<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-31474
PROSPECTUS
3,325,000 SHARES
OSI PHARMACEUTICALS, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
The stockholders named on pages 9-10 are selling up to 3,325,000
shares of OSI's stock.
OSI's common stock is traded on the Nasdaq National Market under the
symbol "OSIP". On June 20, 2000, the reported closing price of the common stock
was $22.688 per share.
--------------------------
THIS INVESTMENT INVOLVES RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 1 OF THIS PROSPECTUS.
--------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JUNE 21, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
RISK FACTORS.......................................................... 1
RECENT EVENTS......................................................... 7
USE OF PROCEEDS....................................................... 9
SELLING STOCKHOLDERS.................................................. 9
PLAN OF DISTRIBUTION.................................................. 11
AVAILABLE INFORMATION................................................. 12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................... 13
LEGAL MATTERS......................................................... 14
EXPERTS............................................................... 14
</TABLE>
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RISK FACTORS
ALTHOUGH WE HAVE POTENTIAL PRODUCTS THAT APPEAR TO BE PROMISING AT
EARLY STAGES OF DEVELOPMENT, NONE OF OUR POTENTIAL PRODUCTS MAY REACH THE MARKET
FOR A NUMBER OF REASONS.
Our success depends on the discovery of new drugs which we can
commercialize and take to market. None of our potential products, however, may
ever reach the market for a number of reasons. They may be found ineffective or
cause harmful side effects during pre-clinical testing or clinical trials or
fail to receive necessary regulatory approvals. We may find that the products
cannot be manufactured on a large scale basis; and therefore, they may not be
economical to produce. Our products could also fail to achieve market acceptance
or be precluded from commercialization by proprietary rights of third parties.
We have various product candidates in very early stages of development,
and we do not expect them to be commercially available for several years, if at
all. All but two of our product candidates are in either a discovery or
pre-clinical evaluation phase. The two candidates are in the clinical evaluation
stage and will still require significant research and development before we or
our collaborative partner will be able to market them.
IF WE OR OUR COLLABORATIVE PARTNERS DO NOT OBTAIN REQUIRED APPROVALS
FROM GOVERNMENTAL AGENCIES, THEN OUR COLLABORATIVE PARTNERS WILL NOT BE ABLE TO
MANUFACTURE OR SELL OUR PRODUCTS.
All of our newly discovered potential products must undergo an
extensive regulatory approval process in the United States and other countries.
This regulatory process, which includes pre-clinical testing and clinical trials
of each compound to establish its safety and efficacy, can take many years and
requires the expenditure of substantial resources. Moreover, data obtained from
pre-clinical and clinical activities are susceptible to varying interpretations
that could delay, limit or prevent regulatory approval. The Food and Drug
Administration, or FDA, and other regulatory agencies may delay or deny the
approval of our proposed products. None of our products have yet received
governmental approval and none may ever do so.
Even if we obtain regulatory approval, a marketed product and its
manufacturer are subject to continuing review, including post-marketing
surveillance. Discovery of previously unknown problems with our product or its
manufacturer may require us to withdraw the product from the market. Violations
of regulatory requirements at any stage may result in various unfavorable
consequences to us, including the FDA's imposition of criminal penalties against
the manufacturer and the new drug
application holder.
WE HAVE INCURRED SUBSTANTIAL LOSSES SINCE INCEPTION, AND WE EXPECT TO
INCUR LOSSES OVER THE NEXT SEVERAL YEARS WHICH MAY CAUSE THE VALUE OF OUR COMMON
STOCK TO DECREASE.
We have had net operating losses since our inception in 1983. At
September 30, 1999, our accumulated deficit was approximately $65.6 million. The
net income recorded for the fiscal quarter ended December 31, 1999 is not
indicative of our expected future results in the near term. It is a result of
two non-recurring events including receipt of a one-time technology access fee
from a collaborative partner and a gain from the sale of our diagnostics
business. Our losses have resulted principally from costs incurred in research
and development and from general and administrative costs associated with
<PAGE> 4
our operations. These costs have exceeded our revenues, which to date have been
generated principally from collaborative research agreements.
We expect to incur substantial additional operating expenses over the
next several years as a result of increases in our expenses for research and
development. These expenses include enhancements in our drug discovery
technologies and increases in the resources we will devote to our internal
proprietary projects , those projects that we undertake without collaborative
partners. We do not expect to generate revenues from the sale of our potential
products for at least two to three more years.
