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PROSPECTUS
FILED PURSUANT TO RULE 424(b)(1)
(REGISTRATION STATEMENT NO. 333-96365)
2,225,000 SHARES
CUBIST PHARMACEUTICALS, INC.
COMMON STOCK
Selling stockholders, together with their respective donees, pledgees,
transferees and other successors in interest, may sell up to 2,225,000 shares
of common stock of Cubist Pharmaceuticals, Inc. Cubist will not receive any
of the proceeds from the sale of shares by the selling stockholders. Cubist's
common stock is listed on the Nasdaq National Market under the symbol "CBST".
On February 7, 2000 the closing sale price of the common stock, as reported
on the Nasdaq National Market, was $32.125 per share. When used herein, the
term "selling stockholder" includes donees, transferees, pledgees and other
successors in interest.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS," BEGINNING ON PAGE 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The selling stockholders may sell the shares of common stock described in
this prospectus in public or private transactions, on or off the National Market
System of the Nasdaq Stock Market, at prevailing market prices, or at privately
negotiated prices. The selling stockholders may sell shares directly to
purchasers or through brokers or dealers. Brokers or dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders. More information is provided in the section titled "Plan
of Distribution."
The date of this Prospectus is February 11, 2000.
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TABLE OF CONTENTS
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PAGE
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Where You Can Get More Information................................................... 2
Certain Information We Are Incorporating By Reference................................ 2
Forward Looking Statements........................................................... 3
Risk Factors......................................................................... 3
Cubist Pharmaceuticals, Inc..........................................................11
Recent Developments..................................................................11
Use of Proceeds......................................................................11
Selling Stockholders.................................................................12
Plan of Distribution.................................................................15
Legal Matters........................................................................16
Experts..............................................................................16
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WHERE YOU CAN GET MORE INFORMATION
Cubist is subject to the reporting requirements of the Securities Exchange
Act of 1934 and files annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy these reports, proxy
statements and other information at the SEC's public reference facilities at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Seven World
Trade Center, 13th Floor, New York, New York 10048 and at Northwest Atrium
Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511. You can
request copies of these documents by writing to the SEC and paying a fee for the
copying cost. Please call the SEC at 1-800-SEC-0330 for more information about
the operation of the public reference facilities. SEC filings are also available
at the SEC's Web site at http://www.sec.gov. Cubist's common stock is listed on
the Nasdaq National Market, and you can read and inspect our filings at the
offices of the National Association of Securities Dealers, Inc. at 1735 K
Street, Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information that we file
with them. Incorporation by reference allows us to disclose important
information to you by referring you to those other documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. Cubist has filed a Registration Statement on Form
S-3 under the Securities Act of 1933 with the SEC with respect to the common
stock being offered pursuant to this prospectus. This prospectus omits certain
information contained in the Registration Statement on Form S-3, as permitted by
the SEC. Refer to the Registration Statement on Form S-3, including the
exhibits, for further information about Cubist and the common stock being
offered pursuant to this prospectus. Statements in this prospectus regarding the
provisions of certain documents filed with, or incorporated by reference in, the
Registration Statement are not necessarily complete and each statement is
qualified in all respects by that reference. Copies of all or any part of the
Registration Statement, including the documents incorporated by reference or the
exhibits, may be obtained upon payment of the prescribed rates at the offices of
the SEC listed above.
Upon request, Cubist will provide without charge to each person to whom a
copy of this prospectus has been delivered a copy of any information that was
incorporated by reference in the prospectus (other than exhibits to documents,
unless the exhibits are specifically incorporated by reference into the
prospectus). Cubist will also provide upon request, without charge to each
person to whom a copy of this prospectus has been delivered, a copy of all
documents filed from time to time by Cubist with the SEC pursuant to the
Exchange Act of 1934. Requests for copies should be directed to Thomas A. Shea,
Vice President and Chief Financial Officer, Cubist Pharmaceuticals, Inc. 24
Emily Street, Cambridge, MA 02139. Telephone requests may be directed to Mr.
Shea at (617) 576-4155.
CERTAIN INFORMATION WE ARE INCORPORATING BY REFERENCE
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
-- Annual Report on Form 10-K for the fiscal year ended December 31, 1998
--Quarterly Reports on Form 10-Q filed on November 12, 1999, August 12,
1999 and May 13, 1999
-- Registration Statement on Form 8-A filed on August 2, 1999
--Current Reports on Form 8-K filed on January 27, 2000, October 18, 1999,
July 30, 1999 and June 29, 1999
-- The Definitive Proxy Statement filed on April 13, 1999
-- The description of the common stock contained in Cubist's Registration
Statement filed with the SEC under Section 12(g) of the Securities Exchange
Act including any amendment or report filed for the purpose of updating
such description.
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You may request a copy of these filings at no cost, by writing, telephoning
or e-mailing us at the following address:
Cubist Pharmaceuticals, Inc.
24 Emily Street
Cambridge, MA 02139
Attn: Thomas A. Shea
(617) 576-1999
e-mail: [email protected]
This prospectus is part of a Registration Statement we filed with the SEC.
You should rely only on the information incorporated by reference or provided in
this prospectus. No one else is authorized to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
document.
FORWARD-LOOKING STATEMENTS
This prospectus contains and incorporates by reference 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 statements
regarding Cubist's drug development programs, clinical trials, receipt of
regulatory approval, capital needs, collaborative agreements, intellectual
property, expectations and intentions. Forward-looking statements may be
identified or qualified by words such as "likely", "will", "suggests", "may",
"would", "could", "should", "expects", "anticipates", "estimates", "plans",
"projects", "believes", or similar expressions and variants of those words or
expressions.
