Cubist Pharmaceuticals Reports GAAP Diluted Net Income of $1.82 Per Share in Fourth Quarter 2008 and GAAP Diluted Net Income of $2.56 Per Share for Full Year 2008
LEXINGTON, MA, January 22, 2009 -- Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) today reported results for the fourth quarter and year ended December 31, 2008. Total net revenues for the fourth quarter of 2008 increased 53% to $131.2 million from $85.6 million in the fourth quarter of 2007. This increase was attributable primarily to Cubist's net sales of CUBICIN(R) (daptomycin for injection) in the United States, which increased 43% to $120.1 million in the fourth quarter of 2008 from $83.9 million in the fourth quarter of 2007.
For the year ended December 31, 2008, total net revenues increased 47% to $433.6 million from $294.6 million for the year ended December 31, 2007. This increase in revenues was primarily attributable to Cubist's net sales of CUBICIN in the United States, which increased 45% to $414.7 million for the year ended December 31, 2008, from $285.1 million for the year ended December 31, 2007. Full year 2008 international net product revenues were $7.4 million, which represents an increase of $2.1 million from full year 2007 international product revenues. Additionally, the full year 2008 total net revenues includes $9.4 million of service revenue relating to Cubist's exclusive agreement with AstraZeneca to sell and provide other support in the United States for MERREM(R) I.V. (meropenem for injection).
Net income for the fourth quarter ended December 31, 2008, on a GAAP basis, was $123.0 million, or $2.15 and $1.82 per basic and diluted share, respectively, as compared to $8.0 million, or $0.14 per basic and diluted share, for the fourth quarter ended December 31, 2007. Included in fourth quarter 2008 results is a tax benefit related to a reversal of Cubist's valuation allowance for deferred tax assets, which resulted in a benefit to tax expense of approximately $127.8 million. Also included in the results for the fourth quarter of 2008 is an other-than-temporary impairment charge of $49.2 million related to our investment in auction rate securities. Cubist's non-GAAP net income for the fourth quarter ended December 31, 2008, excluding the tax benefit and the other-than-temporary impairment charge as well as $3.0 million of stock-compensation expense, was $47.4 million, or $0.83 and $0.71 per basic and diluted share, respectively.
Net income for the year ended December 31, 2008, on a GAAP basis, was $169.8 million, or $3.00 and $2.56 per basic and diluted share, respectively, as compared to net income of $48.1 million, or $0.87 and $0.83 per basic and diluted share, respectively, for the year ended December 31, 2007. GAAP net income for full year 2008 includes $11.8 million of stock-based compensation expense, $2.3 million of assets disposed of in the first quarter of 2008 to build new laboratory space at 65 Hayden Avenue, and $17.5 million of expense related to upfront and milestone payments for the 2008 in-licensing from Dyax Corporation of ecallantide for surgical indications. In addition, included in full year 2008 results is both an other-than-temporary impairment charge of $49.2 million related to our investment in auction rate securities and a tax benefit of $127.8 million related to the reversal of Cubist's valuation allowance for deferred tax assets. Non-GAAP net income for the year ended December 31, 2008, excluding the tax benefit and charges mentioned above, was $122.9 million, or $2.17 and $1.86 per basic and diluted share, respectively.
As of December 31, 2008, Cubist had $417.9 million in cash, cash equivalents and long-term investments. The total number of Cubist's common shares outstanding as of December 31, 2008, was 57,430,200.
Use of Non-GAAP Financial Measures
Cubist uses non-GAAP net income and non-GAAP net income per share data to improve its analysis of operational results and trends. Cubist's management also uses these non-GAAP figures to make financial and operational decisions as these numbers exclude non-operational activities and because management believes these measures are useful to investors because they provide greater transparency regarding Cubist's operating performance. These measures should not be considered an alternative to measurements required by GAAP, such as net income and net income per share, and should not be considered measures of our liquidity. In addition, these non-GAAP measures are unlikely to be comparable with non-GAAP information provided by other companies. A reconciliation between non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this press release after the unaudited condensed consolidated financial statements.
