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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number: 0-15190
  OSI PHARMACEUTICALS,
    INC.
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware

13-3159796(State or other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer Identification
    No.)41 Pinelawn Road, Melville, N.Y.(Address of Principal
    Executive Offices)

11747(Zip
    Code)   Registrants Telephone Number, including area code
 (631) 962-2000
  Securities Registered Pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, par value $.01 per share
    Series SRPA Junior Participating
    Preferred Stock Purchase Rights

The NASDAQ Stock Market LLC   Securities Registered Pursuant to Section 12(g) of the
    Act: None
 (Title of Class)
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated filer
    þ

Accelerated filer
    o

Non-accelerated filer
    o

Smaller reporting company
    o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  TABLE
    OF CONTENTS
  PagePART IITEM 1.

BUSINESS


1ITEM 1A.

RISK FACTORS


20ITEM 1B.

UNRESOLVED STAFF COMMENTS


36ITEM 2.

PROPERTIES


36ITEM 3.

LEGAL PROCEEDINGS


36ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS


36PART IIITEM 5.

MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES


37ITEM 6.

SELECTED CONSOLIDATED FINANCIAL DATA


39ITEM 7.

MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


41ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
    MARKET RISK


59ITEM 8.

CONSOLIDATED FINANCIAL STATEMENTS


61ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


105ITEM 9A.

CONTROLS AND PROCEDURES


105ITEM 9B.

OTHER INFORMATION


107PART IIIITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
    GOVERNANCE


107ITEM 11.

EXECUTIVE COMPENSATION


107ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


107ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    AND DIRECTOR INDEPENDENCE


107ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES


107PART IVITEM 15.

EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES


108EX-3.2: SECOND AMENDED AND RESTATED BYLAWSEX-10.12: FORM OF NON-QUALIFED STOCK OPTION AGREEMENTEX-10.13: FORM OF NON-QUALIFIED STOCK OPTION AGREEMENTEX-10.20: FORM OF RESTRICTED STOCK UNIT AGREEMENTEX-10.38: AMENDMENT TO LETTER  AGREEMENTEX-10.41: AMENDMENT TO CHANGE OF CONTROL ARRANGEMENTEX-10.43: AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENTEX-10.46: AMENDMENT TO EMPLOYMENT AGREEMENTEX-10.49: AMENDMENT TO EMPLOYMENT AGREEMENTEX-10.51: AMENDMENT TO CHANGE IN CONTROL ARRANGEMENTEX-10.57: SCIENTIFIC ADVISORY BOARD AND CONSULTING AGREEMENTEX-10.62: COMPENSATORY ARRANGEMENTSEX-10.63: COMPENSATORY ARRANGEMENTSEX-21: SUBSIDIARIESEX-23: CONSENT OF KPMG LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION   i




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Form 10-K,
  ® ® Form 10-K
 ii




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PART I  ITEM 1.
    BUSINESS           1




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epithelial-to-mesenchymal sub-sets
  1A
  Strategy
  first-in-class best-in-class
    
    More rapid and cost-effective drug development;
    The discovery and development of drugs that deliver meaningful
    clinical benefit to patients; and
    Increased availability of innovative medicines to the patients
    who can benefit from them the most.   2




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Our
    Marketed Product  Tarceva
  Overview
  once-a-day,
      Lifecycle
    Plan
    
    Expand the use of Tarceva into other NSCLC treatment areas;
    Expand the use of Tarceva into other pancreatic cancer treatment
    areas and additional tumor types; and 3




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
    Develop therapies which combine Tarceva and other novel targeted
    agents for the treatment of NSCLC and other tumor types.  Studies
    to Expand Tarceva into other NSCLC Treatment Areas.
  Tarceva Maintenance Therapy Studies.
    BeTa Lung Study. ® sub-set
  RADIANT Study (Adjuvant Tarceva after Surgery and
    Chemotherapy in Patients with Stage IB-IIIA
    NSCLC). and/or in situ
  Smoker Maximum Tolerated Dose
    Study.
 4




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Phase II Studies in
    Never-smokers. sub-population
  TITAN Study. ® ® sub-set
  Phase II Study in Enriched
    Population. and/or
  TASK Study.
  Studies
    to Expand Tarceva into other Pancreatic Cancer Treatment Areas
    and Additional Tumor Types.
  RACHEL
    Study. Sub-set
 5




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MARK Study. follow-up.
  Ovarian and Colorectal
    Cancer.
  Hepatocellular Cancer. ®
  Studies
    Which Combine Tarceva with other Targeted Agents.
    Treatment Beyond Progression.
  Investigator
    Sponsored Studies.
   6




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Sales
    and Marketing
    OSI/Genentech/Roche
    Alliance
    country-by-country country-by-country
  Manufacturing
    and Supply
   7




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Our
    Clinical Development Programs
    OSI-906. P
  PSN821. best-in-class first-in-man
  PSN602. 1A 1A and/or best-in-class. first-in-man
 8




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OSI-027.
  Other
    Development Programs and Significant Outlicensing
    Activities
  OSI-296.
  PSN010. back-up
  OSI-930.
  CP-868,596.
  Our
    Oncology and Diabetes/Obesity Discovery Efforts
  Oncology
    Research
  mesenchymal-to-epithelial E-cadherin, E-cadherin
 9




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E-cadherin and/or
    in vivo
  Diabetes/Obesity
    Discovery
   10




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Divestiture
    of Eye Disease Business
  ® change-of-control
  Our
    Intellectual Property
    Tarceva-Related
    Intellectual Property
  and/or
 11




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and/or
  and/or
     12




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Other
    Intellectual Property
  sub-licensable tm tm ® ®
    1A
   13




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Our
    Competition
      ®
  ® sub-set
  ®
  tm head-to-head tm ® ®
 14




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® ®
  tm ® 1A ®
  Government
    Regulation
    Key
    FDA Regulations
      
    pre-clinical laboratory and animal tests;
    submission to the FDA of an investigational new drug
    application, or IND, which must be in effect before clinical
    trials may begin;
    adequate and well-controlled human clinical trials to establish
    the safety and efficacy of the drug for its intended
    indication(s);
    FDA compliance inspection
    and/or
    clearance of all manufacturers;
    submission to the FDA of an NDA; and
    FDA review of the NDA or product license application in order to
    determine, among other things, whether the drug is safe,
    effective and of appropriate quality for its intended uses. 15




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and/or
     16




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The
    Hatch-Waxman Act
    and/or 45-day 30-month
    Pricing
    and Reimbursement
    out-of-pocket out-of-pocket
 17




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Other
    Regulation
    and/or
        Our
    Employees
   18




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Available
    Information
  Form 10-K, Form 10-Q Form 8-K 1-800-SEC-0330. http://www.sec.gov
  Form 10-K, Form 10-Q Form 8-K http://www.osip.com (631) 962-2000 e-mail
 19




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ITEM 1A.
    RISK
    FACTORS  This report contains forward-looking statements that do not
    convey historical information, but relate to predicted or
    potential future events, such as statements of our plans,
    strategies and intentions, or our future performance or goals
    for our product development programs. These statements can often
    be identified by the use of forward-looking terminology such as
    believe, expect, intend,
    may, will, should, or
    anticipate or similar terminology. The statements
    involve risks and uncertainties and are based on various
    assumptions. Stockholders and prospective stockholders are
    cautioned that these statements are only projections. In
    addition, any forward-looking statement that we make is intended
    to speak only as of the date on which we made the statement.
    Except for our ongoing obligations to disclose material
    information under the federal securities laws, we will not
    update any forward-looking statement to reflect events or
    circumstances that occur after the date on which the statement
    is made. The following risks and uncertainties, among others,
    may cause our actual results to differ materially from those
    described in forward-looking statements made in this report or
    presented elsewhere by management from time to time.
  Risks
    Related to Our Business
  We
    depend heavily on our principal marketed product, Tarceva, to
    generate revenues in order to fund our operations.
    
    Our ability to maintain and expand the market share, both in the
    United States and in the rest of the world, and revenues for
    Tarceva in the treatment of second-line and third-line NSCLC and
    for first-line pancreatic cancer in the midst of numerous
    competing products which are currently in late stage clinical
    development;
    Whether the positive data from the SATURN and ATLAS studies will
    be sufficient to achieve approval from the FDA and its foreign
    counterparts to market and sell Tarceva as a maintenance therapy
    in patients with advanced, recurrent or metastatic NSCLC who
    have not experienced disease progression following chemotherapy,
    and whether, if approved, Tarcevas use in the setting will
    gain acceptance among prescribing physicians and result in
    increased Tarceva sales;
    Whether data from clinical trials for additional indications are
    positive and whether such data, if positive, will be sufficient
    to achieve approval from the FDA and its foreign counterparts to
    market and sell Tarceva in such additional indications;
    Whether physicians are willing to switch from existing treatment
    methods, including traditional chemotherapy agents (where
    certain reimbursement practices in the United States favor the
    use of intravenously administered drugs), to Tarceva;
    Current and future pricing pressures on Tarceva, including as a
    result of government-imposed price reductions, an increase in
    imports of Tarceva from lower cost countries to higher cost
    countries and pressure on physicians to reduce prescriptions of
    higher priced medicines like Tarceva;
    Adequate coverage or reimbursement for Tarceva by third-party
    payors, including private health coverage insurers and health
    maintenance organizations; and
    The ability of patients to afford any required co-payments for
    Tarceva. The risk that patients will not be able to afford the
    co-payments for Tarceva may become particularly acute if the
    recent global financial crisis is prolonged or worsens. 20




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If
    Tarceva were to become the subject of problems related to its
    efficacy, safety, or otherwise, or if new, more effective
    treatments were introduced into the market, our revenues from
    Tarceva could decrease.
    
    efficacy or safety concerns with the product, even if not
    justified;
    unexpected side-effects;
    regulatory proceedings subjecting the product to potential
    recall;
    pressure from competitive products;
    introduction of more effective treatments; or
    manufacturing or quality problems that would reduce or disrupt
    product availability;    Our
    strategy includes expanded use for Tarceva; however, there can
    be no assurance that the positive results from the SATURN or
    ATLAS trials will result in Tarceva receiving the required
    regulatory approvals for expanded use in NSCLC or that data from
    other clinical trials for additional indications will be
    positive or sufficient to achieve approval from the FDA and its
    foreign counterparts to market and sell Tarceva in such
    additional indications.
       21




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We
    depend heavily on our co-development and marketing alliance with
    Genentech and Roche for Tarceva. If Genentech or Roche terminate
    these alliances, or are unable to meet their contractual
    obligations, it could negatively impact our revenues and harm
    our business until appropriate corrective measures have been
    taken.
    country-by-country
  and/or
    If we
    do not receive timely and accurate financial information from
    Genentech and Roche regarding the development and sale of
    Tarceva, we may be unable to accurately report our results of
    operations.
  and/or
 22




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Our
    business will be increasingly affected by pressures on drug
    pricing, which may limit or reduce the prices we can charge for
    Tarceva in the future and the pricing structure available to
    future products emanating from our pipeline.
    We are
    responsible for the manufacture and supply of Tarceva in the
    United States. Because we have no commercial manufacturing
    facilities, we are dependent on two suppliers for the API for
    Tarceva and a single supplier for the tableting of Tarceva in
    the United States. If any of these third parties fails to meet
    its obligations, our revenues from Tarceva could be negatively
    affected.
    We may
    not be able to successfully obtain the grant of the Tarceva
    patent reissue application which could limit our ability to
    assert the 498 patent to prevent or stop competitors from
    marketing or selling products similar to Tarceva.
    If our
    competitors succeed in developing products and technologies that
    are more effective than our own, or if scientific developments
    change our understanding of the potential scope and utility of
    our products, then our products and technologies may be rendered
    less competitive.
   23




