Icos said yesterday it expects worldwide sales of Cialis to climb between 40 percent and 54 percent this year, even as doubts are rising...

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Icos said yesterday it expects worldwide sales of Cialis to climb between 40 percent and 54 percent this year, even as doubts are rising about the potential size of the market for erectile-dysfunction drugs.

The Bothell biotech company, which co-markets Cialis with Eli Lilly, said yesterday it expects to sell $775 million to $850 million worth of the little yellow pill around the world this year, up from $552 million in 2004. The company aims to achieve that sales growth with lower marketing and administrative costs than the $606 million it spent in 2004.

In the company’s year-end conference call with analysts, Chief Financial Officer Michael Stein largely repeated guidance that Icos gave a year ago. The Cialis joint venture is expected to become profitable by the third quarter of 2005, and to finish 2005 $40 million to $70 million in the black.

Stein said Icos, after taking its cut from the joint venture and continuing to fund its own research and development, should become profitable in the second half of 2006. This year, it expects to lose $57 million to $77 million.

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Icos itself had a record loss of $198 million in 2004, as it invested in the initial Cialis marketing blitz.

“Icos could achieve the ‘P’ word, profitability, on a quarterly basis in the second half of 2006,” Stein said.

If it did, that first quarterly profit would come during its 16th year in business.

The company projects that it can do that even if the drug doesn’t live up to the loftiest of projections. The company has said in the past that 70 million men in North America and Europe have suffered from erectile dysfunction. In December, it said 3 million men worldwide have tried Cialis.

When Levitra and Cialis joined the battle with Viagra in 2003, some analysts predicted Cialis would quickly become a $1 billion molecule. No one is saying that now.

The company disappointed many a week ago, when it said its fourth quarter U.S. sales declined by about $15 million because some wholesalers built up their inventories just before a Sept. 30 price increase.

Instead, Stein said the growth and profitability formula for Cialis depends on a combination of overall market growth in use of the drugs, increasing gains in market share, price increases, and controlling of expenses.

Icos said more price increases can be expected for Cialis, which now wholesales for $9.02 per pill, the highest in its class. Leonard Blum, Icos vice president of sales and marketing, said the overall market grew by 11 percent in the U.S. in 2004, based on prescription data from IMS Health.

He said domestic market growth will probably diminish into “single digits” this year, but that in Europe, Canada and Mexico, overall market growth will remain in the double-digit percentages.

Blum also said the percentage of patients getting Cialis through free samples is on the decline. The company is continuing to invest in clinical studies of Cialis as a treatment for enlarged prostate, and it hopes to bring one or two new molecules into clinical development this year.

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com

Icos results
Figures in parentheses are losses.
Dec. 31 %
4th QTR 2004 2003 CHG
Profit ($33,447,000) ($34,158,000) +2.1
Per share (0.53) (0.54) +1.9
Sales 20,415,000 29,213,000 -30.1
Annual 2004 2003 CHG
Profit ($198,248,000) ($125,507,000) -58.0
Per share (3.13) (2.01) -55.7
Sales 74,608,000 75,104,000 -0.7