Merger of OSI, Eyetech solidifies research

October 1, 2005

New York—The $935 million acquisition of Eyetech Pharmaceuticals Inc. by OSI Pharmaceuticals Inc. will boost research and development (R&D) opportunities for both companies, while preserving Eyetech's integrity as a stand-alone business unit, according to leaders of both organizations.

Eyetech's David R. Guyer, MD, and OSI's Colin Goddard, PhD-chief executive officers of the respective companies-said the deal is solid. The merger agreement is built around similar financial goals and research expertise that will create a strong and diverse player in the biotechnology arena, they said.

OSI, which markets the cancer medication erlotinib (Tarceva), announced Aug. 21 it would acquire Eyetech for $20 a share-a 43% premium over Eyetech's $13.99 share price-and $234 million in OSI common stock.

Although both pharmaceuticals serve different markets, OSI's Dr. Goddard nearly joined Eyetech's board, according to Dr. Guyer. As members of the New York Bio-technology Association, dedicated to boosting biotechnology companies in the state, Dr. Guyer said he came to know and respect Dr. Goddard prior to merger talks, which he called "a very natural happening."

Dr. Goddard said the move strengthens his company by adding a second major drug. The company expects more than $600 million in revenues in 2006.

"In our view, a soon-to-be-profitable franchise, with two major products and enhanced top- and bottom-line growth, an enriched pipeline, and quality science has to be better positioned than the stand-alone parent," Dr. Goddard said.

Like OSI's previous acquisition of Oxford, England-based Prosidian, Eyetech will be added as a separate division within OSI. In an interview with Ophthalmology Times, Dr. Goddard said personnel in "areas of overlap"-general administrative positions more than R&D-would likely be let go, but those decisions had not yet been made.

"In deciding to merge, the companies discovered they had many synergies," Dr. Goddard said.

He noted the anti-vascular endothelial growth factor (VEGF) research inherent to pegaptanib sodium is of interest in cancer research as well. The companies also share a geographical similarity, with both based in or near New York City.

"We saw the opportunity to bring Eyetech into the fold as a third business unit, which gets us into a very interesting area of patient care and exciting financial opportunities as well," Dr. Goddard said.

Dr. Guyer agreed, noting that the future of single-product companies lies in merging to create stronger pipelines and to increase scale.

"The individual business unit philosophy will be very important to us. It allows us to keep our autonomy to a degree but be part of a much bigger company," Dr. Guyer said in an interview with Ophthalmology Times. Dr. Guyer will remain CEO of the Eyetech unit, while Paul G. Chaney will continue as chief operating officer and Anthony P. Adamis, MD, will remain its chief scientific officer.

The merger simply allows Eyetech to continue its work with the financial backing of a larger firm, Dr. Guyer said.

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