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Osiris Up to Its Old Tricks Again

Stocks in this article: OSIR

I'm short Osiris Therapeutics (OSIR) in the model portfolio of the Biotech Select newsletter because 1) its adult stem cell drug Prochymal doesn't work; and 2) Osiris management practices the high art of spin-doctoring.

Both are on display in the press release Osiris issued Friday announcing the halt to a phase III study of Prochymal in patients with Crohn's disease.

Let's start with the title of the press release: "Osiris Discontinues Enrollment in Crohn's Study Due to Concerns with Trial Design."

OK, I guess that's sort of what happened, but the more relevant fact is that an independent data monitoring board looked at the study and concluded that Crohn's patients taking one of two doses of Prochymal were not responding any better than patients taking a placebo. In bio-statistical parlance, the Prochymal study failed a futility test.

In plain English, the independent data monitors said Prochymal wasn't working, so there's no point in enrolling any more patients.

Biotech Select

Osiris CEO Randy Mills, speaking on a Friday morning conference call, placed the blame for this mishap on a "study design flaw" that led to a higher-than-expected placebo response. Well, I guess when someone outside your control tells you that your drug doesn't work, it constitutes a flaw in the study.

Later in the call, Mills had the temerity to suggest Osiris be excused for its "study design flaw" because the company had only tested Prochymal in nine Crohn's patients before starting the phase III study.

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