Mixed Results for OSI

Sales miss expectations, but the bottom line is better than Wall Street had forecast.
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Updated from May 8

OSI Pharmaceuticals

(OSIP)

reported mixed results in the first quarter, with better-than-expected earnings but lower sales than Wall Street was predicting.

The Melville, N.Y., drugmaker reported a quarterly loss of $17.9 million, or 31 cents a share, compared with a loss of $32.5 million, or 64 cents a share, a year ago.

Excluding certain charges, OSI earned $2.8 million, or 5 cents a share, for the first quarter. On that basis, analysts surveyed by Thomson Financial were calling for a loss of 11 cents a share.

OSI brought in $116.4 million in revenue during the quarter, more than five times its top line in the same period a year ago, thanks to sales of its lung-cancer drug Tarceva, which was co-developed with biotech giant

Genentech

(DNA)

, and its vision-loss drug Macugen. The company gained Macugen through its acquisition of Eyetech Pharmaceuticals in November.

However, analysts were expecting revenue of $123.9 million. U.S. Macugen sales were $51 million during the quarter. The most recent quarter was the first time Macugen was included in OSI's overall sales.

Worldwide Tarceva sales totaled $133 million, and $93 million of that was in the U.S. OSI shares the revenue from Tarceva, and in the first quarter, it collected $35.7 million from the drug's sales.

Shares of OSI fell 1.7% to $26.91 Tuesday.

Macugen is facing a potentially significant threat from Genentech's vision-loss fighter Lucentis, a product that could be launched this summer. Both drugs treat a condition called wet age-related macular degeneration, a disease that diminishes eyesight and can lead to blindness. OSI believes it's "well-prepared for emerging competition in the marketplace."

Last week, OSI released positive data from a small study using Macugen plus Genentech's cancer drug Avastin, which some doctors have used off-label to treat wet AMD. Although Genentech doesn't support its use for that indication, Avastin has captured a 30% share of the wet AMD market, OSI said.

As for Tarceva, over the course of 2005 and through early 2006, doctors have been prescribing the drug for longer durations, OSI said, a trend it expects to continue going forward.