- Total Net Revenues of $309.2 Million,
Up 16% Over Q3 2013
- Non-GAAP Adjusted Operating Income of
$99.1 Million; GAAP Operating Income of $67.8 Million
- Non-GAAP Diluted EPS of $0.58; GAAP
Diluted EPS of $0.29
Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) today announced
results for the third quarter ended September 30, 2014. The Company
will host a conference call and webcast today at 5:00 p.m. ET
(details below).
Financial highlights for the third quarter of 2014
(unaudited)
- Q3 2014 total net revenues were $309.2
million, up 16% compared to $266.0 million in Q3 2013.
- U.S. CUBICIN® (daptomycin for
injection) net product revenues increased 12% to $256.7 million
from $229.9 million in Q3 2013, the first quarter with U.S. net
revenue representing an annualized run rate of greater than $1
billion.
- International product revenues were
$16.6 million compared to $13.0 million in Q3 2013.
- Non-GAAP adjusted operating income was
$99.1 million compared to $52.5 million in the third quarter of
2013. GAAP operating income was $67.8 million compared to $4.1
million in the third quarter of 2013.
- Non-GAAP diluted earnings per share
(EPS) was $0.58 compared to $0.41 in the third quarter of 2013.
GAAP diluted EPS was $0.29 compared to $(0.50) in the third quarter
of 2013.
“This was a strong quarter for Cubist in which we made
significant progress against our 2014 financial and business
objectives, driven by CUBICIN and meaningful contributions across
our portfolio,” said Mike Bonney, CEO of Cubist. “We are pleased
with the early interest in our new antibiotic for the treatment of
adult acute bacterial skin and skin structure infections, SIVEXTRO,
as well as the traction we are seeing in our re-launch of DIFICID
and with sales of ENTEREG. Third quarter results reflect important
momentum across our portfolio and complement our continued launch
preparation leading up to the December FDA action date of our
potential blockbuster ceftolozane/tazobactam, now known as
ZERBAXA.”
As of September 30, 2014, Cubist had $687.0 million in cash,
cash equivalents and investments. The total number of Cubist’s
common shares outstanding as of September 30, 2014, was
76,012,863.
Recent Corporate Highlights
- On October 20, Cubist announced that
current President and Chief Operating Officer Rob Perez will become
the Company’s Chief Executive Officer, effective January 1, 2015.
At that time, Mr. Bonney will retire from his role as CEO and
become non-executive Chair of Cubist’s Board of Directors and
current Board Chair, Kenneth M. Bate, will become Lead Independent
Director.
- On September 18, Cubist announced the
official opening of its international headquarters in Zurich,
Switzerland, reinforcing its commitment to global public health.
Located in a growing biopharmaceutical hub in Switzerland, the
Company’s international operations complement Cubist’s corporate
headquarters in Lexington, Massachusetts, in the United
States.
Recent Product and Pipeline Highlights
- On August 22, the European Medicines
Agency (EMA) announced that it accepted for review the Company’s
Marketing Authorization Application (MAA) for its investigational
antibiotic ZERBAXA™ (ceftolozane/tazobactam for injection). Cubist
is seeking approval of ZERBAXA for the treatment of complicated
urinary tract infections and complicated intra-abdominal
infections, with a decision from the European Commission (EC)
expected during the second half of 2015. Prior to the MAA
acceptance, the U.S. Food and Drug Administration (FDA) accepted
the Company’s New Drug Application (NDA) for ZERBAXA with Priority
Review and assigned an action date of December 21, 2014.
- On August 5, Cubist announced that
SIVEXTRO® (tedizolid phosphate), indicated for the treatment of
adult acute bacterial skin and skin structure infections (ABSSSI),
is now available in the U.S. in once-daily I.V. and oral
formulations. Approved by the FDA on June 20, 2014, SIVEXTRO
addresses ABSSSI caused by susceptible Gram-positive bacteria,
including methicillin-resistant Staphylococcus aureus — which has
been categorized by the U.S. Centers for Disease Control and
Prevention as a serious public health threat.
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 Q3 2014 FINANCIAL RESULTSTuesday,
October 21, 2014 at 5:00 pm ET
U.S./Canada Attendee Dial-in: (855)
319-7654International Attendee Dial-in: (484) 756-4327Conference
ID: 11866394
24-HOUR REPLAY U.S./CANADA: (855)
859-205624-HOUR REPLAY INTERNATIONAL: (404) 537-3406Conference ID:
11866394
CALL WILL ALSO BE BROADCAST LIVE, LISTEN ONLY,
VIA THE WEB
AT:https://cubist.webex.com/cubist/onstage/g.php?t=a&d=294736098Attendee
Password: 10212014
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.
