Cubist Pharamceuticals Inc. is moving into a new 88,000-square-foot, $34 million corporate headquarters at 65 Hayden Ave. in Lexington, Mass., thanks to the issuance of $39 million in convertible notes to John Hancock Life Insurance Co.
The convertible note issue will cover the building cost plus $5 million of leasehold improvements. The notes are for five years, carry a coupon rate of 8.5 percent, and can be converted to Cubist stock at a premium to the market price, to be determined at the time of commitment. Cubist retains the right to redemption after three years.
Bay City Captial acted as advisors to Cubist in the transaction.
"This transaction allows Cubist to eliminate the typical lease expenses from our income statement, and utilizes our stock with only a 2 percent dilution to provide the company with an efficient working environment to execute our goals and objectives," said Scott Rocklage, chairman, president and CEO of Cubist.
About 35,000 square feet in the company's new headquarters will be laboratory space. The company moves from Cambridge, Mass., where it occupies three buildings.
Cubist said the consolidation involved in the relocation will improve operating efficiencies, as well as deferring rent costs, making the company more profitable in the future. It plans to move in the third quarter of 2001.
The company focuses on research, development and commercialization of novel antimicrobial drugs to combat life-threatening bacterial and fungal infections. Cubist is currently developing several compounds including Cidecin, an injectable formulation of daptomycin now in Phase III testing.
Cubist partners include Novartis Pharma AG and Merck & Co. for the discovery of novel anti-infectives, among others. - Matthew Willett-