Cubist Pharmaceuticals Inc has purchased from Eli Lilly and Company a reduction in the royalties payable to Lilly on net sales of Cubist's investigational antibiotic Cidecin (daptomycin for injection), should it gain regulatory approval. Cubist acquired worldwide development and commercialization rights to daptomycin from Lilly in 1997. The New Drug Application for Cidecin is currently being reviewed by the U.S. Food & Drug Administration under priority review status.
Under the terms of the transaction, Cubist will issue to Lilly $8.0 million in Cubist Common Stock, with registration rights. The price of the shares will be determined based on the average closing price of the stock over twenty consecutive trading days ending July 18, 2003. In exchange for the shares, Cubist's global royalty obligation to Lilly on Cidecin sales will be reduced by one percentage point.
Michael W. Bonney, President & Chief Executive Officer of Cubist commented on the transaction: "Over the past year, Cubist has made tremendous advancements in the development of Cidecin and we remain committed to realizing the maximum value from its commercialization. We believe this transaction is a great opportunity for Cubist, as it reduces our future royalty obligations to Lilly."