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sub-set
    head-to-head
  ®
   24




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1A
  Our
    revenues from our DPIV patent portfolio licenses are contingent
    upon the ability of our licensees to successfully develop and
    commercialize their products which are the subject of these
    licenses and our ability to protect our intellectual property
    rights in our DPIV patent estate.
    Although
    we have clinical and pre-clinical candidates in the pipeline for
    oncology and diabetes and obesity that appear to be promising at
    early stages of development, none of these potential products
    may reach the commercial market for a number of
    reasons.
    follow-up
 25




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Our
    reliance on third parties, such as clinical research
    organizations, or CROs, and manufacturers, may result in delays
    in completing, or a failure to complete, clinical trials if they
    fail to perform under our agreements with them.
    Our
    operating results could be adversely affected by fluctuations in
    the value of the U.S. dollar against foreign
    currencies.
   26




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We may
    not be able to make our required payments of interest and
    principal under our outstanding indebtedness when due, and may
    not be able to repurchase for cash our 2% convertible senior
    subordinated notes due 2025, or our 2025 Notes, or our 3%
    convertible senior subordinated notes due 2038, or our 2038
    Notes, if required to do so in 2010 and 2013, respectively. If
    we elect to repurchase our
    31/4%
    convertible senior subordinated notes due 2023, or our 2023
    Notes, with our common shares, our shareholders would experience
    dilution and our stock price may decline.
    Global
    credit and financial market conditions could negatively impact
    the value of our current portfolio of cash equivalents and
    investment securities.
    Risks
    Relating to Regulatory Matters
  Starting
    in November 2008, generic competitors can challenge our U.S.
    patents by filing an ANDA or a 505(b)(2) NDA for a generic or a
    modified version of Tarceva and adversely affect our competitive
    position.
  i.e.,
   27




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If we
    do not receive adequate third-party reimbursement for the sales
    of Tarceva, we may see a reduction in the profitability of
    Tarceva.
      Foreign
    government involvement and/or control over pricing of
    pharmaceutical products can have an effect on the revenues that
    we receive from Tarceva.
   28




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The
    manufacture and packaging of pharmaceutical products, such as
    Tarceva, are subject to the requirements of the FDA and similar
    foreign regulatory bodies. If we or our third party
    manufacturers fail to satisfy these requirements, our or their
    product development and commercialization efforts may be
    materially harmed.
    and/or
        If
    government agencies do not grant us or our collaborators
    required approvals for any of our potential products in a timely
    manner or at all, we or our collaborators will not be able to
    distribute or sell our products currently under
    development.
   29




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and/or
        Some
    of our activities may subject us to risks under federal and
    state laws prohibiting kickbacks and false or
    fraudulent claims, which could subject us to potential civil and
    criminal penalties and exclusion from federal healthcare
    programs.
   30




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and/or
  Future
    legislative or regulatory reform of the healthcare system may
    limit the commercial prospects of certain of our
    products.
  non-U.S. jurisdictions,
  If
    Tarceva is imported into the United States, the EU or Japan from
    countries where the cost of the drug is lower, it will affect
    our sales and profitability and harm our business.
       31




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Changes
    in laws, regulations, accepted clinical procedures or social
    pressures could restrict our use of animals in testing and
    therefore adversely affect our R&D
    activities.
    Risks
    Related to Intellectual Property and Legal Matters
  If we
    cannot successfully protect, exploit or enforce our intellectual
    property rights, our ability to develop and commercialize our
    products, and receive revenues from licenses under our
    intellectual property, will be adversely affected.
    45-day
   32




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and/or
      If we
    or our collaborators are required to obtain licenses from third
    parties, our revenues and royalties on any commercialized
    products could be reduced.
    If we
    are unable to protect the confidentiality of our proprietary
    information and know-how, the value of our technology and
    products could be negatively impacted.
    The
    failure to prevail in litigation and/or the costs of litigation,
    including patent infringement claims, could harm our financial
    performance and business operations and could cause delays in
    product introductions.
   33




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and/or
  The
    use of any of our potential products in clinical trials and the
    sale of any approved products exposes us to liability
    claims.
    Risks
    Related to Our Common Stock
  Our
    stock price remains highly volatile which could make it
    difficult for our stockholders to resell our common stock at
    desirable prices.
      
    a decline in sales of Tarceva;
    a decline in our business operating results or prospects;
    a general economic slowdown in the United States, Europe or
    other key international markets where Tarceva is sold;
    adverse events with respect to our intellectual property;
    a prolonged interruption in the manufacture or supply of Tarceva; 34




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
    announcement or launching of technological innovations or new
    therapeutic products by third parties;
    positive or negative clinical efficacy or safety results from
    our competitors products;
    public concern as to the safety, or withdrawal, of our products
    and potential products;
    comments by securities analysts regarding us or our competitors
    and general market conditions;
    future sales of substantial amounts of our common stock by us or
    existing stockholders;
    negative developments concerning strategic alliance agreements;
    changes in government regulation, including pricing controls,
    that impact our products;
    material delays in our key clinical trials;
    negative or neutral clinical trial results, including clinical
    trial results for additional indications for Tarceva;
    delays with the FDA in the approval process for products and
    clinical candidates; and
    developments in laws or regulations that impact our patent or
    other proprietary rights.  Our
    governance documents and state law provide certain anti-takeover
    measures which will discourage a third party from seeking to
    acquire us and may impede the ability of stockholders to remove
    and replace our board of directors and, therefore, our
    management.
      
    no stockholder action may be taken without a meeting, without
    prior notice and without a vote; solicitations by consent are
    thus prohibited;
    special meetings of stockholders may be called only by our board
    of directors, or by our stockholders holding 20% of our
    outstanding shares upon 90 days prior written notice;
    nominations by stockholders of candidates for election to the
    board of directors at our annual meeting of stockholders must be
    made at least 45 days prior to the anniversary of the date
    on which we first mailed our proxy materials for the prior
    years annual meeting of stockholders; and
    our board of directors has the authority, without further action
    by the stockholders, to fix the rights and preferences, and
    issue shares, of preferred stock. An issuance of preferred stock
    with dividend and liquidation rights senior to the common stock
    and convertible into a large number of shares of common stock
    could prevent a potential acquiror from gaining effective
    economic or voting control.  and/or
 35




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ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    Melville, New York.
  Farmingdale, New York.
  Cedar Knolls, New Jersey.
  Boulder, Colorado.
  Oxford, England.
  ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   36




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PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Information
  over-the-counter
  2008 FISCAL YEAR

HIGH

LOWFirst Quarter

$
49.21


$
33.46Second Quarter

$
42.10


$
32.10Third Quarter

$
53.71


$
41.21Fourth Quarter

$
48.98


$
31.33   2007 FISCAL YEAR

HIGH

LOWFirst Quarter

$
36.89


$
30.94Second Quarter

$
38.37


$
33.09Third Quarter

$
36.60


$
28.68Fourth Quarter

$
52.00


$
33.27   Holders
    and Dividends
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Equity
    Compensation Plan Information as of December 31,
    2008
  Number ofsecuritiesremainingavailable forNumber of



future issuancesecurities to be



under equityissued upon

Weighted-average

compensationexercise of

exercise price of

plans (excludingoutstanding

outstanding

securitiesoptions, warrants

options, warrants

reflected in thePlan category

and rights(a)

and rights(b)

first column)Equity compensation plans approved by security holders


6,491,465
(c)

$
38.64



5,035,965
(e)Equity compensation plans not approved by security holders


327,889
(d)

$
46.20



Total


6,819,354


$
39.07



5,035,965     (a)
    
    Includes stock options, restricted stock, restricted stock units
    and deferred stock units.(b)
    
    The weighted-average exercise price of outstanding options,
    warrants and rights does not include restricted stock,
    restricted stock units and deferred stock units, as they are
    issued for no cash consideration.(c)
    
    Consists of four plans: the 1989 Incentive and Non-Qualified
    Stock Option Plan, the 1997 Incentive and Non-Qualified Stock
    Option Plan, the 1999 Incentive and Non-Qualified Stock Option
    Plan and the Amended and Restated Stock Incentive Plan. 37




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(d)
    
    In connection with the acquisition of certain oncology assets
    from Gilead Sciences, Inc. on December 21, 2001, we adopted
    a Non-Qualified Stock Option Plan for Former Employees of Gilead
    Sciences, Inc. We granted ten-year options to purchase an
    aggregate of 693,582 shares of our common stock at a
    purchase price of $45.01 per share, which represented the fair
    value of our stock at the date granted. With respect to each
    option grant, one-third of the options vested on the first
    anniversary of the date of grant and the remainder vested
    ratably monthly thereafter for 24 months.In connection with the acquisition of Cadus Pharmaceutical
    Corporation in July 1999, we adopted a Non-Qualified Stock
    Option Plan for Former Employees of Cadus Pharmaceutical
    Corporation. We granted ten-year options to purchase an
    aggregate of 415,000 shares of our common stock at a
    purchase price of $5.00 per share, which represented the fair
    value of our stock at the date granted. These options became
    exercisable on July 30, 2000, one year from the date of the
    grant.In connection with the acquisition of Eyetech Pharmaceuticals,
    Inc., or Eyetech, in November 2005, we adopted a Stock Incentive
    Plan for Pre-Merger Employees of Eyetech Pharmaceuticals, Inc.
    We granted seven-year options to purchase an aggregate of
    625,810 shares of our common stock at a purchase price of
    $23.83, which represents the fair value of our stock at the date
    granted. With respect to each option grant, one-fourth of the
    options vested on the first anniversary and the remainder vest
    ratably thereafter on a monthly basis for 36 months.Also in connection with the acquisition of Eyetech, we assumed
    Eyetechs 2001 Stock Plan and to facilitate such
    assumption, we adopted the Stock Plan for Assumed Options of
    Pre-Merger Employees of Eyetech Pharmaceuticals, Inc. The number
    of shares subject to each assumed option was determined by
    dividing the assumed Eyetech per share option exercise price by
    the conversion ratio of 0.491 and rounding that result down to
    the nearest whole number for a total of 153,290 shares. The
    exercise price was determined by dividing the assumed Eyetech
    per share option exercise price by the conversion ratio of 0.491
    and rounding up to the nearest whole cent.Includes options established for certain outside consultants
    related to clinical trial operations.(e)
    
    Consists of 352,930 shares reserved for issuance under the
    1995 Employee Stock Purchase Plan and the stock purchase plan
    for our U.K.-based employees, and 4,683,035 shares reserved
    for issuance under the 1999 Incentive and Non-Qualified Stock
    Option Plan and the Amended and Restated Stock Incentive Plan.    Recent
    Sales of Unregistered Securities
    Total Number of

Maximum Number (orShares (or Units)

Approximate DollarPurchased as Part

Value) Shares (or Units)Total Number

Average Price

of Publicly

that May Yet BeShares (or Units)

Paid per Share

Announced Plans or

Purchased Under thePeriod

Purchased

(or Unit)

Programs

Plans or ProgramsOctober 1, 2008 
    October 31, 2008










N/A



N/ANovember 1, 2008 
    November 30, 2008










N/A



N/ADecember 1, 2008 
    December 31, 2008


73,251
(1)

$
33.41



N/A



N/A     (1)
    
