Osiris Therapeutics 10-Q 8 Aug 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 03, 2018
Document and Entity Information
Entity Registrant Name	OSIRIS THERAPEUTICS, INC.
Entity Central Index Key	1,360,886
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		34,525,886
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current Assets
Cash and cash equivalents	$ 23,071	$ 3,081
Estimated Fair Value	9,303	24,807
Trade receivables, net	23,534	26,053
Inventory, net	11,118	11,278
Insurance receivable	4,788	4,788
Prepaid expenses and other current assets	2,876	2,920
Total current assets	74,690	72,927
Property and equipment, net	3,295	3,587
Other assets	1,842	1,608
Total assets	79,827	78,122
Current liabilities
Accounts payable	5,452	5,269
Accrued liabilities	10,023	9,399
Accrued shareholder litigation	18,500	18,500
Other current liabilities	1,739	1,934
Total current liabilities	35,714	35,102
Other long term liabilities	2,433	1,626
Total liabilities	38,147	36,728
Equity
Common stock, $0.001 par value, 72,000 shares authorized, 34,526 shares issued and outstanding at June 30, 2018, and 90,000 shares authorized, 34,526 shares issued and outstanding at December 31, 2017	35	35
Additional paid-in-capital	284,049	283,905
Accumulated other comprehensive loss	(230)	(208)
Accumulated deficit	(242,174)	(242,338)
Total equity	41,680	41,394
Total liabilities and equity	$ 79,827	$ 78,122

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	72,000,000	90,000,000
Common stock, issued	34,526,000	34,526,000
Common stock, outstanding	34,526,000	34,526,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Revenue	$ 33,876	$ 29,151	$ 65,510	$ 56,132
Cost of revenue	9,672	7,668	18,525	15,479
Gross profit	24,204	21,483	46,985	40,653
Operating expenses:
Research and development	1,749	924	3,296	2,143
Sales and marketing	16,889	14,698	33,176	29,431
General and administrative	3,401	5,427	10,848	10,286
Total operating expenses	22,039	21,049	47,320	41,860
Income (loss) from operations	2,165	434	(335)	(1,207)
Other income, net	353	356	569	392
Income (loss) before income taxes	2,518	790	234	(815)
Income tax expense	(34)	(32)	(70)	(64)
Net income (loss)	2,484	758	164	(879)
Other comprehensive income (loss):
Unrealized gain (loss) on investments available for sale	189	(144)	(22)	54
Comprehensive income (loss)	$ 2,673	$ 614	$ 142	$ (825)
Net income (loss) per share:
Basic earnings (loss) per share (in dollars per share)	$ 0.07	$ 0.02	$ 0	$ (0.03)
Diluted earnings (loss) per share (in dollars per share)	$ 0.07	$ 0.02	$ 0	$ (0.03)
Weighted average common shares outstanding:
Basic (in shares)	34,526	34,526	34,526	34,523
Diluted (in shares)	34,556	34,529	34,551	34,523

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ 164	$ (879)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Provision for excess and obsolete inventory	776	530
Loss on disposal of fixed assets		3
Realized loss on investments	263	152
Depreciation	426	345
Stock-based compensation expense	144	47
Changes in operating assets and liabilities:
Accounts receivables, net	2,519	(166)
Inventory, net	(616)	(797)
Prepaid expenses and other assets	(190)	(797)
Accounts payable, accrued expenses, and other liabilities	1,419	(3,056)
Net cash provided by (used in) operating activities	4,905	(4,618)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(134)	(200)
Proceeds from sale of investments	15,723	8,238
Purchases of investments	(504)	(4,756)
Net cash provided by investing activities	15,085	3,282
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the exercise of options to purchase common stock		128
Net cash provided by financing activities		128
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	19,990	(1,208)
Cash at beginning of period	3,081	2,833
Cash at end of period	$ 23,071	$ 1,625

