OSI Pharmaceuticals, Inc. (NASDAQ: OSIP) announced today its financial results for the first quarter ended March 31, 2010. The Company reported total revenues from continuing operations of $107 million for the first quarter of 2010, a 14% increase over revenues of $94 million for the first quarter of 2009. Total worldwide net sales of Tarceva® (erlotinib) for the first quarter of 2010, as reported to the Company by its collaborator Roche, were approximately $308 million, representing a 10% increase in sales over the first quarter of 2009.
The Company reported net income from continuing operations of $4.7 million (or $0.08 per share) for the three months ended March 31, 2010, compared to $16.5 million (or $0.28 per share) for the three months ended March 31, 2009. The decline was due primarily to $11 million in costs recorded in connection with the unsolicited tender offer commenced by Astellas Pharma, Inc. in March 2010, and an $8 million non-operating impairment on the Company’s investment holding in AVEO Pharmaceuticals, Inc. following that company’s IPO.
The Company reported that non-GAAP net income from continuing operations increased to $39.6 million (or $0.63 per share) for the first quarter of 2010, compared to $36.0 million (or $0.58 per share) in the first quarter of 2009. The Company adjusted for non-cash tax expense (to reflect OSI’s actual cash tax rate of approximately 3%), tender offer related costs, restructuring and other charges related to our consolidation of U.S. operations in Ardsley, New York, expense related to equity-based compensation, non-cash interest expense on our convertible notes, and certain other items detailed in the attached reconciliation of GAAP to non-GAAP financial measures.
Total revenues for the first quarter were comprised of the following key items:
|-||Net revenues from the unconsolidated joint business for Tarceva of $52 million for the first quarter of 2010, compared to $49 million in the first quarter of 2009, arising from the Company's co-promotion arrangement with Genentech, a wholly owned member of the Roche Group. The net revenues are based on total U.S. Tarceva sales of $114 million for the first quarter of 2010, compared to $111 million in the first quarter of 2009. First quarter sales in both 2009 and 2010 were impacted by reimbursement challenges relating to the reset of the “donut hole” for Medicare Part D patients receiving Tarceva;|
|-||Royalties on product licenses of $40 million for the first quarter of 2010 compared to $34 million in the first quarter of 2009 from Roche for sales of Tarceva. The royalty revenues are based on total rest of world sales of $194 million for the first quarter of 2010, an increase of 16% compared to the $168 million reported in the first quarter of 2009;|
|-||Royalties of $13 million in 2010 compared with $9 million in 2009 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, representing an increase of 42% over the prior year.|