Cubist Pharmaceuticals Reports First Quarter 2013 Financial Results

  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
eileen.mcintyre@cubist.com
or
MEDIA:
Julie DiCarlo, 781-860-8777
Senior Director, Corporate Communications
julie.dicarlo@cubist.com
 
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