OSI Announces Proposal to Offer $100 Million of Convertible Senior Subordinated Notes

OSI Pharmaceuticals, Inc. (Nasdaq: OSIP) today announcedthat it intends to offer, subject to market conditions, a new issue of$100 million of Convertible Senior Subordinated Notes due 2025. Thenotes will be convertible into OSI common stock at a price to bedetermined. The notes will be unsecured obligations of OSI and will besubordinated in right of payment to all of its existing and futuresenior indebtedness. As part of the offering, OSI will also grant theinitial purchaser a 30-day option to purchase up to an additionalaggregate $15 million of the notes.

OSI intends to use up to $25 million of the net proceeds topurchase shares of its common stock concurrently with pricing of thenotes as well as to enter into call spread transactions with respectto its common stock to reduce the potential dilution from conversionof the notes, and to use the remaining funds for general corporatepurposes. In connection with these call spread transactions, theinitial purchaser of the notes or its affiliates have indicated thatthey will purchase shares of OSI's common stock in secondary markettransactions and enter into various derivative transactionsconcurrently with, prior to and possibly after pricing of the notes.

The notes will be issued in a private placement and are expectedto be resold to qualified institutional buyers pursuant to Rule 144Aof the Securities Act of 1933, as amended. The convertible seniorsubordinated notes and the shares of common stock of OSI issuable uponthe conversion of the notes will not be registered under theSecurities Act or any state laws and may not be offered or sold in theUnited States absent registration or an applicable exemption fromregistration requirements.

This news release shall not constitute an offer to sell or asolicitation of an offer to buy, nor shall there be any sales of thesesecurities in any state or jurisdiction in which such an offer,solicitation or sale would be unlawful prior to registration orqualification under the securities law of any such state orjurisdiction.

About OSI Pharmaceuticals

OSI Pharmaceuticals is committed to "shaping medicines andchanging lives" by discovering, developing and commercializinghigh-quality and novel pharmaceutical products that extend life orimprove the quality of life for patients with cancer, eye diseases anddiabetes. The Company operates through three business teams, (OSI)Oncology, (OSI) Eyetech and (OSI) Prosidion. (OSI) Oncology is focusedon developing molecular targeted therapies designed to change theparadigm of cancer care. (OSI) Eyetech specializes in the developmentand commercialization of novel therapeutics to treat diseases of theeye. (OSI) Prosidion is committed to the generation of novel, targetedtherapies for the treatment of type 2 diabetes and obesity. OSI'sflagship product, Tarceva(R) (erlotinib), is the first drug discoveredand developed by OSI to obtain FDA approval and the only EGFRinhibitor to have demonstrated the ability to improve survival in bothnon-small cell lung cancer and pancreatic cancer patients. OSI marketsTarceva through partnerships with Genentech, Inc. in the United Statesand with Roche throughout the rest of the world. Macugen(R)(pegaptanib sodium injection) is approved in the United States for thetreatment of neovascular age-related macular degeneration. OSIcommercializes Macugen in partnership with Pfizer Inc. For additionalinformation about OSI, please visit http://www.osip.com.

This news release contains forward-looking statements. Thesestatements are subject to known and unknown risks and uncertaintiesthat may cause actual future experience and results to differmaterially from the statements made. Factors that might cause such adifference include, among others, the completion of clinical trials,the FDA review process and other governmental regulation, OSI's andits collaborators' abilities to successfully develop and commercializedrug candidates, competition from other pharmaceutical companies, theability to effectively market products, and other factors described inOSI Pharmaceuticals' filings with the Securities and ExchangeCommission.