This is from Merrill, 4/20
Cubist Pharmaceuticals Inc
Earnings Review; Solid Q, Focus Returns to PDUFA
Solid Cubicin sales; Label expansion PDUFA date set:
Cubist reported 1Q Cubicin sales of $37.3 MM in the US, compared to our
estimate of $37.6 MM and consensus of $38.9 MM. US sales figures suggest solid
demand growth in March. Encouragingly, Cubist reiterated '06 Cubicin sales
guidance of $190-205 MM, despite the expanded launch delay. Also, FDA
officially accepted Cubist's response to the approvable letter and set a May 26
PDUFA date. Despite a weak sector, we expect final label expansion in 2Q and
expanded launch, and high likelihood that the company posts its first profitably Q
in 2H to catalyze Cubist. Reiterate BUY.
Cubicin sales guidance maintained for '06
CBST reiterated sales guidance of $190-205 MM for '06, despite the delay in the
expanded launch (new PDUFA date of May 26) which is encouraging. CBST may
already be seeing an increase in demand for Cubicin prior to label expansion. We
had expected CBST to revise guidance down due to the delay because original
guidance assumed label expansion by the March 24 PDUFA date.
Expenses lower based on timing of items
1Q expenses were lower than expected, which helped Cubist post better EPS than
expected. Specifically, gross margins were better due to timing of the switch from
2 manufacturers to 1. As the 2nd manufacturer is phased out during '06, COGS
associated with product produced by that manufacturer will be higher, so there
could be GM volatility during '06. R&D expense guidance was maintained at
$63-68 MM, S&M at $57-60 MM and G&A at $25-27 MM. We expect R&D
spending to accelerate throughout '06 due to new Phase III trials for further
Cubicin label expansion and an IND for its next generation lipopeptide antibiotic.
