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Biotech Losers: Cubist Pharma, Lexicon

Biotech shares trend lower, with Cubist Pharmaceuticals and Lexicon leading the way into the red.
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NEW YORK (

TheStreet

) -- Biotech stocks were mostly lower Tuesday, following the broader equities markets into the red.

The Nasdaq biotechnology index was slumping by more than 16 points to 914.06.

Among the sharpest decliners was

Cubist Pharmaceuticals

(CBST)

, which said Tuesday that it will refinance by offering $250 million in convertible senior notes, a move that could dilute shareholders. The notes will be convertible into cash or common stock or both in combination. Cubist will use the proceeds to pay down other debt.

In recent trades, shares of Cubist were falling more than 6% to $23.65. About 2.6 million shares had changed hands by mid-afternoon, more than five times the daily average turnover in the name.

The company, which makes an antibiotic called Cubicin for the treatment of blood infections,

reported third-quarter results on Thursday

that surpassed Wall Street's profit targets, but missed on revenue.

Cubist has two drugs in its development pipeline aimed at defeating drug-resistant bacteria. The company expects to file a new drug application for one by the end of 2013. A diarrhea treatment is in preclinical trials.

Other decliners Tuesday included

Dendreon

(DNDN)

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and

Vivus

(VVUS) - Get VIVUS, Inc. Report

, both lower by about 3%, and

Lexicon Pharmaceuticals

(LXRX) - Get Lexicon Pharmaceuticals, Inc. Report

which was shedding nearly 6%. On Monday, Lexicon shares added 4% on heavy volume but no news, though the company's boss, Arthur Sands, is supposed to give a speech at the Biotech Industry Conference in New York on Friday.

Elsewhere in the universe of developmental pharmacology, stocks trading in the green stood out.

MannKind

(MNKD) - Get MannKind Corporation Report

shares were rising 3% to $6.95 on heavier-than-average volume; the company on Tuesday said "the first patient has been dosed" in a Phase II clinical trials of its "novel, investigational cancer vaccine," known for the time being as MKC1106-MT.

Much more relevant to MannKind's immediate prospects, though, will be the Food and Drug Administration's decision in December on whether to approve the company's insulin inhaler, Afrezza.

Also Tuesday,

JMP Securities

-- not to be confused with JPM, as in

JPMorgan

(JPM) - Get JPMorgan Chase & Co. Report

-- initiated coverage of MannKind with an outperform rating.

As it happens, JMP launched coverage of a few biotechs Tuesday, sticking market perform ratings on

Biodel

(BIOD)

and

Halozyme

(HALO) - Get Halozyme Therapeutics, Inc. Report

. Biodel shares were rising 4% to $4.16 Tuesday afternoon, while Halozyme lost ground, falling 3% to $7.75.

Biodel faces an FDA approval decision for its fast-acting insulin product Linjeta later in October. A Phase III trial of the treatment in India failed to meet a non-inferiority test when going up against

Eli Lilly's

(LLY) - Get Eli Lilly and Company Report

Humulin, though Biodel has argued that a screw-up of blood samples in India led to the unsatisfactory results.

-- Written by Scott Eden in New York

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.