  Most detected planet-bearing binaries are in wide orbits, for which a high
inclination, $i_B$, between the binary orbital plane and the plane of the
planetary disk around the primary is likely to be common. In this paper, we
investigate the intermediate stages - from planetesimals to planetary
embryos/cores - of planet formation in such highly inclined cases. Our focus is
on the effects of gas drag on the planetesimals' orbital evolution, in
particular on the evolution of the planetesimals' semimajor axis distribution
and their mutual relative velocities. We first demonstrate that a non-evolving
axisymmetric disk model is a good approximation for studying the effects of gas
drag on a planetesimal in the highly inclined case ($30^\circ <i_B<150^\circ$).
We then find that gas drag plays a crucial role, and the results can be
generally divided into two categories, i.e., the Kozai-on regime and the
Kozai-off regime, depending on the specific value of $i_B$. For both regimes, a
robust outcome over a wide range of parameters is that, planetesimals
migrate/jump inwards and pile up, leading to a severely truncated and dense
planetesimal disk around the primary. In this compact and dense disk, collision
rates are high but relative velocities are low, providing conditions which are
favorable for planetesimal growth, and potentially allow for the subsequent
formation of planets.