IF WE CANNOT OBTAIN ADEQUATE FUNDING FOR OUR RESEARCH AND DEVELOPMENT
EFFORTS, WE MAY BE REQUIRED TO LIMIT THE SCOPE OF OUR PRODUCT DEVELOPMENT OR
ENTER INTO MORE RESTRICTIVE ARRANGEMENTS WITH COLLABORATIVE PARTNERS.
Our future capital requirements will depend on many factors, including
the size and complexity of our research and development programs; the progress
of pre-clinical testing and early stage clinical trials; the time and costs
involved in obtaining regulatory approvals for our product candidates; the costs
of manufacturing arrangements; and the costs of commercialization activities.
We intend to seek funding for our capital requirements through the
receipt of revenues from collaborative partners and public or private sales of
our securities, including equity securities. We may not be able to obtain
adequate funding from collaborative partners or equity financings on reasonable
or acceptable terms, if at all. Furthermore, any additional equity financings
may dilute the value of the common stock held by our stockholders. If adequate
funds are not available, we may be required to significantly curtail one or more
of our research and development programs or obtain funds through arrangements
with collaborative partners or others that may require us to relinquish our
rights to a number of our technologies or product candidates. The reduction or
termination of funding from one or more of our collaborative partners would
force us to devote additional internal resources to product development, scale
back or terminate selected development programs, or seek alternative
collaborative arrangements.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR
ABILITY TO DEVELOP AND COMMERCIALIZE OUR TECHNOLOGY AND PRODUCTS WILL BE
SEVERELY LIMITED.
We currently own 13 U.S. patents and 43 foreign patents. We have 24
pending applications for U.S. patents, one of which has been allowed, and 32
applications for foreign patents, one of which has been allowed. We intend to
aggressively seek patent protection for all of the product candidates that we
have discovered or developed.
Our success depends, in part, on our ability and our collaborative
partners' ability to obtain patent protection for new product candidates,
maintain trade secret protection, and operate without infringing the proprietary
rights of third parties. As with most biotechnology and pharmaceutical
companies, our patent position is highly uncertain and involves complex legal
and factual questions. Without patent and other protection, other companies
could offer substantially identical products for sale without incurring the
sizable development and testing costs that we have incurred. Our ability to
recoup these expenditures and realize profits upon the sale of products could be
diminished.
The process of obtaining patents can be time consuming and expensive.
Even if we spend the necessary time and money, a patent may not issue or it may
insufficiently protect the technology it was
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intended to protect. We can never be certain that we were the first to develop
the technology or that we were the first to file a patent application for the
particular technology because U.S. patent applications are maintained in
secrecy until a patent issues and publications in the scientific or patent
literature lag behind actual discoveries.
The degree of future protection for our proprietary rights will remain
uncertain if our pending patent applications are not approved for any reason; we
are unable to develop additional proprietary technologies that are patentable;
or patents issued do not provide us with a competitive advantage. Furthermore,
third parties may independently develop similar or alternative technologies;
duplicate some or all of our technologies; design around our patented
technologies if patents are issued to us; and challenge issued patents.
IF OTHER BIOTECHNOLOGY AND PHARMACEUTICAL COMPANIES ARE NOT WILLING
TO PAY APPROPRIATE ROYALTIES FOR THE USE OF OUR PATENTED "GENE TRANSCRIPTION
ESTATE", THEN WE MAY BE REQUIRED TO EXPEND SUBSTANTIAL AMOUNTS OF FUNDS AND
RESOURCES IN ENFORCING THE PATENTS.
We are seeking to license to other companies rights to use our patented
"gene transcription estate" which consists of drug discovery assays that provide
a way to identify novel product candidates that can control the activity of
genes. We believe technology and practices covered by these patents are in
widespread use in the pharmaceutical and biotechnology industries. To date, we
have granted four licenses to use our gene transcription patent. If other
pharmaceutical and biotechnology firms which we believe are using our patented
technology are not willing to negotiate license arrangements with us on
reasonable terms, we may have to choose between (i) abandoning our licensing
strategy or (ii) initiating legal proceedings against those firms. Legal action,
particularly patent infringement litigation, is extremely costly. Consequently,
our strategy to commercialize our gene transcription patent estate through
licensing may not be successful.
IF WE ARE UNABLE TO MAINTAIN OR ENTER INTO ARRANGEMENTS WITH
COLLABORATIVE PARTNERS, OUR ABILITY TO PROCEED WITH RESEARCH AND DEVELOPMENT
PROGRAMS, MANUFACTURING AND THE SALE OF OUR PRODUCT CANDIDATES WILL BE LIMITED.