    Consists of shares of common stock withheld from employees to
    satisfy their tax withholding obligations arising upon the
    vesting of restricted equity awards granted under our Amended
    and Restated Stock Incentive Plan. 38




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##### Table of Contents



ITEM 6.
    SELECTED
    CONSOLIDATED FINANCIAL DATA  Form 10-QT
  Three MonthsYear Ended


Year Ended


Year Ended


Year Ended


Ended


Year EndedDecember 31,


December 31,


December 31,


December 31,


December 31,


September 30,(In thousands, except per share data)

2008(a)


2007(b)


2006(c)


2005(d)


2004(e)


2004(f)Consolidated Statement of Operations Data:Revenues

$
379,388


$
341,030


$
241,037


$
138,423


$
12,347


$
42,800Expenses:Cost of goods sold


9,315



9,399



8,671



5,035



(1,247
)


8,985Net expense  unconsolidated joint business


















7,661



Research and development


135,344



123,531



117,527



116,655



31,913



110,398Acquired in-process research and development


4,000



9,664







3,542







32,785Selling, general and administrative


94,930



99,159



107,458



89,205



20,313



98,909Impairment of intangible assets






















24,599Amortization of intangibles


2,489



1,840



1,809



15,281



3,804



18,606Income (loss) from operations


133,310



97,437



5,572



(91,295
)


(50,097
)


(251,482
)Other income (expense)  net


(166
)


7,902



1,128



6,201



1,702



(8,889
)Income (loss) from continuing operations before income taxes


133,144



105,339



6,700



(85,094
)


(48,395
)


(260,371
)Income tax (benefit) provision business


(333,457
)


2,732















Net income (loss) from continuing operations


466,601



102,607



6,700



(85,094
)


(48,395
)


(260,371
)Income (loss) from discontinued operations  net of
    tax business


4,884



(36,288
)


(610,930
)


(72,029
)






Net income (loss) before extraordinary gain


471,485



66,319



(604,230
)


(157,123
)


(48,395
)


(260,371
)Extraordinary gain  net of tax










22,046











Net income (loss)

$
471,485


$
66,319


$
(582,184
)

$
(157,123
)

$
(48,395
)

$
(260,371
)Basic and diluted net earnings (loss) per common share:Basic earnings (loss):Income (loss) from continuing operations

$
8.14


$
1.78


$
0.12


$
(1.63
)

$
(1.02
)

$
(6.50
)Income (loss) from discontinued operation


.09



(0.63
)


(10.73
)


(1.38
)






Net income (loss) before extraordinary gain


8.23



1.15



(10.61
)


(3.02
)


(1.02
)


(6.50
)Extraordinary gain










0.39











Net income (loss)

$
8.23


$
1.15


$
(10.22
)

$
(3.02
)

$
(1.02
)

$
(6.50
)Diluted earnings (loss):Income (loss) from continuing operations

$
7.19


$
1.70


$
0.12


$
(1.63
)

$
(1.02
)

$
(6.50
)Loss from discontinued operations


.07



(0.58
)


(10.60
)


(1.38
)






Net income (loss) before extraordinary gain


7.26



1.11



(10.48
)


(3.02
)


(1.02
)


(6.50
)Extraordinary gain










0.38











Net income (loss)

$
7.26


$
1.11


$
(10.10
)

$
(3.02
)

$
(1.02
)

$
(6.50
)Shares used in the calculation of income (loss) per common share:Basic


57,316



57,665



56,939



52,078



47,375



40,083Diluted


66,911



62,241



57,645



52,078



47,375



40,083   39




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##### Table of Contents



As of

As of

As of

As of

As of

As ofDecember 31,

December 31,

December 31,

December 31,

December 31,

September 30,(In thousands)

2008(a)

2007(b)

2006(c)

2005(d)

2004(e)

2004(f)Consolidated Balance Sheet Data:Cash, cash equivalents and investment securities (unrestricted
    and restricted)

$
515,511


$
305,098


$
216,368


$
179,606


$
656,239


$
257,229Receivables


100,242



87,523



80,075



152,482



14,077



12,112Working capital


629,260



197,631



266,496



276,171



630,246



228,223Total assets


1,093,059



558,380



457,732



1,058,582



780,116



388,029Long-term liabilities


460,392



166,930



349,555



337,788



195,814



186,574Stockholders equity


571,546



138,956



28,594



578,466



539,390



154,233     (a)
    
    The calendar 2008 consolidated financial statements include a
    $4.0 million in-process R&D charge related to the
    purchase of intellectual property and a $336.6 million
    gain, included in the income tax provision related recognition
    of certain deferred tax assets. During 2008, we issued
    $200.0 million principal amount of our 2038 Notes in a
    private placement for net proceeds of approximately
    $193 million, of which $65.0 million was used to
    purchase, concurrently with the offering, 1.5 million
    shares of our common stock. In addition, we repurchased
    approximately $50 million of our 2023 Notes. The 2023 Notes
    have been reclassified as long-term in the December 31,
    2008 consolidated balance sheet.(b)
    
    The calendar 2007 consolidated financial statements include a
    $9.7 million in-process R&D charge related to the
    payment made under our research collaboration with AVEO and the
    purchase of AdipoGenix, Inc. intellectual property, and a
    $4.1 million gain, included in Other income
    (expense)  net, related to our decision to
    curtail our post-retirement medical and life insurance plan. The
    2023 Notes were classified as current in the December 31,
    2007 consolidated balance sheet.(c)
    
    The calendar 2006 loss from discontinued operations includes
    $506.0 million of impairment charges related to (OSI)
    Eyetech goodwill and (OSI) Eyetech amortizable intangibles
    ($320.3 million and $185.7 million, respectively) and
    a $26.4 million charge for obsolete and expiring inventory.
    A $22.0 million extraordinary gain was recognized in the
    2006 fiscal year as a result of reversing the accrued contingent
    consideration recorded in connection with the acquisition of
    Cell Pathways, Inc. in the 2003 fiscal year.(d)
    
    The calendar 2005 consolidated financial statements reflect:
    (a) the acquisition of Eyetech in November 2005 for
    aggregate consideration of $909.3 million
    ($637.4 million net of cash and investments acquired),
    including cash consideration of $702.1 million, the value
    of 5.6 million shares of our common stock issued to Eyetech
    shareholders, the value of converted stock options issued to
    Eyetech shareholders and transaction-related costs incurred;
    (b) an in-process R&D charge of $60.9 million
    related to the acquisition of Eyetech recorded as a loss from
    discontinued operations; (c) in-process R&D charges of
    $3.5 million related to the acquisition of the minority
    interest in Prosidion; and (d) the issuance of
    $115.0 million principal amount of our 2025 Notes in a
    private placement for net proceeds of $111.0 million, of
    which approximately $24 million was used to purchase,
    concurrently with the offering, 500,000 shares of our
    common stock and a call spread option with respect to our common
    stock.(e)
    
    The three months ended December 31, 2004 includes:
    (a) the sale of 6.9 million shares of our common stock
    for net proceeds of $419.9 million; (b) net expense
    from unconsolidated joint business of $7.7 million related
    to our co-promotion and manufacturing agreements with Genentech
    for Tarceva; and (c) a net credit adjustment of
    $1.4 million to reduce a previously recorded provision for
    excess
    Gelclair®

    Bioadherent Oral Gel, or Gelclair, inventory.(f)
    
    The fiscal 2004 consolidated financial statements include:
    (a) the acquisition of certain assets from Probiodrug for
    approximately $36.4 million in cash; (b) an impairment
    charge related to the Gelclair intangible asset of
    $24.6 million; (c) the conversion of
    $160.0 million aggregate principal amount of 4% convertible
    senior subordinated notes due 2009 into 3.2 million shares
    of our common stock; (d) the charge of $8.6 million
    relating to excess Gelclair inventory; and (e) the
    recognition of $3.0 million of Tarceva-related milestone
    revenues. 40




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Overview
        epithelial-to-mesenchymal
 41




---



##### Table of Contents



sub-sets
  1A
      Critical
    Accounting Policies
    Revenue
    Recognition
  Net
    Revenues from Unconsolidated Joint Business
   42




---



##### Table of Contents



Royalties
      License
    Fees and Milestones
  EITF 00-21, EITF 00-21.
  EITF 00-21, EITF 00-21.
  Investments
    and
    Other-than-Temporary
    Impairments
   43




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##### Table of Contents



available-for-sale available-for-sale available-for-sale
  available-for-sale other-than-temporary available-for-sale other-than-temporarily other-than-temporarily other-than-temporary other-than-temporary
  Inventory
  work-in-process
  work-in-process
  Stock-Based
    Compensation
     44




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##### Table of Contents



Accruals
    for Clinical Research Organization and Clinical Site
    Costs
    Income
    Taxes
         45




---



##### Table of Contents



Goodwill
    and Other Long-Lived Assets
        Discontinued
    Operations
    ®
   46




---



##### Table of Contents



Years
    Ended December 31, 2008 and 2007
  Results
    of Operations
    Revenues
  Year Ended December 31,(in thousands)2008


2007


$ ChangeTarceva-related revenues


334,653



267,799



66,854Other revenues


44,735



73,231



(28,496
)Total revenues

$
379,388


$
341,030


$
38,358   Tarceva-Related
    Revenues
    Net
    Revenue from Unconsolidated Joint Business
    Tarceva-Related
    Royalties
   47




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##### Table of Contents



Tarceva-Related
    Milestones
  EITF 00-21.
  Other
    Revenues
    tm tm ® ®
      ®
  available-for-sale
 48




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##### Table of Contents



other-than-temporary
  ®
  Expenses
  Year Ended December 31,(in thousands)2008


2007


$ ChangeCost of goods sold

$
9,315


$
9,399


$
(84
)Research and development


135,344



123,531



11,813Acquired in-process research and development


4,000



9,664



(5,664
)Selling, general and administrative


94,930



99,159



(4,229
)Amortization of intangibles


2,489



1,840



649$
246,078


$
243,593


$
2,485   Cost
    of Goods Sold
    Research
    and Development
    and/or
   49




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##### Table of Contents



Acquired
    In-Process Research and Development
        Selling,
    General and Administrative
    Other
    Income and Expense
  Year Ended December 31,(in thousands)2008


2007


$ ChangeInvestment
    income-net

$
12,961


$
12,830


$
131Interest expense


(11,932
)


(7,235
)


(4,697
)Other income (expense)-net


(1,195
)


2,307



(3,502
)Total other income (expense)

$
(166
)

$
7,902


$
(8,068
)        50




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##### Table of Contents



Income
    Taxes
    Income
    (loss) from Discontinued Operations
      Years
    Ended December 31, 2007 and 2006
  Results
    of Operations
   51




---



##### Table of Contents



Revenues
  Year Ended December 31,(in thousands)2007


2006


$ ChangeTarceva-related revenues


267,799



208,298



59,501Other revenues


73,231



32,739



40,492Total revenues

$
341,030


$
241,037


$
99,993   Tarceva-Related
    Revenues
    Net
    Revenue from Unconsolidated Joint Business
    Tarceva-Related
    Royalties
    Tarceva-Related
    Milestones
  EITF 00-21.
 52




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##### Table of Contents



Other
    Revenues
        ®
  available-for-sale
    Expenses
  Year Ended December 31,(in thousands)2007