Forward Looking Statements
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
third quarter 2014 financial results; our progress against our 2014
financial and business objectives; the projected CUBICIN U.S.
revenue annualized run rate of greater than $1 billion; our belief
that ZERBAXA has the potential to achieve blockbuster status; the
Prescription Drug User Fee Act (PDUFA) action date for our NDA with
the FDA for ZERBAXA, including our launch preparation actions; the
expected timing for a decision from the EC on our MAA with the EMA
for ZERBAXA; the therapeutic and commercial potential of SIVEXTRO,
including the level of interest in SIVEXTRO; our progress in our
re-launch of DIFICID® and sales of ENTEREG®; the expected
retirement of our current CEO and the expected appointment of our
new CEO, our new non-executive Chair of the Board and our new Lead
Independent Director; and our commitment to global public health,
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
third quarter 2014 financial results will differ materially from
our expected results disclosed in this release; regulatory
developments, including the risk that the FDA and EC may not agree
with our interpretation of the results from the clinical studies of
ZERBAXA, may not approve on a timely basis or at all our NDA and/or
MAA for ZERBAXA or may require additional data, analysis,
information or further studies that may not be clinically feasible
or financially practicable; the review of our NDA and/or MAA for
ZERBAXA may take longer than anticipated, including as a result of
internal regulatory authority constraints; our ability to achieve
our financial and business objectives, 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 ZERBAXA 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
ZERBAXA 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; the risk that the planned leadership transition
does not occur in the manner or on the time frame that we currently
expect; we may encounter other unanticipated or unexpected risks
with respect to the development, manufacture or commercialization
of our products and product candidates; 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)
September 30, 2014 December 31, 2013
ASSETS Cash, cash equivalents and investments $ 686,982 $
578,558 Accounts receivable, net 115,125 123,155 Inventory 120,552
116,829 Property and equipment, net 182,532 177,544 Deferred tax
assets, net 46,877 52,507 In-process research and development
237,400 896,400 Goodwill 381,930 381,930 Other intangible assets,
net 1,322,382 721,066 Other assets 89,492 97,143 Total
assets $ 3,183,272 $ 3,145,132
LIABILITIES
AND STOCKHOLDERS’ EQUITY Accounts payable and accrued
liabilities $ 198,101 $ 276,955 Deferred tax liabilities, net
363,772 357,113 Deferred revenue 34,519 37,421 Contingent
consideration 167,454 223,322 Debt and other liabilities, net
879,779 856,590 Total liabilities 1,643,625 1,751,401 Total
stockholders' equity 1,539,647 1,393,731 Total liabilities
and stockholders' equity $ 3,183,272 $ 3,145,132
CUBIST PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME
UNAUDITED
(in thousands, except share and per
share data)
Three Months Ended September 30, Nine Months Ended
September 30, 2014 2013 2014
2013 Revenues: U.S. CUBICIN product revenues, net $ 256,694
$ 229,920 $ 703,601 $ 659,082 U.S. DIFICID product revenues, net
17,440 — 47,723 — U.S. ENTEREG product revenues, net 15,315 13,676
43,842 37,265 U.S. SIVEXTRO product revenues, net 2,434 —
2,434 — Total U.S. product revenues, net
291,883 243,596 797,600 696,347 International product revenues
16,619 12,987 51,131 40,349 Other revenues 653 9,410
16,055 18,005 Total revenues, net 309,155
265,993 864,786 754,701 Costs and
expenses: Cost of product revenues 94,959 60,989 257,113 179,705
Research and development expense 66,032 123,423 291,497 352,822
Contingent consideration expense (income) 2,224 2,641 (55,868 )
7,280 Selling, general and administrative expense 77,791 73,855
227,510 171,945 Restructuring charges 340 1,029 6,248
1,029 Total costs and expenses 241,346 261,937
726,500 712,781 Operating income 67,809 4,056
138,286 41,920 Total other (income) expense, net 14,031
43,171 42,253 56,051 Income (loss) before
income taxes 53,778 (39,115 ) 96,033 (14,131 ) Provision (benefit)
for income taxes 30,949 (5,220 ) 24,943 (1,566 ) Net
income (loss) $ 22,829 $ (33,895 ) $ 71,090 $ (12,565
) Basic net income (loss) per common share $ 0.30 $ (0.50 )
$ 0.94 $ (0.19 ) Diluted net income (loss) per common share $ 0.29
$ (0.50 ) $ 0.90 $ (0.19 ) Shares used in calculating: Basic
net income (loss) per common share 75,834,443 67,841,665 75,400,064
