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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1996
COMMISSION FILE NUMBER 0-21379
CUBIST PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 22-3192085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24 EMILY STREET, MA 02139
(Address of principal executive offices) (Zip Code)
</TABLE>
(617) 576-1999
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No. X
--- ---
At November 30, 1996, there were 9,508,975 shares outstanding of the
Company's common stock, $0.001 per value per share.
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1
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CUBIST PHARMACEUTICALS, INC.
INDEX
ITEM PAGE
NUMBER NUMBER
- ------ ------
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Balance Sheets as of September 30, 1996 (pro forma),
September 30, 1996 (actual) and December 31, 1995.............. 3
Condensed Statements of Operations for the three months ended
September 30, 1996 and 1995 and for the nine months ended
September 30, 1996 and 1995 ................................... 4
Condensed Statements of Cash Flows for the nine months
ended September 30, 1996 and 1995.............................. 5
Notes to the Unaudited Condensed Financial Statements.......... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................ 8
PART II. OTHER INFORMATION
Item 2. Changes in Securities............................................ 12
Item 5. Other Information................................................ 12
Item 6. Exhibits and Reports on Form 8-K................................. 12
SIGNATURE........................................................ 13
2
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PART I -- FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
CUBIST PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
Pro Forma
September 30, September 30, December 31,
1996 1996 1995
------------- ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................ $ 19,894,985 $ 4,664,985 $ 2,049,555
Short-term investments............................... -- -- 1,006,569
Accounts receivable.................................. -- -- 988,000
Prepaid expenses and other current assets............ 806,834 806,834 66,996
------------- ------------- -------------
Total current assets................................. 20,701,819 5,471,819 4,111,120
Property and equipment................................. 4,534,415 4,534,415 3,834,953
Less: Accumulated depreciation
and amortization.......................... (1,547,616) (1,547,616) (1,056,802)
------------- ------------- -------------
Property and equipment, net.......................... 2,986,799 2,986,799 2,778,151
Other assets........................................... 171,260 171,260 158,571
------------- ------------- -------------
Total assets.................................... $ 23,859,878 $ 8,629,878 $ 7,047,842
============= ============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable..................................... $ 561,425 $ 561,425 $ 124,856
Accrued expenses..................................... 651,728 651,728 189,663
Current portion of long-term debt.................... 182,532 182,532 168,565
Current portion of capital lease obligations......... 518,595 518,595 413,223
------------- ------------- -------------
Total current liabilities....................... 1,914,280 1,914,280 896,307
Long-term debt, net of current portion................. 341,259 341,259 479,745
Long-term capital lease obligation, net
of current portion................................... 752,762 752,762 777,017
------------- ------------- -------------
Total liabilities.............................. 3,008,301 3,008,301 2,153,069
------------- ------------- -------------
Commitments
Stockholders' Equity:
Preferred Stock non-cumulative; convertible -
$.001 par value authorized: 5,000,000 shares,
1996 pro forma, and 43,000,000 shares, 1996
actual and 1995; issued: 0 shares, 1996 pro
forma, 37,568,085 shares, 1996 actual,
and 34,751,183 shares, 1995.......................... -- 37,568 34,751
Common Stock - $.001 par value; authorized:
25,000,000 shares, 1996 pro forma, and
52,000,000 shares, 1996 actual and 1995;
issued: 9,508,975, 1996 pro forma, and
1,002,854 shares, 1996 actual, and
1,016,662 shares, 1995............................... 9,509 1,003 1,017
Additional paid-in capital............................. 36,002,529 20,743,467 16,790,878
Accumulated deficit.................................... (15,160,461) (15,160,461) (11,931,873)
------------- ------------- -------------
Total stockholders' equity...................... 20,851,577 5,621,577 4,894,773
------------- ------------- -------------
Total liabilities and stockholders' equity...... $ 23,859,878 $ 8,629,878 $ 7,047,842
============= ============= =============
</TABLE>
The accompanying notes are an integral part of the unaudited condensed financial
statements.
