Cubist Pharmaceuticals Announces Proposed Offering of $600 Million of Convertible Senior Notes

  Cubist Pharmaceuticals Announces Proposed Offering of $600 Million of
  Convertible Senior Notes

     Notes to be Offered in Two $300 Million Series, Due in 2018 and 2020

Business Wire

LEXINGTON, Mass. -- September 3, 2013

Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) today announced its intention to
commence an offering, subject to market and other conditions, of $600 million
in convertible senior unsecured notes that are expected to be issued in two
$300 million series, with one series maturing on September 1, 2018 (2018
notes) and the other series maturing on September 1, 2020 (2020 notes and
together with the 2018 notes, the Notes). The Notes will be offered and sold
to qualified institutional buyers pursuant to Rule 144A under the Securities
Exchange Act of 1933, as amended. Cubist also expects to grant the initial
purchasers of the Notes an option to purchase up to an additional $50 million
aggregate principal amount of each series of the Notes.

The Notes will bear cash interest, payable semi-annually, beginning on March
1, 2014. The Notes will not be redeemable prior to maturity. The Notes will be
convertible, only during certain periods and subject to certain circumstances,
into cash, shares of Cubist common stock, or a combination of cash and shares
of Cubist’s common stock, at Cubist’s election. Final terms of each series of
the Notes, including interest rates, conversion rates, conversion prices, and
certain other terms of the offering, will be determined at the time of
pricing.

In connection with the pricing of the Notes, Cubist also expects to enter into
one or more privately negotiated convertible note hedge transactions and
warrant transactions with one or more of the initial purchasers or their
respective affiliates (the option counterparties) in order to reduce the
potential dilution with respect to shares of Cubist's common stock upon any
conversion of the Notes and/or offset any cash payments Cubist is required to
make in excess of the principal amount of converted Notes. If the initial
purchasers exercise their option to purchase additional Notes, Cubist may
enter into additional convertible note hedge and warrant transactions. The
warrant transactions will have a dilutive effect with respect to Cubist's
common stock to the extent that the market price per share of Cubist's common
stock, as measured under the terms of the warrant transactions, exceeds the
applicable strike price of the warrants, which is anticipated to be
significantly higher than the closing price of Cubist’s common stock on the
date the warrants are issued.

Cubist intends to use the majority of the net proceeds of the offering to fund
its previously announced acquisition of Optimer Pharmaceuticals, Inc. (NASDAQ:
OPTR) and to pay the cost of the convertible note hedge transactions (after
such cost is partially offset by proceeds from the warrant transactions). The
remaining net proceeds from the offering will be used for general corporate
purposes.

Cubist has been advised that, in connection with the convertible note hedge
and warrant transactions, the option counterparties or their respective
affiliates expect to purchase shares of Cubist’s common stock and/or enter
into various derivative transactions with respect to Cubist’s common stock
concurrently with or shortly after the pricing of the Notes. This activity
could increase (or reduce the size of any decrease in) the market price of
Cubist’s common stock or the Notes at that time. In addition, the option
counterparties or their respective affiliates may, from time to time following
the pricing of the Notes and prior to the maturity of the Notes, enter into or
unwind various derivatives with respect to Cubist’s common stock and/or
purchase or sell Cubist’s common stock in secondary market transactions (and
are likely to do so during any observation period related to a conversion of
Notes). This activity could also cause a decrease or avoid an increase in the
market price of Cubist’s common stock or the Notes.

The offer and sale of the Notes are not being registered under the Securities
Act of 1933, as amended, or any state securities laws. The Notes may not be
offered or sold in the United States except pursuant to an exemption from the
registration requirements of the Securities Act and any applicable state
securities laws.

This news release does not constitute an offer to sell or a solicitation of an
offer to buy the notes described herein, nor shall there be any sale of these
notes in any state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the laws of
such jurisdiction.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, including Cubist’s
intention to commence an offering of Notes and enter into convertible note
hedge transactions and warrant transactions, the expected terms of the
offering, the Notes and the hedge and warrant transactions and Cubist’s
anticipated use of proceeds. These statements are based on current
expectations or beliefs and are subject to factors and uncertainties that
could cause actual results to differ materially from those described in the
forward-looking statements, including without limitation, whether or not
Cubist will be able to consummate the offering and the hedge and warrant
transactions on the timeline or with the terms anticipated, if at all, and, if
consummated, that Cubist will also close its recently announced acquisition of
Optimer on the anticipated timeline, or at all, so that it can use the
proceeds of the offering as anticipated. Cubist is providing this information
as of the date of this press release and assumes no obligation to update any
forward-looking statement to reflect events or circumstances occurring after
the date of this press release.

Contact:

Cubist Pharmaceuticals, Inc.
INVESTORS:
Eileen C. McIntyre, 781-860-8533
Vice President, Investor Relations
eileen.mcintyre@cubist.com
or
MEDIA:
Julie DiCarlo, 781-860-8063
Senior Director, Corporate Communications
julie.dicarlo@cubist.com
 
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