- Total Net Revenues of $294.4 Million,
Up 14% Over Q2 2013
- Non-GAAP Adjusted Operating Income of
$41.4 Million; GAAP Operating Income of $42.2 Million
- Non-GAAP Diluted EPS of $0.23; GAAP
Diluted EPS of $0.30
Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) today announced
results for the second quarter ended June 30, 2014. 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 2014
(unaudited)
- Q2 2014 total net revenues were $294.4
million, up 14% compared to $258.8 million in Q2 2013.
- U.S. CUBICIN® (daptomycin for
injection) net product revenues increased 3% to $234.7 million from
$227.1 million in Q2 2013 which included a $6.6 million favorable
adjustment to revenue reserves.
- International product revenues were
$17.5 million compared to $15.0 million in Q2 2013.
- Non-GAAP adjusted operating income was
$41.4 million compared to $51.3 million in the second quarter of
2013. GAAP operating income was $42.2 million compared to $28.1
million in the second quarter of 2013.
- Non-GAAP diluted earnings per share
(EPS) was $0.23 compared to $0.42 in the second quarter of 2013.
GAAP diluted EPS was $0.30 compared to $0.23 in the second quarter
of 2013.
“This was another exciting quarter for Cubist in which we
launched an important new antibiotic treatment and made significant
progress advancing another key pipeline program,” said Michael
Bonney, CEO of Cubist. “The FDA’s approval of SIVEXTRO™, and
acceptance of our New Drug Application for our potential
blockbuster, ceftolozane/tazobactam, reinforces our position as the
worldwide leader in the research, development, and
commercialization of antibiotics with activity against a range of
resistant and problematic pathogens.”
As of June 30, 2014, Cubist had $643.5 million in cash, cash
equivalents and investments. The total number of Cubist’s common
shares outstanding as of June 30, 2014, was 75,570,915.
Recent Pipeline Highlights
- On June 20, Cubist received U.S. Food
and Drug Administration (FDA) approval for and subsequently
launched SIVEXTRO™ (tedizolid phosphate). SIVEXTRO is indicated for
the treatment of adult acute bacterial skin and skin structure
infections caused by susceptible Gram-positive bacteria, including
methicillin-resistant Staphylococcus aureus (MRSA), which has been
categorized by the U.S. Centers for Disease Control and Prevention
(CDC) as a serious public health threat.
- On June 19, the FDA accepted Cubist’s
New Drug Application (NDA) for its investigational antibiotic
ceftolozane/tazobactam with Priority Review. The FDA has assigned a
Prescription Drug User Fee Act (PDUFA) action date of December 21,
2014. Cubist is seeking FDA approval of ceftolozane/tazobactam for
the treatment of complicated urinary tract Infections (cUTI) and
complicated intra-abdominal infections (cIAI).
- On May 9, Cubist announced the first
detailed results from positive pivotal Phase 3 clinical trials of
ceftolozane/tazobactam in development to treat serious infections
including cUTI and cIAI. Cubist presented data on microbiological
eradication of key problematic Gram-negative pathogens, including
Pseudomonas aeruginosa and extended-spectrum beta-lactamase
(ESBL)-producing Escherichia coli (E. coli) and Klebsiella
pneumoniae.
