Getting an unexpected agency response that may have little to do with how Cialis is meant to be used, ICOS Corp. and Eli Lilly and Co. said the FDA issued an approvable letter for their erectile dysfunction product in which it requested three issues be resolved, one being pharmacology studies.

Paul Clark, ICOS’ CEO and chairman, said in a conference call the approvability of Cialis is “contingent upon additional confirmatory clinical pharmacology studies, labeling negotiations and resolution of Lilly’s outstanding GMP manufacturing deficiencies.”

ICOS’ stock (NASDAQ:ICOS) fell on the news Tuesday, dropping $13.24, or 34 percent, to close at $25.76. Lilly’s stock (NYSE:LLY) fell $2.25 to close at $66.05.

Clark said ICOS and Lilly would continue to “work closely” with the FDA, but both sides of the joint venture said the response from the FDA caught them off guard.

“We are surprised by the timing of the request to do additional clinical pharmacology studies,” he said. “As we stated in our fourth-quarter conference call, the manufacturing facilities at Lilly where Cialis will be manufactured have been in the review process. While we had not commenced label negotiations, our review appeared to be on track for a U.S. launch in the second half of this year. However, in the last few days, for the first time, the agency informed us it would require additional confirmatory studies.”

Bryce Carmine, president, primary care products at Indianapolis-based Eli Lilly, registered similar emotions during the call.

“Let me reiterate our surprise at the timing of the FDA’s request to do additional and confirmatory clinical pharmacology studies,” he said.

For “competitive reasons,” Clark would not detail what, exactly, the FDA has requested. But speculation is that the agency is fretting over potential misuse of Cialis and other drugs like it.

“The agency seems to be concerned about the recreational use/abuse of this whole class of drugs,” said Andrew Heyward, analyst for Ragen MacKenzie in Seattle, a division of Wells Fargo Investments LLC. “This seems to have come up recently. This is not something the FDA brought up [with the companies] in the past and they ignored it. We need to see exactly what will satisfy the FDA. Given that this [concern] surrounds the whole class of drugs, we don’t think it is Cialis specifically.”

The new drug application for Cialis (tadalafil), an oral PDE5 inhibitor, was submitted in June 2001. The product was developed by Lilly and ICOS through their joint venture Lilly ICOS LLC formed in 1998 in a deal that included Lilly contributing $75 million in up-front funding. (See BioWorld Today, June 29, 2001, and Oct. 2, 1998.)

Heyward was not able to pinpoint precisely what the recreational uses and/or abuses of this class of drugs are, but Viagra New York-based Pfizer Inc.’s blockbuster drug for erectile dysfunction (ED) has been hotly sought after by both people who are prescribed the drug and those who want it simply to enhance their sexual performance.

Clark said ICOS and Lilly intend to furnish the requested supplemental information through “additional analyses of existing data not originally included in the NDA and by conducting additional clinical pathology studies as necessary.”

ICOS was anticipating a 2002 Cialis launch. With that pushed back, ICOS’ 2002 figures are expected to improve. ICOS said in its first-quarter conference call it anticipated a 2002 loss of $2.70 to $2.95 per share. Calling that guidance “no longer appropriate,” Clark said ICOS is reducing by “$35 million to $45 million, or 57 [cents] to 75 cents per share,” its 2002 estimates. However, he cautioned that the new figures are “preliminary and likely to change.”

Clark said Lilly ICOS LLC now anticipates a 2003 U.S. Cialis launch, and will shoulder the costs associated with it then. ICOS posted a net loss of $39.2 million in the first quarter, or 65 cents per share. As of March 31, it had $433.7 million in cash, cash equivalents, investment securities available for sale and interest receivable.

Bayer AG, of Leverkusen, Germany, has a PDE5 inhibitor, vardenafil, under review by the FDA. The Cialis delay could push approval behind vardenafil’s, and Clark said in his call “it remains to be seen if Cialis will enter the market behind vardenafil,” but Heyward suggested the delay might be less than expected for Cialis and cautioned against a smooth vardenafil review process.

“Maybe the first half of [2003] would be my guess [for Cialis approval],” Heyward said. “Clearly the FDA is looking at the whole class of drugs. If I were to guess, if this is an issue that has come up recently, the [the vardenafil NDA] didn’t include [the requested information] either. I don’t think [Bayer] would have anticipated anything that Lilly ICOS didn’t anticipate.”

Although Cialis is ICOS’ lead product, its pipeline includes Pafase in Phase III trials for sepsis. Also, it has sitaxsentan in a Phase IIb/III trial for pulmonary arterial hypertension and expects to begin Phase II studies with four products this year: IC14, RTX, IC747 and TBC3711. Clark said ICOS expects this year to complete Phase I trials with IC485 for the treatment of chronic obstructive pulmonary disease and rheumatoid arthritis.

In July, the joint venture filed an application for Cialis with the European Medicines Evaluation Agency. The review process is ongoing and Clark said he expects regulatory approval in Europe in the second half of this year, despite the FDA’s request.

In the conference call, Clark acknowledged investors’ questions concerning ICOS’ timeline to profitability. With the FDA’s request, prognosticating when ICOS could climb into the black becomes more difficult.

“We cannot answer that question with any precision at this time,” he said. “Certainly, we now do not expect to achieve profitability for at least three years.

“We realize this decision in the U.S. market creates an additional challenge for Lilly ICOS,” Clark said. “We are confident about the long-term potential for this drug as an additional treatment option for ED patients. We believe in the value and potential of Cialis.”