EXHIBIT 99.1
OSI PHARMACEUTICALS ANNOUNCES SECOND QUARTER FINANCIAL RESULTS; COMPANY REPORTS
GAAP AND NON-GAAP LOSS NARROWS FOR SECOND QUARTER COMPARED TO COMPARABLE QUARTER
A YEAR AGO
MELVILLE, N.Y., Jul 27, 2005 (BUSINESS WIRE) -- OSI Pharmaceuticals, Inc.
(Nasdaq: OSIP) announced today its financial results for the Company's three and
six months ended June 30, 2005. The Company reported a net loss of $24.5 million
(or $0.48 per share) and $57.0 million (or $1.11 per share) for the three months
and six months ended June 30, 2005, respectively, compared with a net loss of
$47.3 million (or $1.19 per share) and $97.0 million (or $ 2.47 per share) in
the comparable prior year periods.
Revenues for the three months ended June 30, 2005 were $34.6 million
compared to $11.2 million for the respective prior year period. The increase was
primarily due to the net revenues from the unconsolidated joint business for
Tarceva(R) (erlotinib) arising from the Company's co-promotion arrangement with
Genentech, Inc., the Company's U.S. marketing collaborator for the product. For
the current quarter and six-month period the Company reported net revenues of
$21.7 million and $33.4 million, respectively, from its unconsolidated joint
business for Tarceva. The current quarter revenues from the unconsolidated joint
business of $21.7 million represent an increase of $10.0 million or 85% on a
sequential quarter over quarter basis. For the three months ended June 30, 2005,
U.S. net sales for Tarceva recorded by Genentech were $70.2 million, an increase
of $22.6 million or 47% compared to net sales for the quarter ended March 31,
2005. For the current three-month period, the Company also reported royalty
revenues from Roche, its international partner for Tarceva, of $416,000 based
upon Tarceva sales in certain countries outside the United States totaling $2
million following the approval of Tarceva in Switzerland in March. Also included
in the current period are revenues of $4.5 million related to upfront license
fees resulting from the execution of two worldwide non-exclusive license
agreements for the Company's Dipeptidyl Peptidase IV (DPIV) patent estate.
Total operating expenses for the three months ended June 30, 2005 were
$60.8 million compared to $52.7 million for the comparable prior year period.
The increase in the current three-month period of $8.1 million is primarily due
to an increase in research and development expenses related to the Company's
diabetes programs and Tarceva; an increase in cost of goods sold related to
higher product sales of Tarceva and an in-process research and development
charge of $3.5 million related to the acquisition of the minority interest of
Prosidion Limited. As a result of the acquisition, Prosidion is now a
wholly-owned subsidiary of the Company. Also included in the three months ended
June 30, 2005 is a charge of $1.4 million related to the buyout of Prosidion
stock options in advance of the acquisition of the minority interest.
Investment income for the current three-month period increased $2.9
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 $5.4 million for the current three month period, 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 as shown in the
accompanying table, the Company's net loss was $19.6 million (or $0.38 per
share) for the current three-month period compared to $43.6 million (or $1.10
per share) for the comparable prior year period. The decrease in the non-GAAP
loss for the current three-month period was primarily due to the Company's
revenues of $21.7 million from its unconsolidated joint business for Tarceva.
The Company has disclosed non-GAAP financial results that exclude charges
related to acquired in-process research and development, purchase of stock
options in advance of the acquisition of the minority interest, additional
guaranteed interest payments, inventory reserves and facility related charges.
Management believes that these charges are not reflective of the Company's
normal on-going operations. These non-GAAP 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 these non-GAAP 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 differences in non-GAAP and GAAP numbers are reconciled on the accompanying
table. Non-GAAP financial results should be considered in addition to, and not
as a substitute for, or superior to, financial statements prepared in accordance
with GAAP.
(OSI) ONCOLOGY: HIGHLIGHTS FROM THE TARCEVA PROGRAM
REGULATORY STATUS AND APPROVALS
Tarceva received a positive opinion from the European Committee for
Medicinal Products for Human Use (CHMP) recommending approval for sales in the
European Union of Tarceva for the treatment of patients with locally advanced or
metastatic non-small cell lung cancer (NSCLC) in June 2005. Tarceva was also
approved in July 2005 for sale in Canada. An approval decision by the European
Commission is anticipated over the next several months. Tarceva was approved by
the U.S. Food and Drug Administration (FDA) in November 2004 and is an oral
tablet indicated for daily administration for the treatment of patients with
locally advanced or metastatic NSCLC after failure of at least one prior
chemotherapy regimen. Tarceva was also approved in Switzerland in March 2005.
