Cubist Pharmaceuticals to Purchase 2% Reduction in CUBICIN Royalty Rat

    Business Editors/Medical Editors
    BIOWIRE2K

    LEXINGTON, Mass.--(BUSINESS WIRE)--March 3, 2005--Cubist Pharmaceuticals, Inc. (Nasdaq: CBST) today announced that it entered into definitive agreements to purchase from Eli Lilly and Company (NYSE: LLY) a 2% reduction in the royalties payable to Lilly on net sales of Cubicin(R) (daptomycin for injection). Cubist acquired worldwide development and commercialization rights to daptomycin from Lilly in 1997.
    Upon the closing of the transaction, Cubist will issue to Lilly $20 million in Cubist common stock with associated registration rights. The closing of the transaction is subject to certain conditions, including the effectiveness of a registration statement covering the resale of such shares of common stock. If the registration statement is not declared effective within ninety days, Lilly may terminate the arrangement prior to Cubist issuing the shares and the royalty reduction will not be effected. The price of the shares has been determined based on the average closing price of the stock over ten consecutive trading days ending March 2, 2005, and is $10.66 per share. A total of 1,876,173 shares will be issued. In exchange for the shares, Cubist's global royalty obligation to Lilly on CUBICIN sales will be reduced by two percentage points.
    Michael W. Bonney, President & Chief Executive Officer of Cubist commented: "This transaction is a smart step in further securing our operating base, as it reduces our future royalty obligations to Lilly and improves our cash flow from the growing sales of CUBICIN."

    About Cubist

    Cubist Pharmaceuticals, Inc. is a biopharmaceutical company focused on the research, development and commercialization of antiinfective products that meet unmet medical needs. In the U.S., Cubist markets Cubicin(R) (daptomycin for injection), the first antibiotic in a new class of antiinfectives called lipopeptides. CUBICIN is currently the only once-daily bactericidal antibiotic approved in the U.S. with activity against both methicillin-susceptible and methicillin-resistant Staphylococcus aureus (MSSA and MRSA) in complicated skin and skin structure infections. Cubist's pipeline includes HepeX-B(TM), a monoclonal antibody biologic currently in the second of two Phase 2 trials to determine its potential for the prevention of infection by the Hepatitis B virus (HBV) in liver transplant patients, and research efforts focused on novel members of the lipopeptide class of molecules and on natural products discovery. Cubist is headquartered in Lexington, MA.

    Cubist Safe Harbor Statement

    Statements contained herein that are not historical fact may be 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, and such statements are subject to a variety of risks and uncertainties. There are a number of important factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements made by Cubist. These factors include, but are not limited to: (i) the level of acceptance of CUBICIN by physicians, patients, third-party payors, and the medical community generally; (ii) Cubist's ability to continue to develop, secure additional regulatory approvals for, and successfully market, CUBICIN; (iii) Cubist's ability to manufacture CUBICIN on a commercial scale; (iv) commercialization of products that are competitive with CUBICIN; (v) Cubist's ability to discover or in-license drug candidates; (vi) Cubist's ability to successfully develop drug candidates in its pipeline, including HepeX-B; (vii) Cubist's ability to successfully commercialize any product or technology developed by Cubist; (viii) Cubist's ability to establish and maintain successful manufacturing, sales and marketing, distribution, and development collaborations; (ix) legislative or regulatory changes adversely affecting Cubist or the biopharmaceutical industry; (x) Cubist's ability to protect its intellectual property and proprietary technologies; and (xi) Cubist's ability to finance its operations. Additional factors that could cause actual results to differ materially from those projected or suggested in any forward-looking statements are contained in Cubist's recent filings with the Securities and Exchange Commission, including those factors discussed under the caption "Risk Factors" in such filings.
    Cubist and Cubicin are registered trademarks of Cubist Pharmaceuticals, Inc.; HepeX-B is a trademark of XTL Biopharmaceuticals Ltd.

    Additional information can be found at Cubist's web site at www.cubist.com

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CONTACT: Cubist Pharmaceuticals, Inc. Eileen McIntyre, 781-860-8533 Senior Director, Corporate Communications eileen.mcintyre@cubist.com or Michelle Faulkner, 781-860-8414 Manager, Corporate Communications michelle.faulkner@cubist.com

KEYWORD: MASSACHUSETTS INDUSTRY KEYWORD: BANKING PHARMACEUTICAL MEDICAL BIOTECHNOLOGY MARKETING AGREEMENTS SOURCE: Cubist Pharmaceuticals, Inc.

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