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CUBITS PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------------- ---------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
License and sponsored research revenues. $ 960,879 $ 133,333 $ 3,007,532 $ 233,333
Operating expenses:
Research and development............... 1,656,048 1,235,582 4,838,657 3,830,465
General and administrative............. 463,121 312,215 1,336,707 1,131,192
------------- ------------- ------------- -------------
Total operating expenses.............. 2,119,169 1,547,797 6,175,364 4,961,657
Interest income......................... 68,409 87,713 111,641 178,024
Interest expense........................ (65,494) (66,357) (172,397) (167,164)
------------- ------------- ------------- -------------
Net loss................................ ($1,155,375) ($1,393,108) ($3,228,588) ($4,717,464)
============= ============= ============= =============
Net loss per common share............... ($0.85) ($1.02) ($2.37) ($3.54)
Weighted average number of
common shares...................... 1,361,200 1,367,796 1,363,239 1,332,003
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the unaudited condensed financial
statements.
4
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CUBIST PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Nine months ended
September 30,
---------------------------
1996 1995
------------ ------------
Cash Flows from operating activities:
<S> <C> <C>
Net loss.......................................................... $(3,228,588) (4,717,464)
Adjustments to reconcile net loss to net cash provided
by/(used in) operating activities:
Depreciation and amortization........................... 490,814 399,372
Changes in assets and liabilities:
Accounts receivable................................... 988,000
Prepaid expenses and other current assets............. (739,838) (20,703)
Other assets..........................................
Accounts payable and accrued expenses................. 898,634 (700,263)
Deferred revenue...................................... -- --
------------ ------------
Total adjustments.................................... 1,637,610 (321,594)
------------ ------------
Net cash provided by/(used in) operating activities................ (1,590,978) (5,039,058)
Cash flows from investing activities:
Purchase of fixed assets.................................... (405,019) (398,554)
Leasehold improvements...................................... (266,683) (92,435)
Purchase of short-term investments.......................... -- (1,006,569)
Redemption of short-term investments........................ 1,006,569 (978,110)
------------ -----------
Net cash provided by/(used in) investing activities................ 334,867 (2,475,668)
Cash flows from financing activities:
Issuance of stock........................................... 3,955,392 8,449,408
Repayments of debt.......................................... (124,519) 243,458
Proceeds from capital lease financing....................... 383,525 537,395
Principal payments of capital lease obligations............. (330,168) (263,017)
Deposits relating to capital lease obligations.............. (12,689) (10,090)
------------ -----------
Net cash provided by/(used in) financing activities................ 3,871,541 8,957,154
------------ -----------
Net increase (decrease) in cash and cash equivalents............... 2,615,430 1,442,428
Cash and cash equivalents, beginning of period..................... 2,049,555 1,220,983
Cash and cash equivalents, end of period........................... $ 4,664,985 $ 2,663,411
============ ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest...................... $ 172,397 $ 167,163
Capital lease obligations entered into...................... $ 413,010 $ 501,695
</TABLE>
The accompanying notes are an integral part of the unaudited condensed financial
statements.
5
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CUBIST PHARMACEUTICALS, INC.
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE A. NATURE OF BUSINESS
Cubist Pharmaceuticals, Inc. ("Cubist" or the "Company") is a
biopharmaceutical company founded in May 1992 and is engaged in the research,
development and commercialization of novel classes of antiinfective drugs to
treat infectious diseases caused by bacteria and fungi, primarily those
resistant to existing antiinfective drugs. Cubist has established multiple
technology licenses and collaborations, has established a network of advisors
and collaborators and is located in Cambridge, Massachusetts.
