By Brady Huggett
In a stiff fund-raising year ¿ a year that has seen an 82 percent reduction in the amount of funds raised through public offerings ¿ ICOS Corp. pulled off the largest public stock offering in 2001, pricing 5.5 million shares at $57 and raking in $313.5 million.
With underwriters having an option for another 815,789 shares to cover overallotments, the total take could be about $360 million. Credit Suisse First Boston Corp., of New York, and Merrill Lynch, Pierce, Fenner & Smith Inc., of New York, are joint lead managers. SG Cowen Securities Corp., of New York; Banc of America Securities LLC, of New York; and Robertson Stephens Inc., of San Francisco, are co-managers.
According to BioWorld Snapshots, the $313.5 million places Bothell, Wash.-based ICOS at the top of the biotechnology public offering heap ¿ the next closest offering in size being Mountain View, Calif.-based Aviron Inc.¿s offering of 4 million shares at $50 apiece that raised $200 million. Aviron simultaneously raised another $200 million through the sale of convertible notes. (See BioWorld Today, Feb. 5, 2001.)
From the first of the year through Nov. 2, biotechnology companies raised about $3.3 billion through public offerings ¿ a far cry from the roughly $18 billion the sector raised over the same period in 2000. An offering of ICOS¿ size in this stingy atmosphere signifies the public¿s belief in the company¿s direction, said Andrew Heyward, senior vice president of research at Ragen MacKenzie Inc., of Seattle.
¿It speaks to a lot of confidence about their product, Cialis, getting to market and being a leading drug,¿ he told BioWorld Today. ¿They also have two other drugs in Phase III trials and eight drugs in the clinic. They have a lot going on for a new company.¿
Cialis, a product designed to treat erectile dysfunction, was developed through a joint venture formed by ICOS and Eli Lilly and Co., of Indianapolis, called Lilly ICOS LLC. The product was submitted for FDA review in June and is expected to battle Viagra (made by Pfizer Inc., of New York) for a share of the erectile dysfunction market. (See BioWorld Today, June 29, 2001.)
¿Viagra sold at about $1.6 billion last year [worldwide],¿ Heyward said. ¿Cialis will expand the market because it is a better drug than Viagra, in my opinion. Keep in mind that one disease that is associated with impotence is diabetes, and that is rising.¿
Heyward said the rising incidence of diabetes, plus the longer-living general population, should swell the market that Cialis, if approved, stands to enter. With those factors in play, Cialis should carve out a place in the United States both through the market¿s growth and by taking a slice of Viagra¿s action.
Monday¿s announcement of ICOS¿ in-licensing of RTX, a compound that has been tested in patients with interstitial cystitis and overactive bladder, meshes with ICOS¿ plans for Cialis. While Lilly will market Cialis to general practitioners and endocrinologists, Heyward said he expects ICOS to hire a 150-person sales force to hit the pavement selling Cialis to urologists ¿ thus the RTX deal. (See BioWorld Today, Nov. 6, 2001.)
¿ICOS is going to set up a sales force to market Cialis to urologists, so what [ICOS] wanted was another product to market to them,¿ he said. ¿If [RTX] turns out to be a successful product, ICOS will have another nice product to sell to urologists.¿
Pafase, in Phase III trials for sepsis, is another reason to get behind ICOS, Heyward said, although he softened his statements by saying he was ¿cautiously optimistic about that one.¿ He noted that ¿the Phase II was a pretty small trial¿ and discovering a successful treatment for sepsis has been notoriously difficult for the industry. ¿So you have to take those two things into account,¿ he said. Pafase is partnered with Suntory Ltd., of Japan.
ICOS¿ sitaxsentan, in a Phase II/III trial for pulmonary hypertension, has strong potential, Heyward said. The product is partnered with Texas Biotechnology Corp., of Houston.
¿The market for sitaxsentan wouldn¿t be as big as Pafase, but I think it will be a better drug than the one [Tracleer] that is awaiting approval now,¿ Heyward said. Tracleer was developed by Actelion Ltd., of Allschwil, Switzerland, and is co-promoted by Genentech Inc., of South San Francisco. Actelion has said Tracleer may reach the market by the end of the year. The developers received an approvable letter from the FDA for Tracleer in September.
ICOS¿ stock (NASDAQ:ICOS) fell $2.69 Thursday to close at $55.51.