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

February 21, 2008

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 incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

41 Pinelawn 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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a- 12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o 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 February 21, 2008, OSI Pharmaceuticals, Inc. (“OSI”) issued a press release regarding its financial results for the quarter and year ended December 31, 2007. A copy of this release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

     The information in this Item 2.02 (including Exhibit 99.1) is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (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, as amended, or the Exchange Act, whether made before or after the date of this report, except as shall be expressly set forth by specific reference in such filing.

Item 8.01. Other Events.

     On February 21, 2008, OSI held a webcast conference call regarding its financial results for the quarter and year ended December 31, 2007 as well as an update on OSI’s business. A textual representation of certain portions of the conference call is attached as Exhibit 99.2 to this Form 8-K and is incorporated herein by reference.

     This Current Report on Form 8-K contains “forward-looking statements” that do not convey historical information, but relate to predicted or potential future events, such as statements of our plans, strategies and intentions. These statements can often be identified by the use of forward-looking terminology such as “believe,” “expect,” “intend,” “may,” “will,” “should,” or “anticipate” or similar terminology. All statements other than statements of historical facts included in this Current Report on Form 8-K are forward-looking statements. All forward-looking statements speak only as of the date of this Current Report on Form 8-K. Except for OSI’s ongoing obligations to disclose material information under the federal securities laws, OSI undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition to the risks and uncertainties of ordinary business operations and conditions in the general economy and the markets in which OSI competes, the forward-looking statements of the Company contained in this Current Report on Form 8-K are also subject to various risks and uncertainties, including those set forth in Item 1A, “Risk Factors”, in OSI’s Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2006, and in its subsequent filings made with the Securities and Exchange Commission.

Item 9.01. Financial Statements and Exhibits.

Exhibit No.	Description
99.1	Press release dated February 21, 2008.
99.2	Textual representation of certain portions of the webcast conference call held on February 21, 2008.

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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: February 26, 2008	OSI PHARMACEUTICALS, INC.
	By:	/s/ Barbara A. Wood
		Barbara A. Wood
		Senior Vice President, General Counsel and Secretary

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release dated February 21, 2008.
99.2	Textual representation of certain portions of the webcast conference call held on February 21, 2008.

4

EX-99.1

Exhibit 99.1

NEWS RELEASE

Contacts:
OSI Pharmaceuticals, Inc.
Kathy Galante (investors/media)
631-962-2043
Kim Wittig (media)
631-962-2135
Burns McClellan, Inc. (representing OSI)
Justin Jackson (media)
(212) 213-0006

OSI Pharmaceuticals Announces Year End 2007 Financial Results

—Reports Earnings of $1.70 Per Share From Continuing Operations —Tarceva Global Net Sales of
$886 Million Up 36% Over 2006

MELVILLE, N.Y., Feb 21, 2008 (BUSINESS WIRE) — OSI Pharmaceuticals, Inc. (NASDAQ: OSIP) announced today its financial results for the Company’s year ended December 31, 2007. The Company reported net income from continuing operations of $102.6 million (or $1.70 per share) for the year ended December 31, 2007, compared with net income from continuing operations of $6.7 million (or $0.12 share) for the same period last year. Net income from continuing operations for the three months ended December 31, 2007 was $17.7 million (or $0.29 per share), compared with net income from continuing operations of $8.6 million (or $0.15 share) for the same period last year.

Total worldwide net sales of Tarceva^® (erlotinib) for 2007, as reported by the Company’s collaborators for Tarceva, Genentech, Inc. and Roche, were approximately $886 million representing a 36% growth in global sales compared to the same period last year. For the three months ended December 31, 2007 worldwide Tarceva net sales were approximately $250 million representing a 32% increase over the same period last year.

