Unassociated Document

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S3M08H74WVG2+76l/z4VAQGXi7sxtMH8LlSATwxWVKl16imtGtLvWqYSTAA7lhuc rIziT9MHPFo1FnZpCYSTlg== 0001144204-06-046768.txt : 20061113 0001144204-06-046768.hdr.sgml : 20061113 20061113153120 ACCESSION NUMBER: 0001144204-06-046768 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20061113 DATE AS OF CHANGE: 20061113 GROUP MEMBERS: ARTHUR COHEN GROUP MEMBERS: HEALTHCOR ASSOCIATES, LLC GROUP MEMBERS: JOSEPH HEALEY SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ICOS CORP CENTRAL INDEX KEY: 0000874294 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 911463450 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-48079 FILM NUMBER: 061208663 BUSINESS ADDRESS: STREET 1: 22021-20TH AVENUE S.E., CITY: BOTHELL STATE: WA ZIP: 98021 BUSINESS PHONE: 2064851900 MAIL ADDRESS: STREET 1: 22021 20TH AVE SE CITY: BOTHELL STATE: WA ZIP: 98021 FORMER COMPANY: FORMER CONFORMED NAME: ICOS CORP / DE DATE OF NAME CHANGE: 20050927 FORMER COMPANY: FORMER CONFORMED NAME: ICOS CORP DATE OF NAME CHANGE: 20050927 FORMER COMPANY: FORMER CONFORMED NAME: ICOS CORP / DE DATE OF NAME CHANGE: 19930328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HealthCor Management, L.P. CENTRAL INDEX KEY: 0001343781 IRS NUMBER: 202893581 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 152 WEST 57TH STREET, 47TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212-622-7888 MAIL ADDRESS: STREET 1: 152 WEST 57TH STREET, 47TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D/A 1 v057167_sc13d-a.htm Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D/A

(Amendment No. 1)

Under the Securities Exchange Act of 1934

ICOS Corporation

(Name of Issuer)

Common Stock, $.01 par value

(Title of Class of Securities)

449295104

(CUSIP Number)

HealthCor Management, L.P.

Carnegie Hall Tower

152 West 57th Street, 47^th Floor

New York, New York 10019

Attention: Mr. Steven J. Musumeci

212-622-7884

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

November 13, 2006

(Date of Event which requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o.


CUSIP No. 449295104

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) HealthCor Management, L.P. 20-2893681
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ࿇ (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions) WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) ࿇
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 3,300,000
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 3,300,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,300,000
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) ࿇
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.04%
14	TYPE OF REPORTING PERSON (See Instructions) PN


CUSIP No. 449295104

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) HealthCor Associates, LLC 20-2891849
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ࿇ (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions) AF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) ࿇
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 3,300,000
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 3,300,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,300,000
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) ࿇
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.04%
14	TYPE OF REPORTING PERSON (See Instructions) OO - limited liability company


CUSIP No. 449295104

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) Arthur Cohen
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ࿇ (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions) AF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) ࿇
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 3,300,000
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 3,300,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,300,000
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) ࿇
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.04%
14	TYPE OF REPORTING PERSON (See Instructions) IN


CUSIP No. 449295104

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) Joseph Healey
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) ࿇ (b) x
3	SEC USE ONLY
4	SOURCE OF FUNDS (See Instructions) AF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) ࿇
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 3,300,000
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER 3,300,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,300,000
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) ࿇
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.04%
14	TYPE OF REPORTING PERSON (See Instructions) IN

This Amendment No. 1 (the “Amendment”) amends the Statement of Beneficial Ownership on Schedule 13D, originally filed with the Securities and Exchange Commission (the “SEC”) on November 2, 2006 (the “Schedule 13D”), by HealthCor Management, L.P., HealthCor Associates, LLC, Joseph Healey, and Arthur Cohen (collectively, the “HealthCor Group”). Unless specifically amended hereby, the disclosures set forth in the Schedule 13D shall remain unchanged.

Information contained in this Statement is as of the date hereof, unless otherwise expressly provided herein.

Item 4. Purpose of Transaction.

The response to Item 4 is hereby amended and restated in its entirety as follows:

The shares of Common Stock reported in Item 5 were initially acquired for investment purposes, without the intention of changing or influencing control of the Issuer or as a participant in any transaction having that purpose or effect. However, the HealthCor Group has recommended, and from time-to-time, may continue to recommend to the Issuer’s management various strategies for increasing shareholders’ value.

