OSI Pharma 3rd-qtr profit falls on costs, taxes

OSI Pharmaceuticals' 3rd-quarter profit falls on costs, taxes, but revenue tops forecasts

• On 11:20 am EDT, Thursday October 22, 2009

MELVILLE, N.Y. (AP) -- Shares of drug developer OSI Pharmaceuticals Inc. rallied Thursday after the company posted better-than-expected revenue in the third quarter, even as its profit plunged on higher costs and taxes.

The company said late Wednesday it earned $17.6 million, or 30 cents per share, down from profit of $51.6 million, or 87 cents per share, during the same period a year prior. Revenue rose 18 percent to $111.4 million from $94.6 million.

Excluding discontinued operations, the company said it earned 30 cents per share. Analysts polled by Thomson Reuters expected profit of 32 cents per share on revenue of $106.4 million.

OSI received most of its revenue from Tarceva, which treats lung and pancreatic cancer. It is sold in partnership with Genentech, which is now part of Roche. OSI received $88.7 million in Tarceva-related revenue, up 10 percent from a year prior. Other revenue, mainly from royalties on diabetes treatments, rose 64 percent to $22.7 million.

Meanwhile, operating expenses rose 22 percent to $71.2 million, while the company's income tax provision surged to $17.9 million from $987,000 a year prior.

Shares of OSI rose $1.82, or 5.8 percent, to $33.38 in morning trading. The stock has traded between $27.01 and $43 over the last 52 weeks.