-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ARXGyJTdGu7KoyNXkJsv8DV9CyfEOLplKG3IXYjzulXsd/AqXtBfwY85kKNRnEAl EWh2w8e8b027SFUS3dxXFg== 0000950123-05-005808.txt : 20050506 0000950123-05-005808.hdr.sgml : 20050506 20050506171348 ACCESSION NUMBER: 0000950123-05-005808 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050502 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050506 DATE AS OF CHANGE: 20050506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSI PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000729922 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 133159796 STATE OF INCORPORATION: DE FISCAL YEAR END: 1204 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15190 FILM NUMBER: 05808981 BUSINESS ADDRESS: STREET 1: 58 SOUTH SERVICE RD. STREET 2: SUITE 110 CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 631-962-2000 MAIL ADDRESS: STREET 1: 58 SOUTH SERVICE RD. STREET 2: SUITE 110 CITY: MELVILLE STATE: NY ZIP: 11747 FORMER COMPANY: FORMER CONFORMED NAME: ONCOGENE SCIENCE INC DATE OF NAME CHANGE: 19920703 8-K 1 y08784e8vk.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 May 2, 2005 ------------------------------------------------ Date of Report (Date of earliest event reported) OSI PHARMACEUTICALS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 0-15190 13-3159796 - ------------------------------- ----------- ------------------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation) File Number) Identification No.) 58 SOUTH SERVICE ROAD MELVILLE, NY 11747 ---------------------------------------- (Address of principal executive offices) (631) 962-2000 ---------------------------------------------------- (Registrant's telephone number, including area code) N/A ------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On May 2, 2005, OSI Pharmaceuticals, Inc. (the "Company") issued a press release regarding its financial results for the quarter ended March 31, 2005. The Company's press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein. The information under this item and Exhibit 99.1 attached hereto is being "furnished" and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 (the "Securities Act") or the Exchange Act, except if the Company specifically states that the information and the Exhibit is to be considered "filed" under the Exchange Act or incorporates it by reference into a filing under the Securities Act or the Exchange Act. ITEM 8.01 OTHER EVENTS On May 2, 2005, OSI issued a press release announcing the filing of a supplemental New Drug Application with the U.S. Food and Drug Administration for the use of Tarceva(TM) (erlotinib) plus gemcitabine chemotherapy for the treatment of advanced pancreatic cancer in patients who have not received any prior treatment. The press release is attached hereto as Exhibit 99.2 to this Form 8-K and is incorporated herein by reference. On May 3, 2005, the Company held a webcast conference call regarding its financial results for the quarter ended March 31, 2005 as well as an update on the Company's business. A textual representation of certain portions of the conference call is attached as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated by reference herein. ITEM 9.01 EXHIBITS
EXHIBIT NO. DESCRIPTION - ----------------------- -------------------------------------------------------- 99.1 Press release, dated May 2, 2005. 99.2 Press release, dated May 2, 2005. 99.3 Textual representation of certain portions of the webcast conference call held on May 3, 2005
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: May 6, 2005 OSI PHARMACEUTICALS, INC. By: /s/ Robert L. Van Nostrand ------------------------------------- Robert L. Van Nostrand Vice President and Chief Financial Officer (Principal Financial Officer) EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------------------- -------------------------------------------------------- 99.1 Press release, dated May 2, 2005. 99.2 Press release, dated May 2, 2005. 99.3 Textual representation of certain portions of the webcast conference call held on May 3, 2005
EX-99.1 2 y08784exv99w1.txt EX-99.1: PRESS RELEASE EXHIBIT 99.1 [(OSI)(TM) PHARMACEUTICALS LOGO] NEWS RELEASE Contact: OSI Pharmaceuticals, Inc. Burns McClellan (representing OSI) Kathy Galante Jonathan Nugent (Investors) Director Kathy Jones, Ph.D. (Media) Investor / Public Relations (212) 213-0006 631-962-2000 OSI PHARMACEUTICALS ANNOUNCES FIRST QUARTER FINANCIAL RESULTS MELVILLE, N.Y., MAY 2, 2005 - OSI Pharmaceuticals, Inc. (Nasdaq: OSIP) announced today its financial results for the Company's first quarter ended March 31, 2005. The Company reported a net loss of $32.5 million (or $0.64 per share) for the three months ended March 31, 2005, compared with a net loss of $49.7 million (or $1.27 per share) in the comparable prior year period. During the first quarter the Company reported net revenues of $11.7 million from its unconsolidated joint business for Tarceva(TM) (erlotinib) arising from the Company's co-promotion arrangement with Genentech, Inc., the Company's U.S. marketing partner for the product. First quarter U.S. net sales for Tarceva recorded by Genentech were $47.6 million. The Company also reported its first royalty revenues of $83,000 from its ex-U.S. partner for Tarceva, Roche, following the approval and launch of the product in Switzerland, which occurred late in the quarter. Revenues for the quarter were $19.1 million, an increase of $11.9 million over the comparable prior year period revenues. The increase was primarily due to the net revenues from the unconsolidated joint business for Tarceva with Genentech. The Company was able to achieve positive results from its share of the joint business during its first full quarter following the launch of Tarceva in late November 2004. Total operating expenses for the three months ended March 31, 2005 were $54.2 million compared to $55.1 million for the comparable prior year period. Research and development expenses remained relatively constant at $26.9 million during the three months ended March 31, 2005, compared to $26.7 million for the period ended March 31, 2004. Relative