EXHIBIT 99
ICOS Corporation Reports Net Income of $6.1 Million,
Nine Cents Per Share, for 2006 Second Quarter;
2006 Expected to Be First Profitable Year in Company's History
BOTHELL, Wash.--(BUSINESS WIRE)--Aug. 3, 2006--
Guidance Raised for 2006 Worldwide Sales of Cialis(R)
(tadalafil)(1) and ICOS and Lilly ICOS Net Income
ICOS Corporation (NASDAQ:ICOS) today released its financial
results for the three and six months ended June 30, 2006 and
summarized recent events.
"ICOS achieved quarterly profitability earlier than anticipated
due to the strong sales performance of Cialis and the increased
profitability of Lilly ICOS(2)," said Paul Clark, ICOS Chairman and
CEO. "We are delighted that ICOS is now on track, for the first time
in its history, to report full-year net income in 2006."
During the second quarter of 2006, ICOS announced an exciting
opportunity to expand the commercial potential for Cialis using low
doses, once daily, to treat erectile dysfunction (ED). Lilly ICOS has
already submitted regulatory filings in Europe and Canada, and plans
to seek approval in the United States later this year.
"When Cialis was launched, our objective was to establish the
brand as a new, best-in-class alternative among the on-demand
treatments for ED," commented Leonard Blum, Senior Vice President,
Sales and Marketing. "We are proud that Lilly ICOS has built worldwide
awareness of Cialis and its unique benefits. Currently, we are
developing a daily treatment for ED and other medical conditions.
Cialis, with its extended duration of effectiveness, is well suited
for once-a-day dosing."
Tadalafil, the active pharmaceutical ingredient in Cialis, is
being evaluated as a potential once-a-day treatment for benign
prostatic hyperplasia, hypertension and pulmonary arterial
hypertension. Later this year, we expect to initiate a Phase 2b
clinical study to evaluate the efficacy and safety of tadalafil in
patients with benign prostatic hyperplasia, also known as enlarged
prostate. A Phase 2 proof-of-concept study in hypertension is expected
to conclude and provide top-line results later this year. And, patient
enrollment is continuing in a Phase 3 study designed to enroll 400
patients with pulmonary arterial hypertension, a life threatening
disease.
Financial Results
For the three months ended June 30, 2006, ICOS reported net income
of $6.1 million ($0.09 per share), compared to a proforma net loss of
$30.6 million ($0.48 per share) for the three months ended June 30,
2005.(3)
Our 50% share of Lilly ICOS earnings was $38.0 million in the
second quarter of 2006, compared to equity in losses of Lilly ICOS of
$0.7 million in the second quarter of 2005. The $38.7 million
improvement primarily reflects growth in the sales of Cialis around
the world and planned reductions in marketing and selling expenses.
For the three months ended June 30, 2006, Lilly ICOS reported net
income of $75.8 million, a $77.5 million improvement compared to the
net loss of $1.7 million reported for the 2005 second quarter. On a
sequential basis, Lilly ICOS' second quarter net income was up $10.8
million, or 17%, compared to the 2006 first quarter.
Worldwide sales of Cialis totaled $233.2 million during the 2006
second quarter, a 22% increase compared to the second quarter of 2005.
Sales of Cialis in North America and Europe totaled $182.7 million in
the second quarter of 2006, an increase of 25% compared to the
corresponding period of 2005, and up 9% compared to the 2006 first
quarter. Cialis sales in the United States were $93.8 million in the
2006 second quarter, an increase of 32% compared to the 2005 second
quarter, and up 14% compared to the first quarter of 2006.
ICOS Corporation's total revenue was $18.5 million in the second
quarter of 2006, compared to $18.1 million in the second quarter of
2005.
Collaboration revenue from Lilly ICOS totaled $15.9 million in the
2006 second quarter, compared to $12.7 million in the second quarter
of 2005. The increase primarily reflects incremental research and
development activities performed by ICOS personnel on behalf of Lilly
ICOS and reimbursable costs of 40 contract (non-employee) sales
representatives retained to promote Cialis in the U.S. beginning in
January 2006.
