I have followed Cubist for most of this year and have just moved to the sideline to watch how the market will react to the expected lower earnings and cash flow that will result from the very significant step-up of R&D spend that goes along with the numerous phase 3 studies.
Note I do not short stocks as a mater of principal.
Cubist up-dated guidance for full year 2012 R&D spend is 275 to 285 million, of which 118 mill were spend in 1H12, that means a step-up to 162 mill for 2H12. In a recent conference the CFO also indicated (without being prompted by a question) that considering the ongoing phase 3 programs investors should expect further ramp-up of R&D in 2013 vs 2012.
During 1H2012 Cubist had 4 phase 3 trials ongoing for CXA-201 ceftolozane - tazobactam ( 2 in cUTI and 2 in cIAI) they will run through 1H13
Early jul 12 they started 2 phase 3 trials of CB-315, which are expected to run for 6 quarters to end 2013 with estimated external cost of average 10 mill per quarter
Announced additional phase 3 trials to start during the next 12 months
CXA-201, 1 open label study in HABP/VABP and 1 pivotal phase 3 in VABP to start 2H12 runing beyond 2013.
CB-5945, 1 long-term safety study in OIC and 1 phase 3 efficacy study to start 2H12 and 2 additional phase 3 efficacy studies to start 1H13.
Also it should be noted that the diluted EPS of 0.58 reported for 2q12 was favorably impacted by a 14.2% tax rate while full year tax rate is expected to be about 30%.