[March 11, 2014]

Osiris Therapeutics Reports Change in Tax Benefit Allocation for Fourth Quarter and Full Year 2013 Financial Results

Osiris Therapeutics, Inc. (NASDAQ: OSIR) announced today an accounting adjustment to its Fourth Quarter and Full Year 2013 financial results reported on March 5. The adjustment results from a change in the allocation of income tax benefits from continuing operations to discontinued operations. There is no change in net income, cash or cash flow.

On March 5, 2014, Osiris reported the fourth quarter and full year 2013 financial results. The reported income from continuing operations included an income tax benefit of $3.6 million related to the sale of our Prochymal business in October 2013 and the tax deductions from the exercise of incentive stock options. Late last week, subsequent to the issuance of the press release and our earnings conference call, the need for an adjustment in the computation of the income tax benefit allocated to continuing operations was identified, because it did not properly consider the windfall benefit attributable to the permanent tax deduction related to the disqualifying disposition of incentive stock options. This also results in a corresponding decrease in income tax expense on the gain from the sale of discontinued operations. Osiris had retained outside experts to assist in the preparation of our income tax provision, tax returns and financial statement disclosures for 2013, as presented in the March 5 earnings release. The experts had computed and reviewed the previously reported income tax benefit and determined its allocation, and they participated in the preparation of our March 5, 2014 press release, including the unaudited financial tables, prior to its issuance.

There are no changes in net income for the fourth quarter or for the fiscal year, and there are no changes to the amount of cash taxes the company will pay related to its fiscal 2013 operations.

This adjustment reduces the income tax benefit allocated to Continuing Operations from $3.6 million to $1.3 million in both the fourth quarter and full fiscal year. Correspondingly, this changes Income from Continuing Operations for the fourth quarter of 2013 from $3.7 million to $1.5 million. Income from Continuing Operations for the 2013 fiscal year changes from $1.1 million to a loss of $1.1 million. In addition, Total Assets are increased from $92 million to $92.1 million.

This adjustment also increases the Income from Discontinued Operations for the fiscal year from $40.5 million to $42.7 million and decreases the income tax expense on the Gain from Sale of Discontinued Operations.

Updated unaudited financial tables showing the changes in the allocation of income tax benefit between continuing operations and gain from discontinued operation are attached. In light of this accounting adjustment and other factors, including the change in our business over the last year, we expect to file a Form 12b-25 with the United States Securities and Exchange Commission to request an extension of up to 15-days to file our Annual Report on Form 10-K to allow us additional time to properly finalize our Form 10-K for fiscal 2013.

About Osiris Therapeutics

Osiris Therapeutics, Inc. is the leading stem cell company, having developed the world's first approved stem cell drug, remestemcel-L for graft versus host disease. Osiris' products include Grafix® and Ovation® for acute and chronic wounds, Cartiform®, a viable cartilage mesh for cartilage repair and the latest addition to Osiris' line of products, OvationOS^TM, a viable bone matrix. Osiris is a fully integrated company with capabilities in research, development, manufacturing and distribution. Osiris has developed an extensive intellectual property portfolio to protect the company's technology and commercial interests.

Osiris, Grafix, Ovation and Cartiform are registered trademarks of Osiris Therapeutics, Inc. More information can be found on the company's website, www.Osiris.com. (OSIR-G)

Forward-Looking Statements

This press release contains forward-looking statements. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as "anticipate," "believe," "continue," "ongoing," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project" or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Examples of forward-looking statements may include, without limitation, statements regarding any of the following: our product development efforts; our clinical trials and anticipated regulatory requirements, and our ability to successfully navigate these requirements; the success of our product candidates in development; status of the regulatory process for our product and product candidates; implementation of our corporate strategy; our financial performance; our product research and development activities and projected expenditures, including our anticipated timeline and clinical strategy for marketed Biosurgery products (including Grafix, Ovation, OvationOS and Cartiform) and Biosurgery products under development; our cash needs; patents, trademarks and other proprietary rights; the safety and ability of our products and potential products to address medical needs; our ability to supply a sufficient amount of our marketed products or product candidates and, if approved or otherwise commercially available products, to meet demand; our costs to comply with governmental regulations; our plans for sales and marketing; our plans regarding facilities; types of regulatory frameworks we expect will be applicable to our products and potential products; and results of our scientific research. Additional risks and uncertainties related to the sale of our ceMSC assets and the related transactions contemplated by the Purchase Agreement with Mesoblast include typical business transactional risks, the risk of changing relationships with customers, suppliers or employees, the risk associated with the disposition of our ceMSC assets and the increased relative dependence on and importance of our other business including our Biosurgery business, the risk that we may not be able to fully benefit from the transactions through milestone payments or royalties, payment risks, including the risk associated with receipt of equity as consideration, in lieu of cash, and the risk of dependence on others to achieve results upon which milestone or royalty payments to us are conditioned. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in the section entitled "Risk Factors" in our Annual Report on Form 10-K and other Periodic Reports filed on Form 10-Q, with the United States Securities and Exchange Commission. Accordingly, you should not unduly rely on these forward-looking statements. We undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this press release or to reflect the occurrence of unanticipated events.

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