NOTE B. ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements reflect all
adjustments, consisting of normal recurring adjustments, which are necessary, in
the opinion of management, for a fair presentation of the results of the interim
periods presented. Interim results are not necessarily indicative of results
for a full year. These unaudited condensed financial statements do not include
all information and footnote disclosures required by generally accepted
accounting principles and therefore should be read in conjunction with the
Company's audited financial statements and related footnotes for the year ended
December 31, 1995 which are included in the Company's final prospectus relating
to its Registration Statement on Form S-1 (Registration No. 333-6795) (the
"Principal IPO Registration Statement") and its Registration Statement on Form
S-1 (Registration No. 333-5880) (the "Rule 462(b) IPO Registration Statement").
Such final prospectus was filed by the Company with the Securities and Exchange
Commission (the "Commission") on October 25, 1996 pursuant to Rule 424(b) of the
Securities Act of 1933, as amended.
Pro Forma Balance Sheet
On October 30, 1996, the Company sold 2,500,000 shares of its common stock
at $6.00 per share in connection with the initial public offering of its common
stock (the "IPO"). In addition, on November 6, 1996, the underwriters of the
shares offered by the Company in the IPO exercised their over-allotment option
and the Company sold in the IPO an additional 375,000 shares of its common stock
at a price of $6.00 per share. The total number of shares of common stock sold
by the Company in connection with the IPO was 2,875,000 shares and the total net
proceeds received by the Company in connection with the sale of all of such
shares were $15,230,000, all of which total net proceeds are reflected as cash
and cash equivalents on the condensed pro forma balance sheet of the Company as
of September 30, 1996. In addition, upon the first closing of the IPO on
October 30, 1996, all of the outstanding shares of Series A, B, C and D
Convertible Preferred Stock (collectively, the "Preferred Stock") converted into
5,366,869 shares of common stock of the Company. On October 30, 1996, the
Company issued to Bristol-Myers Squibb Company 264,252 shares of common stock of
the Company pursuant to certain antidilution rights of Bristol-Myers Squibb
Company. The condensed pro forma balance sheet of the Company as of September
30, 1996 reflects that all of the Preferred Stock converted into shares of
common stock of the Company on October 30, 1996, that the initial public
offering price per share in connection with the IPO was $6.00 and that 264,252
shares of common stock of the Company were issued to Bristol-Myers Squibb
Company on October 30, 1996.
Net Loss Per Common Share
The net loss per common share is computed based upon the weighted average
number of common shares and common equivalent shares (using the treasury stock
method) outstanding after certain adjustments described below. Common
equivalent shares are not included in the per share calculations where the
effect of their inclusion would be anti-dilutive, except that, in accordance
with Securities and Exchange Commission Staff Accounting Bulletin No. 83, all
common and common equivalent shares issued during the twelve-month period prior
to the filing of the initial
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public offering, even when anti-dilutive, have been included in the calculation
as if they were outstanding for all periods, using the treasury stock method and
the initial public offering price of $6.00 per share.
NOTE C. SUBSEQUENT EVENTS
Certain significant events that occurred after September 30, 1996 are
described in Note B above under the caption "Pro Forma Balance Sheet" and their
impact is reflected in the Company's condensed pro forma balance sheet as of
September 30, 1996.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the historical information contained herein, this quarterly
Report on Form 10-Q may contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including, but not limited to, (i) statements relating to
the amount or amounts of research support payments, technology licensing fees,
milestone payments, equity investments and royalties that the Company may be
entitled to receive in connection with its collaborations with Bristol-Myers
Squibb Company ("Bristol-Myers Squibb"), Merck & Co., Inc. ("Merck") and Pfizer
Inc. ("Pfizer"), (ii) statements relating to the amount of capital expenditures
to be incurred by the Company for the year ending December 31, 1996 and (iii)
statements about the adequacy of the Company's cash, cash equivalents, other
capital resources, interest income and future revenues due under the Company's
collaborative agreements to fund its operating expenses and capital requirements
as currently planned through mid-1998. Investors are cautioned that forward-
looking statements are inherently uncertain. Actual performance and results of
operations may differ materially from those projected or suggested in the
forward-looking statements due to certain risks and uncertainties, including,
but not limited to, the following risks and uncertainties: (i) the early stage
of the Company's product development and the possibility that the Company cannot
successfully develop or commercialize any products, (ii) the unproven nature of
the Company's technology, (iii) the inability of the Company to raise all of the
additional funds that will be required by the Company to develop and obtain
regulatory approval of a drug candidate, to develop manufacturing, marketing and
sales capabilities and to prosecute and defend its intellectual property rights,
(iv) the Company's dependence on its collaborative partners for the indefinite
future, (v) the inability to obtain regulatory approval in the United States or
elsewhere for any drug developed by the Company, (vi) the Company's lack of
experience in, and current lack of facilities and personnel to, manufacture,
market and sell drugs or to produce an adequate supply of compounds to meet
future requirements for clinical trials, (vii) the lack of market acceptance of
any drug that may be successfully developed by the Company and approved for
marketing, and (viii) the inability of any drugs that may be successfully
developed by the Company to compete with any drug developed by a competitor.