The Company reported total revenues from continuing operations of $341 million for 2007 compared to revenues of $241 million for 2006, an increase of 41%. Revenues from continuing operations for the three months ended December 31, 2007 were $84 million, compared with $69 million for the same period last year. Revenues were comprised of the following key items:

— Net revenues from the unconsolidated joint business for Tarceva of $169 million in 2007, compared with $155 million in 2006, arising from the Company’s co-promotion arrangement with Genentech. The net revenues were based on total U.S. Tarceva net sales of $417 million, compared to $402 million in 2006. Net revenues from the

unconsolidated joint business for Tarceva for the three months ended December 31, 2007 were $45 million, compared to $40 million for the same period last year, based upon total U.S. Tarceva net sales of $112 million for the three months ended December 31, 2007 and $107 million for the same period last year;

— Royalties of $95 million in 2007 compared with $50 million in 2006 from Roche, the Company’s international collaborator for Tarceva. The royalty revenues for 2007 were based on total rest of world Tarceva sales of approximately $470 million which increased 90%, compared to the $247 million reported in 2006. Royalties for the three months ended December 31, 2007 were $28 million compared with $17 million for the same period last year. Royalty revenue for the three months ended December 31, 2007 were based upon rest of world Tarceva sales of approximately $138 million, compared with $84 million for the same period last year;

— License, milestone and other revenues for 2007 of $77 million compared with $36 million in 2006. The increase is comprised primarily of license, milestone and royalty income related to worldwide non-exclusive licensing agreements under the Company’s DP-IV patent portfolio covering the use of DP-IV inhibitors for treatment of type 2 diabetes, an upfront license fee of $25 million, related to a license granted to Eli Lilly and Company, in January 2007, for our Glucokinase Activator program, and license revenue of $7.5 million, from Renovo in connection with their licensing agreement with Shire, plc for their TGF-beta 3 drug candidate Juvista^®. License, milestone and other revenues for the three months ended December 31, 2007 were $11 million compared with $12 million in the same period last year.

Operating expenses from continuing operations for the year ended December 31, 2007 were $243.6 million, compared to $235.5 million for 2006. Operating expenses from continuing operations for the three months ended December 31, 2007 were $67.3 million, compared to $63.5 million in 2006. The increase in operating expenses for the twelve and three months ended December 31, 2007, was primarily a result of higher research and development expenses and in-process research and development charges, partially offset by a decline in selling, general and administrative expenses.

Included in other income (expense) — net for the twelve months ended December 31, 2007 is a $4.0 million gain recognized in the second quarter of 2007, as a result of the Company’s decision to curtail its post retirement medical plan.

On November 6, 2006, we announced our intention to divest our eye disease business, a process which we now expect to complete in 2008. Our eye disease business consists principally of Macugen^® (pegaptanib sodium injection), our marketed product for the treatment of wet age-related macular degeneration, as well as research assets in the eye disease area. As a result of our decision to divest the eye disease business, or Eyetech, the operating results for Eyetech, for all periods presented, are shown as discontinued operations in the accompanying consolidated statement of operations. In the third quarter of 2007, the Company announced the sale of its anti-platelet derived growth factor (PDGF) aptamer program, a key Eyetech research asset to Ophthotech Corporation.

The Company’s net income, including results from discontinued operations, was $66.3 million (or $1.11 per share) for 2007, compared with a net loss of $582.2 million (or $10.10 loss per share) for 2006. Net income for three months ended December 31, 2007, including results from discontinued operations, was $10.4 million (or $0.18 per share), compared with a net loss of $223.1 million (or $3.85 loss per share) for the same period last year.

Conference Call

OSI will host a conference call reviewing the Company’s financial results, product portfolio and business developments on February 21, 2008 at 5:00PM (Eastern Time). To access the live webcast or the fourteen-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 1-800-390-5311 (U.S.) or 1-719-457-2082 (international) to listen to the call. The conference ID number for the live call is 9608247. Telephone replay is available approximately two hours after the call through March 6, 2008. To access the replay, please call 1-888-203-1112 (U.S.) or 1-719-457-0820 (international). The conference ID number is 9608247.

