By Lisa Seachrist
Washington Editor
WASHINGTON--ICOS Corp. said its research and development affiliate, ICOS Clinical Partners L.P., netted $23.4 million in its second sale of interests in the partnership to private investors.
In total, the partnership has raised $87.5 million to fund clinical development of the Bothell, Wash.-based company's product candidates: Hu23F2G, rPAF-AH and ICM3. ICOS also will receive approximately $26.2 million over three years as the result of the two sales.
"This is just a wonderful way of supporting your own products while maintaining control over them and participating in the marketplace," said Lacy Fitzpatrick, ICOS' manager of investor relations. "If we had formed a collaboration with a major pharmaceutical company, we would have lost a lot of control over the products."
In connection with the initial sale of interests in the partnership, ICOS issued the investors warrants to purchase an aggregate of 5,539,800 shares of ICOS common stock at a price of $9.13 per share. ICOS intends to issue warrants for another 7,548,400 shares in July 1999 that may be exercised over the next five years at a price to be determined at the time of issuance, which is expected to be a 25 percent premium over the prevailing market price for ICOS stock.
In connection with this most recent sale, ICOS issued warrants to the investors in ICOS Clinical Partners to purchase an aggregate of 2,008,600 shares of ICOS common stock. The warrants may be exercised between October 1998 and May 2002 at an exercise price of $10.35 per share--a 25 percent premium above recent share prices.
The company established the limited R&D partnership as a response to the increasing number of clinical trials it is conducting.
Cell Adhesion Antibody In Phase II Trials
The company's most advanced product is a humanized monoclonal antibody, Hu23F2G, designed to block cell adhesion molecules, which is in Phase II trials for treatment of multiple sclerosis, to prevent organ damage during hemorrhagic shock, and to prevent heart muscle damage after a heart attack.
By blocking cell adhesion molecules, Hu23F2G can prevent the movement of neutrophils, or white blood cells, from the bloodstream into tissues during inflammatory responses--a process that can destroy tissues and organs.
The company is conducting a Phase II trial of rPAF-AH to treat acute respiratory distress syndrome (ARDS). The drug is an enzyme that works by checking PAF, an inflammatory mediator associated with asthma and ARDS. The drug also is in Phase II trials for pancreatitis and asthma.
"Based on the outcomes of these Phase II trials, we hope to be going into Phase III in 1998," Fitzpatrick said.
The company has a third product, ICM3, in Phase I development for the treatment of psoriasis. ICM3 is a monoclonal antibody aimed at cell surface proteins known as ICAM-3, which is thought to be involved at the very earliest stages of T cell activation and is an attractive target for early intervention in T cell-mediated inflammatory diseases.
Ten percent of the private placement was purchased by investors with links to the company. Purchases by ICOS chairman, president and CEO George Rathmann and Microsoft chairman Bill Gates--a member of the ICOS board and principal investor in the company--represented the bulk of that ten percent.
Excluding the Japanese market, ICOS retains worldwide rights to Hu23F2G and ICM3 should they ultimately become products. ICOS retains only the U.S. rights to rPAF-AH as the result of an agreement with Suntory Ltd., of Tokyo. ICOS and Suntory developed a joint venture company, Suncos Corp., to develop the product. Suntory has the Japanese rights, ICOS retains the U.S. rights and Suncos has the European markets. The company chose to carve out the Japanese market in order to leave open the possibility that Suntory may want to extend the collaboration to include other products.
"We like the relationship that we have with Suntory," Fitzpatrick said. "Carving out Japan opens up possibilities for us."
ICOS' stock (NASDAQ: ICOS) closed at $9, up $0.125. *