Additional information concerning certain risks and uncertainties that would
cause actual results to differ materially from those projected or suggested in
the forward-looking statements is contained in the Company's filings with the
Commission, including those risks and uncertainties discussed under the caption
"Risk Factors" in the Company's final prospectus, dated October 25, 1996,
relating to (x) the Principal IPO Registration Statement, which was declared
effective by the Commission on October 25, 1996 and (y) the Rule 462(b) IPO
Registration Statement, which became effective automatically upon the filing
thereof with the Commission on October 25, 1996 pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, as amended. The forward-looking
statements contained herein represent the Company's judgment as of the date of
this Report on Form 10-Q, and the Company cautions readers not to place undue
reliance on such statements.
OVERVIEW
Since its incorporation on May 1, 1992 and commencement of operations in
February 1993, Cubist has been engaged in the research, development and
commercialization of novel antiinfective drugs to treat infectious diseases
caused by bacteria and fungi, primarily those resistant to existing
antiinfective drugs. The Company has a limited history of operations and has
experienced significant operating losses since inception. The Company expects
to incur significant additional operating losses over the next several years and
expects cumulative losses to increase substantially due to expanded research and
development efforts, pre-clinical and clinical trials and development of
manufacturing, marketing and sales capabilities.
A key element of the Company's strategy is to enhance certain of its drug
discovery and development programs and to fund its capital requirements, in
part, by entering into collaborative agreements with major pharmaceutical
companies. To date, the Company has entered into collaborative agreements based
specifically on its aminoacyl-tRNA synthetase program with Bristol-Myers Squibb,
Merck and Pfizer. Assuming that the collaborative agreements continue until
their scheduled expirations, and that a separate drug is successfully developed
and
8
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commercialized from each of the five research programs to be conducted pursuant
to these collaborative agreements, Cubist will be entitled to receive a total of
$98.5 million in research support payments, technology licensing fees, milestone
payments and equity investments. In addition, the Company will be entitled to
receive royalties on worldwide sales of any drug developed and commercialized
from these collaborations.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1996 and 1995
Revenues. Total revenues in the three months ended September 30, 1996 were
$961,000 compared to $133,000 in the three months ended September 30, 1995, an
increase of $828,000 or 622.5%. The revenue recognized in the three months
ended September 30, 1996 primarily consisted of $800,000 in research support
funding from the Bristol-Myers Squibb and Pfizer collaborations and $161,000 in
SBIR grants. In the three months ended September 30, 1995, total revenues
consisted entirely of SBIR Phase I grant funding.
Research and Development Expenses. Total research and development expenses
in the three months ended September 30, 1996 were $1,656,000 compared to
$1,236,000 in the three months ended September 30, 1995, an increase of $420,000
or 34.0%. The increase was largely due to increased costs related to additional
personnel and purchases of laboratory research supplies that are required by
such additional personnel.
General and Administrative Expenses. General and administrative expenses in
the three months ended September 30, 1996 were $463,000 compared to $312,000 in
the three months ended September 30, 1995, an increase of $151,000 or 48.4%.
