Cubist Pharmaceuticals Inc and Chiron Corporation announced a license agreement for the development and commercialization of Cubist's antibiotic Cubicin (daptomycin for injection) in Western and Eastern Europe, Australia, New Zealand, India and certain Central American, South American and Middle Eastern countries. The U.S. Food & Drug Administration recently approved Cubicin for the treatment of complicated skin and skin structure infections caused by Gram-positive bacteria.

In exchange for development and commercialization rights, Chiron has agreed to pay Cubist up to $50 million. Chiron will pay Cubist $18 million upfront, $10 million of which will be used to purchase restricted Cubist Common Stock at a 50% premium. In addition, Chiron has agreed to pay Cubist regulatory and sales milestones and will also pay Cubist an undisclosed tiered royalty on Cubicin sales in the territories.

"This agreement represents an important achievement in the worldwide development of Cubicin," said Michael W. Bonney, President and Chief Executive Officer of Cubist. "We are very pleased to have found such an experienced partner, with a well established global antiinfective franchise, and one that allows us to focus on the commercialization of Cubicin in the U.S., while at the same time, tapping into Chiron's expertise in the development of regulatory, pricing and commercialization strategies for high-value antiinfective products in Europe and the other countries. With a significant royalty structure and a large portion of the milestones in this partnership tied to regulatory and sales hurdles, we believe Cubist to be in a strong position to maximize the value of this deal."

Craig Wheeler, President of Chiron BioPharmaceuticals, commented on the partnership: "We believe this partnership to be an exciting growth opportunity for Chiron, as these regions represent significant market potential for a drug like Cubicin. Cubicin fits well into Chiron's portfolio of products to treat and prevent infectious disease, and allows us to further leverage our global commercial infrastructure. We look forward to working collaboratively with the Cubist team as we move forward with international regulatory filings for Cubicin."

Chiron markets products in more than 70 countries through its three businesses: BioPharmaceuticals, Vaccines and Blood Testing. The BioPharmaceuticals business markets multiple products, including TOBI tobramycin solution for inhalation for the treatment of Pseudomonas aeruginosa, a Gram-negative bacteria, in patients with cystic fibrosis. Cubicin complements this well, as it is the only once-daily, rapidly bactericidal antibiotic proven effective against both methicillin-susceptible and methicillin-resistant Staphylococcus aureus (MSSA and MRSA). In addition, Chiron has significant experience in the acute care market through the commercialization of its leading cancer product, Proleukin (aldesleukin) interleukin-2.