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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, 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, 2009oro

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.

11747(Address of Principal Executive
    Offices)

(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-T o o
  Regulation S-K Form 10-K Form 10-K. o
  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


21ITEM 1B.

UNRESOLVED STAFF COMMENTS


36ITEM 2.

PROPERTIES


36ITEM 3.

LEGAL PROCEEDINGS


37ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS


37PART IIITEM 5.

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


38ITEM 6.

SELECTED CONSOLIDATED FINANCIAL DATA


40ITEM 7.

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


43ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


60ITEM 8.

CONSOLIDATED FINANCIAL STATEMENTS


62ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


114ITEM 9A.

CONTROLS AND PROCEDURES


114ITEM 9B.

OTHER INFORMATION


116PART IIIITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
    GOVERNANCE


116ITEM 11.

EXECUTIVE COMPENSATION


116ITEM 12.

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


116ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
    AND DIRECTOR INDEPENDENCE


116ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES


116PART IVITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


117EX-10.12EX-10.13EX-10.14EX-10.15EX-10.16EX-10.17EX-10.18EX-10.19EX-10.41EX-10.58EX-10.59EX-10.60EX-21EX-23EX-31.1EX-31.2EX-32.1EX-32.2   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
    Strategy
  first-in-class best-in-class
   2




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
    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.      Our
    Marketed Product  Tarceva
  Overview
  once-a-day,
   3




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Lifecycle
    Plan
    
    Expand the use of Tarceva into other NSCLC treatment areas;
    Expand the use of Tarceva into additional tumor types and
    further explore its utility in pancreatic cancer; and
    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.
  EGFR Mutation Studies
  sub-set
  Tarceva Maintenance Therapy Studies
  SATURN Study (Phase III Study of Tarceva in
    First-Line NSCLC Patients Following
    Chemotherapy)
 4




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ATLAS Study.
  RADIANT Study (Adjuvant Tarceva after Surgery and
    Chemotherapy in Patients with Stage IB-IIIA
    NSCLC) and/or in situ
  Phase II Studies in Never-smokers sub-population
  Tarceva Intercalated with Chemotherapy in First-Line
    NSCLC.
 5




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TITAN Study ® ® lower-than-expected sub-set
  Studies
    to Refine the use of Tarceva in Pancreatic Cancer.
   RACHEL Study. Sub-set
  MARK Study follow-up.
  Studies
    to Expand Tarceva into Additional Tumor Types.
  Hepatocellular Cancer. ®
  Ovarian and Colorectal Cancer.
  Studies
    that Combine Tarceva with other Targeted Agents.
   6




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Treatment Beyond Progression
  Investigator
    Sponsored Studies.
    Sales
    and Marketing
    OSI/Genentech/Roche
    Alliance
     7




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country-by-country country-by-country
  Manufacturing
    and Supply
        Our
    Clinical Development Programs
    OSI-906. P
  
    ACC.  IGF-1R/IR signaling has been implicated
    in the pathogenesis of ACC, an area of significant unmet medical
    need. A significant proportion of patients with ACC have tumors
    that over-express insulin-like 8




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growth factor 2, or IGF-2, an IGF-1R ligand, which we believe
    offers a potential opportunity for patient selection. In the
    third quarter of 2009, we commenced the first efficacy study of
    OSI-906  a Phase III trial that compares OSI-906
    versus placebo in patients with advanced ACC, with the primary
    endpoint of overall survival. As ACC is a rare disease with a
    high mortality rate, our strategy is to pursue approval with the
    FDA as an orphan drug if the trial is successful,
    and to investigate options for accelerated approval.  
    NSCLC Maintenance.  As noted above, we
    commenced a Phase I combination study of Tarceva and
    OSI-906
    based on pre-clinical data that support the importance of
    compensatory signaling with the IGF-1R/IR and EGFR pathways. We
    are currently conducting dose escalation studies with Tarceva
    and OSI-906, with the goal of determining the recommended dose
    for this combination in the first half of 2010. In the event
    that we are able to obtain FDA approval for Tarceva in the
    first-line maintenance setting, we expect to commence a
    randomized Phase II NSCLC maintenance study of Tarceva plus
    OSI-906 in patients whose cancer has not progressed following
    first-line treatment with platinum-based chemotherapy.
    Alternatively, we may commence a randomized Phase II study
    of Tarceva plus OSI-906 in the second-line NSCLC setting.
    NSCLC with EGFR Mutations.  Tarceva has
    demonstrated impressive benefit in patients with activating EGFR
    mutations, however, secondary resistance eventually develops
    resulting in disease relapse. OSI-906 in combination with
    Tarceva may have the ability to improve patient outcomes through
    compensatory signaling and by blocking one of the resistance
    mechanisms to Tarceva. We are planning to initiate a randomized
    Phase III clinical trial that combines OSI-906 and Tarceva
    for the first-line treatment of advanced NSCLC patients with
    EGFR mutations.
    Ovarian Cancer.  Preclinical data suggest
    potential synergies between OSI-906 and paclitaxel in the
    inhibition of IGF-1R/IR signaling pathway. We commenced a
    randomized Phase I/II study in September 2009 of OSI-906 in
    combination with paclitaxel for the treatment of advanced
    ovarian cancer.
    HCC.  We are currently planning a Phase II
    clinical trial evaluating OSI-906 as a single agent for the
    treatment of advanced HCC after the failure of first-line
    treatment, which we expect to commence in the second half of
    2010. Similar to ACC, advanced HCC is a rare disease in which a
    significant proportion of patients over express IGF-2 offering a
    patients selection opportunity for IGFR-1R targeted therapy. HCC
    has a high unmet medical need; therefore, we will investigate
    accelerated approval options if our Phase II and subsequent
    Phase III trials are successful.    PSN821. ® tm ® best-in-class first-in-man 14-day
 9




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OSI-027.
  Other
    Internal and Partnered Development Programs
  OSI-296.
  PSN010. back-up country-by-country back-up
  OSI-930.
  OSI-632.
  PSN602. 1A 1A first-in-man
 10




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Our
    Oncology and Diabetes and Obesity Discovery Efforts
  Oncology
    Research
  mesenchymal-to-epithelial E-cadherin, E-cadherin
  E-cadherin and/or
     11




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in vivo
  Diabetes
    and Obesity Discovery
      Our
    Intellectual Property
    Tarceva-Related
    Intellectual Property
  and/or
 12




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and/or
  and/or
     13




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Other
    Intellectual Property
  sub-licensable tm ® ®
     14




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Our
    Competition
      ® ®
  ®
  tm ® ®
 15




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®
  tm ®
  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.   16




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and/or
      The
    Hatch-Waxman Act
   17




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and/or 45-day 30-month
    Pricing
    and Reimbursement
    out-of-pocket out-of-pocket
   18




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Other
    Regulation
    and/or
        Ardsley
    Site Consolidation
  43-acre
 19




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Our
    Employees
  U.S.-based
  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
 20




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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 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.  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; 21




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
    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 expanding uses for Tarceva; however, there can
    be no assurance that the positive results from the SATURN trial
    will result in Tarceva receiving the required regulatory
    approvals for expanded use in NSCLC nor that the 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.
      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.
   22




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country-by-country
    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
  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.
    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.
   23




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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.
    Healthcare
    reform measures could adversely affect our
    business.
   24




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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.
             25




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Although
    we have clinical and pre-clinical candidates in the pipeline for
    oncology and diabetes and obesity that appear to be promising,
    none of these potential products may reach the commercial market
    for a number of reasons.
    follow-up
      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.
   26




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Our
    operating results could be adversely affected by fluctuations in
    the value of the U.S. dollar against foreign
    currencies.
    We
    cannot be certain that any hedging transactions we may enter
    into will adequately protect us from significant changes in
    foreign currency exchange rates which would potentially impact
    our operating results negatively.
    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 3.25% 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.
    We may
    incur risk in connection with the consolidation of our U.S.
    operations to Ardsley, New York.
   27




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Global
    credit and financial market conditions could negatively impact
    the value of our current portfolio of cash equivalents and
    investment securities.
    Our
    effective income tax rate may increase in the future, reducing
    our net income.
  and/or
  The
    value of our strategic investments may decline, requiring us to
    impair the value of these investments and thereby reducing our
    net income.
    Risks
    Relating to Regulatory Matters
  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 negatively affect our competitive position.
  and/or
 28




