OSI to Purchase Some Gilead Assets

OSI Pharmaceuticals Inc. agreed to pay as much as $200 million in cash and stock for certain assets of rival Gilead Sciences Inc. to expand its offerings in cancer treatment.

OSI said it will buy experimental drugs and patent rights for $130million in cash and $40 million in stock. OSI also agreed to pay Foster City, Calif.-based Gilead as much as $30 million in either cash or a combination of cash and stock for reaching certain research targets, the company said.

The transaction will give Melville, N.Y.-based OSI three experimental cancer drugs. The company has one product in late-stage human testing--Tarceva, a cancer drug it’s developing with Genentech Inc. Gilead said the sale will help it focus on infectious diseases, including the recent introduction of its Viread AIDS drug.

“By focusing our resources, we will be able to reduce expenses and bolster our competitive business to help achieve profitability in 2002,” Gilead President and Chief Executive John Martin said.

Shares of Gilead rose $2.09 to $71.29 on Nasdaq. OSI fell 7 cents to $49.92, also on Nasdaq.

OSI also will gain a team of cancer researchers who will be responsible for further development of the drugs. About 140 Gilead researchers and administrative personnel are expected to join OSI.

The companies expect to complete the transaction by year’s end.

“It’s a nice deal for OSI and it backfills their pipeline nicely,” said Robertson Stephens analyst Michael King.

The cash infusion also will help Gilead complete clinical development of its adefovir dipivoxil treatment for hepatitis B. Gilead said it plans to file for Food and Drug Administration approval of the drug during the first half of 2002.