2006


$ ChangeCost of goods sold

$
9,399


$
8,671


$
728Research and development


123,531



117,527



6,004Acquired in-process research and development


9,664







9,664Selling, general and administrative


99,159



107,458



(8,299
)Amortization of intangibles


1,840



1,809



31$
243,593


$
235,465


$
8,128   Cost
    of Goods Sold
  ®
 53




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##### Table of Contents



Research
    and Development
    and/or
  Acquired
    In-Process Research and Development
        Selling,
    General and Administrative
   54




---



##### Table of Contents



Other
    Income and Expense
  Year Ended December 31,(in thousands)2007


2006


$ ChangeInvestment
    income-net

$
12,830


$
11,098


$
1,732Interest expense


(7,235
)


(7,339
)


104Other income (expense)-net


2,307



(2,631
)


4,938Total other income

$
7,902


$
1,128


$
6,774   income-net
    Income
    Taxes
    Loss from
    Discontinued Operations
    Extraordinary
    Gain
   55




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##### Table of Contents



Liquidity
    and Capital Resources
      and/or
  Commitments
    and Contingencies
    2014 &2009


2010-2011


2012-2013


ThereafterContractual Obligations:Senior convertible debt(a)

$
11,548


$
23,097


$
23,097


$
622,034Operating leases


11,074



21,543



20,303



66,619Purchase obligations(b)


33,800



40,800



13,400



10,200Obligations related to exit activities(c)


1,817







1,409



Total contractual obligations

$
58,239


$
85,440


$
58,209


$
698,853     (a)
    
    Our senior convertible debt obligations assume the payment of
    interest on our senior convertible notes through their
    respective maturity dates and the payment of their outstanding
    principal balance at their respective maturity dates. The
    interest payments on our senior convertible notes are at a rate
    of (i) 3.25% per annum relating to the $99.95 million
    principal amount of the 2023 Notes, (ii) 2% per annum
    relating to the 56




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##### Table of Contents



$115.0 million principal amount of the 2025 Notes, and
    (iii) 3% per annum relating to the $200.0 million
    principal amount of the 2038 Notes. The holders of the 2023
    Notes have the right to require us to purchase, for cash, all of
    the 2023 Notes, or a portion thereof, in September 2013. In the
    event that the holders of the 2023 Notes exercise this right, we
    will have the option of delivering to the holders a specified
    number of shares of our common stock in lieu of cash as set
    forth in the indenture for the 2023 Notes. Holders of the 2025
    Notes have the right to require us to purchase, for cash, all of
    the 2025 Notes, or a portion thereof, in December 2010. Holders
    of the 2038 Notes have the right to require us to purchase, for
    cash, all of the 2038 Notes, or a portion thereof, in January
    2013.(b)
    
    Includes commercial and research commitments and other
    significant purchase commitments. Also includes our share of the
    remaining future commitment related to the Tarceva global
    development costs of approximately $93 million.(c)
    
    Includes payments for termination benefits and facility
    refurbishments.  Other
    significant commitments and contingencies include the
    following:
  
    We are committed to share certain commercialization costs
    relating to Tarceva with Genentech. Under the terms of our
    agreement, there are no contractually determined amounts for
    future commercial costs.
    Under agreements with external CROs, we will continue to incur
    expenses relating to clinical trials of Tarceva and other
    clinical candidates. The timing and amount of these
    disbursements can be based upon the achievement of certain
    milestones, patient enrollment, services rendered or as expenses
    are incurred by the CROs and therefore, we cannot reasonably
    estimate the potential timing of these payments.
    We have outstanding letters of credit of $1.9 million,
    which primarily serve as security for over performance under
    various lease obligations.
    We have a retirement plan which provides post-retirement medical
    and life insurance benefits to eligible employees, board members
    and qualified dependents. We curtailed this plan in 2007;
    however, certain employees, board members and qualified
    dependents remain eligible for these benefits. Eligibility is
    determined based on age and years of service. We had an accrued
    liability for post-retirement benefit costs of $2.7 million
    at December 31, 2008.
    Under certain license and collaboration agreements with
    pharmaceutical companies and educational institutions, we are
    required to pay royalties, milestone
    and/or other
    payments upon the successful development and commercialization
    of products. However, successful research and development of
    pharmaceutical products is high risk, and most products fail to
    reach the market. Therefore, at this time the amount and timing
    of the payments, if any, are not known.
    Under certain license and other agreements, we are required to
    pay license fees for the use of technologies and products in our
    R&D activities or milestone payments upon the achievement
    of certain predetermined conditions. These license fees are not
    deemed material to our consolidated financial statements and the
    amount and timing of the milestone payments, if any, are not
    known due to the uncertainty surrounding the successful
    research, development and commercialization of the products.  Accounting
    Pronouncements
  14-1,
 57




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##### Table of Contents



No. FAS 142-3, FAS 142-3 FAS 142-3 FAS 142-3 FAS 142-3 FAS 142-3
      FSP 157-2, FSP 157-2,
  07-03, 07-03 07-03 07-03
  07-01, 07-01 07-01
 58




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##### Table of Contents



not-for-profit
  Forward
    Looking Statements
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK  available-for-sale
    Other-than-temporary
   59




---



##### Table of Contents



60




---



##### Table of Contents



ITEM 8.
    CONSOLIDATED
    FINANCIAL STATEMENTS    PageNumberReport of Independent Registered Public
    Accounting Firm on the Consolidated Financial Statements


62Consolidated Balance Sheets at December 31,
    2008 and 2007


63Consolidated Statements of Operations for the
    Years Ended December 31, 2008, 2007 and 2006


64Consolidated Statements of Stockholders
    Equity for the Years Ended December 31, 2008, 2007 and
    2006


65Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2007 and 2006


66Notes to Consolidated Financial Statements


67  61




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON THE CONSOLIDATED FINANCIAL STATEMENTS           Internal Control 
    Integrated Framework
      62




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    DECEMBER 31, 2008 AND 2007
    (In thousands except per share data)  December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
272,936


$
162,737Investment securities


240,328



137,439Restricted investment securities


2,247



4,922Accounts receivables  net


100,242



87,523Inventory  net


20,139



21,064Interest receivable


1,428



1,116Prepaid expenses and other assets


6,719



9,882Assets related to discontinued operations


917



25,442Deferred tax assets  net


45,425



Total current assets


690,381



450,125Property, equipment and leasehold improvements  net


43,443



46,694Debt issuance costs  net


7,080



3,047Goodwill


38,648



39,411Other intangible assets  net


7,711



4,966Other assets


14,591



14,137Deferred tax assets  net


291,205



$
1,093,059


$
558,380LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses

$
49,052


$
45,843Unearned revenue  current


10,547



10,912Liabilities related to discontinued operations


1,522



45,739Convertible senior subordinated notes






150,000Total current liabilities


61,121



252,494Other liabilities:Rent obligations and deferred rent expense


8,154



10,812Unearned revenue  long-term


33,398



37,075Convertible senior subordinated notes


414,950



115,000Accrued post-retirement benefit cost and other


3,890



4,043Total liabilities


521,513



419,424Commitments and contingencies (See Note 17)Stockholders equity:Preferred stock, $.01 par value; 5,000 shares
    authorized; no shares issued at December 31, 2008 and 2007,
    respectively






Common stock, $.01 par value; 200,000 shares
    authorized, 61,124 and 60,352 shares issued at
    December 31, 2008 and 2007, respectively


611



604Additional paid-in capital


1,693,263



1,658,737Accumulated deficit


(1,016,201
)


(1,487,686
)Accumulated other comprehensive income (loss)


(3,908
)


4,522673,765



176,177Less: treasury stock, at cost; 3,396 and 1,943 shares at
    December 31, 2008 and 2007, respectively


(102,219
)


(37,221
)Total stockholders equity


571,546



138,956$
1,093,059


$
558,380    63




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
    (In thousands except per share data)  Year Ended December 31,2008


2007


2006Revenues:Tarceva-related revenues

$
334,653


$
267,799


$
208,298Other revenues


44,735



73,231



32,739Total revenues


379,388



341,030



241,037Expenses:Cost of goods sold


9,315



9,399



8,671Research and development


135,344



123,531



117,527Acquired in-process research and development


4,000



9,664



Selling, general and administrative


94,930



99,159



107,458Amortization of intangibles


2,489



1,840



1,809Total expenses


246,078



243,593



235,465Income from continuing operations


133,310



97,437



5,572Other income (expense):Investment income  net


12,961



12,830



11,098Interest expense


(11,932
)


(7,235
)


(7,339
)Other income (expense)  net


(1,195
)


2,307



(2,631
)Income from continuing operations before income taxes


133,144



105,339



6,700Income tax (benefit) provision


(333,457
)


2,732



Net income from continuing operations


466,601



102,607



6,700Income (loss) from discontinued operations  net of tax


4,884



(36,288
)


(610,930
)Net income (loss) before extraordinary gain


471,485



66,319



(604,230
)Extraordinary gain  net of tax










22,046Net income (loss)

$
471,485


$
66,319


$
(582,184
)Basic and diluted income (loss) per common share:Basic earnings (loss)Continuing operations

$
8.14


$
1.78


$
0.12Discontinued operations


0.09



(0.63
)


(10.73
)Net income (loss) before extraordinary gain


8.23



1.15



(10.61
)Extraordinary gain










0.39Net income (loss)

$
8.23


$
1.15


$
(10.22
)Diluted earnings (loss)Continuing operations

$
7.19


$
1.70


$
0.12Discontinued operations


0.07



(0.58
)


(10.60
)Net income (loss) before extraordinary gain


7.26



1.11



(10.48
)Extraordinary gain










0.38Net income (loss)

$
7.26


$
1.11


$
(10.10
)Weighted average shares of common stock outstanding:Basic shares


57,316



57,665



56,939Diluted shares


66,911



62,241



57,645    64




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
    FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
    (In thousands)  AccumulatedAdditional








Other





TotalCommon Stock


Paid-in


Deferred


Accumulated


Comprehensive


Treasury


StockholdersShares


Amount


Capital


Compensation


Deficit


Income (Loss)


Stock


EquityBalance at December 31, 2005


58,728


$
587


$
1,592,155


$
(7,341
)

$
(971,469
)

$
1,755


$
(37,221
)

$
578,466Comprehensive income (loss):Net loss


















(582,184
)










(582,184
)Unrealized holding losses on investment securities 
    net






















(233
)






(233
)Translation adjustment






















2,148







2,148Total comprehensive loss






























(580,269
)Adjustment to initially apply SFAS 158






















(1,316
)






(1,316
)Options exercised


391



4



7,888



















7,892Issuance of common stock for employee purchase plan and other


45



1



1,129



















1,130Issuance of common stock in connection with buyout of Prosidion
    minority interest


3







145



















145Issuance of restricted stock to employees


12







1,539



















1,539Reclassification of deferred compensation due to the adoption of
    SFAS 123(R)










(5,045
)


7,341















2,296Equity based compensation expense










19,063



















19,063Adjustment for EITF
    06-02
    (sabbatical leave)


















(352
)










(352
)Balance at December 31, 2006


59,179



592



1,616,874







(1,554,005
)


2,354



(37,221
)


28,594Comprehensive income:Net income


















66,319











66,319Unrealized holding gains on investment securities  net






















486







486Curtailment of post-retirement plan






















1,316







1,316Translation adjustment






















366







366Total comprehensive income






























68,487Options exercised


1,052



11



25,622



















25,633Issuance of common stock under employee purchase plan and other


26







776



















776Issuance of restricted stock to employees


95



1



18



















19Equity based compensation expense










15,447



















15,447Balance at December 31, 2007


60,352



604



1,658,737







(1,487,686
)


