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1Q Earnings Beat at Cubist Pharma
Cubist Pharmaceuticals Inc.’s first-quarter 2013 earnings (excluding special items) of 34 cents per share beat the Zacks Consensus Estimate by a penny. Earnings were however short of the year-ago figure by 38.2%. The year-over-year decline was primarily attributable to higher expenses.
Revenues in the first quarter of 2013 climbed 8.6% to $229.9 million. The year-over-year rise was attributable to strong sales of antibiotic injection, Cubicin (daptomycin). Cubicin, which is approved in the US and several other markets for the treatment of severe bacterial infections of the skin and bloodstream, accounted for the bulk of the revenues reported in the quarter. Revenues were however short of the Zacks Consensus Estimate of $244 million.
Net product sales in the US climbed 9.8% to $213.2 million. Most of the US sales came from Cubicin. Net sales of the product in the US climbed 9.4% to $202 million in the first quarter of 2013. Cubicin did not perform well in international markets with sales of the drug declining 2% to $12.4 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 to co-promote Dificid in the US for C. difficile acquired diarrhea. The deal is expected to end in Jul 2013.
Entereg, added to Cubist Pharma’s portfolio following the acquisition of Adolor Corporation in Dec 2011, delivered revenues of $11.2 million in the first quarter of 2013, up 2.8% sequentially. During the quarter, Cubist Pharma recognized $3.6 million as service revenues pertaining to Dificid, flat year over year. Cubist Pharma recorded $0.7 million as other revenues in the first quarter of 2013.
Total operating expenses (on a reported basis) at Cubist Pharma came in at approximately $164 million, up 67% due to higher research and development (R&D) expenses, as Cubist Pharma continues to invest in its pipeline. Reported operating expenses were inclusive of the $25 million paid by Cubist Pharma to Astellas Pharma Inc. . Following the deal, Cubist Pharma acquired the remaining rights of ceftolozane from Astellas. Ceftolozane is the key component of Cubist Pharma's antibiotic candidate CXA-201 (ceftolozane/tazobactam).
Following the new agreement, Cubist Pharma gained the rights to develop and market CXA-201 in certain Asia-Pacific and the Middle East countries. Cubist Pharma now has global rights pertaining to CXA-201. 2013 Guidance Tweaked
Apart from announcing its earnings results, Cubist Pharma made some adjustments to its 2013 guidance provided in January. The company now expects R&D costs for 2013 in the range of $400 million to $420 million (old guidance: $375 million to $395 million). The guidance was increased following the $25 million recorded by Cubist Pharma as R&D expense in the first quarter of 2013 pertaining to its deal with Astellas. 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 #4 (Sell). Celgene Corporation ( CELG - Analyst Report) is more favorably placed in the biopharma space carrying a Zacks Rank #2 (Buy).