Icos (NASDAQ:ICOS)
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ICOS Corporation (Nasdaq:ICOS) today released its
financial results for the three and nine months ended September 30,
2005 and summarized recent events.
Lilly ICOS LLC (Lilly ICOS), a 50/50 joint venture between ICOS
Corporation and Eli Lilly and Company that is marketing Cialis(R)
(tadalafil)(1) for the treatment of erectile dysfunction (ED),
reported 2005 third quarter net income of $19.8 million, compared to a
net loss of $21.4 million in the 2004 third quarter -- an improvement
of $41.2 million. Profitability was achieved as a result of sustained
growth in sales of Cialis around the world and reductions in marketing
and selling expenses. Worldwide sales of Cialis in the third quarter
of 2005, totaled $195.1 million, an increase of 27% compared to $154.1
million in the third quarter of 2004.
For the nine months ended September 30, 2005, Lilly ICOS reported
a net loss of $23.6 million, compared to a net loss of $230.6 million
for the nine months ended September 30, 2004. Worldwide sales of
Cialis for the first nine months of 2005, totaled $536.1 million, an
increase of 34% compared to $399.6 million in the first nine months of
2004.
Lilly ICOS recently announced positive results with tadalafil from
a double-blind, placebo-controlled clinical study in the treatment of
urinary symptoms in men with benign prostatic hyperplasia (BPH). The
Phase 2 proof-of-concept study demonstrated clinically meaningful and
statistically significant improvement in the primary endpoint, the
International Prostate Symptom Score (IPSS). In addition, tadalafil
demonstrated statistically significant improvement relative to placebo
on most of the secondary endpoints included in the study.
"We are extremely pleased with the robust results of the Phase 2
proof-of-concept study in BPH," commented Paul Clark, ICOS Chairman,
President and CEO. "In this study, a new mechanism -- a PDE5 inhibitor
-- delivered promising results that, if confirmed in Phase 3 studies,
might offer a new, once-a-day treatment of urinary symptoms for men
with BPH. For the more than 50 percent of men with BPH who also suffer
from ED, tadalafil might offer a unique profile."
David Goodkin, M.D., ICOS Senior Vice President and Chief Medical
Officer, added, "Other treatment opportunities are also being pursued
with tadalafil, including pulmonary arterial hypertension, a rare but
life-threatening disease, and hypertension, a common disorder which
dramatically increases the risk of cardiovascular complications.
Tadalafil relaxes smooth muscle cells within the walls of blood
vessels. As a result, we think tadalafil may have potential as a
once-a-day treatment for these conditions."
Financial Results
For the three months ended September 30, 2005, ICOS reported a net
loss of $11.5 million ($0.18 per share), compared to a net loss of
$26.6 million ($0.42 per share) for the three months ended September
30, 2004.
Equity in earnings of Lilly ICOS was $10.0 million in the 2005
third quarter, compared to equity in losses of $10.5 million in the
third quarter of 2004, reflecting the aforementioned $41.2 million
improvement in Lilly ICOS' results.
ICOS Corporation's total revenue was $20.8 million in the third
quarter of 2005, compared to $19.7 million in the third quarter of
2004.
Collaboration revenue from Lilly ICOS totaled $13.6 million in the
2005 third quarter, compared to $14.0 million in the corresponding
period of the prior year. The decrease primarily reflects a reduction
in Lilly ICOS' reimbursement of the cost of our sales force, from 100%
in 2004, to 60% beginning in January 2005, partially offset by higher
revenue for research and development activities conducted on behalf of
Lilly ICOS.
Co-promotion services revenue was $1.8 million in the 2005 third
quarter. We began promoting AndroGel(R) (testosterone gel) to
physicians, on behalf of Solvay Pharmaceuticals, Inc., in February
2005. We receive a fee per-sales-call, up to a maximum number of
calls. We expect to complete the remaining billable sales calls for
this year by the end of November 2005. The agreement will not be
extended into 2006.
