Tarceva: Our Flagship
Anti-Cancer Therapy
For Tarceva, our first breakthrough therapy and our flagship product, the launch year of 2005 was a remarkable one. An oral, once-a-day oncology medicine, Tarceva demonstrates what OSI is capable of: the nurturing of an extraordinarily innovative and paradigm-shifting medicine – that both extends life and improves patients’ quality of life.

In 2004, U.S. regulators approved Tarceva – a small molecule inhibitor of the epidermal growth factor receptor – for use in patients with non-small cell lung cancer (NSCLC) whose disease has progressed after the failure of at least one prior chemotherapy. This was a major milestone, but further regulatory approvals have kept up the momentum. In November 2005, regulators approved Tarceva in combination with gemcitabine chemotherapy for the treatment of advanced pancreatic cancer in patients who have not received prior chemotherapy. In addition, our international partner for Tarceva, Roche, received approval from the European regulators of Tarceva for the treatment of patients with advanced NSCLC in September 2005.

Tarceva’s launch into the U.S. market by our commercial team together with our U.S. collaborator, Genentech, was record-setting, the most successful oncology drug launch in U.S. history in terms of the number of patients treated during the first 12 months. In dollar terms, total U.S. net sales of $275 million made Tarceva the fourth most successful oncology drug launch ever. Globally, Tarceva recorded $309 million in net sales following the late 2005 launch in Europe.

Setting the Table for Success
The success of Tarceva allows us to embark upon the challenge of building “chapter two” – establishing a growing and successful top-tier biotech company to the benefit of our shareholders, employees and cancer, diabetic and eye disease patients – with real confidence. The revenue Tarceva has and will continue to generate allows us to pursue a three-pronged strategy necessary to ensure that OSI meets its long-term objective. Our goals are to:

1) Operate in three areas of attractive commercial potential that together enable us to broadly leverage our core strengths in the discovery and development of novel molecular targeted therapies;

2) Establish sustainable revenue growth allowing significant reinvestment in the research and development programs necessary to create a strong portfolio, while delivering the profitability and financial strength anticipated by many shareholders following Tarceva’s approval;

3) Continue being a scientific innovator with a novel and differentiated pipeline of follow-on products for unmet medical needs, all representing major commercial opportunities for OSI and for our shareholders.

At our core we intend to retain a strong and dynamic oncology focus. However, the successful execution of this strategy will allow us to lower the risks associated with dependence on a single product and single disease area, while continuing to build on our historical strengths in oncology and broader target-based drug discovery.