Osiris Therapeutics, Inc. (NASDAQ: OSIR) is seeing its stock getting pounded this morning. The company announced that it was ending enrollment at 210 patients in its Phase III trial evaluating its Prochymal for Crohn’s disease. The reason is that the company believes a design flaw exists in the trial resulting in significantly higher than expected placebo response rates.
The decision was apparently made after the trial’s final scheduled interim analysis showed that one of the two Prochymal dose arms had crossed a futility boundary. It noted that the dose arm was unlikely to achieve the primary endpoint of remission because of the high placebo response rate.
This latest analysis continued to show no serious safety concerns with the therapy and safety was not a factor in the decision to stop enrollment.
It is believed that a systemic design flaw in the trial would likely affect the utility of the data for purposes of registration. Osiris is keeping the trial blinded and expects a solid data package for use in designing future trials in Crohn’s disease.
A trial design problem is not as bad as safety issues nor as bad as just outright failures. But this is a huge hit when you consider that the trial had reached Phase III. It is possible that some design changes in the trial may keep it from having to go back to scratch, but this is a serious issue at the company either way.
Shares of Osiris are getting hit hard. The pre-open trading has this one down over $5.00 or 28% to $13.04. We have also seen 135,000 shares trade hands, which is close to its 190,000 average daily volume.
JON C. OGG
MARCH 27, 2009