Icos shareholders should reject drug maker Eli Lilly's $34-a-share takeover bid for the biotech company, according to Institutional Shareholder...

Icos shareholders should reject drug maker Eli Lilly’s $34-a-share takeover bid for the biotech company, according to Institutional Shareholder Services, which advises stockholders how to vote.

Lilly’s revised offer of $34 a share, or $2.28 billion, is still “insufficient to match the increase in value” of Icos because of the sales growth for its impotence drug Cialis, ISS said in a report Friday.

But another proxy advisory firm that had opposed the original Lilly bid of $32 per share recommended Friday that shareholders vote in favor of the new offer, which is 6.3 percent higher. Glass Lewis said the bid “represents a financially fair consideration” for Icos.

The purchase of Icos would give Lilly complete control over Cialis, and most of Icos’ 700 employees would lose their jobs.

Icos expects to report 2006 worldwide sales of its only product of $955 million to $965 million.

“Icos disagrees with the ISS conclusion,” said Paul Clark, Icos’ chairman and chief executive officer, in a statement. “We are disappointed that ISS refused to recognize the substantial and immediate value this offer will deliver to Icos shareholders.”

Shares of Icos slipped 1 cent to $33.86 Friday in Nasdaq Stock Market composite trading.

The shareholder meeting to vote on the takeover is scheduled for 11 a.m. on Jan. 25 at Icos’ headquarters.