Forward-looking statements necessarily involve risks and uncertainties, and
Cubist's actual results could differ materially from those anticipated in the
forward-looking statements due to a number of factors, including those set forth
below under "Risk Factors" and elsewhere in this prospectus. The factors set
forth below under "Risk Factors" and other cautionary statements made in this
prospectus should be read and understood as being applicable to all related
forward-looking statements wherever they appear in this prospectus. The
forward-looking statements contained in this prospectus represent our judgment
as of the date of this prospectus. Cubist cautions readers not to place undue
reliance on such statements. We undertake no obligation to update publicly any
forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.
RISK FACTORS
INVESTING IN CUBIST'S COMMON STOCK IS RISKY. YOU SHOULD BE ABLE TO BEAR A
COMPLETE LOSS OF YOUR INVESTMENT. YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING FACTORS, IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS.
OUR DRUG CANDIDATES MAY NOT PROVE TO BE
SAFE AND EFFECTIVE IN HUMAN CLINICAL TRIALS.
We are currently testing daptomycin in human clinical trials. Clinical
trials of drug candidates involve the testing of potential therapeutic agents in
humans to determine whether the drug candidates are safe and effective and, if
so, to what degree. Many drugs in human clinical trials fail to demonstrate the
desired safety and efficacy characteristics. Drugs in later stages of clinical
development may fail to show the desired safety and efficacy traits despite
having progressed through initial human testing. The clinical trials of any of
our drug candidates may not be successful which may prevent us from
commercializing the drug, substantially impairing our business, financial
condition and results of operations.
WE ARE IN VARIOUS STAGES OF PRODUCT DEVELOPMENT
AND THERE CAN BE NO ASSURANCE OF SUCCESSFUL COMMERCIALIZATION.
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Many of Cubist's research and development programs are at an early stage of
development. The FDA (the United States Food and Drug Administration) has not
approved any of our product candidates. To date, we have not, independently or
with our collaborative partners, optimized any lead drug candidates. Any drug
candidates developed by Cubist will require significant additional research and
development efforts, including extensive pre-clinical and clinical testing and
regulatory approval, prior to commercial sale. Only daptomycin has advanced to
any phase of pre-clinical testing or clinical trials. We cannot be sure our
approach to drug discovery, acting independently or with our collaborative
partners, will be effective or will result in the development of any drug. We
cannot expect that any drugs that do result from our research and development
efforts will be commercially available for many years.
We have limited experience in conducting pre-clinical testing and clinical
trials. Even if we receive initially positive pre-clinical results, such results
do not mean that similar results will be obtained in the later stages of drug
development, such as additional pre-clinical testing or human clinical trials.
All of our potential drug candidates are prone to the risks of failure inherent
in pharmaceutical product development, including the possibility that none of
our drug candidates will or can
- be safe, non-toxic and effective
- otherwise meet applicable regulatory standards
- receive the necessary regulatory approvals
- develop into commercially viable drugs
- be manufactured or produced economically and on a large scale
- be successfully marketed
- be reimbursed by government or private consumers
- achieve customer acceptance.
In addition, third parties may preclude us from marketing our drugs through
enforcement of their proprietary rights. Or, third parties may succeed in
marketing equivalent or superior drug products. Our failure to develop safe,
commercially viable drugs would have a material adverse effect on our business,
financial condition and results of operations.
THERE IS UNCERTAINTY OF SUCCESS DUE TO THE
USE OF OUR UNPROVEN DRUG DISCOVERY TECHNOLOGY.
Cubist's drug discovery approach faces technical issues which have not been
resolved. Our drug discovery approach requires the development of multiple novel
technologies to create a successful drug candidate. While we have demonstrated
that certain compounds have the ability to inhibit the activity of certain
molecular targets, we have not proven that this activity can be utilized
clinically as a therapeutic drug. Furthermore, we cannot be assured that any
preliminary potential demonstrated in primary screening will continue to be
encouraging in further screening or drug discovery studies. Cubist has not
tested any drug candidates developed from its drug discovery program in humans,
and there can be no assurance that there will be clinical benefits associated
with any drug candidates it does develop. Furthermore, there can be no assurance
that we will be successful in addressing the technological challenges of others
that may arise in the course of development. Our failure to anticipate or
respond adequately to any technological developments will have a material
adverse effect on our business, operating results and financial condition. There
can be no assurance that Cubist will be able to employ its drug discovery
approach successfully.
WE DEPEND ON OUR COLLABORATIVE PARTNERS.
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A key element of Cubist'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. We currently have collaborative agreements with Bristol-Myers Squibb
and Merck. Under these collaborative agreements, each of Bristol-Myers Squibb
and Merck is responsible for, among other things
- providing libraries of compounds for screening against certain
Cubist's aminoacyl- tRNA synthetase targets
- selecting, in collaboration with Cubist, compounds determined to be
leads in the screening for subsequent development,
- conducting pre-clinical testing and clinical trials and obtaining
required regulatory approvals of drug candidates, and
- manufacturing and commercializing resulting drugs.
We also have a collaborative agreement with Novartis Pharma AG with respect
to our VITA-Registered Trademark- drug discovery technology. Under the Novartis
collaborative agreement, Novartis is responsible for, among other things
- screening against certain Cubist targets
- selecting compounds determined to be leads in the screening for
subsequent development,
- conducting pre-clinical testing and clinical trials and obtaining
required regulatory approvals of drug candidates, and
- manufacturing and commercializing resulting drugs.
