Cubist Pharmaceuticals To Acquire 2 Drug Makers

LEXINGTON, Mass. (AP) -- Cubist Pharmaceuticals Inc. said Tuesday that it plans to acquire two other drug makers, Optimer and Trius Therapeutics, in an effort to expand its product portfolio.

The deals are valued at $801 million and $818 million, if certain milestones are reached, respectively.

Cubist, based in Lexington, Mass., develops antibiotics used for serious infections.

Its acquisition plans would give Cubist access to a drug, developed by Optimer and recently approved by the FDA, to treat Clostridium difficile-associated diarrhea in adults. This bacterium, often contracted while getting medical care, can cause problems ranging from diarrhea to life-threatening inflammation of the colon.

Dificid is the first antibacterial drug approved in more than 25 years to treat this type of diarrhea. The company said more than 700,000 cases occur annually in the U.S. and the disease is estimated to be responsible for approximately 14,000 deaths per year in the U.S.

Cubist plans to acquire all the outstanding shares of Optimer for $10.75 per share, or approximately $535 million. That represents a discount to the company's closing price of $13.29 on Tuesday before the plans were made public.

However, each stockholder will also receive a contingent value right that entitles them to an additional one-time cash payment of up to $5.00 for each share they own if certain net sales of Dificid are achieved. The contingent value right is expected to be publicly traded.

The boards of both companies have approved the deal, but it still needs shareholder approval.

Cubist said the acquisition was a perfect fit, given the company's focus on acute care and hospital environments. The company also said there is a significant and rising need for the drug as these types of infections have become increasingly common.

The deal is expected to close later this year and Cubist expects it will be accretive to its earnings in the first year after that.

Cubist also stands to benefit from its acquisition of Trius by gaining access to a number of antibiotics it has under development. Trius has a late-stage antibiotic it is working on that could potentially be used to treat several types of serious infections, such as those caused by MRSA. It also has several pre-clinical antibiotic programs under development.

The company plans to buy all of the outstanding shares of Trius for $13.50 per share in cash, or approximately $707 million. That is above the company's closing price of $11.71 on Tuesday.

In addition to the upfront cash payment, each Trius stockholder will receive one contingent value right, entitling the holder to receive an additional cash payment of up to $2.00 for each share they own if certain commercial sales milestones are achieved.

Cubist and Trius boards have approved the deal. The companies expect it will close later this year.

Stephen Brozak, president of WBB Securities, said the acquisitions represent a "stunning" move by Cubist and said that they underscore how important antibiotics will become for the future of global health care. He also said that what makes the deals even more stunning is that large pharmaceutical companies were absent from the discussions, another example of how they have "missed the boat again."

Shares of Trius soared more than 17 percent in after-hours trading to $13.75 on the news. Optimer shares fell nearly 8 percent to $12.24. Cubist shares increased more than 6 percent to $60.50.

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