The increase was largely due to increased costs related to additional personnel
and recruiting.
Interest Income and Expense. Interest income in the three months ended
September 30, 1996 was $68,000 compared to $88,000 in three months ended
September 30, 1995, a decrease of $20,000 or 22.7%. The decrease in interest
income was due primarily to a lower average cash, cash equivalent and investment
balance during the three months ended September 30, 1996 as compared to the
three months ended September 30, 1995. Interest expense in the three months
ended September 30, 1996 was $65,000 as compared to $66,000 during the three
months ended September 30, 1995.
Net Loss. The net loss during the three months ended September 30, 1996
was $1,155,000 compared to $1,393,000 during the three months ended September
30, 1995, a decrease of $238,000 or 17.1%. The decrease was primarily due to
the increased revenues associated with the Bristol-Myers Squibb, Merck and
Pfizer collaborations, which were offset only in part by additional expenses
incurred to support the advancement of the Company's internal research programs.
Nine Months Ended September 30, 1996 and 1995
Revenues. Total revenues in the nine months ended September 30, 1996 were
$3,008,000 compared to $233,000 in the nine months ended September 30, 1995, an
increase of $2,775,000 or 1,190.0%. The revenue recognized in the nine months
ended September 30, 1996 primarily consisted of $1,500,000 in technology
licensing fees from the Merck collaboration, $1,269,000 in research support
funding from the Bristol-Myers Squibb, Merck and Pfizer collaborations and
$239,000 in SBIR grants. In the nine months ended September 30, 1995, total
revenues consisted entirely of SBIR Phase I grant funding.
Research and Development Expenses. Total research and development expenses
in the nine months ended September 30, 1996 were $4,839,000 compared to
$3,830,000 in the nine months ended September 30, 1995, an increase of
$1,009,000 or 26.3%. The increase was largely due to increased costs related to
additional personnel, purchases of compounds to expand the Company's compound
collection and purchases of laboratory research supplies that are required by
such additional personnel.
9
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General and Administrative Expenses. General and administrative expenses in
the nine months ended September 30, 1996 were $1,337,000 compared to $1,131,000
in the nine months ended September 30, 1995, an increase of $206,000 or 18.2%.
The increase was primarily due to costs relating to additional personnel and
recruiting and relocation expenses.
Interest Income and Expense. Interest income in the nine months ended
September 30, 1996 was $112,000 compared to $178,000 in the nine months ended
September 30, 1995, a decrease of $66,000 or 37.1%. The decrease in interest
income was due to a decrease in the average cash, cash equivalent and investment
balance during the nine months ended September 30, 1996 as compared to the nine
months ended September 30, 1995. Interest expense was $172,000 in the nine
months ended September 30, 1996 as compared to $167,000 during the nine months
ended September 30, 1995.
Net Loss. The net loss during the nine months ended September 30, 1996 was
$3,229,000 compared to $4,717,000 during the nine months ended September 30,
1995, a decrease of $1,488,000 or 31.5%. The decrease was primarily due to the
increased revenues associated with the Bristol-Myers Squibb, Merck and Pfizer
collaborations, which were offset only in part by additional expenses incurred
to support the advancement of the Company's internal research programs.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations through the sale
of equity securities, equipment financing, sponsored research revenues, license
revenues and interest earned on invested capital. The Company's total cash,
cash equivalent and investments balance at September 30, 1996 was $4,665,000
compared to $3,056,000 at December 31, 1995. For the nine months ended
September 30, 1996, the Company raised $4,000,000 in private equity offerings,
and received $1,269,000 in sponsored research payments, $1,500,000 in technology
license fees and $239,000 in SBIR grants.
Net cash used in operations in the nine months ended September 30, 1996 was
$1,591,000 compared to $5,039,000 in the nine months ended September 30, 1995.
The cash used in operations was primarily to fund research and development and
for general and administrative expenses.
