OSI to drop eye disease unit

December 15, 2006

OSI Pharmaceuticals Inc. officials plan to exit the eye treatment business with the sale of their most recent acquisition, Eyetech Pharmaceuticals.

Colin Goddard, PhD, OSI's chief executive officer, said he is disappointed that the company's acquisition last year of Eyetech Pharmaceuticals for approximately $650 million net of cash did not produce the results as hoped.

Last September, Dr. Goddard rejected second-guessers in the investment community who questioned the fit, saying the deal-which included pegaptanib sodium injection (Macugen)-would boost sales and enhance research opportunities for the company and provide cash for the company's work on cancer and diabetes therapies.

Recent polls, however, show bevacizu-mab and ranibizumab each boast about 30% of the market, whereas pegaptanib sodium injection claims about 10%, according to Dr. Goddard. Although pegaptanib sodium injection produced $87 million in sales during the first two quarters of 2006, during the most recent quarter it only produced $9 million.

OSI announced Nov. 6 it would "seek to maximize value" for pegaptanib sodium injection through a licensing arrangement, partnership, or an outright sale of the business. In an interview with Ophthalmology Times, however, Dr. Goddard said that he hopes to maintain some relationship with Eyetech Pharmaceuticals.

"We want to be very thoughtful about this," he said. "We still think longer term that, with some of the data we're seeing, there's a more encouraging, longer-term opportunity for [pegaptanib sodium injection]. We think there's value there, but we're unable to invest behind it in the near term.

"We'd like to find a partner or some other merger opportunity that puts the Eyetech Pharmaceuticals franchise into a situation in which it can realize some significant long-term value and where they'll have an opportunity to flourish," Dr. Goddard said. "If [pegaptanib sodium] turns around, we can benefit at the end as well. The last thing we'd like to see now is to be accused of one mistake and then see we were proved right in the long run."

Despite advances by competing drugs, studies show pegaptanib sodium injection offers something unique-long-term safety and efficacy, said Paul G. Chaney, executive vice president of OSI and president of (OSI) Eyetech Pharmaceuticals. An ongoing LEVEL study is evaluating its role as a maintenance therapy to balance long-term safety and efficacy, and the early data in other eye diseases such as diabetic retinopathy and central retinal vein occlusion are "pretty compelling," he said.

"VEGF (vascular endothelial growth factor) also has beneficial effects in the eye," he said.

"It preserves vascular integrity, it preserves neurons; the eye is highly vascular and highly sensitive from a neurosensory perspective," Chaney added. "Those are things that we should be careful with.

"There are known risks for VEGF blockade," he said. "[Pegaptanib sodium injection] is specific for one isoform of VEGF in the eye, more specific than the other agents. . . . That's a place where we think we have some differential benefit."