Snohomish. Gesundheit!

According to news reports (King County Journal), two shareholders have filed class action lawsuits against ICOS Corporation (NASDAQ: ICOS), Eli Lilly and Company (NYSE: LLY) and certain ICOS officers and directors.

The complaints seek to enjoin the proposed acquisition by Eli Lilly of ICOS' outstanding common stock, announced on October 17, 2006, and allege that the ICOS defendants breached their fiduciary duties by adopting the merger agreement and approving the proposed acquisition.

Lilly and ICOS have been partners in Lilly ICOS LLC, a joint venture that manufactures, markets and sells Cialis, the erectile dysfunction treatment.

In a 10-Q filed today, ICOS offered the now ubiquitous explanation:

ICOS believes the lawsuits are without merit and intends to defend the actions vigorously.

The cases were both filed in Snohomish County (WA) Superior Court, the day after the acquisition was announced. Though complete dockets are not available online, a review of available information indicates that both plaintiffs are represented (at least as local counsel) by Clifford A. Cantor.

According to additional news reports (MarketWatch) HealthCor Management L.P., the owner of 3.3 million shares of ICOS indicated that it will vote against the proposed acquisition. HealthCor delivered a letter to the board of directors suggesting that a more appropriate price was "well in excess of $40 per share," and noting:

Although the proposed purchase price represents a premium over the recently depressed share price, the proposed purchase price represents a:

• zero premium over the ICOS stock price from one year and two years ago;
• 30% discount from ICOS share prices seen three years ago;
• 50% discount from ICOS share prices seen five years ago; and
• 30% discount from June 1999 when Paul Clark joined ICOS as President and Chief Executive Officer.
  

The letter goes on to state:

THE BOARD OF DIRECTORS IS SELLING ICOS FOR A DISCOUNT BID, NOT A PREMIUM. (emphasis in original)

Daily Trivia: Eli Lilly and Company was founded in May 1876 by Colonel Eli Lilly, a pharmaceutical chemist and a veteran of the Union Army. Colonel Lilly was apparently influenced by the premature malaria-related death of his wife.