Filed by Cell Pathways, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Cell Pathways, Inc.
Commission File No. 0-24889
On May 14, 2003, Cell Pathways, Inc., a Delaware corporation, issued the
following press release.
CELL PATHWAYS, INC. REPORTS FIRST QUARTER 2003
FINANCIAL RESULTS
HORSHAM, PA, (MAY 14, 2003) - Cell Pathways, Inc. (NASDAQ: CLPA) today
reported financial results for the first quarter ended March 31, 2003.
Net loss for the first quarter of 2003 was $5.6 million or $0.14 per share
compared to a net loss of $5.6 million, or $0.18 per share for the same period
in 2002. The Company ended the quarter with $6.0 million in cash as compared to
$10.9 million in cash at December 31, 2002.
Revenues recognized on sales of Gelclair(TM) Concentrated Oral Gel for the
first quarter of 2003 were $522,000. Gelclair(TM) is approved for use in
treating oral mucositis, an inflammation and ulceration of the mouth caused by
chemotherapy and radiotherapy. The Company has contracts with Celgene
Corportation and John O. Butler Company whereby Celgene and Butler promote
Gelclair(TM) in the oncology and dental marketplaces, respectively. Cost of
products sold related to Gelclair(TM) were $190,000 for the first quarter of
2003. There were no product sales of Gelclair(TM) in the first quarter of 2002
since the Company began promoting Gelclair(TM) in the second quarter of 2002.
Research and development expenses were $3.5 million in the first quarter of 2003
as compared to $4.3 million for the same period in 2002, a decrease of $855,000
or 19.8%. This decrease was primarily the result of reductions in personnel,
lower clinical study costs for Aptosyn(R) (exisulind), the Company's first drug
candidate, a reduction in research supplies and fees associated with the
Company's scientific advisory board. Partially offsetting these lower expenses
were increases in expenses related to the development of the Company's second
drug candidate, CP461.
Selling, general and administrative expenses were $2.5 million in the first
quarter of 2003 as compared to $2.3 million for the same period in 2002, an
increase of $230,000 or 10.2%. This increase was due primarily to expenses for
accounting, legal and consulting related to the Company's pending acquisition by
OSI Pharmaceuticals, Inc. and marketing expenses for Gelclair(TM). Partially
offsetting these increases in expenses were decreases in personnel and marketing
consulting expenses.
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CELL PATHWAYS, INC. REPORTS FIRST QUARTER 2003
FINANCIAL RESULTS
PAGE 2
In the first quarter of 2002, the Company recorded a non-cash reduction of
litigation settlement expense of $850,000 related to the then proposed
securities class action litigation settlement. The reduction of expense related
to and adjusted for the fair value of securities that were to be issued as part
of the settlement. The settlement was finalized in September 2002. There was no
litigation settlement expense or reduction thereof, in the first quarter of
2003.
In February 2003, the Company entered into an agreement with OSI
Pharmaceuticals, Inc. whereby OSI Pharmaceuticals will acquire the Company in a
stock-for-stock merger of the Company with a subsidiary of OSI Pharmaceuticals.
A stockholders meeting for the purpose of seeking approval of the proposed
transaction has been scheduled for June 10, 2003.
Commenting on the quarter, Mr. Robert J. Towarnicki, Cell Pathways' chairman and
chief executive officer, said, "First quarter 2003 was marked by two noteworthy
events, the announcement of the proposed acquisition of Cell Pathways by OSI
Pharmaceuticals and the completion of enrollment in our Phase III trial of
Aptosyn(R) and Taxotere(TM) in non-small cell lung cancer."
Cell Pathways, Inc., headquartered in Horsham, Pennsylvania, is a development
stage pharmaceutical company focused on the research and development of
products to treat and prevent cancer and to treat certain autoimmune
diseases. The Company also markets Gelclair(TM) Concentrated Oral Gel,
manufactured by Sinclair Pharmaceuticals, Ltd. of the United Kingdom. For
additional information on Cell Pathways, Inc., visit the Company's web site
at http://www.cellpathways.com.
Note to Editors: Aptosyn(R) is a registered trademark of Cell Pathways, Inc.,
Gelclair(TM) is a trademark of Sinclair Pharmaceuticals Ltd. and
Taxotere(TM) is a registered trademark of Aventis Pharmaceuticals Inc.
This release contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are those
which express plans, anticipation, intent, contingency or future developments
and/or otherwise are not statements of historical fact, including, statements
regarding the acquisition by merger of the Company by OSI Pharmaceuticals. These
statements are subject to risks and uncertainties, known and unknown, which
could cause actual results and developments to differ materially from those
expressed or implied in such statements, including, among others, the risk that
the Company's stockholders do not approve the merger or that another condition
to the closing of the merger is not satisfied and other risks and uncertainties
discussed in the Company's filings with the Securities and Exchange Commission.