As previously disclosed on the Schedule 13D, on October 17, 2006, ICOS Corporation (the “Issuer” or “Company”) announced that it had entered into a merger agreement whereby it would be acquired by Eli Lilly and Company (“Eli Lilly”) and on November 1, 2006, the Company filed a preliminary proxy statement with the SEC whereby the Company’s management recommended that the Company’s shareholders vote to approve the merger with a consideration of $32 per share of Common Stock. After reviewing the terms of the merger and the financial condition of the Company, the HealthCor Group determined that it intends to vote against the merger as it does not believe the consideration offered adequately compensates the Company’s shareholders for their interest in the Company. On November 2, 2006, HealthCor Management delivered a letter to the Board of Directors of the Company explaining its reasoning for not supporting the merger with Eli Lilly (the “November 2nd Letter”).

Subsequently, on November 3, 2006, the HealthCor Group contacted the offices of Paul N. Clark, Chairman and Chief Executive Officer, and Michael A. Stein, Chief Financial Officer to offer that certain members of the HealthCor Group would travel to ICOS offices, at the expense of the HealthCor Group, and discuss with management and the Board of Directors the HealthCor Groups' evaluation analysis and conclusions. On November 10, 2006, both executives were contacted with the same offer by the HealthCor Group.

On November 13, 2006, the HealthCor Group mailed via overnight delivery service (and by facsimile transmission) a letter the Company's Board of Directors reitorating the positions taken in the November 2nd Letter, describing the attempts to communicate with the Company's senior management and providing examples of healthcare sector transactions disclosed since the Company's announcement of its proposed merger with Eli Lilly which provide additional support to the HealthCor Groups' view that the consideration offered by Eli Lilly for the Company is inadequate (the “November 13th Letter”). A copy of the November 13th Letter is attached hereto as Exhibit 1.

The HealthCor Group will also continue to evaluate on an ongoing basis the Issuer’s financial condition, business, operations and prospects, the market price for the shares of Common Stock, conditions in the securities markets generally, general economic conditions, conditions affecting the Issuer’s operations and other factors, specifically management’s ability to maximize shareholder value. In particular, the HealthCor Group may purchase shares of Common Stock, or may sell or otherwise dispose of all or a portion of the shares of Common Stock, in public and private transactions and/or may enter into negotiated derivative transactions to hedge the market risk of some or all positions in, or to obtain greater exposure to, the shares of the Common Stock. Any such transactions may be effected at any time or from time to time, subject to any applicable limitations imposed on the sale of shares of the Common Stock by the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and applicable state securities or “blue sky” laws. In addition, the HealthCor Group may seek to influence the policies, procedures, goals and strategic plans of the Issuer through direct communication with the Issuer’s management or otherwise.

The HealthCor Group reserves the right to change its plans and intentions at any time as it deems appropriate with respect to all matters referred to in this Item 4.

Except as otherwise set forth above, no member of the HealthCor Group has any plans to effect any of the transactions required to be described in Item 4 of Schedule 13D.

Item 7. Material to be Filed as Exhibits.

Exhibit 1.

Letter sent by HealthCor Management, L.P. to the Board of Directors of ICOS Corporation dated November 13, 2006.

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: November 13, 2006

HealthCor Management, L.P.

By:	HealthCor Associates, LLC, general partner of HealthCor Management, L.P.

	By:	/s/ Arthur Cohen
	Name:	Arthur Cohen
	Title:	Manager

	By:	/s/ Joseph Healey
	Name:	Joseph Healey
	Title:	Manager

HealthCor Associates, LLC

By:	/s/ Arthur Cohen
Name:	Arthur Cohen
Title:	Manager

By:	/s/ Joseph Healey
Name:	Joseph Healey
Title:	Manager


/s/ Joseph Healey
Joseph Healey, Individually

/s/ Arthur Cohen
Arthur Cohen, Individually

EXHIBIT INDEX

Exhibit 1.

Letter sent by HealthCor Management, L.P. to the Board of Directors of ICOS Corporation dated November 13, 2006.

