Drug Giant Merck & Co. Buys Cubist Pharmaceuticals, Inc. For $9.5 Billion
December 8, 2014
By Mark Terry, BioSpace.com Breaking News Staff
Merck (Kenilworth, N.J.) announced today that is acquiring Lexington, Mass.-based Cubist Pharmaceuticals, Inc. for approximately $8.4 billion. The deal will be for about $102 per share in cash and include $1.1 billion in net debt. The total transaction value is estimated at $9.5 billion.
“Cubist is a global leader in antibiotics and has built a strong portfolio of both marketed and late-stage pipeline medicines,” said Merck Chair and CEO Kenneth C. Frazier in a statement. “Combining this expertise with Merck’s strong capabilities and global reach will enable us to create a stronger position in hospital acute care while addressing critical areas of unmet medical need, such as antibiotic resistance.”
Cubist’s lead product is CUBICIN, the only antibiotic approved for once-a-day therapy for S. aureus bacteremia and complicated skin and skin structure infections (cSSSI). Its compound, ZERBAXA, is waiting approval by the U.S. Food and Drug Administration. It is a treatment for Gram-positive and Gram-negative multi-drug resistant infections.
Cubist has shown a good year, posting Q3 sales of $309 million, an increase of 16 percent from the same period in 2013. Merck, the second-largest American drug company, also manufactures vaccines, as well as prescription drugs and oncology medications. In Q3 it posted revenue of $10.6 billion. The Cubist acquisition is expected to add about $11 billion to its annual revenues.
The deal is believed to strengthen Merck’s strategy of focusing on acute care in the hospital setting, along with its efforts in diabetes, oncology and vaccines. It has long been known that drug-resistant bacteria are causing numerous problems in healthcare and pose long-term threats to treatments. Cubist is one of only a few pharmaceutical companies whose primary focus is on antibiotics.
In the year-to-date, Merck’s hospital acute care portfolio grew more than 10 percent compared to the same period in 2013. Merck’s hospital acute care portfolio includes BRIDION, which is available outside the U.S. but currently in review by the FDA. It is used to reverse the effects of strong muscle relaxants that are used during surgery, allowing patients to wake up more quickly after anesthesia.
“Combining with Merck is an exciting opportunity to accelerate Cubist’s established leadership in antibiotics and delivery significant, certain and immediate value to shareholders,” said Michael Bonney, chief executive officer of Cubist in a statement. “We have a deep respect for Merck, and it is clear that they share our commitment to addressing the growing, global problem we are facing in combating antibiotic-resistant bacteria. Under Merck’s robust commercial platform, global reach and scientific expertise, we believe Cubist’s programs can thrive. We’re proud of the company that our team has built and are confident that Cubist’s important mission and focus on significant unmet medical needs will continue.”