EXHIBIT 99.1
OSI PHARMACEUTICALS ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
- - CONFERENCE CALL AND WEBCAST TO FOLLOW -
MELVILLE, NEW YORK - AUGUST 10, 2004 - OSI Pharmaceuticals, Inc. (NASDAQ: OSIP)
today announced its financial results for the Company's third quarter ended June
30, 2004. The Company reported net losses for the third quarter and nine-month
period of $47.3 million ($1.19 net loss per share) and $137.2 million ($3.50 net
loss per share), respectively, compared to net losses of $75.1 million ($2.03
net loss per share) and $132.4 million ($3.62 net loss per share) for the third
quarter and nine month period, respectively, in the prior year.
Revenues for the three and nine months ended June 30, 2004 were $11.2 million
and $29.8 million, respectively, compared to $8.0 million and $20.1 million for
the respective prior year periods. Included in revenues for the current three
and nine-month periods were sales commissions and product sales of $9.9 million
and $25.9 million, respectively, compared to $5.6 million and $6.5 million for
the comparable prior year periods. The increase in sales commissions and product
sales for the quarter primarily reflects the impact of the Company's new
commercial organization which only began promoting Novantrone(R) for oncology
indications in the U.S. in March of 2003.
Total operating expenses for the three and nine months ended June 30, 2004 were
$52.7 million and $157.7 million, respectively, compared to $82.9 million and
$153.8 million, for the comparable prior year periods. The prior year three and
nine-month periods included an in-process research and development charge of
$31.3 million related to the acquisition of in-process research and development
acquired from Cell Pathways, Inc. in June 2003. Net of this charge, the increase
in the current year nine-month period primarily relates to an increase in
selling, general and administrative costs, amortization of intangibles and cost
of product sales. Included in cost of product sales for the current nine-month
period was a charge of $2.0 million related to certain excess inventory the
Company acquired from Cell Pathways. The increase in SG&A cost was primarily
related to anticipated increased costs associated with (i) the expansion of the
Company's commercial and administrative operations, (ii) the Company's share of
increased marketing and commercialization costs relating to Tarceva(TM), and
(iii) costs relating to the closing of the Company's Pennsylvania facility,
acquired in the Cell Pathways acquisition.
Amortization expense also increased by $652,000 and $9.3 million for the three
and nine month periods, respectively, relating to the acquisition of marketing
rights for Novantrone(R) and Gelclair(R). OSI also saw an increase in interest
expense over the prior year periods associated with the interest on convertible
notes the Company issued in September 2003 and the accrual of an additional $3.7
million of guaranteed interest related to the conversion of the convertible
notes due February 2009.
In June 2004, OSI called for the full redemption of the outstanding $160 million
of its 4% convertible senior subordinated notes due February 2009. All of the
holders of these notes converted their notes into shares of OSI common stock
prior to the redemption date of July 19, 2004. As a result OSI issued 3.2
million shares of common stock and has outstanding convertible senior
subordinated notes in the
principal amount of $150 million, which are due in 2023. The total number of
shares of OSI common stock outstanding is now approximately 43.2 million shares.
OSI reported approximately $321.9 million in cash and investment securities as
of June 30, 2004.
The Company also announced today that it proposed to consolidate all of its
U.K.-based oncology research and development activities into its New York
locations by approximately November 30, 2004. The consolidation could result in
a reduction in the Company's U.K.-based oncology workforce by approximately 90
employees and a reduction in the overall research headcount globally. The
Company anticipates savings of $10-15 million per year in annual operating
expense, however the Company also anticipates that its overall workforce will
remain at approximately 500 employees as it continues to expand its sales force
ahead of an anticipated approval of Tarceva(TM). The Company also plans
increases in its investment in translational research programs supporting
Tarceva(TM) and the rest of the Company's clinical pipeline and in the Company's
diabetes and obesity subsidiary, Prosidion Limited. Prosidion will continue to
be based in the U.K., and following the successful acquisition of the Dipeptidyl
Peptidase IV assets from Probiodrug AG, Prosidion expects to double in size to
approximately 65 employees.
"The Company is at an exciting stage in its evolution and, in preparing for an
anticipated launch of Tarceva(TM), we are determined to manage our cost base
diligently as we make the important transition from a development stage to a
commercialization stage organization," stated Colin Goddard, Ph.D., Chief
Executive Officer of OSI Pharmaceuticals. "The decision to consolidate our
U.K.-based oncology research into the U.S. was not an easy one, but we have
prioritized the need to expand our commercial infrastructure and increase our
level of investment in both translational research and our promising diabetes
and obesity subsidiary, Prosidion. We recognized that we could not make these
investments without making hard choices elsewhere in the business."
PIPELINE HIGHLIGHTS / DEVELOPMENTS
TARCEVA(TM)
In April, the Company announced that the pivotal Phase III Tarceva(TM) trial,
Study BR.21, met all of its pre-determined study endpoints (including survival,
progression free-survival, time to symptom deterioration, and objective tumor
response). This was a 731-patient, double-blind, placebo-controlled trial which
compared single-agent Tarceva(TM) to placebo in the treatment of patients with
advanced non-small cell lung cancer (NSCLC) following the failure of first or
second-line chemotherapy. These results make Tarceva(TM) the first and only
targeted therapy to demonstrate an improvement in survival for NSCLC patients.
