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Cubist Completes Offering of $450 Million of Convertible Senior Notes

^{Published on 2010-10-25 13:13:36 - Market Wire}
 

LEXINGTON, Mass.--([ BUSINESS WIRE ])--Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) today announced the completion of its offering and sale of $450 million in aggregate principal amount of 2.50% Convertible Senior Notes due 2017 pursuant to a registration statement filed with the Securities and Exchange Commission. This includes the exercise in full by the underwriters of their option to purchase $50 million aggregate principal amount of the notes.

The notes will mature on November 1, 2017, and will bear interest at a rate of 2.50% per year, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2011. The notes will be convertible, under certain circumstances, into cash, shares of Cubista™s common stock, or a combination, at Cubista™s election, at an initial conversion rate of 34.2759 shares of Cubista™s common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $29.18 per share of Cubista™s common stock.

Cubist intends to use a portion of the net proceeds of the offering to repurchase approximately $191 million aggregate principal amount of its 2.25% Convertible Subordinated Notes due June 15, 2013 through privately negotiated transactions. Cubist intends to use the remaining proceeds to increase investment in building its pipeline via internal and external sources and for working capital and other general corporate purposes. In addition, a portion of the remaining net proceeds of this offering may be used to acquire or invest in businesses, products, services or technologies complementary to our current business, through mergers, acquisitions, in-licensing, joint ventures and similar strategic transactions. Cubist intends to invest the net proceeds of this offering in interest-bearing investment grade securities pending the previously described uses.

Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated are acting as joint book-running managers and Citigroup Global Markets Inc. and RBC Capital Markets Corporation are acting as co-managers. An electronic copy of the prospectus, which is filed as part of Cubista™s automatically effective registration statement on Form S-3, may be obtained from any of the joint book-running managers by contacting: Morgan Stanley & Co. Incorporated, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, New York 10014, telephone: (866) 718-1649, or by emailing [ prospectus@morganstanley.com ]; or Goldman, Sachs & Co., Attention: Prospectus Department, 200 West Street, New York, New York 10282, telephone: (212) 902-1171 or toll-free (866) 471-2526 or by emailing [ prospectus-ny@ny.email.gs.com ]. An electronic copy of the prospectus may also be obtained at no charge at the Securities and Exchange Commission's website at [ www.sec.gov ].

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® (daptomycin for injection), the first antibiotic in a class of anti-infectives called lipopeptides. The Cubist clinical product pipeline currently consists of a Phase 2 program focused on the development of a novel cephalosporin to address certain serious infections caused by multi-drug resistant (MDR) Gram-negative organisms; and a Phase 2 program for the treatment of CDAD (Clostridium difficile-associated diarrhea). Cubist is also working on several pre-clinical programs being developed to address areas of significant medical needs. These include an anti-infective program for the treatment of respiratory syncytial virus (RSV) in children, therapies to treat various serious bacterial infections, and agents to treat acute pain. Cubist is headquartered in Lexington, Mass.

Cubist Safe Harbor Statement

This press release contains forward-looking statements, including statements regarding our planned use of the net proceeds from the sale of the convertible senior notes. Forward-looking statements are based on current beliefs and expectations and are subject to inherent risks and uncertainties, including those discussed under the caption aRisk Factorsa in the prospectus. In addition, management retains broad discretion with respect to the allocation of the net proceeds of this offering. You are cautioned not to place significant reliance on forward-looking statements. The forward-looking statements in this press release speak only as of the date of this release, and we undertake no obligation to update or revise these statements, except as may be required by law.

Cubist and CUBICIN are registered trademarks of Cubist Pharmaceuticals, Inc.