OSI plans to divest Macugen business

OSI Pharmaceuticals Inc. intends to exit the eye disease market by out-licensing, partnering or selling its Macugen business, the company recently announced in its third-quarter 2006 earnings release.

Despite year-to-date sales nearing $100 million for Macugen (pegaptanib sodium injection, OSI/Pfizer), the company said it is evident that its eye business is not on track to generate positive cash flow in the 2006 to 2008 period. That positive cash flow had been a "key strategic goal" behind the acquisition of Eyetech Pharmaceuticals, the drug's initial developer, according to the earnings release.

"Since this goal will not be realized, and OSI will not be able to invest near-term in the eye disease business, the company concluded that they can better realize value from the Macugen assets through strategic partnering strategies," Paul Chaney, President of (OSI) Eyetech, told Ocular Surgery News in an interview.

OSI is still "very early" in the process of divesting its Macugen business, but the company expects the process to take approximately 6 to 9 months, Mr. Chaney said. He would not comment on any prospects for divestiture.

Before the OSI-Eyetech merger, some financial advisors had questioned the wisdom of the move, citing positive study results for the competing age-related macular degeneration treatment Lucentis (ranibizumab, Genentech). Mr. Chaney confirmed that the launch of Lucentis, as well as widespread off-label use of the cancer drug Avastin (bevacizumab, Genentech) for treating AMD, had indeed affected Macugen's market performance.

OSI co-markets Macugen in the United States with Pfizer Inc. The two companies are currently in confidential discussions to determine the drug's future, according to Mr. Chaney.

"In the near-term, both OSI and Pfizer will continue to support Macugen commercially. We are not 'abandoning' our sales and marketing responsibilities; rather we are trying to identify a more appropriate business fit where Macugen can achieve its potential over the long-term," Mr. Chaney said.

In the earnings release, OSI officials said they believe Macugen's induction/maintenance strategy and its promising results in diabetic retinopathy will ultimately provide a "meaningful place" for the drug in the eye disease market.

As for its original indication for treatment of AMD, Mr. Chaney indicated that the drug will continue to be available to patients. Pfizer plans to evaluate its response to OSI's announcement based on the needs of patients and physicians on a region-by-region basis, according to a Pfizer representative.

Including Macugen, OSI currently markets two FDA-approved products. The company's flagship product Tarceva (erlotinib) is approved for treating non-small-cell lung cancer and pancreatic cancer. A co-promotion among OSI, Roche and Genentech, the drug achieved total worldwide net sales of $170 million in the third quarter of 2006, according to OSI's earnings statement.

OSI will focus on its core oncology business in 2007 and will continue its commitment to diabetes, Mr. Chaney said.