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

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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.

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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.

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