Exhibit 99
ICOS Corporation Reports Net Income
of $9.7 Million, Fifteen Cents Per Share, for 2006 Third Quarter
BOTHELL, Wash.--(BUSINESS WIRE)--Nov. 2, 2006--ICOS Corporation
(Nasdaq:ICOS) today released its financial results for the three and
nine months ended September 30, 2006, and summarized recent events.
For the three months ended September 30, 2006, ICOS reported net
income of $9.7 million ($0.15 per share), compared to a proforma net
loss of $19.3 million ($0.30 per share) for the three months ended
September 30, 2005.(1)
Lilly ICOS'(2) 2006 third quarter net income grew to $79.6
million, compared to $19.8 million in the 2005 third quarter.
Worldwide sales of Cialis(3) in the third quarter of 2006 totaled
$245.6 million, an increase of 26% compared to $195.1 million in the
third quarter of 2005.
During the third quarter of 2006, Lilly ICOS initiated a
double-blind, placebo-controlled Phase 2b clinical study to evaluate
tadalafil (the active ingredient in Cialis) as a potential treatment
for the symptoms of benign prostatic hyperplasia (BPH). Patients in
the study are to be administered one of four doses of tadalafil or
placebo, once-a-day for 12 weeks. The study is designed to enroll more
than 1,000 patients and may serve as a pivotal study to support
regulatory filings seeking approval of tadalafil for the treatment of
BPH.
Patient enrollment is progressing on schedule in a 400 patient,
multi-national Phase 3 study evaluating the efficacy and safety of
tadalafil in treating patients with pulmonary arterial hypertension.
Later this year, Lilly ICOS expects to file, with the FDA, for an
expanded indication for Cialis, as a once-a-day treatment for men with
erectile dysfunction. Regulatory filings for Cialis, as a once-a-day
treatment for erectile dysfunction, occurred in Europe and Canada in
mid-2006.
A Lilly ICOS proof-of-concept Phase 2 study, in hypertension, was
recently completed, in which 180 patients were dosed once-a-day with 5
mg tadalafil, 20 mg tadalafil, or placebo, for eight weeks. The
results were consistent with results previously reported from clinical
pharmacology studies conducted for the ED indication. Patients in the
5 mg tadalafil group had a mean blood pressure decline of 5.5/7.5 mm
Hg. Patients in the 20 mg tadalafil group had a mean blood pressure
decline of 5.5/8.3 mm Hg. Results at both doses were statistically
significantly better than the mean 2.1/3.0 mm Hg decrease noted among
patients in the placebo group. Treatment was well tolerated by the men
and women in the study. Dyspepsia and headache were the most frequent
adverse events. The magnitude of reduction in blood pressure induced
by tadalafil in this clinical trial would likely be insufficient for
tadalafil to compete successfully in the broad hypertension
marketplace for first line therapy. Lilly ICOS is considering next
steps for this program.
Our 50% share of Lilly ICOS earnings was $40.0 million in the
third quarter of 2006, compared to $10.0 million in the third quarter
of 2005. The $30.0 million improvement primarily reflects growth in
the sales of Cialis around the world and planned reductions in
marketing and selling expenses.
ICOS Corporation's total revenue was $20.6 million in the third
quarter of 2006, compared to $20.8 million in the third quarter of
2005.
Collaboration revenue from Lilly ICOS totaled $16.4 million in the
2006 third quarter, compared to $13.6 million in the third quarter of
2005. The increase primarily reflects 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 $1.8 million in the 2005 third
quarter, representing fees earned under a co-promotion arrangement
which ended in December 2005.
Total operating expenses were $51.3 million for the three months
ended September 30, 2006, compared to proforma $49.9 million for the
three months ended September 30, 2005. Operating expenses for the
three months ended September 30, 2006 include $5.4 million in stock
option expense, due to a change in accounting for employee stock
options effective January 1, 2006. On a proforma basis, operating
expenses for the three months ended September 30, 2005 include $7.9
million in stock option expense.
