Osiris Up on Grafix Data

Zacks Equity Research
August 14, 2013

Osiris Therapeutics, Inc.’s (OSIR) shares shot up more than 138% with the company reporting positive data on Grafix, a regenerative wound care product.

Results were presented from Protocol 302, a multi-center, randomized, controlled study that was conducted to compare the safety and effectiveness of Grafix to standard of care in patients with chronic diabetic foot ulcers.

Osiris said that a planned interim analysis showed that Grafix had met pre-specified stopping rules for overwhelming efficacy.

While 62% of patients on Grafix met the primary end point of complete wound closure compared to 21% of patients in the standard of care arm, statistical significance was also achieved by Grafix on all top-line secondary endpoints. Grafix was associated with faster wound closure and a reduction in the number of treatments needed to achieve wound closure.

Meanwhile, patients whose wounds failed to close 12 weeks after standard of care experienced an 80% closure rate on switching to Grafix.

Moreover, Osiris reported that patients in the standard of care arm were 74% more likely to suffer from an adverse event compared to patients in the Grafix arm. Given these strong results, Osiris said that the blinded phase of the trial would be discontinued and all patients would be offered to continue on Grafix.

Our Take

The Grafix study results are a major positive for Osiris. The market for diabetic foot ulcers is huge as about 25% of all diabetics suffer from the same and there are more than 25 million diabetics in the U.S.

The company estimates that the diabetic foot ulcers market in the U.S. is about $2 billion. Grafix has a presence in the in-patient market which along with the VA market accounts for about 20% of the total diabetic foot ulcers market in the U.S. However, the company can now seek full reimbursement in the out-patient setting given the positive results from Protocol 302.

Coverage in the out-patient market would expand Grafix’ market five-fold. This would lead to a significant increase in the number of wound care centers that can be covered by the company and the number of wounds that can be covered.

Osiris currently carries a Zacks Rank #4 (Sell). Companies that currently look well positioned include Actelion Ltd. (ALIOF), Pharmacyclics Inc. (PCYC) and Biogen Idec (BIIB) with all three being Zacks Rank #1 (Strong Buy) stocks.

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Read the Full Research Report on OSIR

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