Source: Cubist Pharmaceuticals, Inc.
Contact: Cubist Pharmaceuticals, Inc. Eileen C. McIntyre, 781-860-8533 Senior Director, Corporate Communications eileen.mcintyre@cubist.com or Weber Shandwick Tara Murphy, 617-520-7045 tmurphy@webershandwick.com
For the year ended December 31, 2008, total net revenues increased 47% to $433.6 million from $294.6 million for the year ended December 31, 2007. This increase in revenues was primarily attributable to Cubist's net sales of CUBICIN in the United States, which increased 45% to $414.7 million for the year ended December 31, 2008, from $285.1 million for the year ended December 31, 2007. Full year 2008 international net product revenues were $7.4 million, which represents an increase of $2.1 million from full year 2007 international product revenues. Additionally, the full year 2008 total net revenues includes $9.4 million of service revenue relating to Cubist's exclusive agreement with AstraZeneca to sell and provide other support in the United States for MERREM(R) I.V. (meropenem for injection).
Net income for the fourth quarter ended December 31, 2008, on a GAAP basis, was $123.0 million, or $2.15 and $1.82 per basic and diluted share, respectively, as compared to $8.0 million, or $0.14 per basic and diluted share, for the fourth quarter ended December 31, 2007. Included in fourth quarter 2008 results is a tax benefit related to a reversal of Cubist's valuation allowance for deferred tax assets, which resulted in a benefit to tax expense of approximately $127.8 million. Also included in the results for the fourth quarter of 2008 is an other-than-temporary impairment charge of $49.2 million related to our investment in auction rate securities. Cubist's non-GAAP net income for the fourth quarter ended December 31, 2008, excluding the tax benefit and the other-than-temporary impairment charge as well as $3.0 million of stock-compensation expense, was $47.4 million, or $0.83 and $0.71 per basic and diluted share, respectively.
Net income for the year ended December 31, 2008, on a GAAP basis, was $169.8 million, or $3.00 and $2.56 per basic and diluted share, respectively, as compared to net income of $48.1 million, or $0.87 and $0.83 per basic and diluted share, respectively, for the year ended December 31, 2007. GAAP net income for full year 2008 includes $11.8 million of stock-based compensation expense, $2.3 million of assets disposed of in the first quarter of 2008 to build new laboratory space at 65 Hayden Avenue, and $17.5 million of expense related to upfront and milestone payments for the 2008 in-licensing from Dyax Corporation of ecallantide for surgical indications. In addition, included in full year 2008 results is both an other-than-temporary impairment charge of $49.2 million related to our investment in auction rate securities and a tax benefit of $127.8 million related to the reversal of Cubist's valuation allowance for deferred tax assets. Non-GAAP net income for the year ended December 31, 2008, excluding the tax benefit and charges mentioned above, was $122.9 million, or $2.17 and $1.86 per basic and diluted share, respectively.
As of December 31, 2008, Cubist had $417.9 million in cash, cash equivalents and long-term investments. The total number of Cubist's common shares outstanding as of December 31, 2008, was 57,430,200.
Use of Non-GAAP Financial Measures
Cubist uses non-GAAP net income and non-GAAP net income per share data to improve its analysis of operational results and trends. Cubist's management also uses these non-GAAP figures to make financial and operational decisions as these numbers exclude non-operational activities and because management believes these measures are useful to investors because they provide greater transparency regarding Cubist's operating performance. These measures should not be considered an alternative to measurements required by GAAP, such as net income and net income per share, and should not be considered measures of our liquidity. In addition, these non-GAAP measures are unlikely to be comparable with non-GAAP information provided by other companies. A reconciliation between non-GAAP financial measures and GAAP financial measures are included in the tables accompanying this press release after the unaudited condensed consolidated financial statements.
