Cubist Pharma $125 mln converts talked at 5.0%-5.25% yield, 10%-15%% premium

By Ronda Fears

Nashville, Tenn., Oct. 22 - Cubist Pharmaceutical Inc. trotted out an overnight deal late Monday as its common shares soared with the drug and health sectors. Cubist was pitching $125 million of seven-year convertible subordinated notes with pricing guidance of a 5.0% to 5.25% yield and 10% to 15% initial conversion premium, according to market sources. Robertson Stephens is lead manager of the Rule 144A deal.

The Lexington, Mass.-based company said it would use proceeds for to advance the clinical trials and commercialization strategy of its investigational antibiotic Cidecin, its oral ceftriaxone pre-clinical program, an oral daptomycin pre-clinical program, a lipopeptide drug discovery program, continued development and use of the products, VITA functional genomics and ChemInformatics technologies, and for working capital and general corporate purposes.

Cubist common shares closed up $2.35 to $43, but traders said that the stock lost as much as $4 in after-hours trading due to the convertible offering news.

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