About OSI Pharmaceuticals

OSI Pharmaceuticals is committed to “shaping medicine and changing lives” by discovering, developing and commercializing high-quality and novel pharmaceutical products designed to extend life and/or improve the quality of life for patients with cancer and diabetes/obesity. The Company’s oncology programs are focused on developing molecular targeted therapies designed to change the paradigm of cancer care. OSI’s diabetes/obesity efforts are committed to the generation of novel, targeted therapies for the treatment of type 2 diabetes and obesity. OSI’s flagship product, Tarceva^® (erlotinib), 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 both non-small cell lung cancer and pancreatic cancer patients in certain settings. OSI markets Tarceva through partnerships with Genentech, Inc. in the United States and with Roche throughout the rest of the world.

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
(In thousands, except per share data)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
	Unaudited			Unaudited			Unaudited
Revenues:
Net revenue from unconsolidated joint business	$	44,888		$	40,187		$	168,756		$	154,886
Royalties on product licenses		27,991			17,017			95,243			50,174
License, milestone and other revenues		11,429			12,121			77,031			35,977
Total revenues		84,308			69,325			341,030			241,037
Expenses:
Cost of goods sold		3,306			3,204			9,399			8,671
Research and development		36,147			31,278			123,531			117,527
Acquired in-process research and development		2,164			—			9,664			—
Selling, general and administrative		25,176			28,598			99,159			107,458
Amortization of intangibles		462			456			1,840			1,809
Total expenses		67,255			63,536			243,593			235,465
Income from continuing operations		17,053			5,789			97,437			5,572
Other income (expense):
Investment income – net		3,583			5,386			12,830			11,098
Interest expense		(1,812	)		(1,841	)		(7,235	)		(7,339	)
Other income (expense) — net		(275	)		(729	)		2,307			(2,631	)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
	Unaudited			Unaudited			Unaudited
Income from continuing operations before income taxes		18,549			8,605			105,339			6,700
Income tax provision		817			—			2,732			—
Net income from continuing operations		17,732			8,605			102,607			6,700
Loss from discontinued operations		(7,304	)		(231,748	)		(36,288	)		(610,930	)
Net income (loss) before extraordinary gain		10,428			(223,143	)		66,319			(604,230	)
Extraordinary gain		—			—			—			22,046
Net income (loss)	$	10,428		$	(223,143	)	$	66,319		$	(582,184	)
Basic and diluted income (loss) per common share:
Basic earnings (loss)
Continuing operations	$	0.31		$	0.15		$	1.78		$	0.12
Discontinued operations	$	(0.13	)	$	(4.06	)	$	(0.63	)	$	(10.73	)
Net income (loss) before extraordinary gain	$	0.18		$	(3.91	)	$	1.15		$	(10.61	)
Extraordinary gain	$	0.00		$	0.00		$	0.00		$	0.39
Net income (loss)	$	0.18		$	(3.91	)	$	1.15		$	(10.22	)
Diluted earnings (loss)
Continuing operations	$	0.29		$	0.15		$	1.70		$	0.12
Discontinued operations	$	(0.12	)	$	(3.99	)	$	(0.58	)	$	(10.60	)
Net income (loss) before extraordinary gain	$	0.18		$	(3.85	)	$	1.11		$	(10.48	)
Extraordinary gain	$	0.00		$	0.00		$	0.00		$	0.38
Net income (loss)	$	0.18		$	(3.85	)	$	1.11		$	(10.10	)
Weighted average shares of common stock outstanding:
Basic shares		58,047			57,126			57,665			56,939
Diluted shares		62,839			58,021			62,241			57,645

	December		December
	31,		31,
	2007		2006
	Unaudited
Cash and investments securities (including restricted investments)	$	305,098	$	216,368

OSI Pharmaceuticals, Inc. and Subsidiaries
Reconciliation from Reported Income from Continuing Operations and
Reported Diluted Income Per Share to Adjusted Income from
Continuing Operations and Income Per Share
(In thousands, except per share data)

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2007		2006		2007			2006
	Unaudited		Unaudited		Unaudited			Unaudited
Reported net income from continuing operations	$	17,732	$	8,605	$	102,607		$	6,700
Non GAAP adjustments		—		2,563		(2,035	)		5,168
Adjusted net income from continuing operations	$	17,732	$	11,168	$	100,572		$	11,868
Reported diluted income per common share from continuing operations	$	0.29	$	0.15	$	1.70		$	0.12
Non GAAP adjustments per share		0.00		0.04		(0.03	)		0.09
Adjusted diluted income per common share from continuing operations	$	0.29	$	0.19	$	1.67		$	0.21

