Cubist Pharmaceuticals Inc. rose the most in two years in late Nasdaq trading after the company agreed to license its antibiotic Cubicin to Teva Pharmaceutical Industries Ltd., resolving a patent dispute.
Cubist shares increased as much as 14 percent to $28.90 at 6:31 p.m. New York time in extended Nasdaq Stock Market trading. The stock gained 10 percent in the past 12 months.
Teva can start selling its generic version in June 2018 if Cubist is granted a six-month extension of marketing protection for pediatric use, Lexington, Massachusetts-based Cubist said today in a statement. The patent is due to expire in September 2019. Without pediatric clearance, Teva may sell Cubicin starting in December 2017.
“We believe shares will reflect the removal of a major overhang and could trade higher over time, especially as Cubicin sales begin growing again and the Street begins credit to its pipeline,” said Jason Kantor, an analyst with RBC Capitol Markets in San Francisco, in a note to clients.
Teva, based in Petah Tikva, Israel, declined 3.90 shekels, or 2.2 percent, to 173.70 shekels at 11:01 a.m. in Tel Aviv trading. It was the biggest intraday drop in three weeks.
Cubicin is Cubist’s only approved product, with $600 million in U.S. sales last year. Chief Executive Officer Mike Bonney anticipates the medicine will generate $1 billion in U.S. revenue before Teva’s version goes on sale, he said in a phone interview yesterday.
Bonney said in a conference call following the announcement that the settlement would better allow the company to work with others to develop its business.
“We’ve eliminated for them the uncertainty about what sort of runway Cubist has,” Bonney said.
Cubist’s intravenous antibiotic is used to treat skin infections caused by drug-resistant microorganisms. Under the agreement, Teva will buy its U.S. requirements of active ingredient daptomycin from Cubist for the period of the license.
“As Teva’s exclusive supplier, we expect we will enhance our participation in the market for daptomycin through our latest-to-expire patent,” Bonney said.
Cubist will also get a percentage of Teva’s gross profits from sales of the drug under the agreement. Bonney, in a conference call, wouldn’t disclose the details of either the gross sales or materials supply agreements.
Another generic maker successfully suing Cubist and entering the market would let Teva start selling the drug as soon as the other generic maker did, according to the agreement between Cubist and Teva, Bonney said.
Denise Bradley, a spokeswoman for Teva, declined to comment.