Total operating expenses were $42.0 million for the three months
ended September 30, 2005, compared to $35.6 million for the three
months ended September 30, 2004.
Research and development expenses increased $3.5 million from the
three months ended September 30, 2004, to $21.4 million for the three
months ended September 30, 2005. The increase was primarily due to
higher expenses associated with our discovery and preclinical research
programs and incremental development activities being performed by
ICOS personnel on behalf of Lilly ICOS, partially offset by the impact
of the discontinuation of a clinical program in the 2005 first
quarter.
For the nine months ended September 30, 2005, ICOS reported a net
loss of $80.5 million ($1.26 per share), compared to a net loss of
$164.8 million ($2.60 per share) for the nine months ended September
30, 2004. The 2005 decrease is primarily due to lower Lilly ICOS
losses, partially offset by the reduced reimbursement of the cost of
our sales force.
At September 30, 2005, we had cash, cash equivalents, investment
securities and associated interest receivable of $167.8 million.
Financial Guidance
Lilly ICOS' net income for the year ending December 31, 2005, is
expected to be around $30 million, plus or minus $7 million. The level
of Cialis sales achieved is the primary variable that will affect
Lilly ICOS' results for 2005. We presently expect 2005 worldwide
Cialis net product sales around $730 million to $750 million. We also
expect Lilly ICOS' selling, general and administrative expenses to
decline, in the fourth quarter of 2005, compared to both the fourth
quarter of 2004 and the third quarter of 2005.
We presently expect that ICOS Corporation's net loss for the year
ending December 31, 2005, will be in the range of $77 million ($1.20
per share) to $82 million ($1.28 per share), assuming 2005 net income
of $30 million for Lilly ICOS.
The expected decrease in ICOS' net loss in 2005, compared to $198
million ($3.13 per share) in 2004, is primarily due to our expectation
that Lilly ICOS will be profitable in 2005, compared to Lilly ICOS
having reported a net loss of $262 million in 2004.
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 pulmonary arterial hypertension, benign
prostatic hyperplasia, 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. EST, ICOS
will host a conference call to review 2005 third quarter financial
results and related matters, including financial guidance and plans
for the remainder of 2005. The conference call can be accessed as a
webcast at www.icos.com, in the Investor/Events section, or by
telephone, using the Passcode 795469, live at 612-332-0932, or as a
replay at 320-365-3844. The webcast will be available through November
10, 2005. The telephone replay will be available until November 4,
2005 at 8:30 p.m. EST.
(1) Cialis(R) is a registered trademark of Lilly ICOS LLC.
Selected financial data follows
-0-
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ICOS Corporation and Subsidiaries
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2005 2004 2005 2004
-------- -------- -------- ---------
Condensed Consolidated
Statements of Operations:
Revenue:
Lilly ICOS collaboration $ 13,628 $ 13,958 $ 36,681 $ 42,722
Contract manufacturing 5,347 5,786 11,323 11,471
Co-promotion services 1,791 - 4,634 -
-------- -------- -------- ---------
Total revenue 20,766 19,744 52,638 54,193
-------- -------- -------- ---------
Operating expenses:
Research and development 21,435 17,933 64,943 52,723
Marketing and selling 10,871 9,827 31,854 29,730
Cost of contract
manufacturing 4,350 3,617 9,432 9,121
General and administrative 5,324 4,179 15,296 12,380
-------- -------- -------- ---------
Total operating expenses 41,980 35,556 121,525 103,954
-------- -------- -------- ---------