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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.
      Government
    involvement and/or control over pricing of pharmaceutical
    products can have a negative effect on the revenues that we
    receive from Tarceva.
   29




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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.
   30




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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.
   31




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and/or
  If
    Tarceva is imported into the United States, the EU or Japan from
    countries where the cost of the drug is lower, it will
    negatively affect our sales and profitability and harm our
    business.
          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.
   32




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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.
        and/or
   33




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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.
   34




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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 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;
    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; 35




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
    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
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    Ardsley, New York. 43-acre
  Melville, New York.
 36




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Farmingdale, New York.
  Cedar Knolls, New Jersey.
  Boulder, Colorado.
  Oxford, England.
    ITEM 3.
    LEGAL
    PROCEEDINGS  and/or
      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   37




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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
  2009 FISCAL YEAR

HIGH


LOWFirst Quarter

$
43.00


$
32.28Second Quarter

$
38.30


$
27.07Third Quarter

$
36.29


$
27.01Fourth Quarter

$
35.90


$
30.31   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   Holders
    and Dividends
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans
  Equity
    Compensation Plan Information as of December 31,
    2009
  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


7,219,401
(c)

$
38.51



3,051,605
(e)Equity compensation plans not approved by security holders


289,809
(d)

$
48.25



Total


7,509,210


$
38.93



3,051,605     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 three plans: 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. 38




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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. As of December 31, 2009, there was 190,419
    of options outstanding with a grant 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.e)
    
    Consists of 346,750 shares reserved for issuance under the
    1995 Employee Stock Purchase Plan and the stock purchase plan
    for our U.K.-based employees, and 2,704,855 shares reserved
    for issuance under the Amended and Restated Stock Incentive Plan.    Purchase
    of Equity Securities by the Issuer and Affiliated
    Purchasers
  Form 10-K.
  Issuer
    Purchases of Equity Securities
  Total Number of

Maximum Number (orShares (or Units)

Approximate DollarPurchased as Part

Value) of Shares (or Units)Total Number of

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, 2009 
    October 31, 2009










N/A



N/ANovember 1, 2009 
    November 30, 2009










N/A



N/ADecember 1, 2009 
    December 31, 2009


113,581
(1)

$
34.02



N/A



N/A789,364
(2)

$
50.02541,852
(3)

$
73.82     (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.(2)
    
    In December 2009, we repurchased an aggregate of
    $39.5 million principal amount of our 2023 Notes. These
    were open market repurchases. The repurchased 2023 Notes were
    subsequently cancelled. The table reflects the number of shares
    of common stock into which the cancelled notes would have been
    convertible if the holders of such notes exercised the right to
    convert the notes at the conversion price of $50.02 prior to the
    maturity of the 2023 Notes in accordance with the terms of the
    Indenture for the 2023 Notes.(3)
    
    In December 2009, we repurchased an aggregate of
    $40.0 million principal amount of our 2038 Notes. These
    were open market repurchases. The repurchased 2038 Notes were
    subsequently cancelled. The table reflects the number of shares
    of common stock into which the cancelled notes would have been
    convertible if the holders of such notes exercised the right to
    convert the notes at the conversion price of $73.82 prior to the
    maturity of the 2038 Notes in accordance with the terms of the
    Indenture for the 2038 Notes. 39




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##### Table of Contents



ITEM 6.
    SELECTED
    CONSOLIDATED FINANCIAL DATA  No. 470-20, 14-1,
  Year Ended


Year Ended


Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,


December 31,


December 31,(In thousands, except per share data)

2009(a)


2008(b)


2007(c)


2006(d)


2005(e)Consolidated Statement of Operations Data:Revenues

$
428,148


$
379,388


$
341,030


$
241,037


$
138,423Expenses:Cost of goods sold


8,786



9,315



9,399



8,671



5,035Research and development


151,845



135,344



123,531



117,527



116,655Acquired in-process research and development


6,500



4,000



9,664







3,542Selling, general and administrative


102,989



94,930



99,159



107,458



89,205Restructuring charges


4,454















Amortization of intangibles


920



2,489



1,840



1,809



15,281Income (loss) from operations


152,654



133,310



97,437



5,572



(91,295
)Other income (expense)  net


(19,375
)


(12,650
)


2,108



(4,009
)


6,108Income (loss) from continuing operations before income taxes


133,279



120,660



99,545



1,563



(85,187
)Income tax provision (benefit) business


57,284



(316,049
)


2,732







Net income (loss) from continuing operations


75,995



436,709



96,813



1,563



(85,187
)Income (loss) from discontinued operations  net of tax


(64
)


4,884



(36,288
)


(610,930
)


(72,029
)Net income (loss) before extraordinary gain


75,931



441,593



60,525



(609,367
)


(157,216
)Extraordinary gain  net of tax














22,046



Net income (loss)

$
75,931


$
441,593


$
60,525


$
(587,321
)

$
(157,216
)Basic and diluted net income (loss) per common share:Basic income (loss):Income (loss) from continuing operations

$
1.31


$
7.62


$
1.68


$
0.03


$
(1.64
)Income (loss) from discontinued operation


(0.00
)


0.09



(0.63
)


(10.73
)


(1.38
)Net income (loss) before extraordinary gain


1.31



7.70



1.05



(10.70
)


(3.02
)Extraordinary gain














0.39



Net income (loss)

$
1.31


$
7.70


$
1.05


$
(10.31
)

$
(3.02
)Diluted income (loss):Income (loss) from continuing operations

$
1.29


$
6.93


$
1.66


$
0.03


$
(1.64
)Loss from discontinued operations


(0.00
)


0.07



(0.62
)


(10.60
)


(1.38
)Net income (loss) before extraordinary gain


1.29



7.00



1.04



(10.57
)


(3.02
)Extraordinary gain














0.38



Net income (loss)

$
1.29


$
7.00


$
1.04


$
(10.19
)

$
(3.02
)Shares used in the calculation of income (loss) per common share:Basic


57,939



57,316



57,665



56,939



52,078Diluted


60,452



66,911



58,333



57,645



52,078   40




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##### Table of Contents



As of


As of


As of


As of


As ofDecember 31,


December 31,


December 31,


December 31,


December 31,(In thousands)

2009(a)


2008(b)


2007(c)


2006(d)


2005(e)Consolidated Balance Sheet Data:Cash, cash equivalents and investment securities (unrestricted
    and restricted)

$
471,895


$
515,511


$
305,098


$
216,368


$
179,606Receivables


127,171



100,242



87,523



80,075



152,482Working capital


508,866



629,330



197,631



266,496



276,171Total assets


1,185,372



1,104,203



557,723



456,841



1,057,464Long-term liabilities


290,095



444,537



145,142



321,740



304,608Stockholders equity


711,748



598,545



160,087



55,519



610,527     (a)
    
    The calendar 2009 consolidated financial statements include a
    $6.5 million acquired in-process R&D charge related to
    the expansion of our AVEO collaboration and the purchase of
    intellectual property. In December 2009, we repurchased
    $39.5 million and $40.0 million of outstanding
    principal of our 2023 Notes and 2038 Notes, respectively. As of
    December 31, 2009, the 2025 Notes have been reclassified as
    short-term on the accompanying consolidated balance sheets,
    since the holders of the Notes have a right to require us to
    purchase all, or a portion thereof, for cash, on
    December 15, 2010.(b)
    
    The calendar 2008 consolidated financial statements include a
    $4.0 million acquired in-process R&D charge related to
    the purchase of intellectual property and a $319.2 million
    benefit, included in income tax provision (benefit), related to
    the 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 in 2008.The calendar 2008 consolidated financial statements reflect the
    retrospective application of accounting literature FASB ASC
    Subtopic
    No. 470-20
    which includes the accounting literature formerly known as FSP
    APB 14-1.
    The application of this accounting literature resulted in a
    $29.9 million decrease to net income, a $0.26 decrease in
    diluted earnings per share, a $45.9 million decrease in
    long-term liabilities and a $27.0 million increase in
    stockholders equity.(c)
    