Exhibit 1

EX-1 2 v057167_ex-1.htm Unassociated Document

[LOGO]

November 13, 2006

ICOS Corporation

22021 20^th Avenue Southeast

Bothell, WA 98021

Attn:

Board of Directors

Paul N. Clark

James L. Ferguson

Robert J. Herbold

Jack W. Schuler

Vaughn D. Bryson

Gary L. Wilcox

Teresa Beck

Robert W. Pangia

David V. Milligan

Dear Gentlemen:

HealthCor Management, L.P. (“HealthCor”) is the investment advisor to certain private investment funds that currently own 3,300,000 shares of ICOS Corporation (“ICOS” or the “Company”). This represents more than 5% of all ICOS common shares outstanding.¹

On November 2, 2006, HealthCor stated in a letter delivered to ICOS our intention to vote against the proposed acquisition of ICOS by Eli Lilly & Company (“Eli Lilly”) at the upcoming shareholder meeting that was announced in the Company’s November 1, 2006 Proxy Statement.² The reason we will take this action is that we believe that ICOS’ actual value is well in excess of $40 per share.

¹ Based upon 65,547,192 shares of the Company’s common shares outstanding as of October 30, 2006 as reported in the Company’s Schedule 14A Proxy Statement filed with the Securities and Exchange Commission on November 1, 2006 (the “Proxy Statement”).

² A copy of our November 2, 2006 letter to ICOS was attached as Exhibit 1 to our Form 13D filed with Securities and Exchange Commission on November 2, 2006.

On November 3, 2006, we contacted the offices of Paul N. Clark, Chairman and Chief Executive Officer, and Michael A. Stein, Chief Financial Officer, to offer that we would travel to ICOS’ offices, at our expense, and discuss with management and the Board of Directors our valuation analysis and conclusions. On November 10, 2006, we again contacted the offices of both executives with the same offer.

We are concerned that ICOS has not directly responded to the serious issues we have raised especially in light of our repeated and unacknowledged offers to assist in the proper valuation analysis of the Company. We are attempting to communicate productively and in good faith with the Company’s management and the Board of Directors to openly discuss our concerns. Our objective is the realization of fair value for ICOS’ stockholders, not just incumbent management and the acquiring company, Eli Lilly.

The proposed purchase of ICOS by Eli Lilly is not an arm’s length transaction. The acquisition has not occurred in a market-based, competitive bid process. Therefore, in making its determination of fair value, we believe the Board of Directors must rely upon market-based comparables of similar transactions. We have clearly shown, in our initial communication to you, the flaws and distortions that are contained within the “Fairness Opinion” provided by Merrill Lynch. Without a competitive bid and without a “Fairness Opinion” that can be relied upon, the Board of Directors of ICOS is “flying blind” while trying to assess appropriate value.

Our analysis is based upon objective data sourced from independent investment analysts’ projections as well as from the information provided by the Company in its November 1, 2006 Proxy Statement. As set forth in the following table, since the announcement of the proposed merger with Eli Lilly, three additional transactions have been announced in the relevant healthcare universe. These transactions are all at premiums significantly higher than the premium in the Eli Lilly/ICOS transaction, as currently proposed. The Genentech, Inc. purchase of Tanox, Inc. is particularly important as there is an ongoing partnership on the target’s lead commercial product, Xolair. While ICOS’ management might believe that ICOS is a “captive target” for Eli Lilly and therefore unable to generate a fair price, the existence of a partnership did not prohibit Tanox, Inc. or Genentech, Inc. from agreeing on a fair price.

Date	Transaction	Premium from Previous Day’s Price	Premium from Previous Month’s Price	Price / 2007 Revenues	Price/ 2008 Revenues	Price / 2007 Earnings	Price / 2008 Earnings
10/31/06	MRK buys RNAI	101.6%	133.4%	NM	NM	NM	NM
11/6/06	ABT buys KOSP	55.7%	58.7%	3.7x	3.5x	30x	26x
11/10/06	DNA buys TNOX	46.6%	50.6%	11.25x	8.1x	NM	NM

10/17	LLY buys ICOS	18.0%	25.7%	3.35x	3.02x	29.4x	20.0x

We believe these additional transactions further support our case that ICOS’ actual value is well in excess of $40 per share.

We hope to hear from you so that we can have a productive discussion with you regarding the issues we have raised.

Sincerely,


HealthCor Management, L.P.



/s/ Joseph P. Healey		/s/ Arthur B. Cohen
Joseph P. Healey		Arthur B. Cohen
Portfolio Manager		Portfolio Manager

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