Co-promotion services revenue was $1.9 million in the 2005 second
quarter, representing fees earned under a co-promotion arrangement
which ended in December 2005.
Total operating expenses were $50.2 million for the three months
ended June 30, 2006, compared to proforma $48.1 million for the three
months ended June 30, 2005. The increase was primarily due to the
aforementioned research and development activities being performed on
behalf of Lilly ICOS and costs for the 40 contract sales
representatives. Operating expenses for the three months ended June
30, 2006 include $5.8 million in stock-based compensation, due to a
change in accounting for employee stock options effective January 1,
2006. Accompanying Schedules 3 and 4 provide additional information
regarding stock-based compensation expense.
For the six months ended June 30, 2006, ICOS reported net income
of $5.4 million ($0.08 per share), compared to a proforma net loss of
$84.7 million ($1.33 per share) for the six months ended June 30,
2005.(4)
At June 30, 2006, we had cash, cash equivalents, investment
securities and associated interest receivable of $179.8 million.
Financial Guidance
We are increasing our expectation for Lilly ICOS' full-year 2006
net income, from approximately $240 million, to between $265 million
and $280 million. We are increasing our guidance for expected 2006
worldwide Cialis net product sales, from approximately $900 million,
to between $920 million and $950 million. We expect that Lilly ICOS'
operating expenses will increase in the 2006 third and fourth
quarters, compared to the second quarter, reflecting planned research
and development activities and the timing of certain marketing and
selling programs.
In view of the foregoing, we are increasing our guidance for ICOS
Corporation's expected 2006 full-year results, from a net loss of
approximately $5 million ($0.08 per diluted share), to net income in
the range of $6 million to $15 million, approximately $0.09 to $0.23
per diluted share.
ICOS Corporation, a biotechnology company headquartered in
Bothell, Washington, is dedicated to bringing innovative therapeutics
to patients. Through Lilly ICOS LLC, ICOS is marketing its first
product, Cialis (tadalafil), for the treatment of erectile
dysfunction. ICOS is working to develop treatments for serious unmet
medical needs such as benign prostatic hyperplasia, hypertension,
pulmonary arterial hypertension, cancer and inflammatory diseases.
Except for historical information contained herein, this press
release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve risks and uncertainties that may
cause our results and the timing and outcome of events to differ
materially from those expressed in or implied by the forward-looking
statements, including risks associated with product commercialization,
research and clinical development, regulatory approvals,
manufacturing, collaboration arrangements, liquidity, competition,
intellectual property claims, litigation and other risks detailed in
our latest Quarterly Report on Form 10-Q and our other public filings
with the Securities and Exchange Commission.
The forward-looking statements contained in this press release
represent our judgment as of the date of this release. We undertake no
obligation to publicly update any forward-looking statements. The
biotechnology and pharmaceutical businesses are risky and there can be
no assurance that any of our products or product candidates will
achieve commercial success or that competing therapies will not
pre-empt market opportunities that might exist for any of our products
or product candidates.
Conference Call
As previously announced, today, beginning at 4:30 p.m. Eastern
Time, ICOS will host a conference call to review 2006 second quarter
financial results and related matters, including financial guidance
and plans for the remainder of 2006. The conference call can be
accessed as a webcast at www.icos.com, in the Investor/Events section,
or by telephone, using the Passcode 834085, live at (612) 332-1025, or
as a replay at (320) 365-3844. The webcast will be available until
August 10, 2006 at 5:30 p.m. Eastern Time. The telephone replay will
be available until August 4, 2006 at 8:00 p.m. Eastern Time.
NOTES:
(1) Cialis(R) is a registered trademark of Lilly ICOS LLC.
(2) Lilly ICOS LLC (Lilly ICOS) is a 50/50 joint venture between
ICOS Corporation and Eli Lilly and Company that is marketing Cialis(R)
in North America and Europe for the treatment of erectile dysfunction
(ED).
