Diabetes and Obesity

OSI confirmed its commitment to finding medicines that can help people with diabetes with the April 2005 consolidation of Prosidion into OSI as a wholly owned subsidiary. This was achieved through the buy-back of shares from minority shareholders.

OSI has a 14-year history of diabetes research including alliances with international pharmaceutical companies such as Wyeth and Tanabe Seiyaku Co., Ltd. Prosidion, established in 2003 as a vehicle to advance and develop OSI’s diabetes and obesity assets, has progressed three compounds into clinical development. It acquired the Phase II DP-IV inhibitor PSN9301 and a DP-IV inhibitor patent estate from Probiodrug AG. Through our Prosidion team, OSI believes it can produce a pipeline of innovative and competitive diabetic drug candidates.

PSN9301, PSN357 and PSN010 are our three leading diabetes and obesity candidates. PSN9301, a small molecule DP-IV inhibitor, is currently in Phase II clinical trials. DP-IV is one of the most important targets in diabetes drug development today. DP-IV inactivates a natural hormone produced by the body after meals that helps regulate meal-related increases in glucose called GLP-1. DP-IV inhibitors help maintain GLP-1 levels. This area is competitive, but we believe PSN9301, which is designed to be prandially dosed – taken with meals – could offer advantages in terms of minimizing potential side effects and providing an optimal profile for combination with other diabetes drugs such as metformin.

We have also out-licensed our DP-IV medical-use patents to six major pharmaceutical companies, including Novartis AG and Merck & Co. These licenses provide us with milestone and royalty payments. With both Novartis and Merck having recently filed NDAs for their DP-IV inhibitors (Januvia™ from Merck and Galvus™ from Novartis), we expect both milestone and royalty payments from these companies if their agents are successfully registered.

PSN357, a glycogen phosphorylase inhibitor, entered a Phase IIa clinical trial in late February of 2006. It has demonstrated safety in Phase I trials and efficacy in reducing blood glucose in animal models. PSN010 is a glucokinase activator which has recently begun clinical trials. It has a dual effect on the liver and the pancreas, resulting in increased hepatic glucose uptake in the liver and stimulated insulin secretion by the pancreas. It, too, has demonstrated efficacy in animal models and successfully completed pre-clinical toxicological profiling.

Behind these clinical candidates we also have two potential drug candidates for obesity, a growing health concern related to occurrence of diabetes.