As a result, our receipt of revenues (whether in the form of continued
research funding, drug development milestone payments or royalty payments on
sales of drugs) from these collaborative agreements is dependent upon the
decisions made by the drug discovery, drug development, manufacturing and
marketing resources of our collaborative partners. Therefore, the amount and
timing of resources dedicated by our collaborative partners to their respective
collaborations with Cubist is not under our control.
Moreover, certain drug candidates discovered by Cubist may be viewed by our
collaborative partners as competitive with their drugs or drug candidates.
Accordingly, our collaborative partners may not elect to proceed with the
development of drug candidates which we believe to be promising. In addition,
our collaborative partners may pursue their existing or alternative technologies
in preference to Cubist's drug candidates. We advise you that
- the interests and goals of our collaborative partners might not
always coincide with ours
- some of our collaborative partners might develop independently (or
with others) drugs that could compete with ours, or
- disagreements over rights or technology or other proprietary might
occur leading to delays in research or in the development and
commercialization of certain product candidates (such disputes could also
require or result in litigation or arbitration, which is time-consuming and
expensive).
If any of our collaborative partners breaches or terminates its agreement
with us, or otherwise fails to conduct its collaborative activities in a timely
manner
- the development or commercialization of any drug candidate or
research program under these collaborative agreements may be delayed,
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- we may be required to undertake unforeseen additional
responsibilities or to devote unforeseen additional resources to such
development or commercialization, or
- such development or commercialization could be terminated.
Any such event could materially adversely affect our financial condition,
intellectual property position and operations. In addition, there have been a
significant number of recent consolidations among pharmaceutical companies. Such
consolidations among the companies with which Cubist is collaborating could
result in the diminution or termination of, or delays in, the development or
commercialization of drug candidates or research programs. Moreover, although
each of our collaboration agreements may be extended past its current term, we
cannot be sure that these contracts will be extended or renewed, or that any
renewal, if made, will be on terms favorable to us.
WE HAVE SIGNIFICANT DEVELOPMENT COSTS AND
ARE UNCERTAIN AS TO THE AVAILABILITY OF FUTURE FUNDING.
Cubist will require substantial additional funds in order to
- finance its drug discovery and development programs,
- fund its operating expenses, pursue regulatory clearances,
- develop manufacturing, marketing and sales capabilities and
- prosecute and defend its intellectual property rights.
Cubist intends to seek additional funding through public or private
financing or other arrangements with collaborative partners. If we raise
additional funds by issuing equity securities, further dilution to existing
stockholders may result. In addition, as a condition to giving additional funds
to Cubist, future investors may demand, and may be granted, rights superior to
those of existing stockholders. We cannot be sure, however, that additional
financing will be available from any of these sources or, if available, will be
available on acceptable or affordable terms.
If adequate additional funds are not available, Cubist may be required to
delay, reduce the scope of or eliminate one or more of its research and
development programs. In order to obtain additional funding, Cubist may be
required to relinquish rights to certain technologies or drug candidates that we
would not otherwise relinquish in order to continue independent operations.
WE HAVE A HISTORY OF LOSSES AND
AN EXPECTATION OF FUTURE LOSSES.
Cubist has incurred a cumulative net operating loss of approximately $46.5
million through September 30, 1999. These losses have resulted principally from
costs incurred in research and development activities related to our efforts to
(1) commence clinical trials, (2) develop target assays, (3) acquire and
optimize chemical compounds, (4) conduct automated high throughput screening,
and (5) from associated administrative costs. Cubist expects to incur
significant additional operating losses over the next several years and expects
cumulative losses to increase. We expect this increase to be substantially due
to expanded research and development efforts, pre-clinical testing and clinical
trials and the development of manufacturing, marketing and sales capabilities.
In the next few years, Cubist's revenues may be limited to support payments from
any collaborative agreements it has established or will establish. We cannot be
sure, however, that Cubist will be able to establish any additional
collaborative relationships on terms acceptable to Cubist or maintain in effect
its current collaborative agreements. Our ability to achieve significant revenue
or profitability depends on our and our collaborative partners' ability to
- successfully complete the development of drug candidates,
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- develop and obtain patent protection and regulatory approvals for
our drug candidates and
- to manufacture and commercialize the resulting drugs.
Cubist will not receive revenues or royalties from commercial sales for a
significant number of years, if at all. Our failure to receive significant
revenues or achieve profitable operations will impair our ability to sustain
operations. We cannot provide assurance that we will ever successfully develop,
commercialize, patent, manufacture and market any products, obtain required
regulatory approvals or achieve profitability.
UNCERTAINTY OF PATENTS AND PROPRIETARY
RIGHTS COULD EFFECT OUR ABILITY TO COMPETE.
Cubist's success will depend in part on its ability to obtain United States
and foreign patent protection for its drug candidates and processes, preserve
its trade secrets, and operate without infringing the proprietary rights of
third parties. We place considerable importance on obtaining patent protection
for significant new technologies, products and processes. Legal standards
relating to the validity of patents covering pharmaceutical and biotechnological
inventions, and the scope of claims made under such patents, are still
developing. Our patent position is highly uncertain and involves complex legal
and factual questions. We cannot be certain that the named applicants or
inventors of the subject matter covered by our patent applications or patents
(whether directly owned by us or licensed to us) were the first to invent or the
first to file patent applications for such inventions. Third parties may
challenge, infringe upon, circumvent or seek to invalidate existing or future
patents owned by or licensed to us. A court or other agency with jurisdiction
may find our patents unenforceable. Even if we have valid patents, these patents
still may not provide sufficient protection against competitive products or
other commercially valuable products or processes.
