By Lisa Seachrist

Washington Editor

WASHINGTON — ICOS Corp. and Eli Lilly & Co. have formed a 50-50 joint venture to develop and market phosphodiesterase type 5 (PDE5) inhibitors as an oral treatment for sexual dysfunction in men and women, with Lilly contributing $75 million up front to the effort.

ICOS, of Bothell, Wash., will provide all intellectual property associated with the lead drug candidate, IC351.

"This deal is very much like the joint venture we signed with Suntory to form Suncos," said Lacy Fitzpatrick, ICOS' manager of investor relations. "ICOS puts in the technology, and Lilly capitalizes the venture."

Early last year, ICOS formed a $30 million joint venture with Suntory Ltd., of Tokyo, to develop PAF-AH, a naturally occurring enzyme that breaks down platelet-activating factor, over-production of which is associated with inflammatory diseases. (See BioWorld Today, Jan. 17, 1997, p. 1.)

The new venture will be fully funded by Lilly for the first three years. In addition to $75 million for operating costs during the period, Lilly will provide undisclosed milestone payments to ICOS. The membership on the venture's board of directors will be split between the two companies.

After three years, ICOS and Lilly will fund the joint venture on a 50-50 basis. The venture business itself will market products resulting from the collaborative effort in the U.S. and Europe. Lilly will commercialize the products outside the U.S. and Europe, and pay a royalty to the joint venture.

ICOS has IC351, a PDE5 inhibitor, in Phase II studies in the U.S. and in Europe. PDE5 is an enzyme in smooth muscle that controls the level of cyclic GMP. Inhibiting PDE5 increases the level of cyclic GMP, allowing blood vessels to dilate.

"One of the advantages of a PDE5 inhibitor is that it is a contingent agonist," Fitzpatrick said. "There is no erection without stimulation, so men won't have the inconvenience of an unwanted erection."

Fitzpatrick said that there are several female sexual dysfunction syndromes that may be responsive to therapy with a PDE5 inhibitor. Lilly, with its progams in women's health, will play an important role in developing that aspect of the venture, she said.

ICOS originally partnered the product with Glaxo Wellcome plc, of London. That collaboration, however, dissolved approximately a 18 months ago as Glaxo sought a new direction, Fitzpatrick said.

"Our plate is so full that working with Lilly allows us to get this program moving much more quickly," Fitzpatrick said. "Lilly has such a good track record working with biotech companies that we are really pleased with the arrangement."

In addition to PDE5 inhibitors, ICOS has a humanized antibody called LeukArrest in Phase II clinical trials, testing its efficacy in combating multiple sclerosis, hemorrhagic shock, ischemic stroke and heart attack. ICM3, a humanized antibody, is in Phase I development for psoriasis. In Phase II studies is Pafase, an inflammatory mediator to treat asthma, acute respiratory distress syndrome, and pancreatitis.

ICOS' stock (NASDAQ:ICOS) closed Thursday at $19.375 up $1.625. *