Icos
ICOS Corporation was a biotechnology company based in Bothell, Washington 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, haemorrhagic shock, and sexual dysfunction.
Acquisition by Eli Lilly
In 1998, ICOS formed a 50/50 owned joint venture with Indianapolis-based 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 the industry.
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 2007-01-25, 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 2007-01-29.[6]
As a result of the acquisition, 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.
Controversy
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 - despite poor stock performance in part from failed clinical development programs and an inability to successfully license drugs over the preceding years - advocated for and were to be massively compensated upon a successful acquisition.[9]
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); Leonard Blum, Senior Vice President, Sales & Marketing ($4.9 million); John Kliewer, Vice President, General Counsel ($4 million); Michelle Yetman, Vice President, Human Resources ($4 million); Clifford Stocks, Vice President, Business Development ($3.6 million), and Shing Chang, Senior Vice President, Drug Discovery ($1.4 million).[10]
Other senior personnel - while not officers of the company and thus without public disclosure of compensation – were believed to have received over $1 million resulting from the acquisition: Drs. Gregory Dietsch, Kenneth Ferguson, Lyn Frumkin, David Vetterlein, J. Steven Whitaker, and Albert Yu.
References
- ^ "Francuch, P. Biotech Builder". Northwestern. Fall 2000. Retrieved 2008-01-16.
- ^ "Smith, A. Lilly to buy sex-drug partner Icos". CNNMoney.com. 2006-10-17. Retrieved 2008-01-16.
- ^ "Lilly Increases Offer for Icos; Shareholders' Vote Is Put Off". The New York Times. 2006-12-19. Retrieved 2008-01-16.
- ^ "ICOS Corporation Analysis Materials Prepared For ISS (US Securities and Exchange Commission)". 2006-11-28. Retrieved 2008-01-16.
- ^ "Timmerman, L. Proxy adviser urges rejection of Icos sale". The Seattle Times. 2006-12-06. Retrieved 2008-01-16.
- ^ "Harrison, Victoria. Icos shareholders approve merger with Eli Lilly". Pharmaceutical Business Review. 2007-01-26. Retrieved 2008-01-16.
- ^ "Timmerman, L. All Icos workers losing their jobs". The Seattle Times. 2006-12-12. Retrieved 2008-01-16.
- ^ "Timmerman, L. Proposed Icos sale gets more criticism: Payouts for execs called "overkill". The Seattle Times. 2006-11-02. Retrieved 2008-01-16.
- ^ "Timmerman, L. Icos sale to enrich top executives". The Seattle Times. 2006-10-21. Retrieved 2008-01-16.
- ^ "Timmerman, L. Icos leaders to get $68 million from company's sale". The Seattle Times. 2006-11-02. Retrieved 2008-01-16.