If a third party claims the same or overlapping subject matter as we have
claimed in a United States patent application or patent, then we may decide or
be required to participate in interference proceedings in the United States
Patent and Trademark Office in order to determine who invented the subject
matter first. If we lost such an interference proceeding, then we would be
deprived of the patent protection we previously sought or obtained. Indeed,
regardless of whether we win or lose in such proceedings, we would still incur
substantial costs.
If our drug candidates or processes are found to infringe upon the patents
of others or are found to impermissibly utilize the intellectual property of
others, our development, manufacture and sale of our infringing drug candidates
could be severely restricted or prohibited. In this case, we may have to obtain
licenses from third parties to continue utilizing the patents or proprietary
rights of others. Obtaining these licenses may be expensive, if Cubist is able
to obtain them at all. If Cubist becomes involved in litigation involving its
intellectual property rights or the intellectual property rights of others, the
potential costs of such litigation and the potential damages that Cubist could
be required to pay could be substantial.
In addition to patent protection, Cubist relies on trade secrets,
proprietary know-how, and confidentiality provisions in agreements with our
collaborative partners, employees and consultants to protect our intellectual
property. We also rely on invention assignment provisions in agreements with
employees and certain consultants. It is possible that these agreements could be
breached or that we might not have adequate remedies for any such breaches.
Third parties may learn of or independently discover our trade secrets,
proprietary know-how and intellectual property, which could have a material
adverse effect on our business, financial condition and results of operations.
THERE IS UNCERTAINTY ASSOCIATED
WITH PRE-CLINICAL AND CLINICAL TESTING.
Before obtaining regulatory approvals for the commercial sale of any of our
potential drugs, our drug candidates will be subject to extensive pre-clinical
testing and clinical trials to demonstrate their safety and efficacy in humans.
Cubist is dependent on its collaborative partners to conduct clinical trials for
the drug candidates resulting from the collaborative agreements and may become
dependent on other third parties to conduct future clinical trials of its
internally developed drug candidates. Cubist has limited experience in
conducting pre-clinical
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testing or clinical trials, and pre-clinical testing or clinical trials have
been commenced with respect to only one of our licensed drug candidates
(daptomycin) and none of the drug candidates being developed jointly by Cubist
and its collaborative partners. -Furthermore, we cannot be sure that
pre-clinical testing or clinical trials of any drug candidates will demonstrate
the safety and efficacy of such drug candidates at all or to the extent
necessary to obtain regulatory approvals. Companies in the biotechnology
industry have suffered significant setbacks in advanced clinical trials, even
after demonstrating promising results in earlier trials. The failure to
adequately demonstrate the safety and efficacy of a drug candidate under
development could delay or prevent regulatory approval of the drug candidate and
would have a material adverse effect on our business, operating results and
financial condition.
THERE IS NO ASSURANCE OF MARKET
ACCEPTANCE OF OUR DRUGS.
We cannot be sure that any drugs successfully developed by us,
independently or with our collaborative partners, even if they are approved by
the appropriate regulatory agencies, will be accepted by the pharmaceutical
market. The anti-infective drugs we are attempting to develop will compete with
a number of well-established anti-infective drugs manufactured and marketed by
major pharmaceutical companies. The degree of market acceptance of any drugs
developed by Cubist depends on a number of factors, including
- the establishment and demonstration by us of the clinical efficacy
and safety of our drug candidates,
- their potential advantage of our drugs over existing therapies and
- the reimbursement policies of government and third-party payors.
We cannot be sure that physicians, patients or the medical community in
general will accept and utilize any drugs we develop.
INTENSE COMPETITION CREATES RISKS.
The biotechnology and pharmaceutical industries are intensely competitive.
Cubist has many competitors both in the United States and abroad, including
major, multinational pharmaceutical and chemical companies, specialized
biotechnology firms and universities and other research institutions. Many of
our competitors have greater financial and other resources, such as larger
research and development staffs and more effective marketing and manufacturing
organizations. Our competitors may succeed in developing or licensing on an
exclusive basis technologies and drugs that are more effective or less costly
than any which we are currently developing, which could render our technology
and future drug products obsolete and noncompetitive. It is possible for our
competitors to obtain FDA or other regulatory approvals for drug candidates
before we can. In general, companies that begin commercial sale of their drugs
before their competitors have a significant competitive advantage in the
marketplace, including the ability to obtain certain patent and FDA marketing
exclusivity rights that would delay our ability to market certain products. Even
if our drugs or drug products are approved for sale, we cannot assure our
ability to compete successfully with competitors' existing products or products
under development.
OUR DRUG CANDIDATES ARE SUBJECT TO EXTENSIVE
GOVERNMENT REGULATION AND PRODUCT APPROVALS.
The FDA and comparable agencies in foreign countries impose substantial
requirements upon the introduction of pharmaceutical products to establish their
safety and efficacy. These include lengthy and detailed pre-clinical, laboratory
and clinical testing procedures, sampling activities and other costly and
time-consuming procedures. All of Cubist's drug candidates will require
governmental approvals for commercialization, none of which have been obtained.
Pre-clinical testing and clinical trials and manufacturing of our drug
candidates will be subject to the rigorous testing and approval processes of the
FDA and corresponding foreign regulatory authorities. Satisfaction of these
requirements typically takes a significant number of years and can vary
substantially based upon the type, complexity and novelty of the product. We
cannot be sure when Cubist, independently or with its collaborative partners,
might submit drug candidates for FDA or other regulatory review. Government
regulation also affects the manufacturing and marketing of pharmaceutical
products like ours.
