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Icos sees new market for Cialis: Drug may ease prostate problems

By Luke Timmerman
Seattle Times business reporter

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In its quarterly-earnings report yesterday, Icos said all the things Wall Street likes to hear: Its erectile-dysfunction drug Cialis is grabbing market share away from Viagra; its marketing plan is on budget; and the company plans to test the drug as a treatment for a condition that affects a large group of aging men.

The only part of the report that surprised analysts was the potential new use of Cialis. Many expected the Bothell biotech company and its partner Eli Lilly to tangle with Viagra on a second front — a treatment for pulmonary hypertension. Both drugs work by relaxing blood vessels and increasing blood flow.

ICOS RESULTS
Figures in parentheses are losses
1st qtr	Mar. 31, 2004	2003	% Chg
Profit	($86,303,000)	($41,104,000)	-110
Per share	(1.36)	(0.65)	-109
Sales	16,523,000	7,081,000	+133

The company also reported a number of other items:

• Cialis' market share among erectile-dysfunction drugs climbed to 12.1 percent for the week ending April 23, surpassing rival Levitra's 10.7 percent, according to market-research firm IMS Health.

• Icos affirmed its 2004 financial forecasts. It expects to lose $192 million to $215 million this year, or $3 to $3.35 a share. It still expects $500 million to $600 million in worldwide Cialis sales this year.

• About half of American men are aware of Cialis after three months of the ad campaign, compared with the roughly 100 percent name recognition of Viagra. Because of those gains, Icos said it doesn't need to run as many long TV commercials to introduce the drug and can run shorter, cheaper commercials to keep name-brand visibility high.

Charles Hill, a professor at the University of Washington School of Business, said the recent announcement by Viagra-maker Pfizer of a "buy six, get one free" program, is a concern. It could increase the overall size of the market or ignite a higher-stakes marketing battle or price war that could erode profits for all impotence-drug makers, Hill said.

"I wonder if Pfizer has come to the conclusion that Cialis is a better drug and they will have to fight hard to maintain their market," Hill said. "Cialis may not become as profitable as people think."

Dr. Fred Govier, head of urology at Virginia Mason Medical Center in Seattle, said he was surprised by the new potential use of Cialis.

The current standard of prostate-enlargement treatment, alpha-blockers, are safe, effective and typically cost $1 or $2 a pill. Erectile-dysfunction drugs cost $8 to $10 a pill.

"The ideal would be to have one pill that would treat your (prostate enlargement) and (erectile dysfunction) in one fell swoop," said Govier, who owns Icos and Pfizer stock.

"I suppose that would appeal to a lot of men."

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com

Copyright © 2004 The Seattle Times Company

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