Cubist Pharmaceuticals Inc.
) fourth quarter 2013 earnings (excluding special items) of 29
cents per share fell well short of the Zacks Consensus Estimate
of 33 cents. Moreover, earnings were short of the year-ago figure
by approximately 31% due to higher expenses.
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Including one-time items, Cubist Pharma incurred fourth quarter
loss of 8 cents per share, as opposed to the year-ago earnings of
Revenues in the fourth quarter of 2013 climbed 21.9% to $299.7
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
surpassed the Zacks Consensus Estimate of $288 million.
The biopharmaceutical company's full year earnings were $1.45 per
share, down 32.6% and below the Zacks Consensus Estimate of $1.53
per share. Revenues came in at $1.1 billion, up 14% and just
above the Zacks Consensus Estimate of $1.04 billion. Revenues in
2013 were marginally above the company's projected range of
The Fourth Quarter in Details
Net product sales in the U.S. climbed 21% to $274.8 million. Most
of the U.S. sales came from Cubicin. Net sales of the product in
the U.S. climbed 15.2% to $248.9 million in the fourth quarter of
2013. Apart from revenues from Cubicin sales, total product
revenue at Cubist Pharma comprises Entereg (up 26% to $13.8
million) and Dificid sales ($12.2 million) in the U.S. and sales
in international markets (up 44% to $20.9 million).
Cubist Pharma gained full control of Dificid (fidaxomicin), an
antibiotic for treating patients suffering from clostridium
difficile-associated diarrhea (CDAD), following the completion of
its acquisition of Optimer Pharmaceuticals in Oct 2013.This
strengthened the company's antibiotics portfolio. Moreover,
Cubist Pharma had acquired another antibiotics maker, Trius
Therapeutics, in the third quarter of 2013. During the quarter,
Cubist Pharma recognized $1.2 million as service revenues.
Both research and development (R&D) and selling, general and
administrative (SG&A) expenses were on the upswing during the
final quarter of 2013 leading to a rise in operating costs (on a
reported basis). The 82% increase in SG&A costs in the fourth
quarter of 2013 was due to the merger & acquisition activity
of Cubist Pharma. R&D expenses during the quarter climbed
approximately 40% primarily due to development costs related to
Cubist Pharma's pipeline candidates.
The acquisition of Trius added tedizolid phosphate (TR-701) to
Cubist Pharma's pipeline. The candidate is under priority review
in the U.S. for treating acute bacterial skin and skin structure
infections (ABSSSI). A final decision from the U.S. Food and Drug
Administration (FDA) is expected on Jun 20, 2014. European
approval of the candidate for the same indication is expected to
be sought by Jun 30, 2014. Cubist Pharma intends to commence
phase III studies on the candidate in the hospital-acquired
bacterial pneumonia (HABP)/ventilator-associated bacterial
pneumonia (VABP) indication by Mar 31, 2014.
Ceftolozane/tazobactam is another interesting candidate in Cubist
Pharma's pipeline. The impressive top-line data on
ceftolozane/tazobactam from the phase III studies in the
complicated urinary tract infections (cUTI) and complicated
intra-abdominal infections (cIAI) indications is encouraging. On
the back of positive results from these two phase III studies,
the company intends to submit a New Drug Application (NDA) for
ceftolozane/tazobactam to the FDA in the first half of 2014 for
both indications. Cubist Pharma also intends to do the same in
the EU in the latter half of the year. Furthermore, Cubist Pharma
intends to initiate a phase III study on ceftolozane/tazobactam
in patients suffering from in HABP/ VABP by Jun 30, 2014.
Apart from announcing its earnings results, Cubist Pharma also
provided guidance for 2014. The company now expects revenues in
the range of $1.19-$1.275 billion, well over 2013 levels. The
Zacks Consensus Estimate of $1.24 billion is towards the upper
end of the guided range. Net U.S. sales of Cubicin are expected
in the range of $0.97-$1.02 billion. Revenues from Dificid and
Entereg are projected in the range of $205-$235 million.
Service and other revenues are expected in the range of $15-$20
million. Gross margin (on an adjusted basis) is expected in the
range of 77%-78%.
The company expects R&D costs (inclusive of milestone
payments) for 2014 in the range of $460 - $480 million. Selling,
general and administrative expenses in 2014 are now expected in
the range of $310-$320 million.
The Way Forward at Cubist Pharma- Our View
We expect Cubicin sales to remain strong. Moreover, the full
control over Dificid following Optimer's acquisition will boost
revenues further at Cubist Pharma. Moreover, the pipeline led by
late-stage candidates, ceftolozane/tazobactam and tedizolid
phosphate is also encouraging. Approval of the candidates will
drive the company's long-term growth. We expect investor
focus to remain on Cubist Pharma's pipeline going forward.
Cubist Pharma currently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks include
Forest Laboratories, Inc.
). While Forest Laboratories and Actelion carry a Zacks Rank # 1
(Strong Buy), Medivation holds a Zacks Rank #2 (Buy).