Shares of Cubist Pharmaceuticals ( CBST) dropped Monday after the Food and Drug Administration delayed acting on the company's request to expand the uses of the antibiotic Cubicin. On Friday, after the markets had closed, Cubist said the FDA granted conditional approval for expanding Cubicin to treat bacteremia, or bloodstream infections, and infective endocarditis, a potentially deadly heart-valve infection caused by the bacteria Staphylococcus aureus. The drug is now used for treating skin and skin-structure infections caused by the bacteria. Cubicin is the company's only product. Cubist CEO Mike Bonney said the agency didn't ask for additional clinical trials. He said the delay was the result of a disagreement over what the label can say about the new uses. Bonney said the dispute with the FDA should be resolved within 60 days. Still, the Lexington, Mass., company's stock dropped $1.06, or 4.3%, to $23.39 on heavier than average trading. The stock fell as low as $22.90. Earlier this month
an FDA advisory committee unanimously endorsed Cubicin for treating bacteremia, but voted only 5 to 4 to support it for treating endocarditis. The FDA doesn't have to follow its advisers' recommendations, but it usually does. Panel members had raised questions about a high dropout rate in the clinical trials, as well as about the small number of endocarditis patients being tested. The company has been trying to expand the uses of Cubicin, saying more antibiotics are needed because bacteria are developing resistance to some of the older treatments for bacteremia and endocarditis caused by Staphylococcus aureus. "It is unlikely that Cubicin will obtain a label indication for endocarditis, given the limited number of endocarditis patients in the clinical trial," says Joel Sendek of Lazard Capital Markets in a Monday research report. "We view the FDA's decision to be a setback, as it was widely expected that they would receive the approval and the company has already expanded its sales force in anticipation." Sendek, who has a hold rating on Cubist, predicts Cubicin will be used primarily as a second-line therapy or as a treatment for high-risk patients. He doesn't own shares of Cubist, and his firm doesn't have an investment-banking relationship.