Description of Business

Description of Business	6 Months Ended
	Jun. 30, 2018
Description of Business
Description of Business	1. Description of Business Osiris Therapeutics, Inc. (“we”, “us”, “our”, “Osiris”, or the “Company”) researches, develops, manufactures and commercializes regenerative medicine products intended to improve the health and lives of patients and lower overall healthcare costs. We are headquartered in Columbia, Maryland. We continue to advance our research and development (“R&D”) by focusing on innovation in regenerative medicine, including the development of bioengineered stem cell and tissue-based products. We have achieved commercial success with products in orthopedics, sports medicine and wound care. We operate in one segment and are focused on using unique tissue preservation technologies to develop viable human tissue products designed to improve wound closure and surgical outcomes for patients and physicians over standard of care alone. We have achieved commercial success with products in orthopedics, sports medicine, including the Grafix product line, Stravix, BIO 4 and Cartiform. We are a fully integrated company, having developed capabilities in R&D, manufacturing, marketing and sales of our products. We are focused on the long-term commercial growth of the Company through the delivery of differentiated products for use across multiple fields of medicine with clear value propositions for patients, providers and third-party payors.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2018
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Osiris Therapeutics International GmbH. All intercompany transactions have been eliminated in consolidation. Osiris Therapeutics International GmbH does not have any operations. The condensed financial statements included in this quarterly report have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated balance sheet as of December 31, 2017 is derived from the Company’s audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with our financial statements and footnotes included in our Annual Report on Form 10-K for the years ended December 31, 2017, 2016, and 2015 (the “Annual Report”). In the opinion of management, these condensed consolidated financial statements include all adjustments (consisting solely of normal recurring adjustments) considered necessary to fairly present the results of operations, financial position and cash flows for the periods indicated. Operating results for any interim period are not necessarily indicative of the results that may be achieved for the full year. Use of Estimates We make certain estimates and assumptions in preparing our condensed consolidated financial statements in accordance with GAAP. These estimates and assumptions affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses for the period presented. Actual results may differ from these estimates. Income (Loss) per Common Share Basic income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share adjusts basic income (loss) per share for the potentially dilutive effects of common share equivalents, using the treasury stock method, and includes the incremental effect of shares that would be issued upon the assumed exercise of stock options. Three months ended Six months ended June 30, June 30, 2018 2017 2018 2017 (in thousands, except per share amounts) Net income (loss) $ 2,484 $ 758 $ 164 $ (879) Shares used in computation: Weighted-average shares outstanding 34,526 34,526 34,526 34,523 Basic earnings (loss) per share $ 0.07 $ 0.02 $ 0.00 $ (0.03) Diluted earnings (loss) per share: Net income (loss) $ 2,484 $ 758 $ 164 $ (879) Shares used in computation: Weighted-average shares outstanding 34,526 34,526 34,526 34,523 Weighted-average share equivalents from stock options 30 3 25 — Weighted-average shares and share equivalents outstanding 34,556 34,529 34,551 34,523 Diluted earnings (loss) per share $ 0.07 $ 0.02 $ 0.00 $ (0.03) Diluted earnings per common share for the three months ended June 30, 2018 and 2017 exclude 382,813 and 645,751 of our outstanding options as of that date, respectively, as their impact on our net income per share is anti-dilutive. Diluted earnings (loss) per common share for the six months ended June 30, 2018 and 2017 excludes 380,501 and 682,876 of our outstanding options as of that date, respectively, as their impact on our net income (loss) per share is anti-dilutive. Stockholders’ Equity On June 26, 2018, the Company amended Section 5.7 of Article V of its charter, which was approved by the Company’s stockholders, by decreasing the total number of authorized shares of common stock from ninety million (90,000,000) shares to seventy-two million (72,000,000) shares. The Company is authorized to issue shares of common stock at a par value per share of $0.001 as described in section 5.7 of the charter. Concentration of Risk We maintain cash and cash equivalents as well as short-term investment balances in accounts that exceed federally insured limits. Our investments consist primarily of marketable securities with a total portfolio duration of approximately two years. We have historically provided credit in the normal course of business to contract counterparties and to the end user customers and distributors of our products. Trade accounts receivable in the accompanying condensed consolidated balance sheets consist primarily of amounts due from end user customers and distributors of our products within the United States. The Company's revenue concentrations through distributors of 10% or greater are as follows: Three Months Ended June 30, Six Months Ended June 30, Distributor 2018 2017 2018 2017 A 18 % 20 % 20 % 20 % B 3 % 9 % 5 % 10 % Total 21 % 29 % 25 % 30 % The Company's accounts receivable concentrations of 10% or greater are as follows: June 30, December 31, Distributor 2018 2017 A 20 % 24 % Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (“Topic 606”).” This ASU outlines a single set of comprehensive principles for recognizing revenue under GAAP and supersedes existing revenue recognition guidance. The main principle of this ASU is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted the new standard on a modified retrospective basis as of January 1, 2018. The Company completed a comprehensive assessment of customer contracts and concluded that the adoption of this ASU did not have a material impact on our condensed consolidated financial statements; therefore, no cumulative catch-up adjustment was recorded to prior periods. See Note 8, “Revenue,” for additional information. In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 203). ” This ASU addresses eight specific cash flow issues and clarifies their presentation and