For the nine months ended September 30, 2006, ICOS reported net
income of $15.1 million ($0.23 per share), compared to a proforma net
loss of $104.0 million ($1.63 per share) for the nine months ended
September 30, 2005.(4)
At September 30, 2006, we had cash, cash equivalents, investment
securities and associated interest receivable of $187.8 million.
On October 17, 2006, ICOS announced that it had entered into an
Agreement and Plan of Merger with Eli Lilly and Company, whereby Lilly
will acquire all of the outstanding stock of ICOS for a purchase price
of $32 per share in cash. Closing of the transaction is expected
around 2006 year-end, subject to approval by the shareholders of ICOS
and other customary closing conditions.
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.
Where to Find Additional Information About the Proposed
Acquisition by Eli Lilly and Company
A special shareholder meeting will be announced soon to obtain
shareholder approval of the proposed transaction. ICOS intends to file
with the Securities and Exchange Commission (SEC) a proxy statement
and other relevant documents in connection with the proposed
transaction. Investors of ICOS are urged to read the definitive proxy
statement and other relevant materials when they become available
because they will contain important information about ICOS, Lilly and
the proposed transaction. Investors may obtain a free copy of these
materials (when they are available) and other documents filed by ICOS
with the SEC at the SEC's website at www.sec.gov, at ICOS
Corporation's website at www.ICOS.com or by sending a written request
to ICOS Corporation at 22021 20th Avenue SE, Bothell, Washington
98021, Attention: Corporate Secretary.
ICOS and its directors, executive officers and certain other
members of management and employees may be deemed to be participants
in soliciting proxies from its shareholders in favor of the proposed
merger. Information regarding the persons who may, under the rules of
the SEC, be considered to be participants in the solicitation of ICOS'
shareholders in connection with the proposed transaction will be set
forth in ICOS' proxy statement for its special meeting. Additional
information regarding these individuals and any interest they have in
the proposed transaction will be set forth in the definitive proxy
statement when it is filed with the SEC.
(1) Proforma net loss of $19.3 million ($0.30 per share) reflects
previously reported net loss of $11.4 million ($0.18 per share), plus
$7.9 million of proforma stock option expense as if we had adopted FAS
123R at the beginning of 2005.
(2) Lilly ICOS LLC (Lilly ICOS) is a 50/50 joint venture between
ICOS Corporation and Eli Lilly and Company that is marketing Cialis in
North America and Europe.
(3) Cialis(R) is a registered trademark of Lilly ICOS LLC.
(4) Proforma net loss of $104.0 million ($1.63 per share) reflects
previously reported net loss of $80.4 million ($1.26 per share), plus
$23.6 million of proforma stock option expense as if we had adopted
FAS 123R 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 September 30,
--------------------------------
2005
--------------------
Proforma As
2006 (a) Reported
--------------------------------
Condensed Consolidated
Statements of Operations:
Revenue:
Lilly ICOS collaboration $ 16,375 $ 13,628 $ 13,628
Contract manufacturing 4,265 5,347 5,347
Co-promotion services - 1,791 1,791
----------- --------- ---------
Total revenue 20,640 20,766 20,766
----------- --------- ---------
Equity in earnings (losses) of Lilly
ICOS 39,974 10,038 10,038
----------- --------- ---------
Operating expenses:
Research and development 25,343 24,516 21,435
Marketing and selling 13,168 11,938 10,871
Cost of contract manufacturing 4,641 4,726 4,350
General and administrative 8,121 8,676 5,324
----------- --------- ---------
Total operating expenses 51,273 49,856 41,980
----------- --------- ---------
Operating income (loss) 9,341 (19,052) (11,176)
Other income (expense):
Interest expense (1,704) (1,704) (1,704)
Interest and other income 2,302 1,426 1,426
