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Tickers in this Article: VPHM, CBST
Cubist Pharmaceuticals, Inc. (CBST) recently announced the first enrolment in one of two identical, global phase III studies of CB-315. The pivotal studies will evaluate the safety and efficacy of the candidate versus ViroPharma Inc.'s (VPHM) Vancocin (vancomycin) in patients suffering from clostridium difficile-associated diarrhea (CDAD). Around 608 patients will be enrolled in each trial. We are pleased with the company's focus on developing its pipeline. Currently marketed products at Cubist Pharma include Cubicin and Entereg. Entereg became a part of the company's portfolio following the December 2011 acquisition of Adolor.

In June 2012, the company discussed its strategic goal for the next five years. Cubist Pharma expects research and development expense to account for 25% of total revenues by 2017. Cubist Pharma also intends to focus on pipeline candidates, CXA-201 and CB-5945, apart from CB-315.

We remind investors that, in May 2012, Cubist Pharma announced positive results from two phase II studies of CB-5945. The other pipeline candidate, CXA-201, is in phase III development. Cubist Pharma also intends to file one investigational new drug (IND) application every 18 months. Merger and acquisition and in-licensing activities and other partnerships should help the company boost its pipeline.

As far as revenues are concerned, Cubist Pharma expects to generate around $2 billion of global revenues in 2017 on the back of organic growth. The company expects Cubicin sales in the US alone to exceed $1 billion and Entereg sales of about $100 million in 2017.

Our Recommendation

We believe that the successful development of the late-stage candidates would allow the company to achieve its $2 billion revenue guidance for 2012. We currently have a Neutral recommendation on Cubist Pharma. The stock carries a Zacks #3 Rank (Hold rating) in the short run.

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