(3) Proforma net loss of $30.6 million ($0.48 per share) reflects
previously reported net loss of $22.6 million ($0.35 per share), plus
$8.0 million of proforma stock-based compensation expense as if we had
adopted the change in accounting at the beginning of 2005.
(4) Proforma net loss of $84.7 million ($1.33 per share) reflects
previously reported net loss of $69.0 million ($1.08 per share), plus
$15.7 million of proforma stock-based compensation expense as if we
had adopted the change in accounting at the beginning of 2005.
ICOS Corporation and Subsidiaries
Schedule 1 - SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
(unaudited)
Three Months Ended June 30,
---------------------------------
2005
-----------------------
Proforma As
2006 (a) Reported
--------- --------- -------------
Condensed Consolidated
Statements of Operations:
Revenue:
Lilly ICOS
collaboration $15,896 $12,693 $12,693
Contract
manufacturing 2,652 3,502 3,502
Co-promotion services - 1,893 1,893
--------- --------- ---------
Total revenue 18,548 18,088 18,088
--------- --------- ---------
Equity in earnings
(losses) of Lilly
ICOS 38,040 (689) (689)
--------- --------- ---------
Operating expenses:
Research and
development 25,749 24,514 21,295
Marketing and selling 13,074 11,652 10,549
Cost of contract
manufacturing 2,999 3,596 3,231
General and
administrative 8,368 8,292 4,967
--------- --------- ---------
Total operating
expenses 50,190 48,054 40,042
--------- --------- ---------
Operating
income
(loss) 6,398 (30,655) (22,643)
Other income
(expense):
Interest expense (1,705) (1,705) (1,705)
Interest and other
income 1,757 1,723 1,723
--------- --------- ---------
Income (loss) before
income taxes 6,450 (30,637) (22,625)
Provision for income
taxes 375 - -
--------- --------- ---------
Net income (loss) $6,075 $(30,637) $(22,625)
========= ========= =========
Net income (loss) per
common share - basic $0.09 $(0.48) $(0.35)
========= ========= =========
Net income (loss) per
common share -
diluted $0.09 $(0.48) $(0.35)
========= ========= =========
Weighted average
common shares
outstanding - basic 64,478 63,941 63,941
========= ========= =========
Weighted average
common shares
outstanding - diluted 65,034 63,941 63,941
========= ========= =========
Six Months Ended June 30,
-------------------------------
2005
---------------------
Proforma As
2006 (a) Reported
--------- --------- -----------
Condensed Consolidated
Statements of Operations:
Revenue:
Lilly ICOS
collaboration $30,872 $23,053 $23,053
Contract
manufacturing 6,403 5,976 5,976
Co-promotion services - 2,843 2,843
-------- --------- ---------
Total revenue 37,275 31,872 31,872
-------- --------- ---------
Equity in earnings
(losses) of Lilly
ICOS 70,676 (21,368) (21,368)
-------- --------- ---------
Operating expenses:
Research and
development 51,568 50,065 43,508
Marketing and selling 26,630 23,240 20,983
Cost of contract
manufacturing 6,789 5,738 5,082
General and
administrative 16,935 16,204 9,972
-------- --------- ---------
Total operating
expenses 101,922 95,247 79,545
-------- --------- ---------
Operating
income
(loss) 6,029 (84,743) (69,041)
Other income
(expense):
Interest expense (3,409) (3,409) (3,409)
Interest and other
income 3,177 3,441 3,441
-------- --------- ---------
Income (loss) before
income taxes 5,797 (84,711) (69,009)
Provision for income
taxes 375 - -
-------- --------- ---------
Net income (loss) $5,422 $(84,711) $(69,009)
======== ========= =========
Net income (loss) per
common share - basic $0.08 $(1.33) $(1.08)
======== ========= =========
Net income (loss) per
common share -
diluted $0.08 $(1.33) $(1.08)
======== ========= =========
Weighted average
common shares
outstanding - basic 64,399 63,870 63,870
======== ========= =========
Weighted average
common shares
outstanding - diluted 65,117 63,870 63,870
======== ========= =========
Condensed Consolidated Balance Sheets:
June 30, December 31,
2006 2005
--------- ---------
Cash, cash equivalents,
investment securities and
interest receivable $179,762 $162,782
Receivable from Lilly ICOS 16,346 14,300
Investment in Lilly ICOS 39,796 35,497
Property and equipment, net 18,593 17,995
Deferred financing costs
and other 11,638 11,193
--------- ---------
Total assets $266,135 $241,767
========= =========
Current liabilities $23,404 $22,387
Convertible subordinated debt 278,650 278,650
Stockholders' deficit (35,919) (59,270)
--------- ---------
Total liabilities
and stockholders'
deficit $266,135 $241,767
========= =========
(a) Effective January 1, 2006, we adopted Statement of Financial
Accounting Standards No. 123 (revised 2004), "Share-Based Payment"
(FAS 123R) and began recognizing expense for all stock options.
