EX-99.1 2 y72089exv99w1.htm EX-99.1: PRESS RELEASE EX-99.1
Exhibit 99.1
(LOGO)
NEWS RELEASE
     
Contacts:
    
OSI Pharmaceuticals, Inc.
  Burns McClellan, Inc. (representing OSI)
Kathy Galante (investors/media)
  Justin Jackson/Kathy Nugent (media)
631-962-2043
  212 -213-0006
Kim Wittig (media)
    
631-962-2135
    
OSI Pharmaceuticals Announces Third Quarter 2008 Financial Results
— Reports Earnings of $0.56 Per Share From Continuing Operations —
— Tarceva Global Net Sales of $279 Million Up 23% Over The Third Quarter of 2007 —
MELVILLE, NEW YORK — October 22, 2008 — OSI Pharmaceuticals, Inc. (NASDAQ: OSIP) announced today its financial results for the Company’s third quarter ended September 30, 2008. The Company reported net income from continuing operations of $34.5 million (or $0.56 per share) for the three months ended September 30, 2008, compared with net income from continuing operations of $35.9 million (or $0.59 per share) for the third quarter of 2007.
The Company reported total revenues from continuing operations of $95 million for the third quarter of 2008 compared to revenues of $100 million for the third quarter of 2007. The decline was primarily due to greater license and milestone revenue received in 2007, which was partially offset by the growth in revenues relating to worldwide Tarceva® (erlotinib) sales. Total worldwide net sales of Tarceva for the third quarter of 2008, as reported by the Company’s collaborators for Tarceva, Genentech, Inc. and Roche, were approximately $279 million, representing a 23% growth in global sales compared to the same period last year. For the nine months ended September 30, 2008 worldwide Tarceva net sales were approximately $837 million, representing a 32% increase over the same period last year.
Total revenues from continuing operations for the third quarter of 2008 are comprised of the following key items:
  •   Net revenues from the unconsolidated joint business for Tarceva of $46 million, compared to $42 million in the third quarter of 2007, arising from the Company’s co-promotion arrangement with Genentech. The net revenues were based on total U.S. Tarceva sales of $110 million, compared to $101 million in the third quarter of 2007, a 9% increase. However, sales for both the third quarter of 2008 and 2007 were negatively impacted by approximately $11 million and $13 million, respectively, of net reserve adjustments primarily due to higher than anticipated product returns related to expiring inventory.
 -more-

 

 

  •   Royalties of $34 million compared to $25 million in the third quarter of 2007 from Roche, the Company’s international partner for Tarceva. The royalty revenues are based on total rest of world sales of approximately $169 million, an increase of 35%, compared to the $125 million reported in the third quarter of 2007.
 
  •   License, milestone and other revenues of $15 million compared with $33 million in the third quarter of 2007. Overall revenue generated from the Company’s DP-IV patent portfolio covering the use of DP-IV inhibitors for treatment of type 2 diabetes decreased due to the inclusion of license and milestone revenue in 2007, which was partially offset by an increase in royalty income in 2008. Royalty income nearly tripled to $13 million. The remaining decrease was comprised primarily of the inclusion of amortization of an upfront license fee in 2007 related to the outlicense of our Glucokinase Activator program to Eli Lilly and Company in January 2007, and the inclusion of license revenue in 2007 from Renovo plc. in connection with their licensing agreement with Shire, plc. for their TGF-beta 3 drug candidate Juvista®.
Operating expenses from continuing operations for the third quarter of 2008 were $58 million, compared to $64 million for last year’s third quarter. Research and development expense for the third quarter of 2008 increased to $33 million compared to $29 million for last year’s third quarter. The Company also recognized a $7.5 million in-process research and development charge in the third quarter of 2007 related to its discovery and translational research collaboration with AVEO Pharmaceuticals, Inc. Selling, general and administrative expenses for the third quarter of 2008 decreased to $22 million compared to $25 million for the third quarter of 2007. Operating expenses include $5.1 million (or $0.08 per share) of equity related compensation expense for the third quarter of 2008, compared to $3.4 million (or $0.05 per share) for the third quarter of 2007.
Discontinued Operations
As a result of the Company’s decision to divest its 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 August 2008, the Company divested the Company’s remaining eye disease business assets.
The Company’s net income, including results from discontinued operations, was $54.8 million (or $0.88 per share) for the three months ended September 30, 2008, compared with a net income of $29.6 million (or $0.49 per share) reported for the third quarter of 2007.
Conference Call
OSI will host a conference call reviewing the Company’s financial results, product portfolio and business developments on October 22, 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 1-888-244-2435 (U.S.) or 1-913-312-1265 (international) to listen to the call. The conference ID number for the live call is 5943449. Telephone replay is available approximately two hours after the call through November 5, 2008. To access the replay, please call 1-888-203-1112 (U.S.) or 1-719-457-0820 (international). The conference ID number for the replay is 5943449.

