Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

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.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.