Our business strategy and limited resources require us to enter into
collaborative arrangements with various research partners. We are largely
dependent on our collaborative partners for:
- clinical development;
- regulatory approval;
- manufacturing and marketing products;
- patent protection and proprietary technology; and
- funding.
Like many small biopharmaceutical companies, our business strategy
includes funding from larger pharmaceutical companies that we collaborate with
to support some of our research and development programs and the
commercialization of our product candidates. In trying to attract partners to
collaborate with, we face serious competition from other small biopharmaceutical
companies as well as in-house research and development staffs of larger
pharmaceutical companies. Our future development and delivery of many of our
products on a timely, profitable and competitive basis depends on the attraction
and maintenance of these collaborative partners. If we fail to enter into and
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maintain acceptable collaborative partnerships, we may not be able to obtain the
funding and resources needed to continue certain drug discovery efforts or
operate our business profitably.
IF OUR COLLABORATIVE PARTNERS GIVE OTHER PRODUCTS GREATER PRIORITY THAN
OUR PRODUCTS, THEN OUR PRODUCTS MAY BE SUBJECT TO DELAYS IN RESEARCH AND
DEVELOPMENT AND MANUFACTURE THAT WILL IMPEDE OUR ABILITY TO TAKE OUR PRODUCTS TO
MARKET, WHICH MAY GIVE OUR COMPETITORS THE OPPORTUNITY TO ENTER THE MARKET WITH
THEIR PRODUCTS AHEAD OF OUR PRODUCTS. THIS MAY RENDER OUR PRODUCTS OBSOLETE OR
MAY RESULT IN LOWER THAN ANTICIPATED REVENUES.
We rely on collaborative partners to assist with research and
development as well as the manufacture of our potential products in their
FDA-approved manufacturing facilities. Our collaborative agreements allow our
collaborative partners significant discretion in electing to pursue or not to
pursue the activities the partners agree to perform for us. We cannot control
the amount and timing of resources our collaborative partners devoted to our
programs or potential products. Our potential products may be in competition
with other products for priority of access to our collaborative partners'
research and development and manufacturing facilities. If our collaborative
partners do not give significant priority to the research and development or
manufacture of our potential products in an effective or timely manner, the
clinical trial development of our product candidates or their submission for
regulatory approval could be delayed, and our ability to deliver products to the
market on a timely basis could be impaired. Furthermore, we may not be able to
enter into any necessary third-party research and development or manufacturing
arrangements on acceptable terms, if at all.
IF OUR COLLABORATIVE AGREEMENTS ARE NOT RENEWED, OUR ABILITY TO PURSUE
THE DRUG DISCOVERY EFFORTS THAT ARE THE SUBJECT OF THE AGREEMENTS MAY BE
SEVERELY LIMITED.
Because all of our collaborative programs with pharmaceutical companies
have terms of six or fewer years, which is generally less than the period
required for the discovery, clinical development and commercialization of most
drugs, the continuation of our drug discovery and development programs is
dependent on the periodic renewal of our collaborative arrangements. Our
collaborative partners can terminate our collaborative research agreements under
various circumstances, sometimes on short notice without cause. The termination
or non-renewal of any collaborative relationship could delay our research and
development efforts arising from that collaboration because we would be forced
to focus our efforts on the collaborative programs internally and/or search for
and engage new collaborative partners. Our internal costs would inevitably
increase as a result, and we may have difficulty recovering these costs.
CONSOLIDATIONS AMONG COMPANIES WITH WHICH WE ARE ENGAGED IN
COLLABORATIVE RESEARCH CAN RESULT IN THE DIMINUTION OR TERMINATION OF, OR DELAYS
IN, ONE OR MORE OF OUR COLLABORATIVE PROGRAMS.
In 1995, the pharmaceutical operations of three companies with which we
had collaborative research agreements, Hoechst AG, Hoechst Roussel
Pharmaceuticals, Inc. and Marion Merrell Dow Inc., were combined into one
entity. This combination resulted in delays in our collaborative programs with
each of the constituent companies and a reduction in the aggregate funding
received by us. The merger between Pfizer and Warner Lambert and other possible
consolidations among large pharmaceutical companies could produce similar
results.
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IF WE OR OUR COLLABORATIVE PARTNERS ARE REQUIRED TO OBTAIN LICENSES
FROM OTHERS, OUR ROYALTIES ON ANY COMMERCIALIZED PRODUCTS COULD BE REDUCED.
