Cubist's Antibiotic Zerbaxa Wins FDA Nod for cUTI and cIAI - Analyst Blog

Great news came in Cubist Pharmaceuticals Inc.'s (CBST) way when the FDA approved the company's antibiotic, Zerbaxa (ceftolozane/tazobactam). Zerbaxa is approved for the treatment of adults suffering from complicated urinary tract infections (cUTI) and complicated intra-abdominal infections (cIAI) caused by designated susceptible gram-negative bacteria.

This makes Zerbaxa the first new antibiotic approved in the U.S. under the Generating Antibiotic Incentives Now (GAIN) Act for the treatment of gram-negative bacteria. We note that Zerbaxa enjoys Qualified Infectious Disease Product (QIDP) for both cUTI and cIAI indications, under the GAIN Act. While the GAIN Act provides incentives for the development of new antibacterial drugs for the treatment of serious or life-threatening diseases or conditions caused by drug resistant pathogens, the QIDP status makes Zerbaxa eligible for certain benefits including a five-year extension of Hatch-Waxman exclusivity.

We note that Zerbaxa is currently under review in the EU for both cUTI and cIAI indications with a response expected in the second half of 2015.

Currently, Cubist is evaluating Zerbaxa for the treatment of hospital-acquired bacterial pneumonia/ventilator-associated bacterial pneumonia at a 3g dose.

We are positive on Zerbaxa's approval. However, several companies including Actavis (ACT) among others are also developing treatments for cUTI and cIAI.

Meanwhile, Cubist is all set to be acquired by the U.S. drug maker, Merck (MRK), in an all-cash transaction valued at about $9.5 billion or $102 per share. The deal is slated to close in the first quarter of 2015 (read more: Cubist Shoots Up on $9.5 Billion Buyout Offer from Merck).

Cubist currently carries a Zacks Rank #2 (Buy). A better-ranked stock in the health care sector is Biodel Inc. (BIOD) carrying a Zacks Rank #1(Strong Buy).

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