classification in the statement of cash flows. The Company adopted this ASU on January 1, 2018 and concluded that the adoption of this ASU did not have a material impact on our condensed consolidated financial statements. As such, no retrospective adjustment was recorded. On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the newly-enacted U.S. Tax Cuts and Jobs Act (the “Act”). SAB 118 allows registrants to include a provisional amount to account for the implications of the Act where a reasonable estimate can be made and requires the completion of the accounting no later than one year from the date of enactment of the Act or December 22, 2018. We continue to evaluate the implications of the Act and have not made any adjustments to the provisional amounts recorded in the prior year. Additionally, the Company intends to file its 2017 U.S. income tax return in the second half of 2018 which may change our tax basis in temporary differences, tax pools, earning, profits and other elements of the income tax effects of the Act estimated as of December 31, 2017. This may result in an adjustment to the tax provision and be reflected as a re-measurement amount recorded in the financial statements during the quarter in which the U.S. tax return is filed. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU requires, among other things, a lessee to recognize assets and liabilities associated with the rights and obligations attributable to most leases but also recognize expenses similar to current lease accounting. This ASU also requires certain qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases, along with additional key information about leasing arrangements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The new guidance must be adopted using a modified retrospective transition and provides for certain practical expedients. The Company is in the process of analyzing initial data gathered to evaluate the impact of adopting this ASU on its consolidated financial statements, the related systems required to capture the increased reporting and disclosures associated with this ASU, and its use of practical expedients. The Company will apply this ASU and its related updates on a modified retrospective basis as of January 1, 2019. The adoption of the guidance will likely have a material effect on the consolidated balance sheets, resulting in the recording of an operating lease asset and liability. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326).” The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. We have not yet begun to evaluate the specific impacts of this guidance nor have we determined the manner in which we will adopt this guidance. In February 2018, the FASB issued ASU 2018-02, “ Income Statement - Reporting Comprehensive Income (Topic 220) , Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ” This ASU gives entities the option to reclassify the disproportionate income tax effects caused by the Act from accumulated other comprehensive income to retained earnings. The update also requires new disclosures, some of which are applicable for all entities. The guidance in ASU 2018-02 is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and the timing of adoption although we do not believe the impact of adoption will be material.

Investments

Investments	6 Months Ended
	Jun. 30, 2018
Investments
Investments	3. Investments Our investments consisted of the following as of June 30, 2018 and December 31, 2017: June 30, 2018 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gain Loss Fair Value (in $000's) U.S. government agencies $ 2,114 $ — $ (60) $ 2,054 Obligations of government sponsored enterprises (1) 1,239 — (24) 1,215 Corporate debt securities 4,962 3 (88) 4,877 Foreign government bonds 1,181 — (24) 1,157 Total (2) $ 9,496 $ 3 $ (196) $ 9,303 (1) Includes investments in notes issued by the Federal Home Loan Bank and the Federal Farm Credit Bank. (2) During the six months ended June 30, 2018, investments were sold which resulted in net proceeds of $15.2 million and realized losses of $0.3 million. Investments were sold in order to provide the funds necessary in cash and cash equivalents for the eventual payment of the settlement of the securities class action lawsuit. December 31, 2017 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gain Loss Fair Value (in $000's) U.S. government agencies $ 6,077 $ — $ (73) $ 6,004 Obligations of government sponsored enterprises (1) 3,737 — (31) 3,706 Corporate debt securities 12,479 21 (66) 12,434 Foreign government bonds 2,689 — (26) 2,663 Total $ 24,982 $ 21 $ (196) $ 24,807 (1) Includes investments in notes issued by the Federal Home Loan Bank and the Federal Farm Credit Bank. The following tables summarize the securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of June 30, 2018 and December 31, 2017: June 30, 2018 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (in $000's) U.S. government agencies $ — $ — $ 2,054 $ (60) $ 2,054 $ (60) Obligations of government sponsored enterprises (1) 350 (1) 865 (23) 1,215 (24) Corporate debt securities 722 (4) 3,294 (84) 4,016 (88) Foreign government bonds 199 (1) 957 (23) 1,156 (24) Total $ 1,271 $ (6) $ 7,170 $ (190) $ 8,441 $ (196) (1) Includes investments in notes issued by the Federal Home Loan Bank and the Federal Farm Credit Bank. December 31, 2017 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (in $000's) U.S. government agencies $ 1,073 $ (3) $ 4,931 $ (70) $ 6,004 $ (73) Obligations of government sponsored enterprises (1) 1,298 (6) 2,408 (25) 3,706 (31) Corporate debt securities 1,667 (5) 7,286 (61) 8,953 (66) Foreign government bonds 597 (3) 2,066 (23) 2,663 (26) Total $ 4,635 $ (17) $ 16,691 $ (179) $ 21,326 $ (196) (1) Includes investments in notes issued by the Federal Home Loan Bank and the Federal Farm Credit Bank. As of June 30, 2018 and December 31, 2017, there were no material unrealized losses that the Company believed to be other-than-temporary. The following table summarizes maturities of our investments available-for-sale as of June 30, 2018: June 30, 2018 (in $000's) Cost Fair Value Maturities: Within 1 year $ 1,632 $ 1,625 After 1 year through 5 years 7,864 7,678 Total investments available for sale $ 9,496 $ 9,303 Realized gains (losses) net of investment income was $(0.2) million and $0.2 million for three months ended June 30, 2018, and 2017, respectively. Realized losses net of investment income was $0.3 million and $0.2 million for the six months ended June 30, 2018 and 2017, respectively. The realized losses net of investment income have been included as a component of “Other income, net” in the accompanying unaudited condensed consolidated statements of comprehensive income (loss).

