OSI Pharmaceuticals Inc. (OSIP) recently announced that it has narrowed its 2010 revenue guidance. However, the company still expects earnings to grow at 10% or more.

OSI Pharma currently expects 2010 revenue growth rate to be in the mid-teens. On Dec. 3 2009, the company presented the guidance for revenue growth in the high teens over the next several years. On the same day it had reaffirmed 2009 revenue guidance of approximately $425 million.

The trimming of the 2010 revenue forecast is primarily attributable to the negative opinion expressed by the advisory panel of the U.S. Food and Drug Administration (FDA) regarding expanding the approval of OSIP’s lead lung cancer drug Tarceva to patients already responding to chemotherapy. The panel voted 12-1 against Tarceva as a follow-up therapy in those patients. The U.S. agency, which is not bound to accept the panel’s advice, will decide on its approval for Tarceva for the additional indication by Jan 18, 2010.

Tarceva is already approved for the treatment of patients with locally advanced or metastatic non-small cell lung cancer (2nd line NSCLC) after the failure of at least one prior chemotherapy regimen. Tarceva, which OSIP has co-developed with Genentech now a part of Roche Holdings, is a small molecule inhibitor of the epidermal growth factor receptor (EGFR) designed to specifically block the activity of the EGFR protein, which is often over-expressed or mutated in many solid cancerous tumors.

OSIP also provided an update on the re-purchase of a portion of its outstanding convertible debt bonds. OSIP had bought $39.5 million (face value) of the 2023 convertible bonds for $37.6 million and $40.0 million (face value) of the 2038 convertible bonds for $37.4 million as of Dec 22, 2009. The company’s outstanding 2038 notes, 2023 notes and 2025 notes at face value currently aggregates $335.5 million. Furthermore, OSIP announced that it may continue to selectively re-purchase convertible debt bonds and common stock throughout 2010.

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