Event Brief of Q4 2004 Cubist Pharmaceuticals, Inc. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. Michael Bonney, Cubist Pharmaceutical, Inc., President & CEO . David McGill, Cubist Pharmaceutical, Inc., SVP & CFO . Chris Guiffre, Cubist Pharmaceutical, Inc., General Counsel

OVERVIEW

CBST reported net revenues for Cubicin of $21m during 4Q04, an increase of 17% over 3Q04. The 4Q04 net loss of $17.69m was lower than analysts' expectations. Cash and investments at year-end total $128m, and debt was reduced by $31m during the quarter. Guidance was given for revenues of $100-110m during FY05. Q&A Focus: Chiron royalties, MRSA, R&D, and pricing.

FINANCIAL DATA

A. Key Data From Call 1. Net Cubicin revenues FY04: $58.6m. 2. Net Cubicin revenues 4Q04: $21m. 3. Net loss 4Q04: $17.69m. 4. Overall debt down $31m in 4Q04. 5. $128m in cash and investments end of 4Q04. 6. Cost of goods sold 4Q04: 32.6%. 7. R&D costs FY04: $57m. 8. Sales and marketing costs FY04: $35m. 9. General and administrative expenses FY04: $20m. 10. Product revenue guidance FY05: $110-120m.

11. Cost of goods sold guidance FY05: 30-32.5%. 12. R&D guidance FY05: $52-54m. 13. Sales and marketing costs guidance FY05: $43-45m.

14. General and administrative expense guidance FY05: $19-20m. 15. Net interest expense guidance FY05: $7m. 16. Net cash burn forecast FY05: $50m.

PRESENTATION SUMMARY

S1. Cubicin (M.B.) 1. 2004 Goal Update: 1. Delivered strong Cubicin revenue growth. 2. Supported Chiron's early Dec. filing for European approval. 3. Completed enrollment for first ever Phase III trial for infective endocarditis and bacteremia caused by staphylococcus

aureus. 4. Geared up manufacturing for continued sales growth for Cubicin in US and in anticipation of European launch.

5. In-licensed Phase II developments compound, HepeX-B. 6. Made notable progress in discovery research. 7. Improved balance sheet and net loss. 2. Cubicin Highlights: 1. CBST delivered an increase in net revenue for Cubicin to $58.6m during FY04 and 55,000 patients have now been treated using the drug. 2. CBST identified three main factors that have driven growth in 2004: 1. Methicillin resistant staphylococcus aureus (MRSA) being present in US hospitals. 2. Community acquired MRSA. 3. Questions about the traditional standards of care being raised. 3. CBST focused sales force towards hospitals; within the top eight hospitals representing approximately 40-45% of the market, 92% have ordered Cubicin. 4. Hiring 24 more sales people this quarter, and the target market now represents approximately 80% of the potential sales opportunity. 5. Outpatients represent 38% of sales, which has been steady for the last two quarters.

1. Physicians likely to write prescriptions for outpatients often cite how easy it is to use. 6. CBST research suggests that almost half of the prescriptions were written for infections at surgical sites, which suggest that surgeons are gaining awareness of Cubicin. 7. CBST believes that the increased MRSA threat makes an agent that works within both MSSA and MRSA more attractive.

8. Chiron MAA has been accepted by the EMEA; seeking regulatory

approval for the marketing of Cubicin within the European

Union, which should be launched towards the start of 2006 with

sales between $100-200m. 9. CBST filing for permission to build more facilities to triple supply capacity. 10. CBST end licensed HepeX-B and are continuing to develop new products from national product screening efforts. 11. Tests in-vitro and on mice have helped to show major improvements within the compound lipopeptide to complement Cubicin.

S2. Financial Results (D.M.) 1. Financial Review: 1. CBST reports $21m in net Cubicin revenues in 4Q04 from $18m in 3Q04, an increase of 17%. 1. FY04 net Cubicin revenues $58.6m vs. $33m and $37m predicted by two analysts at beginning of year. 2. CBST reports a net loss during 4Q04 of $17.69m, lower than consensus loss of $20.14m. 3. CBST debt was reduced by $31m in the quarter; there has been debt reduction of $45m over the past two years as well as an end to all short term debt. 4. CBST has $128m in cash and investments. 5. Cost of goods sold were 32.6% for 4Q04, an improvement against 3Q04 of more than 3%. 1. FY04 cost of goods sold 34.6%. 6. R&D: $57m. 7. Sales and marketing: $35m. 8. General and administrative expenses: $20m including one-time

charge of $2.2m. 9. FY04 expenses, excluding costs of goods sold, were $112.4m; better than the $113m forecasted at the end of 3Q04. 10. Average adjusted daily net sales per shipping day $339,000, …