Washington Editor

Cubist Pharmaceuticals Inc. raised more than $100 million through a larger public offering of its common shares than originally expected.

Specifically, the anti-infective company priced about 9.3 million shares at $11.20 apiece for gross proceeds of about $104.3 million. When plans for the placement first were reported, Cubist said it would sell 7.5 million shares.

"We've got a very good story to tell at the moment," David McGirr, Cubist's chief financial officer, told BioWorld Today. "We're at a very interesting phase in the life of the company."

The per-share price represented a slight discount to Monday's $11.43 closing bid on the stock. Tuesday, the shares (NASDAQ:CBST) gained $1.01 to close at $12.44. The placement padded Cubist's coffers, which stood at $63.2 million on Sept. 30. Through that date, the company had about 40.3 million shares outstanding. It recorded a $17.7 million net loss in the preceding quarter.

McGirr noted that Cubist's sole marketed product, Cubicin (daptomycin for injection), continues to draw interest as its quarterly sales grow. Its year-to-date net sales generated $37.5 million for the nine months ended Sept. 30.

The company, of Lexington, Mass., plans to direct a portion of the proceeds to fund the commercialization and continued development of Cubicin. Cubist markets the antibiotic in the U.S., where it was approved last year for use in hospitals to fight complicated skin and skin-structure infections, including those caused by methicillin-resistant and methicillin-susceptible Staphylococcus aureus. Other indications include uses for treating strains of a number of Gram-positive microorganisms.

"There's some interesting growth opportunities from the underlying product," McGirr said. "And we've also got this potentially very exciting news coming."

That news is clinical. In an effort to further expand the product's label, the company recently completed enrollment in a Phase III trial of Cubicin for infective endocarditis and bacteremia caused by S. aureus. Data are expected in the middle of next year.

Cubist sold all the shares from a shelf registration statement previously filed with the SEC. The company also granted a 1.4 million-share, 30-day overallotment option to the underwriters. The offering's sole bookrunner is Morgan Stanley, of New York. Pacific Growth Equities LLC, of San Francisco, is a co-lead manager. Co-managers include WR Hambrecht + Co. and Harris Nesbitt, both of New York, and Wells Fargo Securities LLC, of San Francisco.

"We've been saying for some time that we were going to do an equity offering," McGirr said. "We've been waiting for the right market conditions. They were pretty soft over the summer, but seem to have stabilized nicely over the last couple of weeks, so we thought we'd just get it done."

Should underwriters fully exercise their option, Cubist said it expects net proceeds to total about $112.5 million. Beyond its Cubicin plans, the company also intends to use proceeds for the development of HepeX-B (libivirumab and exbivirumab for injection), a product for hepatitis B; drug discovery programs; the repayment of $29 million worth of convertible debt that carries an 8.5 percent coupon; working capital; and other general corporate purposes.

The HepeX-B program was in-licensed from XTL Biopharmaceuticals Ltd., of Rehovot, Israel, and an independent Data Safety Monitoring Board recently completed its first scheduled review of the first group of 15 patients enrolled in an ongoing Phase II trial. The second of two planned Phase II studies, the trial is examining HepeX-B's safety and efficacy for prevention of hepatitis B re-infection in patients who have received liver transplantation for end-stage hepatitis B infection and who have been maintained on hepatitis B immune globulin.

Based on a review of the data provided by XTL, the board recommended that the trial continue. Patients continue to be enrolled in the U.S. and Israel, and sites in several Western European countries soon will open, as well. Data are expected in the middle of next year.

Cubist is taking over responsibility of the program's costs going forward, as it acquired worldwide rights to HepeX-B.

Elsewhere in its research department, the company continues to explore broader uses of Cubicin in treating renal-impaired patients, as well as for post-surgical wound infections, neutropenia and burn injuries.

"It's all for getting Cubicin understood by as large a part of the medical community as possible," McGirr said.