to the prior year's quarter there was an increase in research and development expenses related to the Company's diabetes programs offset by a decrease in the Company's oncology research programs as a result of decisions over the last year to deprioritize or cease development of certain oncology clinical candidates including Aptosyn(R), OSI-7836 and OSI-211. Diabetes R&D accounted for $8.3 million, or 31 percent, of overall R&D spend. Selling, general and administrative (SG&A) expense increased $1.2 million compared to the prior year period reflecting a net increase in the Company's sales and marketing efforts related to Tarceva. Cost of goods sold decreased $1.6 million for the three months ended March 31, 2005 compared to March 31, 2004, primarily due to a charge of $2.0 million in relation to Gelclair inventory that the Company deemed to be in excess of forecasted demand that was recorded in the prior year period. The Company completed the quarter with a strong balance sheet, which included cash and investments of approximately $612.4 million. Investment income for the current three-month period increased $2.6 million compared to the comparable prior year period, primarily due to an increase in funds available for investment as a result of the public offering completed in November 2004. The Company also saw a decrease in interest expense of $1.6 million or 57 percent compared to the prior year period, related to the Company's decision to call for the full redemption of the then outstanding $160.0 million 4% convertible senior subordinated notes in June 2004. On a non-GAAP basis, excluding certain charges, the Company's net loss was $30.7 million (or $0.60 per share) for the current three-month period compared to $46.0 million (or $1.18 per share) for the comparable prior year period. On a non-GAAP basis, excluding certain charges, total operating expenses were $52.4 million for the current three-month period compared to $51.4 for the comparable prior year period. Included in SG&A expenses for the three months ended March 31, 2005 was a charge of $1.8 million for facility return costs and remaining net lease obligations related to the Company's Oxford, UK facility. This charge was related to consolidation of our U.K. oncology research and development activities into our New York locations. The three months ended March 31, 2004 included a charge of $1.8 million for remaining net lease obligations for the Horsham, PA facility the Company assumed in the Cell Pathways, Inc. acquisition. Also included in the three months ended March 31, 2004 is the charge of $2.0 million for excess Gelclair inventory. The Company has disclosed these non-GAAP financial measures including charges related to facility exit costs and an inventory adjustment related to Gelclair. Management believes that these charges are not reflective of the Company's normal on-going operations. These non-GAAP financial measures can assist in making meaningful period-over-period comparisons and in identifying operating trends that could otherwise be masked or distorted by the items subject to the adjustments. Management uses these non-GAAP measures internally to evaluate the performance of the business, including the allocation of resources as well as the planning and forecasting of future periods. Management believes these non-GAAP financial measures are useful to others in analyzing operating performance and trends of the Company. The differences in non-GAAP and GAAP numbers are reconciled on the accompanying table. Non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. HIGHLIGHTS FROM THE TARCEVA PROGRAM: Tarceva was approved by the FDA and launched in November 2004 for the treatment of patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) after failure of at least one prior chemotherapy regimen. Tarceva is the only EGFR inhibitor to have demonstrated the ability to improve survival in non-small cell lung cancer and pancreatic cancer. SALES OSI's partner for the distribution and sales of Tarceva in the United States, Genentech, reported that the net sales of Tarceva for the first quarter of 2005 were $47.6 million compared with $13.3 million for the fourth quarter of 2004. SWISS APPROVAL In March 2005, OSI and Roche announced that the Swiss health authority, Swissmedic, had approved Tarceva for the treatment of patients with locally advanced or metastatic NSCLC after failure of at least one prior chemotherapy regimen. Roche began selling Tarceva in Switzerland in March. Tarceva is also currently under review for marketing authorization with the European and other health authorities. PANCREATIC CANCER In January 2005, detailed data from the randomized Phase III study of Tarceva in combination with gemcitabine chemotherapy in front-line treatment of patients with advanced or metastatic pancreatic cancer were presented at the Second Annual Gastrointestinal Cancers Symposium in Hollywood, Fla. Data reported showed that the study met its primary endpoint of improving survival by demonstrating a 23.5 percent improvement in overall survival. Tarceva is the first drug shown to prolong survival in a Phase III trial when added to the standard of care (gemcitabine) in the treatment of patients with previously untreated advanced pancreatic cancer. OSI announced earlier today, that it submitted a Supplemental New Drug Application (sNDA) with the FDA for use of Tarceva in this pancreatic cancer setting. AACR HIGHLIGHTS At this year's Annual Meeting of the American Association for Cancer Research (AACR), there were several Tarceva abstracts presented on behalf of the Company. Data were presented from a comparative clinical study on the effects of smoking on the pharmacokinetics of Tarceva in healthy (non-cancer patients) smokers and non-smokers. Data from the study were consistent with the hypothesis that smoking results in a reduction in the blood levels of Tarceva following dosing of the drug. The Company intends to pursue studies in cancer patients in order to further explore whether an increase in Tarceva dose in smokers will result in enhanced clinical benefit. HIGHLIGHTS FROM (OSI) ONCOLOGY In March 2005, OSI announced that it had initiated a Phase I clinical study of OSI-930, the first de novo drug candidate to emerge from the Company's oncology research program. The OSI-930 program is focused on the identification of dual c-kit/VEGFR inhibitors. In April 2005, OSI announced that it received Notice of Allowance by the United States Patent and Trademark Office. The resulting patent will cover the compound, compositions containing the compound for its patent application covering claims for OSI-930, and methods of treating cancers with the compound. The issuance of this patent provides protection of OSI-930 until 2024. The Company had also previously announced that a second agent from the program, OSI-817, is being evaluated in pre-clinical toxicology experiments prior to entry into the clinic. Both OSI-930 and OSI-817 are designed to target both cancer cell proliferation and blood vessel growth, or angiogenesis. The Company anticipates moving both candidates through early stages of development before selecting one of the two candidates for full clinical development in cancer patients. HIGHLIGHTS FROM (OSI) PROSIDION: DIABETES & OBESITY SUBSIDIARY The Company operates two separately focused business teams around its efforts in the oncology and diabetes/obesity arenas. In April 2005, the Company acquired the outstanding minority shares of its diabetes and obesity subsidiary, Prosidion, resulting in Prosidion becoming a wholly-owned subsidiary of OSI. The Company completed a stock-for-stock exchange resulting in the acquisition of all minority interest shares of the UK-based subsidiary. A total of 84,940 new shares of OSIP were issued in exchange for 286,200 minority interest shares of Prosidion, which represented 2.7 percent of Prosidion shares. The issued OSIP shares represent an approximately 0.17% dilution of total OSIP shares outstanding. In January 2005, OSI announced that Prosidion initiated a Phase II proof-of-concept and dose range finding study for its Dipeptidyl Peptidase-IV (DP-IV) inhibitor, PSN9301. Data from the study is anticipated by the end of 2005. CONFERENCE CALL OSI will host a conference call reviewing the Company's financial results, product portfolio and business developments, May 3, 2005 at 8:00AM (Eastern Time). To access the live call or the seven-day archive via the Internet, log on to www.osip.com. Please connect to the Company's website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to access the webcast. Alternatively, please call 1-800-819-9193 (U.S.) or 1-913-981-4911 (international) to listen to the call. Telephone replay is available approximately two hours after the call through May 10, 2005. To access the replay, please call 1-888-203-1112 (U.S.) or 1-719-457-0820 (international). The conference ID number is 4562589. ABOUT OSI PHARMACEUTICALS OSI Pharmaceuticals is a leading biotechnology company primarily focused on the discovery, development and commercialization of high-quality pharmaceutical products that extend life or improve the quality of life for cancer and diabetes patients worldwide. OSI's primary business remains oncology, but the Company has a second business interest in the area of diabetes through its subsidiary, Prosidion Limited, based in the United Kingdom. Tarceva(TM) (erlotinib), OSI's flagship product, is the first drug discovered and developed by OSI to obtain FDA approval and the only EGFR inhibitor to have demonstrated the ability to improve survival in non-small cell lung cancer and pancreatic cancer. OSI exclusively markets Novantrone(R) (mitoxantrone concentrate for injection) for the approved oncology indications and markets Gelclair(R) Bioadherent Oral Gel for the relief of pain associated with oral mucositis. This news release contains forward-looking statements. These statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. Factors that might cause such a difference include, among others, the completion of clinical trials, the FDA review process and other governmental regulation, OSI's and its collaborators' abilities to successfully develop and commercialize drug candidates, competition from other pharmaceutical companies, the ability to effectively market products, and other factors described in OSI Pharmaceuticals' filings with the Securities and Exchange Commission. ### OSI Pharmaceuticals, Inc. and Subsidiaries Selected Financial Information
Consolidated Statements of Operations Three Months Ended March 31, (In thousands, except per share data) ---------------------------------------------------------------- (Unaudited) 2005 2004 --------------------------------------- ----------------------- GAAP(1) DIFFERENCES NON-GAAP(2) GAAP(1) DIFFERENCES Revenues: Net revenue from unconsolidated joint business $ 11,721 $ 11,721 $ -- Royalties on product sales 83 83 -- Sales commissions and product sales 6,977 6,977 5,941 License and milestone revenues 286 286 1,275 ---------------------------------------------------------------- Total revenues 19,067 19,067 7,216 ---------------------------------------------------------------- Expenses: Cost of goods sold 423 423 2,044 (1,954)(4) Research and development 26,949 26,949 26,721 Selling, general and administrative 23,031 (1,780)(3) 21,251 21,804 (1,764)(5) Amortization of intangibles 3,803 3,803 4,574 ---------------------------------------------------------------- Total expenses 54,206 (1,780) 52,426 55,143 (3,718) ---------------------------------------------------------------- Loss from operations (35,139) 1,780 (33,359) (47,927) 3,718 Other income (expense): Investment income - net 4,037 4,037 1,427 Interest expense (1,219) (1,219) (2,820) Other expense - net (183) (183) (384) ---------------------------------------------------------------- Net loss $(32,504) $ 1,780 $ (30,724) $(49,704) $ 3,718 ================================================================ Basic and diluted net loss per common share $ (0.64) $ 0.04 $ (0.60) $ (1.27) $ 0.09 ================================================================ Weighted average shares of common stock outstanding 51,096 51,096 38,985 ================================================================
