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Actionable news in OSIR: Osiris Therapeutics, Inc.,

Osiris Therapeutics Beset By Newer And Bigger Troubles

Summary

Since I last highlighted fraud concerns at Osiris, the stock has fallen by 40%. I expect an additional 50% drop based on new catalysts.

The CEO has since resigned unexpectedly.

Osiris is unable to file its 10K and has now received a NASDAQ deficiency notice.

Last week, Osiris' head of sales has just been charged with defrauding the federal government.

Yet, Osiris still trades with a market cap of nearly $200 million.

Background on Osiris

The last time I wrote about Osiris Therapeutics (NASDAQ:OSIR) was in January 2016 when the share price was $8.50. At the time, the stock was hitting what were then 52-week lows. As I noted in that article, I seldom drop the "F Bomb" (the word "fraud"), but there are simply too many red flags to ignore with Osiris.

Since that time, the shares are now down by around 40% to around $5.00. The shares did briefly plunge to as low as $3.55 (down 60%) before rebounding to the current level. I now see an abundance of borrowable shares for shorting available at a very low rate, so I assume that the recent bounce was largely due to short covering.

I continue to expect that the shares will soon trade down to the $2-3 range, based on additional catalysts which were expected and which are now materializing. As expected, Osiris is now delinquent in filing its financials. As of its last filed financial statement, the company had approx. $1.23 in cash per share. (However, based on its historical cash burn, the cash balance has almost certainly declined significantly over the past 6 months). Osiris still has a market cap of close to $200 million.

In my previous article, I noted that the CFO had already resigned and been replaced. The auditor had already resigned. Internal controls had been deemed to be ineffective. The former auditor had required multiple restatements of the financials due to revenue recognition issues. I also noted that I expected that the annual report would not end up being filed as expected.

Recent developments

The recent bounce in the stock has now provided another excellent entry point for a short trade as the next leg down begins. Following my last article, there have been several new developments, none of which bode well for...


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