    The calendar 2007 consolidated financial statements include a
    $9.7 million acquired 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 a current liability in the
    December 31, 2007 consolidated balance sheets.The calendar 2007 consolidated financial statements reflect the
    retrospective application of accounting literature FASB ASC
    Subtopic
    No. 470-20.
    The application of this accounting literature resulted in a
    $5.8 million decrease to net income, a $0.07 decrease in
    diluted earnings per share, a $21.8 million decrease in
    long-term liabilities and a $21.1 million increase in
    stockholders equity.(d)
    
    The calendar 2006 consolidated financial statements reflect the
    retrospective application of accounting literature FASB ASC
    Subtopic
    No. 470-20
    which includes the accounting literature formerly known as FSP
    APB 14-1.
    The application of this accounting literature resulted in a
    $5.1 million decrease to net income, a $0.09 decrease in
    diluted earnings per share, a $27.8 million decrease in
    long-term liabilities and a $26.9 million increase in
    stockholders equity.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 calendar 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.(e)
    
    The calendar 2005 consolidated financial statements reflect the
    retrospective application of accounting literature FASB ASC
    Subtopic
    No. 470-20
    which includes the accounting literature formerly known as 41




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##### Table of Contents



FSP APB
    14-1. The
    application of this accounting literature resulted in a $93,000
    decrease to net income, a $33.2 million decrease in
    long-term liabilities and a $32.1 million increase in
    stockholders equity.The calendar 2005 consolidated financial statements reflect:
    (a) the acquisition of Eyetech Pharmaceuticals, Inc. 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. 42




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Overview
        43-acre
   43




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##### Table of Contents



Critical
    Accounting Policies
    Revenue
    Recognition
  Tarceva-related
    Revenues
    Net
    Revenue from Unconsolidated Joint Business
    Royalties
    year-to-date
 44




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##### Table of Contents



License
    Fees and Milestones
  No. 605-25, 00-21, No. 605-25.
  No. 605-25.
  Investments
    and
    Other-than-Temporary
    Impairments
  available-for-sale available-for-sale available-for-sale
  available-for-sale other-than-temporary available-for-sale other-than-temporarily other-than-temporarily
 45




---



##### Table of Contents



other-than-temporary other-than-temporary
  Inventory
  work-in-process
  work-in-process
  Stock-Based
    Compensation
      Accruals
    for Clinical Research Organization and Clinical Site
    Costs
  and/or
  Income
    Taxes
   46




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##### Table of Contents



No. 740-10, No. 740-10 No. 740-10
  Goodwill
    and Other Long-Lived Assets
       47




---



##### Table of Contents



Discontinued
    Operations
    No. 810-10,
  No. 810-10
  Change
    in Accounting Principle
  No. 470-20, 14-1,
  Years
    Ended December 31, 2009 and 2008
  Results
    of Operations
   48




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##### Table of Contents



Revenues
  Year Ended December 31,(in thousands)2009


2008


$ ChangeTarceva-related revenues

$
358,730


$
334,653


$
24,077Other revenues


69,418



44,735



24,683Total revenues

$
428,148


$
379,388


$
48,760   Tarceva-Related
    Revenues
    Net
    Revenue from Unconsolidated Joint Business
    Tarceva-Related
    Royalties
  rest-of-world
  Tarceva-Related
    Milestones
   49




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##### Table of Contents



Other
    Revenues
    tm tm ® ® tm
      Expenses
  Year Ended December 31,(in thousands)2009


2008


$ ChangeCost of goods sold

$
8,786


$
9,315


$
(529
)Research and development


151,845



135,344



16,501Acquired in-process research and development


6,500



4,000



2,500Selling, general and administrative


102,989



94,930



8,059Restructuring costs


4,454







4,454Amortization of intangibles


920



2,489



(1,569
)$
275,494


$
246,078


$
29,416   Cost
    of Goods Sold
   50




---



##### Table of Contents



Research
    and Development
      and/or
  Form 10-K, Form 10-K  EGFR-mutation
 51




---



##### Table of Contents



Acquired
    In-Process Research and Development
  epithelial-to-mesenchymal
      Selling,
    General and Administrative
    Restructuring
    Costs
  43-acre
 52




---



##### Table of Contents



Other
    Income and Expense
  Year Ended December 31,(in thousands)2009


2008


$ ChangeInvestment
    income-net

$
8,148


$
12,961


$
(4,813
)Interest expense


(27,085
)


(27,243
)


158Other income (expense)-net


(438
)


1,632



(2,070
)Total other income (expense)

$
(19,375
)

$
(12,650
)

$
(6,725
)       other-than-temporary.
  Income
    Taxes
      Income
    (Loss) from Discontinued Operations
   53




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##### Table of Contents



Years
    Ended December 31, 2008 and 2007
  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
   54




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##### Table of Contents



Tarceva-Related
    Milestones
    Other
    Revenues
        country-by-country back-up
  ®
  available-for-sale
 55




---



##### 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
  Acquired
    In-Process Research and Development
     56




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##### Table of Contents



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


(27,243
)


(14,892
)


(12,351
)Other income (expense)-net


1,632



4,170



(2,538
)Total other income

$
(12,650
)

$
2,108


$
(14,758
)     No. 470-20, 14-1, No. 470-20
  other-than-temporary.
  Income
    Taxes
   57




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##### Table of Contents



Loss from
    Discontinued Operations
    Liquidity
    and Capital Resources
        and/or
 58




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##### Table of Contents



Commitments
    and Contingencies
    Payments Due by PeriodLess than








More thanTotal


1 Year


1-3 Years


3-5 Years


5 YearsContractual Obligations:Senior convertible debt(a)

$
536,579


$
9,065


$
18,130


$
18,130


$
491,254Operating leases


90,491



8,896



17,518



16,551



47,526Purchase obligations(b)


85,400



35,100



36,700



8,600



5,000Capital commitments


481



481











Obligations related to exit activities(c)


3,734



2,537











1,197Total contractual obligations

$
716,685


$
56,079


$
72,348


$
43,281


$
544,977     (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 $60.5 million
    principal amount of the 2023 Notes; (ii) 2% per annum
    relating to the $115.0 million principal amount of the 2025
    Notes; and (iii) 3% per annum relating to the
    $160.0 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 estimated commitment related to the Tarceva
    global development costs of approximately $79 million.(c)
    
    Includes expected payments for termination benefits and
    estimated facility refurbishments. As discussed below, we
    anticipate additional payments relating to plans to consolidate
    operations.  Other
    significant commitments and contingencies not included in the
    table above include the following:
  
    As part of our purchase of the
    43-acre site
    in Ardsley, New York, which consists of approximately
    400,000 square feet of existing office and laboratory
    space, we expect to incur approximately $100 million of
    capital-related renovation costs over the next twelve months. We
    also expect to use approximately $16 million of cash over
    the next two years, which primarily relate to labor-related and
    relocation-related costs. We also expect to recognize additional
    charges over the next 6 to 12 months related to our leased
    facilities in the U.S. when these facilities cease to be
    used.
    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. These
    agreements are cancellable on short notice. 59




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##### Table of Contents




    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.
    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, 2009.  Accounting
    Pronouncements
    Forward
    Looking Statements
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  available-for-sale
    Other-than-temporary
 60




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##### Table of Contents



61




---



##### Table of Contents



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


63Consolidated Balance Sheets at December 31,
    2009 and 2008


64Consolidated Statements of Operations for the
    Years Ended December 31, 2009, 2008 and 2007


65Consolidated Statements of Stockholders
    Equity for the Years Ended December 31, 2009, 2008 and
    2007


66Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2009, 2008 and 2007


67Notes to Consolidated Financial Statements


68  62




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON THE CONSOLIDATED FINANCIAL STATEMENTS  
        14-1, 470-20,
  Internal Control  Integrated
    Framework
      63




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    DECEMBER 31, 2009 AND 2008
    (In thousands except per share data)  December 31,2009