Inventory, net

Inventory, net	6 Months Ended
	Jun. 30, 2018
Inventory net
Inventory, net	4. Inventory, net Inventory, net consisted of the following: June 30, December 31, 2018 2017 (in $000's) Raw materials and supplies $ 690 $ 1,330 Work-in-process 6,627 5,605 Finished goods 6,574 6,350 13,891 13,285 Reserve for excess and obsolete inventory (2,773) (2,007) Inventory, net $ 11,118 $ 11,278 Work-in-process inventory is largely product that is in quarantine pending completion of our quality assurance procedures. Finished goods inventory included gross consigned inventory of $1.9 million and $1.5 million as of June 30, 2018 and December 31, 2017, respectively. This consigned finished goods inventory was reduced by reserves of $0.8 million and $0.6 million as of June 30, 2018 and December 31, 2017, respectively.

Property and Equipment, net

Property and Equipment, net	6 Months Ended
	Jun. 30, 2018
Property and Equipment, net
Property and Equipment, net	5. Property and Equipment, net Property and equipment, net, consisted of the following: Depreciable Life June 30, December 31, (in years) 2018 2017 (in $000's) Laboratory and manufacturing equipment 3 - 7 $ 3,190 $ 3,083 Computer hardware, furniture and fixtures 3 - 7 944 1,134 Leasehold improvements (A) 6,359 6,344 10,493 10,561 Accumulated depreciation (7,198) (6,974) Property and equipment, net $ 3,295 $ 3,587 (A) Shorter of economic life or lease term. Depreciation expense was $0.2 million and $0.4 million for the three and six month periods ended June 30, 2018, respectively, and $0.2 million and $0.3 million for the three and six month periods ended June 30, 2017, respectively.

Accrued Liabilities

Accrued Liabilities	6 Months Ended
	Jun. 30, 2018
Accrued Liabilities
Accrued Liabilities	6. Accrued Liabilities Accrued liabilities consisted of the following: June 30, December 31, 2018 2017 (in $000's) Payroll and related $ 2,378 $ 1,980 Commissions 4,749 5,651 Legal and accounting 895 905 Lease liabilities 321 120 Other 1,680 743 Total $ 10,023 $ 9,399

Financial Instruments and Fair

Financial Instruments and Fair Value	6 Months Ended
	Jun. 30, 2018
Financial Instruments and Fair Value
Financial Instruments and Fair Value	7. Financial Instruments and Fair Value Fair value is defined as the price at which an asset could be exchanged or a liability transferred (an exit price) in an orderly transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. Financial assets recorded at fair value in the accompanying financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The levels are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities and are as follows: Level 1 Inputs are unadjusted, quoted prices in active markets for identical assets at the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Inputs are other than quoted prices included in Level 1, which are either directly or indirectly observable for the asset or liability through correlation with market data at the reporting date and for the duration of the instrument’s anticipated life. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the reporting date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. When quoted prices in active markets for identical assets are available, we use these quoted market prices to determine the fair value of financial assets and classify these assets as Level 1. In other cases where a quoted market price for identical assets in an active market is either not available or not observable, we obtain the fair value from a third party vendor that uses pricing models, such as matrix pricing, to determine fair value. These financial assets would then be classified as Level 2. In the event quoted market prices were not available, we would determine fair value using broker quotes or an internal analysis of each investment’s financial statements and cash flow projections. In these instances, financial assets would be classified based upon the lowest level of input that is significant to the valuation. Thus, financial assets might be classified in Level 3 even though there could be some significant inputs that may be readily available. Assets and liabilities measured at fair value on a recurring basis are summarized below as of June 30, 2018 and December 31, 2017: (in $000's) June 30, 2018 Assets Level I Level II Level III Total Investments: Available for Sale Securities U.S. government agencies $ — $ 2,054 $ — $ 2,054 Obligations of government sponsored enterprises — 1,215 — 1,215 Corporate debt securities — 4,877 — 4,877 Foreign government bonds — 1,157 — 1,157 Total investments available for sale $ — $ 9,303 $ — $ 9,303 (in $000's) December 31, 2017 Assets Level I Level II Level III Total Investments: Available for Sale Securities U.S. government agencies $ — $ 6,004 $ — $ 6,004 Obligations of government sponsored enterprises — 3,706 — 3,706 Corporate debt securities — 12,434 — 12,434 Foreign government bonds — 2,663 — 2,663 Total investments available for sale $ — $ 24,807 $ — $ 24,807 There were no transfers in or out of Level I, II, or III during the six months ended June 30, 2018.

Revenue

Revenue	6 Months Ended
	Jun. 30, 2018
Revenue
Revenue	8. Revenue The Company began accounting for revenue in accordance with Topic 606 on January 1, 2018, using the modified retrospective method. Under the new revenue standard for arrangements that are determined to be within the scope of Topic 606, the Company recognizes revenue following the five-step model: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines the performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Accordingly, the Company recognizes revenue when title to the product, ownership and risk of loss transfer to the customer, which is either the date of receipt by the customer or when we receive appropriate notification that the product has been used or implanted in a patient. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to in exchange for transferring the goods. The nature of the Company’s contracts gives rise to certain types of variable consideration, including rebates and other discounts. The Company includes estimated amounts of variable consideration in the transaction price to the extent that it is probable there will not be a significant reversal of revenue. Estimates are based on historical or anticipated performance and represent our best judgment at the time. Any estimates are evaluated on a quarterly basis until the uncertainty is resolved. The Company provides a variety of products and services to its customers. Most of the Company’s contracts consist of a single, distinct performance obligation or promise to transfer goods to a customer. For contracts that include multiple performance obligations, the Company allocates the total transaction price to each performance obligation using our best estimate of the standalone selling price of each identified performance obligation. The Company’s incremental costs of obtaining a contract would generally have less than a one-year duration; therefore, the Company applies the practical expedient available and expenses costs to obtain a contract when incurred. The following table presents our revenues disaggregated by product line: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in $000’s) Grafix/Stravix $ 25,350 $ 21,308 $ 47,971 $ 40,745 BIO 4 6,152 5,776 12,948 11,143 Cartiform 2,374 2,067 4,590 4,211 Other — — 1 33 Total $ 33,876 $ 29,151 $ 65,510 $ 56,132