2005 proforma amounts reflect our results of operations as if we
had applied the provisions of FAS 123R beginning January 1, 2005.
See also accompanying Schedules 3 and 4.
ICOS Corporation and Subsidiaries
Schedule 2 - SUMMARIZED OPERATING RESULTS OF LILLY ICOS LLC
(in thousands)
(unaudited)
2006
---------------------------
Q1 Q2 Total
-------- -------- ---------
Revenue:
Product sales, net
United States $82,537 $93,779 $176,316
Europe 67,586 71,374 138,960
Canada and Mexico 17,151 17,508 34,659
-------- -------- ---------
167,274 182,661 349,935
Royalties 11,088 11,642 22,730
-------- -------- ---------
Total revenue 178,362 194,303 372,665
-------- -------- ---------
Expenses:
Cost of sales (a) 13,382 14,370 27,752
Selling, general and
administrative 86,517 90,342 176,859
Research and
development 13,502 13,820 27,322
-------- -------- ---------
Total expenses 113,401 118,532 231,933
-------- -------- ---------
Net income (loss) $64,961 $75,771 $140,732
======== ======== =========
ICOS Corporation's
share of net
income (loss) $32,636 $38,040 $70,676
======== ======== =========
(a) Cost of sales includes $103 per month of license fee
amortization applicable only to Eli Lilly and Company's interest
in Lilly ICOS.
2005
-------------------------------------------
Q1 Q2 Q3 Q4 Total
------- ------- ------- ------- -------
Revenue:
Product sales,
net
United States $42,744 $71,118 $77,438 $81,615 $272,915
Europe 56,264 60,925 61,992 65,311 244,492
Canada and
Mexico 12,186 13,839 14,727 18,575 59,327
--------- -------- -------- -------- ---------
111,194 145,882 154,157 165,501 576,734
Royalties 7,790 9,010 8,172 8,997 33,969
--------- -------- -------- -------- ---------
Total revenue 118,984 154,892 162,329 174,498 610,703
--------- -------- -------- -------- ---------
Expenses:
Cost of sales (a) 9,752 11,934 12,378 13,200 47,264
Selling, general
and
administrative 137,027 126,232 112,152 84,416 459,827
Research and
development 13,874 18,413 18,035 15,494 65,816
--------- -------- -------- -------- ---------
Total expenses 160,653 156,579 142,565 113,110 572,907
--------- -------- -------- -------- ---------
Net income
(loss) $(41,669) $(1,687) $19,764 $61,388 $37,796
========= ======== ======== ======== =========
ICOS Corporation's
share of net
income (loss) $(20,679) $(689) $10,038 $30,849 $19,519
========= ======== ======== ======== =========
(a) Cost of sales includes $103 per month of license fee
amortization applicable only to Eli Lilly and Company's interest
in Lilly ICOS.
ICOS Corporation and Subsidiaries
Schedule 3 - TOTAL STOCK-BASED COMPENSATION EXPENSE
(in thousands)
(unaudited)
The following table presents stock-based compensation expense for
2006 as reported, 2005 as reported and 2005 proforma as if ICOS had
applied FAS 123R during that year.
