Despite some strong early sales numbers and tens of millions of dollars in advertising, Cialis is coming up short.

When Icos ( ICOS) and Eli Lilly ( LLY) kicked off the U.S. launch of their much-hyped impotence drug in November 2003, optimists said the drug -- nicknamed "the weekender" because of its 36-hour potency -- would quickly leapfrog over Pfizer's ( PFE) Viagra and GlaxosmithKline's ( GSK) Levitra.

But Cialis' share of total new prescriptions in the erectile dysfunction (ED) market has been flat for the past three months and is still No. 2 behind market leader Viagra. Meantime, the entry of Cialis and Levitra -- and all the associated marketing and publicity -- has not grown the overall ED market to any significant degree. Total prescriptions, new and renewals, for all three ED drugs also are flat.

On Monday, Lehman Brothers analyst Jim Birchenough downgraded Icos to equal weight from overweight, essentially throwing in the towel on his optimistic projections for Cialis.

"The basis of our rating change is non-reassuring prescription trends for Cialis suggesting an early flattening that could jeopardize 2004 sales and 2005 joint venture profits," he wrote. (Icos and Lilly share marketing expenses for Cialis. Icos doesn't report Cialis sales on its income statement, only the profit or loss from its 50% share of the joint venture. Lilly and Icos report second-quarter financial results on July 22 and Aug. 4, respectively.)

The Lehman downgrade helped pushed Icos shares down 89 cents, or 3.5%, to $24.26 Monday. But as is often the case, investors have been one step ahead of the sell side. Icos shares have been cut almost in half since last November, when the stock was in the mid-$40 range.

In February, this column warned that lofty sales and market-share expectations for Cialis were in danger of getting too far in front of actual results. At the time, it was really too early to tell how well Cialis would perform, or whether Cialis sales would ever be large enough to move Icos into profitability, especially given the drug's huge marketing and launch costs. Now, the caution of some of my more skeptical and bearish sources appears prescient.

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