate and bladder cancer and central precocious puberty.[5]
- Impax Laboratories Inc (IPXL) is a technology-based, specialty pharmaceutical company.
References
- ↑ OSIR FY2010 Form-10K, Pg 3
- ↑ Osiris Therapeutics Completes Enrollment Of Stem Cell Trial For The Treatment Of Heart Attacks
- ↑ Osiris completes patient enrollment in Prochymal Phase 2 trial to treat heart attack</ef> Besides those uses, Prochymal is also being developed for the repair of heart tissue following a heart attack and for protection of pancreatic islet cells in patients with type I diabetes.<ref>[http://www.sec.gov/Archives/edgar/data/1360886/000104746911002089/a2202646z10-k.htm OSIR FY2010 Form-10K, Pg 1]</li> <li id="_note-3">[[#_ref-3|↑]] [http://www.pharmiweb.com/pressreleases/pressrel.asp?ROW_ID=39355 Osiris Therapeutics, Inc.]</li> <li id="_note-4">[[#_ref-4|↑]] [http://www.google.com/finance?q=NASDAQ:ENDP ENDP Business Description]</li></ol></ref>
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