OSI Pharmaceuticals Announces Year End 2007 Financial Results

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. For additional information about OSI, please visit . 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 December 31, Twelve Months Ended 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)   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 31, December 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 December 31, Twelve Months Ended 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 December 31, Twelve Months Ended December 31,   2007   2006   2007   2006 Adjusted amounts shown above include the following: Unaudited Unaudited Unaudited Unaudited 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.