Cubist Pharmaceuticals Reports First Quarter 2013 Financial Results *Total Net Revenues of $229.9 Million, Up 9% Over Q1 2012; U.S. CUBICIN Net Revenues of $202.0 Million, Up 9% Over Q1 2012 *Non-GAAP Diluted EPS of $0.34; GAAP Diluted EPS of $0.09 *Non-GAAP Adjusted Operating Income of $42.2 Million; GAAP Operating Income of $9.8 Million Business Wire LEXINGTON, Mass. -- April 18, 2013 Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) today announced results for the first quarter ended March 31, 2013. The Company will host a conference call and webcast today at 5:00 p.m. ET (details below). Financial highlights for the first quarter of 2013 (unaudited) *Total net revenues were up 9% over the same period in 2012. Q1 2013 total net revenues were $229.9 million compared to $211.7 million in Q1 2012. *U.S. CUBICIN® (daptomycin for injection) net product revenues increased 9% to $202.0 million from $184.7 million in Q1 2012. CUBICIN international revenues were $12.4 million compared to $12.7 million in Q1 2012. *Non-GAAP adjusted operating income was $42.2 million compared to $71.5 million in the first quarter of 2012. GAAP operating income was $9.8 million compared to $60.0 million in the first quarter of 2012. *Non-GAAP diluted earnings per share (EPS) was $0.34 compared to $0.55 in the first quarter of 2012. GAAP diluted EPS was $0.09 compared to $0.45 in the first quarter of 2012. “As we enter this next chapter for the Company, Cubist continues to deliver solid financial results while driving continued growth,” said Michael Bonney, CEO of Cubist. “We continue to enhance our leadership team and took several important growth-focused actions during the quarter, including obtaining rights to expand our acute care pipeline through our option agreement with Adynxx and securing the worldwide commercialization rights to our potential blockbuster candidate, ceftolozane/tazobactam. We are making solid progress toward our Building Blocks of Growth and are well-positioned to extend our leadership in the hospital and acute care environment.” First quarter ENTEREG® (alvimopan) net product revenues were $11.2 million, up 19% compared to $9.4 million in the first quarter of 2012. Service revenues for the Company’s co-promote of DIFICID® (fidaxomicin) for the first quarter were $3.6 million. As of March 31, 2013, Cubist had $940.7 million in cash, cash equivalents and investments. The total number of Cubist’s common shares outstanding as of March 31, 2013, was 65,163,806. Updated R&D Expense Guidance The Company recorded $25.0 million of R&D expense in the first quarter related to the acquisition of certain rights to ceftolozane from Astellas Pharma, Inc. As a result, the Company updated its R&D expense guidance for 2013 to $400 million - $420 million from the previous estimate of $375 million - $395 million. Recent Pipeline Highlights *In February, Cubist obtained rights to expand its acute care pipeline by entering into an option agreement with Adynxx, Inc. under which Cubist has the exclusive right to acquire Adynxx following the data readout of Adynxx’s ongoing Phase 2 trial for its lead product candidate, AYX1. AYX1 targets EGR1, which is a key transcription factor in the establishment of pain that is rapidly induced after painful stimuli or injury. *In February, the U.S. Food and Drug Administration (FDA) designated the Company’s late-stage antibiotic candidate, ceftolozane/tazobactam, as a Qualified Infectious Disease Product (QIDP) for the indications of Hospital-Acquired Bacterial Pneumonia (HABP)/Ventilator-Associated Bacterial Pneumonia (VABP) and Complicated Urinary Tract Infections (cUTI). Additionally, ceftolozane/tazobactam and surotomycin have been granted Fast Track status in their previously granted QIDP indications, Complicated Intra-Abdominal Infections (cIAI) and Clostridium difficile-associated Diarrhea (CDAD), respectively. *In March, Cubist obtained the rights to ceftolozane in certain Asia-Pacific and Middle East territories from Astellas. With the attainment of these rights, Cubist now owns worldwide rights to develop, manufacture, and commercialize ceftolozane/tazobactam, subject to ongoing milestone and royalty obligations to Astellas. Recent Corporate Highlights *Michael Tomsicek was promoted to Senior Vice President and Chief Financial Officer. After a decade of leadership at Cubist, David McGirr stepped down as CFO in March. He is serving as Senior Advisor to the CEO and will retire in 2014. *Thomas J. DesRosier joined Cubist as Senior Vice President, Chief Legal Officer, General Counsel and Secretary in March. He was previously Senior Vice President, General Counsel North America of Sanofi, and was the Chief Legal Officer of Genzyme Corporation prior to the acquisition of Genzyme by Sanofi . Use of Non-GAAP Financial Measures Cubist uses non-GAAP financial measures, such as non-GAAP net income, non-GAAP adjusted operating income and non-GAAP diluted EPS, to assess and analyze its operational results and trends and to make financial and operational decisions. Cubist believes these non-GAAP financial measures are also useful to investors because they provide greater transparency regarding Cubist’s operating performance. These non-GAAP financial measures should not be considered an alternative to measurements required by GAAP, such as net income, operating income and earnings per share, and should not be considered measures of Cubist’s liquidity. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Reconciliations between non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this press release after the unaudited condensed consolidated financial statements. ***********************CONFERENCE CALL & WEBCAST INFORMATION*********************** CUBIST Q1 2013 FINANCIAL RESULTS Thursday, April 18, 2013 at 5:00 pm ET U.S./Canada Attendee Dial-in: (855) 319-7654 International Attendee Dial-in: (484) 756-4327 Attendee Passcode: 27242301 24-HOUR REPLAY U.S./CANADA: (855) 859-2056 24-HOUR REPLAY INTERNATIONAL: (404) 537-3406 Conference ID: 27242301 CALL WILL ALSO BE BROADCAST LIVE, LISTEN ONLY, VIA THE WEB AT: https://tinyurl.com/CBST1Q13 Attendee Password: 041813 Replay will be available for 90 days at www.cubist.com ********************************************************************************* About Cubist Cubist Pharmaceuticals, Inc. is a biopharmaceutical company focused on the research, development, and commercialization of pharmaceutical products that address significant unmet medical needs in the acute care environment. Cubist is headquartered in Lexington, Mass. Additional information can be found at Cubist’s web site at www.cubist.com. Cubist Safe Harbor Statement This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Any statements contained herein which do not describe historical facts, including but not limited to, statements regarding: (i) our unaudited first quarter financial results, (ii) our belief in the blockbuster potential of ceftolozane/tazobactam, (iii) the potential for Cubist to acquire Adynxx, and (iv) our Building Blocks of Growth, are forward-looking statements which involve risks and uncertainties that could cause actual results to differ materially from those discussed in such forward-looking statements. Such risks and uncertainties include: the risk that our final first quarter financial results will differ materially from our expected results disclosed in this release; our ability to continue to grow revenues from the sale of CUBICIN and ENTEREG; the ability of our third-party suppliers to produce and deliver adequate amounts of our products and product candidates; the strength of, and our ability to successfully enforce, our intellectual property portfolio protecting our products and product candidates; competition from generic drug companies such as Teva and Hospira; our ability to successfully develop, gain marketing approval for and commercially launch ceftolozane/tazobactam and our other product candidates for their planned indications and on the timelines that we expect; our ability to discover, in-license or acquire new products and product candidates; our ability to achieve and manage our growth in our business; the potential that the Phase 2 trial for AYX1 will not yield positive results or support further development of AYX1; and those additional factors discussed in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. We caution investors not to place considerable reliance on the forward-looking statements contained in this press release. These forward-looking statements speak only as of the date of this document, and we undertake no obligation to update or revise any of these statements. CUBIST PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED (in thousands) March 31, December 31, 2013 2012 ASSETS Cash, cash equivalents and investments $ 940,667 $ 979,396 Accounts receivable, net 92,659 93,467 Inventory 79,800 79,440 Property and equipment, net 166,272 166,465 Deferred tax assets, net 17,935 14,190 In-process research and development 272,700 272,700 Other assets 335,438 326,727 Total assets $ 1,905,471 $ 1,932,385 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued expenses $ 155,670 $ 209,236 Deferred tax liabilities, net 99,562 103,081 Deferred revenue 39,464 40,875 Contingent consideration 191,266 189,213 Debt and other liabilities, net 404,726 399,232 Total liabilities 890,688 941,637 Total stockholders' equity 1,014,783 990,748 Total liabilities and stockholders' equity $ 1,905,471 $ 1,932,385 CUBIST PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME UNAUDITED (in thousands, except share and per share data) Three months ended March 31, 2013 2012 Revenues: U.S. CUBICIN product revenues, net $ 202,045 $ 184,707 U.S. ENTEREG product revenues, net 11,203 9,442 Total U.S. product revenues, net 213,248 194,149 International product revenues 12,403 12,654 Service revenues 3,624 3,664 Other revenues 654 1,225 Total revenues, net 229,929 211,692 Costs and expenses: Cost of product revenues 55,675 53,952 Research and development 114,209 51,172 Contingent consideration 2,053 2,829 Selling, general and administrative 48,201 43,780 Total costs and expenses 220,138 151,733 Operating income 9,791 59,959 Other income (expense), net (6,202) (8,513) Income before income taxes 3,589 51,446 (Benefit) provision for income taxes (2,499) 18,652 Net income $ 6,088 $ 32,794 Basic earnings per share $ 0.09 $ 0.52 Diluted earnings per share $ 0.09 $ 0.45 ^1 Shares used in calculating: Basic earnings per share 64,935,601 63,001,379 Diluted earnings per share 67,034,457 84,386,002 ^1 Includes add back of interest expense, debt issuance costs and debt discount amortization on 2.50% notes and 2.25% notes to income, net of tax effect CUBIST PHARMACEUTICALS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION UNAUDITED (in thousands, except share and per share data) Three months ended Reconciliation of GAAP net income March 31, to non-GAAP net income 2013 2012 GAAP net income $ 6,088 $ 32,794 Non-cash debt discount 3,607 4,827 amortization ENTEREG intangible asset 4,424 4,589 amortization ENTEREG inventory step-up 963 534 Expenses related to the - 3,589 acquisition of Adolor Acquisition of rights from 25,000 - Astellas Contingent consideration 2,053 2,829 Tax adjustment ^1 (15,963) (5,274) Non-GAAP net income $ 26,172 $ 43,888 Non-GAAP basic earnings per share $ 0.40 $ 0.70 Non-GAAP diluted earnings per $ 0.34 ^2 $ 0.55 ^3 share Shares used in calculating: Non-GAAP basic earnings per share 64,935,601 63,001,379 Non-GAAP diluted earnings per 82,458,609 84,386,002 share ^1 The methodology used to compute the tax adjustments above was revised in Q1 2013 to reflect the tax effect of non-GAAP adjustments and to include material, non-recurring discrete items for the period.The prior year tax adjustment has been revised to conform to the current quarter’s presentation. ^2 Includes add back of interest expense and debt issuance costs on 2.50% notes to income, net of tax effect ^3 Includes add back of interest expense and debt issuance costs on 2.25% notes and 2.50% notes to income, net of tax effect CUBIST PHARMACEUTICALS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION UNAUDITED (in thousands) Three months ended Reconciliation of GAAP operating income to March 31, non-GAAP adjusted operating income 2013 2012 Operating income $ 9,791 $ 59,959 ENTEREG intangible asset amortization 4,424 4,589 ENTEREG inventory step-up 963 534 Expenses related to the acquisition of Adolor - 3,589 Acquisition of rights from Astellas 25,000 - Contingent consideration 2,053 2,829 Non-GAAP adjusted operating income $ 42,231 $ 71,500 CUBIST PHARMACEUTICALS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION UNAUDITED (in thousands, except share and per share data) Three months ended March 31, 2013 2012 Reconciliation of GAAP basic earnings per share to non-GAAP basic earnings per share Non-GAAP basic net income - from $ 26,172 $ 43,888 table above GAAP and Non-GAAP basic shares 64,935,601 63,001,379 GAAP basic earnings per share $ 0.09 $ 0.52 Non-GAAP adjustments - from table 0.31 0.18 above Non-GAAP basic earnings per share $ 0.40 $ 0.70 Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share Non-GAAP basic net income - from $ 26,172 $ 43,888 table above Non-GAAP dilutive adjustments 2,132 ^1 2,490 ^2 Non-GAAP diluted net income $ 28,304 $ 46,378 GAAP diluted shares 67,034,457 84,386,002 Non-GAAP dilutive adjustments 15,424,152 ^3 - Non-GAAP diluted shares 82,458,609 84,386,002 GAAP diluted earnings per share $ 0.09 $ 0.45 Non-GAAP dilutive adjustments 0.25 0.10 Non-GAAP diluted earnings per $ 0.34 $ 0.55 share ^1 Includes add back of interest expense and debt issuance costs on 2.50% notes to income, net of tax effect ^2 Includes add back of interest expense and debt issuance costs on 2.25% notes and 2.50% notes to income, net of tax effect ^3 Weighted average shares issued on full conversion Contact: Cubist Pharmaceuticals, Inc. INVESTORS: Cubist Pharmaceuticals, Inc. Eileen C. McIntyre, 781-860-8533 Vice President, Investor Relations firstname.lastname@example.org or MEDIA: Julie DiCarlo, 781-860-8777 Senior Director, Corporate Communications email@example.com
Cubist Pharmaceuticals Reports First Quarter 2013 Financial Results
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