On October 30, 1996, the Company sold 2,500,000 shares of its common stock
at $6.00 per share in connection with the IPO. In addition, on November 6,
1996, the underwriters of the shares offered by the Company in the IPO exercised
their over-allotment option and the Company sold in the IPO an additional
375,000 shares of its common stock at a price of $6.00 per share. The total
number of shares of common stock sold by the Company in connection with the IPO
was 2,875,000 shares and the total net proceeds received by the Company in
connection with the sale of all of such shares were $15,230,000. At September
30, 1996, on a pro forma basis after giving effect to the consummation of the
IPO, the Company's total cash, cash equivalent and investment balance was
$19,895,000.
The Company has entered into collaborative agreements based specifically on
its aminoacyl-tRNA synthetase program with Bristol-Myers Squibb, Merck and
Pfizer. Assuming that the collaborative agreements continue until their
scheduled expirations, and that a separate drug is successfully developed and
commercialized from each of the five research programs to be conducted pursuant
to these collaborative agreements, Cubist will be entitled to receive a total of
$98.5 million in research support payments, technology licensing fees, milestone
payments and equity investments. In addition, the Company will be entitled to
receive royalties on worldwide sales of any drug developed and commercialized
from these collaborations. Through September 30, 1996, the Company's
collaborative partners have provided the Company with $1.8 million of research
support payments, $2.0 million technology licensing fees and $4.0 million in
an equity investment. There can be no assurance that the Company will receive
any additional funding from any of the Company's collaborative partners.
As of September 30, 1996, the Company had invested an aggregate of
$4,534,000 (of which $699,000 was invested during the nine months then ended) in
property and equipment, primarily in facility renovations and laboratory
equipment under capital leases. The obligations under capital leases at
September 30, 1996 were
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$1,271,000. Minimum annual principal payments due under capital leases
total $520,000 in 1996 and 1997. Principal payments decline each year thereafter
until expiration in 1999. The Company made principal payments under its capital
lease obligations of $330,000 in the nine months ended on September 30, 1996.
The Company expects its capital expenditures in 1996 to be approximately
$1,000,000 consisting of $300,000 in leasehold improvements and $700,000 of
laboratory and other equipment purchases.
The Company believes that its existing cash (including the $15,230,000 in
net proceeds received by the Company in connection with the IPO), cash
equivalents, other capital resources, interest income and future revenues due
under the Bristol-Myers Squibb, Merck and Pfizer collaborative agreements, will
be sufficient to fund its operating expenses and capital requirements as
currently planned through mid-1998.
11
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PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On October 17, 1996, the Company amended its Restated Certificate of
Incorporation for purposes of (i) reducing the number of authorized shares of
its common stock, $0.001 par value per share ("Common Stock"), from 52,000,000
shares to 25,000,000 shares, (ii) effecting a reverse one-for-seven stock split
of its Common Stock, and (iii) adding certain anti-takeover provisions described
in the Company's Registration Statement on Form S-1 (Registration No. 333-6795)
(the "Principal IPO Registration Statement") under the captions "Risk Factors--
Potential Anti-Takeover Effect of Certain Charter and By-Law Provisions" and
"Description of Capital Stock--Delaware Law and Certain Charter and By-Law
Provisions". The description of such anti-takeover provisions set forth in the
Principal IPO Registration Statement is hereby incorporated herein by reference.
