Cubist Discusses Strategic Goals - Analyst Blog


Cubist Pharmaceuticals, Inc. ( CBST ) recently announced its strategic plans for the next five years at its Investor Day. Cubist Pharma discussed goals for top- and bottom-line growth and its future pipeline development prospects.

Cubist Pharma expects to generate around $2 billion of global revenues in 2017 on the back of organic growth. The company had raised its 2012 global sales guidance following a good first quarter to a band of $900 million to $930 million, from $880 million to $910 million earlier.

Cubist Pharma expects Cubicin sales in the US alone to exceed $1 billion in 2017. In 2011, Cubist Pharma reported Cubicin US sales of $698.8 million. On the first quarter earnings call, the company projected US Cubicin sales of $790-$850 million for 2012.

Meanwhile, Cubist Pharma expects Entereg sales of about $100 million in 2017. The company projects 2012 Entereg sales in the range of $40-$45 million after clocking $9.4 million in the first quarter of 2012.

The company stated it would focus on the late stage pipeline candidates CXA-201, CB-315, and CB-5945. The company also expects to have four new product candidates in late-stage clinical trials by 2017. The company expects its research and development expense to account for 25% of total revenues by 2017.

Cubist Pharma also intends to file one investigational new drug (IND) application every 18 months. Merger and acquisition and in-licensing activities and other partnerships should help the company boost its pipeline.

Moreover, the company intends to generate $700 million in non-GAAP annual adjusted operating income by 2017. Cubist Pharma expects selling, general and administrative expense and overall cost of goods sold to be approximately 20% each of total revenues by 2017.

Our Take

We believe that Cubicin is doing well and has the potential to reach its billion dollar sales goal in the US by 2017. We are also impressed by the upcoming development programs, as revealed by the company. With Cubicin and Entereg slated to deliver revenues of $1.1 billion in 2017, the balance $900 million in revenues should come from new products.

Successful development of the late-stage candidates would allow the company to achieve its $2 billion revenue guidance. We would be more comfortable with the company's total revenue targets once we see phase III data on the late-stage candidates.

We currently have a Neutral recommendation on Cubist Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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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 , IND

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