By Brady Huggett

OSI Pharmaceuticals priced its public offering of 5.35 million shares at $70 per share, offering 850,000 shares more than it registered for and upping its anticipated proceeds by nearly $60 million to $374.5 million.

"It's pretty unusual when you can price north of the level you filed at," Colin Goddard, chairman, president and CEO of OSI, told BioWorld Today. "And we are delighted to do it."

In early October, OSI filed to offer 4.5 million shares and, based on the closing price on the day of filing, sought $315 million. It priced at the same mark, but raised significantly more through the sale of additional shares. Robertson Stephens Inc., of San Francisco, and Lehman Brothers Inc., of New York, are joint book-running managers, with Prudential Vector Healthcare Group, of New York; Lazard Freres & Co. LLC, of New York; and Adams, Harkness & Hill Inc., of Boston, also participating. The underwriters have an option to purchase 802,500 shares to cover overallotments.

Following the pricing, OSI, of Uniondale, N.Y., has just less than 33 million shares outstanding, Goddard said.

Goddard said OSI will use the funding to support its lead product, OSI-774, currently in Phase II trials, and also to look beyond that product.

"We intend to invest heavily in [OSI-774] but also to invest in the pipeline behind it," Goddard said. "With the financing, we can take advantage of our own products and not have to seek partners for them."

OSI-774, an oral inhibitor of epidermal growth factor receptor, had been licensed to Pfizer Inc. for full development and marketing rights. When Pfizer moved to acquire Warner-Lambert Co., a company that had a similar anticancer agent in the works, the Federal Trade Commission said the merged company could not keep both products and Pfizer returned rights to OSI.

Early results of OSI-774's Phase II, 48-patient, non-small-cell lung cancer study were presented at the 9th World Conference on Lung Cancer in Tokyo in September. Four of the first 12 evaluable patients in the study had objective partial responses, while another four showed evidence of disease stabilization. (See BioWorld Today, Sept. 15, 2000.)

Behind OSI-774, OSI's pipeline is filled with product candidates. It has CP-609,754 for cancer in Phase I stage, in collaboration with Pfizer, and three other cancer products on an investigational new drug track, also with Pfizer. It has products in development for respiratory/asthma indications, cholesterol lowering, congestive heart failure and cosmeceuticals, all preclinical and in collaboration with others.

OSI had about $83 million in cash before the financing. By raising more than four times that amount, Goddard said the company has the funding it requires not only for OSI-774, but for the foreseeable future.

"We don't expect to have to go back to the markets anytime soon," Goddard said. "We think 774 will be an outstanding anticancer drug and if all goes well we hope to have a 2003 launch. With this financing we have the financial base to support that."

On news of the financing, OSI's stock (NASDAQ:OSIP) - which traded as low as $4.06 last December - rose $6.25 Wednesday, or about 9 percent, to close at $78.25. Goddard said the stock jump mirrors investors' confidence in the company's future and said the financing is a marker for OSI.

"I think it reflects a strong and oversubscribed deal and the strong franchise that we have built," Goddard said. "[The financing] is a milestone event that takes the company to the next level in the industry."

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