Cubist Pharmaceuticals Inc.
) third quarter 2013 earnings (excluding special items) of 41
cents per share fell well short of the Zacks Consensus Estimate
of 55 cents. Earnings were short of the year-ago figure by
approximately 34% due to higher expenses.
Revenues in the third quarter of 2013 climbed 12% to $266
million. The year-over-year rise was attributable to strong sales
of antibiotic injection, Cubicin (daptomycin). Cubicin accounted
for the bulk of the revenues reported in the quarter. Revenues
fell short of the Zacks Consensus Estimate of $270 million.
Net product sales in the U.S. climbed 11.6% to $243.6 million.
Most of the U.S. sales came from Cubicin. Net sales of the
product in the U.S. climbed 10.4% to $229.9 million in the third
quarter of 2013. Cubicin performed decently in international
markets with sales of the drug climbing 8.6% to $13 million.
Apart from revenues from Cubicin sales, total revenue at Cubist
Pharma primarily includes Entereg sales and service revenues
pertaining to the company's agreement with
Optimer Pharmaceuticals, Inc.
) to co-promote Dificid in the U.S. for C. difficile acquired
We note that in Jul 2013, Cubist Pharma had announced its
intention to acquire Optimer Pharma. The acquisition is expected
to be completed shortly. Following the completion of the deal,
Cubist Pharma will gain full control of Dificid, thus
strengthening its antibiotics portfolio. Moreover, Cubist Pharma
had acquired another antibiotics maker, Trius Therapeutics, in
the third quarter of 2013.
Entereg delivered revenues of $13.7 million in the third quarter
of 2013, up 35.6%. During the quarter, Cubist Pharma recognized
$3.8 million as service revenues pertaining to Dificid. Revenues
in the third quarter also included a milestone payment of $5
We note that earlier in the month, Entereg's label was
successfully expanded in the U.S. The U.S. Food and Drug
Administration cleared the drug for expediting gastrointestinal
recovery following any surgery that includes a bowel resection
with primary anastomosis. Prior to the label expansion, Entereg
was approved only in patients who needed surgery for colorectal
Total operating expenses (on a reported basis) at Cubist Pharma
came in at approximately $262 million, up 56.1% due to higher
research and development (R&D) and selling, general and
administrative (SG&A) expenses. An increase of 85% in
SG&A costs in the third quarter of 2013 was due to the merger
& acquisition activity of Cubist Pharma. R&D expenses
during the quarter climbed approximately 76% primarily due to
costs related to the acquisition of Trius Therapeutics. R&D
expenses also surged due to the development costs related to
Cubist Pharma's pipeline candidate ceftolozane/tazobactam.
Apart from ceftolozane/tazobactam, important phase III candidates
at Cubist Pharma include Surotomycin (CB-315) and Bevenopran
(CB-5945). In another significant move, Cubist Pharma filed a new
drug application with the FDA seeking approval for its antibiotic
candidate tedizolid phosphate for treating acute bacterial skin
and skin structure infections. Tedizolid phosphate was added to
Cubist Pharma's pipeline following its acquisition of Trius
2013 Guidance Adjusted
Apart from announcing its earnings results, Cubist Pharma made
adjustments to its 2013 guidance provided earlier in the year.
The company now expects R&D costs (inclusive of milestone
payments) for 2013 in the range of $465 million to $485 million
(old guidance: $415 million to $435 million). The guidance was
increased primarily due to costs related to the Trius acquisition
and expenses on ceftolozane/tazobactam and tedizolid phosphate.
Selling, general and administrative expenses in 2013 are now
expected in the range of $235-$250 million (old guidance:
$180-$195 million). Cubist Pharma increased the guidance
primarily due to costs associated with the acquisitions of Trius
Therapeutics (already completed) and Optimer Pharma (expected to
close shortly). Adjusted operating income is now expected in the
range $175-$195 million (old guidance: $230-$250 million).
Cubist Pharma also tweaked its revenue guidance for 2013. The
company now expects to end 2013 with revenues in the range of
$1.010-$1.035 billion (old guidance: $1-$1.045 billion). Net U.S.
sales of Cubicin are now expected in the range of $885-$900
million (old guidance: $900-$925 million). The reduction in
guidance is primarily due to the increased visibility as 3 out of
the 4 quarters have already passed.
International Cubicin sales for 2013 are now projected in the
range of $56-$58 million (old guidance: $53-$58 million). Net
sales of Entereg in the U.S. are now expected to be $50 million
(old guidance: $45-$50 million). Gross margin (on total product
revenue) is still expected in the range of 74%-75%. Service and
other revenues are expected to be $24 million, up $9 million from
the earlier projection.
ALEXION PHARMA (ALXN): Free Stock Analysis
CUBIST PHARM (CBST): Free Stock Analysis
NOVARTIS AG-ADR (NVS): Free Stock Analysis
OPTIMER PHARMAC (OPTR): Free Stock Analysis
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Cubist Pharma, a biopharmaceutical company, carries a Zacks Rank
Alexion Pharmaceuticals, Inc.
) appears to be more attractive in the biopharma space with a
Zacks Rank #2 (Buy).