PANCREATIC CANCER
In May 2005, OSI submitted a supplemental New Drug Application (sNDA) with
the FDA for use of Tarceva plus gemcitabine chemotherapy for the treatment of
advanced pancreatic cancer in patients who have not received any previous
treatment. In July 2005, the FDA accepted the sNDA for filing and review and
granted priority review for Tarceva in this indication. Based on this priority
review status, the FDA has six months from receipt of the sNDA, or until
November 2, 2005, to take action on the sNDA filing (commonly referred to as the
PDUFA date).
PIVOTAL BR.21 TRIAL PUBLISHED IN NEW ENGLAND JOURNAL OF MEDICINE
In July 2005, the New England Journal of Medicine published results from
the pivotal BR.21 Phase III study showing Tarceva improved survival in patients
with advanced NSCLC. The global study was conducted by the National Cancer
Institute of Canada Clinical Trials Group based at Queen's University in
collaboration with the Company, and involved 86 sites from 17 countries around
the world. The FDA based its approval decision for Tarceva on results from the
BR.21 trials. In addition, a companion paper published in the same issue
reported on an analysis of molecular and clinical markers from tumor samples
from the pivotal BR.21 trial as correlated with response rate and survival. The
authors concluded that the subset of patients analyzed, patients whose tumors
had mutations in their EGFR genes, experienced no greater survival benefit than
patients whose tumors expressed the non-mutated - or "wild-type" - form of the
gene.
ISSUANCE OF ADDITIONAL PATENT STATUS
In June 2005, OSI announced the issuance of U.S. Patent No. 6,900,221 by
the United States Patent and Trademark Office, which resulted in extending the
intellectual property protection for Tarceva by approximately five years. The
patent is directed to a crystalline polymorph of Tarceva, methods for treating
various cancers, and processes for production of the crystalline polymorph. The
claims in the patent will extend exclusive protection of Tarceva until 2020.
ASCO HIGHLIGHTS
At this year's Annual Meeting of the American Society of Clinical Oncology
(ASCO) held in May, there were over 35 abstracts presented on Tarceva in various
indications and combinations.
An analysis of symptom data from the pivotal BR.21 study in NSCLC was
reported and the authors concluded that patients on Tarceva had slower
deterioration of their disease-related symptoms of cough, dyspnea and pain and
that these differences were clinically and statistically significant. Additional
highlights included data from two separate single-arm Phase II studies of
monotherapy Tarceva in chemotherapy-naive or front-line NSCLC patients. In both
studies encouraging anti-tumor activity was demonstrated in the front-line
setting. Encouraging anti-tumor activity was also reported in several Phase II
studies outside of NSCLC including combination therapy data for Tarceva with
Avastin in renal cell carcinoma; Tarceva with chemotherapy in head and neck
cancer and monotherapy use of Tarceva in colorectal and hepatocellular cancer.
AACR HIGHLIGHTS
At this year's Annual Meeting of the American Association for Cancer
Research (AACR) held in April, 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.
(OSI) ONCOLOGY: HIGHLIGHTS FROM THE C-KIT/KDR PROGRAM
In April 2005, the Company announced that its patent application covering
claims for its lead c-Kit/KDR compound, OSI-930, received 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
cancers with the compound. The issuance of this patent provides protection for
OSI-930 until 2024. OSI-930 is currently in a Phase I clinical trial and is the
first de novo drug candidate to emerge from the Company's oncology research
program.
(OSI) PROSIDION: HIGHLIGHTS FROM DIABETES & OBESITY PROGRAM
The Company secured two additional non-exclusive licensees to its DPIV
inhibitor patent estate. The Company has granted a number of non-exclusive
licenses under its patent family to major pharmaceutical companies including
Merck and Novartis, and expects to grant additional non-exclusive licenses in
the future. The Company is also developing its own DPIV inhibitor, PSN9301,
which is currently being evaluated in a Phase II clinical trial. Data from the
study are anticipated by the end of 2005.
At this year's Annual American Diabetes Association's Annual Scientific
Meeting in June, (OSI) Prosidion, OSI's diabetes and obesity team, presented
pre-clinical data on its glucokinase activator (GKA) and glycogen phosphorylase
inhibitor (GPI) programs. In July 2005, (OSI) Prosidion initiated a Phase I
clinical study of its GPI drug candidate, PSN357. Discovered by (OSI) Prosidion,
PSN357 is the first clinical candidate to emerge from the Company's discovery
research efforts in diabetes. (OSI) Prosidion expects to initiate a clinical
trial of a candidate from its GKA program by the end of 2005.
CONFERENCE CALL
OSI will host a conference call reviewing the Company's financial results,
product portfolio and business developments, July 28, 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
1-800-811-7286 (U.S.) or 1-913-981-4902 (international) to listen to the call.
Telephone replay is available approximately two hours after the call through
August 4, 2005. To access the replay, please call 1-888-203-1112 (U.S.) or
1-719-457-0820 (international). The conference ID number is 2431072.