4,522



(37,221
)


138,956Comprehensive income:Net income


















471,485











471,485Unrealized holding losses on investment securities 
    net






















(727
)






(727
)Post-retirement plan






















378







378Translation adjustment






















(8,081
)






(8,081
)Total comprehensive income






























463,055Options exercised


568



5



15,733



















15,738Issuance of common stock under employee purchase plan and other


25







843



















843Issuance of restricted stock to employees


179



2























2Equity based compensation expense










17,494



















17,494Purchase of treasury stock- 1,453 shares


























(64,998
)


(64,998
)Excess tax benefits from stock-based compensation










456



















456Balance at December 31, 2008


61,124


$
611


$
1,693,263


$



$
(1,016,201
)

$
(3,908
)

$
(102,219
)

$
571,546    65




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
    (In thousands)  Year Ended December 31,2008


2007


2006Cash flow from operating activities:Net income (loss)

$
471,485


$
66,319


$
(582,184
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Extraordinary gain from reversal of contingent consideration










(22,046
)Loss (gain) on sale and disposals of equipment


9



1,471



(5
)Gain on sale of intellectual property






(7,892
)


Depreciation and amortization


13,198



12,471



34,235Loss on sale of eye disease business and non-cash impairment
    charges


14,136







Impairment of assets


1,217



10,765



505,985Provision for excess inventory  net










26,408Impact of inventory
    step-up
    related to inventory sold


51



2,365



19,924Amortization of premiums and discounts on investments


(1,151
)


(2,578
)


1,858In-process research and development charge


4,000



9,664



Non-cash compensation charge


20,727



17,099



19,703Gain on recognition of certain deferred tax assets


(336,629
)






Changes in assets and liabilities:Accounts receivable


(4,895
)


(23,262
)


69,569Inventory


536



12



(9,551
)Prepaid expenses and other current assets


2,994



(1,054
)


1,715Other assets


(67
)


(1,077
)


(3,755
)Accounts payable and accrued expenses


(12,925
)


6,038



(17,017
)Collaboration profit share payable






(9,257
)


(37,829
)Unearned revenue


(33,616
)


(1,331
)


29,104Accrued post-retirement benefit cost and other


(134
)


(3,944
)


1,401Net cash provided by operating activities


138,936



75,809



37,515Cash flows from investing activities:Purchases of investments (restricted and unrestricted)


(337,355
)


(258,085
)


(239,268
)Maturities and sales of investments (restricted and unrestricted)


237,565



287,628



80,788Net additions to property, equipment and leasehold improvements


(4,977
)


(4,332
)


(10,728
)Purchase of intangible assets


(8,000
)






Purchase of intellectual property and capitalized patent defense
    costs


(4,886
)


(9,664
)


Proceeds from sale of intellectual property






4,000



Proceeds from sale of fixed assets






335



795Purchase of compound library assets


(257
)


(3
)


(31
)Payments made in connection with disposal of eye disease business


(1,240
)






Net cash provided by (used in) investing activities


(119,150
)


19,879



(168,444
)Cash flows from financing activities:Proceeds from the exercise of stock options, employee purchase
    plan, and other


17,038



26,409



9,138Employees taxes paid related to equity awards


(3,233
)


(1,654
)


Proceeds from the issuance of convertible senior subordinated
    notes


200,000







Debt issuance costs


(6,730
)






(102
)Payments on loans and capital leases payable










(640
)Purchase of treasury stock


(64,998
)






Repurchase of a portion of the 2023 Notes


(50,050
)






Excess tax benefits from stock-based compensation


456







Net cash provided by financing activities


92,483



24,755



8,396Net increase (decrease) in cash and cash equivalents


112,269



120,443



(122,533
)Effect of exchange rate changes on cash and cash equivalents


(2,070
)


266



477Cash and cash equivalents at beginning of year


162,737



42,028



164,084Cash and cash equivalents at end of year

$
272,936


$
162,737


$
42,028Cash paid for taxes

$
2,108


$
1,400


$
Cash paid for interest

$
9,770


$
7,175


$
7,137Non-cash activities:Stock and warrants received from sale of intellectual property

$



$
3,892


$
Post-retirement benefit obligation upon adoption of
    SFAS No. 158

$



$



$
1,316    66




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  Form 10-K,
  (1)
    Summary
    of Significant Accounting Policies  (a)
    Principles
    of Consolidation  Form 10-K
  (b)
    Reclassifications    (c)
    Revenue
    Recognition    (i)
    Net
    Revenue from Unconsolidated Joint Business       67




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (ii)
    Royalties      (iii)
    License,
    Milestones, and Commissions  EITF 00-21,
  EITF 00-21,
  EITF 00-21.
   68




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  EITF 00-21, EITF 00-21.
        (d)
    Research
    and Development Costs   69




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (e)
    Acquired
    In-Process Research and Development    (f)
    Cash
    and Cash Equivalents    (g)
    Investment
    Securities  available-for-sale available-for-sale available-for-sale available-for-sale
    Other-than-temporary
  (h)
    Other-Than-Temporary
    Impairments of
    Available-For-Sale
    Marketable Securities  available-for-sale other-than-temporary available-for-sale other-than-temporarily other-than-temporarily other-than-temporary
 70




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  other-than-temporary
  (i)
    Goodwill
    and Intangible Assets        (j)
    Accounting
    for the Impairment of Long-Lived Assets and for Long-Lived
    Assets to be Disposed of      (k)
    Inventory  work-in-process work-in-process,
 71




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (l)
    Depreciation
    and Amortization      (m)
    Computer
    Software Costs  98-1, SOP 98-1. SOP 98-1
  (n)
    Accrual
    for Clinical Research Organization and Clinical Site
    Costs  and/or
  (o)
    Foreign
    Currency Translation  non-U.S. subsidiaries,
  (p)
    Income
    Taxes     72




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (q)
    Debt
    Issuance Costs    (r)
    Stock-Based
    Compensation        (s)
    Segment
    Information    (t)
    Use of
    Estimates   73




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (2)
    Product
    Development/Commercialization Agreements/License
    Agreements  (a)
    Genentech
    and Roche             74




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      country-by-country country-by-country
  (b)
    AVEO  epithelial-to-mesenchymal
   75




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (c)
    Eli
    Lilly    (d)
    OncoVista  available-for-sale other-than-temporary,
  (e)
    Patent
    Licenses    (f)
    TGF
    ß3    (3)
    Net
    Earnings (Loss) Per Share  in-the-money
 76




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2008


2007


2006Net income from continuing operations  basic

$
466,601


$
102,607


$
6,700Add: Interest and issuance cost related to convertible debt


14,351



3,040



Net income from continuing operations  diluted

$
480,952


$
105,647


$
6,700Weighted-average common shares outstanding  basic


57,316



57,665



56,939Dilutive effect of options and restricted stock


729



668



706Dilutive effect of 2025 Notes


3,908



3,908



Dilutive effect of 2023 Notes


2,308







Dilutive effect of 2038 Notes (issued in January 2008)


2,650







Weighted-average common shares and dilutive potential common
    shares  diluted


66,911



62,241



57,645Net income per share from continuing operations:Basic

$
8.14


$
1.78


$
0.12Diluted

$
7.19


$
1.70


$
0.12     Year Ended December 31,2008

2007

2006Common share equivalents  convertible debt






2,999



6,907Common share equivalents  equity plans


2,865



3,285



4,054Contingent shares










1,585Convertible note interest and issuance expense not added back
    under the if converted method

$



$
5,936


$
9,038      77




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (4)
    Comprehensive
    Income (Loss)  available-for-sale
  Year Ended December 31,2008


2007


2006Net income (loss)

$
471,485


$
66,319


$
(582,184
)Other comprehensive income (loss):Foreign currency translation adjustments


(8,081
)


366



2,148Post-retirement plan


378



1,316



Unrealized holding gains (losses) arising during period


(727
)


486



(233
)(8,430
)


2,168



1,915Total comprehensive income (loss)

$
463,055


$
68,487


$
(580,269
)     As of December 31,2008


2007Cumulative foreign currency translation adjustment

$
(3,739
)

$
4,342Post-retirement plan


378



Unrealized gains (losses) on
    available-for-sale
    securities


(547
)


180Accumulated other comprehensive income

$
(3,908
)

$
4,522   (5)
    Investments   78




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  available-for-sale
  GrossUnrealized2008

Costs


Gains (Losses)


Fair ValueU.S. government and U.S. government agency securities

$
66,007


$
607


$
66,614Corporate and financial institutions debt


170,634



(1,173
)


169,461Municipal securities


4,237



16



4,253Total investment securities


240,878



(550
)


240,328Restricted investments


2,244



3



2,247Total

$
243,122


$
(547
)

$
242,575   GrossUnrealized2007

Costs


Gains


Fair ValueU.S. government and U.S. government agency securities

$
128,416


$
156


$
128,572Corporate and financial institutions debt


8,847



20



8,867Total investment securities


137,263



176



137,439Restricted investments


4,918



4



4,922Total

$
142,181


$
180


$
142,361     other-than-temporarily
  available-for-sale,
  Cost


Fair Value2009

$
157,885


$
158,0492010


79,494



78,7882011


3,499



3,491$
240,878


$
240,328   (6)
    Fair
    Value Measurements   79




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Level 1
  Level 2 
  Level 3
    QuotedPrices inActiveAs

Market

SignificantReflected

for

Other

Significanton the

Identical

Observable

UnobservableBalance

Assets

Inputs

InputsSheet

(Level 1)

(Level 2)

(Level 3)

TotalAssets:Cash equivalents

$
250,380



248,181


$
2,201






$
250,382Investment securities


240,328







240,328







240,328Restricted investments


2,247







2,247







2,247Other assets


1,104







1,104







1,104Liabilities:2038 Notes


200,000







161,220







161,2202025 Notes


115,000







157,010







157,0102023 Notes


99,950







85,407







85,407   marked-to-market.
  marked-to-market
    (7)
    Inventory  work-in-process,
 80




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      December 31,


December 31,2008


2007Raw materials

$
676


$
1,704Work-in-process


8,532



8,595Finished goods on hand, net


4,897



4,614Inventory subject to return


6,034



6,151Total inventory

$
20,139


$
21,064     (8)
    Property,
    Equipment and Leasehold Improvements    Estimated Life


December(years)


2008


2007Land





$
3,600


$
3,600Building and improvements


10-35



23,249



23,395Laboratory equipment


5-15



26,917



26,478Office furniture and equipment and computer equipment


3-7



13,503



16,025Capitalized software


1-3



7,114



6,942Manufacturing equipment


3-7



135



136Leasehold improvements


Life of lease



30,634



34,525Total






105,152



111,101Less: accumulated depreciation and amortization






(61,709
)


(64,407
)Property, equipment and leasehold improvements, net





$
43,443


$
46,694     (9)
    Goodwill
    and Other Intangible Assets   81




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  assets-net
  December 31, 2008


December 31, 2007Net








NetCarrying


Accumulated


Book





Accumulated


BookAmount


Amortization


Value


Carrying Amount


Amortization


ValueNovantrone technology

$
46,009


$
(46,009
)

$



$
46,009


$
(44,558
)

$
1,451Acquired intangibles


9,386



(1,675
)


7,711



4,754



(1,239
)


3,515Total

$
55,395


$
(47,684
)

$
7,711


$
50,763


$
(45,797
)

$
4,966         (10)
    Accounts
    Payable and Accrued Expenses    December 31,2008


