Merck dumps 120 Cubist researchers after its $9.5B merger

Merck ($MRK) has pulled the plug on Cubist Pharmaceuticals' early R&D operation, cutting 120 jobs in Massachusetts as it integrates its latest big acquisition.

As the Boston Business Journal reports, the company informed employees today that it's backing away from the antibiotic specialist's drug discovery efforts, dialing down operations at Cubist's Lexington headquarters but promising to keep up work on later-stage products. Merck told the BBJ that it plans to keep at least some of Cubist's preclinical candidates in development, transferring them to other R&D sites.

The move marks Merck's first major cuts to Cubist after wrapping up a $9.5 billion buyout in January. Merck expects the acquisition to add about $1 billion to its 2015 revenue, but the pharma giant is apparently less than committed to following through on Cubist's plans for major spending on antibiotic R&D.

Before the acquisition, Cubist unveiled an ambitious plot to spend more than $400 million a year on research and deliver four new treatments by 2020. In September, the company made European landfall with an R&D hub in Zurich, angling to recruit about 200 international workers and flesh out a global operation.

But such expansion plans are now on hold as Merck pores over its assets and decides what to do with Cubist's in-development drugs. And it stymies the growth of what was a rapidly expanding player in mid-cap biopharma, as Cubist had increased it headcount by 35% in 2013 and employed more than 1,000 people around the world.

"Antimicrobial research remains an area of focus for Merck, and we continue to invest in multiple programs spanning discovery through late-stage development," a spokesperson said in an email.

Merck's bet on Cubist followed a trend among the world's largest drugmakers, whose history of inattention to antibiotic R&D is in part responsible for the current increase in demand--and market opportunity--for anti-infectives.

The big get was Cubist's anchor product, the blockbuster Cubicin, which pulls in roughly $1 billion a year. In the deal, Merck also inherited the recently launched Zerbaxa, a combination treatment designed to fight complicated urinary tract and intra-abdominal infections caused by Gram-negative bacteria. And last year Cubist won approval for Sivextro, a superbug treatment it picked up in its $707 million acquisition for Trius Therapeutics. Thanks to Cubist, Merck's antibiotics pipeline now includes treatments for hospital-acquired bacterial pneumonia, Clostridium difficile infection and opioid-induced constipation.

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