************CONFERENCE CALL & WEBCAST INFORMATION*************
Cubist will host a conference call and live audio webcast to discuss its fourth quarter andfull year 2008 financial results, business activities and financial outlook.
WHEN: Thursday, January 22, 2009 at 5:00 p.m. ET
LIVE DOMESTIC & CANADA CALL-IN: 877-407-0778LIVE INTERNATIONAL CALL-IN: 201-689-8565
24-HOUR REPLAY DOMESTIC & CANADA: 877-660-685324-HOUR REPLAY INTERNATIONAL: 201-612-7415REPLAY PASSCODES (BOTH REQUIRED FOR PLAYBACK):ACCOUNT #: 286 , CONFERENCE ID #: 302882
CALL WILL ALSO BE BROADCAST LIVE, LISTEN ONLY, VIA THE WEB AT:www.cubist.com
Replay will be available for 30 days at www.cubist.com
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About Cubist
Cubist Pharmaceuticals, Inc. is a biopharmaceutical company focused on the research, development, and commercialization of pharmaceutical products that address unmet medical needs in the acute care environment. In the U.S., Cubist markets CUBICIN(R) (daptomycin for injection), the first antibiotic in a new class of anti-infectives called lipopeptides. Cubist has entered into an agreement with AstraZeneca to promote their established broad spectrum antibiotic, MERREM I.V.(R) (meropenem for injection) in U.S. hospitals. The Cubist product pipeline includes ecallantide, a recombinant human protein in Phase 2 clinical trials for the prevention of blood loss during cardiothoracic surgery; two programs with recently submitted INDs that address unmet medical needs to treat Gram-negative infections and CDAD (Clostridium difficile-associated diarrhea); and a program to develop a therapy to treat respiratory syncitial virus (RSV) infection in collaboration with Alnylam Pharmaceuticals, Inc. Cubist is headquartered in Lexington, MA. Additional information can be found at Cubist's web site at www.cubist.com
Cubist and CUBICIN are registered trademarks of Cubist Pharmaceuticals, Inc.AstraZeneca and MERREM are registered trademarks of the AstraZeneca group of companies.
| CUBIST PHARMACEUTICALS, INC. | ||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
| UNAUDITED | ||||
| (in thousands) | ||||
| December 31, | December 31, | |||
| 2008 | 2007 | |||
| ASSETS | ||||
| Cash, cash equivalents and long-term investments | $ 417,945 | $ 398,184 | ||
| Accounts receivable, net | 43,162 | 29,075 | ||
| Inventory | 21,958 | 18,733 | ||
| Property and equipment, net | 66,819 | 50,150 | ||
| Deferred tax assets, net | 127,792 | — | ||
| Other assets | 38,916 | 38,373 | ||
| Total assets | $ 716,592 | $ 534,515 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Accounts payable and accrued expenses | $ 79,584 | $ 65,299 | ||
| Deferred revenue | 21,340 | 17,816 | ||
| Debt and other long-term liabilities | 303,696 | 352,698 | ||
| Total liabilities | 404,620 | 435,813 | ||
| Total stockholders' equity | 311,972 | 98,702 | ||
| Total liabilities and stockholders' equity | $ 716,592 | $ 534,515 | ||
| CUBIST PHARMACEUTICALS, INC. | |||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| UNAUDITED | |||||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||||
| Three months ended | Twelve months ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||||||
| Revenues: | |||||||||||||||||
| U.S. product revenues, net | $ | 120,058 | $ | 83,875 | $ | 414,681 | $ | 285,059 | |||||||||
| International product revenues | 2,167 | 1,245 | 7,400 | 5,347 | |||||||||||||
| Service revenues | 8,033 | — | 9,451 | — | |||||||||||||
