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Aggressive goals set by Icos are hitting the mark

By Luke Timmerman
Seattle Times business reporter

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The Bothell biotech company said yesterday in its third-quarter report that Cialis sales are climbing, spending on marketing and administration is shrinking, and company profits appear to be on the horizon for the second half of 2006.

The U.S. market share of impotence drugs remained relatively stable, with Cialis at 17 percent in September, a distant second behind Viagra.

On a conference call with analysts, Icos delivered no revelations but described some incremental progress. It said it raised the wholesale price of Cialis 6 percent at the end of September, so that at $9.02 per pill, it is slightly more expensive than Viagra and Levitra.

To widen the Cialis market, the company said it has begun enrolling patients in a clinical trial of men with enlarged prostates.

In a testament to its extensive advertising, the company said that in the drug's first year on the U.S. market, 78 percent of men with erectile dysfunction recognize the name when prompted, compared with 99 percent who recognize Viagra.

Cialis had $154 million in worldwide sales in the third quarter, up from $137 million the previous quarter and from $108 million the quarter before that.

Mike Stein, chief financial officer, said $550 million in worldwide Cialis sales this year "may be a bit conservative," suggesting sales should fall in the higher end of the predicted range of $500 million to $600 million this year.

Largely because of the frenzied spending on marketing required to produce those sales, Icos had predicted it would lose $192 million to $215 million this year. Yesterday, Stein said he now expects losses to be on the lower end of the forecast, at $193 million to $203 million.

The company's stock has languished, down 45 percent this year, but Icos pointed toward some future catalytic events.

For instance, Chief Executive Paul Clark said, a second drug candidate is in midstage testing for chronic obstructive pulmonary disease, and results could be available in the first half of next year.
 
The company intends to put one or two experimental drugs into human testing in the next 12 months, but Clark acknowledged when questioned by an analyst that those efforts have faced some delays this year. Clark also said the company is continually looking at buying rights to develop a drug from another company.

Paul Latta, an analyst with McAdams Wright Ragen, who doesn't own Icos stock, said the quarter was solid, partly because marketing spending is on the decline. "People can begin to smell profits," Latta said.

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

Icos' results
Figures in parentheses are losses.
	Sept. 30		%
3rd QTR	2004	2003	CHG
Profit	($26,600,000)	($39,309,000)	+32.3
Per share	(0.42)	(0.63)	+33.3
Sales	19,744,000	12,103,000	+63.1
9 Months 2004		2003	CHG
Profit	($164,801,000)	($91,349,000)	-80.4
Per share	(2.60)	(1.46)	-78.0
Sales	54,193,000	45,891,000	+18.1