OSI Pharmaceuticals, Inc. and Eyetech Pharmaceuticals, Inc. have entered into a definitive merger agreement whereby OSI has agreed to acquire Eyetech, a biopharmaceutical company that focuses on the development and commercialization of novel therapeutics to treat eye diseases.

Under the merger agreement, OSI will acquire all outstanding shares of Eyetech common stock at a price of $20 per share in a combination of cash and OSI common stock, for an aggregate purchase price of approximately $935 million, representing a 43 per cent premium over Eyetech's $13.99 closing share price on August 19, 2005. The merger agreement calls for 75 per cent of the purchase price, or $15 per share, to be paid in cash with the remaining 25 per cent to be paid in OSI common stock using an exchange ratio of 0.12275 OSI shares for each share of Eyetech.

Approximately 5.7 million OSI shares will be issued in the transaction. The acquisition is subject to a number of closing conditions, including Eyetech stockholder approval and regulatory approvals, and the parties expect to close the transaction by the end of 2005, said an OSI release here.

"The acquisition of Eyetech represents the rare opportunity to combine two inherently strong growth stories and create a dynamic new entity with real strength. The combination of OSI and Eyetech will create a substantial biopharmaceutical company with over $600 million of projected revenues in 2006 and strong growth prospects for the future," commented Colin Goddard, CEO of OSI Pharmaceuticals.

According to the company release, the acquisition of Eyetech by OSI creates a diversified biopharmaceutical company that focuses on three therapeutic disease areas of significant market potential: oncology, eye diseases and diabetes. The combined company will have two major marketed products for the treatment of cancer and age-related macular degeneration and a robust product pipeline offering both new indications for the marketed products and novel therapeutics in all three disease areas.

Tarceva and Macugen are two of the most exciting and novel biotech products launched in recent years. Tarceva is the first EGFR inhibitor to demonstrate improved survival in both non-small cell lung cancer (NSCLC) and pancreatic cancer, two of the most deadly forms of cancer. Macugen is a novel first in class therapeutic that selectively binds to the pathological isoform of Vascular Endothelial Growth Factor (VEGF) to treat all forms of neovascular AMD including occult, minimally classic and predominantly classic lesion subtypes. Both Tarceva and Macugen are expected to be launched in the European Union by early 2006.