729922--3/1/2007--OSI_PHARMACEUTICALS

related topics

{product, candidate, development}

{property, intellectual, protect}

{regulation, government, change}

{product, liability, claim}

{stock, price, share}

{provision, law, control}

{debt, indebtedness, cash}

{financial, litigation, operation}

We depend heavily on our co-development and marketing alliance with Genentech and Roche for Tarceva. If Genentech or Roche terminate these alliances, or are unable to meet their contractual obligations, it would negatively impact our revenues and harm our business. We are responsible for the manufacture and supply of Tarceva in the United States. Because we have no commercial manufacturing facilities, we are dependent on two suppliers for the API for Tarceva and a single supplier for the tableting of Tarceva in the United States. If any of these third parties fails to meet its obligations, our revenues from Tarceva could be negatively affected. If our competitors succeed in developing products and technologies that are more effective than our own, or if scientific developments change our understanding of the potential scope and utility of our products, then our products and technologies may be rendered less competitive. Our revenues from our DPIV patent portfolio licenses are contingent upon the ability of the licensees to successfully develop and commercialize their products which are the subject of these licenses. Although we have clinical candidates in the pipeline for oncology and diabetes and obesity that appear to be promising at early stages of development, none of these potential products may reach the commercial market for a number of reasons. A component of our business strategy is to enter into collaborations with third parties to research, develop and commercialize certain of our products, or to outlicense clinical candidates, when we believe that doing so will maximize product value or when the products or candidates are no longer considered to be part of our core business. We may not be successful in establishing such collaborations or entering into such license agreements, which could adversely affect the prospects for these products to become commercialized. Our reliance on third parties, such as clinical research organizations, or CROs, may result in delays in completing, or a failure to complete, clinical trials if they fail to perform under our agreements with them. We may not be able to make our required payments of interest and principal under our long-term indebtedness when due, and therefore we may face liquidity problems. Risks Relating to Regulatory Matters The manufacture and packaging of pharmaceutical products such as Tarceva and Macugen are subject to the requirements of the FDA and similar foreign regulatory bodies. If we or our third party manufacturers fail to satisfy these requirements, our or their product development and commercialization efforts may be materially harmed. If government agencies do not grant us or our collaborative partners required approvals for any of our potential products in a timely manner or at all, we or our collaborative partners will not be able to distribute or sell our products currently under development. Competitors could challenge our patents and file an ANDA or a 505(b)(2) new drug application for a generic or a modified version of Tarceva or Macugen and adversely affect our competitive position. Some of our activities may subject us to risks under federal and state laws prohibiting kickbacks and false or fraudulent claims, which could subject us to potential civil and criminal penalties and exclusion from federal healthcare programs. If we do not receive adequate third-party reimbursement for the sales of our marketed products, we may not be able to sell such products on a profitable basis. The 2003 Medicare prescription drug coverage legislation, The Medicare Prescription Drug Improvement and Modernization Act, or the MMA, and future legislative or regulatory reform of the healthcare system may affect our ability to sell certain of our products profitably. Risks Related to Intellectual Property and Legal Matters If we or our collaborative partners are required to obtain licenses from third parties, our revenues and royalties on any commercialized products could be reduced. If we cannot successfully protect, exploit or enforce our intellectual property rights, our ability to develop and commercialize our products, and receive revenues from licenses under our intellectual property, will be adversely affected. If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be negatively impacted. The failure to prevail in litigation or the costs of litigation, including patent infringement claims, could harm our financial performance and business operations and could cause delays in product introductions. The use of any of our potential products in clinical trials and the sale of any approved products exposes us to liability claims. Risks Related to Our Common Stock Our stock price remains highly volatile which could make it difficult for our stockholders to resell our common stock. Our governance documents and state law provide certain anti-takeover measures which will discourage a third party from seeking to acquire us and may impede the ability of stockholders to remove and replace our board of directors and, therefore, our management.

Full 10-K form ▸

729922--3/1/2007--OSI_PHARMACEUTICALS_INC