Cubist Pharmaceuticals Inc (CBST), Trius Therapeutics, Inc. (TSRX): This Week in Biotech

With the SPDR S&P Biotech Index up 43% over the trailing-12-month period, it’s evident that investment dollars are willingly flowing into the biotech sector. Keeping that in mind, let’s have a look at some of the rulings, studies, and companies that made waves in the sector last week.

If you thought last week was busy, this week brought a whole new sense to the term breaking news. Earnings results stole the show for a number of stocks, including Quesctor Pharmaceuticals and Dynavax Technologies which both easily topped Wall Street’s EPS projections. But there was a considerable amount of clinical data and buyout news earlier on in the week that biotech enthusiasts would scold me for not including in this week’s wrap-up.

Cubist Pharmaceuticals Inc (NASDAQ:CBST)Will you be my valentine?
No one ever said three’s company with Cubist Pharmaceuticals Inc (NASDAQ:CBST) proposing to both Trius Therapeutics, Inc. (NASDAQ:TSRX) and Optimer Pharmaceuticals for a combined sum of approximately $1.6 billion.

The deal values Trius Therapeutics, Inc. (NASDAQ:TSRX) at $13.50 per share and gives shareholders the option of receiving $2 per share more if certain sales targets are met for Trius Therapeutics, Inc. (NASDAQ:TSRX)’s late-stage acute bacterial skin and skin structure infection drug, tedizolid. Considering that tedizolid packed a better punch and required less dosing than Pfizer‘s Zyvox in trials, I’d say Cubist Pharmaceuticals Inc (NASDAQ:CBST) is getting quite the bargain.

With Optimer, I’m left scratching my head. Optimer brings Dificid, its Clostridium difficile-associate diarrhea drug, to Cubist Pharmaceuticals Inc (NASDAQ:CBST)’s portfolio, which I suspect has peak sales potential of perhaps no more than $225 million. Even at $10.75 per share with $5 per share in sales milestone incentives, Cubist Pharmaceuticals Inc (NASDAQ:CBST)’s purchase of Optimer fails to excite me and values the company somewhere around four or more times peak sales estimates.

In contrast, ultra-rare drugmaker Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) decided to retain the services of Goldman Sachs in the wake of growing rumors that Roche plans to make a move to acquire Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN). The impetus behind retaining Goldman Sachs is in an effort to ensure it gets top dollar for its pipeline, or to be able to withstand a hostile takeover bid should one occur. Goldman and Alexion have worked together before when Alexion was on the acquisition hunt, so the two parties are well acquainted with one another. I already think Alexion is priced for perfection and can’t see what Roche is going to squeeze out of its lone FDA-approved drug, Soliris, moving forward.