A veteran executive, formerly with Bayer Healthcare, was hired in April to preside over what he calls a business with "substantial momentum."

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Most of the 700 workers at Icos, the developer of erectile-dysfunction drug Cialis, were axed in 2007 when it was acquired by pharmaceutical giant Lilly.

But its contract-manufacturing division, now in the hands of a Danish company, lives on — and is poised for an expansion that could create welcome new jobs in the much-battered local biotechnology sector.

CMC Icos Biologics, as the unit is now known, will break ground next month on a $35 million project at its Bothell headquarters that will nearly double its 135-strong work force and quintuple its capacity to churn out compounds for biotechnology companies.

The project is expected to be completed by mid-2010, said CMC Icos Biologics President Gustavo Mahler.

Born in Argentina, Mahler, a veteran executive formerly with Bayer Healthcare, was hired in April to preside over what he calls a business with “substantial momentum.”

CMC Icos Biologics’ bid for growth comes amid a widespread downsizing in the local biotechnology sector. In recent months, companies such as Nastech Pharmaceuticals and Northstar Neurosciences have shed dozens of jobs and refocused their research efforts after key clinical trials failed.

In August, Sonus Pharmaceuticals merged with Vancouver, B.C.’s OncoGenex Technologies and fired most of its Bothell staff.

ZymoGenetics, which employs more people than any other independent local biotech, also laid off some personnel at the beginning of the year.

CMC’s business model, however, differs from the region’s research-oriented biotechnology companies. It develops and manufactures drugs for biotech firms engaged in clinical trials, most of which are “virtual biotechs” that don’t have the resources or need to have their own manufacturing facilities, Mahler said.

The company recently finished a $3 million remodel that enables it to go beyond manufacturing material for clinical trials, to producing market-ready drugs. The anticipated expansion will augment that commercial-scale manufacturing capacity.

CMC Icos Biologics has signed new clients since Mahler’s tenure began, and is in the midst of a major ramp-up.

Its current contracts are with undisclosed biotech firms on both coasts of the U.S. and it is in conversations with local companies, said the 41-year-old executive.

Icos began manufacturing clinical compounds for other companies in 2000 to put its state-of-the-art facilities to use after disappointing results in its own biologics-research pipeline.

The operation lived in the shadow of Cialis, the drug that made Icos a big success and outlived the company.

When partner Eli Lilly bought Icos for about $2.3 billion early last year, it quickly fired most employees but kept the manufacturing unit, which had contracts to fulfill.

Lilly and the remaining management at Icos shopped around the unit, aiming to keep it intact. CMC, a closely held biotech contract manufacturer founded in 2004, bought the facility last December, as it sought to establish a beachhead in the U.S. biopharmaceutical industry.

“It was clear that the West Coast was the right marketplace to be,” Mahler said. Some of the industry’s greatest hubs are the San Francisco Bay Area and San Diego.

The purchase, for an undisclosed amount, significantly increased CMC’s production capacity and payroll; the combined company has 350 employees.

The labs resemble a space-age brewery: white-clad technicians walk among huge, shiny metal vats growing the cells that produce biotech therapies.

CMC also inherited an established group of workers, many of whom had developed research expertise working for Icos in the early days.

“When a team has some years of working together, that improves performance,” Mahler said.

The facility’s workers also provided some input to Lilly when prospective buyers came in to kick the tires of the operation, said human-resources manager Mark Honda.

“They wanted to sell the company to the best fit,” Honda said.

CMC Icos Biologics’ planned expansion also comes with its challenges.

All of the facility’s manufacturing employees have bachelor’s degrees in the sciences, an appropriate background for manufacturing clinical-stage experimental products, said David Shank, senior director of manufacturing.

But once the company starts producing drugs at a commercial scale, using more standardized procedures, it is going to need a “fairly large” staff of technicians with lower education requirements.

The company is in early talks with local schools and colleges to plan on how to provide the required technical training.

“This is going to be the biggest operation” in commercial biologics manufacturing in the Seattle area, Shank said.

The region already has a reputation for biotech manufacturing.

Amgen has a large clinical manufacturing facility in Bothell that employs 200 people.

Bayer Healthcare has commercial-manufacturing operations in Seattle and Bothell, 170 strong, which it plans to consolidate into a new facility in Lynnwood.

Ángel González: 206-515-5644 or agonzalez@seattletimes.com