2008ASSETSCurrent assets:Cash and cash equivalents

$
98,179


$
272,936Available-for-sale
    securities


371,410



240,328Restricted investment securities


2,306



2,247Accounts receivables  net


127,171



100,242Inventory


19,138



20,139Accrued investment income receivable


1,888



1,428Prepaid expenses and other current assets


16,137



6,719Assets related to discontinued operations


427



917Deferred tax assets


55,739



45,495Total current assets


692,395



690,451Property, equipment and leasehold improvements  net


101,544



43,443Debt issuance costs  net


2,720



5,632Goodwill


38,873



38,648Other intangible assets  net


7,638



7,711Other assets


80,505



14,591Deferred tax assets


261,697



303,727$
1,185,372


$
1,104,203LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses

$
62,293


$
49,052Unearned revenue  current


11,841



10,547Liabilities related to discontinued operations


1,238



1,522Convertible senior subordinated notes  net


107,062



Deferred tax liabilities


1,095



Total current liabilities


183,529



61,121Other liabilities:Rent obligations and deferred rent expense


4,829



8,154Unearned revenue  long-term


29,705



33,398Convertible senior subordinated notes  net


201,262



369,095Accrued post-retirement benefit cost and other


5,045



3,890Deferred tax liabilities


49,254



30,000Total liabilities


473,624



505,658Commitments and contingencies (See Note 19)Stockholders equity:Preferred stock, $.01 par value; 5,000 shares
    authorized; no shares issued at 
    December 31, 2009 and 2008






Common stock, $.01 par value; 200,000 shares
    authorized, 61,636 and 61,124 shares issued at
    December 31, 2009 and 2008, respectively


616



611Additional paid-in capital


1,787,386



1,761,179Accumulated deficit


(981,187
)


(1,057,118
)Accumulated other comprehensive income (loss)


7,152



(3,908
)813,967



700,764Less: treasury stock, at cost; 3,396 shares at
    December 31, 2009 and 2008


(102,219
)


(102,219
)Total stockholders equity


711,748



598,545$
1,185,372


$
1,104,203    64




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS
    FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
    (In thousands except per share data)  Year Ended December 31,2009


2008


2007Revenues:Tarceva-related revenues

$
358,730


$
334,653


$
267,799Other revenues


69,418



44,735



73,231Total revenues


428,148



379,388



341,030Expenses:Cost of goods sold


8,786



9,315



9,399Research and development


151,845



135,344



123,531Acquired in-process research and development


6,500



4,000



9,664Selling, general and administrative


102,989



94,930



99,159Restructuring charges


4,454







Amortization of intangibles


920



2,489



1,840Total expenses


275,494



246,078



243,593Operating income from continuing operations


152,654



133,310



97,437Other income (expense):Investment income  net


8,148



12,961



12,830Interest expense


(27,085
)


(27,243
)


(14,892
)Other income (expense)  net


(438
)


1,632



4,170Income from continuing operations before income taxes


133,279



120,660



99,545Income tax (benefit) provision


57,284



(316,049
)


2,732Net income from continuing operations


75,995



436,709



96,813Income (loss) from discontinued operations  net of tax


(64
)


4,884



(36,288
)Net income

$
75,931


$
441,593


$
60,525Basic and diluted income (loss) per common share:Basic income (loss)Continuing operations

$
1.31


$
7.62


$
1.68Discontinued operations


0.00



0.09



(0.63
)Net income

$
1.31


$
7.70


$
1.05Diluted income (loss)Continuing operations

$
1.29


$
6.93


$
1.66Discontinued operations


0.00



0.07



(0.62
)Net income

$
1.29


$
7.00


$
1.04Weighted average shares of common stock outstanding:Basic shares


57,939



57,316



57,665Diluted shares


60,452



66,911



58,333    65




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
    FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
    (In thousands)  AccumulatedAdditional





Other





TotalCommon Stock


Paid-in


Accumulated


Comprehensive


Treasury


StockholdersShares


Amount


Capital


Deficit


Income (Loss)


Stock


EquityBalance at December 31, 2006


59,179


$
592


$
1,649,030


$
(1,559,236
)

$
2,354


$
(37,221
)

$
55,519Comprehensive income:Net income














60,525











60,525Unrealized gain on investment securities  net


















486







486Curtailment of post-retirement plan


















1,316







1,316Foreign currency translation adjustment


















366







366Total comprehensive income


























62,693Stock options 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



1,690,893



(1,498,711
)


4,522



(37,221
)


160,087Comprehensive income:Net income














441,593











441,593Unrealized loss on investment securities  net


















(727
)






(727
)Post-retirement plan


















378







378Foreign currency translation adjustment


















(8,081
)






(8,081
)Total comprehensive income


























433,163Value attributed to the equity component of the 2038 Notes










35,760















35,760Stock options 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 net of share settlements










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



1,761,179



(1,057,118
)


(3,908
)


(102,219
)


598,545Comprehensive income:Net income














75,931











75,931Unrealized gain on investment securities  net


















4,957







4,957Unrealized gain on derivative instruments


















145







145Post-retirement plan


















(141
)






(141
)Foreign currency translation adjustment


















6,099







6,099Total comprehensive income


























86,991Stock options exercised


256



3



5,692















5,695Issuance of common stock under employee purchase plan and other


68







1,074















1,074Issuance of restricted stock to employees


188



2



















2Equity-based compensation expense net of share settlements










21,316















21,316Excess tax benefits from stock-based compensation










5















5Repurchase of a portion of the value attributed to the equity
    component of the 2038 Notes










(1,880
)














(1,880
)Balance at December 31, 2009


61,636


$
616


$
1,787,386


$
(981,187
)

$
7,152


$
(102,219
)

$
711,748    66




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
    (In thousands)  Year Ended December 31,2009


2008


2007Cash flow from operating activities:Net income

$
75,931


$
441,593


$
60,525Adjustments to reconcile net income to net cash provided by
    operating activities:Non-cash compensation charge


25,269



20,727



17,099Deferred tax provision


52,772



(319,221
)


Amortization of debt discount and debt issuance costs


15,093



15,182



7,657Amortization of premiums and discounts on investments


560



(1,151
)


(2,578
)Depreciation and amortization


10,056



10,501



10,608Acquired in-process research and development charge


6,500



4,000



9,664Impairment of assets


663



1,217



10,765Gain on repurchase of portion of 2023 and 2038 Notes


(776
)






Impact of inventory
    step-up
    related to inventory sold






51



2,365Loss on sale of eye disease business and non-cash impairment
    charges






14,136



Loss on sale and disposals of equipment






9



1,471Gain on sale of intellectual property










(7,892
)Changes in assets and liabilities:Accounts receivable


(25,105
)


(4,895
)


(23,262
)Inventory


1,000



536



12Prepaid expenses and other current assets


(8,740
)


2,994



(1,054
)Other assets


(4,527
)


(67
)


(1,077
)Accounts payable and accrued expenses


13,505



(12,926
)


6,038Collaboration profit share payable










(9,257
)Unearned revenue


(2,398
)


(33,616
)


(1,331
)Accrued post-retirement benefit cost and other


(43
)


(134
)


(3,944
)Net cash provided by operating activities


159,760



138,936



75,809Cash flows from investing activities:Purchases of short and long-term
    available-for-sale
    securities


(601,754
)


(337,355
)


(258,085
)Sales of short and long-term
    available-for-sale
    securities


234,136



149,141



76,012Maturities of short and long-term
    available-for-sale
    securities


237,495



88,424



211,616Additions to property, equipment and leasehold improvements


(69,178
)


(4,977
)


(4,332
)Purchase of equity investments


(56,009
)






Purchase of intellectual property (acquired in-process research
    and development)


(6,500
)


(4,886
)


(9,664
)Proceeds from sale of fixed assets


34







335Purchase of compound library assets


(47
)


(257
)


(3
)Proceeds from sale of intellectual property










4,000Purchase of intangible assets






(8,000
)


Payments made in connection with disposal of eye disease business






(1,240
)


Net cash (used in) provided by investing activities


(261,823
)


(119,150
)


19,879Cash flows from financing activities:Repurchase of a portion of the 2023 and 2038 Notes


(75,038
)


(50,050
)


Proceeds from the exercise of stock options, employee purchase
    plan, and other


6,776



17,038



26,409Employees taxes paid related to equity awards


(3,951
)


(3,233
)


(1,654
)Proceeds from the issuance of convertible senior subordinated
    notes






200,000



Debt issuance costs paid






(6,730
)


Purchase of treasury stock






(64,998
)


Excess tax benefits from stock-based compensation


5



456



Net cash (used in) provided by financing activities


(72,208
)


92,483



24,755Net increase (decrease) in cash and cash equivalents


(174,271
)


