By Mary Welch

Cubist Pharmaceuticals Inc. raised $18.8 million in a private placement to fund development of the late-stage trials of daptomycin and the development of its proprietary genomic target validation and assay development VITA technology.

"We were aiming for between $15 million and $20 million, so this is a little on the high side of that," said Scott Rocklage, president and chief executive officer of the Cambridge, Mass. company. "It's our largest financing to date. There are no warrants or overallotments. It's a very clean deal."

Cubist sold 2.5 million shares of its common stock at $7.50, a 6 percent discount from the current price of $8. When the financing is completed, the company will have 20 million shares outstanding. The 2.5 million shares will represent about 12 percent of the total outstanding shares after the closing.

Pacific Growth Equities, of San Francisco, acted as the sole placement agent. Stock was purchased by new and current shareholders.

The company's lead product, daptomycin, is in Phase III trials for skin and soft-tissue infections, and in Phase II for blood stream infections. The Phase III trials involve 400 patients in both Europe and the U.S. The primary endpoint will be clinical outcome, as determined by disappearance of signs and symptoms. (See BioWorld Today, March 2, 1999, p. 1.)

Daptomycin is a novel anti-infective agent with potent activity against all gram-positive bacteria. It is a novel cyclic lipopeptide antibiotic derived from a fermentation process.

Daptomycin works at the bacterial cytoplasmic membrane and disrupts multiple aspects of membrane function. Although not clearly understood in detail, daptomycin's mechanism of antimicrobial action is distinct from those of other antibiotics, the company said. Cubist obtained an exclusive worldwide license to the compound from Eli Lilly and Co., of Indianapolis, that tested the drug in 300 patients before shelving development in 1991.

The VITA technology (validation in vivo of targets and assays for anti-infectives) enhances the quality of leads identified by screening target assays for anti-infectives. It generates functional biology data useful for prioritizing the most valuable protein therapeutic targets from clinically important pathogens, such as Staphylococcus aureus.

Early this year, Cubist entered into a research and licensing deal worth up to $33 million with Novartis Pharma AG, of Basel, Switzerland, including a $4 million equity investment. Novartis will use VITA to validate and develop assays for anti-infective targets and to identify new compounds for the development of anti-infective agents. (See BioWorld Today, Feb. 10, 1999, p. 1.)

Cubist ended the second quarter of 1999 with revenues of $863,000, compared to $374,00 for the same period last year. The net loss was $4.6 million, compared to $3 million for the same quarter last year. Total revenues for the first six months were $1.4 million, up from $887,000 for the first six months of 1998. Net loss was $9.1 million compared to $5.8 million for the first six months of 1998. The company had a cash balance of $15.5 million as of June 30.

The company's stock (NASDAQ:CBST) closed Friday at $8.062, up 6.25 cents.