Condensed Consolidated Balance Sheet March 31, September 30, (In thousands) 2005 2004 ------------ ------------- (unaudited) Cash and investments securities (including restricted investments) $ 612,422 $ 257,229 ================================================== Total assets $ 747,636 $ 388,029 ================================================== Total stockholders' equity $ 509,333 $ 154,233 ==================================================
(1) Reflects operating results in accordance with U.S. generally accepted accounting principles (or GAAP). (2) Non-GAAP amounts exclude adjustments for the Gelclair inventory reserve and facility related charges. (3) Represents a charge for facility return costs and remaining net lease obligations related to our Oxford, U.K. facility. (4) Represents an inventory reserve provision for excess Gelclair inventory. EX-99.2 3 y08784exv99w2.txt EX-99.2: PRESS RELEASE EXHIBIT 99.2 NEWS RELEASE OSI PHARMACEUTICALS AND GENENTECH ANNOUNCE FILING OF A SUPPLEMENTAL NEW DRUG APPLICATION TO THE FDA FOR TARCEVA(TM) IN PANCREATIC CANCER MELVILLE, N.Y. and SOUTH SAN FRANCISCO, Calif.--May 2, 2005--OSI Pharmaceuticals, Inc. (NASDAQ: OSIP) and Genentech, Inc. (NYSE: DNA) announced today that OSI submitted a supplemental New Drug Application (sNDA) with the U.S. Food and Drug Administration (FDA) for use of Tarceva(TM) (erlotinib) plus gemcitabine chemotherapy for the treatment of advanced pancreatic cancer in patients who have not received any previous treatment. Tarceva is the first drug to significantly improve survival in a Phase III trial when added to gemcitabine chemotherapy in first-line pancreatic cancer compared to gemcitabine alone. "There is an urgent need for additional therapeutic options for patients with advanced pancreatic cancer and we look forward to working closely with the FDA through this review process," stated Colin Goddard, Ph.D., Chief Executive Officer of OSI Pharmaceuticals. "Pancreatic cancer is difficult to treat and is a disease in which only 20 percent of patients survive one year after diagnosis. The improved survival observed in the Phase III trial that is the basis for this filing represents a potential treatment advance for both patients and physicians," said Hal Barron, M.D., Genentech's senior vice president of Development and chief medical officer. "We would like to recognize our colleagues at OSI Pharmaceuticals for their hard work on this important filing." The sNDA filing is based on a pivotal Phase III multi-center, randomized, double-blind, placebo-controlled trial evaluating Tarceva in patients with locally advanced or metastatic pancreatic cancer. Results of the trial were presented in January at the Second Annual Gastrointestinal Cancers Symposium in Hollywood, Fla. A total of 569 patients were randomized in the study, to receive Tarceva plus gemcitabine or gemcitabine plus placebo. The study demonstrated a statistically significant 23.5 percent improvement in overall survival for patients receiving Tarceva plus gemcitabine compared to patients receiving gemcitabine plus placebo. Twenty-four percent of patients receiving Tarceva plus gemcitabine were alive after one year compared to 17 percent of patients receiving gemcitabine plus placebo. Median survival in the Tarceva plus gemcitabine arm was 6.4 months compared to 5.9 months in the gemcitabine plus placebo arm. An exploratory analysis of survival by pre-treatment characteristics also showed that patients with metastatic disease and patients with poor performance status derived a significant survival benefit. Progression-free survival in the Tarceva plus gemcitabine arm also was significantly improved, although there was virtually no difference in tumor response (9 percent in patients receiving Tarceva plus gemcitabine versus 8 percent in the gemcitabine plus placebo arm). The analysis of safety data did not reveal any unexpected safety signals beyond that seen in previous studies of Tarceva in both monotherapy and combination settings. As expected, rash and diarrhea were the principal Tarceva related side effects seen in the study. Rash was reported by 72 percent of patients who received Tarceva plus gemcitabine and by 28 percent of patients who received gemcitabine plus placebo. Diarrhea was reported by 51 percent of patients who received Tarceva plus gemcitabine and by 36 percent of patients who received gemcitabine plus placebo. Possible interstitial lung disease (ILD) was experienced by 2.1 percent of patients in the Tarceva plus gemcitabine arm compared with 0.4 percent in the gemcitabine plus placebo arm. These ILD incidence levels for the combination of Tarceva and gemcitabine were higher than the 0.8 percent incidence reported for both monotherapy Tarceva and placebo in the pivotal BR.21 study in advanced NSCLC. However, the incidence of possible ILD from all clinical studies with Tarceva is 0.7 percent. About Pancreatic Cancer According to the World Health Organization, more than 216,000 people worldwide are diagnosed each year with pancreatic cancer. The American Cancer Society estimates that in 2005 approximately 32,180 people in the United States will be diagnosed with pancreatic cancer and approximately 31,800 will die of the disease. Most pancreatic tumors originate in the exocrine duct cells or in the cells that produce digestive enzymes (acinar cells). Called adenocarcinomas, these tumors account for nearly 95 percent of pancreatic cancers. About Tarceva Tarceva is currently approved by the FDA as a monotherapy for the treatment of patients with locally advanced or metastatic non-small cell lung cancer after failure of at least one prior chemotherapy regimen and is an oral tablet indicated for daily administration. Results from two earlier large, randomized, placebo-controlled clinical trials in first-line advanced NSCLC patients showed no clinical benefit with concurrent administration of Tarceva with doublet platinum-based chemotherapy (carboplatin and paclitaxel or gemcitabine and cisplatin) and its use is not recommended in that setting. Tarceva is a small molecule designed to target