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2018
Income Taxes
Income Taxes	9. Income Taxes We calculate our interim tax provision in accordance with the guidance for accounting for income taxes in interim periods. At the end of each interim period, we estimate the annual effective tax rate and apply that tax rate to our ordinary quarterly pre-tax income from continuing operations. The tax expense or benefit related to significant, unusual or extraordinary discrete events during the interim period is recognized in the interim period in which those events occurred. In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs. On December 22, 2017, the U.S. enacted the Act, which significantly changed U.S. tax law. The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018. The Company’s effective income tax rate for the three and six month periods ended June 30, 2018 is lower than the federal statutory income tax rate primarily due to the estimated reduction of the valuation allowance resulting from the projected reversal of deferred tax assets during 2018. For the three months ended June 30, 2018 and 2017, the tax expense was $34 thousand and $32 thousand, respectively, and is primarily related to interest and penalties. For the six months ended June 30, 2018 and 2017, the tax expense was $70 thousand and $64 thousand, respectively, and is primarily related to interest and penalties. A full valuation allowance has been recorded on the net deferred tax assets as of June 30, 2018 and December 31, 2017.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2018
Commitments and Contingencies
Commitments and Contingencies	10. Commitments and Contingencies Operating Leases We lease facilities and equipment under various non-cancellable operating lease agreements expiring through 2023. As of June 30, 2018, the Company’s total future minimum lease payments under non-cancelable operating leases were $6.9 million. Legal The Company is party to outstanding legal proceedings and claims as described below. The Company cannot predict with any certainty the final outcome of any legal proceedings or claims made against it as described in the paragraphs below, and there can be no assurance that the ultimate resolution of any such matter will not have a material adverse impact on the Company’s consolidated financial position, results of operations, or cash flows. The Company records accruals for certain outstanding legal proceedings, investigations or claims when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. The Company evaluates, on a quarterly basis, developments in legal proceedings, investigations and claims that could affect the amount of any accrual, as well as any developments that would make a loss contingency both probable and reasonably estimable. When a loss contingency is not both probable and reasonably estimable, the Company does not accrue the loss. However, if the loss (or an additional loss in excess of the accrual) is at least a reasonable possibility and material, then the Company discloses a reasonable estimate of the possible loss or range of loss, if such reasonable estimate can be made. If the Company cannot make a reasonable estimate of the possible loss, or range of loss, then that is disclosed. The assessments of whether a loss is probable or a reasonable possibility, and whether the loss or range of loss is reasonably estimable, often involve a series of complex judgments about future events. Among the factors that the Company considers in this assessment are the nature of existing legal proceedings, investigations and claims, the asserted or possible damages or loss contingency (if reasonably estimable), the progress of the matter, existing law and precedent, the opinions or views of legal counsel and other advisers, the involvement of the U.S. Government and its agencies in such proceedings, the Company’s experience in similar matters and the experience of other companies, the facts available to the Company at the time of assessment, and how the Company intends to respond, or has responded, to the proceeding, investigation or claim. The Company’s assessment of these factors may change over time as individual proceedings, investigations or claims progress. For matters where the Company is not currently able to reasonably estimate the range of reasonably possible loss, the factors that have contributed to this determination include the following: (i) the damages sought are indeterminate, or an investigation has not manifested itself in a filed civil or criminal complaint, (ii) the matters are in the early stages, (iii) the matters involve novel or unsettled legal theories or a large or uncertain number of actual or potential cases or parties, and/or (iv) discussions with the government or other parties in matters that may be expected ultimately to be resolved through negotiation and settlement have not reached the point where the Company believes a reasonable estimate of loss, or range of loss, can be made. In such instances, the Company believes that there is considerable uncertainty regarding the timing or ultimate resolution of such matters, including a possible eventual loss, fine, penalty or business impact, if any. The Company does not accrue for estimated legal fees and other directly related costs as they are expensed as incurred. In addition to the matters described in the paragraphs below, in the normal course of its business, the Company is involved in various lawsuits from time to time and may be subject to certain other contingencies, none of which we believe to be material. Based on our analysis and assessment as described above, including consultation with our legal counsel, management believes there are no matters that are probable or reasonably possible that require accrual or disclosure, except for the matters described below. Securities Class Action On November 23, 2015, a putative class action lawsuit was filed in the United States District Court for the District of Maryland by a single plaintiff, individually and on behalf of other persons similarly situated, against the Company and three current or former executive officers of the Company. An amended complaint clarifying plaintiff's claims was filed on April 6, 2018. The action, captioned Kiran Kumar Nallagonda v. Osiris Therapeutics, Inc. et al., Case 1:15-cv-03562 (the “Nallagonda Action”), alleges, among other things, that the defendants made materially false or misleading statements and material omissions in the Company’s filings with the SEC in violation of the federal securities laws. The complaint seeks certification as a class action, unspecified damages and reimbursement of attorneys’ fees. On March 21, 2016, the court entered an order appointing Dr. Raffy Mirzayan as lead plaintiff and the firm of Hagens Berman Sobol Shapiro LLP as lead counsel. On March 11, 2018, we entered into a memorandum of understanding to settle the Nallagonda Action. Subsequently, on June 5, 2018, the parties executed a Stipulation and Settlement Agreement in which the Company agreed in principle to pay $18.5 million in cash to create a settlement fund for the benefit of class members. On June 12, 2018, the lead plaintiff filed an Unopposed Motion for Preliminary Approval of the parties’ settlement. The Company also expects that lead plaintiff will seek an award of attorneys’ fees and expenses from the settlement fund. Both the settlement itself and any award to lead plaintiff of attorneys’ fees and expenses remain subject to Court approval. The Company can provide no assurance that the Court will approve the settlement. The $18.5 million shareholder settlement liability was recorded in Accrued shareholder litigation in the Company’s condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017. The Company had a $5.0 million executive and corporate securities liability insurance policy in place at the time of the allegations. The Company expects to recover the remaining $4.8 million of unused policy coverage for the shareholder settlement of the Nallagonda Action in 2018. The $4.8 million insurance receivable was recorded in Insurance receivable in the Company’s condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017. Shareholder Derivative Actions On March 2, 2016, a shareholder derivative complaint was filed in the Circuit Court for Howard County in the State of Maryland (Case No. 13C16106811) by a single plaintiff, derivatively and on behalf of the Company, against certain current and former directors and certain former executive officers. This action, captioned Kevin Connelley v. Lode Debrabandere et al., alleges that each of the individual directors and officers named as defendants (i) violated their fiduciary duties to the Company’s shareholders; (ii) abused their ability to control and influence the Company; (iii) engaged in gross mismanagement of the assets and business of the Company; and (iv) was unjustly enriched at the expense of, and to the detriment of, the Company. The alleged claims generally relate to the matters that are the subject of the Nallagonda Action. The plaintiff seeks, among other things, unspecified monetary damages, reimbursement of attorneys’ fees and shareholder votes on amendments to the Company’s Articles of Incorporation and Bylaws with respect to various corporate governance policies. On June 2, 2016, the Court entered an order that, subject to certain qualifications, stayed the action until 30 days after the entry of an order either: (1) denying all motions to dismiss in the Nallagonda Action, or (2) finally dismissing the Nallagonda Action with prejudice. On March 12, 2018, the plaintiff filed an amended complaint clarifying his claims. On February 9, 2017, a shareholder derivative complaint was filed in the United States District Court for the District of Maryland (Case No. 1:17-cv-00381-JKB) by a single plaintiff, derivatively and on behalf of the Company, against certain current and former directors. This action, captioned Recupero v. Friedli et al., alleges, among other things, that each of the individual directors named as defendants (i) violated their fiduciary duties to the Company’s shareholders, including that such violations constituted constructive fraud; (ii) engaged in gross mismanagement of the assets and business of the Company; and (iii) was unjustly enriched at the expense of, and to the detriment of, the Company. The plaintiff seeks, among other things, unspecified monetary damages, reimbursement of attorneys’, accountants’ and experts’ fees, and that the Company take all necessary actions to improve and comply with corporate governance, internal procedures and existing laws. On March 28, 2017, the Court entered an order that stays the action until: (1) the Nallagonda Action is dismissed with prejudice and all appeals relating thereto have been exhausted; (2) all motions to dismiss the Nallagonda Action are denied; or (3) either party provides 30 days’ notice that they no longer consent to a stay. On April 5, 2018, the plaintiff filed an amended complaint clarifying her claims. On May 11, 2017, a shareholder derivative complaint was filed in the Circuit Court for Howard County in the State of Maryland, (Case No. 13C17111441) by a single plaintiff, derivatively on behalf of the Company, against certain former executive officers and certain current and former directors. The action, captioned Brian Lee v. Peter Friedli, et. al., alleges that each of the individual defendants violated their fiduciary duties by allegedly failing to adopt and implement adequate accounting and financial reporting systems and for allegedly causing the Company to make false and misleading statements regarding its financial condition. The alleged claims generally relate to the matters that are the subject of the Nallagonda Action and seek substantially similar relief. On September 5, 2017, the defendants moved to either stay or dismiss the plaintiffs’ complaint. That motion was subsequently withdrawn. On February 14, 2018, the plaintiff filed an amended derivative complaint. No defendant has yet responded to that pleading. On December 21, 2017, a shareholder derivative action was filed in the United States District Court for the District of Maryland (Case No. 1:17-cv-03777) by a single plaintiff, derivatively and on behalf of the Company, against certain former executive officers and certain current and former directors. The action, captioned Todd Salley v. Lode Debrabandere, et. al., alleges that each of the individual defendants violated their fiduciary duties by failing to maintain adequate internal controls and by causing the Company to make false and misleading statements regarding the Company’s financial condition. The alleged claims generally relate to the matters that are the subject of the Nallagonda Action and seek substantially similar relief. No defendant has yet responded to the complaint. The Company has executed a Memorandum of Understanding with the plaintiffs in the shareholder derivative actions to resolve the derivative matters by adopting certain governance changes. We expect that the plaintiffs will seek recovery of attorney’s fees. We cannot currently predict whether or not we will be able to reach a final settlement with the derivative plaintiffs, and if so, the amount of attorney’s fees we may be required to pay, if any. We also can provide no assurance that the courts will approve any final settlement reached with the derivative plaintiffs. While we believe it is reasonably possible that we will incur losses associated with the shareholder derivative actions, it is not possible to estimate the amount of loss, if any, that might result from any settlements or other resolution. The Company will continue to evaluate information as it becomes known and will record an estimate for losses at the time or times when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable.