| Other revenues | 897 | 461 | 2,109 | 4,214 | |||||||||||||
| Total revenues, net | 131,155 | 85,581 | 433,641 | 294,620 | |||||||||||||
| Costs and expenses: | |||||||||||||||||
| Cost of product revenues | 24,808 | 19,135 | 90,381 | 68,860 | |||||||||||||
| Research and development | 30,484 | 34,270 | 126,670 | 85,175 | |||||||||||||
| Sales and marketing | 20,604 | 18,653 | 84,997 | 67,662 | |||||||||||||
| General and administrative | 9,409 | 7,493 | 40,704 | 31,485 | |||||||||||||
| Total costs and expenses | 85,305 | 79,551 | 342,752 | 253,182 | |||||||||||||
| Operating income | 45,850 | 6,030 | 90,889 | 41,438 | |||||||||||||
| Other income (expense), net | (48,884) | 2,520 | (44,986) | 8,589 | |||||||||||||
| (Loss) income before income taxes | (3,034) | 8,550 | 45,903 | 50,027 | |||||||||||||
| (Benefit) provision for income taxes | (126,069) | 517 | (123,916) | 1,880 | |||||||||||||
| Net income | $ | 123,035 | $ | 8,033 | $ | 169,819 | $ | 48,147 | |||||||||
| Basic net income per common share | $ | 2.15 | $ | 0.14 | $ | 3.00 | $ | 0.87 | |||||||||
| Diluted net income per common share | $ | 1.82 | 1 | $ | 0.14 | 1 | $ | 2.56 | 2 | $ | 0.83 | 1 | |||||
| Shares used in calculating: | |||||||||||||||||
| Basic net income per common share | 57,202,892 | 56,070,144 | 56,645,962 | 55,591,775 | |||||||||||||
| Diluted net income per common share | 68,320,590 | 57,758,867 | 67,955,061 | 68,822,996 | |||||||||||||
| 1 Includes add back of interest expense and debt issuance costs on 2.25% notes to income, net of tax effect | |||||||||||||||||
| 2 Includes add back of interest expense, debt issuance costs and net gain on repurchase of 2.25% notes to income, net of tax effect | |||||||||||||||||
| CUBIST PHARMACEUTICALS, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - NON-GAAP | ||||||||||||||||
| UNAUDITED | ||||||||||||||||
| (in thousands, except share and per share data) | ||||||||||||||||
| Three months ended | Twelve months ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| GAAP net income | $ | 123,035 | $ | 8,033 | $ | 169,819 | $ | 48,147 | ||||||||
| Add back of tax benefit | (127,792) | — | (127,792) | — | ||||||||||||
| Other-than-temporary impairment of auction rate securities | 49,178 | — | 49,178 | — | ||||||||||||
| Stock-based compensation expense under SFAS 123(R) | 2,967 | 2,643 | 11,831 | 10,539 | ||||||||||||
| Ecallantide licensing fees | — | — | 17,500 | — | ||||||||||||
| Write off of assets disposed of to build new lab space | — | — | 2,323 | — | ||||||||||||
| IPR&D - Illumigen | — | 15,148 | — | 15,148 | ||||||||||||
| Non-GAAP proforma net income | $ | 47,388 | $ | 25,824 | $ | 122,859 | $ | 73,834 | ||||||||
| Non-GAAP basic net income per common share | $ | 0.83 | $ | 0.46 | $ | 2.17 | $ | 1.33 | ||||||||
| Non-GAAP diluted net income per common share | $ | 0.71 | 1 | $ | 0.41 | 1 | $ | 1.86 | 2 | $ | 1.20 | 1 | ||||
| Shares used in calculating: | ||||||||||||||||
| Non-GAAP basic net income per common share | 57,202,892 | 56,070,144 | 56,645,962 | 55,591,775 | ||||||||||||
| Non-GAAP diluted net income per common share | 68,320,590 | 69,133,202 | 67,955,061 | 68,822,996 | ||||||||||||
| 1 Includes add back of interest expense and debt issuance costs on 2.25% notes to income, net of tax effect | ||||||||||||||||
| 2 Includes add back of interest expense, debt issuance costs and net gain on repurchase of 2.25% notes to income, net of tax effect | ||||||||||||||||