the human epidermal growth factor receptor 1 (HER1) pathway, which is one of the factors critical to cell growth in a number of different cancer types. HER1, also known as EGFR, is a component of the HER signaling pathway, which plays a role in the formation and growth of numerous cancers. Tarceva is designed to inhibit the tyrosine kinase activity of the HER1 signaling pathway inside the cell, which may block tumor cell growth. Tarceva is the only EGFR therapy to show in a Phase III trial improved survival for advanced NSCLC patients. Additional early-stage trials of Tarceva are being conducted in other solid tumors. About Tarceva Safety In the pivotal NSCLC trial, the most common adverse reactions in patients receiving Tarceva were rash and diarrhea. Severe grade 3/4 rash and diarrhea occurred in nine and six percent of Tarceva-treated patients, respectively. Rash and diarrhea each resulted in discontinuation of one percent of Tarceva-treated patients. Dose reduction was needed for six and one percent of patients for rash and diarrhea, respectively. Historically, there have been infrequent reports of serious interstitial lung disease (ILD), including fatalities, in patients receiving Tarceva for treatment of NSCLC or other advanced solid tumors. In the Phase III trial, severe pulmonary reactions, including potential cases of interstitial lung disease, were infrequent (0.8 percent) and were equally distributed between treatment arms. The overall incidence of possible ILD in Tarceva-treated patients from all studies was approximately 0.7 percent. About OSI Pharmaceuticals OSI Pharmaceuticals is a leading biotechnology company primarily focused on the discovery, development and commercialization of high-quality pharmaceutical products that extend life or improve the quality of life for cancer and diabetes patients worldwide. OSI's primary business remains oncology, but the Company has a second business interest in the area of diabetes through its subsidiary, Prosidion Limited, based in the United Kingdom. Tarceva(TM) (erlotinib), OSI's flagship product, is the first drug discovered and developed by OSI to obtain FDA approval and the only EGFR inhibitor to have demonstrated the ability to improve survival in non-small cell lung cancer and pancreatic cancer. OSI exclusively markets Novantrone(R) (mitoxantrone concentrate for injection) for the approved oncology indications and markets Gelclair(R) Bioadherent Oral Gel for the relief of pain associated with oral mucositis. About Genentech BioOncology Genentech is committed to changing the way cancer is treated by establishing a broad oncology portfolio of innovative, targeted therapies with the goal of improving patients' lives. The company is the leading provider of anti-tumor therapeutics in the United States. Genentech is leading clinical development programs for Rituxan(R) (Rituximab), Herceptin(R) (Trastuzumab), Avastin(TM) (bevacizumab), and Tarceva(TM) (erlotinib), and markets all four products in the United States, either alone (Avastin and Herceptin) or with Biogen Idec Inc. (Rituxan) or OSI Pharmaceuticals, Inc. (Tarceva). Genentech has licensed Rituxan, Herceptin, and Avastin, and OSI Pharmaceuticals has licensed Tarceva to Roche for sale by the Roche Group outside of the United States. The company has a robust pipeline of potential oncology therapies with a focus on four key areas: angiogenesis, apoptosis (i.e., programmed cell death), the HER pathway, and B-cell biology. A therapeutic antibody directed at the HER pathway is currently in Phase II trials and in early development are a small molecule directed at the hedgehog pathway, a therapy targeting apoptosis, and a humanized anti-CD20 antibody for hematology/oncology indications. Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes biotherapeutics for significant unmet medical needs. A considerable number of the currently approved biotechnology products originated from, or are based on, Genentech science. Genentech manufactures and commercializes multiple biotechnology products directly in the United States, and receives royalties or other income from companies that are licensed to market its products outside of the United States. The company has headquarters in South San Francisco, California and is traded on the New York Stock Exchange under the symbol DNA. Regarding OSI This news release contains forward-looking statements. These statements are subject to known and unknown risks and uncertainties that may cause actual future experience and results to differ materially from the statements made. Factors that might cause such a difference include, among others, the completion of clinical trials, the FDA review process and other governmental regulation, OSI's and its collaborators' abilities to successfully develop and commercialize drug candidates, competition from other pharmaceutical companies, the ability to effectively market products, and other factors described in OSI Pharmaceuticals' filings with the Securities and Exchange Commission. For full prescribing information, including Boxed Warnings for Avastin, Rituxan and Herceptin, or for Tarceva full prescribing information, please call 800-821-8590. CONTACT: OSI Contact: Kathy Galante, 631-962-2000 or Genentech Media Contact: Kristina Becker, 650-467-6450 or Genentech Investor Contact: Kathee Littrell, 650-225-1034 EX-99.3 4 y08784exv99w3.txt EX-99.3: PRESS RELEASE EXHIBIT 99.3 On May 3, 2005, OSI Pharmaceuticals, Inc. (the "Company") held a webcast conference call regarding its financial results for the quarter ended March 31, 2005 as well as an update on the Company's business. The following represents a textual representation of certain portions of the transcript of the webcast conference call consisting of remarks by Colin Goddard, Chief Executive Officer, Gabriel Leung, Executive Vice President and President (OSI) Oncology, and Robert L. Van Nostrand, Vice President and Chief Financial Officer of the Company. OSI PHARMACEUTICALS, INC. MAY 3, 2005 8:00 A.M. EST [OPERATOR'S INTRODUCTION] [COLIN GODDARD:] Good morning everyone and welcome to our Quarterly call. Joining me today I