Zacks_Analysts' Blog : Cubist Settles Dispute with Teva - Analyst Blog

Cubist Pharmaceuticals Inc. (CBST) announced that it has settled a patent dispute with Teva Pharmaceutical Industries Ltd. (TEVA) regarding Cubicin (daptomycin injection), the sole marketed product at Cubist Pharma. Cubicin is approved in the US and several other markets for the treatment of severe bacterial infections of the skin and bloodstream.

Teva was seeking to introduce a generic version of Cubicin. The patents for Cubicin are set to expire on September 24, 2019. Under the terms of the agreement, Teva can start selling the generic version of the antibiotic from December 24, 2017.

However, if Cubist Pharma is successful in gaining approval for Cubicin for the pediatric population in the US, Teva can start selling the generic version only from June 18, 2018. We note that pediatric exclusivity prolongs the market exclusivity period by 6 months. The agreement also provides that Cubist Pharma will supply the entire amount of daptomycin required for the generic version of Cubicin in the US.

We remind investors that in February 2009, Cubist Pharma received a paragraph IV certification notice from Teva notifying that the latter had submitted an abbreviated new drug application (ANDA) to the US Food and Drug Administration (FDA). Cubist Pharma challenged the application.

The settlement of the litigation with Teva removes a major overhang for Cubist Pharma. However, the competition confronting Cubicin is a challenge for the company. Cubicin faces competition from Pfizer's (PFE) Zyvox and Tygacil, and Theravance's (THRX) Vibativ.

Our Recommendation

We currently have a Neutral recommendation on Cubist Pharma, which is supported by a Zacks #3 Rank (short-term Hold rating). We have a similar stance on Teva.