	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2007		2006		2007			2006
	Unaudited		Unaudited		Unaudited			Unaudited
Adjusted amounts shown above include the following:
Facility related restructuring charges (a)	$	—	$	1,909	$	704		$	4,514
Severance related restructuring charges (b)		—		654		1,292			654
Curtailment gain (c)		—		—		(4,031	)		—
Total Non GAAP adjustments	$	—	$	2,563	$	(2,035	)	$	5,168

(a)	Represents facility restructuring charges included in SG&A.
(b)	Represents severance charges related to planned workforce reductions of $574 included in R&D and $718 included in SG&A for the twelve months ended December 31, 2007 and $255 included in R&D and $399 included in SG&A for the three and twelve months ended
(c)	Represents a gain recorded in other income (expenses) — net as a result of the curtailment of the Company’s post retirement medical plan.

The table above details the charges excluded in the calculation of the Company’s adjusted income from continuing operations. Management believes that these charges are not reflective of the Company’s normal on-going operations. The adjusted financial results 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 the adjusted results internally to evaluate the performance of the business, including the allocation of resources as well as the planning and forecasting of future periods and believes these results are useful to others in analyzing operating performance and trends of the Company. The adjusted amounts are not, and should not be viewed as, substitutes for U.S. GAAP amounts.

EX-99.2

Exhibit 99.2

On February 21, 2008, OSI Pharmaceuticals, Inc. (the “Company”) held a webcast conference call regarding its financial results for the quarter and year ended December 31, 2007 as well as an update on the Company’s business. The following represents a textual representation of remarks by Kathy Galante, Investor Relations, Colin Goddard, Ph.D., Chief Executive Officer of the Company, Gabriel Leung, Executive Vice President and President, (OSI) Oncology and Michael G. Atieh, Executive Vice President, Chief Financial Officer and Treasurer of the Company.

Operator

[Operator’s Instruction]

Kathy Galante

Good afternoon and welcome to our year-end call. Joining me today, I have Colin Goddard, our Chief Executive Officer; Mike Atieh, our Chief Financial Officer; and Gabe Leung, President of our oncology business. We will begin with Mike, who will provide you with a summary of the financial results and guidance for 2008, after which Colin will come back and discuss corporate development in our oncology and diabetes/obesity programs.

Before we begin, 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 cover 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 refer you to our SEC filings for a detailed description of the risk factors affecting our business.

Michael Atieh

[Michael Atieh discusses year end information]

Colin Goddard

Thanks, Mike. In 2007, we set out to appropriately balance the business around three core tenets; execution —together with our partners at Genentech and Roche — on our Tarceva program; the prioritization of our R&D investments around novel and highly differentiated assets; and the delivery of strong financial performance in a year that we committed to taking the Company profitable in an emphatic fashion. We believe that 2007 was a very successful year and one that has the Company on track for a strong 2008.

As Mike has mentioned, 2007 was a strong year for Tarceva, and we exited 2007 with a fourth quarter annualized run-rate of $1 billion for global Tarceva sales — the universally recognized standard for a ‘blockbuster’ in our industry. We are proud of the fact that Tarceva has achieved this milestone just three years after its November 2004 U.S. launch and — most importantly — has become an important and valuable contributor to the treatment of lung and pancreatic cancer patients around the world. While competition in the oncology area continues to be significant, we believe this established role for Tarceva in the care of cancer patients, coupled to our robust, ongoing development and label expansion program, positions the brand for continued growth as we go forward.

In 2008, we foresee the potential for credible U.S. sales growth based on: a refined promotional program in pancreatic cancer; tactical programs designed to ease reimbursement issues; continued selling efforts to counter the practice economic disadvantage to oral therapies; and the impact of the recent price increase, which was effective on February 6th. We note that there are no unusual inventory or return issues in the fourth quarter and believe that the combination of the increased reserve levels and the outcome of ongoing discussions with Genentech concerning possible changes to the Tarceva returns policy should substantially ameliorate this as an issue going forward.