Summary of Significant Accoun16

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2018
Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Osiris Therapeutics International GmbH. All intercompany transactions have been eliminated in consolidation. Osiris Therapeutics International GmbH does not have any operations. The condensed financial statements included in this quarterly report have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated balance sheet as of December 31, 2017 is derived from the Company’s audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim financial statements. This Quarterly Report on Form 10-Q should be read in conjunction with our financial statements and footnotes included in our Annual Report on Form 10-K for the years ended December 31, 2017, 2016, and 2015 (the “Annual Report”). In the opinion of management, these condensed consolidated financial statements include all adjustments (consisting solely of normal recurring adjustments) considered necessary to fairly present the results of operations, financial position and cash flows for the periods indicated. Operating results for any interim period are not necessarily indicative of the results that may be achieved for the full year.
Use of Estimates	Use of Estimates We make certain estimates and assumptions in preparing our condensed consolidated financial statements in accordance with GAAP. These estimates and assumptions affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses for the period presented. Actual results may differ from these estimates.
Income (Loss) per Common Share	Income (Loss) per Common Share Basic income (loss) per common share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share adjusts basic income (loss) per share for the potentially dilutive effects of common share equivalents, using the treasury stock method, and includes the incremental effect of shares that would be issued upon the assumed exercise of stock options. Three months ended Six months ended June 30, June 30, 2018 2017 2018 2017 (in thousands, except per share amounts) Net income (loss) $ 2,484 $ 758 $ 164 $ (879) Shares used in computation: Weighted-average shares outstanding 34,526 34,526 34,526 34,523 Basic earnings (loss) per share $ 0.07 $ 0.02 $ 0.00 $ (0.03) Diluted earnings (loss) per share: Net income (loss) $ 2,484 $ 758 $ 164 $ (879) Shares used in computation: Weighted-average shares outstanding 34,526 34,526 34,526 34,523 Weighted-average share equivalents from stock options 30 3 25 — Weighted-average shares and share equivalents outstanding 34,556 34,529 34,551 34,523 Diluted earnings (loss) per share $ 0.07 $ 0.02 $ 0.00 $ (0.03) Diluted earnings per common share for the three months ended June 30, 2018 and 2017 exclude 382,813 and 645,751 of our outstanding options as of that date, respectively, as their impact on our net income per share is anti-dilutive. Diluted earnings (loss) per common share for the six months ended June 30, 2018 and 2017 excludes 380,501 and 682,876 of our outstanding options as of that date, respectively, as their impact on our net income (loss) per share is anti-dilutive.
Stockholders’ Equity	Stockholders’ Equity On June 26, 2018, the Company amended Section 5.7 of Article V of its charter, which was approved by the Company’s stockholders, by decreasing the total number of authorized shares of common stock from ninety million (90,000,000) shares to seventy-two million (72,000,000) shares. The Company is authorized to issue shares of common stock at a par value per share of $0.001 as described in section 5.7 of the charter.
Concentration of Risk	Concentration of Risk We maintain cash and cash equivalents as well as short-term investment balances in accounts that exceed federally insured limits. Our investments consist primarily of marketable securities with a total portfolio duration of approximately two years. We have historically provided credit in the normal course of business to contract counterparties and to the end user customers and distributors of our products. Trade accounts receivable in the accompanying condensed consolidated balance sheets consist primarily of amounts due from end user customers and distributors of our products within the United States. The Company's revenue concentrations through distributors of 10% or greater are as follows: Three Months Ended June 30, Six Months Ended June 30, Distributor 2018 2017 2018 2017 A 18 % 20 % 20 % 20 % B 3 % 9 % 5 % 10 % Total 21 % 29 % 25 % 30 % The Company's accounts receivable concentrations of 10% or greater are as follows: June 30, December 31, Distributor 2018 2017 A 20 % 24 %
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (“Topic 606”).” This ASU outlines a single set of comprehensive principles for recognizing revenue under GAAP and supersedes existing revenue recognition guidance. The main principle of this ASU is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted the new standard on a modified retrospective basis as of January 1, 2018. The Company completed a comprehensive assessment of customer contracts and concluded that the adoption of this ASU did not have a material impact on our condensed consolidated financial statements; therefore, no cumulative catch-up adjustment was recorded to prior periods. See Note 8, “Revenue,” for additional information. In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 203). ” This ASU addresses eight specific cash flow issues and clarifies their presentation and classification in the statement of cash flows. The Company adopted this ASU on January 1, 2018 and concluded that the adoption of this ASU did not have a material impact on our condensed consolidated financial statements. As such, no retrospective adjustment was recorded. On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the newly-enacted U.S. Tax Cuts and Jobs Act (the “Act”). SAB 118 allows registrants to include a provisional amount to account for the implications of the Act where a reasonable estimate can be made and requires the completion of the accounting no later than one year from the date of enactment of the Act or December 22, 2018. We continue to evaluate the implications of the Act and have not made any adjustments to the provisional amounts recorded in the prior year. Additionally, the Company intends to file its 2017 U.S. income tax return in the second half of 2018 which may change our tax basis in temporary differences, tax pools, earning, profits and other elements of the income tax effects of the Act estimated as of December 31, 2017. This may result in an adjustment to the tax provision and be reflected as a re-measurement amount recorded in the financial statements during the quarter in which the U.S. tax return is filed.
Recently Issued Accounting Pronouncements Not Yet Adopted	Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU requires, among other things, a lessee to recognize assets and liabilities associated with the rights and obligations attributable to most leases but also recognize expenses similar to current lease accounting. This ASU also requires certain qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases, along with additional key information about leasing arrangements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The new guidance must be adopted using a modified retrospective transition and provides for certain practical expedients. The Company is in the process of analyzing initial data gathered to evaluate the impact of adopting this ASU on its consolidated financial statements, the related systems required to capture the increased reporting and disclosures associated with this ASU, and its use of practical expedients. The Company will apply this ASU and its related updates on a modified retrospective basis as of January 1, 2019. The adoption of the guidance will likely have a material effect on the consolidated balance sheets, resulting in the recording of an operating lease asset and liability. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326).” The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. We have not yet begun to evaluate the specific impacts of this guidance nor have we determined the manner in which we will adopt this guidance. In February 2018, the FASB issued ASU 2018-02, “ Income Statement - Reporting Comprehensive Income (Topic 220) , Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ” This ASU gives entities the option to reclassify the disproportionate income tax effects caused by the Act from accumulated other comprehensive income to retained earnings. The update also requires new disclosures, some of which are applicable for all entities. The guidance in ASU 2018-02 is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and the timing of adoption although we do not believe the impact of adoption will be material.

Significant Accounting Policies

Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2018
Income (Loss) per Common Share
Schedule of income (loss) per share	Three months ended Six months ended June 30, June 30, 2018 2017 2018 2017 (in thousands, except per share amounts) Net income (loss) $ 2,484 $ 758 $ 164 $ (879) Shares used in computation: Weighted-average shares outstanding 34,526 34,526 34,526 34,523 Basic earnings (loss) per share $ 0.07 $ 0.02 $ 0.00 $ (0.03) Diluted earnings (loss) per share: Net income (loss) $ 2,484 $ 758 $ 164 $ (879) Shares used in computation: Weighted-average shares outstanding 34,526 34,526 34,526 34,523 Weighted-average share equivalents from stock options 30 3 25 — Weighted-average shares and share equivalents outstanding 34,556 34,529 34,551 34,523 Diluted earnings (loss) per share $ 0.07 $ 0.02 $ 0.00 $ (0.03)
Revenue.
Concentration of Risk
Schedule of concentration risk	Three Months Ended June 30, Six Months Ended June 30, Distributor 2018 2017 2018 2017 A 18 % 20 % 20 % 20 % B 3 % 9 % 5 % 10 % Total 21 % 29 % 25 % 30 %
Accounts Receivable
Concentration of Risk
Schedule of concentration risk	June 30, December 31, Distributor 2018 2017 A 20 % 24 %

Investments (Tables)

Investments (Tables)	6 Months Ended
	Jun. 30, 2018
Investments
Schedule of investments	June 30, 2018 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gain Loss Fair Value (in $000's) U.S. government agencies $ 2,114 $ — $ (60) $ 2,054 Obligations of government sponsored enterprises (1) 1,239 — (24) 1,215 Corporate debt securities 4,962 3 (88) 4,877 Foreign government bonds 1,181 — (24) 1,157 Total (2) $ 9,496 $ 3 $ (196) $ 9,303 (1) Includes investments in notes issued by the Federal Home Loan Bank and the Federal Farm Credit Bank. (2) During the six months ended June 30, 2018, investments were sold which resulted in net proceeds of $15.2 million and realized losses of $0.3 million. Investments were sold in order to provide the funds necessary in cash and cash equivalents for the eventual payment of the settlement of the securities class action lawsuit. December 31, 2017 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gain Loss Fair Value (in $000's) U.S. government agencies $ 6,077 $ — $ (73) $ 6,004 Obligations of government sponsored enterprises (1) 3,737 — (31) 3,706 Corporate debt securities 12,479 21 (66) 12,434 Foreign government bonds 2,689 — (26) 2,663 Total $ 24,982 $ 21 $ (196) $ 24,807 (1) Includes investments in notes issued by the Federal Home Loan Bank and the Federal Farm Credit Bank.
Summary of securities with unrealized losses	June 30, 2018 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (in $000's) U.S. government agencies $ — $ — $ 2,054 $ (60) $ 2,054 $ (60) Obligations of government sponsored enterprises (1) 350 (1) 865 (23) 1,215 (24) Corporate debt securities 722 (4) 3,294 (84) 4,016 (88) Foreign government bonds 199 (1) 957 (23) 1,156 (24) Total $ 1,271 $ (6) $ 7,170 $ (190) $ 8,441 $ (196) (1) Includes investments in notes issued by the Federal Home Loan Bank and the Federal Farm Credit Bank. December 31, 2017 Less than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized Value Loss Value Loss Value Loss (in $000's) U.S. government agencies $ 1,073 $ (3) $ 4,931 $ (70) $ 6,004 $ (73) Obligations of government sponsored enterprises (1) 1,298 (6) 2,408 (25) 3,706 (31) Corporate debt securities 1,667 (5) 7,286 (61) 8,953 (66) Foreign government bonds 597 (3) 2,066 (23) 2,663 (26) Total $ 4,635 $ (17) $ 16,691 $ (179) $ 21,326 $ (196) (1) Includes investments in notes issued by the Federal Home Loan Bank and the Federal Farm Credit Bank.
Schedule of maturities of investments available for sale	June 30, 2018 (in $000's) Cost Fair Value Maturities: Within 1 year $ 1,632 $ 1,625 After 1 year through 5 years 7,864 7,678 Total investments available for sale $ 9,496 $ 9,303