Use of Non-GAAP Financial Measures
Cubist has presented certain non-GAAP financial measures,
including non-GAAP adjusted operating income, non-GAAP net income,
non-GAAP diluted earnings per share, non-GAAP cost of product
revenues, non-GAAP R&D expenses, non-GAAP SG&A expenses,
non-GAAP other income (expense) and non-GAAP provision for income
taxes. These non-GAAP financial measures exclude certain amounts,
expenses or income, from the corresponding financial measures
determined in accordance with accounting principles generally
accepted in the U.S. (GAAP). Management believes this non-GAAP
information is useful for investors, taken in conjunction with
Cubist’s GAAP financial statements, because it provides greater
transparency regarding Cubist’s operating performance. Management
uses these measures, among other factors, to assess and analyze
operational results and trends and to make financial and
operational decisions. Non-GAAP information is not prepared under a
comprehensive set of accounting rules and should only be used
to supplement an understanding of Cubist’s operating results as
reported under GAAP, not as a substitute for GAAP. In addition,
these non-GAAP financial measures are unlikely to be comparable
with non-GAAP information provided by other companies. The
determination of the amounts that are excluded from non-GAAP
financial measures is a matter of management judgment and depends
upon, among other factors, the nature of the underlying expense or
income amounts. Reconciliations between these non-GAAP financial
measures and the most comparable 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 2014 FINANCIAL RESULTSTuesday, July
22, 2014 at 5:00 pm ET
U.S./Canada Attendee Dial-in: (855)
319-7654International Attendee Dial-in: (484) 756-4327Conference
ID: 55596186
24-HOUR REPLAY U.S./CANADA: (855)
859-205624-HOUR REPLAY INTERNATIONAL: (404) 537-3406Conference ID:
55596186
CALL WILL ALSO BE BROADCAST LIVE, LISTEN ONLY,
VIA THE WEB
AT:https://cubist.webex.com/cubist/onstage/g.php?t=a&d=625014646Attendee
Password: 07222014
Replay will be available for 90 days at
www.cubist.com
*********************************************************************************
About Cubist
Cubist Pharmaceuticals, Inc. is a global 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, Massachusetts, with a central international office
located in Zurich, Switzerland. Additional information can be found
at Cubist’s web site at www.cubist.com. Also, connect with Cubist
on Twitter @cubistbiopharma and @cubistcareers, LinkedIn, or
YouTube.
Cubist Safe Harbor Statement
This press release contains forward-looking statements. Any
statements contained herein which do not describe historical facts,
including but not limited to, statements regarding: our expected
second quarter 2014 financial results; our belief that
ceftolozane/tazobactam has the potential to achieve blockbuster
status; the anticipated PDUFA action date for our NDA for
ceftolozane/tazobactam; and the therapeutic potential of SIVEXTRO
and ceftolozane/tazobactam, 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, among others: the
risk that our final second quarter 2014 financial results will
differ materially from our expected results disclosed in this
release; regulatory developments, including the risk that the FDA
may not agree with our interpretation of the results from the
clinical studies of ceftolozane/tazobactam, may not approve on a
timely basis or at all our NDA for ceftolozane/tazobactam or may
require additional data, analysis, information or further studies
that may not be clinically feasible or financially practicable; the
review of our NDA for ceftolozane/tazobactam may take longer than
anticipated, including as a result of internal FDA constraints; our
ability to achieve our strategic milestones and initiatives,
including as a result of our ability to continue to grow revenues
from the sale of our commercial products, generic and other
competition, manufacturing issues, our ability to successfully
develop, gain marketing approval for and commercially launch our
product candidates for their planned indications and on their
expected timelines, and our ability to discover, in-license or
acquire new products and product candidates; any marketing approval
for ceftolozane/tazobactam may impose significant limitations on
its use and additional post-marketing requirements; our ability to
obtain adequate pricing and reimbursement levels for our products;
our ability to successfully commercialize our products; the
acceptance of and demand for new pharmaceutical products;
competitive risks from current and future therapeutic alternatives
to our products; our ability to obtain, maintain and enforce
intellectual property for our products and product candidates;
additional clinical trials of SIVEXTRO and/or
ceftolozane/tazobactam may produce negative or inconclusive results
or may not be initiated or conducted in a timely manner; technical
difficulties, excessive costs or other issues relating to the
manufacture or supply of our products and product candidates,
including our ability to work with our third party contract
manufacturers that manufacture and supply our product and product
candidates on our behalf; our ability to work with, and the
performance of our third party contract research organizations that
help us conduct our clinical trials; we may encounter other
unanticipated or unexpected risks with respect to the development
or manufacture of our products and product candidates; the fact
that drug discovery and development is complex, time consuming,
expensive and fraught with a high risk of failure; and those
additional factors discussed in our most recent Annual Report on
Form 10-K and subsequent Quarterly Reports 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.