ABOUT OSI PHARMACEUTICALS
OSI Pharmaceuticals is committed to "shaping medicines and changing lives"
by discovering, developing and commercializing high-quality and novel
pharmaceutical products that extend life or improve the quality of life for
cancer and diabetes patients worldwide. The company operates through two
business teams, (OSI) Oncology and (OSI) Prosidion. (OSI) Oncology is focused on
developing molecular targeted therapies designed to change the paradigm of
cancer care. (OSI) Prosidion is committed to the generation of novel, targeted
therapies for the treatment of type 2 diabetes and obesity. OSI's flagship
product, Tarceva(R) (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. OSI markets Tarceva through partnerships with Genentech, Inc.
in the U.S. and with Roche throughout the rest of the world. For additional
information about OSI, please visit http://www.osip.com.
In addition to Tarceva, (OSI) Oncology exclusively markets Novantrone(R)
(mitoxantrone concentrate for injection) for its approved oncology indications
and markets Gelclair(R) Bioadherent Oral Gel for the relief of pain associated
with oral mucositis. The research and development pipeline consists of novel
molecularly targeted anti-cancer agents focused on signal transduction pathways
involved in cell proliferation, apoptosis and angiogenesis. The most advanced of
these programs, targeting the co-inhibition of c-kit/KDR, has two candidates in
development.
(OSI) Prosidion is the diabetes and obesity business team within OSI
Pharmaceuticals, dedicated to the discovery and development of novel drugs for
the treatment of type 2 diabetes and obesity. (OSI) Prosidion's lead compound,
PSN9301, is a Dipeptidyl Peptidase IV (DPIV) inhibitor currently in Phase II
clinical trials. Other product candidates include a glycogen phosphorylase
inhibitor currently in a Phase I clinical trial and a glucokinase activator
scheduled to enter clinical trials in 2005. (OSI) Prosidion owns or has
licensing rights to a portfolio of DPIV medical use patents with claims covering
DPIV as a target for anti-diabetes therapy and the use of combinations of DPIV
inhibitors with other anti-diabetes drugs such as metformin. A number of
non-exclusive licenses to the patent estate have been granted to major
pharmaceutical companies. (OSI) Prosidion operates through OSI's wholly-owned
subsidiary, Prosidion Limited, in Oxford, U.K. For additional information about
Prosidion, please visit http://www.prosidion.com.
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) (Unaudited)
Three Months Ended June 30, 2005
----------------------------------------
GAAP (1) Differences Non-GAAP (2)
--------- ------------- ------------
Revenues:
Net revenue from unconsolidated
joint business $ 21,707 $ 21,707
Royalties on product sales 416 416
Sales commissions and product sales 7,567 7,567
License and milestone revenues 4,939 4,939
-------- --------
Total revenues 34,629 34,629
-------- --------
Expenses:
Cost of goods sold 1,749 1,749
Research and development 30,360 (577) (3) 29,783
Acquired in-process research and development 3,542 (3,542) (4) -
Selling, general and administrative 21,371 (803) (3) 20,568
Amortization of intangibles 3,802 3,802
-------- -------- --------
Total expenses 60,824 (4,922) 55,902
-------- -------- --------
Loss from operations (26,195) 4,922 (21,273)
Other income (expense):
Investment income - net 4,133 4,133
Interest expense (1,219) (1,219)
Other expense - net (1,257) (1,257)
-------- -------- --------
Net loss $(24,538) $ 4,922 $(19,616)
======== ======== ========
Basic and diluted net loss per
common share $ (0.48) $ 0.10 $ (0.38)
======== ======== ========
Weighted average shares of common
stock outstanding 51,313 51,313
======== ========
OSI Pharmaceuticals, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
Three Months Ended June 30, 2004
-----------------------------------------
GAAP (1) Differences Non-GAAP (2)
---------- ------------- ------------
Revenues:
Net revenue from unconsolidated
joint business $ - $ -
Royalties on product sales - -
Sales commissions and product sales 9,866 9,866
License and milestone revenues 1,300 1,300
--------- ----------
Total revenues 11,166 11,166
--------- ----------
Expenses:
Cost of goods sold 108 108
Research and development 25,352 25,352
Acquired in-process research and development - -
Selling, general and administrative 22,655 22,655
Amortization of intangibles 4,574 4,574
--------- --------- ----------
Total expenses 52,689 - 52,689
--------- --------- ----------
Loss from operations (41,523) - (41,523)
Other income (expense):
Investment income - net 1,271 1,271
Interest expense (6,576) 3,733 (5) (2,843)
Other expense - net (517) (517)
--------- --------- ----------
Net loss $(47,345) $ 3,733 $ (43,612)
========= ========= ==========
Basic and diluted net loss per
common share $ (1.19) $ 0.09 $ (1.10)
========= ========= ==========
Weighted average shares of common
stock outstanding 39,643 39,643
========= ==========
Condensed Consolidated Balance Sheet
(In thousands)
June 30, 2005 September 30, 2004
------------- ------------------
(unaudited)
Cash and investments securities
(including restricted investments) $571,523 $257,229
======== ========
Total assets $731,922 $388,029
======== ========
Total stockholders' equity $492,578 $154,233
======== ========
(1) Reflects operating results in accordance with U.S. generally accepted
accounting principles (or GAAP).