112,269



120,443Effect of exchange rate changes on cash and cash equivalents


(486
)


(2,070
)


266Cash and cash equivalents at beginning of year


272,936



162,737



42,028Cash and cash equivalents at end of year

$
98,179


$
272,936


$
162,737Cash paid for income taxes

$
2,665


$
2,108


$
1,400Cash paid for interest

$
11,548


$
9,770


$
7,175Non-cash financing and investing activities:Stock and warrants received from sale of intellectual property

$



$



$
3,892    67




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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)
    Tarceva-Related
    Revenues: Net Revenue from Unconsolidated Joint
    Business     68




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (ii)
    Royalties      (iii)
    License
    and Milestones  No. 605-25, 00-21,
      No. 605-25.
 69




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            (d)
    Research
    and Development Costs    (e)
    Acquired
    In-Process Research and Development    (f)
    Cash
    and Cash Equivalents   70




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (g)
    Investment
    Securities  available-for-sale available-for-sale available-for-sale available-for-sale
      (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 other-than-temporary other-than-temporary
  (i)
    Goodwill
    and Intangible Assets   71




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (j)
    Accounting
    for the Impairment of Long-Lived Assets and for Long-Lived
    Assets to be Disposed of  No. 360-10,
  (k)
    Inventory  work-in-process work-in-process,
  (l)
    Depreciation
    and Amortization      (m)
    Computer
    Software Costs  350-40,
 72




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (n)
    Accrual
    for Clinical Research Organization and Clinical Site
    Costs  and/or
  (o)
    Foreign
    Currency Translation  non-U.S. subsidiaries,
  (p)
    Income
    Taxes    (q)
    Capitalized
    Interest    (r)
    Change
    in Accounting Principle  No. 470-20, 14-1,
 73




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Statement of Operations Impact:

Year Ended December 31,2008


2007Increase in interest expense

$
12,963


$
6,027Decrease in debt issuance costs amortization


(479
)


(233
)Decrease in net income


(29,892
)


(5,794
)Decrease in diluted EPS

$
(0.26
)

$
(0.04
)   Balance Sheet and Stockholders Equity Impact:

As of December 31,2008


2007


2006Increase in additional
    paid-in-capital

$
67,916


$
32,156


$
32,156Decrease in retained earnings


(40,917
)


(11,025
)


(5,230
)   (s)
    Debt
    Issuance Costs    (t)
    Stock-Based
    Compensation      (u)
    Segment
    Information   74




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (v)
    Use of
    Estimates    (w)
    Subsequent
    Events  Form 10-K
  (2)
    Product
    Development, Commercialization Agreements and Licensing
    Agreements        (a)
    Genentech
    and Roche     75




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             76




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  country-by-country country-by-country
  (b)
    AVEO
    Pharmaceuticals, Inc.  epithelial-to-mesenchymal
   77




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (c)
    Eli
    Lilly  back-up country-by-country back-up
  (d)
    PhaseBio
    Pharmaceuticals, Inc.    (e)
    Simcere
    Pharmaceutical Co., Ltd.    (f)
    TGF
    ß3    (g)
    OncoVista  available-for-sale other-than-temporary,
 78




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (h)
    Patent
    Estate Licenses    (3)
    Income
    Per Share  in-the-money
    No. 470-20, 14-1,
 79




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2009


2008


2007Net income from continuing operations  basic

$
75,995


$
436,709


$
96,813Add: Interest and debt issuance cost related to convertible
    notes  net of tax


1,842



26,830



Net income from continuing operations  diluted

$
77,837


$
463,539


$
96,813Weighted-average common shares outstanding  basic


57,939



57,316



57,665Dilutive effect of options and restricted stock


554



729



668Dilutive effect of 2023 Notes


1,959



2,308



Dilutive effect of 2025 Notes






3,908



Dilutive effect of 2038 Notes






2,650



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


60,452



66,911



58,333Net income per share from continuing operations:Basic

$
1.31


$
7.62


$
1.68Diluted

$
1.29


$
6.93


$
1.66     Year Ended December 31,2009


2008


2007Common share equivalents  convertible notes


6,592







6,907Common share equivalents  equity plans


3,018



2,865



3,285Convertible note interest and debt issuance expense not added
    back under the if-converted method

$
14,137


$



$
14,652  80




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (4)
    Comprehensive
    Income  available-for-sale
  Year Ended December 31,2009


2008


2007Net income

$
75,931


$
441,593


$
60,525Other comprehensive income:Foreign currency translation adjustments


6,099



(8,081
)


366Post-retirement plan


(141
)


378



1,316Unrealized holding gains (losses) arising during period


4,957



(727
)


486Unrealized gains on derivative instruments


145







11,060



(8,430
)


2,168Total comprehensive income

$
86,991


$
433,163


$
62,693     As of December 31,2009


2008Cumulative foreign currency translation adjustment

$
2,360


$
(3,739
)Post-retirement plan


237



378Unrealized gains (losses) on
    available-for-sale
    securities


4,410



(547
)Unrealized gains on derivative instruments


145



Accumulated other comprehensive income (losses)

$
7,152


$
(3,908
)   (5)
    Fair
    Value Measurements  No. 820-10, FAS 157-4,
  Section No. 820-10-35
  Level 1
  Level 2
  Level 3
   81




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##### Table of Contents



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

Prices inReflected

Activeon the

Market

SignificantBalance

for

Other

SignificantSheet

Identical

Observable

UnobservableLine

Assets

Inputs

InputsDecember 31, 2009

Items

(Level 1)

(Level 2)

(Level 3)

TotalAssets:Cash equivalents

$
82,173


$
82,173


$



$



$
82,173Investment securities


371,410







371,410







371,410Restricted investments


2,306







2,306







2,306Other Assets-Strategic investments


46,323



46,323











46,323Other assets


1,655







1,653







1,653Derivatives (see Note 7)


323







323







323Liabilities:Derivatives (see Note 7)


88







88







882038 Notes (Face value $160,000)


140,795







146,900







146,9002025 Notes (Face value $115,000)


107,062







133,472







133,4722023 Notes (Face value $60,467)


60,467







55,441







55,441   QuotedPrices inActiveAs

Market

SignificantReflected

for

Other

Significanton the

Identical

Observable

UnobservableBalance

Assets

Inputs

InputsSheet

(Level 1)

(Level 2)

(Level 3)

TotalDecember 31, 2008Assets: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 (Face value $200,000)


169,326







161,220







161,2202025 Notes (Face value $115,000)


99,819







157,010







157,0102023 Notes (Face value $99,950)


99,950







85,407







85,407    82




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  marked-to-market. marked-to-market.
      marked-to-market
    (6)
    Investments    available-for-sale
  Unrealized


UnrealizedDecember 31, 2009

Costs


Gains


Losses


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

$
44,679


$
137


$
(5
)

$
44,811Corporate and financial institutions debt


325,700



1,107



(208
)


326,599Total investment securities


370,379



1,244



(213
)


371,410Restricted investments


2,306











2,306Strategic investments
    (available-for-sale
    equity investments)


40,254



6,069







46,323Total

$
412,939


$
7,313


$
(213
)

$
420,039   83




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##### Table of Contents



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


UnrealizedDecember 31, 2008

Costs


Gains


Losses


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

$
66,007


$
607


$



$
66,614Corporate and financial institutions debt


170,634



74



(1,247
)


169,461Municipal securities


4,237



16







4,253Total investment securities


240,878



697



(1,247
)


240,328Restricted investments


2,244



3







2,247Total

$
243,122


$
700


$
(1,247
)

$
242,575       available-for-sale other-than-temporary
    other-than-temporarily
  available-for-sale,
  Unrealized


Unrealized


FairCosts


Gains


Losses


Value2010

$
170,136


$
422


$
(22
)

$
170,5362011


177,788



773



(170
)


178,3912012


22,455



49



(21
)


22,483$
370,379


$
1,244


$
(213
)

$
371,410   (7)  Derivatives
   84




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. 820-10. Section No. 815-20-35,
        ForeignCurrencyContractsFair Value of Derivative Instruments

December 31, 2009Prepaid expenses and other current assets

$
323Accounts payable and accrued expenses

$
88Accumulated other comprehensive income (net of tax)

