OSI shares rise after posting 1Q profit on cancer drug sales

NEW YORK - Shares of OSI Pharmaceuticals rose Wednesday, a day after the biotechnology company beat Wall Street expectations on higher sales of its cancer drug Tarceva.

In midday trading, OSI shares were up $1.54, or 4.4 percent, to $36.41.

Total worldwide sales of Tarceva, which OSI helped develop and which is distributed by Genentech Inc., rose 35 percent during the first quarter.

Goldman Sachs analyst May-Kin Ho said Tuesday that while Tarceva sales were strong outside the U.S., they were flat domestically. However, she said U.S. growth of the drug could accelerate next year if late-stage trial data expected in the second half of the year is positive.

She added the two indications being studied could account for an additional $500 million in sales. Ho has a "Neutral" rating and $46 price target on Melville, N.Y.-based OSI.

BMO Capital Markets analyst Jason Zhang, who has an "Outperform" rating and a $54 price target, noted that other drug makers will be presenting lung cancer data at the American Society of Clinical Oncology's annual meeting that begins later this month. In addition, he said that AstraZeneca PLC is slated to present lung cancer data on its experimental drug, Zactima, later this year.

"Overall, we believe Tarceva will come out ahead," he said.

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