Cubist Pharmaceuticals Inc.
) announced the pricing of $700 million of convertible senior
notes. The unsecured notes will be issued in two series of $300
million and $400 million (principal amount). The company has
provided an over-allotment option to the underwriters for
purchasing an additional $50 million worth of notes.
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The $300 million notes will carry an annual interest rate of
1.125% and are set to mature on Sep 1, 2018. The $400 million
notes will bear an interest rate of 1.875% and are set to mature
on Sep 1, 2023. The interest amount will be payable on Sep1 and
Mar 1 from Mar 1, 2014 in each case. Cubist Pharma further stated
that the notes cannot be redeemed before they mature. Moreover,
the notes can be converted into cash, shares of Cubist Pharma's
common stock or a combination of both in certain
Cubist Pharma expects to raise a net amount of $679 million from
this transaction. The company intends to make use of the amount
primarily to finance its impending acquisition of antibiotics
Optimer Pharmaceuticals, Inc.
). The deal is expected to close by year end.
Following the deal with Optimer Pharma, Cubist Pharma extended
its deal with Optimer Pharma (which was scheduled to end in Jul
2013) by up to a year. As per the deal, the companies co-promote
Dificid (fidaxomicin) in the U.S. for the treatment of C.
difficile acquired diarrhea. Dificid is available in the U.S.
since Jul 2011.
Cubist Pharma, a biopharmaceutical company, carries a Zacks Rank
#3 (Hold). Companies such as
Gilead Sciences Inc.
) appear to be more attractive in the biopharma space. Both
stocks carry a Zacks Rank #1 (Strong Buy).