Osiris Therapeutics Reports Third Quarter 2012 Financial Results

  Osiris Therapeutics Reports Third Quarter 2012 Financial Results

Biosurgery sales up 6-fold over previous year - Osiris regains worldwide
rights to Prochymal

Business Wire

COLUMBIA, Md. -- November 05, 2012

Osiris Therapeutics, Inc. (NASDAQ: OSIR), the leading stem cell company
focused on developing and marketing products to treat medical conditions in
inflammatory, cardiovascular, orthopedic and wound healing markets, announced
today its results for the third quarter ended September 30, 2012.

Highlights and Recent Developments

  *Regained worldwide rights to Prochymal® and Chondrogen®
  *Reported $2.2 million of revenue from our Biosurgery products, Grafix and
    Ovation, during the third quarter – a 32% increase over the prior quarter
    and a greater than 6-fold increase over 3Q 2011.
  *Reported cash, receivables and short-term investments of $39.4 million as
    of September 30, 2012.
  *Promoted Lode Debrabandere, Ph.D. to the role of Chief Operating Officer.
  *Elected Hans Klingemann, M.D., Ph.D. to the position of Director to serve
    as a member of the company’s Audit, Compensation and Nominating
    Committees.
  *Received notification from Swissmedic that Prochymal will be evaluated
    under its Rapid Authorization Procedures, a designation that cuts the
    evaluation period for promising new drugs in half.
  *Submitted a full proposal to the Biomedical Advanced Research and
    Development Authority (BARDA) after being selected for a Broad Agency
    Announcement (BAA) to fund advanced research and development of
    countermeasures, specifically for the use of Grafix in mass casualty
    thermal burn injuries.
  *Increased our U.S. intellectual property estate to 51 issued patents (154
    worldwide). Recent additions cover the use of MSCs for graft-versus-host
    disease and inflammatory conditions, as well as methods of manufacturing
    and MSC quality.

“We are very pleased with how all aspects of our business performed this
quarter,” said C. Randal Mills, Ph.D., President and Chief Executive Officer
of Osiris Therapeutics. “We have a very unique and exciting opportunity ahead
of us. As we transition into a fully commercial entity, we will not relinquish
the scientific leadership position we have created in cell therapy. Instead,
we are leveraging our highly sophisticated understanding of this powerful
technology to favorably differentiate our best-in-class products within the
market place.”

Third Quarter Financial Results

Biosurgery product revenue rose 32% from the previous quarter to $2.2 million
and over 6-fold from the third quarter of 2011. Gross profit from product
sales rose to $1.4 million for the quarter or 66% of revenue. As of September
30, 2012, Osiris had $39.4 million of cash, receivables and short-term
investments.

Research and development expenses for the third quarter of 2012 were $3.0
million, compared to $5.0 million incurred in the third quarter of 2011.
General and administrative (G&A) expenses were $1.6 million for the third
quarter of 2012 compared to $1.4 million for the same period of the prior
year. Net cash used in operations for the three months ended September 30,
2012 was $1.6 million.

Webcast and Conference Call

A webcast and conference call to discuss the financial results is scheduled
for today, November 5, 2012 at 9:00 a.m. ET. To access the webcast, visit the
Investor Relations section of the company's website at
http://investor.osiris.com/events.cfm. Alternatively, callers may participate
in the conference call by dialing (877) 303-6133 (U.S. participants) or (970)
315-0493 (international participants).

An archive of the webcast will be available approximately two hours after the
completion of the call through November 12, 2012. To access the archived
webcast, visit the Investor Relations section of the company's website at
http://investor.osiris.com/events.cfm.