2007Accounts payable

$
6,659


$
5,249Accrued payroll, incentive compensation and employee benefits


11,766



3,398Accrued exit costs


492



2,589Accrued interest


3,856



1,619Accrued CRO and site costs


4,094



4,969Accrued commercial and development costs


7,272



6,566Other accrued expenses


14,913



21,453$
49,052


$
45,843    82




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (11)
    Consolidation
    of Facilities  (a)
    Restructuring
    Plan    Year EndedDecember 31,2008


2007Opening liability

$
1,556


$
1,897Accrual for severance payments






1,292Accrual for lease payments


(51
)


702Cash paid for severance


(410
)


(1,525
)Cash paid for rent, net of buildout allowance


(1,095
)


(810
)Ending liability

$



$
1,556   (b)
    Oxford,
    England    Year EndedDecember 31,2008


2007Opening liability

$
2,882


$
4,062Accrual for lease payments


390



Cash paid for rent


(906
)


(1,251
)Other


(467
)


71Ending liability

$
1,899


$
2,882   (c)
    Eyetech
    Acquired Facilities   83




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year EndedDecember 31,2008


2007Opening liability

$
3,282


$
2,054Accrual for lease termination cost






3,709Accretion expense


159



248Cash paid for rent


(5,698
)


(4,601
)Sublease income


4,552



1,872Ending liability

$
2,295


$
3,282   (12)
    Income
    Taxes    Year Ended December 31,2008


2007


2006Current:Federal

$
2,007


$
2,190


$
State and Local


1,033



196



Foreign


132



346



Total

$
3,172


$
2,732


$
Deferred:Federal

$
(300,578
)

$



$
State and Local


(36,051
)






Foreign










Total

$
(336,629
)

$



$
Total

$
(333,457
)

$
2,732


$
      84




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007


2006United States

$
133,180


$
93,471


$
25,904Foreign


(36
)


11,868



(19,204
)Earnings before income taxes

$
133,144


$
105,339


$
6,700     Year Ended December 31,2008


2007Statutory U.S. federal tax rate


35.0
%


35.0
%State and local taxes, net of federal benefit


0.5



0.2Foreign taxes


0.1



0.3Current utilization of net operating losses and other deferred
    tax assets


(33.6
)


(35.1
)Reversal of valuation allowance


(252.8
)


Other, net


0.4



2.2Total


(250.4
)%


2.6
%     December 31,2008


2007Deferred tax assets:Net operating loss carry forwards

$
333,443


$
412,877R&D tax credit carry forwards


12,115



35,243Intangible assets


11,021



11,951Unearned revenue


17,108



31,174Purchased R&D


39,498



45,968Capitalized R&D


5,278



7,235Other


26,992



18,304445,455



562,752Valuation allowance


(96,801
)


(562,246
)348,654



506Deferred tax liability:Depreciation


(7,385
)


Contingent bond interest


(3,479
)


Other


(1,161
)


(506
)(12,025
)


(506
)$
336,629


$
    85




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  equity-based
           86




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (13)
    Convertible
    Senior Subordinated Notes    December 31,2008


20072038 Notes(a)

$
200,000


$
2025 Notes(b)


115,000



115,0002023 Notes(c)


99,950



150,000Total

$
414,950


$
265,000   (a)
    3.0% Convertible
    Senior Subordinated Notes       87




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          (b)
    2.0% Convertible
    Senior Subordinated Notes   88




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      No. 00-19,
    (c)
    3.25% Convertible
    Senior Subordinated Notes   89




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        income-net
  (14)
    Employee
    Savings and Investment Plans  dollar-for-dollar
   90




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (15)
    Employee
    Post-retirement Plan and Other  (a)
    Employee
    Post-retirement Plan        Year Ended December 31,2008


2007


2006Service cost for benefits earned during the period

$



$
337


$
1,054Interest cost on accumulated post-retirement benefit obligation


176



252



409Amortization of initial benefits attributed to past service






2



6Amortization of loss






6



66Net post-retirement benefit cost

$
176


$
597


$
1,535    91




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2008


2007Balance at beginning of year

$
3,163


$
8,070Benefit payments


(182
)


(118
)Loss experience


(506
)


128Service cost






337Curtailment gain






(5,506
)Interest cost


176



252Balance at end of year

$
2,651


$
3,163       2008


2007


2006Discount rate


5.25
%


5.72
%


5.75
%Expected long-term rate of return on plan assets


N/A



N/A



N/A       (b)
    Sabbatical
    Leave Accrual  EITF 06-02,
  (16)
    Stockholders
    Equity  (a)
    Equity
    Plans   92




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        36-month 36-month
      Year Ended December 31,2008


2007


2006Cost of sales

$
620


$
338


$
251Research and development expenses


7,373



4,683



2,973Selling, general and administrative expenses


12,789



10,406



9,957Stock-based compensation expense

$
20,782


$
15,427


$
13,181    93




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (b)
    Stock
    Options      Year Ended December 31,2008

2007

2006Expected dividend yield


0
%


0
%


0
%Expected volatility


50.20
%


46.40
%


54.53
%Risk-free interest rate


2.32
%


3.83
%


4.53
%Expected term (years)


5.36



4.65



4.51Per share weighted average fair value of stock options grants

$
15.81


$
19.26


$
16.21  94




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    AggregateWeighted

Intrinsic

Weighted AverageNo. Shares

Average Exercise

Value(1)

Contractual Life(In thousands)

Price

(In millions)

Remaining in YearsOutstanding at December 31, 2005


6,964


$
35.29Granted


777


$
32.87Exercised


(391
)

$
20.22Forfeitures


(621
)

$
31.15Expired


(2
)

$
15.90Outstanding at December 31, 2006


6,727


$
36.01Granted


665


$
44.25Exercised


(1,042
)

$
24.65Forfeitures


(765
)

$
39.42Outstanding at December 31, 2007


5,585


$
38.69Granted


956


$
34.90Exercised


(569
)

$
27.69Forfeitures


(259
)

$
41.56Outstanding at December 31, 2008


5,713


$
39.07


$
28.4



4.62Exercisable at December 31, 2008


3,806


$
40.61


$
19.3



4.39Unvested at December 31, 2008


1,907


$
36.00


$
9.1



5.37     (1)
    
    The intrinsic value of a stock option is the amount by which the
    current market value of the underlying stock exceeds the
    exercise price of the option.      (c)
    Restricted
    Stock, Restricted Stock Units, and Deferred Stock
    Units   95




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedNo. Shares

Average Grant(In thousands)

Date Fair ValueOutstanding at December 31, 2005


16


$
37.88Granted


623


$
35.58Vested


(4
)

$
40.22Forfeited


(12
)

$
31.29Outstanding at December 31, 2006


623


$
35.69Granted


498


$
46.77Vested


(127
)

$
36.22Forfeited


(97
)

$
35.59Outstanding at December 31, 2007


897


$
41.90Granted


538


$
33.96Vested


(276
)

$
40.26Forfeited


(52
)

$
43.12Outstanding at December 31, 2008


1,107


$
38.46     (d)
    Shareholder
    Rights Plan       96




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (e)
    Authorized
    Common and Preferred Stock    (17)
    Commitments
    and Contingencies  (a)
    Lease
    Commitments    sub-rental
  2009

$
11,0742010


10,7922011


10,7512012


10,1812013


10,1222014 and thereafter


66,619$
119,539     (b)
    Contingencies  and/or
  and/or
 97




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (18)
    Related
    Party Transactions    (19)
    Acquisitions  (a)
    7TM
    Pharma    (b)
    Acquisition
    of AdipoGenix Assets    (20)
    Eyetech
    Discontinued Operations  (a)
    Divestiture
    of Eye Disease Business    No. 99-19
     98




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  change-of-control
  (b)
    (OSI)
    Eyetech Milestone Revenue and Expense  EITF 00-21,
  (c)
    (OSI)
    Eyetech Operating Results    (d)
    Goodwill
    Impairment  ®
 99




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (e)
    Macugen
    Intangibles Impairment      Year EndedDecember 31,2008

2007

2006Net revenue

$
44,314


$
37,435


$
134,659Gain on sale of PDGF aptamer research program






6,012



Loss on sale of eye disease business


(14,135
)






Impairment loss










(505,985
)Operating income (loss)


18,267



(35,797
)


(104,580
)Pretax income (loss)


3,582



(36,930
)


(610,930
)Net income (loss) from discontinued operations

$
4,884


$
(36,288
)

$
(610,930
)       Year EndedDecember 31,2008


2007Assets:Accounts receivable

$
917


$
18,411Prepaid expenses and other assets






470Assets held for sale






6,561Assets related to discontinued operations

$
917


$
25,442Liabilities:Accounts payable and accrued expenses

$
1,522


$
13,382Collaboration profit share






2,783Unearned revenue






29,574Liabilities related to discontinued operations

$
1,522


$
45,739  100




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (f)
    Variable
    Interest Entities      (g)
    (OSI)
    Eyetech Divestiture  Severance Costs      Year EndedDecember 31,2008


2007Opening liability

$
800


$
3,284Accrual for severance, relocation and retention bonuses


1,376



5,206Cash paid for severance


(1,789
)


(7,690
)Ending liability

$
387


$
800   (21)
    Accounting
    Pronouncements  14-1,
 101




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. FAS 142-3, FAS 142-3 FAS 142-3 FAS 142-3 FAS 142-3 FAS 142-3
      FSP 157-2, FSP 157-2,
  07-03, 07-03 07-03 07-03
  07-01, 07-01
 102




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  07-01
    not-for-profit
  (22)
    Subsequent
    Event  ®
  45-day
 103




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (23)
    Quarterly
    Financial Data (unaudited)    Three Months Ended(In thousands, except per share data)March 31,

June 30,

September 30,

December 31,2008

2008

2008

2008Revenues from continuing operations

$
90,735


$
95,654


$
94,572


$
98,427Net income from continuing operations

$
31,663


$
37,217


$
34,545


$
363,176Net income

$
29,237


$
25,298


$
54,826


$
362,124Basic earnings per share from continuing operations

$
0.55


$
0.65


$
0.60


$
6.30Diluted earnings per share from continuing operations

$
0.52


$
0.61


$
0.56


$
5.50Basic net income per share

$
0.51


$
0.44


$
0.95


$
6.29Diluted net income per share

$
0.49


$
0.43


$
0.88


$
5.48   Three Months Ended(In thousands, except per share data)March 31,

June 30,

September 30,

December 31,2007

2007

2007

2007Revenues from continuing operations

$
77,469


$
78,883


$
100,370


$
84,308Net income from continuing operations

$
19,695


$
29,276


$
35,904


$
17,732Net income

$
6,641


$
19,622


$
29,628


$
10,428Basic earnings per share from continuing operations

$
0.34


$
0.51


$
0.62


$
0.31Diluted earnings per share from continuing operations

$
0.33


$
0.48


$
0.59


$
0.29Basic net income per share

$
0.12


$
0.34


$
0.51


$
0.18Diluted net income per share

$
0.12


$
0.33


$
0.49


$
0.18    104




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  CEO/CFO
    CERTIFICATIONS
  Form 10-K
  EVALUATION
    OF DISCLOSURE CONTROLS AND PROCEDURES
  Evaluation of Our Disclosure Controls and
    Procedures. Form 10-K, Rule 13a-15(e)) Form 10-K.
  CEO/CFO Conclusions about the Effectiveness of the Disclosure
    Controls and Procedures. Form 10-K
  MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rules 13a-15(f)
  Internal
    Control  Integrated Framework, Form 10-K.
  CHANGES
    IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
  Rule 13a-15(f)
 105




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON INTERNAL CONTROL OVER FINANCIAL REPORTING
     Internal Control  Integrated Framework
        Internal Control 
    Integrated Framework
        106




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##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   107




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##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENTS AND SCHEDULES                     108




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##### Table of Contents



SIGNATURES
      By:
    /s/  COLIN
    GODDARD, Ph.D         Signature

Title

Date/s/  ROBERT
    A. INGRAMRobert
    A. Ingram

Chairman of the Board

February 27, 2009/s/  COLIN
    GODDARD, Ph.D.Colin
    Goddard, Ph.D.

