Market Defying Stock: Cubist Pharmaceuticals (CBST)

December 3, 2008 · Filed Under General 

Many investors have looked to biotech stocks as growth plays during strong markets and as defensive plays for a coming administration change.  But the stock market has been so uncooperative that many investors have lost heart (and real money).  So when we scan over the list of highs and lows, it is rather interesting when a company like Cubist Pharmaceuticals Inc. (NASDAQ: CBST) is doing so well while others are not.

Cubist is one of the super-bug fighters and its main product is Cubicin.  Cubist is a biopharmaceutical company focused on R&D and commercialization of products that address unmet medical needs in the acute care environment. Below are some basic details followed by some investor metrics outlining its prospects:

  • In the U.S., Cubist markets CUBICIN, the first antibiotic in a new class of anti-infectives called lipopeptides.  This is for staph and other bacteria and for bloodstream infections.
  • Cubist has entered into an agreement with AstraZeneca to handle U.S. hospital sales for their established broad spectrum antibiotic, MERREM I.V.® (meropenem for injection).
  • The Cubist product pipeline includes ecallantide, a recombinant human protein in Phase 2 clinical trials for the prevention of blood loss during cardiothoracic surgery, and pre-clinical programs that address unmet medical needs in Gram-negative infections, CDAD, and HCV (Hepatitis C infections).
  • Today the company named Santosh J. Vetticaden, M.D., Ph.D. as Senior Vice President, Clinical Development and Chief Medical Officer, and he will be a member of Cubist’s executive team.

This stock is up 4% at $26.65 as of 10:35 AM EST and its current market cap is about $1.5 billion.  This is a new 52-week high as the prior range had been $16.25 to $26.12.  To find higher share prices, you have to go back to the old 2000 to 2002 time period when there was a bubble and then when there was a superbug push from investors looking for the next anti-bio-terror stocks.

Interestingly enough, Cubist looks cheap on the surface when you consider how under-treated many hospital-borne bacterias and infections are out there.  It is expected to earn $1.27 EPS on $434.8 million in revenues in 2008 and $1.78 EPS on $567 million in revenues.  While earnings projections are bing cut in most sectors, this one has seen a steady boost by analysts to forward earnings projections over the last 3-months.

Jon C. Ogg
December 3, 2008

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