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UPDATE: Merck to acquire Cubist for $8.4bn

Will expand company's presence in antibiotics
Merck & Co Cubist

US pharma company Merck & Co is to acquire antibiotic specialist Cubist Pharmaceuticals in a deal valued at $8.4bn.

According to a joint statement released this morning Merck will pay $102 per share for the bacterial infection specialist - a 35% premium to Cubist's average stock price for the most recent five trading days.

The deal also includes $1.1bn in net debt, pushing the total value to $9.5bn.

“Cubist is a global leader in antibiotics and has built a strong portfolio of both marketed and late-stage pipeline medicines,” said Kenneth Frazier, CEO and chairman of 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's interest in Cubist is understandable as the company is one of the few firms dedicated to the development of new antibiotic treatments at a time of growing resistance to existing drugs.

The problem of antimicrobial resistance - now seen as a global public health threat - has been exacerbated as few drug development companies have committed to research new treatments, due primarily to the poor return on investment offered by the drugs.

Cubist, formed in 1992, has bucked the trend over the past couple of decades, however, and now has one of the healthiest antibiotic pipelines in the industry, with plans to introduce for new drugs for bacterial infections by 2020.

Its main product is currently Cubicin (daptomycin for injection), which is approved for complicated skin and skin structure infections caused by certain bacteria and in Staphylococcus aureus infections of the bloodstream.

According to the company's most recent financial report Cubicin achieved net revenues of $256.7m for the third quarter of 2014, around 80% of the company's total sales for the period.

Cubist Cubicin 

Cubicin is Cubist's leading product

The company's portfolio has been strengthened recently by the approval of Sivextro (tedizolid phosphate) to treat acute bacterial skin and skin structure infections, while ceftolozane/tazobactam is on course for approval in both the US and Europe in the coming months.

Merck has existing interests in the area of antibiotics, including two products in mid- to late-stage development.

Actoxumab/bezlotoxumab (MK-3415A) is a combination of two antibodies  in phase III development to prevent recurrence of the serious infection Clostridium difficile. The drug is being developed in partnership with Massachusetts Biological Laboratories and Medarex, a subsidiary of Bristol Myers Squibb (BMS).

Merck also has relebactam (MK-7655) in phase II trials to investigate its potential as a treatment for acute bacterial infections. This drug is categorised as a Qualified Infectious Disease Product, a classification introduced by the US FDA to give incentives to companies researching new antibiotics.

Article by
Thomas Meek

8th December 2014

From: Research, Sales

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