About Osiris Therapeutics

Osiris Therapeutics, Inc., having developed the world’s first approved stem
cell drug, Prochymal®, is the leading stem cell company. The company is
focused on developing and marketing products to treat medical conditions in
inflammatory, cardiovascular, orthopedic and wound healing markets. In
Biosurgery, Osiris currently markets Grafix® for burns and chronic wounds, and
Ovation® for orthopedic applications. Osiris is a fully integrated company
with capabilities in research, development, manufacturing and distribution of
stem cell products. Osiris has developed an extensive intellectual property
portfolio to protect the company's technology, including 51 U.S. and 154
foreign patents.

Osiris, Prochymal, Grafix and Ovation are registered trademarks of Osiris
Therapeutics, Inc. More information can be found on the company's website,
www.Osiris.com. (OSIR-G)

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking
statements include statements about our expectations, beliefs, plans,
objectives, intentions, assumptions and other statements that are not
historical facts. Words or phrases such as "anticipate," "believe,"
"continue," "ongoing," "estimate," "expect," "intend," "may," "plan,"
"potential," "predict," "project" or similar words or phrases, or the
negatives of those words or phrases, may identify forward-looking statements,
but the absence of these words does not necessarily mean that a statement is
not forward-looking. Examples of forward-looking statements may include,
without limitation, statements regarding any of the following: our product
development efforts; our clinical trials and anticipated regulatory
requirements, and our ability to successfully navigate these requirements; the
success of our product candidates in development; status of the regulatory
process for our biologic drug candidates; implementation of our corporate
strategy; our financial performance; our product research and development
activities and projected expenditures, including our anticipated timeline and
clinical strategy for mesenchymal stem cells and biologic drug candidates and
marketed Biosurgery products (including Prochymal®, Chondrogen®, Grafix® and
Ovation®); our cash needs; patents, trademarks and other proprietary rights;
the safety and ability of our products and potential products to treat
disease; our ability to supply a sufficient amount of our marketed products or
product candidates and, if approved or otherwise commercially available,
products to meet demand; our costs to comply with governmental regulations;
our plans for sales and marketing; our plans regarding facilities; types of
regulatory frameworks we expect will be applicable to our products and
potential products; and results of our scientific research. Forward-looking
statements are subject to known and unknown risks and uncertainties and are
based on potentially inaccurate assumptions that could cause actual results to
differ materially from those expected or implied by the forward-looking
statements. Our actual results could differ materially from those anticipated
in forward-looking statements for many reasons, including the factors
described in the section entitled "Risk Factors" in our Annual Report on Form
10-K and other Periodic Reports filed on Form 10-Q, with the United States
Securities and Exchange Commission. Accordingly, you should not unduly rely on
these forward-looking statements. We undertake no obligation to publicly
revise any forward-looking statement to reflect circumstances or events after
the date of this press release or to reflect the occurrence of unanticipated
events.

OSIRIS THERAPEUTICS, INC.
Condensed Balance Sheets
Amounts in thousands, except per share data
                                                        
                                        September 30, 2012   December 31, 2011
                                        (unaudited)
Assets
Current assets:
  Cash                                  $   1,056            $   1,661
  Investments available for sale            36,159               45,604
  Accounts receivable, net                  2,231                728
  Inventory                                 922                  767
  Deferred tax asset                        -                    2,188
  Prepaid expenses and other current       1,062              470        
  assets
     Total current assets                   41,430               51,418
                                                             
Property and equipment, net                 2,220                2,463
Restricted cash                            318                392        
     Total assets                       $   43,968          $   54,273     
                                                             
Liabilities and Stockholders' Equity
                                                             
Current liabilities:
  Accounts payable and accrued          $   5,002            $   4,692
  expenses
  Capital lease obligations, current        44                   -
  portion
  Deferred revenue, current portion        -                  3,333      
     Total current liabilities              5,046                8,025
                                                             
Long-term portion of capital lease          173                  -
obligations
Other long-term liabilities                387                430        
     Total liabilities                     5,606              8,455      
                                                             