Director and Chief Executive Officer (principal executive
    officer)

February 27, 2009/s/  PIERRE
    LEGAULTPierre
    Legault

Executive Vice President, Chief Financial Officer and Treasurer
    (principal financial and accounting officer)

February 27, 2009/s/  SANTO
    J. COSTASanto
    J. Costa

Director

February 27, 2009/s/  DARYL
    K. GRANNER, M.D.Daryl
    K. Granner, M.D.

Director

February 27, 2009/s/  JOSEPH
    KLEIN, IIIJoseph
    Klein, III

Director

February 27, 2009/s/  KENNETH
    B. LEE, Jr.Kenneth
    B. Lee, Jr.

Director

February 27, 2009/s/  VIREN
    MEHTAViren
    Mehta

Director

February 27, 2009/s/  DAVID
    W. NIEMIECDavid
    W. Niemiec

Director

February 27, 2009/s/  HERBERT
    PINEDO, M.D., Ph.D.Herbert
    Pinedo, M.D., Ph.D.

Director

February 27, 2009/s/  KATHARINE
    B. STEVENSONKatharine
    B. Stevenson

Director

February 27, 2009/s/  JOHN
    P. WHITE, ESQUIREJohn
    P. White, Esquire

Director

February 27, 2009  109




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##### Table of Contents



EXHIBIT INDEX
  Exhibit2
.1+

Asset Purchase Agreement, dated as of June 17, 2004, by and
    between Probiodrug AG, Halle and Prosidion Limited, filed by the
    Company as an exhibit to the
    Form 8-K
    filed on July 6, 2004 (file
    no. 000-15190),
    and incorporated herein by reference.2
.2+

Agreement and Plan of Merger, dated August 21, 2005, among
    OSI Pharmaceuticals, Inc., Merger EP Corporation and Eyetech
    Pharmaceuticals, Inc., filed by the Company as an exhibit to the
    Form 8-K
    filed on August 22, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.3
.1

Restated Certificate of Incorporation of OSI Pharmaceuticals,
    Inc., filed by the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended September 30, 2001 (file
    no. 000-15190),
    and incorporated herein by reference.3
.2

Second Amended and Restated Bylaws of OSI Pharmaceuticals, Inc.
    (Filed herewith).4
.1

Rights Agreement, dated September 27, 2000, between OSI
    Pharmaceuticals, Inc. and The Bank of New York as Rights Agent,
    including Terms of Series SRP Junior Participating
    Preferred Stock, Summary of Rights to Purchase Preferred Stock
    and Form of Right Certificate, filed by the Company as an
    exhibit to the
    Form 8-A
    filed on September 27, 2000 (file
    no. 000-15190),
    and incorporated herein by reference.4
.2

Form of Contingent Value Rights Agreement by and between OSI
    Pharmaceuticals, Inc. and the Bank of New York, filed by the
    Company as an exhibit to the registration statement on
    Form S-4
    (file
    no. 333-103644),
    and incorporated herein by reference.4
.3

Indenture, dated September 8, 2003, by and between OSI
    Pharmaceuticals, Inc. and The Bank of New York, filed by the
    Company as an exhibit to the
    Form 10-K
    for the fiscal year ended September 30, 2003 (file
    no. 000-15190)
    and incorporated herein by reference.4
.4

Form of
    31/4% Convertible
    Senior Subordinated Note Due 2023 (included in
    Exhibit 4.3), filed by the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended September 30, 2003 (file
    no. 000-15190)
    and incorporated herein by reference.4
.5

Registration Rights Agreements, dated September 8, 2003, by
    and among OSI Pharmaceuticals, Inc., Merrill Lynch &
    Co., Merrill Lynch, Pierce, Fenner & Smith,
    Incorporated, and Morgan Stanley & Co., Incorporated,
    filed by the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended September 30, 2003 (file
    no. 000-15190)
    and incorporated herein by reference.4
.6

Indenture, dated December 21, 2005, by and between OSI
    Pharmaceuticals, Inc. and The Bank of New York, filed by the
    Company as an exhibit to the
    Form 8-K
    filed on December 28, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.4
.7

Form of 2% Convertible Senior Subordinated Note Due 2025
    (included in Exhibit 4.6), filed by the Company as an
    exhibit to the
    Form 8-K
    filed on December 28, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.4
.8

Registration Rights Agreement, dated December 21, 2005, by
    and between OSI Pharmaceuticals, Inc. and UBS Securities LLC,
    filed by the Company as an exhibit to the
    Form 8-K
    filed on December 28, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.4
.9

Indenture, dated January 9, 2008, by and between OSI
    Pharmaceuticals, Inc. and The Bank of New York, filed by the
    Company as an exhibit to the
    Form 8-K
    filed on January 15, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.4
.10

Form of 3% Convertible Senior Subordinated Note Due 2038
    (included in Exhibit 4.9), filed by the Company as an
    exhibit to the
    Form 8-K
    filed on January 15, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.4
.11

Registration Rights Agreement, dated January 9, 2008, by
    and between OSI Pharmaceuticals, Inc. and Merrill
    Lynch & Co., Merrill Lynch, Pierce, Fenner &
    Smith Incorporated and J.P. Morgan Securities Inc., filed
    by the Company as an exhibit to the
    Form 8-K
    filed on January 15, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.10
.1*

1989 Incentive and Non-Qualified Stock Option Plan, filed by the
    Company as an exhibit to the registration statement on
    Form S-8
    (file
    no. 33-38443),
    and incorporated herein by reference.10
.2*

1995 Employee Stock Purchase Plan, filed by the Company as an
    exhibit to the registration statement on
    Form S-8,
    filed on December 4, 1995 (file
    no. 333-06861),
    and incorporated herein by reference. 110




---



##### Table of Contents



Exhibit10
.3*

1997 Incentive and Non-Qualified Stock Option Plan, filed by the
    Company as an exhibit to the registration statement on
    Form S-8,
    filed on November 4, 1997 (file
    no. 333-39509),
    and incorporated herein by reference.10
.4*

1999 Incentive and Non-Qualified Stock Option Plan, as amended,
    filed by the Company as an exhibit to the
    Form 10-Q
    for the quarter ended September 30, 2006 (file
    no. 000-15190),
    and incorporated herein by reference.10
.5*

Amended and Restated Stock Incentive Plan, as amended, filed by
    the Company as an exhibit to the
    Form 10-Q
    for the quarter ended September 30, 2007 (file
    no. 000-15190),
    and incorporated herein by reference.10
.6*

Form of Non-Qualified Stock Option Agreement issued under the
    Amended and Restated Stock Incentive Plan for employees of OSI
    Pharmaceuticals, Inc., filed by the Company as an exhibit to the
    Form 10-Q
    for the quarter ended June 30, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.7*

Form of Non-Qualified Stock Option Agreement issued under the
    Amended and Restated Stock Incentive Plan for employees of
    Prosidion Limited and OSI Pharmaceuticals (UK) Limited filed by
    the Company as an exhibit to the
    Form 10-Q
    for the quarter ended March 31, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.8

OSI Pharmaceuticals, Inc. Non-Qualified Stock Option Plan for
    Former Employees of Cadus Pharmaceutical Corporation, filed by
    the Company as an exhibit to the
    Form 10-Q
    for the quarter ended June 30, 1999 (file
    no. 000-15190),
    and incorporated herein by reference.10
.9

OSI Pharmaceuticals, Inc. Non-Qualified Stock Option Plan for
    Former Employees of Gilead Sciences, Inc. filed by the Company
    as an exhibit to the
    Form 8-K
    filed on January 7, 2002 (file
    no. 000-15190),
    and incorporated herein by reference.10
.10

OSI Pharmaceuticals, Inc. Stock Incentive Plan for Pre-Merger
    Employees of Eyetech Pharmaceuticals, Inc., filed by the Company
    as an exhibit to the
    Form 8-K
    filed on November 16, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.11

OSI Pharmaceuticals, Inc. Stock Plan for Assumed Options of
    Pre-Merger Employees of Eyetech Pharmaceuticals, Inc. filed by
    the Company as an exhibit to the
    Form 8-K
    filed on November 16, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.12*

Form of Non-Qualified Stock Option Agreement, issued under the
    Amended and Restated Stock Incentive Plan, as amended, for
    option grants made in December 2008 for
    U.S.-Based
    Executive Officers of OSI Pharmaceuticals, Inc. (Filed herewith).10
.13*

Form of Non-Qualified Stock Option Agreement, issued under the
    Amended and Restated Stock Incentive Plan, as amended, for
    option grants made in December 2008 for U.K.-Based Executive
    Officers of OSI Pharmaceuticals, Inc. (Filed herewith).10
.14*

Form of Non-Qualified Stock Option Agreement for
    U.S.-Based
    Executive Officers of OSI Pharmaceuticals, Inc., filed by the
    Company as an exhibit to the
    Form 8-K
    filed on June 22, 2006, and incorporated herein by
    reference.10
.15*

Form of Non-Qualified Stock Option Agreement for U.K.-Based
    Employees of OSI Pharmaceuticals, Inc., filed by the Company as
    an exhibit to the
    Form 8-K
    filed on June 22, 2006, and incorporated herein by
    reference.10
.16*

Form of Non-Qualified Stock Option Agreement for Non-Management
    Directors of OSI Pharmaceuticals, Inc., filed by the Company as
    an exhibit to the
    Form 8-K
    filed on June 22, 2006, and incorporated herein by
    reference.10
.17*

Form of Restricted Stock Agreement for Executive Officers of OSI
    Pharmaceuticals, Inc., filed by the Company as an exhibit to the
    Form 8-K
    filed on July 12, 2006, and incorporated herein by
    reference.10
.18*

Form of Restricted Stock Agreement for Non-Management Directors
    of OSI Pharmaceuticals, Inc., filed by the Company as an exhibit
    to the
    Form 8-K
    filed on July 12, 2006, and incorporated herein by
    reference.10
.19*

Form of Restricted Stock Unit Agreement for U.S.-Based Executive
    Officers of OSI Pharmaceuticals, Inc., filed by the Company as
    an exhibit to the
    Form 8-K
    filed on July 12, 2006, and incorporated herein by
    reference. 111




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##### Table of Contents



Exhibit10
.20*

Form of Restricted Stock Unit Agreement for U.K.-Based Executive
    Officers of OSI Pharmaceuticals, Inc. (Filed herewith).10
.21*

Form of Restricted Stock Unit Agreement for Non-Management
    Directors of OSI Pharmaceuticals, Inc., filed by the Company as
    an exhibit to the
    Form 8-K
    filed on July 12, 2006, and incorporated herein by
    reference.10
.22*

OSI Pharmaceuticals, Inc. Nonqualified Deferred Compensation
    Plan, effective July 1, 2007, filed by the Company as an
    exhibit to the
    Form 10-Q
    for the quarter ended June 30, 2007 (file
    no. 000-15190),
    and incorporated herein by reference.10
.23*

