cafepharma’s detailpiece

At the Wachovia Healthcare Conference yesterday, OSI Pharmaceuticals (NASDAQ: OSIP) discussed Tarceva sales and future plans and strategies. OSI is predicting $2.00 EPS (earnings per share) for 2008 based on the strength of Tarceva sales. This is up from approximately $1.15 EPS for 2007.

Tarceva sales for Q4 2007 were $250 million and tracking at $1 billion annually. The company thinks Tarceva sales will only increase in the future. Additionally the company will be able to shield significant future income via $1 billion dollars in loss accumulated prior to bringing Tarceva to market.

The next target for Tarceva sales is the $2 billion mark. The company feels this can be obtained with no additional cost.

Tarceva is positioned to be a growth engine for some time into the future. Several studies that should yield some results in 2008 have the potential to increase Tarceva’s patient base and sales. The Saturn Study, which is examining the use of Tarceva as maintenance therapy in non-small cell lung cancer patients could result in a doubling of Tarceva’s patient base. The BETA-lung trial is evaluating the use of Tarceva with Avastin as a second line therapy in advanced non-small cell lung cancer. Additional studies should yield data in 2010 (in ovarian cancer) and 2014. Data from these studies could drive additional growth in Tarceva sales into its advanced life cycle stages.

While the spokesperson did not address patent strategy, he did mention that Tarceva should still have significant patent life in 2014. The competitive landscape also bodes well for Tarceva at the moment.

In the last 18 months, eight of nine studies in lung and pancreatic cancer have failed to meet their primary endpoints. At this time, the company does not foresee a competitive threat to their pancreatic treatment. In fact, the spokesperson said they feel the competitive landscape to be “de-risked” at this point. 

While Tarceva is the current primary revenue engine, OSI is developing a number of promising therapies. Their strategy is to focus on treatments that will be either first in class or best in class and to abandon those that do not have that potential. They expect data on OSI-906 (a possible treatment for variety of human cancers, including colorectal, non-small cell lung, breast and ovarian cancers) in next 18 months. Data from studies involving OSI-027 (a kinase inhibitor that inhibits the kinase activity associated with both the TORC1 and TORC2 complexes of mTOR) should yield data in first half of 09.

OSI seems to be positioned for continued growth into the future. Their focus on financial discipline (they recently reduced head count to 2005 levels) and developing Tarceva should provide ample resources for developing their early but promising pipeline.