The development of some of our products may require the use of
technology developed by third parties. The extent to which efforts by other
researchers have resulted or will result in patents and the extent to which we
or our collaborative partners are forced to obtain licenses from others, if
available, is currently unknown. In the case where we or our collaborative
partners must obtain licenses from third parties, fees must be paid for such
licenses. These fees would reduce the royalties we may receive on commercialized
products.
THE USE OF ANY OF OUR POTENTIAL PRODUCTS IN CLINICAL TRIALS AND THE
SALE OF ANY APPROVED PRODUCTS MAY EXPOSE US TO LIABILITY CLAIMS RESULTING FROM
THE USE OF PRODUCTS OR PRODUCT CANDIDATES.
Consumers, pharmaceutical companies including our collaborative
partners, or others may make product liability claims against us. We do not
independently maintain product liability insurance coverage for claims arising
from the use of our products in clinical trials as we understand that our
collaborative partners maintain this insurance. We may not, however, be named as
an insured party on the insurance policy held by our collaborative partners with
respect to trials underway by our collaborative partners or others, and we may
not be able to obtain insurance in the future at a reasonable cost or in
sufficient amounts to protect us. If we do not or cannot maintain adequate
insurance coverage, we may incur significant liability if a product liability
claim arises.
IF OUR COMPETITORS SUCCEED IN DEVELOPING TECHNOLOGIES AND PRODUCTS THAT
ARE MORE EFFECTIVE THAN OUR OWN, OUR TECHNOLOGIES AND PRODUCTS MAY BE RENDERED
OBSOLETE OR NONCOMPETITIVE.
We face significant competition from industry participants who are
pursuing the same technologies we are pursuing and from organizations that are
pursuing pharmaceutical products that are competitive with our potential
products. Where we are developing products independently, many of the
organizations competing with us have greater capital resources, larger research
and development staffs and facilities, and more extensive experience in drug
discovery and development, obtaining regulatory approval and pharmaceutical
product manufacturing and marketing. With these additional resources, our
competitors may be able to respond to the rapid and significant technological
changes in the biotechnology and pharmaceutical industries faster than we can.
Our future success will depend in large part on our ability to maintain a
competitive position with respect to this technology. Rapid technological
development may result in our compounds, products or processes becoming obsolete
before we recover any expenses incurred to develop these compounds, products or
processes.
A NEW ACCOUNTING POLICY MAY REQUIRE US TO CHANGE OUR REVENUE
RECOGNITION POLICIES, THE RESULT OF WHICH WOULD REQUIRE US TO RECOGNIZE REVENUES
MORE SLOWLY THAN WE HAVE IN THE PAST.
We are in the process of assessing the financial impact of staff
accounting bulletin, SAB No. 101, "Revenue Recognition in Financial Statements",
recently issued by the Securities and Exchange Commission. The staff accounting
bulletin expresses the SEC staff's views on the timing of recognition of
revenue, including nonrefundable technology access fees received by
biotechnology companies in connection with research collaborations with third
parties. The SEC staff's position is that in certain circumstances up-front
fees, even if nonrefundable, should be deferred and recognized systematically
over the term of the related agreement.
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We are still studying the requirements of the staff accounting bulletin
and reviewing the research agreements under which we received upfront,
nonrefundable fees to determine if we would be required to recognize revenue for
these fees over the period of the agreements rather than when the fees are
received. If we determine that the staff accounting bulletin applies to some or
all of these agreements, we would be required to recognize revenue more slowly
than we had in the past. The initial adoption of the staff accounting bulletin
may result in the reversal of a portion of previously recorded revenue which
would then be recorded over the remaining term(s) of the agreement(s). This
would increase the reported loss in the quarter that we adopt the staff
accounting bulletin. We intend to adopt the staff accounting bulletin, if
applicable to our agreements, no later that the first quarter of our fiscal year
ending September 30, 2001 (i.e., the quarter ending December 31, 2000).
IF THE MARKET PRICE OF OUR COMMON STOCK, SIMILAR TO OTHER BIOTECHNOLOGY
COMPANIES, REMAINS HIGHLY VOLATILE, THEN OUR STOCKHOLDERS MAY NOT BE ABLE TO
SELL THEIR STOCK WHEN DESIRED OR AT DESIRABLE PRICES.
You should be aware that when the stock price of biotechnology
companies falls, our stock price will most likely fall as well. The market price
of the common stock of biotechnology and pharmaceutical companies and our common
stock has been volatile and may remain volatile for the foreseeable future. If
our stock price falls, our stockholders may not be able to sell their stock at
desirable prices.
