Analyst Akhtar Samad says that on Monday, OSI received fast track status with the FDA for its Tarceva drug in refractory non-small cell lung cancer. Samad says OSI now plans to expand its Tarceva Phase III lung cancer trial, and downsize its Tarceva Phase III pancreatic cancer trial. He views this move as positive as he believes that Tarceva's pancreatic cancer trial poses a higher risk. He thinks the move also will allow OSI to focus on its refractory lung cancer indication.
Samad continues to view the Tarceva refractory lung trial as better designed. He maintains a roughly $20 target, based on shares trading at a multiple of 40 times his $1.59 2007 earnings per share estimate.