Similarly, cIAI is one of most common causes for hospitalization. Usually resulting from post-operative infection in the gastrointestinal tract, it can be fatal if untreated. The incidence rate of cIAI in the U.S. is around 150,000 per year with a mortality rate of 35%.
Opportunity for Ceftolozane/Tazobactam
On successful completion and regulatory approvals, CXA-201 may be a prospective candidate in severeal hospital acquired infections. The fact that the FDA has speeded up the approval process is encouraging. Cubist expects peak sales around $1 billion for Ceftolozane/tazobactam from the U.S. and EU markets.
Cubist’s market performance
Cubist’s performance is driven by its marketed products- Cubicin and Entereg. During second quarter ended June 30, 2013, total revenues increased by 12.2% to $258.8 million, over $230.6 million in the same period 2012. The growth was due to increasing sales of Cubicin and Entereg. Cubin represents 87% of total revenues. Adjusted operating income was $51.3 million, down by 27% year over year from $71.1 million in the second quarter of 2012. Adjusted EPS was $0.42 during second quarter 2013 compared to $0.56 in the same period 2012. Cubist has enough cash balance to support its operation. As of June 30, 2013, Cubist cash and investment was $1.0 billion.
Peer market
Ceftazidime/ Avibactam from Forest Laboratories, Inc. (NYSE:FRX) is a combined therapy to treat cIAI and cUTI. Forest Laboratories, Inc. (NYSE:FRX) has initiated trial studies in collaboration with AstraZeneca to develop this combined therapy for bacterial infections. The ongoing trial started in 2011 for cIAI and in 2012 for cUTI. During fourth quarter ended March 31, 2013, the company’s net sales decreased by 21.4% to $783.2 million, from $996.9 million in the same period of 2012. The decrease was due to loss of patent exclusivity of Lexapro in March 14, 2012. Adjusted EPS decreased significantly to $0.25, from $0.77 same period in 2012.
Conclusion
The good thing about Cubist is that it has a revenue-generating operation that produces substantial cash flow for the company. It has chosen to work in a niche market, which helps develop core expertise. Now that the CXA-201 product has been approved for fast track, and studies show significant benefit from its use, I would expect the company to be a strong growth stock for the long term.
Dr. Kanak Kanti De has no position in any stocks mentioned. The Motley Fool recommends Cubist Pharmaceuticals. Kanak is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Marketed Drugs, Strong Pipeline, Long Term Growth Stock originally appeared on Fool.com is written by Kanak Kanti.
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