Cubist Pharmaceuticals Inc. moved to expand its pipeline beyond Cubicin (daptomycin for injection) by picking up an exclusive option to acquire Illumigen Biosciences Inc.

Lexington, Mass.-based Cubist agreed to pay $4.7 million for the option and fund Illumigen's operating costs during the option period. Cubist also will pay $1 million to fund an investigational new drug enabling study of Illumigen's lead compound, a recombinant protein dubbed IB657.

If studies of IB657 go well and Cubist decides to exercise its option, the company will pay $9 million up front as well as a potential $75.5 million in development and regulatory milestones for IB657 in hepatitis C, $117 million in development and regulatory milestones should the drug be pursued in other antiviral indications, $140 million in sales milestones, and tiered royalties.

Cubist certainly has the money for such a deal. The company reported late Wednesday that it had $368 million in cash, equivalents and short-term investments as of Sept. 30. Third-quarter revenues were $79.8 million, up from $50.4 million in the third quarter of the previous year.

Most of those revenues came from sales of Cubicin, Cubist's once-daily intravenous antibiotic, which brought in third-quarter net revenues of $76.3 million. The drug gained FDA approval in 2003 for certain complicated skin and skin structure infections (cSSSI), and Cubist has since grown the franchise by expanding the label into bloodstream infections, including right-sided infective endocarditis, as well as working with a variety of partners to gain international approvals. (See BioWorld Today, Sept. 16, 2003, and May 30, 2006.)

Cubist also is investigating Cubicin in additional indications, such as prosthetic joint infections and high-dose, short-term treatment of cSSSI. But beyond Cubicin, Cubist's cupboard looks fairly bare. The company has preclinical programs in Gram-positive lung infections and Gram-negative infections. President and CEO Michael Bonney said during a conference call that "go, no-go decisions" regarding two of those programs will be made by the end of the year.

To supplement its pipeline, Bonney said Cubist continues to seek candidates for collaborations, licensing and acquisition, particularly in the anti-infective space. Illumigen provides a prime example of that strategy.

Although IB657 is preclinical, it is at least in late preclinical development. Illumigen previously had projected beginning Phase I trials in the first quarter of 2008.

Seattle-based Illumigen, which was founded in 2000 to study beneficial mutations that confer resistance to disease, developed IB657 to mimic the effect of a mutation that allows certain people to resist HCV infection. The drug works downstream of interferon, and preclinical studies have indicated it may offer less toxicity and be less likely to induce viral resistance than interferon.

Early research also has shown that IB657 may be effective against influenza, West Nile virus and respiratory syncytial virus. Cubist may conduct preclinical studies in these indications as well.

Privately held Illumigen had raised $8 million in Series A financing prior to the option deal with Cubist.

Shares of Cubist (NASDAQ:CBST) rose 26 cents to close at $23.88 on Wednesday.