The maker of erectile-dysfunction drug Cialis is expected today to accomplish a rare feat for a biotechnology company: profitability. Analysts expect Lilly Icos...

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The maker of erectile-dysfunction drug Cialis is expected today to accomplish a rare feat for a biotechnology company: profitability.

Analysts expect Lilly Icos, the joint venture of Bothell biotech company Icos and pharmaceutical giant Eli Lilly, to post its first quarterly profit as Cialis captures a growing share of the multibillion-dollar market from competitors Viagra and Levitra.

“I think we ought to have a miniature Seafair any time that something like this does happen,” said Jack Faris, president of the Washington Biotechnology and Biomedical Association. “As everyone knows, it’s long odds, and best case, it’s a long haul.”

Earlier this year, Cialis passed $1 billion in total sales since its 2003 introduction.

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Blockbuster status — $1 billion in annual sales — is not far off. McAdams Wright Ragen analyst Paul Latta forecasts 2006 sales of $910 million.

Positive results reported last week from a midstage trial for a second use of the drug, to treat enlarged prostates, could further accelerate sales growth.

Icos itself is still expected to post a per-share loss of 16 cents when it reports its third-quarter results Nov. 3, according to a poll of analysts by Thomson Financial. But profits are expected by the first half of next year, with full-year 2006 earnings projected at 28 cents a share.

Icos


Began operations: 1990

Headquarters: Bothell

Employment: About 700

Lead product: Cialis, an erectile-dysfunction drug it produces through a joint venture with Eli Lilly

Global sales: $1.1 billion from Cialis market introduction in 2003 through June

Source: Icos

Philip Nadeau, a biotech analyst with SG Cowen, estimated that fewer than one in 10 U.S. biotechnology companies has a profitable product. The industry as a whole lost $4.3 billion in 2004, according to Ernst & Young.

“The industry is still relatively young, and there’s not too many companies that even have a marketed product,” Nadeau said.

Only one in five drug candidates will make it to market at a typical development cost of between $500 million and $800 million.

For those that do, the rewards can be phenomenal.

Doug Williams, senior vice president and chief scientific officer at ZymoGenetics, was at Immunex from 1988 through its acquisition by Amgen for $16 billion in 2002. He remembers the thrill of meeting rheumatoid-arthritis patients whose lives were changed by Enbrel, the best-selling drug to come out of Seattle’s biotech industry.

Now used to treat several kinds of arthritis and psoriasis, Enbrel will have sales of more than $3 billion next year, Amgen forecast yesterday.

“We knew that we had something that was going to forever change the face of the company,” Williams said of the months after Enbrel’s 1998 launch.

“We were going to go from being the typical biotech company that survives on the basis of hope, to one that had crossed the threshold of becoming a real, sustainable entity.”

As profitability approaches at Icos, Latta said, the company will undergo a similar shift from a cyclical technology firm tied to the capital markets for cash to continue research and operations, to a stable health-care company that can invest its earnings in its future.

“In general,” he said, “you’re out of the casino and you’re into the promised land.”

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com