HealthCor Management LP, the fifth-biggest holder of Icos Corp. shares, said it will vote against Eli Lilly & Co.'s $34-a- share offer to acquire Icos, the maker of the Cialis impotence pill.

HealthCor, a New York-based hedge fund, said in a letter to the Icos board that the price "still does not represent adequate compensation" even after Lilly raised its bid by $2 a share, according to a regulatory filing Monday. Shareholders of the Bothell-based biotechnology company are to vote on the proposed $2.28 billion transaction Jan. 25.

"On a pure valuation basis, $34 is actually lower than the previous bid," John Schroer, a member of the HealthCor investment team, said in an interview. To compensate investors for the increased "earnings power" Icos indicated in raising its forecast last month, Lilly should pay at least $40 a share for Icos, he said.

The Dec. 18 bid by Indianapolis-based Lilly was 6.3 percent higher than an Oct. 17 offer. Lilly wants full marketing rights to Cialis, the world's second-biggest-selling impotence drug, after Pfizer Inc.'s Viagra, to boost sales as it faces a dry spell of new products. Lilly and Icos market Cialis through a joint venture.

HealthCor sold 710,000 Icos shares at $33.90 each Dec. 18, leaving its holding at 3.45 million shares, or 5.2 percent, according to Monday's filing.

Shares of Icos rose 3 cents to $33.84 in Nasdaq stock market composite trading. The stock gained 22 percent last year.

Lilly raised its offer after Icos said it expected to significantly beat its internal earnings estimates for 2006. Icos said its fourth-quarter profit would rise to 17 to 22 cents a share, above the 11-cent average estimate in a Bloomberg survey of six analysts.

Icos and Eli Lilly are scheduled to report fourth-quarter results of their Cialis joint venture on Jan. 18.

Institutional Shareholder Services, the proxy advisory firm based in Rockville, Md., probably will make a recommendation to Icos shareholders about two weeks before the vote.

The organization recommended that shareholders reject the $32 bid.