Cubist Pharmaceuticals Reports Second Quarter 2013 Financial Results *Total Net Revenues of $258.8 Million, Up 12.2% Over Q2 2012; U.S. CUBICIN Net Revenues of $227.1 Million, Up 13.5% Over Q2 2012 *Non-GAAP Diluted EPS of $0.42; GAAP Diluted EPS of $0.23 *Non-GAAP Adjusted Operating Income of $51.3 Million; GAAP Operating Income of $28.1 Million Business Wire LEXINGTON, Mass. -- July 18, 2013 Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) today announced results for the second quarter ended June 30, 2013. The Company will host a conference call and webcast today at 5:00 p.m. ET (details below). Financial Highlights for the Second Quarter of 2013 (unaudited) *Total net revenues were up 12.2% over the same period in 2012. Q2 2013 total net revenues were $258.8 million compared to $230.6 million in Q2 2012. *U.S. CUBICIN® (daptomycin for injection) net product revenues increased 13.5% to $227.1 million from $200.2 million in Q2 2012. CUBICIN international revenues were $15.0 million compared to $11.4 million in Q2 2012. *Non-GAAP adjusted operating income was $51.3 million compared to $71.1 million in the second quarter of 2012. GAAP operating income was $28.1 million compared to $61.5 million in the second quarter of 2012. *Non-GAAP diluted earnings per share (EPS) was $0.42 compared to $0.56 in the second quarter of 2012. GAAP diluted EPS was $0.23 compared to $0.58 in the second quarter of 2012. “We made important progress across the company this quarter, highlighted by continued strong top-line growth and advancement of our exciting late-stage pipeline,” said Michael Bonney, CEO of Cubist. “We are pleased to have now secured Fast-Track status from the FDA for ceftolozane/tazobactam in all three of its potential indications, and we look forward to reporting top-line Phase 3 data from the cUTI and cIAI trials later this year. We are making progress against our Building Blocks of Growth goals and continue to enhance our leadership in the acute care environment.” Second quarter ENTEREG® (alvimopan) net product revenues were $12.4 million, up 27.6% compared to $9.7 million in the second quarter of 2012. Service revenues for the Company’s co-promote of DIFICID® (fidaxomicin) for the second quarter were $3.7 million. This will be the final quarter reflecting the full service fee from Cubist’s agreement with Optimer, which concludes in July. As of June 30, 2013, Cubist had $1.0 billion in cash, cash equivalents and investments. The total number of Cubist’s common shares outstanding as of June 30, 2013, was 66,013,909. Pipeline Update Cubist also announced the initiation of a randomized, open-label study evaluating the efficacy and safety of ceftolozane/tazobactam (formerly CXA-201) in patients with ventilator-associated bacterial pneumonia (VABP). Ceftolozane/tazobactam is an antibacterial consisting of a novel anti-pseudomonal cephalosporin, with tazobactam, a well-established β-lactamase inhibitor. The primary endpoint of this study is to compare the clinical cure rates of ceftolozane/tazobactam to piperacillin/tazobactam. The Company will provide an update on all of its pipeline activity, including its Phase 3 program for ceftolozane/tazobactam, on today’s second quarter earnings call. Recent Company Highlights *In May, the FDA granted the Company’s late-stage antibiotic candidate, ceftolozane/tazobactam, Fast Track status in the previously granted Qualified Infectious Disease Product (QIDP) indications, hospital-acquired bacterial pneumonia (HABP)/VABP and complicated urinary tract infections (cUTI). The FDA previously granted Fast Track status for ceftolozane/tazobactam in complicated intra-abdominal infections (cIAI) in February 2013. *Dr. Lorianne Masuoka joined Cubist as Chief Medical Officer and Senior Vice President, Clinical Development and Medical Affairs. She was previously Senior Vice President/Chief Medical Officer at Nektar Therapeutics. *For the fifth consecutive year, Cubist was named to the Globe 100, the Boston Globe’s annual ranking of the 100 top-performing public companies headquartered in Massachusetts. Cubist was ranked number six overall and was named the top performing biotech company. 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 Q2 2013 FINANCIAL RESULTS Thursday, July 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: 96695003 24-HOUR REPLAY U.S./CANADA: (855) 859-2056 24-HOUR REPLAY INTERNATIONAL: (404) 537-3406 Conference ID: 96695003 CALL WILL ALSO BE BROADCAST LIVE, LISTEN ONLY, VIA THE WEB AT: https://cubist.webex.com/cubist/onstage/g.php?t=a&d=625133922 Attendee Password: 071813 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 our unaudited second quarter financial results; the expected timing of clinical trial data readouts for ceftolozane/tazobactam; and 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 second 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; and those additional factors discussed in our most recent Quarterly Report on Form 10-Q 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) June 30, December 31, 2013 2012 ASSETS Cash, cash equivalents and investments $ 1,000,599 $ 979,396 Accounts receivable, net 101,609 93,467 Inventory 86,177 79,440 Property and equipment, net 168,404 166,465 Deferred tax assets, net 18,343 