We believe that we will continue to see robust growth in the rest of the world markets in 2008. We are continuing to witness an effective “rolling” European launch of Tarceva in pancreatic cancer. And our Japanese partner, Chugai, is in the early stages of what we think will be a successful Japanese launch for non-small-cell lung cancer. Our partner was successful in achieving a favorable price in Japan (of 10,500 Yen per 150mg tablet) and is demonstrating a strong commitment to the brand.

Many of you will have noticed both press and analyst commentary concerning an ongoing legal clash with the generics industry in India. Tarceva was one of the first small molecule oncology drugs granted a patent in India (in July 2007) following India’s 2005 amendment of their patent laws to conform with the WTO’s agreement on trade-related aspects of intellectual copyrights. Recently, Cipla Ltd. — a major Indian generics manufacturer — announced its intention to launch a generic version of erlotinib in India, and we — together with our partners at Roche — filed for an injunction against this launch. A decision is anticipated at any time. The situation is symbolic of the increasingly aggressive activities of the generic industry toward innovator intellectual property rights, with challenges to innovator intellectual property around the world becoming increasingly common.

We — together with Genentech and Roche — have continued to assess the Tarceva IP estate both in the U.S. and around the world and have developed an aggressive and proactive strategy going forward designed to protect and pursue our IP interests on a global basis.

We continue to conduct a robust development program for Tarceva, and we remain confident that our program will continue to drive label expansion and sales growth of the brand. Clearly, the anticipated second-half data unblinding for SATURN and BETA lung phase III trials — if positive — has the potential to substantially improve the competitive positioning of the brand by demonstrating the value of Tarceva in a maintenance mode following front-line treatment of non-small-cell lung cancer patients and — in combination with Avastin — in extending the survival of second-line non-small-cell lung cancer patients. We believe the convenience of oral Tarceva therapy is ideally suited to a maintenance setting and are excited about the prospects of an all-targeted therapy combination regimen in the second-line setting. There are no remaining planned interim analyses for SATURN, while the BETA protocol includes one remaining planned interim analysis after a certain proportion of events have occurred, which will assess safety and also efficacy. We also filed our smoking PK data as a supplement to the NDA at the end of 2007 and anticipate action on this in the fourth quarter.

In addition to the 2008 phase III data read-outs, we anticipate the possibility of top-line data from three additional phase II/III trials in 2009/10: the ATLAS Tarceva/Avastin front-line maintenance non-small-cell lung study, the CALGB sponsored front-line “never-smoker” studies in lung cancer, and the EORTC sponsored front-line maintenance study in ovarian cancer. We are also making good progress in catching up on accruals to our RADIANT non-small-cell lung cancer trial in the adjuvant (that’s Stage I through IIIa setting). We have approximately 300 patients screened and approximately 100 patients randomized to date. We continue to believe that this study — which we don’t expect to read out until the 2014/15 timeframe — remains a critical component of the latter stages of the Tarceva lifecycle plan.

In addition to these studies that we have previously highlighted for investors, we would like to draw your attention to some of the planned or recently initiated studies that we believe will play an important role in building the Tarceva franchise in the longer term. We’re contemplating a Tarceva phase III trial comparing a combination of Nexavar and Tarceva with Nexavar monotherapy in hepatocellular carcinoma. Separate phase II trials have indicated a median survival of 10-13 months with Tarceva monotherapy in HCC, and the phase II Avastin/Tarceva combination trial — demonstrating a median survival of 19 months (which was presented at last year’s ASCO meeting) — shows the compatibility of an anti-angiogenesis/anti-EGFR regimen in this setting. The planned study could address an important strategic goal for OSI in demonstrating the value and utility of all-oral combinations of targeted therapies in treating human cancer and could potentially read-out in 2011.