ITEM 5. OTHER INFORMATION
On October 25, 1996, (i) the Securities and Exchange Commission (the
"Commission") simultaneously declared effective the Principal IPO Registration
Statement and the Company's Registration Statement on Form 8-A, filed under the
Securities Exchange Act of 1934, as amended, and (ii) the Company filed with the
Commission another Registration Statement on Form S-1 (Registration No. 333-
5880) (the "Rule 462(b) IPO Registration Statement"), which became effective
immediately upon its filing with the Commission pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, as amended. The Principal IPO
Registration Statement and the Rule 462(b) IPO Registration Statement
(collectively, the "IPO Registration Statement") relate to the initial public
offering of 2,875,000 shares of the Company's Common Stock. On October 25,
1996, the Company entered into an Underwriting Agreement with UBS Securities
LLC, Hambrecht & Quist LLC and Pacific Growth Equities, Inc., as representatives
of the several underwriters named on Schedule A thereto (the "Underwriters"),
-------- -
pursuant to which (x) the Underwriters agreed to purchase from the Company
2,500,000 shares of its Common Stock at the public offering price of $6.00 per
share, less underwriting discounts and commissions of $0.42 per share, and (y)
the Company granted to the Underwriters an option to purchase an additional
375,000 shares of Common Stock, solely to cover over-allotments, at the public
offering price of $6.00 per share, less underwriting discounts and commissions
of $0.42 per share. On October 30, 1996, pursuant to the terms of Underwriting
Agreement, the Underwriters consummated the purchase of such 2,500,000 shares of
Common Stock and the Company received from the Underwriters net proceeds in the
amount of $13,950,000. On November 4, 1996, the Underwriters notified the
Company of their exercise of the option, granted under the Underwriting
Agreement, to purchase 375,000 additional shares of Common Stock solely to cover
over-allotments, and on November 6, 1996, the Underwriters consummated the
purchase of such 375,000 additional shares of Common Stock and the Company
received additional net proceeds of $2,092,500 from the Underwriters.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 -- Statement of Computation of Earnings Per Share
27 -- Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended September 30, 1996.
12
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SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
CUBIST PHARMACEUTICALS, INC.
December 9, 1996 By: /s/ Thomas A. Shea
---------------------------------
Thomas A. Shea,
Director of Finance
& Administration and Treasurer
(Authorized Officer and Principal
Finance and Accounting Officer)
13
<PAGE>
EXHIBIT 11
CALCULATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
1996 1995
------------ ------------
<S> <C> <C>
Beginning Balance June 30 1,006,154 1,011,804
Issuance of Common Stock (1,121) (175)
Issuance of Cheap Stock 356,167 356,167
----------- -----------
Weighted Average Shares at September 30 1,361,200 1,367,769
Net Loss Third Quarter ($1,155,375) ($1,393,108)
Net Loss per Share ($0.85) ($1.02)
----------- -----------
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1995
----------- -----------
Beginning Balance January 1 1,016,666 910,029
Issuance of Common Stock (9,594) 65,807
Issuance of Cheap Stock 356,167 356,167
----------- -----------
Weighted Average Shares at September 30 1,363,239 1,332,003
Net Loss Nine Months ($3,228,588) ($4,717,464)
Net Loss per Share ($2.37) ($3.54)
----------- -----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CUBIST FORM
S-1 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 SEP-30-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<CASH> 2,049,555 4,664,985
<SECURITIES> 1,006,569 0
<RECEIVABLES> 988,000 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 66,996 806,834
<PP&E> 3,834,953 4,534,415
<DEPRECIATION> 1,056,802 1,547,616
<TOTAL-ASSETS> 7,047,842 8,629,878
<CURRENT-LIABILITIES> 896,307 1,914,280
<BONDS> 1,838,550 1,795,148
0 0
34,751 37,568
<COMMON> 1,017 1,003
<OTHER-SE> 4,859,005 5,583,006
<TOTAL-LIABILITY-AND-EQUITY> 7,047,842 8,629,878
<SALES> 0 0
<TOTAL-REVENUES> 1,271,333 3,007,532
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 6,673,389 6,175,364
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (6,050) 60,756
<INCOME-PRETAX> (5,396,006) (3,228,588)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (5,396,006) (3,228,588)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,396,006) (3,228,588)
<EPS-PRIMARY> (.91)<F1> (2.37)<F1>
<EPS-DILUTED> 0 0
<FN>
<F1>Computed on a pro forma basis as described in Note B of the Notes to the
Financial Statements.
</FN>
</TABLE>