$
145     Income Statement

For the YearAccumulated Other Comprehensive

Classification for

EndedIncome (Loss) (Net of Taxes)

Reclassifications

December 31, 2009Opening balance as of January 1, 2009



$
Net gains recognized during the year in AOCI (effective portion)




116Losses reclassified from AOCI (effective portion)

Royalty revenue


29Gains/(losses) reclassified from AOCI because of ineffectiveness

Other income/ (expense)


Balance at December 31, 2009



$
145  85




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (8)
    Inventory  work-in-process,
    December 31,


December 31,2009


2008Raw materials

$
628


$
676Work-in-process


7,054



8,532Finished goods on hand


5,688



4,897Inventory subject to return


5,768



6,034Total inventory

$
19,138


$
20,139    86




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (9)
    Property,
    Equipment and Leasehold Improvements    Estimated Life

December 31,(years)

2009


2008Land



$
18,068


$
3,600Building and improvements

10-35


44,548



23,249Laboratory equipment

5-15


28,513



26,917Office furniture and equipment and computer equipment

3-7


13,905



13,503Capitalized software

1-3


8,103



7,114Manufacturing equipment

3-7


224



135Leasehold improvements

Shorter of lease term or
    estimated useful life


30,852



30,634Construction in progress




27,388



Total




171,601



105,152Less: accumulated depreciation and amortization




(70,057
)


(61,709
)Property, equipment and leasehold improvements, net



$
101,544


$
43,443       (10)
    Goodwill
    and Other Intangible Assets  Net     87




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    assets-net
  December 31, 2009


December 31, 2008Net








NetCarrying


Accumulated


Book





Accumulated


BookAmount


Amortization


Value


Carrying Amount


Amortization


ValueAcquired intangibles

$
10,386


$
(2,748
)

$
7,638


$
9,386


$
(1,675
)

$
7,711         (11)
    Accounts
    Payable and Accrued Expenses    December 31,2009


2008Accounts payable

$
4,423


$
6,659Accrued payroll, incentive compensation and employee benefits


12,105



11,766Accrued exit costs


1,428



492Accrued interest


2,912



3,856Accrued CRO and site costs


6,341



4,094Accrued and development costs


6,569



7,272Other accrued expenses


28,515



14,913$
62,293


$
49,052     (12)
    Consolidation
    of Facilities  Ardsley,
    New York
   88




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    18-24 months
      Year EndedDecember 31, 2009Opening balance, prepaid retention bonus

$
Cash payments and accrual for retention bonuses and relocation
    costs


12,884Amortization of paid retention bonuses and relocation costs


(2,552
)Ending balance

$
10,332   Year EndedDecember 31, 2009Opening balance

$
Accrual for severance payments


1,077Ending balance, accrued severance

$
1,077  89




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (13)
    Income
    Taxes    Year Ended December 31,2009


2008


2007Current:Federal

$
3,323


$
2,008


$
2,190State and Local


761



1,033



196Foreign


428



132



346Total

$
4,512


$
3,173


$
2,732Deferred:Federal

$
53,730


$
(286,052
)

$
State and Local


17,557



(33,170
)


Foreign


(18,515
)






Total

$
52,772


$
(319,222
)

$
Total

$
57,284


$
(316,049
)

$
2,732        90




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2009


2008


2007United States

$
108,125


$
120,696


$
87,677Foreign


25,154



(36
)


11,868Earnings before income taxes

$
133,279


$
120,660


$
99,545       Year Ended December 31,2009


2008


2007Statutory U.S. federal tax rate


35.0
%


35.0
%


35.0
%State and local taxes, net of federal benefit


6.4



0.6



0.2Foreign taxes






0.1



0.3Current utilization of NOLs and other deferred tax assets






(33.4
)


(35.1
)U.S. R&D tax credit carry forwards


(2.0
)






Equity compensation


0.5







Reversal of valuation allowance


2.5



(264.6
)


Other, net


0.6



0.4



2.2Total


43.0
%


(261.9
)%


2.6
%  91




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2009


2008Deferred tax assets:NOL carry forwards

$
270,220


$
333,443R&D tax credit carry forwards


14,874



12,115Intangible assets


9,644



11,021Unearned revenue


15,995



17,108Purchased R&D


35,827



39,498Capitalized R&D


3,436



5,278Other


44,586



27,559394,582



446,022Valuation allowance


(77,146
)


(96,801
)317,436



349,222Deferred tax liability:Depreciation


(7,523
)


(7,385
)Contingent note interest


(4,540
)


(3,479
)FSP-APB 14-1
    note amortization


(12,321
)


(17,395
)U.S. deferred tax liability related to recognition of U.K.
    deferred tax asset


(18,515
)


Other


(7,450
)


(1,741
)(50,349
)


(30,000
)$
267,087


$
319,222        92




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Balance as of December 31, 2008

$
52,048Gross decreases  tax positions in prior period


(4,156
)Gross increases  current period


690Lapse of statute of limitations


Balance as of December 31, 2009

$
48,582       United States


1992-2009United Kingdom


2007-2009New York


2000-2009Colorado


2001-2009        93




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##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (14)
    Convertible
    Senior Subordinated Notes    No. 470-20, 14-1. No. 470-20
  No. 470-20
    December 31, 2009


December 31, 2008Net Carrying








Net CarryingPrincipal


Discount


Value


Principal


Discount


Value2023 Notes  3.25%

$
60,467


$



$
60,467


$
99,950


$



$
99,9502025 Notes  2.00%


115,000



7,938



107,062



115,000



15,181



99,8192038 Notes  3.00%


160,000



19,205



140,795



200,000



30,674



169,326$
335,467


$
27,143


$
308,324


$
414,950


$
45,855


$
369,095    94




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2009


2008


20072023 NotesCash interest

$
3,096


$
3,757


$
4,875Imputed interest










Amortization of debt issuance costs






707



1,0612025 NotesCash interest


2,227



2,300



2,300Imputed interest


7,014



6,607



6,028Amortization of debt issuance costs


569



569



5692038 NotesCash interest


5,760



5,850



Imputed interest


6,401



6,356



Amortization of debt issuance costs


1,798



1,071



Total interest expense

$
26,865


$
27,217


$
14,833   (a)
    3.0% Convertible
    Senior Subordinated Notes       95




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          (b)
    2.0% Convertible
    Senior Subordinated Notes   96




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              (c)
    3.25% Convertible
    Senior Subordinated Notes     97




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          (15)
    Change in
    Accounting Principle  No. 470-20 No. 470-20
  No. 470-20
 98




---



##### Table of Contents



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








As Adjustedand








andAs Originally


Currently


Effect of


As Originally


Currently


Effect ofReported


Reported


Change


Reported


Reported


ChangeYear Ended December 31, 2008


Year Ended December 31, 2007Revenues

$
379,388


$
379,388


$



$
341,030


$
341,030


$
Operating expenses


246,078



246,078







243,593



243,593



Operating income from continuing operations


133,310



133,310







97,437



97,437



Investment income


12,961



12,961







12,830



12,830



Interest expense


(14,759
)


(27,243
)


(12,484
)


(9,098
)


(14,892
)


(5,794
)Other income (expense)  net


1,632



1,632







4,170



4,170



Income from continuing operations before income taxes


133,144



120,660



(12,484
)


105,339



99,545



(5,794
)Income tax (benefit) provision


(333,457
)


(316,049
)


17,408



2,732



2,732



Net income from continuing operations


466,601



436,709



(29,892
)


102,607



96,813



(5,794
)Loss from discontinued operations


4,884



4,884







(36,288
)


(36,288
)


Net income

$
471,485


$
441,593


$
(29,892
)

$
66,319


$
60,525


$
(5,794
)     As Adjusted








As Adjustedand








andAs Originally


Currently


Effect of


As Originally


Currently


Effect ofReported


Reported


Change


Reported


Reported


ChangeYear Ended December 31, 2008


Year Ended December 31, 2007Net income from continuing operations  basic


$466,601



$436,709



$(29,892
)


$102,607



$96,813



$(5,794
)Add: Interest and issuance costs related to convertible
    debt  net of tax


14,351



26,830



12,484



3,040







(3,040
)Net income from continuing operations  diluted


$480,952



$463,539



$(17,408
)


