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Actionable news in OSIR: Osiris Therapeutics, Inc.,

Analyst Downgrade Of Osiris Therapeutics Raises Serious Accounting Concerns

Brean Capital downgraded OSIR to a sell with an $8 target based on rising DSO balances and aggressive past and potentially ongoing revenue recognition policies.

Despite OSIR hiring collection agents, the trade receivables balance is still outpacing revenue growth, leading to the distinct possibility of major write-offs and slowing revenue growth.

OSIR is 2x-4x overvalued compared to a similar competitor in the space, RTIX. Brean's note that OSIR could sink to $5 has merit.

Last week, Osiris Therapeutics, Inc. (NASDAQ:OSIR) was happy to announce its attendance at the Brean Capital 2015 Life Sciences Summit on November 16th. The following morning, Brean Capital's analyst Jason Wittes downgraded the stock to a sell with a target price of $8, citing several concerns over the viability of the business. Brean was particularly concerned over the elevated amount of trade receivables that the company has held on its balance sheet ever since it loosened its credit terms late last year to try to stimulate revenue growth. I find the timing particularly interesting as it came right after the conference as well as the filing of the 10-Q for Q3 2015. One can only imagine the conversation the company had with Brean while at the conference to result in a note like this:

Osiris has been a good growth story for the past several quarters, increasing revenue in the highly competitive biosurgery business. The concern is that growth has actually been driven by very favorable credit terms given to its distributors, money which thus far the company has had a hard time collecting, according to this conversation held on the Q3 conference call between Wittes and the CFO Greg Law:

OSIR has hired internal collection agents to try to get the money it is owed...


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