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The effect of government regulation may be to
- delay the marketing of our potential drugs for a considerable or
indefinite period of time,
- impose costly procedural requirements upon our activities and
- furnish a competitive advantage to larger companies or companies
more experienced in regulatory affairs.
Delays in obtaining governmental regulatory approval could adversely affect
our marketing as well as our ability to generate significant revenues from
commercial sales. We cannot be sure that FDA or other regulatory approvals for
any drug candidates developed by us will be granted on a timely basis or at all.
Moreover, if regulatory approval of a drug candidate is granted, such approval
may impose limitations on the indicated use for which the drug may be marketed.
Even if initial regulatory approvals for our drug candidates are obtained,
Cubist, its drugs and its manufacturing facilities would be subject to continual
review and periodic inspection. Later discovery of previously unknown problems
with a drug, manufacturer or facility may result in restrictions on such drug or
Cubist, including withdrawal of the drug from the market. The FDA stringently
applies the regulatory standards. Failure to comply can, among other things,
result in fines, denial or withdrawal of regulatory approvals, product recalls
or seizures, operating restrictions and criminal prosecution.
The FDA has developed two "fast track" policies for certain new drugs
(including antibiotics). One policy is for expedited development and review and
the other policy is for accelerated approval. The expedited development and
review policy applies to new drug therapies that are intended to treat persons
with life-threatening and severely debilitating illnesses, especially where no
satisfactory alternative therapy exists. The accelerated approval policy applies
to certain new drugs that are intended to treat persons with serious or
life-threatening illnesses that provide a meaningful therapeutic benefit to
patients over existing treatments. We cannot be sure that any drug candidate
contemplated by Cubist will qualify for the FDA's various fast track or priority
approval policies. Nor can we be sure that such policies will remain as
currently implemented by the FDA.
As with many biotechnology and pharmaceutical companies, Cubist is subject
to numerous environmental and safety laws and regulations. Any violation of, and
the cost of compliance with, these regulations could materially adversely affect
our business, operating results and financial condition. Cubist is subject to
periodic inspections and has not received notice of any material violations of
any environmental or safety law or regulation.
RAPID TECHNOLOGICAL CHANGE
COULD RENDER PRODUCTS OBSOLETE.
Biotechnology and related pharmaceutical technology have undergone and are
subject to rapid and significant change. Cubist expects that the technologies
associated with biotechnology research and development will continue along this
rapid path. Our success will depend in large part on our ability to maintain a
competitive position in the rapidly changing environment. Because of the rapid
changes in technology, our compounds, products or processes may become obsolete
before we can recover the expenses incurred in developing such compounds,
products or processes. We cannot assure that we can maintain our technological
competitiveness.
WE DEPEND ON KEY PERSONNEL.
We believe that our ability to successfully implement our business strategy
is highly dependent on our senior management and scientific team, including Dr.
Rocklage, our President and Chief Executive Officer. Although Dr. Rocklage has
entered into an employment agreement with Cubist, Dr. Rocklage may terminate his
employment at any time upon thirty days' written notice. No other senior
executive officer or key employee has entered into an employment agreement with
Cubist. Losing the services of one or more of these individuals might hinder our
ability to achieve our development objectives. We are highly dependent upon our
ability to attract and retain qualified scientific and technical personnel. The
competition for these employees is intense. We cannot be sure that we will be
able to continue to attract and retain the qualified personnel necessary for our
business. Loss of
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the services of, or failure to recruit, key scientific and technical personnel
could adversely affect our business, operating results and financial condition.
WE LACK MANUFACTURING, MARKETING
AND SALES CAPABILITY AND EXPERIENCE.
Cubist depends on third parties to manufacture its product candidates and
is aware of only a limited number of manufacturers which it believes has the
ability and capability to manufacture its drug candidates for pre-clinical
testing and clinical trials. Cubist has an agreement with ACS Dobfar of Milan,
Italy for the production of daptomycin for our clinical trials and for any
commercial sales. If we were required to transfer manufacturing processes to
other third-party manufacturers, we could experience significant delays in
supply. If, at any time, we are unable to maintain, develop or contract for
manufacturing capabilities on acceptable terms, then our ability to conduct
pre-clinical testing and clinical trials with our drug candidates will be
adversely affected, resulting in delays in the submission of drug candidates for
regulatory approvals. We have no experience in manufacturing and we currently
lack the facilities and personnel to manufacture products in accordance with
Good Manufacturing Practices as prescribed by the FDA or to produce an adequate
supply of compounds to meet future requirements for pre-clinical testing and
clinical trials. Cubist has no experience in marketing drugs. Therefore, we have
granted marketing rights to our collaborative partners with respect to drugs
developed through the collaborative agreements. Cubist may seek to collaborate
with a third party to market those drugs for which we retain or license
marketing rights or may seek to market and sell those drugs by ourselves. If we
seek to collaborate with a third party, we cannot be sure that a collaborative
agreement can be reached on terms acceptable to us. If we seek to market and
sell our drugs directly, we will need to hire additional personnel skilled in
marketing and sales. We cannot be sure that we will be able to acquire, or
establish third-party relationships to provide, any or all of these marketing
and sales capabilities.
FUTURE REVENUE DEPENDS ON REIMBURSEMENT AND DRUG PRICING.
