Eli Lilly acquired Icos in a definitive agreement between the two firms that values Icos at approximately $2.1 billion. Under the terms of the agreement, Icos shareholders will receive $32 per share in cash for all the company’s common stock. This represents a 32% premium over the average closing price of Icos’ stock over the last 90 days, according to Icos.
“When Lilly approached us with its offer, our board conducted a thorough and careful review, and unanimously concluded that this offer delivers immediate, compelling value to our shareholders,” says Paul Clark, Icos chairman, president, and CEO.
Icos and Lilly currently have a joint venture that manufactures, markets, and sells Icos’ erectile dysfunction drug, Cialis®. “We have had a very successful and productive partnership with Icos over the past eight years,” remarks Sidney Taurel, Lilly chairman and CEO. “With full ownership of Cialis, we will be able to realize operational efficiencies in the further development, marketing, and selling of this important product.”
Launched in 2003, Cialis is an oral PDE-5 inhibitor available in more than 100 countries. It is the sales leader in many of them, including France and Brazil, according to Lilly. Cialis has gained 26% of the market for erectile dysfunction in the U.S. and 36% of the aggregate European, Canadian, and Mexican market.
In the first half of 2006, Cialis grew 36% over the same period in 2005 and generated worldwide sales of $456 million. Icos expects Cialis to surpass $1 billion in worldwide sales in 2007.
“We expect this acquisition will increase the company’s earnings and earnings growth rate beginning in 2008,” says Taurel. “After a significant addition to sales in 2007, it will modestly accelerate the company’s sales growth rate thereafter.”
Tadalafil, the active pharmaceutical ingredient in Cialis, is also in Phase III trials for pulmonary arterial hypertension and Phase II trials for benign prostatic hyperplasia and hypertension. “We also look forward to further developing the commercial potential of tadalafil through the pursuit of new indications,” adds Taurel.
The transaction is expected to close around the end of 2006, subject to shareholder approval and other customary closing conditions, says Icos.