Cubist is number one

This year's Boston Globe 100 issue, published today, is a lot gloomier than normal. Certainly the economy is way down but the tone of the issue seems even more depressing, perhaps having something to do with the Globe's own fragile finances.Cubist Pharmaceuticals is listed as the number one company this year, based on return on equity (ROE) among public companies during 2008. Its ROE was 83 percent. Number 50 on the top list, Cynosure, managed an ROE of 7.8 percent. (If they'd done a top 100 they probably would have ended in negative territory.)Cubist is an interesting number one, and it's somewhat emblematic of companies in the Boston area. It's a successful biotech company, but it's not in a position to control its own destiny. For example:

• The company has just one drug on the market, Cubicin, which was approved in 2003. The drug came from Lilly, which abandoned development.
• Revenues are growing fast but are still under half a billion. Market cap is under $1 billion.
• The drug is mainly used for MRSA infections --an indication that wasn't anticipated when the drug came to market.
• Although the patents are not expected to expire until 2016, Teva Pharmaceuticals is already preparing to challenge their validity. A generic entrant could come along and wipe Cubist out.
• Cubist is taking a number of steps to become a "real" company: co-promoting a drug with a big pharma company and developing some earlier stage products, but don't hold your breath for the next Cubicin

Cubist is a nice company and I wish them continued success, but if it's the #1 company in the Boston area that's kind of sad.