Cubist Pharmaceuticals, Inc. (NASDAQ:CBST)

CAPS Rating: 4 out of 5

A biopharmaceutical company focused on the research, development and commercialization of pharmaceutical products that address unmet medical needs in the acute care environment.


Player Avatar PDTBiotech (88.96) Submitted: 5/27/2011 11:07:12 AM : Outperform Start Price: $37.78 CBST Score: +106.38

Comically simple speculation approach - buying the rumor, hoping to sell the news. I like Cubist a lot, but I'll hit the high points.

*Rumored offer by Shire is probably legit, and will stir up BD execs at many other companies to take a peek. Confusingly, the articles all say the private offer was $44.5/share, or $2B, but with just shy of 60M shares outstanding it seems like that would be more in the $2.7B range. Current cap is $2.28B. A takeunder seems very unlikely, although they could be backing out CBST's debt when they cite the $2B figure, but with a big chunk of assets on their balance sheet as well I'm guessing the $2B is off substantially.

*Cubicin offers a way to buy revenues over a stretch of time when many companies will have a gap due to the patent cliff (cubicin IP expires mid-2016).

*Lots of upside to this company, including a seasoned ID sales force, some interesting pipeline products, and profitability.

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