have Bob Van Nostrand and Gabe Leung. As you will be aware from our organizational announcement of 21st April Bob is transitioning from his current role as CFO to the newly created role of Chief Compliance Officer effective on 31st May, 2005 when Mike Atieh will assume the role of Executive Vice-President and Chief Financial Officer. The change was part of a series of senior management and Board changes that follow on from the commercial launch of Tarceva and the recently announced acquisition of the minority interest shares in our diabetes and obesity subsidiary, Prosidion. The changes reflect our total commitment to strengthening and broadening the management team and board as we prepare for the next stage of the company's growth. With Bob taking on the Chief Compliance Officer role we have made a key change in our internal corporate governance aligning with the internal audit and financial control aims of Sarbanes-Oxley and in Mike we are adding a seasoned executive with considerable experience on the commercial side of the Pharmaceutical business. Mike has formerly served as head of government affairs, head of investor relations and treasurer of Merck before moving over to Merck/MEDCO where he held a number of positions including head of Sales and Business development prior to moving on to Dendrite International as Senior Vice-President and Chief Financial Officer. He has most recently served as an outside director on the OSI board and Chair of the Boards Audit Committee. Effective May 1st, we announced the appointment of Kate Stephenson to our Board of Directors and to the position of Chair of the Boards Audit Committee. Kate is currently treasurer of Nortel and has, in that role, acquired extensive experience on the corporate governance side and is well qualified to assume this role. This morning we will have Bob provide you a summary of the quarter's financials before handing over to Gabe who will provide more color to the Tarceva launch. I will then come back and discuss other aspects of the business, including the other elements of our organizational changes, after which we will be happy to take your questions. Firstly then, I'll pass you over to Bob who will provide a summary on the quarterly numbers. [BOB VAN NOSTRAND:] Thank you Colin. Good morning everyone. Before I start with a review of our financial results for our First Quarter ending March 31, 2005, I would like to remind you that we will be making forward-looking statements relating to financial results and clinical and regulatory developments on the call today. These statements support the development of many events that are outside of OSI's control and are subject to various risks that could cause the results to differ materially from those expressed in any forward-looking statements. I would refer you to our SEC filings for a detailed description of the risk factors affecting our business. [BOB VAN NOSTRAND DISCUSSES QUARTERLY INFORMATION.] With more traction in Tarceva sales, we are tightening our total revenue guidance for 2005 to be between $130 million and $170 million from our previous guidance of $105-$170 million. We are maintaining our R&D and SG&A guidance of $120-$130 million, and $90-100 million, respectively, and have also updated our loss per share estimates for the year to range between $1.05 and $1.85. We continue to target profitability by the end of 2006. I will now hand over to Gabe who will provide some more detail on our progress with Tarceva this quarter. [GABE LEUNG:] Thank you Bob. As Bob mentioned first quarter net sales of Tarceva recorded by Genentech were $47.6 million up from the $13.3 million in the prior quarter following the launch of the product on November 22nd, 2004. Our partner also implemented a 15% price increase on April 5th, subsequent to the quarter, raising the price to wholesalers for a 30 day supply of Tarceva in the U.S. to $2,330 for the 150mg tablets, $2060 for the 100mg tablets and $750 for the 25mg tablets. Genentech continues to run a tight inventory at the wholesalers and we do not believe that either inventory or the pending price increase had any material impact on these impressive first quarter sales numbers. The decision to take this price increase occurred after thorough analysis of multiple factors, including long-term value and investment needs for the product, the reimbursement and pricing environment, competitive conditions, and the product's proven survival benefit. We believe this price to be fair as Tarceva is at least 40 - 50% less expensive on a cost per month basis when compared to other drugs approved for 2nd line non-small cell lung cancer treatment, which are all conventional chemotherapy drugs. The oral route of administration and favorable side effect profile of Tarceva is such that additional infusion costs or supportive care costs often associated with traditional chemotherapy do not apply for this agent further enhancing the relative cost effectiveness of Tarceva. We, together with our partner Genentech, will continue to monitor the market to ensure that Tarceva is priced fairly and appropriately in the market. Tarceva continues to make impressive in-roads on the oral EGFR inhibitor market following launch. IMS data for the week ending April 22nd indicates that Tarceva has a 90% share of new patient starts, a number that has been consistently north of 85% for over two months. Using the more traditional IMS datasets Tarceva has succeeded in capturing over 80% of new scripts (a number that includes some refills as well as new patient starts) and over 70% of total scripts. This has been achieved in just 5 months following launch. In addition, the total number of weekly EGFR scripts since launch is about 10% over the total number of scripts in the weeks prior to Tarceva approval indicating that we have grown the overall market for the class during these months. Remembering that IMS market data does not capture a full picture of the market, we are pleased that the data reinforces that previously reported by our partners Genentech using another service (Verispan) and is backed up by survey data from Oncology