$105,647



$96,813



$(8,834
)Weighted average common shares outstanding  basic


57,316



57,316







57,665



57,665



Dilutive effect of options and restricted stock


729



729







668



668



Dilutive effect of 2023 Notes


2,308



2,308















Dilutive effect of 2025 Notes


3,908



3,908







3,908







(3,908
)Dilutive effect of 2038 Notes


2,650



2,650















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


66,911



66,911







62,241



58,333



(3,908
)Net income per share from continuing operations:Basic


$8.14



$7.62



$(0.52
)


$1.78



$1.68



$(0.10
)Diluted


$7.19



$6.93



$(0.26
)


$1.70



$1.66



$(0.04
)  99




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. 470-20
  As AdjustedDecember 31,


and2008


Currently


Effect ofAs Reported


Reported


ChangeCurrent assets

$
690,451


$
690,451


$
Deferred tax assets


303,727



303,727



Debt issuance costs


7,080



5,632



(1,448
)Other Assets  non current


104,393



104,393



Total assets

$
1,105,651


$
1,104,203


$
(1,448
)Current liabilities

$
61,121


$
61,121


$
Non-current liabilities


45,442



45,442



Convertible senior subordinated notes  non- current


414,950



369,095



(45,855
)Deferred tax liabilities


12,592



30,000



17,408Total liabilities


534,105



505,658



(28,447
)Common and preferred stock, net of treasury stock


(101,608
)


(101,608
)


Additional
    paid-in-capital


1,693,263



1,761,179



67,916Accumulated deficit


(1,016,201
)


(1,057,118
)


(40,917
)Accumulated other comprehensive income


(3,908
)


(3,908
)


Total stockholders equity


571,546



598,545



26,999Total liabilities and stockholders equity

$
1,105,651


$
1,104,203


$
(1,448
)   No. 470-20
  As Adjusted








As AdjustedDecember 31,


and





December 31,


and2008


Currently


Effect of


2007


Currently


Effect ofAs Reported


Reported


Change


As Reported


Reported


ChangeCommon Stock

$
611


$
611


$



$
604


$
604


$
Additional paid-in capital


1,693,263



1,761,179



67,916



1,658,737



1,690,893



32,156Accumulated deficit


(1,016,201
)


(1,057,118
)


(40,917
)


(1,487,686
)


(1,498,711
)


(11,025
)Accumulated other comprehensive income


(3,908
)


(3,908
)






4,522



4,522



Treasury stock


(102,219
)


(102,219
)






(37,221
)


(37,221
)


Total stockholders equity

$
571,546


$
598,545


$
26,999


$
138,956


$
160,087


$
21,131     (16)
    Employee
    Savings and Investment Plans   100




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  dollar-for-dollar
    (17)
    Employee
    Post-retirement Plan and Other  (a)
    Employee
    Post-retirement Plan      Year Ended December 31,2009


2008


2007Service cost for benefits earned during the period

$



$



$
337Interest cost on accumulated post-retirement benefit obligation


135



176



252Amortization of initial benefits attributed to past service










2Amortization of (gain)/loss


(32
)






6Net post-retirement benefit cost

$
103


$
176


$
597    101




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009


2008Balance at beginning of year

$
2,651


$
3,163Benefit payments


(146
)


(182
)Loss experience


109



(506
)Interest cost


135



176Balance at end of year

$
2,749


$
2,651       2009


2008


2007Discount rate


5.00
%


5.25
%


5.72
%Expected long-term rate of return on plan assets


N/A



N/A



N/A       (b)
    Sabbatical
    Leave Accrual    (c)
    Nonqualified
    Deferred Compensation Plan   102




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (18)
    Stockholders
    Equity  (a)
    Equity
    Plans        36-month 36-month
   103




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2009


2008


2007Cost of sales

$
809


$
620


$
338Research and development expenses


9,020



7,373



4,683Selling, general and administrative expenses


15,440



12,789



10,406Stock-based compensation expense

$
25,269


$
20,782


$
15,427     (b)
    Stock
    Options      Year Ended December 31,2009


2008


2007Expected dividend yield


0
%


0
%


0
%Expected volatility


47.62
%


50.20
%


46.40
%Risk-free interest rate


2.47
%


2.32
%


3.83
%Expected term (years)


5.81



5.36



4.65Per share weighted average fair value of stock options grants

$
16.67


$
15.81


$
19.26  104




---



##### 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, 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


$
39.07Granted


1,063


$
35.18Exercised


( 256
)

$
22.23Forfeitures


( 281
)

$
42.00Outstanding at December 31, 2009


6,239


$
38.97


$
6.9



4.62Exercisable at December 31, 2009


3,990


$
40.56


$
6.6



4.06Unvested at December 31, 2009


2,249


$
36.14


$
0.03



5.49     (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 for in the money stock options.      (c)
    Restricted
    Stock, Restricted Stock Units, and Deferred Stock
    Units   105




---



##### 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, 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


$
38.46Granted


580


$
35.23Vested


(338
)

$
38.59Forfeited


(78
)

$
39.03Outstanding at December 31, 2009


1,271


$
36.84   (d)
    Shareholder
    Rights Plan       106




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (e)
    Authorized
    Common and Preferred Stock    (19)
    Commitments
    and Contingencies  (a)
    Lease
    Commitments    sub-rental
  2010

$
8,8962011


8,9472012


8,5712013


8,5132014


8,0382015 and thereafter


47,526$
90,491     (b)
    Contingencies  and/or
  and/or
 107




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (20)
    Acquisitions  (a)
    7TM
    Pharma    (b)
    Acquisition
    of AdipoGenix Assets    (21)
    Eyetech
    Discontinued Operations  (a)
    Divestiture
    of Eye Disease Business        change-of-control
 108




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (b)
    (OSI)
    Eyetech Milestone Revenue and Expense    (c)
    (OSI)
    Eyetech Operating Results      Year EndedDecember 31,2009


2008


2007Net revenue

$
1,263


$
44,314


$
37,435Gain on sale of PDGF aptamer research program










6,012Loss on sale of eye disease business






(14,135
)


Operating income (loss)


(107
)


18,267



(35,797
)Pretax income (loss)


(107
)


3,582



(36,930
)Net income (loss) from discontinued operations

$
(64
)

$
4,884


$
(36,288
)    109




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2009


2008Assets:Accounts receivable

$
427


$
917Assets related to discontinued operations

$
427


$
917Liabilities:Accounts payable and accrued expenses

$
1,238


$
1,522Liabilities related to discontinued operations

$
1,238


$
1,522   (d)
    Variable
    Interest Entities      (e)
    (OSI)
    Eyetech Divestiture  Severance Costs      Year Ended December 31,2009


2008Opening liability

$
387


$
800Accrual for severance, relocation and retention bonuses


108



1,376Cash paid for severance


(180
)


(1,789
)Ending liability

$
315


$
387  110




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (22)
    Accounting
    Pronouncements  (a)
    Adopted
    Standards  No. 2009-05, No. 2009-05
  No. 320-10-65, FAS 115-2 FAS 124-2 Other-Than-Temporary other-than-temporary No. 320-10
  FAS 157-4
  14-1,
    (b)
    Recently
    Issued Standards (Not Yet Adopted)  No. 2009-13, No. 2009-13
 111




---



##### Table of Contents



OSI
    PHARMACEUTICALS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. 2009-13
  No. 2009-17,
  No. 2009-06, 2009-06 820-10.
  (23) Quarterly
    Financial Data (unaudited)
    Three Months Ended(in thousands, except per share data)March 31,


June 30,


September 30,


December 31,2009


2009


2009


2009Revenues from continuing operations

$
93,677


$
99,066


$
111,447


$
123,958Net income from continuing operations

$
16,504


$
16,508


$
17,864


$
25,119Net income

$
16,400


$
16,531


$
17,566


$
25,434Basic income per share from continuing operations

$
0.29


$
0.29


$
0.31


$
0.43Diluted income per share from continuing operations

$
0.28


$
0.28


$
0.30


$
0.42Basic net income per share

$
0.28


$
0.29


$
0.30


$
0.44Diluted net income per share

$
0.28


$
0.28


$
0.30


$
0.42   112




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##### Table of Contents



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

$
28,596


$
34,166


$
31,362


$
342,585Net income

$
26,170


$
22,247


$
51,643


$
341,533Basic income per share from continuing operations

$
0.50


$
0.60


$
0.55


$
5.95Diluted income per share from continuing operations

$
0.49


$
0.59


$
0.53


$
5.24Basic net income per share

$
0.46


$
0.39


$
0.90


$
5.93Diluted net income per share

$
0.45


$
0.39


$
0.87


$
5.22    113




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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)
 114




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control 
    Integrated Framework
        Internal Control  Integrated
    Framework
        115




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION  Form 10-K.
 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   116




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##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS
    AND FINANCIAL STATEMENT SCHEDULES                     117




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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 24, 2010/s/  COLIN
    GODDARD, Ph.D.Colin
    Goddard, Ph.D.