The following factors may also cause our stock price to fall:
- fluctuations in operating results;
- announcements of technological innovations or new therapeutic
products by others;
- clinical trial results;
- developments concerning strategic alliance agreements;
- government regulation;
- developments in patent or other proprietary rights;
- public concern as to the safety of our drugs;
- future sales of substantial amounts of our common stock by
existing stockholders; and
- comments by securities analysts and general market conditions.
OUR CORPORATE GOVERNANCE DOCUMENTS, AND STATE LAW, PROVIDE CERTAIN
ANTI-TAKEOVER MEASURES WHICH WILL DISCOURAGE CERTAIN TYPES OF TRANSACTIONS
INVOLVING AN ACTUAL OR POTENTIAL CHANGE IN CONTROL OF THE COMPANY.
Under our certificate of incorporation, our board of directors has the
authority, without further action by the stockholders, to fix the rights and
preferences of, and issue shares of, preferred stock. In January 1999, we
adopted a shareholders rights plan, commonly referred to as a "poison pill."
Further, we are subject to Section 203 of the Delaware General Corporation Law
which, subject to certain exceptions, restricts certain transactions and
business combinations between a corporation and a stockholder owning 15% or more
of the corporation's outstanding voting stock for a period of three years from
the date the stockholder becomes an interested stockholder.
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RECENT EVENTS
PRIVATE PLACEMENT
On February 28, 2000, OSI sold a total of 3,325,000 shares of common
stock to American Variable Insurance Series Global Small Capitalization Fund;
Asset Management Holding Co.; Biotechnology Value Fund, L.P.; Biotechnology
Value Fund II, L.P.; Chelsey Capital; Forstmann International Fund, LTD;
Forstmann Partners, L.P.; Galleon Healthcare Overseas, Ltd; Galleon Healthcare
Partners, LP; International Biotechnology Trust PLC; Investment 10, L.L.C.;
Janus Investment Fund; Lone Balsam, L.P.; Lone Cypress, LTD; Lone Sequoia, L.P.;
Lone Spruce, L.P.; Merlin BioMed LP; Merlin BioMed Intl LTD; Moore Global
Investments, Ltd.; Remington Investment Strategies, L.P.; Sands Point Partners;
SMALLCAP World Fund, Inc.; United Capital Management, Inc.; and Ziff Asset
Management, L.P. The gross proceeds of the sale were $56,525,000.00. OSI agreed
to file the registration statement, of which this prospectus is a part, which
enables the selling stockholders to sell their shares. OSI also agreed to
reimburse the selling stockholders for liability OSI causes by making any untrue
statements of material fact or failing to state a material fact in this
registration statement.
PFIZER INC.'S DIVESTITURE OF CP-358,774
Pfizer Inc., in order to meet Federal Trade Commission requirements
for its merger with Warner-Lambert Company, has agreed to grant all development
and marketing rights to OSI Pharmaceuticals, Inc. for CP-358,774 (OSI-774), a
potent and selective inhibitor of a protein called the epidermal growth factor
receptor, or EGFR, which is associated with the type of uncontrolled cell
growth which occurs in many cancers. This compound, which is active following
oral administration, is the most advanced clinical development candidate
arising from the OSI/Pfizer cancer collaboration and is currently in Phase II
trials. The reason for the divestiture is the determination by the FTC of an
anti-trust issue in the emerging EGFR cancer market arising as a result of the
development by Warner-Lambert of an EGFR inhibitor that is currently in early
Phase I studies. The divestiture of CP-358,774 (OSI-774) through the vehicle of
the existing Pfizer/OSI collaboration presented the most expeditious resolution
of the anti-trust issue. Although the FTC's determination is technically
subject to a 30-day public notice period to be followed by final approval,
both OSI and Pfizer believe that such final approval is all but certain. Pfizer
and Warner-Lambert completed the merger immediately following the FTC's
announcement.
Under terms of the May 23, 2000 agreement with Pfizer, which became
effective upon issuance and publication of the FTC's order on June 19, 2000,
OSI will receive an exclusive, royalty-free license to all rights for the
further development and commercialization of CP-358,774 (OSI-774). In order to
minimize any development delays and ensure a smooth transition, Pfizer will
continue to coordinate the ongoing Phase II trials in ovarian, head and neck
and non-small-cell lung cancer through a transition period of up to six months.
Pfizer will also provide OSI with its inventories of finished product, bulk
drug and production intermediates. Sufficient inventories are available to
complete an extensive clinical development program.