Inventory, net (Tables)

Inventory, net (Tables)	6 Months Ended
	Jun. 30, 2018
Inventory net
Schedule of inventory, net	June 30, December 31, 2018 2017 (in $000's) Raw materials and supplies $ 690 $ 1,330 Work-in-process 6,627 5,605 Finished goods 6,574 6,350 13,891 13,285 Reserve for excess and obsolete inventory (2,773) (2,007) Inventory, net $ 11,118 $ 11,278

Property and Equipment, net (Ta

Property and Equipment, net (Tables)	6 Months Ended
	Jun. 30, 2018
Property and Equipment, net
Schedule of property and equipment, net	Depreciable Life June 30, December 31, (in years) 2018 2017 (in $000's) Laboratory and manufacturing equipment 3 - 7 $ 3,190 $ 3,083 Computer hardware, furniture and fixtures 3 - 7 944 1,134 Leasehold improvements (A) 6,359 6,344 10,493 10,561 Accumulated depreciation (7,198) (6,974) Property and equipment, net $ 3,295 $ 3,587 (A) Shorter of economic life or lease term.

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	6 Months Ended
	Jun. 30, 2018
Accrued Liabilities
Schedule of accrued liabilities	June 30, December 31, 2018 2017 (in $000's) Payroll and related $ 2,378 $ 1,980 Commissions 4,749 5,651 Legal and accounting 895 905 Lease liabilities 321 120 Other 1,680 743 Total $ 10,023 $ 9,399

Financial Instruments and Fai22

Financial Instruments and Fair Value (Tables)	6 Months Ended
	Jun. 30, 2018
Financial Instruments and Fair Value
Schedule of assets and liabilities measured at fair value on a recurring basis	(in $000's) June 30, 2018 Assets Level I Level II Level III Total Investments: Available for Sale Securities U.S. government agencies $ — $ 2,054 $ — $ 2,054 Obligations of government sponsored enterprises — 1,215 — 1,215 Corporate debt securities — 4,877 — 4,877 Foreign government bonds — 1,157 — 1,157 Total investments available for sale $ — $ 9,303 $ — $ 9,303 (in $000's) December 31, 2017 Assets Level I Level II Level III Total Investments: Available for Sale Securities U.S. government agencies $ — $ 6,004 $ — $ 6,004 Obligations of government sponsored enterprises — 3,706 — 3,706 Corporate debt securities — 12,434 — 12,434 Foreign government bonds — 2,663 — 2,663 Total investments available for sale $ — $ 24,807 $ — $ 24,807

Revenue (Tables)

Revenue (Tables)	6 Months Ended
	Jun. 30, 2018
Revenue
Schedule of disaggregation of revenue by product line	Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 (in $000’s) Grafix/Stravix $ 25,350 $ 21,308 $ 47,971 $ 40,745 BIO 4 6,152 5,776 12,948 11,143 Cartiform 2,374 2,067 4,590 4,211 Other — — 1 33 Total $ 33,876 $ 29,151 $ 65,510 $ 56,132

Description of Business (Detail

Description of Business (Details)	6 Months Ended
	Jun. 30, 2018item
Description of Business
Number of operating segments	1

Significant Accounting Polici25

Significant Accounting Policies - Income (Loss) per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Net income (loss) per share:
Net income (loss)	$ 2,484	$ 758	$ 164	$ (879)
Shares used in computation:
Weighted Average Number of Shares Outstanding, Basic	34,526,000	34,526,000	34,526,000	34,523,000
Basic earnings (loss) per share (in dollars per share)	$ 0.07	$ 0.02	$ 0	$ (0.03)
Diluted earnings (loss) per share:
Net income (loss)	$ 2,484	$ 758	$ 164	$ (879)
Shares used in computation:
Weighted Average Number of Shares Outstanding, Basic	34,526,000	34,526,000	34,526,000	34,523,000
Weighted-average share equivalents from stock options	30,000	3,000	25,000
Weighted average shares and share equivalents outstanding	34,556,000	34,529,000	34,551,000	34,523,000
Diluted earnings (loss) per share (in dollars per share)	$ 0.07	$ 0.02	$ 0	$ (0.03)
Anti-dilutive securities excluded from the computation of diluted earnings per share	382,813	645,751	380,501	682,876

Significant Accounting Polici26

Significant Accounting Policies - Stockholders’ Equity - $ / shares	Jun. 30, 2018	Jun. 26, 2018	Jun. 25, 2018	Dec. 31, 2017
Summary of Significant Accounting Policies
Common stock, shares authorized	72,000,000	72,000,000	90,000,000	90,000,000
Common stock, par value (in dollars per share)	$ 0.001			$ 0.001

Significant Accounting Polici27

Significant Accounting Policies - Concentration of Risk (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Concentration of Risk
Average maturities of investment-grade-securities			2 years
Accounts Receivable | Distributor A
Concentration of Risk
Concentration of risk (as a percent)			20.00%	24.00%
Revenues
Concentration of Risk
Concentration of risk (as a percent)	21.00%	29.00%	25.00%	30.00%
Revenues | Distributor A
Concentration of Risk
Concentration of risk (as a percent)	18.00%	20.00%	20.00%	20.00%
Revenues | Distributor B
Concentration of Risk
Concentration of risk (as a percent)	3.00%	9.00%	5.00%	10.00%

Significant Accounting Polici28

Significant Accounting Policies - Recently Adopted Accounting Pronouncements (Details) $ in Thousands	Jan. 01, 2018USD ($)
ASU 2014-09
Recently Adopted Accounting Pronouncements
Cumulative adjustment on retained earnings	$ 0

Investments (Details)

Investments (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Investments available for sale
Amortized cost	$ 9,496		$ 24,982
Gross unrealized gains	3		21
Gross unrealized losses	196		196
Estimated Fair Value	9,303		24,807
Realized losses on investments
Proceeds from investments sold net of purchases	15,200
Realized losses on investments sold	300	$ 200
U.S. government agencies
Investments available for sale
Amortized cost	2,114		6,077
Gross unrealized losses	60		73
Estimated Fair Value	2,054		6,004
Obligations of government sponsored enterprises
Investments available for sale
Amortized cost	1,239		3,737
Gross unrealized losses	24		31
Estimated Fair Value	1,215		3,706
Corporate debt securities
Investments available for sale
Amortized cost	4,962		12,479
Gross unrealized gains	3		21
Gross unrealized losses	88		66
Estimated Fair Value	4,877		12,434
Foreign government bonds
Investments available for sale
Amortized cost	1,181		2,689
Gross unrealized losses	24		26
Estimated Fair Value	$ 1,157		$ 2,663