Detailed results of the BR.21 study as well as results from earlier clinical
studies examining Tarceva(TM) in various indications and combinations including
the combination of Tarceva(TM) and Avastin(R) in the treatment of metastatic
renal cell carcinoma and relapsed NSCLC were presented in June 2004 at the 40th
Annual American Society of Clinical Oncology (ASCO) meeting in New Orleans, LA.
In June, OSI announced that Tarceva(TM) was granted Pilot 1 Status under the
U.S. Food and Drug Administration's (FDA) Pilot 1 Program for Continuous
Marketing Applications. The Pilot 1 Program is designed to expedite the review
process for investigational products, such as Tarceva(TM), that have been given
Fast Track status and that have demonstrated significant promise in clinical
trials as a therapeutic advance over available therapy for a disease or
condition. Tarceva(TM) is one of the first drugs to be
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reviewed under this new Pilot 1 Program. Subsequent to the quarter, OSI
announced on August 2, 2004 that it completed the submission of the New Drug
Application (NDA) for FDA approval of Tarceva(TM). Assuming a full six-month
review by the FDA, the Company would project a possible approval in the United
States in the first quarter of calendar 2005.
OSI-7904L
OSI also announced that it has initiated a randomized, open label, Phase II
clinical study of OSI-7904L versus 5-fluorouracil (5-FU) as first-line treatment
in patients with advanced or metastatic gallbladder or biliary tract cancers.
This multi-center study is scheduled to enroll approximately 60 patients in
North America and Europe, and is designed to evaluate the efficacy and safety of
OSI-7904L in parallel with that of 5-FU.
In addition to the initiation of this Phase II study in gallbladder and biliary
cancers, the Company's overall OSI-7904L program includes an ongoing Phase II
clinical study of OSI-7904L in chemotherapy-naive gastric and gastroesophageal
junction cancer patients and two on-going studies evaluating the use of
OSI-7904L in combination with the chemotherapy agents cisplatin and oxaliplatin.
OSI-7904L is a liposomal formulation of a potent thymidylate synthase (TS)
inhibitor which is designed to improve activity by changing the drug exposure
(pharmacokinetic) profile when compared to its non-liposomal formulation,
thereby maintaining active concentrations of drug in the tumor for extended
periods of time. OSI-7904L is currently being developed by the Company as a
potential next-generation cytotoxic drug and competitor to 5-FU, a leading TS
inhibitor currently marketed.
SAAND'S PLATFORM
In line with OSI's expectations, in June 2004, the Company announced that a
Phase III study of Aptosyn(R) in combination with docetaxel in advanced NSCLC
did not meet its primary and secondary endpoints. Aptosyn(R) was part of the
Selective Apoptotic Anti-Neoplastic Drug (SAANDs) platform acquired from Cell
Pathways. The Company also announced results from a Pilot Phase II study of
OSI-461, the follow-on molecule to Aptosyn(R), in Crohn's disease. OSI-461 was
tested at 200mg BID for up to eight weeks in patients with moderately to
severely active Crohn's disease. Clinical response rate (as measured by a >70
point reduction in the Crohn's disease activity index (CDAI)) was the primary
endpoint, and a clinical remission rate (CDAI<150) was among the secondary
endpoints. Thirteen (42 percent) of patients had either a clinical response
(8/31) or a clinical remission (5/31). Eight (26 percent) of the patients
experienced abdominal pain, which was the most common adverse event reported in
the study. The Company believes that these results are borderline and need to be
interpreted with caution in the context of a disease that has a well-documented
variable course. OSI is currently conducting a Phase I study in cancer patients
to explore whether increases in systemic exposure of OSI-461 can be achieved by
administering the drug with food and will consider the most appropriate next
steps for the entire OSI-461 program based upon the results of this study. The
SAANDs program continues to be an area of research activity within the Company's
overall efforts in developing pro-apoptotic anti-cancer drugs.
CORPORATE HIGHLIGHTS FOR THE QUARTER
TARCEVA(TM): PROMOTION, MARKETING AND MANUFACTURING AGREEMENTS
In June, OSI and Genentech announced that they entered into two agreements
detailing the roles of the two parties with respect to promotion, marketing and
manufacturing responsibilities for Tarceva(TM) once
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it is approved for distribution in the U.S. market. As stated in an original
2001 co-development and commercialization agreement, Genentech will have the
lead responsibility for the marketing and promotion of Tarceva(TM) in the U.S.
OSI will co-promote Tarceva(TM) and field at least 25% of the combined U.S.
sales force. In addition, OSI has the responsibility for clinical and commercial
manufacturing and supply of Tarceva(TM) in the U.S. market.