Because OSI will no longer have Pfizer as its collaborative partner in
the clinical development of CP-358,774 (OSI-774), OSI is taking appropriate
steps to increase its expertise and capacity in this area. OSI has appointed
Paul I. Nadler, M.D., of Nadler Pharma Associates, LLC, as Acting Vice
President of Medical Affairs on an interim basis, who will coordinate the first
phase of this program and is establishing working partnerships with appropriate
Contract Research Organizations, or CRO's.
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Dr. Nadler's medical training is in oncology and clinical immunology, and he
has over 23 years experience in clinical trials. He has served as a clinical
consultant to OSI since September 1999.
OSI intends to retain full ownership of CP-358,774 (OSI-774) through
advanced clinical development prior to seeking a marketing partnership with a
major pharmaceutical company. OSI does not have, and does not currently plan
to develop, its own marketing capability.
OSI anticipates a net investment of approximately $25,000,000 in
development of CP-358,774 (OSI-774) over the next several years. As a result of
OSI's recently concluded private placement, which raised gross proceeds of
$56,525,000, OSI's strategic plan has been focused on increasing investment in
its own drug development programs and seeking an opportunity to license rights
to a drug candidate from another company for development by OSI. This
pre-existing plan envisioned significant increases in OSI's cash burn rate over
the next several years, with a projected operating cash burn of approximately
$20-22 million/year for fiscal years 2001 and 2002. The CP-358,774 (OSI-774)
project supercedes the preceding goal for licensing a clinical development
candidate from another company. OSI has current cash reserves of over $83
million and anticipates an operating cash burn of up to $12,000,000 for fiscal
year 2000. Although as a result of the acquisition of CP-358,774 (OSI-774), the
cash burn may now increase to as much as $22-24 million for fiscal year 2001,
OSI does not intend to cut any existing programs.
Trial Results to Date
Phase I safety studies for CP-358,774 (OSI-774) have demonstrated that
CP-358,774 (OSI-774) is well tolerated and revealed a reversible rash and
mild to moderate diarrhea, treated effectively with Lopermide (Imodium(R)), as
side effects from a 150 mg daily dosing regimen. A sub-set of patients in both
Phase I and II studies have now received daily doses of CP-358,774 (OSI-774)
for extended periods (from six months to over a year), and over 100 patients
have now received the drug with well managed side effects.
Enrollment has been completed for two trials testing CP-358,774 (OSI-774)
as a single agent against 30 patients with ovarian cancer and approximately 45
patients with non-small cell lung cancer. Enrollment is ongoing for a similar
study involving 100 patients with head and neck cancer. Patients in these Phase
II efficacy studies have advanced cancer and have failed standard treatment
regimens. Data continues to indicate that this drug is well tolerated, and
there have been encouraging indications of activity, including clinical
responses, consistent with expectations based upon the experience of competitor
compounds.
Competition
OSI is aware of three companies, two of which have resources substantially
larger than OSI, which are currently developing drugs similar to CP-358,774
(OSI-774). AstraZeneca PLC is developing a small molecule with a close
structural relationship to CP-358,774 (OSI-774) called Iressa(TM) that is
currently in Phase III trials. The Pfizer/Warner-Lambert compound, CI-1033, now
in Phase I trials, is structurally similar to Iressa(TM). Imclone Systems
Incorporated is developing a different king of product, a humanized antibody,
against the EGFR target that is also in Phase III trials. AstraZeneca and
Imclone have both indicated an expectation that they will enter the market in
early 2002. Pfizer has estimated an early 2003 launch date for CP-358,774
(OSI-774), and OSI believes that it can complete development at least as
quickly as Pfizer's timeline.
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USE OF PROCEEDS
The proceeds from the sale of the shares of common stock are solely for
the account of the selling stockholders. OSI will not receive any proceeds from
the sale of the shares.
SELLING STOCKHOLDERS
The table below describes the amount of common stock owned by the
selling stockholders as of June 16, 2000 and the number of shares of common
stock the selling stockholders are selling under this prospectus.