66,122,521 Diluted net income (loss) per common share 85,995,727
67,841,665 85,901,660 66,122,521
CUBIST PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
UNAUDITED
(in thousands)
Three Months Ended September 30, Nine Months Ended
September 30, 2014 2013 2014
2013 Operating income reconciliation: 1 GAAP
operating income $ 67,809 $ 4,056 $ 138,286 $ 41,920 Cost of
product revenues adjustments 1 27,762 5,620 60,903 16,619 Research
and development expense adjustments 1 927 12,305 7,482 52,305
Contingent consideration expense (income) 2,224 2,641 (55,868 )
7,280 Selling, general and administrative expense adjustments 1 —
26,875 2,158 26,875 Restructuring charges 340 1,029
6,248 1,029 Non-GAAP adjusted operating income $ 99,062 $
52,526 $ 159,209 $ 146,028 Non-GAAP other (income) expense 2 5,338
3,828 16,579 9,431 Non-GAAP provision for income taxes 2 41,311
15,965 63,372 44,670 Non-GAAP net income $
52,413 $ 32,733 $ 79,258 $ 91,927
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 September 30, Nine Months Ended
September 30, 2014 2013 2014
2013 Cost of product revenues reconciliation: GAAP
cost of product revenues $ 94,959 $ 60,989 $ 257,113 $ 179,705
Intangible asset amortization (26,554 ) (4,552 ) (57,344 ) (13,529
) Inventory fair value step-up (1,208 ) (1,068 ) (3,559 ) (3,090 )
Non-GAAP cost of product revenues $ 67,197 $ 55,369 $
196,210 $ 163,086
Product gross margin
reconciliation: GAAP product gross margin 69.2 % 76.2 % 69.7 %
75.6 % Intangible asset amortization 8.6 % 1.8 % 6.8 % 1.8 %
Inventory fair value step-up 0.4 % 0.4 % 0.4 % 0.4 % Non-GAAP
product gross margin 78.2 % 78.4 % 76.9 % 77.8 %
Research
and development expenses reconciliation: GAAP research and
development expenses $ 66,032 $ 123,423 $ 291,497 $ 352,822
Acquisition-related expenses (110 ) (12,305 ) (5,032 ) (12,305 )
Intangible asset amortization (817 ) — (2,450 ) — Upfront license
fees — — — (40,000 ) Non-GAAP research and
development expenses $ 65,105 $ 111,118 $ 284,015
$ 300,517
Selling, general and
administrative expenses reconciliation: GAAP selling, general
and administrative expenses $ 77,791 $ 73,855 $ 227,510 $ 171,945
Acquisition-related expenses — (26,875 ) (2,158 ) (26,875 )
Non-GAAP selling, general and administrative expenses $ 77,791
$ 46,980 $ 225,352 $ 145,070
Other (income) expense reconciliation: GAAP other (income)
expense $ 14,031 $ 43,171 $ 42,253 $ 56,051 Non-cash debt discount
amortization (8,693 ) (4,765 ) (25,674 ) (12,042 ) Loss on
extinguishment of convertible notes — (34,578 ) —
(34,578 ) Non-GAAP other (income) expense $ 5,338 $ 3,828
$ 16,579 $ 9,431
Provision (benefit)
for income taxes reconciliation: GAAP provision (benefit) for
income taxes $ 30,949 $ (5,220 ) $ 24,943 $ (1,566 ) Tax adjustment
10,362 21,185 38,429 46,236 Non-GAAP
provision for income taxes $ 41,311 $ 15,965 $ 63,372
$ 44,670
CUBIST PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP
FINANCIAL INFORMATION
UNAUDITED
(in thousands, except share and per
share amounts)
Three Months Ended September 30, Nine Months Ended
September 30, 2014 2013 2014 2013
Non-GAAP net income reconciliation: GAAP net income (loss) $
22,829 $ (33,895 ) $ 71,090 $ (12,565 ) Non-cash debt discount
amortization 8,693 4,765 25,674 12,042 Loss on extinguishment of
convertible notes — 34,578 — 34,578 Intangible asset amortization
27,371 4,552 59,794 13,529 Inventory fair value step-up 1,208 1,068
3,559 3,090 Restructuring charges 340 1,029 6,248 1,029
Acquisition-related expenses 110 39,180 7,190 39,180 Upfront
license fees — — — 40,000 Contingent consideration expense (income)
2,224 2,641 (55,868 ) 7,280 Tax adjustment (10,362 ) (21,185 )
(38,429 ) (46,236 ) Non-GAAP net income $ 52,413 $ 32,733
$ 79,258 $ 91,927
Diluted earnings
per common share reconciliation: GAAP diluted earnings (loss)
per common share $ 0.29 $ (0.50 ) $ 0.90 $ (0.19 ) Non-GAAP
dilutive adjustments 0.29 1 0.91 1 0.03 1 1.36
1 Non-GAAP diluted earnings per common share $ 0.58 $
0.41 $ 0.93 $ 1.17
Shares used in
diluted per common share calculation reconciliation: GAAP
shares used in diluted earnings (loss) per common share 85,995,727
67,841,665 85,901,660 66,122,521 Non-GAAP dilutive share
adjustments 9,705,442 2 18,644,465 3 9,705,442
2 17,925,826 3 Non-GAAP shares used in diluted earnings per
common share 95,701,169 86,486,130 95,607,102
84,048,347
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
3 Additional dilutive weighted average shares
issuable upon conversion of Cubist's outstanding convertible notes
and exercise or vesting of Cubist's outstanding equity awards
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