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Regenerative Medicine Company Faces NASDAQ Delisting

After being given roughly a month to show that it had gotten its financials in order, Osiris Therapeutics (NASDAQ: OSIR) has failed and faces a real chance of being delisted.

On Monday, the company provided an update regarding the status of its compliance with the Listing Rules of the NASDAQ.

In March, Osiris received a notification from NASDAQ indicating that, as a result of the company not timely filing with the Securities and Exchange Commission (SEC) its Annual Report on Form 10-K for the year ended December 2015 Osiris had failed to comply with the periodic filing requirements.

On May 12, the company received an anticipated letter from NASDAQ noting that it had still filed its quarterly report for the quarter ended March 31.

Osiris has submitted to the NASDAQ listing qualifications staff a plan to regain compliance with NASDAQ’s continued listing requirements. The NASDAQ staff has discretion to grant up to 180 calendar days. That would put the maximum date at Sept. 12, 2016.

The question is whether Osiris work to complete its previously announced accounting reviews, restatements of prior period financial statements, transition to a new independent registered public accounting firm and 2015 audit will be enough to put it in a position to bring its SEC filings up to date.

Founded in 1992, the medical device company managed to carve out market share and a strong reputation for its research, development, manufacturing, marketing and distribution of several regenerative medicine products. Those products, Grafix, which are cryopreserved placental membranes that are used to treat hard-to-treat acute and chronic wounds. Grafix and its two other products, Cartiform and Bio4, have helped it grow its revenues; and they helped it go public in 2006. Back then Osiris’ stock opened for its first public trade around $10. It peaked at $23 last year, and now it is trading just under $6 and faces delisting.

Then there was some bad publicity that the company faced that raised some eyebrows surrounding its hiring of Todd Clawson, who was the head of the company’s national sales department. Prior to going to Osiris, he worked at Advance Bio Healing. Federal prosecutors are now looking at him over his work while at Advance Bio due to allegations that he gave doctors several perks in exchange for them doing business with Advance Bio.

There has been no evidence presented that Clawson did anything corrupt while at Osiris. Clawson was credited with the company’s sales jumping substantially when he was hired. Sales went to $60 million in 2014 from $24 million in 2013.

So as we wait for the final outcome for Osiris and its NASDAQ possible delisting, I advise to stay away from this stock.

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