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
SHARES SHARES OWNED SHARES OWNED
SHARES OFFERED PRIOR TO AFTER
SELLING STOCKHOLDERS OWNED HEREBY OFFERING(1) CLOSING(1)
-------------------- ----- ------ ----------- ----------
<S> <C> <C> <C> <C>
American Variable Insurance Series
Global Small Capitalization Fund 14,000 14,000 * 0
Asset Management Holding Co. 13,318 13,000 * *
Biotechnology Value Fund, L.P. 1,052,131 75,000 4.0% 3.7%
Biotechnology Value Fund, II L.P. 1,310,328 115,000 4.9% 4.5%
Chelsey Capital 50,000 50,000 * 0
Forstmann International Fund, LTD 31,969 27,000 * *
Forstmann Partners, L.P. 14,913 10,000 * *
Galleon Healthcare Overseas, Ltd 71,500 71,500 * 0
Galleon Healthcare Partners, LP 28,500 28,500 * 0
International Biotechnology Trust PLC 500,000 500,000 1.9% 0
Investment 10, L.L.C. 116,732 10,000 * *
Janus Investment Fund 1,978,460 1,000,000 7.5% 3.7%
Lone Balsam, L.P. 19,750 19,750 * 0
Lone Cypress, LTD 204,750 204,750 * 0
Lone Sequoia, L.P. 16,500 16,500 * 0
Lone Spruce, L.P. 9,000 9,000 * 0
Merlin BioMed LP 180,600 50,000 * *
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Merlin BioMed Int'l LTD 199,700 50,000 * *
Moore Global Investments, Ltd. 80,000 80,000 * 0
Remington Investment Strategies, L.P. 20,000 20,000 * 0
Sands Point Partners 50,000 50,000 * 0
SMALLCAP World Fund, Inc. 1,052,600 561,000 4.0% 1.9%
United Capital Management, Inc. 50,000 50,000 * 0
Ziff Asset Management, L.P. 300,000 300,000 1.1% 0
</TABLE>
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* Less than 1.0%.
(1) Based on shares of common stock outstanding as of June 16, 2000.
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PLAN OF DISTRIBUTION
Any distribution hereunder of the shares by the selling stockholders
may be effected from time to time in one or more of the following transactions:
- through brokers, acting as principal or agent, in
transactions (which may involve block transactions) on Nasdaq
or otherwise, in special offerings, in the over-the-counter
market, or otherwise, at market prices obtainable at the time
of sale, at prices related to such prevailing market prices,
at negotiated prices or at fixed prices,
- to underwriters who will acquire the shares for their
own account and resell them in one or more transactions,
including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale (any
public offering price and any discount or concessions allowed
or reallowed or paid to dealers may be changed from time to
time),
- directly or through brokers or agents in private
sales at negotiated prices,
- to lenders pledged as collateral to secure loans,
credit or other financing arrangements and any subsequent
foreclosure, if any, thereunder,
- through put or call options transactions relating to
the shares,
- through short sales of shares, or
- by any other legally available means.
Also, offers to purchase shares may be solicited by agents designated
by the selling stockholders from time to time. Underwriters or other agents
participating in an offering made pursuant to this prospectus (as amended or
supplemented from time to time) may receive underwriting discounts and
commissions under the Securities Act of 1933, as amended, and discounts or
concessions may be allowed or reallowed or paid to dealers, and brokers or
agents participating in such transactions may receive brokerage or agent's
commissions or fees. The selling stockholders may effect sales of shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of the shares for whom such broker-dealers may act as
agents or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).
At the time a particular offering of any shares is made hereunder, to
the extent required by law, a prospectus supplement will be distributed which
will set forth the amount of shares being offered and the terms of the offering,
including the purchase price or public offering price, the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriter for
any shares purchased from the selling stockholders, any discounts, commissions
and other items constituting compensation from the selling stockholders and any
discounts, commissions or concessions allowed or filed or paid to dealers. The
shares may be sold from time to time in one or more transactions at a fixed
offering price, which may be changed, or at varying prices determined at the
time of sale or at negotiated prices. Such prices will be determined by the
selling stockholders or by agreement between the selling stockholders and
underwriters or dealers, if any. The selling stockholders also may, from
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time to time, authorize dealers, acting as selling stockholders' agents, to
solicit offers to purchase the shares upon the terms and conditions set forth in
any prospectus supplement.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold hereunder in such jurisdictions only
through registered or licensed brokers or dealers.
OSI has been advised that, as of the date hereof, the selling
stockholders have made no arrangements with any broker for the sale of their
shares. The selling stockholders and any underwriters, brokers or dealers
involved in the sale of the shares may be considered "underwriters" as that term
is defined by the Securities Act although the selling stockholders disclaim such
status. OSI has agreed to reimburse the selling stockholders against certain
liabilities that may be incurred in connection with the sale of the shares under
this prospectus. In addition, the selling stockholders have agreed to reimburse
OSI against certain liabilities. OSI has agreed to pay certain expenses incident
to the registration statement and the sale of the shares hereunder to the
public, other than certain internal administrative and similar costs of the
selling stockholders, legal fees and expenses of counsel for the selling
stockholders and any underwriting discount and commissions, selling or placement
agent or broker fees or commissions, and transfer taxes, if any, in connection
with the sale of securities by the selling stockholders. OSI will not receive
any proceeds from any sales of the shares pursuant to this prospectus. Each
selling stockholder will be subject to applicable provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder,
including, without limitation, Regulation M, which provisions may limit the
timing of purchases and sales of shares of OSI's common stock by the selling
stockholders.
