OSI Pharmaceuticals, best known for its cancer drug Tarceva (erlotinib), is to buy Eyetech Pharmaceuticals for close on $1 billion dollars, according to a statement over the weekend. OSI wants to make a jump into eye disease treatments and, as part of this bid, will acquire all outstanding Eyetech stock at $20 per share - $15 in cash and the remainder in stock - for a total purchase price of $935 million dollars. Shareholders in Eyetech will likely be delighted at the news, as it represents a 43% premium over the firm’s stock price at market close on Friday.

Collin Goddard, OSI’s chief executive, said: “The combination of OSI and Eyetech will create a substantial biopharmaceutical company with over $600 million in projected revenues in 2006 and strong growth prospects for the future. We believe the proposed transaction will deliver scale to OSI’s current business, bring forward profitability and provide for double digit revenue growth over the next five years.”

The transaction is expected to close by the end of the year, but is subject to shareholder and regulatory approval. The combined company will concentrate on the field of oncology, eye diseases and diabetes.