Oncology Research & Development at OSI
An important part of our mission at OSI is to improve upon the available treatment options for patients suffering from cancer. The success of Tarceva positions us at the forefront of a paradigm-shifting movement toward more targeted and better-tolerated therapies. While we do not discount the importance of traditional chemotherapy in the treatment of cancer patients today, our ongoing R&D efforts are predominantly focused on developing a portfolio of novel molecular targeted therapies built around Tarceva.

Targeting Cancer Cell Growth and Apoptosis
Our growing understanding of the genetic aberrations associated with various cancers has allowed us to develop agents that directly target these abnormalities and thus treat their consequences. As these new targeted therapies emerge from clinical testing, they are likely to be used independently or in combination with other targeted agents and they may also be used in combination with traditional cytotoxic chemotherapy agents.

We have made significant strides this year in the advancement of OSI-930, a co-inhibitor of the receptor-tyrosine kinases c-kit and vascular endothelial growth factor receptor (VEGFR). c-kit is an important growth regulator implicated in many tumors and VEGFR is one of the most important genes in the regulation of blood vessel growth (or angiogenesis). As tumors grow they need a network of blood vessels to ensure a supply of nutrients. OSI-930 is designed to target both proliferative and angiogenic signaling in selected tumors. We have filed an IND for OSI-930 and anticipate beginning a clinical program in the first half of 2005. OSI-817 is a second development candidate to arise from our c-kit/VEGFR program and this molecule could enter clinical development by year end.

In addition to Tarceva, three other molecules targeting receptor tyrosine kinases are currently in clinical trials resulting from our historical relationship with Pfizer in cancer drug discovery. CP-547,632, a potent and selective inhibitor of VEGFR, has been advanced to Phase II studies in ovarian cancer patients with minimal disease and in NSCLC. Phase I trials also continue for CP-868,596, a platelet-derived growth factor receptor of PDGF receptor inhibitor and for CP-724,714, an oral HER2 receptor inhibitor. If Pfizer is successful in commercializing these products, we will receive royalties based upon their sales.

We are also targeting apoptosis, or programmed cell death. Cancer cells often possess genetic aberrations that allow them to avoid the normally tightly regulated process of cell death. Our apoptosis program utilizes apoptosis inducers to restore and enhance programmed cell death in cancer cells that no longer respond to this tightly regulated process. The Cell Pathways acquisition in 2003 gave us access to a technology platform in apoptosis called SAANDs (Selective Apoptotic Anti-Neoplastic Drugs). In June 2004, we were disappointed but not surprised to announce that our Phase III study evaluating Aptosyn in combination with Taxotere in advanced non-small cell lung cancer did not meet its primary endpoint of improving overall survival. We had concerns about the potency of Aptosyn and are continuing to evaluate OSI-461, a more potent follow-on candidate. We have also expanded our apoptosis program beyond the SAANDs technology platform and are targeting a number of crucial genes in the apoptosis arena including IGF-1R.

Beyond our targeted therapy programs, we are continuing the clinical development of OSI-7904L, a liposomal formulation of a potent thymidylate synthase (TS) inhibitor that we are developing as a differentiated competitor in this class of cytotoxic drugs.

The activity of 5-FU, the lead agent in the class, is improved by continuous, long-term infusion of the product. We are trying to mimic this effect with a single, short-term infusion of a liposomal formulation of our TS inhibitor. Last May, we announced that we had initiated a randomized open-label Phase II study of OSI-7904L versus 5-FU as first-line treatment in patients with advanced or metastatic gallbladder or biliary tract cancers. This multi-center study is designed to evaluate the efficacy and safety of OSI-7904L in parallel with that of 5-FU. Our overall program for OSI-7904L also includes an ongoing Phase II clinical study of the product candidate in chemotherapy-naïve gastric and gastroesophageal junction cancer patients and two ongoing Phase I studies evaluating the use of OSI-7904L in combination with the chemotherapy agents cisplatin and oxaliplatin.