Seeking Alpha: Cubist Fills Its Sales Bag And Pipeline With Adolor

Stuck in a trading range for about five years, Cubist Pharmaceuticals (CBST) has had a pretty good year in 2011. The company resolved a patent dispute with Teva Pharmaceuticals (TEVA) on reasonably good terms, got some patent extensions that should further boost its profit potential on Cubicin, and struck marketing deals with Optimer (OPTR) and AstraZeneca (AZN) to make better use of its own sales force. But that's not all that's working in Cubist's favor recently. The company's pipeline has also come along nicely, as the Calixa deal has delivered two promising compounds, one of which is now in late-stage studies.

That said, it has not been all sweetness and light for Cubist. Investors have been troubled by this company's heavy reliance on Cubicin and the inevitable declines that are coming in operating income, to say nothing of the inefficiencies of operating a salesforce with few compounds to sell. Investors have been waiting for Cubist to do a deal or two and now management has done just that – giving the company an additional product to sell and also adding some clinical compounds outside of its core anti-infective space.

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Cubist Fills Its Sales Bag And Pipeline With Adolor

Investopedia: Should Investors Circle Back To Cubist?

It is biotech stocks like Cubist Pharmaceuticals (Nasdaq:CBST) that keep investors coming back into a sector that is arguably more famous for spectacular failures than reliable success. While Cubist stock has not reclaimed the highs of the 2000-2001 era, the company has nevertheless ridden the success of its antibiotic Cubicin to become a near 10-bagger from the lows of late 2002. The question for investors now, though, is whether the company can find another Cubicin and keep the investor enthusiasm healthy. 

A Solid, But Not Special, Second Quarter  
Cubist reported sales growth of 5% for the second quarter, fueled by 9% growth from the company's core drug, Cubicin. Although Cubicin sales were a bit stronger than analysts were generally expecting, overall revenue was basically in line with expectations. Margin performance was likewise unspectacular in either direction - the company saw some gross margin erosion (due in part to larger sales discounts), but adjusted operating income growth tracked revenue. 


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