2006
------------------------
Q1 Q2 Total
------- ------- --------
As reported
Stock options $6,487 $5,766 $12,253
Restricted shares 1,121 1,285 2,406
Restricted stock units 203 265 468
------- ------- --------
7,811 7,316 15,127
------- ------- --------
Proforma adjustments
Stock options - - -
Restricted shares - - -
Restricted stock units - - -
------- ------- --------
- - -
------- ------- --------
Total (2006 as reported;
2005 proforma)
Stock options 6,487 5,766 12,253
Restricted shares 1,121 1,285 2,406
Restricted stock units 203 265 468
------- ------- --------
$7,811 $7,316 $15,127
======= ======= ========
2005
---------------------------------------
Q1 Q2 Q3 Q4 Total
------ ------ ------ ------ -------
As reported
Stock options $ - $ - $ - $ - $ -
Restricted shares - - 946 1,167 2,113
Restricted stock units - - - - -
------- ------- ------- ------- --------
- - 946 1,167 2,113
------- ------- ------- ------- --------
Proforma adjustments
Stock options 7,690 8,012 7,876 7,679 31,257
Restricted shares - - - - -
Restricted stock units - - - - -
------- ------- ------- ------- --------
7,690 8,012 7,876 7,679 31,257
------- ------- ------- ------- --------
Total (2006 as
reported; 2005 proforma)
Stock options 7,690 8,012 7,876 7,679 31,257
Restricted shares - - 946 1,167 2,113
Restricted stock units - - - - -
------- ------- ------- ------- --------
$7,690 $8,012 $8,822 $8,846 $33,370
======= ======= ======= ======= ========
ICOS Corporation and Subsidiaries
Schedule 4 - ALLOCATION OF TOTAL STOCK-BASED COMPENSATION EXPENSE
(in thousands)
(unaudited)
The following table presents the allocation of stock-based
compensation expense for 2006 as reported, 2005 as reported and 2005
proforma as if ICOS had applied FAS 123R during that year.
2006
------------------------
Q1 Q2 Total
------- ------- --------
As reported
Research and development $3,178 $2,963 $6,141
Marketing and selling 1,064 1,031 2,095
Cost of contract manufacturing 282 278 560
General and administrative 3,287 3,044 6,331
------- ------- --------
7,811 7,316 15,127
------- ------- --------
Proforma adjustments
Research and development - - -
Marketing and selling - - -
Cost of contract manufacturing - - -
General and administrative - - -
------- ------- --------
- - -
------- ------- --------
Total (2006 as reported; 2005
proforma)
Research and development 3,178 2,963 6,141
Marketing and selling 1,064 1,031 2,095
Cost of contract manufacturing 282 278 560
General and administrative 3,287 3,044 6,331
------- ------- --------
$7,811 $7,316 $15,127
======= ======= ========
2005
------------------------------------
Q1 Q2 Q3 Q4 Total
------ ------ ------ ------ ------
As reported
Research and
development $ - $ - $ 487 $ 602 $ 1,089
Marketing and selling - - 96 116 212
Cost of contract
manufacturing - - 45 70 115
General and administrative - - 318 379 697
------- ------ ------ ------ -------
- - 946 1,167 2,113
------- ------ ------ ------ -------
Proforma adjustments
Research and
development 3,338 3,219 3,081 2,930 12,568
Marketing and selling 1,154 1,103 1,067 1,054 4,378
Cost of contract
manufacturing 291 365 376 417 1,449
General and
administrative 2,907 3,325 3,352 3,278 12,862
------- ------ ------ ------ -------
7,690 8,012 7,876 7,679 31,257
------- ------ ------ ------ -------
Total (2006 as
reported; 2005
proforma)
Research and
development 3,338 3,219 3,568 3,532 13,657
Marketing and selling 1,154 1,103 1,163 1,170 4,590
Cost of contract
manufacturing 291 365 421 487 1,564
General and
administrative 2,907 3,325 3,670 3,657 13,559
------- ------ ------ ------ -------
$7,690 $8,012 $8,822 $8,846 $33,370
======= ====== ====== ====== =======
CONTACT: ICOS Corporation
Lacy Fitzpatrick, 425-415-2207