PROSIDION: DIABETES & OBESITY SUBSIDIARY
During this past quarter, OSI announced that Prosidion Limited, its
majority-owned United Kingdom subsidiary focused on the discovery and
development of diabetes and obesity therapeutics, entered into an asset purchase
agreement with Probiodrug AG. The assets acquired by Prosidion include a
platform of Dipeptidyl Peptidase IV (DP-IV) technology, which includes PSN9301
(formerly P93/01), a clinical candidate that is in Phase II clinical trials for
the treatment of Type 2 diabetes and issued method-of-use claims that have been
non-exclusively licensed to other companies (including Merck & Co., Inc. and
Novartis, Inc.) for future milestones and royalty payments. Upon closing of the
acquisition on July 26, 2004, Prodision paid $35 million in cash to Probiodrug
and additional milestone payments are due to Probiodrug upon the successful
development of PSN9301.
OSI considers expansion into a second disease area to be an important part of
its strategy for long-term value creation. In June, OSI's Board of Directors
authorized a further investment of $50 million in Prosidion, in addition to the
$10 million invested in April 2004, in order to finance the acquisition and fund
the ongoing research and development efforts at Prosidion. OSI owns
approximately 96% of Prosidion following the latest round of investment.
CONFERENCE CALL
OSI will host a conference call reviewing the Company's third quarter financial
results, product portfolio and business developments on August 11, 2004 at
10:00am (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 1-800-888-5452 (U.S.) or 1-719-867-0660 (international) to listen to
the call. Telephone replay is available approximately two hours after the call
through August 18, 2004. To access the replay, please call 1-888-203-1112 (U.S.)
or 1-719-457-0820 (international). The conference ID number is 717611.
ABOUT OSI PHARMACEUTICALS
OSI Pharmaceuticals is a leading biotechnology company focused on the discovery,
development, and commercialization of high-quality, next-generation oncology
products that both extend life and improve the quality of life for cancer
patients worldwide. OSI has a balanced pipeline of oncology drug candidates that
includes both novel mechanism-based, gene-targeted therapies focused in the
areas of signal transduction and apoptosis and a next-generation cytotoxic
chemotherapy agent. OSI's most advanced drug candidate, Tarceva(TM), a
small-molecule inhibitor of the HER1 gene, has successfully completed Phase III
clinical trials for lung cancer and is the subject of an ongoing New Drug
Application (NDA). OSI has a commercial presence in the U.S. oncology market
where it exclusively markets Novantrone(R) (mitoxantrone concentrate for
injection) for approved oncology indications and Gelclair(R) for the relief of
pain associated with oral mucositis. OSI has also established Prosidion Ltd., an
independently operated diabetes and obesity subsidiary based in the United
Kingdom. For additional information about the company, please visit
http://www.osip.com.
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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, and other
factors described in OSI Pharmaceuticals' filings with the Securities and
Exchange Commission. Tarceva(TM), OSI-7904L, OSI-461, P93/01 and Aptosyn(R) are
an investigational compounds and have not yet been approved as safe or
efficacious in humans for their ultimate intended use.
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OSI Pharmaceuticals, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Operations Three Months Ended June 30, Nine Months Ended June 30,
(Unaudited) ------------------------- -------------------------
(In thousands, except per share data) 2004 2003 2004 2003
--------- --------- --------- ---------
Revenues:
Sales commissions and product sales .............. $ 9,866 $ 5,636 $ 25,948 $ 6,523
License and other revenues ....................... 1,300 1,519 3,825 4,478
Collaborative program revenues ................... -- 867 -- 9,085
--------- --------- --------- ---------
Total revenues .................................. 11,166 8,022 29,773 20,086
--------- --------- --------- ---------
Expenses:
Cost of product sales ........................... 108 55 2,262 55
Research and development ........................ 25,352 24,301 76,178 76,297
Acquired in-process research and development .... -- 31,290 -- 31,290
Selling, general and administrative ............. 22,655 23,336 65,279 41,496
Amortization of intangibles ..................... 4,574 3,922 13,986 4,666
--------- --------- --------- ---------
Total expenses ................................. 52,689 82,904 157,705 153,804
--------- --------- --------- ---------
Loss from operations .......................... (41,523) (74,882) (127,932) (133,718)
Other income (expense):
Investment income - net ......................... 1,271 1,567 4,185 6,469
Interest expense ................................ (6,576) (1,605) (12,216) (4,817)
Other expense - net ............................. (517) (198) (1,219) (321)
--------- --------- --------- ---------
Net loss .......................................... $ (47,345) $ (75,118) $(137,182) $(132,387)
========= ========= ========= =========
Basic and diluted net loss per common share ....... $ (1.19) $ (2.03) $ (3.50) $ (3.62)
========= ========= ========= =========
Weighted average shares of
common stock outstanding ......................... 39,643 36,992 39,173 36,618
========= ========= ========= =========
Condensed Consolidated Balance Sheet June 30, September 30,
(In thousands) 2004 2003
-------- --------
(unaudited)
Cash and investments securities
(including restricted investments)... $321,903 $404,147
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Total assets ......................... $484,022 $591,502
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Total stockholders' equity .......... $111,039 $218,057
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