AVAILABLE INFORMATION
OSI has filed a registration statement, of which this prospectus is a
part, and related exhibits with the SEC pursuant to the Securities Act. The
registration statement contains additional information about OSI and OSI's
common stock. OSI also files annual and quarterly reports, proxy statements and
other information with the SEC. You may read and copy the registration statement
or any other document OSI files with the SEC at the SEC's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the Public Reference Room.
The SEC also maintains a website that contains reports, proxy and
information statements, and other information that OSI has filed electronically.
The SEC's website is located at http://www.sec.gov. OSI also maintains its own
website which is located at http://www.osip.com.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows OSI to "incorporate by reference" the information OSI
provides in documents filed with the SEC, which means that OSI can disclose
important information by referring to those documents. The information
incorporated by reference is an important part of this prospectus. Any statement
contained in a document which is incorporated by reference in this prospectus is
automatically updated and superseded if information contained in this
prospectus, or information that OSI later files with the SEC, modifies and
replaces this information. OSI incorporates by reference the following documents
OSI has filed with the SEC:
1. annual report on Form 10-K for the fiscal year ended September
30, 1999, filed with the SEC on December 29, 1999 and amended
on January 25, 2000 and May 23, 2000;
2. current report on Form 8-K, filed with the SEC on December 15,
1999 and amended on May 23, 2000;
3. current report on Form 8-K, filed with the SEC on
March 1, 2000;
4. current report on Form 8-K, filed with the SEC on June 20,
2000;
5. quarterly report on Form 10-Q for the quarter ended December
31, 1999, filed with the SEC on February 14, 2000;
6. quarterly report on Form 10-Q for the quarter ended March 31,
2000, filed with the SEC on May 15, 2000 and amended on June
19, 2000;
7. proxy statement, dated February 7, 2000, for OSI's 2000 annual
meeting of stockholders, filed with the SEC on January 28,
2000; and
8. the description of OSI's common stock, which is registered
under Section 12 of the Exchange Act, contained in OSI's
registration statement on Form 8-A, including any amendments
or reports filed for the purpose of updating such description.
All documents OSI has filed with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this prospectus will become a
part of this prospectus. To receive a free copy of any of the documents
incorporated by reference in this prospectus call or write Robert L. Van
Nostrand, Vice President and Chief Financial Officer, OSI Pharmaceuticals, Inc.,
106 Charles Lindbergh Boulevard, Uniondale, New York 11553, telephone (516)
222-0023. OSI will not send exhibits to the documents unless those exhibits have
been specifically incorporated by reference in this prospectus.
You should rely only on the information incorporated by reference or
included in this prospectus or the applicable prospectus supplement. OSI has not
authorized anyone else to provide you with different information. The selling
stockholders may only use this prospectus to sell securities if a prospectus
supplement is delivered with the prospectus, to the extent one is required. The
selling stockholders are only offering these securities in states where the
offer is permitted. You should not assume that the information in this
prospectus or the applicable prospectus supplement is accurate as of any date
other than the dates set forth on the front of these documents.
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<PAGE> 16
LEGAL MATTERS
Saul, Ewing, Remick & Saul LLP, Philadelphia, Pennsylvania, will pass
upon the validity of the shares of common stock offered in this prospectus for
OSI.
EXPERTS
The consolidated financial statements of OSI as of September 30, 1999
and 1998, and for each of the years in the three-year period then ended included
in OSI's 1999 annual report on Form 10-K, have been incorporated by reference in
this prospectus and in the registration statement in reliance upon the report of
KPMG LLP, independent certified public accountants, also incorporated by
reference in this prospectus, and upon the authority of KPMG LLP as experts in
accounting and auditing.
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<PAGE> 17
You should rely only on the information contained in this prospectus or
incorporated by reference. OSI has not authorized anyone to provide you with
additional or different information. OSI is not making an offer of these
securities in any jurisdiction where the offer or sale is not permitted. You
should not assume that the information contained in or incorporated by reference
in this prospectus is accurate as of any date other than the date on the front
cover of this prospectus, regardless of the date of delivery of this prospectus
or the date of any sale of the securities.
3,325,000 shares
OSI PHARMACEUTICALS, INC.
Common Stock
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Prospectus
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June 21, 2000
