Cubist Pharmaceuticals Inc.’s (CBST) second quarter 2013 earnings (excluding special items) of 42 cents per share fell well short of the Zacks Consensus Estimate of 54 cents. Moreover, earnings were short of the year-ago figure by 25% due to higher expenses.
Revenues in the second quarter of 2013 climbed 12.2% to $258.8 million. The year-over-year rise was attributable to strong sales of antibiotic injection, Cubicin (daptomycin). Cubicin accounted for the bulk of the revenues reported in the quarter. Revenues surpassed the Zacks Consensus Estimate of $255 million.
Net product sales in the US climbed 14.1% to $239.5 million. Most of the US sales came from Cubicin. Net sales of the product in the US climbed 13.4% to $227.1 million in the second quarter of 2013. Cubicin performed well in international markets with sales of the drug climbing 31.6% to $15 million. Apart from revenues from Cubicin sales, total revenue at Cubist Pharma comprises primarily of Entereg sales and service revenues pertaining to the company’s agreement with Optimer Pharmaceuticals, Inc. (OPTR) to co-promote Dificid in the US for C. difficile acquired diarrhea. The deal is expected to end shortly.
Entereg delivered revenues of $12.4 million in the second quarter of 2013, up 27.6%. During the quarter, Cubist Pharma recognized $3.7 million as service revenues pertaining to Dificid. Cubist Pharma recorded $0.7 million as other revenues in the second quarter of 2013.
Total operating expenses (on a reported basis) at Cubist Pharma came in at approximately $167.8 million, up 52.3% due to higher research and development (R&D) expenses, as Cubist Pharma continues to invest in its pipeline. Important phase III candidates at Cubist Pharma include ceftolozane/tazobactam (formerly CXA-201), Surotomycin (CB-315) and Bevenopran (CB-5945).
Reported operating expenses were inclusive of the $15 million paid by Cubist Pharma to the privately held Hydra Biosciences pertaining to an amendment to the agreement regarding Cubist Pharma’s preclinical Transient Receptor Potential Ankyrin repeat 1 program.
2013 Guidance Tweaked
Apart from announcing its earnings results, Cubist Pharma made some adjustments to its 2013 guidance provided earlier in the year. The company now expects R&D costs for 2013 in the range of $415 million to $435 million (old guidance: $400 million to $420 million). The guidance was increased following the payment of $15 million made in the second quarter of 2013 to Hydra Biosciences. Selling, general and administrative expenses in 2013 are still expected in the range of $180–$195 million. Adjusted operating income continues to be forecast in the range of $230–$250 million for 2013.
Cubist Pharma also maintained its guidance pertaining to its revenue items. Net US sales of Cubicin are still expected in the range of $900–$925 million. International Cubicin sales for 2013 continue to be projected in the range of $53–$58 million. Net sales of Entereg in the US are still expected in the range of $45–$50 million.
Cubist Pharma, a biopharmaceutical company, carries a Zacks Rank #3 (Hold). Biopharmaceutical stocks such as Medivation, Inc. (MDVN) and Sarepta Therapeutics, Inc. (SRPT) appear to be more attractive. While Medivation carries a Zacks Rank #2 (Buy), Sarepta carries a Zacks Rank #1(Strong Buy).
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