By Karen Young
Cubist Pharmaceuticals Inc. raised $125 million by offering 5.5 percent, seven-year subordinated notes, due in 2008 and convertible into Cubist common stock. Purchased by institutional buyers, the offering is expected to close Friday.
Cubist, based in Lexington, Mass., has granted the initial purchasers a 45-day option to purchase an additional $50 million in aggregate principal amount of notes.
The notes are convertible at $47.20 per share. Cubist¿s stock (NASDAQ:CBST) lost $3.82, or 8.8 percent, Tuesday to close at $39.18.
The company had slightly more than 28 million shares outstanding as of June 30 with a cash position of $116 million, said Jennifer LaVin, senior director of corporate communications for Cubist.
¿The first two quarters of this year, we burned about $17 million a quarter,¿ she said.
The company will use the money to fund clinical trials and commercialization of its investigational antibiotic Cidecin (daptomycin for injection), which has achieved the primary endpoint in its second pivotal trial in complicated skin and soft-tissue infection resulting from Gram-positive bacteria. The company reported these results earlier this month. (See BioWorld Today, Oct. 5, 2001.)
Cubist will present data from this pivotal trial Friday in San Francisco, at the annual meeting of the Infectious Disease Society of America.
Cidecin is the first drug designed from this new class called lipopeptides.
¿What we focus on internally is developing a franchise around this novel class,¿ LaVin said. ¿As with other anti-infectives that have developed multiple generations of antibiotics from one chemical class, we hope to be able to develop multiple generations of lipopeptides.¿
The new money also will be used for the company¿s oral ceftriaxone preclinical program, the oral daptomycin preclinical program and the company¿s overall lipopeptide drug discovery program. The ceftriaxone formulation is the first orally active version of the largest-selling intravenous antibiotic worldwide: Basel, Switzerland-based F. Hoffman-La Roche Ltd.¿s Rocephin.
Cubist acquired worldwide rights to oral ceftriaxone from International Health Management Associates Inc., of Chicago, in November 2000.
LaVin said the company is on track to complete proof-of-principle studies on oral ceftriaxone by year¿s end.
The money also will go toward Cubist¿s natural products program, its VITA (which stands for validation in vivo of targets and assays for anti-infectives) functional genomics and ChemInformatics technologies, and for working capital. The natural products program, among other things, provides the company with a novel natural product library suitable for high-throughput screening.
¿VITA is a way to accelerate the validation of novel anti-infective targets,¿ LaVin said. ¿We¿ve partnered that technology with Novartis [AG, of Basel, Switzerland] on a non-exclusive basis, and we also use the technology for our own in-house drug discovery program.¿
ChemInformatics discovers novel anti-infectives against the targets discovered through VITA technology, LaVin said.