Form of Deferred Stock Unit Agreement for the Non-Employee
    Directors of OSI Pharmaceuticals, Inc., filed by the Company as
    an exhibit to the
    Form 10-Q
    for the quarter ended June 30, 2007 (file
    no. 000-15190),
    and incorporated herein by reference.10
.24

Collaborative Research Agreement, dated April 1, 1996,
    between OSI Pharmaceuticals, Inc. and Pfizer Inc., filed by the
    Company as an exhibit to the
    Form 10-Q
    for the quarter ended March 31, 1996, as amended (file
    no. 000-15190),
    and incorporated herein by reference.10
.25

License Agreement, dated April 1, 1996, between OSI
    Pharmaceuticals, Inc. and Pfizer Inc., filed by the Company as
    an exhibit to the
    Form 10-Q
    for the quarter ended March 31, 1996, as amended (file
    no. 000-15190),
    and incorporated herein by reference.10
.26

Amended and Restated License Agreement, dated April 20,
    2007, by and between OSI Pharmaceuticals, Inc. and Pfizer, Inc.,
    filed by the Company as an exhibit to the
    Form 10-Q
    for the quarter ended March 31, 2007 (file
    no. 000-15190),
    and incorporated herein by reference.10
.27

Agreement, dated May 23, 2000, by and between OSI
    Pharmaceuticals, Inc. and Pfizer Inc., filed by the Company as
    an exhibit to the
    Form 8-K
    filed on June 20, 2000 (file
    no. 000-15190),
    and incorporated herein by reference.10
.28

Development and Marketing Collaboration Agreement, dated
    January 8, 2001, between OSI Pharmaceuticals, Inc. and
    Genentech, Inc., filed by the Company as an exhibit to the
    Form 8-K
    filed on February 14, 2001 (file
    no. 000-15190),
    and incorporated herein by reference.10
.29

Amendment No. 1 to Development and Marketing Collaboration
    Agreement, dated as of June 4, 2004, between OSI
    Pharmaceuticals, Inc. and Genentech, Inc., filed by the Company
    as an exhibit to the
    Form 8-K
    filed on June 28, 2004 (file
    no. 000-15190),
    and incorporated herein by reference.10
.30

Manufacturing and Supply Agreement, dated as of June 4,
    2004, by and between OSI Pharmaceuticals, Inc. and Genentech,
    Inc., filed by the Company as an exhibit to the
    Form 8-K
    filed on June 28, 2004 (file
    no. 000-15190),
    and incorporated herein by reference.10
.31

Development Collaboration and Licensing Agreement, dated
    January 8, 2001, between OSI Pharmaceuticals, Inc. and F.
    Hoffman  La Roche Ltd., filed by the Company as
    an exhibit to the
    Form 8-K
    filed on February 14, 2001 (file
    no. 000-15190),
    and incorporated herein by reference.10
.32

Tripartite Agreement, dated January 8, 2001, by and among
    OSI Pharmaceuticals, Inc., Genentech, Inc., and F. Hoffman
    La Roche Ltd., filed by the Company as an exhibit to the
    Form 8-K
    filed on February 14, 2001 (file
    no. 000-15190),
    and incorporated herein by reference.10
.33

Supply Agreement, dated February 2, 2005, by and between
    Schwarz Pharma Manufacturing, Inc. and OSI Pharmaceuticals, Inc.
    filed by the Company as an exhibit to the
    Form 10-Q
    for the quarter ended March 31, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.34

Agreement of Sale and Purchase, dated March 15, 2005, by
    and between Swissair, Swiss Air Transport Co., Ltd. and OSI
    Pharmaceuticals, Inc. filed by the Company as an exhibit to the
    Form 10-Q
    for the quarter ended March 31, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.35

Exclusive License Agreement, effective as of January 4,
    2007, between Eli Lilly and Company and Prosidion Limited, filed
    by the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2006 (file
    no. 000-15190),
    and incorporated herein by reference.10
.36*

Letter Agreement, dated November 15, 2001, by and between
    OSI Pharmaceuticals, Inc. and Mr. Robert L. Simon filed by
    the Company as an exhibit to the
    Form 10-Q
    for the quarter ended March 31, 2005 (file
    no. 000-15190),
    and incorporated herein by reference. 112




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##### Table of Contents



Exhibit10
.37*

Amended Letter Agreement, dated September 20, 2005, by and
    between OSI Pharmaceuticals, Inc. and Robert L. Simon, filed by
    the Company as an exhibit to the
    Form 8-K
    filed on September 26, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.38*

Amendment to Letter Agreement, dated December 19, 2008, by
    and between OSI Pharmaceuticals, Inc. and Robert L. Simon (Filed
    herewith).10
.39*

Change of Control Arrangement, dated October 4, 2001, by
    and between OSI Pharmaceuticals, Inc. and Barbara A.
    Wood, Esq., filed by the Company as an exhibit to the
    Form 10-Q
    for the quarter ended March 31, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.40*

Amended Change in Control Arrangement, dated September 20,
    2005, by and between OSI Pharmaceuticals, Inc. and Barbara A.
    Wood, Esq. filed by the Company as an exhibit to the
    Form 8-K
    filed on September 26, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.41*

Amendment to Change of Control Arrangement, dated
    December 18, 2008, by and between OSI Pharmaceuticals, Inc.
    and Barbara A. Wood, Esq. (Filed herewith).10
.42*

Amended and Restated Employment Agreement, dated May 31,
    2005, by and between OSI Pharmaceuticals, Inc. and Michael G.
    Atieh, filed by the Company as an exhibit to the
    Form 10-Q
    for the quarter ended June 30, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.43*

Amendment to Amended and Restated Employment Agreement, dated
    December 19, 2008, by and between OSI Pharmaceuticals, Inc.
    and Michael G. Atieh (Filed herewith).10
.44*

Employment Agreement, dated May 16, 2003, by and between
    OSI Pharmaceuticals, Inc. and Gabriel Leung, filed by the
    Company as an exhibit to the
    Form 10-K
    for the fiscal year ended September 30, 2003 (file
    no. 000-15190),
    and incorporated herein by reference.10
.45*

Addendum to Employment Agreement, dated January 5, 2004,
    between by and between OSI Pharmaceuticals, Inc. and Gabriel
    Leung, filed by the Company as an exhibit to the
    Form 10-QT
    for the transition period ended December 31, 2004 (file
    no. 000-15190),
    and incorporated herein by reference.10
.46*

Amendment to Employment Agreement, dated December 16, 2008,
    by and between OSI Pharmaceuticals, Inc. and Gabriel Leung
    (Filed herewith).10
.47*

Service Contract, dated September 20, 2005, by and between
    OSI Pharmaceuticals, Inc. and Dr. Anker Lundemose, filed by
    the Company as an exhibit to the
    Form 8-K
    filed on September 26, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.48*

Employment Agreement between OSI Pharmaceuticals, Inc. and Colin
    Goddard, Ph.D., as amended on June 21, 2006, filed by
    the Company as an exhibit to the
    Form 8-K
    filed on June 22, 2006, and incorporated herein by
    reference.10
.49*

Amendment to Employment Agreement, dated December 18, 2008,
    between OSI Pharmaceuticals, Inc. and Colin Goddard, Ph.D.
    (Filed herewith).10
.50*

Change in Control Arrangement, dated December 4, 2007, by
    and between OSI Pharmaceuticals, Inc. and Linda E. Amper, filed
    by the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2007 (file
    no. 000-15190),
    and incorporated herein by reference.10
.51*

Amendment to Change in Control Arrangement, dated
    December 17, 2008, by and between OSI Pharmaceuticals, Inc.
    and Linda E. Amper. (Filed herewith).10
.52*

Employment Agreement, dated December 16, 2008, by and
    between OSI Pharmaceuticals, Inc. and Pierre Legault, filed by
    the Company as an exhibit to the
    Form 8-K
    filed on December 16, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.10
.53*

Consulting Agreement, dated January 28, 2008, by and
    between OSI Pharmaceuticals, Inc. and Herbert M.
    Pinedo, M.D., Ph.D., filed by the Company as an
    Exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2007 (file
    no. 000-15190),
    and incorporated herein by reference.10
.54*

Consulting Agreement, dated November 20, 2008 between OSI
    Pharmaceuticals, Inc., and Mehta Partners, LLC, filed by the
    Company as an Exhibit to the
    Form 8-K
    filed on November 21, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.10
.55*

Letter Agreement, dated January 25, 2007, by and between
    Dr. Daryl Granner and OSI Pharmaceuticals, Inc., filed by
    the Company as an exhibit to the
    Form 8-K,
    filed on January 29, 2007 (file
    no. 000-15190),
    and incorporated herein by reference. 113




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##### Table of Contents



Exhibit10
.56*

Letter Agreement, dated January 1, 2008, by and between
    Dr. Daryl Granner and OSI Pharmaceuticals, Inc., filed by
    the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2007 (file
    no. 000-15190),
    and incorporated herein by reference.10
.57*

Scientific Advisory Board and Consulting Agreement, dated
    January 1, 2009, between Prosidion Limited and
    Dr. Daryl Granner. (Filed herewith).10
.58*

Consulting Agreement dated August 23, 2007, by and between
    OSI Pharmaceuticals, Inc. and Walter M. Lovenberg, Ph.D.,
    filed by the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2007 (file
    no. 000-15190),
    and incorporated herein by reference.10
.59*

Share Purchase Deed relating to Shares of Prosidion Limited,
    dated April 14, 2005, between OSI Pharmaceuticals, Inc. and
    Dr. Daryl Granner, filed by the Company as an exhibit to
    the
    Form 8-K,
    filed on April 20, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.60*

Amended and Restated Stock Incentive Plan Stock Award Agreement,
    dated April 14, 2005, between OSI Pharmaceuticals, Inc. and
    Dr. Daryl Granner, filed by the Company as an exhibit to
    the
    Form 8-K
    filed on April 20, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.61*

Restricted Stock Agreement, dated May 31, 2005, by and
    between OSI Pharmaceuticals, Inc. and Michael G. Atieh, filed by
    the Company as an exhibit to the
    Form 10-Q
    for the quarter ended June 30, 2005 (file
    no. 000-15190),
    and incorporated herein by reference.10
.62*

Compensatory Arrangements for Non-Employee Directors. (Filed
    herewith).10
.63*

Compensatory Arrangements of Executive Officers. (Filed
    herewith).21


Significant Subsidiaries of OSI Pharmaceuticals, Inc. (Filed
    herewith).23


Consent of KPMG LLP, independent registered public accounting
    firm. (Filed herewith).31
.1

Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)
    or 15(d)-14(a). (Filed herewith).31
.2

Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)
    or 15d-14(a). (Filed herewith).32
.1

Certification of Chief Executive Officer pursuant to
    18 U.S.C. § 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
    herewith).32
.2

Certification of Chief Financial Officer pursuant to
    18 U.S.C. § 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
    herewith).     *
    
    Indicates a management contract or compensatory plan, contract
    or arrangement in which directors or executive officers
    participates.
    
    Portions of this exhibit have been redacted and are subject to a
    confidential treatment request filed with the Secretary of the
    Securities and Exchange Commission pursuant to Rule 24b-2 under
    the Securities Exchange Act of 1934, as amended.+
    
    The schedules to this exhibit have been omitted pursuant to
    Item 601(b)(2) of
    Regulation S-K
    promulgated by the Securities and Exchange Commission. The
    omitted schedules from this filing will be provided upon request. 114