Tables to
follow
CUBIST PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
UNAUDITED
(in thousands)
June 30, 2014 December 31, 2013 ASSETS
Cash, cash equivalents and investments $ 643,482 $ 578,558 Accounts
receivable, net 107,395 123,155 Inventory 113,774 116,829 Property
and equipment, net 179,584 177,544 Deferred tax assets, net 65,556
52,108 In-process research and development 237,400 896,400 Goodwill
383,018 383,018 Other intangible assets, net 1,350,383 721,066
Other assets 100,380 97,143 Total assets $ 3,180,972
$ 3,145,821
LIABILITIES AND STOCKHOLDERS’
EQUITY Accounts payable and accrued liabilities $ 256,757 $
276,955 Deferred tax liabilities, net 363,358 357,802 Deferred
revenue 34,335 37,421 Contingent consideration 165,230 223,322 Debt
and other liabilities, net 873,593 856,590 Total liabilities
1,693,273 1,752,090 Total stockholders' equity 1,487,699
1,393,731 Total liabilities and stockholders' equity $ 3,180,972
$ 3,145,821
CUBIST PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
UNAUDITED
(in thousands, except share and per
share data)
Three Months Ended June 30, Six Months Ended June
30, 2014 2013 2014
2013 Revenues: U.S. CUBICIN product revenues,
net $ 234,723 $ 227,117 $ 446,907 $ 429,162 U.S. DIFICID product
revenues, net 15,930 — 30,283 — U.S. ENTEREG product revenues, net
14,606 12,386 28,527 23,589 Total U.S. product
revenues, net 265,259 239,503 505,717 452,751 International product
revenues 17,485 14,959 34,512 27,362 Other revenues 11,654
4,317 15,402 8,595 Total revenues, net 294,398
258,779 555,631 488,708 Costs and expenses:
Cost of product revenues 88,613 63,041 162,154 118,716 Research and
development expense 104,862 115,190 225,465 229,399 Contingent
consideration (income) expense (24,774 ) 2,586 (58,092 ) 4,639
Selling, general and administrative expense 80,057 49,889 149,719
98,090 Restructuring charges 3,469 — 5,908 —
Total costs and expenses 252,227 230,706 485,154
450,844 Operating income 42,171 28,073 70,477 37,864 Total
other expense (income), net 14,135 6,678 28,222
12,880 Income before income taxes 28,036 21,395 42,255
24,984 Provision (benefit) for income taxes 4,008 6,153
(6,006 ) 3,654 Net income $ 24,028 $ 15,242 $
48,261 $ 21,330 Basic net income per common share $
0.32 $ 0.23 $ 0.64 $ 0.33 Diluted net income per common share $
0.30 $ 0.23 $ 0.61 $ 0.32 Shares used in calculating: Basic
net income per common share 75,421,354 65,558,376 75,179,275
65,248,707 Diluted net income per common share 86,108,783
67,731,976 85,853,847 67,385,141
CUBIST PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
UNAUDITED
(in thousands)
Three Months Ended June 30, Six Months Ended June
30, 2014 2013 2014
2013 Operating income reconciliation: 1 GAAP
operating income $ 42,171 $ 28,073 $ 70,477 $ 37,864 Cost of
product revenues adjustments 1 17,157 5,611 33,141 10,999 Research
and development expense adjustments 1 1,833 15,000 6,555 40,000
Contingent consideration (income) expense (24,774 ) 2,586 (58,092 )
4,639 Selling, general and administrative expense adjustments 1
1,497 — 2,158 — Restructuring charges 3,469 — 5,908
— Non-GAAP adjusted operating income $ 41,353 $ 51,270 $
60,147 $ 93,502 Non-GAAP other expense (income) 2 5,577 3,008
11,241 5,603 Non-GAAP provision for income taxes 2 16,732
15,240 22,061 28,705 Non-GAAP net income $ 19,044
$ 33,022 $ 26,845 $ 59,194
1 Detail on the adjustments included herein is provided in the
tables below.
2 A reconciliation to the most comparable GAAP financial measure
is included in the tables below.
