Tags: Merck | Cubist | merger | antibiotics

Merck to Buy Cubist for $8.4 Billion in Cash to Add Antibiotics

Monday, 08 December 2014 08:01 AM

Merck & Co. agreed to buy Cubist Pharmaceuticals Inc. for $8.4 billion in cash to add products to help fight the growing threat of drug-resistant bacteria.

Merck will begin a $102-a-share tender offer for Cubist, the companies said in a statement Monday. The price is 37 percent above Cubist’s closing share level on Dec. 5. Including $1.1 billion of net debt, the deal is valued at about $9.5 billion.

Cubist has said it plans to introduce four new drugs by 2020 to combat bacterial infections that are resistant to other treatments because of overuse. The rising threat of drug- resistant bugs has spurred public health authorities to urge companies to invest in new antibiotics, a field drugmakers had largely abandoned to focus on more profitable therapeutic areas such as cancer or hepatitis C.

Merck Chief Executive Officer Ken Frazier, 59, has said the second-biggest U.S. drugmaker was trying to make small to midsize acquisitions in areas that would complement its stable of treatments. The company wasn’t interested in megadeals that are “very time consuming and distracting to what we’re here to do, which is invest in new medicines,” Frazier told Bloomberg News in July.

Merck had cash and equivalents of $14.3 billion at the end of September and total debt of $27.8 billion, according to data compiled by Bloomberg.

Best-Selling Drug

Cubicin, Cubist’s top drug, was approved in 2003 by the U.S. Food and Drug Administration for serious skin infections. Its use was expanded in 2006 to include bloodstream infections. Cubicin generates more than 80 percent of Cubist’s sales, which the Lexington, Massachusetts-based company has forecast will reach $2 billion by 2017.

Cubist’s products may complement Merck’s own infectious disease program. One of its experimental drugs, called relebactam, received fast-track status from the FDA in September, meaning the agency will accelerate the approval process. Relebactam works by inhibiting beta-lactamase, an enzyme produced by some bacteria that can cause resistance to widely used antibiotics, including penicillin.

Relebactam also received designation as a Qualified Infectious Disease Product, which would give it five extra years of market exclusivity when approved.

Antibody Tests

Merck also has an antibody targeting Clostridium difficile in a final-stage trial. Cubist already had a drug approved that works against the bacteria, which cause infectious diarrhea.

The U.S. Centers for Disease Control and Prevention has said antibiotic resistance is killing at least 23,000 Americans a year, making it “one of our most serious health threats.”

Robert Perez, Cubist’s president and chief operating officer, is scheduled to succeed Michael Bonney as chief executive officer on Jan. 1. Bonney has been CEO since June 2003.

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Merck agreed to buy Cubist Pharmaceuticals for $8.4 billion in cash to add products to help fight the growing threat of drug-resistant bacteria. Merck will begin a $102-a-share tender offer for Cubist, the companies.
Merck, Cubist, merger, antibiotics
Monday, 08 December 2014 08:01 AM
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