Acceptable levels of reimbursement of the costs of the developing and
manufacturing of the drugs and the treatments related to such drugs by
government authorities, private health insurers and other organizations, such as
HMOs, will have an effect on the successful commercialization of, and attracting
collaborative partners to invest in, the development of Cubist's drug. We cannot
be sure that reimbursement in the United States or elsewhere will be available
for any drugs we may develop or, if already available, will not be decreased in
the future. Also, we cannot be sure that reimbursement amounts will not reduce
the demand for, or the price of, our drugs. Such reduction in demand would
adversely affect our business. If reimbursement is not available or is available
only to limited levels, Cubist may not be able to obtain collaborative partners
to manufacture and commercialize drugs, and may not be able to obtain a
sufficient financial return on its own manufacture and commercialization of any
future drugs.
Third-party payors are increasingly challenging the prices charged for
medical products and services. Also, the trend toward managed health care in the
United States and the concurrent growth of organizations such as HMOs, as well
as legislative proposals to reform health care or reduce government insurance
programs, may result in lower prices for our pharmaceutical products. The cost
cutting measures that health care providers are instituting, and the effect of
any health care reform, could materially adversely affect our ability to sell
any of its drugs if successfully developed and approved. Moreover, we are unable
to predict what additional legislation or regulation, if any, relating to the
health care industry or third-party coverage and reimbursement may be enacted in
the future or what effect such legislation or regulation would have on our
business.
POTENTIAL PRODUCT LIABILITY AND AVAILABILITY OF INSURANCE.
The nature of our business exposes Cubist to potential liability risks that
are inherent in the testing, manufacturing and marketing of pharmaceutical
products. Using our drug candidates in clinical trials may expose us to product
liability claims and possible adverse publicity. These risks will expand with
respect any drug candidates, if any, that receive regulatory approval for
commercial sale. Product liability insurance we have obtained, and additional
product liability insurance we will need for the testing and commercialization
of other drug candidates, is generally expensive. We cannot be sure that we will
be able to maintain or obtain insurance coverage at acceptable costs or in a
sufficient amount, or that a product liability claim would not adversely affect
our business, operating results or financial condition.
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<PAGE>
POTENTIAL ANTI-TAKEOVER EFFECT OF
CERTAIN CHARTER AND BY-LAW PROVISIONS.
Pursuant to Cubist's corporate governing documents, special meetings of
stockholders may be called only by the Chairman of the Board, the President or a
majority of the Board of Directors. In addition, the Board of Directors may
issue preferred stock and to determine its rights and preferences in order to
eliminate delays associated with a stockholder vote on specific issuances.
Cubist has no present plans to issue any shares of preferred stock. Cubist's
governing documents also provide for staggered elections of its Board of
Directors and specific procedures for director nominations by stockholders and
submission of other proposals for consideration at stockholder meetings. In
addition, Cubist has instituted a shareholder rights plan commonly known as a
poison pill pursuant to which all stockholders have the right to receive
additional shares of Cubist common stock to prevent certain changes in control.
These provisions may have the effect of deterring hostile takeovers or
delaying or preventing changes in control or management of Cubist, including
transactions in which stockholders might otherwise receive a premium for their
shares over then-current market prices. Certain provisions of Delaware law
applicable to Cubist could also delay or make more difficult a merger, tender
offer or proxy contest involving Cubist, including Section 203 of the Delaware
General Corporation Law which prohibits a Delaware corporation from engaging in
any business combination with any stockholder owning 15% or more of Cubist's
outstanding voting stock for a period of three years from the date a stockholder
becomes an interested stockholder unless certain conditions are met. These
provisions could also limit the price that investors might be willing to pay in
the future for shares of common stock.
WE HAVE NOT DECLARED ANY DIVIDENDS.
We have never declared or paid cash dividends. We do not intend to declare
or pay any cash dividends in the foreseeable future.
CUBIST PHARMACEUTICALS, INC.
Cubist Pharmaceuticals, Inc. is a specialty biopharmaceutical company
focused on the research, development and commercialization of novel
anti-microbial drugs to combat serious life-threatening bacterial and fungal
infections. The mailing address and telephone number of Cubist's principal
executive office is 24 Emily Street, Cambridge, MA 02139 (617) 576-1999.
RECENT DEVELOPMENTS
On January 27, 2000, Cubist entered into an agreement with the selling
stockholders to raise approximately $55.0 million in a private placement of its
stock. At the closing of the private placement held on February 2, 2000, upon
payment of the $55,000,000.00 purchase price, Cubist issued 2,200,000 shares of
common stock to the selling stockholders
USE OF PROCEEDS
Cubist will not receive any proceeds from the sale of the shares of common
stock offered pursuant to this registration statement by the selling
stockholders.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Cubist's common stock as of January 28, 2000, by each of the
selling stockholders. The selling stockholders covered by this prospectus are
persons who received Cubist common stock in connection with the private
placement of Cubist's common stock which occurred on or before January 27, 2000.
January 27, 2000 Private Placement. Under a Registration Rights Agreement
dated January 27, 2000 among Cubist and the selling stockholders, we agreed to
register the Cubist common stock sold to those selling stockholders in the
private placement and to use commercially reasonable efforts to keep the
Registration Statement effective for two years, or until all of the shares are
sold under the Registration Statement, whichever comes first.
