Cubist Pharmaceuticals Management Discusses Q2 2012 Results - Earnings Call Transcript

Cubist Pharmaceuticals (CBST)

Q2 2012 Earnings Call

July 19, 2012 5:00 pm ET


Eileen C. McIntyre - Senior Director of Investor Relations

Michael W. Bonney - Chief Executive Officer and Director

David W. J. McGirr - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Robert J. Perez - President and Chief Operating Officer

Steven C. Gilman - Chief Scientific Officer and Executive Vice President of Research & Development

Gregory Stea - Senior Vice President of Commercial Operations


Mario V. Corso - Caris & Company, Inc., Research Division

Thomas J. Russo - Robert W. Baird & Co. Incorporated, Research Division

Eun K. Yang - Jefferies & Company, Inc., Research Division

Steve Byrne - BofA Merrill Lynch, Research Division

Alan Carr - Needham & Company, LLC, Research Division

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

James F. Molloy - ThinkEquity LLC, Research Division

Howard Liang - Leerink Swann LLC, Research Division

Stephen Willey - Stifel, Nicolaus & Co., Inc., Research Division



Good day. My name is Nikki, and I will be your events specialist today. At this time, I would like to welcome everyone to the Cubist Pharmaceuticals Second Quarter Earnings Call. [Operator Instructions] At this time, I would like to turn today's program over to Eileen McIntyre. Eileen, you may begin.

Eileen C. McIntyre

Good afternoon, and thank you for joining us for our review of Second Quarter 2012 Business Performance and Financial Results of Cubist Pharmaceuticals. Before introducing our speakers, I will read the safe harbor statement and describe the context for use of non-GAAP financial measures.

Today's presentation includes forward-looking statements relating to our business, including those set forth on this slide. We may also make forward looking statements during the Q&A session following our prepared remarks. These statements are neither promises nor guarantees and there are a number of risks and uncertainties that could cause actual results to differ materially from those set forth in these forward-looking statements.

These and other risk factors are described in the slide shown and to the Risk Factors section of our most recent quarterly report on Form 10-Q, filed with the SEC. Forward-looking statements are made as of today's date, and we do not undertake any obligation to update any forward-looking statement.

We will also refer to certain non-GAAP financial measures that involve adjustments to GAAP figures in order to provide greater transparency regarding Cubist's operating performance. Please refer to the slide being shown regarding our use of non-GAAP financial measures, as well as additional slides on the Investor Relations page of our website, which contains the reconciliation between our non-GAAP financial measures and GAAP financial measures.

Speakers on today's call will include Cubist's CEO, Mike Bonney; President and Chief Operating Officer, Rob Perez; Chief Scientific Officer, Steve Gilman; and Chief Financial Officer, David McGirr. You will first hear from Mike Bonney. Mike?

Michael W. Bonney

Thanks, Eileen. Before providing an overview of our financial results for the quarter, I wanted to comment on some important goals we shared with you last month.

On our June 11th Investor Day, we announced our 5-year targets for top and bottom line growth, with revenue expectations of $2 billion and non-GAAP adjusted operating income of $700 million in 2017. We also set forth goals for maintaining a robust late-stage pipeline, expecting to have 4 products in late-stage clinical trials at year-end 2017.

These goals, which we referred to as our building blocks of growth are aspirational, but we do think they're achievable. And they provide a useful framework for our strategic and tactical decision-making in the months and years ahead. We also think it's helpful as we continue to build a channel-focused acute care company to share with you our vision of what Cubist can become.

Now turning to the financial results we announced earlier. As you've seen in today's news release, Cubist has delivered strong results from the top and bottom line in the second quarter of 2012. In a year focused on execution, we continue to see important progress against key goals for the year.

Our total revenues for Q2 2012 were $231 million, this is our second consecutive quarter with year-over-year top line growth of 30%. Operating income for the quarter is $61.5 million. This is an $86 million positive swing year-over-year, which reflects the impact of $82 million of contingent consideration expense on GAAP operating income in the year ago quarter.

On the top line, there are multiple contributors to our strong results this quarter. CUBICIN momentum in the U.S. continues to be the most important contributor to our top line growth. Q2 net revenues in the U.S. grew 19% versus a year ago, resulting in our first $200 million quarter in the U.S. for CUBICIN.

CUBICIN international revenues from our x U.S. partners in Q2 totaled $11.4 million, up 47% versus Q2 a year ago. I'm pleased with the uptick we have seen in international results through the first half of 2012.

ENTEREG results also contributed to our top line in Q2. In our second quarter of commercializing this product, which we brought in with the acquisition of Adolor late last year, we achieved just under $10 million in net revenues.

As we begin Q3, we are, as planned, increasing our call universe for ENTEREG to a significantly larger percentage of the hospitals for clinical business managers call-on in the U.S.

As Rob will discuss, an important component of this expansion will be some adjustments we are making to incorporate key learnings in the first 6 months of the relaunch.

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