Cubist Pharmaceuticals ($CBST) picked up FDA approval for its latest antibiotic contender, a potential blockbuster whose promise helped bring Merck ($MRK) to the table with a $9.5 billion buyout offer.
The treatment, a combination of the anti-infectives ceftolozane and tazobactam, is designed to fight complicated urinary tract and intra-abdominal infections caused by Gram-negative bacteria, which have few treatment options. The drug, to be sold as Zerbaxa, is Cubist's second approval of 2014, and analysts expect it to bring in peak sales north of $1 billion.
The promise of Zerbaxa and the rest of Cubist's antibiotic pipeline were a major selling point for Merck, which signed a deal earlier this month to acquire the Lexington, MA, company for $9.5 billion.
Zerbaxa benefited from a series of federal programs designed to incentivize the development of therapies for treatment-resistant bacteria, giving Cubist a speedy review and a 5-year extension on patent exclusivity. Beyond the two initial indications, Cubist hopes to expand the market for Zerbaxa, running late-stage trials on hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia.
That's welcome news for Merck, whose splashy deal for Cubist, expected to close early next year, has drawn some criticism for analysts who contend the company overpaid.
Cubist's lead drug, Cubicin, is a blockbuster antibiotic Merck believes will only continue to grow. However, lingering over the two companies' negotiations was the chance that a federal judge might invalidate some of Cubicin's patents, exposing the drug to generic competition in 2016. Merck decided not to push for a contingency clause in the final framework, and, just hours after announcing the deal, a district judge did just what the company feared, opening the door for Hospira ($HSP) to launch a knockoff as early as June 2016.
But despite the looming threat of generic competition, Merck is keeping the faith in Cubist's potential. Beyond Zerbaxa, the company recently launched Sivextro, a superbug treatment it picked up in its $707 million deal for Trius Therapeutics last year, and its pipeline includes treatments for hospital-acquired bacterial pneumonia, Clostridium difficile and opioid-induced constipation.
- read the FDA's release
- here's Cubist's statement