----------- --------- ---------
Income (loss) before income taxes 9,939 (19,330) (11,454)
Provision for income taxes 220 - -
----------- --------- ---------
Net income (loss) $ 9,719 $ (19,330) $(11,454)
=========== ========= =========
Net income (loss) per common share -
basic and diluted $ 0.15 $ (0.30) $ (0.18)
=========== ========= =========
Weighted average common shares
outstanding - basic 64,552 64,075 64,075
=========== ========= =========
Weighted average common shares
outstanding - diluted 65,223 64,075 64,075
=========== ========= =========
Nine Months Ended September 30,
--------------------------------
2005
--------------------
Proforma As
2006 (a) Reported
--------------------------------
Condensed Consolidated
Statements of Operations:
Revenue:
Lilly ICOS collaboration $ 47,247 $ 36,681 $ 36,681
Contract manufacturing 10,668 11,323 11,323
Co-promotion services - 4,634 4,634
------------ --------- ---------
Total revenue 57,915 52,638 52,638
------------ --------- ---------
Equity in earnings (losses) of Lilly
ICOS 110,650 (11,330) (11,330)
------------ --------- ---------
Operating expenses:
Research and development 76,911 74,581 64,943
Marketing and selling 39,798 35,178 31,854
Cost of contract manufacturing 11,430 10,464 9,432
General and administrative 25,056 24,880 15,296
------------ --------- ---------
Total operating expenses 153,195 145,103 121,525
------------ --------- ---------
Operating income (loss) 15,370 (103,795) (80,217)
Other income (expense):
Interest expense (5,113) (5,113) (5,113)
Interest and other income 5,479 4,867 4,867
------------ --------- ---------
Income (loss) before income taxes 15,736 (104,041) (80,463)
Provision for income taxes 595 - -
------------ --------- ---------
Net income (loss) $ 15,141 $(104,041) $(80,463)
============ ========= =========
Net income (loss) per common share -
basic and diluted $ 0.23 $ (1.63) $ (1.26)
============ ========= =========
Weighted average common shares
outstanding - basic 64,450 63,940 63,940
============ ========= =========
Weighted average common shares
outstanding - diluted 65,165 63,940 63,940
============ ========= =========
Condensed Consolidated Balance Sheets: September 30, December 31,
2006 2005
-------------- -------------
Cash, cash equivalents,
investment securities and
interest receivable $ 187,805 $ 162,782
Receivable from Lilly ICOS 22,138 14,300
Investment in Lilly ICOS 46,502 35,497
Property and equipment, net 18,269 17,995
Deferred financing costs and other 9,921 11,193
-------------- -------------
Total assets $ 284,635 $ 241,767
============== =============
Current liabilities $ 23,600 $ 22,387
Convertible subordinated debt 278,650 278,650
Stockholders' deficit (17,615) (59,270)
-------------- -------------
Total liabilities and stockholders'
deficit $ 284,635 $ 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.
ICOS Corporation and Subsidiaries
Schedule 2 - SUMMARIZED OPERATING RESULTS OF LILLY ICOS LLC
(in thousands)
(unaudited)
2006
------------------------------------
Q1 Q2 Q3 Total
-------- -------- -------- ---------
Revenue:
Product sales, net
United States $82,537 $93,779 $94,946 $271,262
Europe 67,586 71,374 75,427 214,387
Canada and Mexico 17,151 17,508 20,205 54,864
-------- -------- -------- ---------
167,274 182,661 190,578 540,513
Royalties 11,088 11,642 11,008 33,738
-------- -------- -------- ---------
Total revenue 178,362 194,303 201,586 574,251
-------- -------- -------- ---------
Expenses:
Cost of sales (a) 13,382 14,370 15,031 42,783
Selling, general and
administrative 86,517 90,342 91,830 268,689
Research and development 13,502 13,820 15,087 42,409
-------- -------- -------- ---------
Total expenses 113,401 118,532 121,948 353,881
-------- -------- -------- ---------
Net income (loss) $64,961 $75,771 $79,638 $220,370
======== ======== ======== =========
ICOS Corporation's share of net
income (loss) $32,636 $38,040 $39,974 $110,650
======== ======== ======== =========
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.
CONTACT: ICOS Corporation
Lacy Fitzpatrick, 425-415-2207