Our partner Roche has recently initiated a randomized phase II trial named TASK that treats patients with either Avastin plus Tarceva or chemotherapy plus Avastin in the first-line non-small-cell lung cancer setting. They are also preparing to run a second randomized phase II trial called RACHEL, which seeks to examine the impact of dose escalating Tarceva to grade II rash in combination with a fixed standard dose of gemcitabine in pancreatic cancer patients. The third randomized phase II trial called MARK focuses on evaluating a number of biomarkers in addition to assessing efficacy outcomes for Tarceva monotherapy and best supportive care treatments in advanced pancreatic cancer patients who have failed prior chemotherapy.

We also have a comprehensive investigative sponsored trial program for Tarceva, currently comprising over 250 ongoing or planned clinical trials. This program is aimed at exploring additional potential treatment regimens and

opportunities for the brand. The program includes some strategically important exploratory initiatives such as three trials that explore the ongoing use of Tarceva in a “treatment beyond progression” mode.

In 2008, we see three major competitor events on the horizon. At this year’s ASCO meeting, we anticipate data presentations for Alimta and Erbitux phase III trials in multiple-cell lung cancer that have been previously announced as having positive outcomes. We also expect a topline data announcement of the ongoing Zactima versus Tarceva phase III trial. While we — from our assessment of published Zactima data and our understanding of Tarceva — consider it relatively unlikely that Zactima will prove to be superior to Tarceva, we recognize an element of competitive risk in all three of these events. There are additional ongoing studies that could impact the Tarceva franchise and we fully appreciate the ongoing, long-term competitive nature of the cancer — and particularly the lung cancer markets. Nonetheless, with a $1 billion a year global sales exit rate for 2007 — and the robust ongoing development and label expansion program outlined above — we believe that it will take a remarkably unfortunate and — we think unlikely — confluence of negative events in order to counteract our anticipation of continued growth for the Tarceva brand.

Moving onto the pipeline, as you know, we have identified four key development assets in our portfolio — two each in oncology and diabetes/obesity — that we believe have significant potential. We have two ongoing phase I trials for OSI-906, our small molecule IGF-1 receptor inhibitor, exploring both continuous and intermittent dosing schedules. We expect to initiate an additional combination phase I trial with Tarceva later in the year. We have submitted an IMPD to the European regulatory authorities with a view to initiating the clinical program for OSI-027, our next-generation mTOR inhibitor, in the first part of this year. OSI-027 inhibits both the TORC-1 and TORC-2 mTOR signaling complexes, and pre-clinical results have shown this to be very active, but to carry an appreciable toxicity burden. The biology of our approach is very attractive from an EMT perspective, and we’re hopeful that we can explore an effective regimen for what could be a very promising clinical agent.

On the diabetes/obesity front, the preclinical programs for both PSN821 — our GPR-119 agonist — and PSN602 — our S1RUP program candidate — continue on track for clinical program initiation later this year.

Our oncology research efforts continue to focus on exploiting our growing understanding of epithelial-to-mesenchymal transition biology and, in support of this effort, we paid our first milestone to our partners AVEO in the fourth quarter for transfer of the first of a series of animal models that we believe will provide benefits to both our drug discovery and translational research efforts in this arena. We have also completed an asset acquisition from a very small company called AdipoGenix — totaling approximately $2 million — in the fourth quarter. The AdipoGenix platform adds useful flat cell screening technology and some early chemistry in support of our diabetes and obesity drug discovery research efforts.

Our DP-IV patent estate continues to be a very valuable asset to the organization and with Merck reporting a 2007 annualized exit run-rate for Januvia/Janumet sales of approximately $1.2 billion we expect to see continued growth in the royalty stream that we receive from this patent estate in 2008. The reason for the termination of our internal DP-IV program — lack of sufficient DP8/9 selectivity — is likely to be an issue for some — but not all- players in this space and has, in the near term, allowed Merck to secure a dominant position. Merck were the original partners of Probiodrug from whom we acquired the estate and, as such, we have a more robust royalty schedule from that license than the norm. Royalties escalate modestly as milestone sales levels are met, so it is reasonable to assume slightly more than a 2% average royalty on Januvia/Janumet sales.

[Dr. Goddard provided concluding remarks and a question and answer session then followed.]