By Chelsey Dulaney
Merck & Co. said its $8.4 billion acquisition of Cubist
Pharmaceuticals Inc. will proceed as planned, even after a federal
court ruled that the company's flagship antibiotic could be subject
to generic competition in two years.
Shares of Merck were off 3% in premarket trading, while Cubist
was down 2%.
Merck announced plans to buy Cubist on Monday, part of its
deeper push into antibiotics, an area seeing renewed interest
because of the rise of dangerous new infections.
Cubicin, an intravenous antibiotic used to treat serious
infections--including those caused by bacteria resistant to older
antibiotics--currently accounts for more than 80% of Cubist's
sales. The drug logged $967 million in revenue last year.
But a federal judge in Delaware issued an order Monday afternoon
concluding that certain claims in Cubist patents covering Cubicin
were invalid because the claimed inventions would have been obvious
to people skilled in drug development. The patents are due to
expire in 2019 and 2020.
Cubist said late Monday that the court decision wouldn't affect
the company's proposed sale to Merck. The company said the judge
upheld the validity of one patent, which will prohibit Hospira Inc.
from selling generic Cubicin before June 2016. The company said it
plans to appeal the portion of the judge's ruling that invalidated
claims for later-expiring patents. Hospira has challenged the
validity of a U.S. patent for the drug.
Merck on Tuesday said it still expects the deal to modestly add
to earnings next year and contribute more than $1 billion in
revenue.
The deal, which also includes the assumption of $1.1 billion in
debt, is worth $102 a share, a 37% premium to Friday's close.
Lexington, Mass.-based Cubist is one of few companies that
specializes in drugs to treat infectious diseases and other
conditions, primarily in a hospital setting.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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