Cubist Gains Antibiotic Power Products in $1.6B Buying Spree
By Catherine Shaffer
With the acquisition of Trius Therapeutics Inc. and Optimer Pharmaceuticals Inc. after the market closed Tuesday for a total of more than $1.6 billion, Cubist Pharmaceuticals Inc. has made a play to position itself as an antibiotic powerhouse in the biotech field.
Cubist will gain possession of Dificid (fidaxomicin), the first antibacterial drug approved in more than 25 years for Clostridium difficile, with its acquisition of San Diego, Calif.-based Optimer for $801 million. And its $818 million purchase of Trius, also headquartered in San Diego, will secure control of that company's late-stage antibiotic candidate, tedizolid phosphate (TR-701), which is in development for methicillin-resistant Staphylococcus aureus (MRSA).
In an investor conference Tuesday evening, Cubist CEO Mike Bonney said that the combined transactions would be accretive to the company's earnings in 2015 in a non-GAAP basis, with peak revenues between $600 million and a billion annually.
“These transactions are right in our wheelhouse,” Bonney said. “Bringing us one antibiotic we know intimately, and another in the gram positive space where we've been a pioneer in the last decade.”
Regarding the simultaneous timing of the two transactions, Bonney said it was “really a function of where each of those individual companies are and where we are.”
For the Trius transaction, Cubist, of Lexington, Mass., will acquire all outstanding shares of Trius for $13.50 each in cash, or about $707 million. In addition, each stockholder will receive a contingent value right worth an additional cash payment of up to $2 for each share upon achievement of certain sales milestones, for a total transaction value of $818 million.
Trius's tedizolid sailed through Phase III trials, meeting all primary and secondary endpoints in two studies in patients with acute bacterial skin and skin structure infections. In those studies, tedizolid 200 mg once daily for six days was statistically non-inferior to 10 days of linezolid (Zyvox, Pfizer Inc.) 600 mg twice daily.
The compound is partnered with Bayer Pharma AG for development and commercialization outside the U.S., Europe and Canada.
The companies expect to submit a new drug application to the FDA in the second half of 2013, and a marketing authorization application to the European Medicines Agency in the first half of 2014.
“We plan to launch tedizolid in the U.S. in late 2014, said Ronald Farquhar, senior vice president of Discovery and Pharmaceutical Sciences for Cubist.
Cubist expects tedizolid to be highly complementary to its internal portfolio, particularly Cubicin (daptomycin for injection), its approved MRSA product.
Farquhar said that Cubicin and tedizolid address different patient populations, with different severity and types of infections. Tedizolid is a once-daily, short-course, oral antibiotic that “could be an attractive option for patients with less serious skin infections,” whereas Cubicin is a better option for sicker patients with more serious skin or blood infections.
Trius stock (NASDAQ:TSRX) closed at $11.71 Tuesday evening, a gain of 26 cents, or 2.27 percent, over its last close. It had cash of $84 million as of March 31, 2013.
Meanwhile, Cubist has also snapped up Optimer for $10.75 per share, or about $535 million. On top of its up-front payment, Optimer is granting each stockholder a contingent value right entitling the holder to a cash payment of up to $5 for each share if certain net sales of Dificid are achieved, for a total transaction value of $801 million.
The FDA approved Dificid in May 2011 for treatment of C. difficile associated diarrhea (CDAD) in adults over 18. The drug proved itself non-inferior to oral vancomycin after 10 days treatment in two large Phase III trials, and it was superior to vancomycin in sustained clinical response through 25 days beyond the end of treatment.
There are more than 700,000 cases of CDAD in the U.S. annually, with a recurrence rate of 20 percent to 30 percent, and about 14,000 deaths per year.
As part of an agreement dating to April 2011, Cubist and Optimer have been co-promoting Dificid to physicians, hospitals, and other healthcare institutions. Under the new merger agreement, the co-promotion period is extended for up to one year.
Leerink Swann analyst Marko Kozul wrote, “OPTR represents an attractive biotech pick over the next 12 months and beyond based on expanding use of Dificid and growth in sales.”
Optimer stock (NASDAQ: OPTR) closed at $13.29 Tuesday.
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