Investments - Unrealized Losses

Investments - Unrealized Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Fair Value
Less than 12 Months	$ 1,271		$ 1,271		$ 4,635
12 Months or More	7,170		7,170		16,691
Total	8,441		8,441		21,326
Unrealized Gain (Loss), net
Less than 12 Months	(6)		(6)		(17)
12 Months or More	(190)		(190)		(179)
Total	(196)		(196)		(196)
Realized gains (losses) net of investment income
Realized gains net of investment income	200	$ (200)
Realized losses net of investment income			300	$ 200
U.S. government agencies
Fair Value
Less than 12 Months					1,073
12 Months or More	2,054		2,054		4,931
Total	2,054		2,054		6,004
Unrealized Gain (Loss), net
Less than 12 Months					(3)
12 Months or More	(60)		(60)		(70)
Total	(60)		(60)		(73)
Obligations of government sponsored enterprises
Fair Value
Less than 12 Months	350		350		1,298
12 Months or More	865		865		2,408
Total	1,215		1,215		3,706
Unrealized Gain (Loss), net
Less than 12 Months	(1)		(1)		(6)
12 Months or More	(23)		(23)		(25)
Total	(24)		(24)		(31)
Corporate debt securities
Fair Value
Less than 12 Months	722		722		1,667
12 Months or More	3,294		3,294		7,286
Total	4,016		4,016		8,953
Unrealized Gain (Loss), net
Less than 12 Months	(4)		(4)		(5)
12 Months or More	(84)		(84)		(61)
Total	(88)		(88)		(66)
Foreign government bonds
Fair Value
Less than 12 Months	199		199		597
12 Months or More	957		957		2,066
Total	1,156		1,156		2,663
Unrealized Gain (Loss), net
Less than 12 Months	(1)		(1)		(3)
12 Months or More	(23)		(23)		(23)
Total	$ (24)		$ (24)		$ (26)

Investments - Maturities (Detai

Investments - Maturities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Investments
Unrealized losses OTTI	$ 0	$ 0
Cost
Within 1 year	1,632
After 1 year through 5 years	7,864
Total investments available for sale	9,496
Fair Value
Within 1 year	1,625
After 1 year through 5 years	7,678
Total investments available for sale	$ 9,303

Inventory, net (Details)

Inventory, net (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Inventory, net
Raw materials and supplies	$ 690	$ 1,330
Work-in-process	6,627	5,605
Finished goods	6,574	6,350
Total gross inventory	13,891	13,285
Reserve for excess and obsolete inventory	(2,773)	(2,007)
Inventory, net	11,118	11,278
Consigned Inventory
Inventory, net
Finished goods	1,900	1,500
Reserve for excess and obsolete inventory	$ (800)	$ (600)

Property and Equipment, net (De

Property and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Property and Equipment, net
Property and equipment, gross	$ 10,493		$ 10,493		$ 10,561
Accumulated depreciation	(7,198)		(7,198)		(6,974)
Property and equipment, net	3,295		3,295		3,587
Depreciation	200	$ 200	426	$ 345
Laboratory and manufacturing equipment
Property and Equipment, net
Property and equipment, gross	3,190		3,190		3,083
Computer hardware, furniture and fixtures
Property and Equipment, net
Property and equipment, gross	944		944		1,134
Leasehold improvements
Property and Equipment, net
Property and equipment, gross	$ 6,359		$ 6,359		$ 6,344
Minimum | Laboratory and manufacturing equipment
Property and Equipment, net
Estimated useful lives			3 years
Minimum | Computer hardware, furniture and fixtures
Property and Equipment, net
Estimated useful lives			3 years
Maximum | Laboratory and manufacturing equipment
Property and Equipment, net
Estimated useful lives			7 years
Maximum | Computer hardware, furniture and fixtures
Property and Equipment, net
Estimated useful lives			7 years

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Accrued Liabilities
Payroll and related	$ 2,378	$ 1,980
Commissions	4,749	5,651
Legal and accounting	895	905
Lease liabilities	321	120
Other	1,680	743
Total	$ 10,023	$ 9,399

Financial Instruments and Fai35

Financial Instruments and Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets
Estimated Fair Value	$ 9,303	$ 24,807
Level 2
Assets
Estimated Fair Value	9,303	24,807
U.S. government agencies
Assets
Estimated Fair Value	2,054	6,004
U.S. government agencies | Level 2
Assets
Estimated Fair Value	2,054	6,004
Obligations of government sponsored enterprises
Assets
Estimated Fair Value	1,215	3,706
Obligations of government sponsored enterprises | Level 2
Assets
Estimated Fair Value	1,215	3,706
Corporate debt securities
Assets
Estimated Fair Value	4,877	12,434
Corporate debt securities | Level 2
Assets
Estimated Fair Value	4,877	12,434
Foreign government bonds
Assets
Estimated Fair Value	1,157	2,663
Foreign government bonds | Level 2
Assets
Estimated Fair Value	$ 1,157	$ 2,663

Revenue (Details)

Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue
Revenue	$ 33,876	$ 29,151	$ 65,510	$ 56,132
Grafix/Stravix
Revenue
Revenue	25,350	21,308	47,971	40,745
BIO4
Revenue
Revenue	6,152	5,776	12,948	11,143
Cartiform
Revenue
Revenue	$ 2,374	$ 2,067	4,590	4,211
Other
Revenue
Revenue			$ 1	$ 33

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	Jan. 01, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Income Taxes
Federal income tax rate (as a percent)	21.00%					35.00%
Income tax expense		$ 34	$ 32	$ 70	$ 64

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions	Jun. 30, 2018USD ($)
Operating Leases
Non-cancelable operating leases	$ 6.9

Commitments and Contingencies -

Commitments and Contingencies -Litigation Settlements (Details) $ in Thousands	Jun. 02, 2016	Nov. 23, 2015USD ($)item	Jun. 30, 2018USD ($)	Jun. 05, 2018USD ($)	Dec. 31, 2017USD ($)
Litigation Settlements
Accrued shareholder litigation, current			$ 18,500		$ 18,500
Insurance receivable, current			4,788		4,788
Securities Class Actions
Litigation Settlements
Number of former Company officers in continuing civil action | item		3
Commitment agreed in principle to create a settlement fund				$ 18,500
Insurance offset accrual			4,800
Executive and corporate securities liability insurance policy		$ 5,000
Shareholder Derivative Complaints
Litigation Settlements
Period for stay order subject to certain qualification	30 days
Accrued shareholder litigation | Securities Class Actions
Litigation Settlements
Accrued shareholder litigation, current			18,500		$ 18,500
Insurance receivable | Securities Class Actions
Litigation Settlements
Insurance receivable, current			$ 4,800