Recently, Cubist Pharmaceuticals (CBST) decided to acquire a privately held biopharmaceutical company Calixa Therapeutics for an upfront payment of $92.5 million. Additionally, Cubist would be required to make a payment of another $310 million on the achievement of certain development, regulatory, and commercial milestones. Calixa is primarily focused on the development of antibiotics to treat serious bacterial infections. The deal is expected to close by year end.

Following the deal, Cubist will gain rights to Calixa’s lead compound CXA-201 (containing CXA-101), an intravenous treatment in mid-stage trial for the treatment of urinary tract and intra-abdominal infections caused by Pseudomonas aeruginosa. In addition, Cubist will also receive rights to another compound CXA-101 and any other drugs incorporating CXA-101, which was acquired from Astellas Pharma. Cubist plans to begin clinical studies of CXA-201 for the nosocomial pneumonia indication as well in the second half of 2010. Provided results are encouraging, Cubist expects to file a New Drug Application (NDA) for CXA-201 in the second half of 2013.

Cubist has sufficient funds to complete the acquisition as well as the development of Calixa’s product candidates. At the end of September 30, 2009, the company had $500 million in cash and short-term investments on its books. We believe the acquisition of Calixa will boost Cubist’s portfolio of antibiotics, which includes Cubicin (daptomycin for injection) to treat complicated skin infections and bacteremia caused by methicillin-resistant Staphylococcus aureus (MRSA) bacteria.

This is good news for Cubist especially after the recent setback it received for one of its pipeline candidates. Early this month, Cubist had to stop patient enrollment in trials of ecallantide, a drug intended to reduce bleeding during heart surgery because of deaths among patients that took the drug. The drug was licensed from Dyax Corporation (DYAX). Cubist is also facing a patent challenge from Teva pharmaceuticals (TEVA), which is developing a generic version of Cubicin. A trial date has been set for April 25, 2011.

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