 

 

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
                                 
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2008     2007     2008     2007  
(In thousands, except per share data)   Unaudited     Unaudited     Unaudited     Unaudited  
Revenues:
                                
Net revenue from unconsolidated joint business
   $ 45,501     $ 41,747     $ 147,237     $ 123,868  
Royalties on product licenses
     34,228       25,413       100,831       67,252  
License, milestone and other revenues
     14,843       33,210       32,893       65,602  
 
                        
Total revenues
     94,572       100,370       280,961       256,722  
 
                        
 
                                
Expenses:
                                
Cost of goods sold
     2,517       2,142       6,748       6,093  
Research and development
     33,054       29,489       94,009       87,384  
Acquired in-process research and development
     —       7,500       —       7,500  
Selling, general and administrative
     22,262       24,816       69,985       73,983  
Amortization of intangibles
     646       461       1,884       1,378  
 
                        
Total expenses
     58,479       64,408       172,626       176,338  
 
                        
 
                                
Income from continuing operations
     36,093       35,962       108,335       80,384  
 
                                
Other income (expense):
                                
Investment income — net
     2,976       3,157       9,670       9,247  
Interest expense
     (2,894 )     (1,811 )     (9,040 )     (5,423 )
Other income (expense) — net
     (643 )     (497 )     (2,779 )     2,582  
 
                        
 
                                
Income from continuing operations before income taxes
     35,532       36,811       106,186       86,790  
Income tax provision
     987       907       2,761       1,915  
 
                        
Net income from continuing operations
     34,545       35,904       103,425       84,875  
Income (loss) from discontinued operations
     20,281       (6,276 )     5,936       (28,984 )
 
                        
Net income
   $ 54,826     $ 29,628     $ 109,361     $ 55,891  
 
                        
 
                                
Basic and diluted income (loss) per common share:
                                
Basic income (loss)
                                
Continuing operations
   $ 0.60     $ 0.62     $ 1.81     $ 1.48  
Discontinued operations
   $ 0.35     $ (0.11 )   $ 0.10     $ (0.50 )
Net income
   $ 0.95     $ 0.51     $ 1.91     $ 0.97  
Diluted income (loss)
                                
Continuing operations *
   $ 0.56     $ 0.59     $ 1.70     $ 1.41  
Discontinued operations
   $ 0.31     $ (0.10 )   $ 0.09     $ (0.46 )
Net income
   $ 0.88     $ 0.49     $ 1.79     $ 0.95  
 
                                
Weighted average shares of common stock outstanding:
                                
Basic shares
     57,437       57,756       57,218       57,536  
Diluted shares
     64,571       65,201       64,355       63,041  
 
                                
 
* Computation of diluted income per share from continuing operations:
                                
 
                                
Net income from continuing operations
   $ 34,545     $ 35,904     $ 103,425     $ 84,875  
Add: Interest and issuance cost related to dilutive convertible debt
     1,667       2,260       5,829       3,811  
 
                        
Net income from continuing operations — diluted
   $ 36,212     $ 38,164     $ 109,254     $ 88,686  
 
                        
 
                                
Basic shares
     57,437       57,756       57,218       57,536  
Dilutive effect of options and restricted stock
     1,227       538       821       597  
Dilutive effect of the 2025 Notes
     3,908       3,908       3,908       3,908  
Dilutive effect of the 2023 Notes
     1,999       2,999       2,408       1,000  
Dilutive effect of the 2038 Notes** (issued in January 2008)
     —       —       —       —  
 
                        
Diluted shares
     64,571       65,201       64,355       63,041  
 
                        
 
**    Under the “if-converted” method, common share equivalents related to our 2038 Notes were not included in diluted earnings per share for the three and nine months ended September 30, 2008 because their effect would be anti-dilutive.
                 
    September 30,     December 31,  
    2008     2007  
    Unaudited          
Cash and investments securities (including restricted investments)
   $ 488,469     $ 305,098