ICOS Corporation was a Bothell, Washington-based biotechnology company that began operations in 1990 after being co-founded by Dr. George B. Rathmann, previously CEO and co-founder of Amgen Inc. and a pioneer in the biotechnology industry.^[1] During its 17-year history, ICOS conducted clinical trials of many compounds in the areas of sepsis, multiple sclerosis, ischemic stroke, pancreatitis, pulmonary arterial hypertension, COPD, pneumonia sepsis, interstitial cystitis, psoriasis, hemorrhagic shock, percutaneous transluminal coronary angioplasty following acute myocardial infarction, female sexual dysfunction, and erectile dysfunction.

In 1998, ICOS formed a 50/50 owned joint venture with Eli Lilly (Lilly ICOS LLC) to develop and commercialize the phosphodiesterase type 5 inhibitor (PDE5) Cialis (tadalafil) for the treatment of erectile dysfunction. Cialis eventually gained regulatory approval to be marketed in multiple regions worldwide and allowed ICOS to eventually achieve profitability in an industry in which few companies ever do.

With the failed clinical development of investigational therapies other than Cialis and that were solely owned by ICOS (i.e., not part of any joint venture or partnership), Eli Lilly was in a prime position to purchase ICOS Corporation. In October 2006, Eli Lilly announced that it had reached terms to acquire ICOS for $2.1 billion, or $32 a share.^[2] This offer met with significant resistance from institutional and individual shareholders. After receiving pressure from large institutional shareholders, as well as Proxy advisory firm ISS, Lilly increased its offer to $34 per share, a 6% increase.^[3] Resistance to the new offer was voiced again by some large shareholders, and ISS again advised shareholders against accepting the offer, which it deemed as inadequate.^{[4] [5]}A special meeting of shareholders held on January 25, 2007 resulted in the announcement that 77.0 percent of the shares voted were in support of the acquisition. Closing of the transaction for Eli Lilly to acquire ICOS for $2.3 billion occurred on January 29, 2007.^[6]

As a result of the acquisition, Indianapolis-based Eli Lilly gained complete ownership of Cialis and promptly shut down ICOS operations and employment of ICOS personnel, except for 127 employees working at the biologics facility^[7]. At the time of the acquisition, ICOS was the largest biotechnology company in the Pacific Northwest, employing approximately 700 persons. In December 2007, CMC Biopharmaceuticals A/S (CMC), a Copenhagen, Denmark based provider of contract biomanufacturing services, bought the Bothell-based biologics facility and retained the existing 127 employees.

In addition to termination of ICOS employees, other aspects of the acquisition were similarly legal but controversial. These aspects included the assertions that ICOS was being sold too cheaply and that conflicts of interests existed.^[8] The latter related to ICOS senior executives, who advocated for and were to be massively compensated upon a successful acquisition^[9](despite poor stock performance in part from failed clinical development programs and an inability to successfully license drugs over the preceding years).

According to a filing with the Securities and Exchange Commission (SEC), senior executives at ICOS received cash payments worth a combined $67.8 million for selling the company to Eli Lilly. At the top of the list was Paul Clark, 59, ICOS chairman, chief executive and president, who received a "golden parachute" worth $23.2 million in severance pay, cashed-out stock options, restricted stock awards and other bonuses for retention and closing the deal. Other management packages included Executive Vice President Gary Wilcox ($8.5 million); Chief Financial Officer Michael Stein ($7.1 million); Chief Medical Officer David Goodkin ($5.9 million); Thomas St. John, Vice President, Therapeutic Development ($5.2 million); Michelle Yetman, Vice President, Human Resources ($4 million); and Clifford Stocks, Vice President, Business Development ($3.6 million).^[10]

References

External links

• ICOS Official Web Site.