Inc. This survey data looks at the use patterns for Tarceva in NSCLC in the hands of oncologists. Using three month rolling data effective for March (that is, January through March averages) Tarceva as a single agent is already the leading treatment regimen used in the third line and beyond setting (a 31% share) and is used more frequently than any other regimen in the second line setting (an 18% share versus single-agent Taxotere 9% and single-agent Alimta 14%). Going forward, we will continue to emphasize Tarceva's survival advantage in second-line NSCLC. Our messages are focused on the fact that Tarceva's efficacy profile is comparable to other second-line options, while our favorable overall profile makes Tarceva a desirable alternative to cytotoxic therapy for patients. Commercial health plan coverage and reimbursement of Tarceva remains excellent. The vast majority of commercial payers have already made coverage decisions on Tarceva, which has resulted in more than 85% of those prescriptions being approved right at the pharmacy. The reimbursement picture for Tarceva will continue to get better with Medicare Part D coming on Board in January 2006. In March, the Swiss health authority, Swissmedic, granted Tarceva its first ex - U.S. approval for the treatment of patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) after failure of at least one prior chemotherapy regimen. OSI earned approximately $83,000 in royalties from our partner, Roche, for Tarceva product sales outside the U.S. In Switzerland, Tarceva's price based on the exchange rate converts to about $3,498 and $2,976 for a 30 day supply of 150mg and 100mg, respectively. Our partners at Roche are working closely with the European Health Authorities on the European Union filing which was submitted in August 2004. As a reminder, the EU system does not offer a "Fast Track Program" and therefore it typically takes about one year from submission for the EU authorities to respond to a filing. In addition to our activities in lung cancer, we announced the completion of our sNDA submission for Tarceva in pancreatic cancer on May 2nd. Data from the PA.3 study, which is the basis for the sNDA filing, was reported at the ASCO GI meeting in January. The data showed a 23.5% improvement in overall survival for Tarceva plus gemcitabine versus gemcitabine plus placebo in front-line patients with locally advanced or metastatic pancreatic cancer. Tarceva is the first non-chemotherapy agent, and only the second drug ever, to demonstrate a survival benefit in this disease setting. We would anticipate receiving rapid review for this application and estimate approval by year-end, assuming a smooth and successful review with the FDA. With limited available therapeutic choices in pancreatic cancer we expect to achieve a strong market uptake in this setting. There are approximately 32,000 newly diagnosed cases of pancreatic cancer in the U.S. each year. As Bob has mentioned we have agreed with our partners to an ongoing investment in the global development plan. As part of this plan, we are working with the FDA on finalizing protocol development in which patients with stage IIIb and IV NSCLC and available tissue sample will first be treated with front-line therapy. Patients benefiting from front-line therapy will then be randomized to either Tarceva or placebo, while those progressing will be randomized to either Tarceva or chemotherapy. In addition to providing an opportunity for label expansion to the front-line setting, this important study will allow us to track patients through the treatment paradigm while assessing their tumors for a host of markers that may impact treatment choices in the future. Our partners at Roche will be responsible for the conduct of this trial. We also agreed that a Tarceva Phase III trial adjuvant program in NSCLC is a key component to our ongoing development plans and the OSI team will be responsible for the conduct of this trial. Elsewhere in the program, an 800 patients ex-US. Phase III study of Tarceva in women with ovarian cancer is close to initiation. The randomized study will evaluate carbo/taxol treatment followed by Tarceva vs. placebo in a maintenance setting and we continue to explore Tarceva use in combination with other targeted therapies, including Avastin. April's edition of the Journal of Clinical Oncology featured results from a Phase II trial evaluating Tarceva in combination with Avastin for patients with recurrent NSCLC. Data showed that median overall survival for the 34 patients treated was 12.6 months, with progression-free survival of 6.2 months. Data on Avastin /Tarceva in Renal cell will also be updated amongst more than 30 abstracts accepted for presentation at the upcoming ASCO meeting on Tarceva. These abstracts include studies on the EGFR mutation status, EGFR wild-type status and overall EGFR expression status of tumor specimens obtained in both the BR.21 NSCLC Phase III trial and the PA.3 pancreatic cancer trial. We anticipate that results from all these studies will shed further light on the question of whether it is possible, or even appropriate, to select sub-sets of lung cancer patients for therapy with Tarceva using the available, but unvalidated methodologies such as immunohistochemistry (IHC). Additional abstracts include an ex.US Phase II study evaluating the efficacy and safety of Tarceva in first-line, unselected patients with advanced non-small cell lung cancer, a Phase II study of Tarceva in patients over 70 years of age with previously untreated advanced NSCLC, the analysis of symptom benefits from the BR.21 study and the exploratory phase II dose to rash study. We would also like to congratulate Dr. Malcolm Moore from the NCIC and Principal Investigator on the Tarceva pancreatic PA.3 trial. Dr. Moore's presentation on the PA.3 trial is abstract #1 at ASCO. At this year's Annual Meeting of the American Association for Cancer Research (AACR), which was held two weeks ago, there were several abstracts presented on behalf of the Company which included data from a comparative clinical trial on the effects of smoking on the pharmacokinetics