(2) Non-GAAP amounts exclude adjustments for acquired in-process research and
development, the purchase of Prosidion stock options outstanding and
guaranteed interest upon the redemption of convertible notes.
(3) Represents a charge for the buyout of Prosidion stock options.
(4) Represents an in process research and development charge for the
acquisition of the minority interest of Prosidion Limited in April 2005.
(5) Represents a charge relating to the guaranteed interest upon the
redemption of convertible notes.
OSI Pharmaceuticals, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
Six Months Ended June 30, 2005
----------------------------------------
GAAP (1) Differences Non-GAAP (2)
---------- ------------ ------------
Revenues:
Net revenue from unconsolidated
joint business $ 33,428 $ 33,428
Royalties on product sales 499 499
Sales commissions and product sales 14,544 14,544
License and milestone revenues 5,225 5,225
--------- ---------
Total revenues 53,696 53,696
--------- ---------
Expenses:
Cost of goods sold 2,172 2,172
Research and development 57,309 (577) (7) 56,732
Acquired in-process research and development 3,542 (3,542) (6) -
Selling, general and administrative 44,402 (2,583) (3) 41,819
Amortization of intangibles 7,605 7,605
--------- ------- ---------
Total expenses 115,030 (6,702) 108,328
--------- ------- ---------
Loss from operations (61,334) 6,702 (54,632)
Other income (expense):
Investment income - net 8,170 8,170
Interest expense (2,438) (2,438)
Other expense - net (1,440) (1,440)
--------- ------- ---------
Net loss $ (57,042) $ 6,702 $ (50,340)
========= ======= =========
Basic and diluted net loss per
common share $ (1.11) $ 0.13 $ (0.98)
========= ======= =========
Weighted average shares of common
stock outstanding 51,205 51,205
========= =========
OSI Pharmaceuticals, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
Six Months Ended June 30, 2004
-------------------------------------------
GAAP (1) Differences Non-GAAP (2)
---------- ------------- ------------
Revenues:
Net revenue from unconsolidated
joint business $ - $ -
Royalties on product sales - -
Sales commissions and product sales 15,807 15,807
License and milestone revenues 2,575 2,575
--------- ---------
Total revenues 18,382 18,382
--------- ---------
Expenses:
Cost of goods sold 2,152 (1,954) (4) 198
Research and development 52,073 52,073
Acquired in-process research and development - - -
Selling, general and administrative 44,459 (1,764) (5) 42,695
Amortization of intangibles 9,148 9,148
--------- -------- ---------
Total expenses 107,832 (3,718) 104,114
--------- -------- ---------
Loss from operations (89,450) 3,718 (85,732)
Other income (expense):
Investment income - net 2,698 2,698
Interest expense (9,396) 3,733 (8) (5,663)
Other expense - net (901) (901)
--------- -------- ---------
Net loss $ (97,049) $ 7,451 $ (89,598)
========= ======== =========
Basic and diluted net loss per
common share $ (2.47) $ 0.19 $ (2.28)
========= ======== =========
Weighted average shares of common
stock outstanding 39,318 39,318
========= =========
Condensed Consolidated Balance Sheet
(In thousands)
June 30, 2005 September 30, 2004
------------- ------------------
(unaudited)
Cash and investments securities
(including restricted investments) $571,523 $257,229
======== ========
Total assets $731,922 $388,029
======== ========
Total stockholders' equity $492,578 $154,233
======== ========
(1) Reflects operating results in accordance with U.S. generally accepted
accounting principles (or GAAP).
(2) Non-GAAP amounts exclude adjustments for acquired in-process research and
development, the purchase of Prosidion stock options, guaranteed interest
upon the redemption of convertible notes, 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 and a charge of $803,000
for buyout of Prosidion stock options.
(4) Represents an inventory reserve provision for excess Gelclair inventory.
(5) Represents a charge for the remaining net lease obligations related to our
Horsham, PA facility.
(6) Represents an in process research and development charge for the
acquisition of the minority interest of Prosidion Limited in April 2005.
(7) Represents a charge for the buyout of Prosidion options.
(8) Represents a charge relating to the guaranteed interest upon the
redemption of 4% convertible notes.
SOURCE: OSI Pharmaceuticals, Inc.
OSI Pharmaceuticals, Inc.
Kathy Galante
Director
Investor / Public Relations
631-962-2000