Our registration of the shares of common stock covered by this prospectus
does not necessarily mean that the selling stockholders will sell all or any of
the shares. The information provided in the table below with respect to each
selling stockholder has been obtained from such selling stockholder. Except as
otherwise disclosed below, none of the selling stockholders has, or within the
past three years has had, any position, office or other material relationship
with Cubist or any of its predecessors or affiliates. Because the selling
stockholders may sell all or some portion of the shares of common stock
beneficially owned by them, only an estimate (assuming each selling stockholder
sells all of their shares offered hereby) can be given as to the number of
shares of common stock that will be beneficially owned by the selling
stockholders after this offering. In addition, the selling stockholders may have
sold, transferred or otherwise disposed of, or may sell, transfer or otherwise
dispose of, at any time or from time to time since the date on which they last
provided to Cubist any information regarding the shares of common stock
beneficially owned by them, all or a portion of the shares of common stock
beneficially owned by them in transactions exempt from the registration
requirements of the Securities Act of 1933. Certain selling stockholders have
not provided updated information to us regarding the shares of common stock
beneficially owned by them.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES NUMBER SHARES
BENEFICIALLY OWNED OF SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING(1) BEING OFFERED AFTER OFFERING(1)
-------------------- ------------- -----------------
NUMBER PERCENT
------ -------
<S> <C> <C> <C> <C>
DVG DEUTSCHE VERMOGENSBILDUNGSGESELLSCHAFT 700,000 200,000 500,000 2.1%
Mainzer Landstrasse 16
60225 Frankfurt, Germany
DEUTSCHE ASSET MANAGEMENT INVESTMENTGESELLSCHAFT MBH 100,000 100,000 -0- *
On behalf of DIRFONDS, AP
Mainzer Landstrasse 16
60225 Frankfurt, Germany
DEUTSCHE ASSET MANAGEMENT INVESTMENTGESELLSCHAFT MBH 200,000 200,000 -0- *
On behalf of NAVAP
Mainzer Landstrasse 16
60225 Frankfurt, Germany
CHELSEY CAPITAL 300,000 300,000 -0- *
1370 Avenue of the Americas, Suite 2603
New York, NY 10019
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<PAGE>
CROSSLINK CROSSOVER FUND III, L.P. 100,000 100,000 -0- *
c/o Crosslink Capital
555 California Street
San Francisco, CA 94104
DELAWARE MANAGEMENT COMPANY 31,700 31,700 -0- *
On behalf of its PACE SMALL/MEDIUM COMPANY GROWTH EQUITY INVESTMENTS
1818 Market Street
Philadelphia, PA 19103
DELAWARE GROUP EQUITY FUNDS III 110,200 110,200 -0- *
On behalf of its DELAWARE TREND FUND
1818 Market Street
Philadelphia, PA 19103
DELAWARE POOLED TRUST 800 800 -0- *
On behalf of its THE SMALL-CAP GROWTH EQUITY PORTFOLIO
1818 Market Street
Philadelphia, PA 19103
DELAWARE GROUP PREMIUM FUND 57,300 57,300 -0- *
On behalf of its TREND SERIES
1818 Market Street
Philadelphia, PA 19103
DWS INVESTMENTS gmbH 950,000 200,000 750,000 3.21%
f/k/a DEUTSCHE GESELLSCHAFT FUR
WERTPAPIERSPAREN, FRANKFURT
Gruneburgweg 113-115
60323 Frankfurt Au Main, Germany
FRANKLIN AGGRESSIVE GROWTH FUND #462 75,000 75,000 -0- *
777 Mariners Island Blvd.
San Mateo, CA 94404
FRANKLIN BIOTECH DISCOVERY FUND #402 250,000 250,000 -0- *
777 Mariners Island Blvd.
San Mateo, CA 94404
FRANKLIN GLOBAL HEALTH CARE FUND #199 50,000 50,000 -0- *
777 Mariners Island Blvd.
San Mateo, CA 94404
RS PACIFIC PARTNERS 57,253 57,253 -0- *
c/o RS Investment Management
388 Market Street #200
San Francisco, CA 94111
RS PACIFIC PARTNERS LP ONSHORE 276 276 -0- *
c/o RS Investment Management
388 Market Street #200
San Francisco, CA 94111
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES NUMBER SHARES
- ------------------------------------ BENEFICIALLY OWNED OF SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING(1) BEING OFFERED AFTER OFFERING(1)
-------------------- ------------- -----------------
NUMBER PERCENT
------ -------
<S> <C> <C> <C> <C>
RS EMERGING GROWTH PARTNERS LP 27,651 27,651 -0- *
c/o RS Investment Management
388 Market Street #200
San Francisco, CA 94111
RS PREMIUM PARTNERS LP 34,820 34,820 -0- *
c/o RS Investment Management
388 Market Street #200
San Francisco, CA 94111
PAISLEY PACIFIC FUND 60,000 60,000 -0- *
c/o RS Investment Management
388 Market Street #200
San Francisco, CA 94111
THE PAISLEY FUND LP 20,000 20,000 -0- *
c/o RS Investment Management
388 Market Street #200
San Francisco, CA 94111
ENDEAVOR FUND, LLC 57,200 57,200 -0- *
100 Heritage Reserve
Menomonee Falls, WI 53051
STRONG SPECIAL INVESTMENT, L.P. 34,800 34,800 -0- *
100 Heritage Reserve
Menomonee Falls, WI 53051
ENDEAVOR OFFSHORE FUND LTD 8,700 8,700 -0- *
100 Heritage Reserve
Menomonee Falls, WI 53051
STRONG DISCOVERY FUND II, a Series of Strong Variable Insurance 44,100 44,100 -0- *
Funds, Inc.
