From the 10Q filed today...
2. Research and Development Arrangements
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Abbott Laboratories
In April 1995, the Company entered into a collaborative agreement with
Abbott Laboratories ("Abbott"). The collaboration focused on the development of
small molecules that modulate, by intracellular interaction, the activity of
certain cell adhesion molecules and also provided the Company with a library of
chemical compounds for use in its own discovery programs. Under the
collaboration, the Company had rights to market cancer products in the U.S. and
would receive a royalty on all non-cancer products in the U.S. and all products
outside the U.S. In June 2000, the Company renegotiated the agreement with
Abbott and acquired the remaining rights from Abbott for all technology and
compounds in the field of LFA-1 antagonism. Under the terms of the revised
agreement, Abbott will receive milestone payments upon the occurrence of certain
events and royalties on any marketed products.
Form 10-Q Page 4
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Suncos
The Company owns a 50% interest in Suncos Corporation ("Suncos"), a
corporation formed for the development and commercialization of Pafase(TM).
Pursuant to the terms of agreements entered into with Suncos, the Company
conducts certain research and development activities on behalf of Suncos and is
paid for such services based upon costs incurred. For the quarter and six
months ended June 30, 2000, the Company recognized cost reimbursement revenue
under this arrangement of $3.4 million and $6.1 million, respectively. For the
quarter and six months ended June 30, 1999, the Company recognized cost
reimbursement revenue under this arrangement of $6.3 million and $11.1 million,
respectively.
For the quarter and six months ended June 30, 2000, the Company recognized
$1.7 million and $3.2 million of expense, respectively, representing its
proportionate share of Suncos' net losses. For the quarter and six months ended
June 30, 1999, the Company recognized $3.2 million and $4.7 million of expense,
respectively, representing its proportionate share of Suncos' net losses.
ICOS Clinical Partners, L.P.
In 1997, ICOS Clinical Partners, L.P. (the "Partnership"), an affiliate of the
Company, completed the sale to private investors of interests in the Partnership
("partnership units"). Proceeds from the offering are dedicated to fund the
Company's development of product candidates based on three compounds--
LeukArrest(TM), Pafase(TM) and ICM3--pursuant to the terms of a Product
Development Agreement. In April 2000, the Company elected to forgo further study
of LeukArrest(TM) as the results of an interim efficacy analysis failed to meet
the Company's predefined criteria for success. For the quarter and six months
ended June 30, 2000, the Company recognized cost reimbursement revenue from the
Partnership of $2.0 million and $5.5 million, respectively. For the quarter and
six months ended June 30, 1999, the Company recognized cost reimbursement
revenue from the Partnership of $3.9 million and $9.1 million, respectively.
In connection with the Partnership's 1997 sale of limited partnership units,
the Company issued Series A warrants to purchase 5.6 million and 2.0 million
shares of the Company's common stock at exercise prices of $9.13 and $10.35 per
share, respectively. The Series A warrants are exercisable through May 31,
2002. In June 1999, the Company issued Series B warrants to purchase 7.6
million shares of the Company's common stock at an exercise price of $52.49 per
share. The Series B warrants issued are exercisable through June 30, 2004.
During the six months ended June 30, 2000, warrants to purchase 594,900 shares
were exercised at a weighted-average exercise price of $9.46 per share resulting
in total proceeds to the Company of $5.6 million. At June 30, 2000, warrants to
purchase approximately 10.8 million shares remain outstanding at an average
exercise price of $39.57 per share.
Form 10-Q Page 5
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Lilly ICOS, LLC
The Company owns a 50% interest in Lilly ICOS LLC ("Lilly ICOS"), a limited
liability company. Lilly ICOS was formed by the Company and Eli Lilly and
Company ("Lilly") to jointly develop and globally commercialize
phosphodiesterase type 5 inhibitors (PDE5) as oral therapeutic agents for the
treatment of both male erectile dysfunction and female sexual dysfunction. For
the quarter and six months ended June 30, 2000, the Company recognized cost
reimbursement revenue under this arrangement of $5.0 million and $8.6 million,
respectively. For the quarter and six months ended June 30, 1999, the Company
recognized cost reimbursement revenue under this arrangement of $5.8 million
and $11.5 million, respectively.
The joint venture has been capitalized by cash contributions from Lilly and
the Company's contribution of intellectual property associated with IC351. The
intellectual property contributed to Lilly ICOS by the Company had no basis for
financial reporting purposes and, accordingly, the Company has recorded its
investment in Lilly ICOS at zero. The Company will not report its proportionate
share of Lilly ICOS' results of operations until such time, if ever, that the
Company makes capital contributions to Lilly ICOS.
ICOS - Texas Biotechnology L. P.
On June 6, 2000, the Company and Texas Biotechnology Corporation ("Texas
Biotech") formed the joint venture ICOS-Texas Biotechnology L.P. ("ICOS-TBC"),
for the purpose of developing and commercializing endothelin-A receptor
antagonists. The initial focus of the joint venture will be to initiate a Phase
2b/3 pulmonary hypertension trial for sitaxsentan (a selective endothelin-A
receptor antagonist) and explore applications for second generation endothelin
antagonists.
Under the terms of the limited partnership joint venture agreement, ICOS and
Texas Biotech agreed to equally fund the development of sitaxsentan and other
endothelin receptor antagonists and share equally in the profits of the joint
venture. In June 2000, the Company made an initial $2.0 million capital
contribution to the joint venture and may make future milestone payments of up
to $53.5 million to ICOS-TBC for the development and commercialization of
products resulting from the collaboration. In accordance with the joint venture
agreement, the Company's initial capital contribution and future milestone
payments will be distributed by the joint venture to Texas Biotech.
For both the quarter and six months ended June 30, 2000, the Company
recognized $0.1 million in revenue under a related research and development
agreement. During the same periods, the Company also recognized $2.3 million of
expense representing its proportionate share of ICOS-TBC net loss since
inception. |
