OSI Pharmaceuticals, Inc. Prices $100 Million 2.00% Convertible Senior Subordinated Note Offering

OSI intends to use a part of the net proceeds to (i) purchasethrough the initial purchaser or its affiliates, concurrently with theoffering, 500,000 shares of its common stock and (ii) payapproximately $12.2 million in connection with call spreadtransactions with respect to the Company's common stock. OSI intendsto use the remaining net proceeds of approximately $72.0 million forthe ongoing development and commercialization of Tarceva(R) andMacugen(R), research and development activities, working capitalrequirements and other general corporate purposes.

The convertible notes will pay interest semiannually in arrearsthrough maturity at an annual rate of 2.00% and will mature onDecember 15, 2025. OSI may redeem for cash, all or part of the noteson or after December 15, 2010 at a price equal to 100% of theprincipal amount of the notes plus accrued and unpaid interest.Holders of the notes have the right to require OSI to purchase, forcash, all or any portion of their notes (i) on December 15, 2010, (ii)on December 15, 2015, (iii) on December 15, 2020, and (iv) undercertain other circumstances, as set out in the indenture, at a priceequal to 100% of the principal amount of the notes plus accrued andunpaid interest. The notes will be subordinated to existing and futuresenior indebtedness and will be pari passu with OSI's existing seniorsubordinated notes due 2023.

The notes will be convertible, in certain circumstances, intocommon stock of OSI at an initial conversion rate of 33.9847 sharesper $1,000 principal amount of notes (equivalent to a conversion priceof approximately $29.43 per share of common stock). The conversionprice represents a premium of 25.0% to the $23.54 per share closingprice of OSI's common stock on December 15, 2005. Upon conversion, OSIwill have the right to deliver shares of its common stock, cash or acombination of cash and shares of its common stock.

In connection with the offering, OSI has entered into call spreadtransactions with respect to its common stock with an affiliate of theinitial purchaser of the notes. These transactions are intended toreduce the potential dilution upon future conversion of the notes. Thecall spread provides OSI with the option, subject to certain customaryexceptions, to acquire shares of OSI common stock at the initialconversion price of approximately $29.43 per share, which offset thedelivery of newly issued shares upon settlement of conversions of thenotes. This would have the impact of increasing the effectiveconversion price of the notes from the company's perspective to $40.00per share, representing a conversion premium of approximately 70% tothe per share closing price on December 15, 2005. If the initialpurchaser exercises its option to purchase additional notes, OSI mayenter into additional call spread transactions.

The other party to the call spread transactions has advised OSIthat it has purchased shares of OSI's common stock. If OSI enters intoadditional call spread transactions upon an exercise by the initialpurchaser of its option to purchase additional notes to cover theoverallotment, the other party to such transaction is expected topurchase shares of OSI's common stock or enter into over-the-counterderivatives transactions linked to OSI's common stockcontemporaneously with such transaction. In addition, in each case,after entering into the transactions, the other party may continue topurchase and may sell shares of OSI's common stock in secondary markettransactions and may enter into or unwind over-the-counter derivativetransactions.

The notes will be issued in a private placement and are expectedto be resold to qualified institutional buyers pursuant to Rule 144Aof the Securities Act of 1933, as amended. The convertible seniorsubordinated notes and the shares of common stock of OSI issuable uponthe conversion of the notes will not be registered under theSecurities Act or any state laws and may not be offered or sold in theUnited States absent registration or an applicable exemption fromregistration requirements.

This news release shall not constitute an offer to sell or asolicitation of an offer to buy, nor shall there be any sales of thesesecurities in any state or jurisdiction in which such an offer,solicitation or sale would be unlawful prior to registration orqualification under the securities law of any such state orjurisdiction.

About OSI Pharmaceuticals

OSI Pharmaceuticals is committed to "shaping medicines andchanging lives" by discovering, developing and commercializinghigh-quality and novel pharmaceutical products that extend life orimprove the quality of life for patients with cancer, eye diseases anddiabetes. The Company operates through three business teams, (OSI)Oncology, (OSI) Eyetech and (OSI) Prosidion. (OSI) Oncology is focusedon developing molecular targeted therapies designed to change theparadigm of cancer care. (OSI) Eyetech specializes in the developmentand commercialization of novel therapeutics to treat diseases of theeye. (OSI) Prosidion is committed to the generation of novel, targetedtherapies for the treatment of type 2 diabetes and obesity. OSI'sflagship product, Tarceva(R) (erlotinib), is the first drug discoveredand developed by OSI to obtain FDA approval and the only EGFRinhibitor to have demonstrated the ability to improve survival in bothnon-small cell lung cancer and pancreatic cancer patients. OSI marketsTarceva through partnerships with Genentech, Inc. in the United Statesand with Roche throughout the rest of the world. Macugen(R)(pegaptanib sodium injection) is approved in the United States for thetreatment of neovascular age-related macular degeneration. OSIcommercializes Macugen in partnership with Pfizer Inc. For additionalinformation about OSI, please visit http://www.osip.com.

This news release contains forward-looking statements. Thesestatements are subject to known and unknown risks and uncertaintiesthat may cause actual future experience and results to differmaterially from the statements made. Factors that might cause such adifference include, among others, the completion of clinical trials,the FDA review process and other governmental regulation, OSI's andits collaborators' abilities to successfully develop and commercializedrug candidates, competition from other pharmaceutical companies, theability to effectively market products, and other factors described inOSI Pharmaceuticals' filings with the Securities and ExchangeCommission.