100 Heritage Reserve
Menomonee Falls, WI 53051
STRONG DISCOVERY FUND, INC. 54,000 54,000 -0- *
100 Heritage Reserve
Menomonee Falls, WI 53051
HARBOUR HOLDING LTD. 26,200 26,200 -0- *
100 Heritage Reserve
Menomonee Falls, WI 53051
ACTIVEST MANAGEMENT SA 70,000 70,000 -0- *
12 Rue Ceard
1204 Geneva, Switzerland
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES NUMBER SHARES
BENEFICIALLY OWNED OF SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING(1) BEING OFFERED AFTER OFFERING(1)
-------------------- ------------- -----------------
NUMBER PERCENT
------ -------
<S> <C> <C> <C> <C>
ACTIVEST AMERICAN PERFORMANCE LIMITED 30,000 30,000 -0- *
P.O. Box 896
Harbour Centre, North Church Street
Grand Cayman
SMALLCAPS ONLINE GROUP LLC 25,000(2) 25,000(2) -0- *
1285 Avenue of the Americas
35th Floor
New York, New York 10019
</TABLE>
- --------------------------------------------------------------------------------
* Less than 1% of the outstanding shares of Common Stock.
(1) Beneficial ownership is determined in accordance with Rule 13d-3(d)
promulgated by the Commission under the Securities and Exchange Act of
1934, as amended. Shares of Common Stock issuable pursuant to options,
warrants and convertible securities, to the extent such securities are
currently exercisable or convertible within 60 days of January 28, 2000,
are treated as outstanding for computing the percentage of the person
holding such securities but are not treated as outstanding for computing
the percentage of any other person. Unless otherwise noted, each person or
group identified possesses sole voting and investment power with respect to
shares, subject to community property laws where applicable. Shares not
outstanding but deemed beneficially owned by virtue of the right of a
person or group to acquire them within 60 days are treated as outstanding
only for purposes of determining the number of and percent owned by such
person or group.
(2) Consists of 25,000 shares of common stock which SmallCaps Online Group
LLC has the right to acquire within 60 days of February 4, 2000 upon the
exercise of a common stock purchase warrant.
PLAN OF DISTRIBUTION
The shares of common stock may be sold from time to time by the selling
stockholders or their donees, pledgees, transferees and other successors in
interest in one or more transactions at fixed prices, at market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. When used herein, the term "selling stockholders" refers to all of their
donees, pledgees, transferees and other successors in interest. The shares of
common stock may be sold in one or more of the following transactions:
- on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including the Nasdaq
National Stock Market,
- in the over-the-counter market,
- in private transactions,
- through options, or
- a combination of any of the above transactions.
If required, we will distribute a supplement to this prospectus to describe
material changes in the terms of the offering. The supplement will set forth the
aggregate number of shares of common stock being offered and the terms of such
offering, including the name or names of the broker/dealers or agents, any
discounts, commissions and other terms constituting compensation from the
selling stockholders and any discounts, commissions or concessions allowed or
reallowed to be paid to broker/dealers.
The shares of common stock described in this prospectus may be sold from
time to time directly by the selling stockholders. Alternatively, the selling
stockholders may from time to time offer shares of common stock to or through
broker/dealers or agents. The selling stockholders and any broker/dealers or
agents that participate in the distribution of the shares of common stock may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933.
Any profits on the resale of shares of common stock and any compensation
received by any
15
<PAGE>
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933.
Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act of 1933 may be sold under Rule 144 rather than
pursuant to this prospectus. The selling stockholders may not sell all of the
shares. The selling stockholders may transfer, devise or gift such shares by
other means not described in this prospectus.
To comply with the securities laws of certain jurisdictions, if applicable,
the common stock must be offered or sold only through registered or licensed
brokers or dealers. In addition, in certain jurisdictions, the common stock may
not be offered or sold unless they have been registered or qualified for sale or
an exemption is available and complied with.
Under applicable rules and regulations under the Securities Exchange Act of
1934, any person engaged in a distribution of the common stock offered hereby
may not simultaneously engage in market-making activities with respect to our
common stock for a specified period prior to the start of the distribution. In
addition, each selling stockholder and any other person participating in a
distribution will be subject to the Securities Exchange Act and the rules and
regulations promulgated under the Exchange Act, including Regulation M, which
may limit the timing of purchases and sales of common stock by the selling
stockholders or any such other person. These factors may affect the
marketability of the common stock and the ability of brokers or dealers to
engage in market-making activities.
All expenses of this registration will be paid by Cubist. These expenses
include the SEC's filing fees and fees under state securities or "blue sky"
laws. The selling stockholders will pay all underwriting discounts and selling
commissions, if any.
LEGAL MATTERS
Bingham Dana LLP, Boston, Massachusetts has given its opinion that the
shares offered in this prospectus have been validly issued and are fully paid
and non-assessable. Justin P. Morreale, a partner at Bingham Dana LLP, is the
Secretary of Cubist.
EXPERTS
The Financial Statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1998 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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<PAGE>
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT IS AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THESE SECURITIES IN ANY JURISDICTION
WHERE AN OFFER OR SOLICITATION IS NOT PERMITTED. NO SALE MADE PURSUANT TO THIS
PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE AFFAIRS CUBIST SINCE THE DATE OF THIS PROSPECTUS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Where You Can Get More
Information.................. 2
Certain Information We Are
Incorporating By Reference... 2
Forward Looking Statements... 3
Risk Factors................. 3
Cubist Pharmaceuticals, Inc.. 11
Recent Developments.......... 11
Use of Proceeds.............. 11
Selling Stockholders......... 12
Plan of Distribution......... 15
Legal Matters................ 16
Experts...................... 16
</TABLE>
2,225,000 SHARES
CUBIST PHARMACEUTICALS, INC.
COMMON STOCK
-------------------
PROSPECTUS
FEBRUARY 11, 2000
-------------------
17
