Antibiotic Giant Cubist Acquired by Merck In $9.5 B Deal
By C. Rajan, contributing writer
Massachusetts-based company Cubist Pharmaceuticals has announced that Merck will be acquiring Cubist in a deal valued at about $9.5 billion.
Under terms of the agreement, Merck will pay $8.4 billion for Cubist shares, and will also take over $1.1 billion in Cubist debt. The companies expect the transaction to close in the first quarter of 2015.
Merck’s decision to purchase Cubist is based on its alignment with Merck’s overall strategy and specific focus on the hospital acute care segment. Cubist has a strong pipeline of anti-infective medicines and has spent about $300 million on antibiotic drug research in just the past year, reports the Boston Globe. Its investigational drug, Zerbaxa, is pending approval from the U.S. FDA and is an attractive prospect for Merck’s hospital acute care business.
Cubist had announced its plans to introduce four new antibiotic drugs by 2020 to fight drug resistant bacterial infections. Cubist’s blockbuster drug, Cubicin, which was approved in 2003 for serious skin infections and bloodstream infections, generates more than 80 percent of the company’s sales. Cubist revenues are estimated to reach $2 billion by 2017.
“Cubist is a global leader in antibiotics and has built a strong portfolio of both marketed and late-stage pipeline medicines,” said Kenneth C. Frazier, chairman and CEO, Merck. “Combining this expertise with Merck’s strong capabilities and global reach will enable us to create a stronger position in hospital acute care while addressing critical areas of unmet medical need, such as antibiotic resistance.”
Merck expects that the Cubist deal will generate over $1 billion in revenue in 2015 and will significantly add to its corporate profits from 2016 and onwards.
Cubist’s antibiotic products also complement Merck’s own infectious disease program, which has several antibacterials and antifungals in late stage trials. Merck’s experimental beta-lactamase inhibitor, Relebactam, received a Qualified Infectious Disease Product designation, as well as a fast-track status from the FDA in September.
“Our portfolio dovetails very nicely with Merck’s antibacterial portfolio,” said Cubist Chief Executive, Michael W. Bonney.
Cubist has its international headquarters in Zurich, Switzerland and its corporate headquarters and research center in Lexington, MA. This is Merck’s second major acquisition of a Massachusetts-based pharma company this year. Merck purchased Idenix Pharmaceuticals in June in a $3.8 billion deal, in order to acquire Idenix’s portfolio of drugs to treat hepatitis C.