Weird - this is what they wrote on 11/27, reiterating Buy:
October Cubicin sales show modest growth
Cubicin sales grew modestly in October after a lull during the last week of
September, based on NDC data. NDC reported sales of $17 MM, or $803,000 per
day in October, which was up 6% and 1% sequentially, respectively. Historically,
October is the weakest month of sales in 4Q, with an average decline of 1.1% for
all IV antibiotics, so the modest rise in absolute sales and daily sales rate is
somewhat encouraging. Based on the NDC sales data, we are maintaining our
estimates for 2006 and still believe Cubist can hit its guidance of $190mn-195mn
in Cubicin sales for 2006. But if sales do not show stronger growth in November
or December, sales could fall short of guidance.
Continued steady growth expected
Antibiotics do not typically have steep launch curves or steep inflections following
a label expansion. Instead, growth is typically steady and persists for 3-5 years as
physicians get comfortable using a new antibiotic. We continue to expect solid
growth for Cubicin over the next 3 – 5 years towards our peak sales estimate of
$400 MM - $500 MM. But because of seasonality and recent softness, it may take
3-5 months for better sales growth trends to emerge again.
Promotional materials still not available
Cubicin sales continue to grow following the label expansion for bacteremia and
endocarditis despite its new promotional materials including the expanded FDA
label and recent publication in the New England Journal of Medicine not yet being
approved by FDA. We would expect the availability of additional promotion
ammunition to help Cubist’s sales force stimulate additional growth.
Expectations low, seasonal strength possible in 4Q
Following 3Q sales that were below projections, we believe expectations for
Cubicin sales and growth are at a low during what is typically a seasonally strong
quarter for IV antibiotics, especially Cubicin. We believe that if Cubicin shows
continued growth in 4Q, it will improve investor sentiment and help the stock.
However, 1Q is typically a seasonally weak period and we would expect 2007
guidance to include flat QoQ growth for 1Q07 over 4Q06, which may disappoint
some investors, but should not be a surprise. |
