On June 23, 2009, Osiris Therapeutics (OSIR) announced interim results from a phase II trial testing Prochymal as a treatment for chronic obstructive pulmonary disease (COPD).

The primary endpoint for these interim six-month results was to demonstrate that Prochymal was safe in a patient population with compromised pulmonary lung function. The trial enrolled 62 patients with COPD, 23 of which had moderate disease and 39 of which had severe disease, and were randomized 1:1 to receive Prochymal or placebo in four infusions over a six month period.

The primary safety endpoint was met, with patients on Prochymal demonstrating no severe adverse events associated with the infusion or the drug, no infections and no adverse immune reaction.

Beside the primary safety endpoint, management was able to analyze preliminary signs of efficacy from the first six-months of the two-year-long planned program. The data show that patients taking Prochymal has a decrease in systemic inflammation as determined by C-reactive protein (CRP). This was evident in as little as 10 days after the first infusion.

Unfortunately, despite the reduction in inflammation, pulmonary function (FEV1 or DLCO) in patients receiving Prochymal was not significantly improved compared to those receiving placebo. This caused a sell-off in the shares. However, we note that the data did show a positive trend in exploratory endpoints such as a six-minute walk distance and cardiac parameters.

We believe the FEV1 endpoint was not met because the phase II trial was not adequately powered to test for efficacy — the trial was too small (n=62) and too short (six-months).

The interim analysis was designed to show safety. We note that when the full two-year data becomes available, we should have a much better sense of the efficacy potential of Prochymal in COPD. COPD is an enormous market with blockbuster sales potential for Prochymal if the company can generate positive data in future studies.

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