14,190 In-process research and development 272,700 272,700 Other assets 334,362 326,727 Total assets $ 1,982,194 $ 1,932,385 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable and accrued expenses $ 188,030 $ 209,236 Deferred tax liabilities, net 94,486 103,081 Deferred revenue 38,225 40,875 Contingent consideration 193,852 189,213 Debt and other liabilities, net 408,213 399,232 Total liabilities 922,806 941,637 Total stockholders' equity 1,059,388 990,748 Total liabilities and stockholders' $ 1,982,194 $ 1,932,385 equity CUBIST PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME UNAUDITED (in thousands, expect share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2013 2012 2013 2012 Revenues: U.S. CUBICIN product $ 227,117 $ 200,180 $ 429,162 $ 384,887 revenues, net U.S. ENTEREG product 12,386 9,706 23,589 19,148 revenues, net Total U.S. product 239,503 209,886 452,751 404,035 revenues, net International product 14,959 11,363 27,362 24,017 revenues Service 3,665 8,665 7,289 12,329 revenues Other revenues 652 653 1,306 1,878 Total 258,779 230,567 488,708 442,259 revenues, net Costs and expenses: Cost of product 63,041 58,891 118,716 112,843 revenues Research and 115,190 67,206 229,399 118,378 development Contingent 2,586 2,694 4,639 5,523 consideration Selling, general and 49,889 40,255 98,090 84,035 administrative Total costs 230,706 169,046 450,844 320,779 and expenses Operating 28,073 61,521 37,864 121,480 income Other income (6,678 ) (11,273 ) (12,880 ) (19,786 ) (expense), net Income before 21,395 50,248 24,984 101,694 income taxes Provision for 6,153 7,125 3,654 25,777 income taxes Net income $ 15,242 $ 43,123 $ 21,330 $ 75,917 Basic earnings $ 0.23 $ 0.68 $ 0.33 $ 1.20 per share Diluted earnings per $ 0.23 $ 0.58 ^1 $ 0.32 $ 1.04 ^1 share Shares used in calculating: Basic earnings 65,558,376 63,498,953 65,248,707 63,250,165 per share Diluted earnings per 67,731,976 81,166,329 67,385,141 81,001,476 share ^1 Includes add back of interest expense, debt issuance costs and debt discount amortization on 2.50% 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) Reconciliation Three Months Ended Six Months Ended of GAAP net June 30, June 30, income to non-GAAP net 2013 2012 2013 2012 income GAAP net $ 15,242 $ 43,123 $ 21,330 $ 75,917 income Non-cash debt discount 3,670 4,654 7,277 9,481 amortization Loss on partial — 3,728 — 3,728 extinguishment of 2.25% Notes ENTEREG intangible 4,552 4,589 8,977 9,177 asset amortization ENTEREG inventory 1,059 834 2,022 1,369 step-up Expenses related to the — 1,448 — 5,037 acquisition of Adolor Hydra license 15,000 — 15,000 — fee Acquisition of rights from — — 25,000 — Astellas Contingent 2,586 2,694 4,639 5,523 consideration Tax (9,087 ) (16,805 ) (25,051 ) (22,079 ) adjustment^1 Non-GAAP net $ 33,022 $ 44,265 $ 59,194 $ 88,153 income Non-GAAP basic earnings per $ 0.50 $ 0.70 $ 0.91 $ 1.39 share Non-GAAP diluted $ 0.42 ^2 $ 0.56 ^3 $ 0.77 ^2 $ 1.10 ^3 earnings per share Shares used in calculating: Non-GAAP basic earnings per 65,558,376 63,498,953 65,248,707 63,250,165 share Non-GAAP diluted 83,156,060 84,076,268 82,809,259 84,231,134 earnings per 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) Reconciliation of GAAP Three Months Ended June 30, Six Months Ended June operating income 30, to non-GAAP adjusted 2013 2012 2013 2012 operating income Operating income $ 28,073 $ 61,521 37,864 $ 121,480 ENTEREG intangible asset 4,552 4,589 8,977 9,177 amortization ENTEREG inventory 1,059 834 2,022 1,369 step-up Expenses related to the — 1,448 — 5,037 acquisition of Adolor Hydra license 15,000 — 15,000 — fee Acquisition of rights from — — 25,000 — Astellas Contingent 2,586 2,694 4,639 5,523 consideration Non-GAAP adjusted $ 51,270 $ 71,086 $ 93,502 $ 142,586 operating income CUBIST PHARMACEUTICALS, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION UNAUDITED (in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2013 2012 2013 2012 Reconciliation of GAAP basic earnings per share to non-GAAP basic earnings per share Non-GAAP basic net income - $ 33,022 $ 44,265 $ 59,194 $ 88,153 from table above GAAP and Non-GAAP basic 65,558,376 63,498,953 65,248,707 63,250,165 shares GAAP basic earnings per $ 0.23 $ 0.68 $ 0.33 $ 1.20 share Non-GAAP adjustments - 0.27 0.02 0.58 0.19 from table above Non-GAAP basic earnings per $ 0.50 $ 0.70 $ 0.91 $ 1.39 share Reconciliation of GAAP diluted earnings per share to non-GAAP diluted earnings per share Non-GAAP basic net income - $ 33,022 $ 44,265 $ 59,194 $ 88,153 from table above Non-GAAP dilutive 2,138 ^1 2,417 ^2 4,275 ^1 4,906 ^2 adjustments Non-GAAP diluted net $ 35,160 $ 46,682 $ 63,469 $ 93,059 income GAAP diluted 67,731,976 81,166,329 67,385,141 81,001,476 shares Non-GAAP dilutive 15,424,084 ^3 2,909,939 ^3 15,424,118 ^3 3,229,658 ^3 adjustments Non-GAAP 83,156,060 84,076,268 82,809,259 84,231,134 diluted shares GAAP diluted earnings per $ 0.23 $ 0.58 $ 0.32 $ 1.04 share Non-GAAP dilutive 0.19 (0.02 ) 0.45 0.06 adjustments Non-GAAP diluted $ 0.42 $ 0.56 $ 0.77 $ 1.10 earnings per 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. 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Cubist Pharmaceuticals Reports Second Quarter 2013 Financial Results
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