Additional Information About the Merger and Where to Find It
In connection with the proposed merger referred to above, OSI Pharmaceuticals
has filed with the Securities and Exchange Commission (SEC) a registration
statement on Form S-4. The registration statement has been declared effective,
and it contains the proxy statement of Cell Pathways for the meeting of its
stockholders scheduled for June 10, 2003 to consider and vote upon the proposed
merger. The proxy statement also serves as a prospectus of OSI Pharmaceuticals
with respect to the shares of OSI Pharmaceuticals to be distributed to
stockholders of Cell Pathways in the proposed transaction. INVESTORS AND
SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE PROXY STATEMENT/PROSPECTUS
REGARDING THE PROPOSED MERGER TRANSACTION AND ANY OTHER DOCUMENTS FILED WITH THE
SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OSI, CELL PATHWAYS,
THE MERGER AND RELATED MATTERS.
Investors and security holders may obtain a free copy of the proxy
statement/prospectus and other documents filed by OSI Pharmaceuticals and
Cell Pathways at the SEC's web site at http://www.sec.gov. In addition, they
may obtain such documents from OSI Pharmaceuticals or from Cell Pathways free
of charge by requesting them in writing from OSI Pharmaceuticals, Inc., 58
South Service Road, Suite 110, Melville, New York 11747, Attention: Investor
Relations, telephone: (631) 962-2000, or from
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CELL PATHWAYS, INC. REPORTS FIRST QUARTER 2003
FINANCIAL RESULTS
PAGE 3
Cell Pathways, Inc., 702 Electronic Drive, Horsham, Pennsylvania 19044,
Attention: Investor Relations, telephone: (215) 706-3800.
OSI, Cell Pathways, their respective officers and directors and certain other
members of management or employees may be deemed to be participants in the
solicitation of proxies from stockholders of Cell Pathways with respect to the
transactions contemplated by the merger agreement. A description of any
interests that OSI Pharmaceuticals' or Cell Pathways' directors and executive
officers have in the proposed merger is available in the proxy
statement/prospectus.
This press release is not an offer to sell shares of OSI Pharmaceuticals common
stock which may be issued in the proposed merger with Cell Pathways. Such OSI
Pharmaceuticals common stock is offered only by means of the proxy
statement/prospectus referred to herein.
Financial Tables Follow
CELL PATHWAYS, INC. REPORTS FIRST QUARTER 2003
FINANCIAL RESULTS
PAGE 4
CELL PATHWAYS, INC.
(A development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2003 December 31, 2002
-------------- -----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,984,766 $ 10,920,335
Accounts receivable 330,018 472,012
Inventory 2,430,849 2,140,615
Other current assets 802,118 792,610
------------- -------------
Total current assets 9,547,751 14,325,572
OTHER ASSETS 3,039,195 3,144,112
------------- -------------
$ 12,586,946 $ 17,469,684
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES $ 6,405,341 $ 5,729,622
------------- -------------
LONG TERM LIABILITIES 21,583 36,668
------------- -------------
STOCKHOLDERS' EQUITY
Common Stock 394,759 393,637
Additional paid-in capital 152,565,427 152,524,388
Deferred Compensation (54,926) (58,672)
Deficit accumulated during the
development stage (146,745,238) (141,155,959)
------------- -------------
Total stockholders' equity 6,160,022 11,703,394
------------- -------------
$ 12,586,946 $ 17,469,684
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CELL PATHWAYS, INC. REPORTS FIRST QUARTER 2003
FINANCIAL RESULTS
PAGE 5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31,
------------------------------
2003 2002
------------ ------------
PRODUCT SALES $ 522,414 $ --
------------ ------------
EXPENSES:
Cost of products sold 189,595 --
Research and development 3,456,436 4,311,246
Selling, general and administrative 2,489,371 2,259,476
Litigation settlement (1) -- (850,000)
------------ ------------
6,135,402 5,720,722
------------ ------------
Operating loss (5,612,988) (5,720,722)
INTEREST INCOME, net 23,709 88,821
------------ ------------
NET LOSS $ (5,589,279) $ (5,631,901)
============ ============
Basic and diluted net loss per common share $ (0.14) $ (0.18)
============ ============
Shares used in computing basic and diluted net loss per
common share 39,431,821 31,322,203
============ ============
(1) Reduction of expense amount was recorded to adjust the 2001 recorded
preliminary securities class action settlement amount to equal the fair
value of the 1.7 million shares of common stock as of March 31, 2002. These
shares have not been included in the shares used in computing basic and
diluted net loss per common share for the three months ended March 31, 2002
since the settlement was not finalized until September 2002.