Director and Chief Executive Officer
    (principal executive officer)

February 24, 2010/s/  PIERRE
    LEGAULTPierre
    Legault

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

February 24, 2010/s/  SANTO
    J. COSTASanto
    J. Costa

Director

February 24, 2010/s/  JOSEPH
    KLEIN, IIIJoseph
    Klein, III

Director

February 24, 2010/s/  KENNETH
    B. LEE, Jr.Kenneth
    B. Lee, Jr.

Director

February 24, 2010/s/  VIREN
    MEHTAViren
    Mehta

Director

February 24, 2010/s/  DAVID
    W. NIEMIECDavid
    W. Niemiec

Director

February 24, 2010/s/  HERBERT
    PINEDO, M.D., Ph.D.Herbert
    Pinedo, M.D., Ph.D.

Director

February 24, 2010/s/  KATHARINE
    B. STEVENSONKatharine
    B. Stevenson

Director

February 24, 2010/s/  JOHN
    P. WHITE, ESQUIREJohn
    P. White, Esquire

Director

February 24, 2010  118




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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.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 by the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2008 (file
    no. 000-15190)
    and incorporated herein by reference.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 3.25% 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. 119




---



##### 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

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
.7

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
.8

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
.9

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
.10*

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 to
    U.S.-Based
    Executive Officers of OSI Pharmaceuticals, Inc., filed by the
    Company as an exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.10
.11*

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 to U.K.-Based Executive
    Officers of OSI Pharmaceuticals, Inc., filed by the Company as
    an exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2008 (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, to
    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, to the
    Chief Executive Officer of OSI Pharmaceuticals, Inc. (Filed
    herewith).10
.14*

Form of Non-Qualified Stock Option Agreement, issued under the
    Amended and Restated Stock Incentive Plan, as amended, to
    Dr. Anker Lundemose. (Filed herewith).10
.15*

Form of Non-Qualified Stock Option Agreement, issued under the
    Amended and Restated Stock Incentive Plan, as amended, to
    Dr. Jonathan Rachman. (Filed herewith).10
.16*

Form of Restricted Stock Unit Agreement, issued under the
    Amended and Restated Stock Incentive Plan, for grants made to
    the Chief Executive Officer and Chief Financial Officer in
    December, 2009 to
    U.S.-Based
    Executive Officers of OSI Pharmaceuticals, Inc. (Filed herewith).10
.17*

Form of Restricted Stock Unit Agreement, issued under the
    Amended and Restated Stock Incentive Plan, for grants made to
    U.S.-Based
    Executive Officers of OSI Pharmaceuticals, Inc. (Filed herewith).10
.18*

Form of Restricted Stock Unit Agreement, issued under the
    Amended and Restated Stock Incentive Plan, for grants made to
    Dr. Anker Lundemose. (Filed herewith).10
.19*

Form of Restricted Stock Unit Agreement, issued under the
    Amended and Restated Stock Incentive Plan, for grants made to
    Dr. Jonathan Rachman. (Filed herewith).10
.20*

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 (file
    no. 000-15190),
    and incorporated herein by reference. 120




---



##### Table of Contents



Exhibit10
.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 (file
    no. 000-15190),
    and incorporated herein by reference.10
.22*

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 (file
    no. 000-15190),
    and incorporated herein by reference.10
.23*

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
.24*

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
.25

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
.26

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
.27

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
.28

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
.29

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
.30

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
.31

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
.32

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
.33

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
.34

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
.35

Manufacturing and Supply Agreement, dated December 27,
    2004, by and among OSI Pharmaceuticals, Inc., Charkit Chemical
    Corporation and Sumitomo Chemical Co., Ltd., filed by the
    Company as an exhibit to the
    Form 10-Q
    for the quarter ended September 30, 2009 (file
    no. 000-15190),
    and incorporated herein by reference.10
.36

Manufacturing and Supply Agreement, dated November 10,
    2005, by and among OSI Pharmaceuticals, Inc., Davos Chemical
    Corporation and Dipharma SpA., filed by the Company as an
    exhibit to the
    Form 10-Q
    for the quarter ended September 30, 2009 (file
    no. 000-15190),
    and incorporated herein by reference. 121




---



##### Table of Contents



Exhibit10
.37

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
.38

Purchase and Sale Agreement, dated July 6, 2009, by and
    between OSI Pharmaceuticals, Inc. and Millsaw Realty L.P., filed
    by the Company as an exhibit to the
    Form 10-Q
    for the quarter ended June 30, 2009 (file
    no. 000-15190),
    and incorporated herein by reference.10
.39

Agreement relating to Windrush Court, Oxford, dated May 29,
    2009, by and between Matrix Portfolio No. 1 Limited and
    Oxford Real Estate Owner No. 2 Limited, filed by the
    Company as an exhibit to the
    Form 10-Q
    for the quarter ended June 30, 2009 (file
    no. 000-15190),
    and incorporated herein by reference.10
.40

Exclusive License Agreement, effective as of January 4,
    2007, by and 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
.41

Design-Build Agreement, dated September 22, 2009, by and
    between OSI Ardsley LLC, and Eagle Interiors Inc. (Filed
    herewith).10
.42*

Employment Agreement, dated June 14, 2006, by and 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
.43*

Amendment to Employment Agreement, dated December 18, 2008,
    by and between OSI Pharmaceuticals, Inc. and Colin
    Goddard, Ph.D., filed by the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.10
.44*

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
.45*

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.10
.46*

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
.47*

Amendment to Letter Agreement, dated December 18, 2008, by
    and between OSI Pharmaceuticals, Inc. and Robert L. Simon, filed
    by the Company as an exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.10
.48*

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
.49*

Amended Change of 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
.50*

Amendment to Change of Control Arrangement, dated
    December 18, 2008, by and between OSI Pharmaceuticals, Inc.
    and Barbara A. Wood, Esq., filed by the Company as an
    exhibit to the
    Form 10-K
    for the fiscal year ended December 31, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.10
.51*

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
.52*

Addendum to Employment Agreement, dated January 5, 2004, 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
.53*

Amendment to Employment Agreement, dated December 18, 2008,
    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 December 31, 2008 (file
    no. 000-15190),
    and incorporated herein by reference. 122




---



##### Table of Contents



Exhibit10
.54*

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
.55*

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
.56*

Amendment to Change in Control Arrangement, dated
    December 18, 2008, 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, 2008 (file
    no. 000-15190),
    and incorporated herein by reference.10
.57*

Consulting and Confidential Disclosure Agreement, dated
    October 1, 2009, between OSI Pharmaceuticals, Inc. and
    Herbert M. Pinedo, M.D., Ph.D., filed by the Company
    as an Exhibit to the
    Form 10-Q
    for the quarter ended September 30, 2009 (file
    no. 000-15190),
    and incorporated herein by reference.10
.58*

Employment Agreement, dated March 2, 2005, between
    Prosidion Limited and Dr. Jonathan Rachman. (Filed
    herewith).10
.59*

Compensatory Arrangements for Non-Employee Directors. (Filed
    herewith).10
.60*

Compensatory Arrangements for Executive Officers. (Filed
    herewith).10
.61*

Consulting and Confidential Disclosure Agreement, dated
    June 30, 2009, by and between OSI Pharmaceuticals, Inc. and
    Dr. Daryl Granner, filed by the Company as an Exhibit to the
    Form 10-Q for the quarter ended June 30, 2009 (file
    no. 000-15190) and incorporated herein by reference.10
.62*

Consulting Agreement, dated November 20, 2008, by and
    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.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 15(d)-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. 123