CUBIST PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
UNAUDITED
(in thousands, except
percentages)
Three Months Ended June 30, Six Months Ended June
30, 2014 2013 2014
2013 Cost of product revenues reconciliation: GAAP
cost of product revenues $ 88,613 $ 63,041 $ 162,154 $ 118,716
Intangible asset amortization (16,052 ) (4,552 ) (30,790 ) (8,977 )
Inventory fair value step-up (1,105 ) (1,059 ) (2,351 ) (2,022 )
Non-GAAP cost of product revenues $ 71,456 $ 57,430 $
129,013 $ 107,717
Product gross margin
reconciliation: GAAP product gross margin 68.7 % 75.2 % 70.0 %
75.3 % Intangible asset amortization 5.7 % 1.8 % 5.7 % 1.9 %
Inventory fair value step-up 0.4 % 0.4 % 0.4 % 0.4 % Non-GAAP
product gross margin 74.8 % 77.4 % 76.1 % 77.6 %
Research
and development expenses reconciliation: GAAP research and
development expenses $ 104,862 $ 115,190 $ 225,465 $ 229,399
Acquisition-related expenses (1,017 ) — (4,922 ) — Intangible asset
amortization (816 ) — (1,633 ) — Upfront license fees —
(15,000 ) — (40,000 ) Non-GAAP research and development
expenses $ 103,029 $ 100,190 $ 218,910 $
189,399
Selling, general and administrative
expenses reconciliation: GAAP selling, general and
administrative expenses $ 80,057 $ 49,889 $ 149,719 $ 98,090
Acquisition-related expenses (1,497 ) — (2,158 ) —
Non-GAAP selling, general and administrative expenses $ 78,560
$ 49,889 $ 147,561 $ 98,090
Other (income) expense reconciliation: GAAP other (income)
expense $ 14,135 $ 6,678 $ 28,222 $ 12,880 Non-cash debt discount
amortization (8,558 ) (3,670 ) (16,981 ) (7,277 ) Non-GAAP other
(income) expense $ 5,577 $ 3,008 $ 11,241 $
5,603
Provision (benefit) for income taxes
reconciliation: GAAP provision (benefit) for income taxes $
4,008 $ 6,153 $ (6,006 ) $ 3,654 Tax adjustment 12,724 9,087
28,067 25,051 Non-GAAP provision for income
taxes $ 16,732 $ 15,240 $ 22,061 $ 28,705
CUBIST PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
UNAUDITED
(in thousands, except share and per
share amounts)
Three Months Ended June 30, Six Months Ended June
30, 2014 2013 2014 2013
Non-GAAP net income
reconciliation:
GAAP net income $ 24,028 $ 15,242 $ 48,261 $ 21,330 Non-cash debt
discount amortization 8,558 3,670 16,981 7,277 Intangible asset
amortization 16,868 4,552 32,423 8,977 Inventory fair value step-up
1,105 1,059 2,351 2,022 Restructuring charges 3,469 — 5,908 —
Acquisition-related expenses 2,514 — 7,080 — Upfront license fees —
15,000 — 40,000 Contingent consideration (income) expense (24,774 )
2,586 (58,092 ) 4,639 Tax adjustment (12,724 ) (9,087 ) (28,067 )
(25,051 ) Non-GAAP net income $ 19,044 $ 33,022 $
26,845 $ 59,194
Diluted earnings per common share
reconciliation:
GAAP diluted earnings per common share $ 0.30 $ 0.23 $ 0.61 $ 0.32
Non-GAAP dilutive adjustments (0.07 ) (1 ) 0.19 (1 ) (0.27 )
(1 ) 0.45 (1 ) Non-GAAP diluted earnings per common share $
0.23 $ 0.42 $ 0.34 $ 0.77
Shares used in diluted per common share
calculation reconciliation:
GAAP shares used in diluted earnings per common share 86,108,783
67,731,976 85,853,847 67,385,141 Non-GAAP dilutive share
adjustments 4,246,131 (2 ) 15,424,084 (2 ) —
15,424,118 (2 ) Non-GAAP shares used in diluted earnings per
common share 90,354,914 83,156,060 85,853,847
82,809,259
1. Includes impact of non-GAAP adjustments from GAAP net income
to non-GAAP net income and add back of interest expense and debt
issuance costs on Cubist’s outstanding convertible notes, net of
tax effect
2. Additional dilutive weighted average shares issuable upon
conversion of Cubist’s outstanding convertible notes
Cubist Pharmaceuticals, Inc.INVESTORS:Eileen C. McIntyre,
781-860-8533Vice President, Investor
Relationseileen.mcintyre@cubist.comorMEDIA:Julie DiCarlo,
781-860-8063Senior Director, Corporate
Communicationsjulie.dicarlo@cubist.com