Cubist Pharmaceuticals Inc. proposed its initial public offering (IPO)of 2.5 million shares at the beginning of a summer slump inbiotechnology stocks and last week finally priced the equity financingat $6 per share, raising $15 million, which was considerably belowexpectations.

When the Cambridge, Mass., company registered for the offering inJune, it projected a price range of $11 to $13 per share. (SeeBioWorld Today, June 27, 1996, p. 1.)

After battling the summer's bearish two months, Cubist amended theIPO in September, lowering the shares to 2 million and theanticipated price to between $10 to $12.

Despite settling for $6 to get the IPO completed, Cubist sold theoriginally proposed 2.5 million shares and raised enough money forits development programs, which also are supported by three majorpharmaceutical company collaborations.

Cubist's stock (NASDAQ:CBST) debuted Friday and closed at$6.437.

The company's drug discovery focuses on developing new antibioticsby targeting various enzymes linked to protein synthesis in bacteriaand fungi that cause infections.

Its first alliance was forged with Pfizer Inc., of New York, for apotential $21.5 million in January 1996.

Cubist's second two collaborations with Bristol-Myers Squibb Co.,of New York, and Merck & Co., of Whitehouse Station, N.J., wererevealed in the IPO prospectus.

The deal with Bristol-Myers is worth up to $56.5 million and Merckhas agreed to pay Cubist as much as $20.5 million.

Bristol-Myers made an equity investment of $5 million and Pfizerinvested $4 million.

The three drug makers are using Cubist's genetic targets to screenagainst their chemical compound libraries for drug candidates.

Cubist's lead development programs target aminoacyl transfer RNAsynthetases, which are enzymes that assemble amino acids intoproteins. Disrupting those enzymes is designed to lead to cell death inthe pathogenic organisms.

Following the IPO, Cubist has about 8.9 million shares outstanding.Underwriters Hambrecht & Quist LLC, of New York, and PacificGrowth Equities Inc., of San Francisco, have options to purchaseanother 375,000 to cover overallotments. n

-- Charles Craig

(c) 1997 American Health Consultants. All rights reserved.