of Tarceva in healthy (non-cancer patients) smokers and non-smokers. Data from the study were consistent with the hypothesis that smoking results in a reduction in the blood levels of Tarceva following dosing of the drug. The Company intends to pursue studies in cancer patients in order to further explore whether an increase in Tarceva dose in smokers will result in enhanced clinical benefit. With that I'll hand it back to Colin [COLIN GODDARD:] Thanks, Gabe. Moving beyond Tarceva, in April and subsequent to the quarter, we completed a stock-for-stock exchange resulting in the acquisition of all minority interest shares of the Company's UK-based diabetes and obesity subsidiary, Prosidion Limited. We continue to be encouraged by the progress of our DP-IV program, where PSN-9301 is currently undergoing a Phase II trial and with the progress of our late stage pre-clinical pipeline in diabetes. We are close to signing an additional licensee to our DP-IV patent estate further validating this piece of IP. We therefore considered it prudent to secure the minority interest shares at this time. The acquisition of the outstanding 2.7% of Prosidion shares was accomplished through the issuance of approximately 85,000 new shares of OSIP which represents a 0.17% dilution. With the completion of this transaction and the continuing evolution of the business to a more commercial footing we have implemented a series of organizational changes including the CFO and board changes I discussed in my opening comments. We will continue to operate two focused business teams around our efforts in the oncology and diabetes/obesity arenas. Gabe Leung has assumed the role of Executive Vice President and President of (OSI) Oncology expanding his responsibility to include operational oversight of oncology R&D in addition to the oncology business. Dr. Anker Lundemose has assumed the role of Executive Vice President of (OSI) Prosidion our diabetes/obesity business. Additionally, a new Pharmaceutical Development and Technical Operations Group, covering regulatory affairs, drug safety, CMC, quality assurance, toxicology and pharmacokinetics areas has been formed under the leadership of Bob Simon, who we have promoted to Executive Vice President. This change allow us to better meet these needs for both business teams. Each business team will continue to have separate commercial, clinical and research and development efforts. We also announced that Dr. Nicole Onetto, the Company's former Chief Medical Officer left the Company on May 2nd to pursue other interests. Dr. Pablo Cagnoni, who was recently appointed to the newly created position of Vice President of Medical Affairs and Translational Research, will serve as the senior medical officer for oncology clinical development on an interim basis pending recruitment of a Head of Clinical Oncology. Dr. Karsten Witt will be responsible for Drug Safety on a company-wide basis. Over in the UK, Dr. Jonathan Rachman has joined the Company as Vice President of Clinical Development for (OSI) Prosidion. I would like to comment briefly on some recent developments in our pipeline before opening up the line for questions. On the oncology side, in this past quarter, the (OSI) Oncology team initiated a Phase I clinical study of OSI-930, the first drug candidate to emerge from the Company's de novo cancer research efforts over the last several years. The OSI-930 project is focused on the identification of dual c-kit/VEGFR or KDR inhibitors. In April 2005, we also announced that our patent application covering claims for OSI-930 received a Notice of Allowance by the United States Patent and Trademark Office. The resulting patent will cover the compound, compositions containing the compound, and methods of treating cancer with the compound. The issuance of this patent provides protection of OSI-930 until 2024. The c-kit/KDR project has also advanced a second agent from the program, OSI-817 which is currently on IND-track. Both OSI-930 and OSI-817 are designed to simultaneously target cancer cell proliferation and blood vessel growth, or angiogenesis. We anticipate moving both candidates through the early stages of development before selecting one of the two candidates for full clinical development in cancer patients. On the diabetes front, our (OSI) Prosidion team initiated a Phase II proof-of-concept and dose range finding study for our Dipeptidyl Peptidase-IV (DP-IV) inhibitor, PSN9301. In addition, we have two other small molecule drug candidates targeting glucokinase activation (PSN105) and glycogen phosphorylase inhibition (PSN357) which are both in late pre-clinical development and are scheduled to enter Phase I clinical trials over the next two quarters. A second glucokinase activator, PSN010 is scheduled to enter Phase I before the end of the year, where, as with our kit/KDR program in oncology, we will likely adopt a pick-the-winner strategy. In summary, we have completed a very busy quarter. In its first full quarter of sales, our partner, Genentech, reported $47.6 million in U.S. net sales for Tarceva which translated into a solidly profitable first quarter for our share of the joint business - contributing $11.7 million toward our overall revenues of $19.1 million. We continue to manage our R&D and SG&A expenses in line with our previous guidance. On the basis of this and continued progress, we have updated our corporate 2005 revenue and earnings guidance to revenues of $130-170 million and a loss of $1.05 - $1.85 per share, respectively. We have taken steps to organize the business optimally for continued growth and success and were pleased with the pipeline progress this quarter which included initiation of a Phase II trial for our DP-IV inhibitor PSN9301 and the initiation of clinical development for our c-kit/KDR inhibitor OSI-930. We look forward to continued progress through the year and, with that closing summary, I am happy to turn it over to question. [OPERATOR PROVIDES INSTRUCTIONS AS TO HOW QUESTIONS MAY BE ASKED.] [MANAGEMENT RESPONDS TO QUESTIONS AND CONCLUDES THE WEBCAST CONFERENCE CALL.] -----END PRIVACY-ENHANCED MESSAGE-----