Stockholders' equity
  Common stock, $.001 par value,
  90,000 shares
     authorized, 32,874 shares
     outstanding - 2012,
     32,828 shares outstanding - 2011       33                   33
  Additional paid-in-capital                279,092              278,092
  Accumulated other comprehensive           15                   20
  income
  Accumulated deficit                      (240,778   )        (232,327   )
     Total stockholders' equity            38,362             45,818     
     Total liabilities and              $   43,968          $   54,273     
     stockholders' equity
                                                                            


OSIRIS THERAPEUTICS, INC.
Condensed Statements of Operations
(Unaudited)
Amounts in thousands, except per share data
                                                
                               Three Months Ended      Nine Months Ended
                               September 30,           September 30,
                              2012        2011       2012        2011
                                                                    
Product revenues               $ 2,151      $ 331      $ 4,914      $ 498
   Cost of product revenues     732        139       1,671      209    
           Gross profit         1,419      192       3,243      289    
                                                                    
Revenue from collaborative
research agreements and          232          10,242     3,776        30,861
royalties
                                                                    
   Operating expenses:
       Research and              2,983        5,018      11,018       14,938
       development
       General and              1,600      1,429     4,541      6,405  
       administrative
                                4,583      6,447     15,559     21,343 
                                                                    
           (Loss) income         (2,932 )     3,987      (8,540 )     9,807
           from operations
                                                                    
   Other income, net            13         26        52         80     
                                                                    
           (Loss) income
           before income         (2,919 )     4,013      (8,488 )     9,887
           taxes
                                                                    
                Income tax
                benefit         5          -         37         (43    )
                (expense)
                                                                    
   Net (loss) income           $ (2,914 )   $ 4,013    $ (8,451 )   $ 9,844  
                                                                    
Basic (loss) earnings per      $ (0.09  )   $ 0.12     $ (0.26  )   $ 0.30   
share
                                                                    
Diluted (loss) earnings per    $ (0.09  )   $ 0.12     $ (0.26  )   $ 0.30   
share
                                                                    
Weighted average common         32,871     32,826    32,854     32,818 
shares (basic)
                                                                    
Weighted average common         32,871     33,121    32,854     33,121 
shares (diluted)
                                                                             

                                                 
OSIRIS THERAPEUTICS, INC.
Statements of Cash Flows
(Unaudited)
Amounts in thousands
                                                     
                                                     Nine months ended,
                                                     Sept 30,
                                                     2012         2011
Cash flows from operating activities:
    Net (loss) income                                $ (8,451  )   $ 9,844
    Adjustments to reconcile net (loss)
    income
    to net cash used in operating activities:
    Depreciation and amortization                      528           560
    Non cash share-based payments                      952           1,341
    Provision for bad debts                            11            -
    Non cash expense- extension of expiration date     -             1,740
    of warrant to related party
    Changes in operating assets and
    liabilities:
    Accounts receivable                                (1,514  )     468
    Inventory, prepaid expenses, and other             (747    )     733
    current assets
    Deferred tax assets                                2,188         -
    Other assets                                       -             165
    Accounts payable and accrued expenses              267           21
    Deferred revenue                                  (3,333  )    (30,720 )
    Net cash used in operating activities             (10,099 )    (15,848 )
                                                                   
Cash flows from investing activities:
    Purchases of property and equipment                (57     )     (79     )
    Proceeds from sale of investments                  9,485         15,805
    available for sale
    Purchases of investments available for            (45     )    (68     )
    sale
    Net cash provided by investing activities         9,383       15,658  
                                                                   
Cash flows from financing activities:
    Principal payments on capital lease                (11     )     -
    obligations
    Restricted cash                                    74            129
    Proceeds from the issuance of common              48          22      
    stock, net
    Net cash provided by financing activities         111         151     
                                                                   
    Net decrease in cash                               (605    )     (39     )
    Cash at beginning of period                       1,661       1,442   
                                                                   
    Cash at end of period                            $ 1,056      $ 1,403   

Contact:

Osiris Therapeutics, Inc.
Erica Elchin, 443-545-1834
OsirisPR@Osiris.com