Operating loss (21,214) (15,812) (68,887) (49,761)
Other income (expense):
Equity in income (losses) of
Lilly ICOS 10,038 (10,528) (11,330) (114,855)
Interest expense (1,704) (1,704) (5,113) (5,120)
Interest and other income 1,426 1,444 4,867 4,935
-------- -------- -------- ---------
Net loss $(11,454) $(26,600) $(80,463) $(164,801)
======== ======== ======== =========
Net loss per common share -
basic and diluted $ (0.18) $ (0.42) $ (1.26) $ (2.60)
======== ======== ======== =========
Weighted-average common shares
outstanding - basic and
diluted 64,075 63,498 63,940 63,388
======== ======== ======== =========
Condensed Consolidated
Balance Sheets: Sept. 30, Dec. 31,
2005 2004
-------- --------
Cash, cash equivalents,
investment securities and
interest receivable $167,820 $275,769
Receivable from Lilly ICOS 20,172 15,053
Investment in Lilly ICOS 11,995 -
Property and equipment, net 18,383 19,206
Deferred financing costs and
other 14,010 14,953
-------- --------
Total assets $232,380 $324,981
======== ========
Due to Lilly ICOS $ - $ 14,147
Other current liabilities 20,490 25,656
Convertible subordinated debt 278,650 278,650
Stockholders' equity (deficit) (66,760) 6,528
-------- --------
Total liabilities and
stockholders' equity
(deficit) $232,380 $324,981
======== ========
ICOS Corporation and Subsidiaries
SUMMARIZED OPERATING RESULTS OF LILLY ICOS LLC
(in thousands)
(unaudited)
2005
------------------------------------
Q1 Q2 Q3 TOTAL
--------- -------- --------- ---------
Revenue:
Product sales,
net
United States $ 42,744 $ 71,118 $ 77,438 $191,300
Europe 56,264 60,925 61,992 179,181
Canada and
Mexico 12,186 13,839 14,727 40,752
--------- --------- --------- --------
111,194 145,882 154,157 411,233
Royalties 7,790 9,010 8,172 24,972
-------- -------- -------- --------
Total revenue 118,984 154,892 162,329 436,205
-------- -------- -------- --------
Expenses:
Cost of sales (a) 9,752 11,934 12,378 34,064
Selling, general
and
administrative 137,027 126,232 112,152 375,411
Research and
development 13,874 18,413 18,035 50,322
-------- -------- -------- --------
Total expenses 160,653 156,579 142,565 459,797
-------- -------- -------- --------
Net income
(loss)(a) $(41,669) $ (1,687) $ 19,764 $(23,592)
======== ======== ======== ========
ICOS Corporation's
share of net
income (loss) $(20,679) $ (689) $ 10,038 $(11,330)
======== ======== ======== ========
2004
--------------------------------------------------
Q1 Q2 Q3 Q4 TOTAL
---------- --------- --------- --------- ----------
Revenue:
Product sales,
net
United States $ 32,807 $ 50,768 $ 70,226 $ 52,783 $ 206,584
Europe 36,356 45,301 43,414 52,859 177,930
Canada and
Mexico 5,854 8,931 9,380 13,063 37,228
---------- --------- --------- --------- ---------
75,017 105,000 123,020 118,705 421,742
Royalties 6,652 6,449 6,210 6,809 26,120
--------- -------- -------- -------- ---------
Total revenue 81,669 111,449 129,230 125,514 447,862
--------- -------- -------- -------- ---------
Expenses:
Cost of sales (a) 6,573 8,982 10,173 10,338 36,066
Selling, general
and
administrative 195,053 157,838 123,222 130,398 606,511
Research and
development 18,827 15,119 17,203 16,169 67,318
--------- -------- -------- -------- ---------
Total expenses 220,453 181,939 150,598 156,905 709,895
--------- -------- -------- -------- ---------
Net income
(loss)(a) $(138,784) $(70,490) $(21,368) $(31,391) $(262,033)
========= ======== ======== ======== =========
ICOS Corporation's
share of net
income (loss) $ (69,237) $(35,090) $(10,528) $(15,541) $(130,396)
========= ======== ======== ======== =========
(a) Cost of sales includes $103 per month of license fee amortization
applicable only to Eli Lilly and Company's interest in Lilly ICOS
LLC.
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