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OSI TO BUY EYETECH FOR APPROXIMATELY $935 MILLION
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OSI Pharmaceuticals Inc. agreed to acquire all the outstanding shares of
Eyetech Pharmaceuticals Inc., a biopharmaceutical company that focuses on
treatments for eye diseases, for approximately $935 million.
Eyetech shareholders will receive $20 per common share, 75 percent of which
will be paid in cash and 25 percent of which will be paid in OSI common
stock.
This merger will provide Eyetech's "shareholders with good value for their
equity," according to Eyetech's chief executive officer, Dr. David Guyer,
who added that the agreement will provide its "employees with an opportunity
for an even more exciting future."
Colin Goddard, OSI's chief executive officer, said the transaction will
create a "substantial biopharmaceutical company with over $600 million of
projected revenues in 2006 and strong growth prospects for the future." He
noted that the company anticipates having three business units to focus on
oncology, eye disease and diabetes soon.
The transaction is expected to be accretive to OSI on a cumulative basis for
earnings per share over the next four years.
The transaction may complicate OSI's ties with Genentech Inc., The Wall
Street Journal said, noting that OSI co-markets its lung cancer drug,
Tarceva (erlotinib hydrochloride), with F. Hoffmann-La Roche Ltd. and
Genentech, while Pfizer Inc. and Eyetech's wet age-related macular
degeneration treatment, Macugen (pegaptanib sodium), is a direct competitor
of Genentech's investigational drug Lucentis (ranibizumab), which is being
co-developed with Novartis Ophthalmics Business Unit.
In May, Genentech released study results showing that approximately 95
percent of patients treated with Lucentis maintained or improved their
vision at one year. The news sent Eyetech shares down 46 percent since
Macugen has been shown to maintain or improve vision in 70 percent of
patients, according to The Journal, which noted that the company's shares
never quite recovered.
OSI shares were trading at $32.17, down $8.60, or 21.1 percent, while
Eyetech shares were trading at $18.13, up $4.14, or 29.6 percent, both in
heavy midday trading on the Nasdaq.
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