Cubicin Drives Cubist Pharma - Analyst Blog


Cubist Pharmaceuticals Inc. 's ( CBST ) fourth quarter 2011 earnings (excluding special items but including stock-based compensation expense) of 58 cents per share raced past the Zacks Consensus Estimate by 29 cents. Results in the quarter were helped by strong sales of antibiotic injection, Cubicin (daptomycin). Adjusted earnings surpassed the year-ago adjusted earnings by 3 cents.

The fourth quarter in details

Revenue in the final quarter of 2011 climbed 31.6% to $212.9 million. Revenues beat the Zacks Consensus Estimate of $205.0 million. Cubicin, which is approved in the US and several other markets for the treatment of severe bacterial infections of the skin and bloodstream, accounted for the bulk of the revenues reported in the quarter.

Net product sales in the US climbed 24.4% to $192.6 million. Most of the US sales came from Cubicin. Net sales of the product in the US climbed 22.8% to $190.1 million in the reported quarter. Entereg, added to Cubist Pharma's portfolio following the acquisition of Adolor Corporation in December 2011, accounted for the remaining US sales. Entereg is marketed to expedite gastrointestinal recovery following bowel resection surgery. Net revenues from international sales of Cubicin jumped 71% to $10.8 million in the fourth quarter of 2011. Total Cubicin sales climbed 25% in the final quarter of 2011 to $200.9 million.

During the quarter, Cubist Pharma recognized $3.7 million as service revenues pertaining to its two-year agreement with Optimer Pharmaceuticals Inc. ( OPTR ) for the co-promotion of Optimer's Dificid (fidaxomicin) in the US. The drug, developed by Optimer, is approved for treating patients suffering from clostridium difficile-associated diarrhea . Dificid is available in US markets since July 2011. Cubist Pharma recorded $5.7 million as other revenues in the final quarter of 2011.

Annual Results

Cubist Pharma earned (excluding special items but including stock-based compensation expense) $2.36 per share in 2011 as opposed to approximately $2.46 in 2010. Earnings were well above the Zacks Consensus Estimate of 74 cents.

Total net revenues at Cubist Pharma climbed 18% to $754.0 million driven by strong Cubicin sales. Revenues in 2011 surpassed the Zacks Consensus Estimate of $746.0 million. Cubicin sales climbed 18% in 2011 to $735.5 million. The drug fared well in the US (up 16.6% to $698.8 million) as well as internationally (up 45% to $36.7 million).

2012 Projection

Apart from announcing the financial results, Cubist Pharma also gave guidance for 2012. The biopharmaceutical company expects to end 2012 with revenues in the range of $880 - $910 million, driven by strong sales of Cubicin in the US. The Zacks Consensus Estimate is below the guidance range provided by the company and currently stands at $873 million.

Net US sales of Cubicin are expected in the range of $770 - $795 million. International Cubicin sales for 2012 are projected to be approximately $45 million. Net sales of Entereg in the US are expected in the range of $40 - $45 million. Service revenues and other revenues are expected to add up to $25 million in 2012.

Research and development costs for 2012 are projected in the range of $285 and $295 million in 2012 ($184.5 million in 2011). The increase is primarily due to Cubist Pharma's efforts to develop its pipeline. Selling, general and administrative expenses in 2012 are expected in the range of $165-$175 million ($163.2 million in 2011). Adjusted operating income is forecasted in the range of $245 - $250 million for 2012.

Our Recommendation

Currently we have an Underperform recommendation on Cubist Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short-run.

CUBIST PHARM ( CBST ): Free Stock Analysis Report
OPTIMER PHARMAC ( OPTR ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CBST , OPTR

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