BUSINESS AGREEMENTS	12 Months Ended
Dec. 31, 2013
BUSINESS AGREEMENTS
BUSINESS AGREEMENTS	C. BUSINESS AGREEMENTS CUBICIN Agreements Novartis AG In October 2003, Cubist entered into a license agreement and a manufacturing and supply agreement with Chiron Healthcare Ireland Ltd., or Chiron, for the development and commercialization of CUBICIN in Europe, Australia, New Zealand, India and certain Central American, South American and Middle Eastern countries. After the acquisition of Chiron by Novartis AG, or Novartis, in 2006, the license agreement and manufacturing and supply agreement were assigned to a subsidiary of Novartis. During each of the years ended December 31, 2013 and 2011, the Company received a $5.0 million sales milestone payment as a result of Novartis achieving a predetermined level of aggregate sales to third parties. Cubist recognized these sales milestones as other revenue upon achievement. Under the license agreement, Cubist is eligible to receive from Novartis' subsidiary additional remaining milestone payments of up to $15.0 million upon Novartis achieving certain sales milestones. Under the manufacturing and supply agreement, Novartis' subsidiary pays Cubist a transfer price for CUBICIN, and under the license agreement, Novartis' subsidiary pays Cubist royalty payments, net of the transfer price, based on Novartis' sales of CUBICIN. Unless terminated earlier, in accordance with its terms, the license agreement expires on the later of: (a) expiration of the last-to-expire of the CUBICIN patents owned by Cubist or jointly-owned by Cubist and Novartis' subsidiary; (b) the date on which there no longer exists a claim of a pending CUBICIN patent application owned by Cubist or jointly-owned by Cubist and Novartis' subsidiary; and (c) the earlier of: (i) generic daptomycin sales reaching a specified percentage of the total market share for all daptomycin sales in Novartis' territory, and (ii) June 30, 2020. Eli Lilly & Co. Cubist licensed the exclusive worldwide rights to develop, manufacture and market daptomycin, the active ingredient in CUBICIN from Eli Lilly & Co., or Eli Lilly, pursuant to an amended and restated October 2000 license agreement. Cubist is required to pay royalties to Eli Lilly on worldwide sales of CUBICIN. In July 2003 and March 2005, Cubist entered into amendments to the restated license agreement and issued to Eli Lilly an aggregate 2,599,792 shares of common stock valued at an aggregate of $28.0 million in consideration for single-digit reductions in the royalty rates payable to Eli Lilly. In September 2003, Cubist issued 38,922 shares of common stock valued at $0.5 million as a milestone payment to Eli Lilly upon Cubist receiving FDA approval for the commercial sale of CUBICIN. The aggregate payments of $28.5 million were recorded as intangible assets within the consolidated balance sheets and are being amortized through 2016, which was the estimated remaining life of the license agreement with Eli Lilly on the dates of the transactions. The amortization of these intangible assets is included in cost of product revenues within the consolidated statements of income. As of December 31, 2013, in addition to the milestone payments made in stock, Cubist has made payments to Eli Lilly of approximately $588.6 million for royalties on sales of CUBICIN, which were paid in cash. Unless terminated earlier in accordance with its terms, Cubist's license agreement with Eli Lilly expires on the later of: (a) the expiration of the last-to-expire of the patents assigned or licensed under the agreement; and (b) the end of the tenth year from the date of first sale of CUBICIN in any of the U.S., Canada, Japan, the United Kingdom, or UK, Germany, France, Italy, Spain, Switzerland, Netherlands or Belgium in which know-how royalties are due under the agreement. DIFICID Agreements Astellas Pharma Europe Ltd. In connection with the Company's acquisition of Optimer in October 2013, Cubist acquired a collaboration and license agreement and a supply agreement, which were entered into by Optimer and Astellas Pharma Europe Ltd., or Astellas Europe, in February 2011. Under the terms of the collaboration and license agreement, Astellas Europe was granted an exclusive, royalty-bearing license to develop and commercialize fidaxomicin, the active ingredient in DIFICID, in Europe and certain other countries, or the Astellas Territory. Cubist is the exclusive supplier of fidaxomicin for Astellas Europe's development and commercialization activities in the Astellas Territory, for which supply Astellas Europe is obligated to pay Cubist an amount equal to cost plus an agreed upon margin. In March 2011, Astellas Europe paid Optimer an upfront fee of $69.2 million under the terms of the agreement. In June 2012, Astellas Europe paid Optimer 50.0 million euros, which consisted of a regulatory approval milestone payment of 40.0 million euros and a milestone payment for the first commercial launch of DIFICLIR in an Astellas Territory of 10.0 million euros. Cubist is eligible to receive additional remaining milestone payments totaling up to 65.0 million euros if certain sales milestones are achieved. In addition, Cubist is entitled to receive escalating double-digit royalties ranging from the high teens to low twenties on net sales of fidaxomicin products in the Astellas Territory, which royalties are subject to reduction in certain, limited circumstances. The agreements expire on a product-by-product and country-by-country basis when a generic product accounts for a specified market share of the applicable fidaxomicin product in the applicable country. Par Pharmaceutical, Inc. In connection with the Company's acquisition of Optimer, Cubist is obligated, under the terms of a January 2007 buy-back agreement entered into by Optimer and Par Pharmaceutical, Inc., or Par, to pay Par a single-digit royalty on net sales of fidaxomicin by: (i) Cubist, its affiliates or licensees in the U.S., Canada and Israel and (ii) Cubist and its affiliates in all countries outside the U.S., Canada and Israel. Cubist is also obligated to pay Par a royalty on net revenues received by Cubist in connection with licensing or granting rights to commercialize fidaxomicin to a third party in any country outside of the U.S., Canada and Israel. Cubist is obligated to pay the net sales royalties on a country-by-country basis for seven years following the applicable commercial launch in each such country and is obligated to pay the net revenues royalties for seven years following the first commercial launch in any such country. Optimer Pharmaceuticals, Inc. In April 2011, the Company entered into a co-promotion agreement with Optimer, pursuant to which Optimer engaged Cubist as its exclusive partner for the promotion of DIFICID in the U.S. Optimer and Cubist co-promoted DIFICID from July 2011 until October 2013, at which point the agreement was terminated in connection with the completion of the Company's acquisition of Optimer. See Note D., "Business Combinations and Acquisitions," for additional information. ENTEREG Agreements Glaxo Group Limited, Eli Lilly & Co., Shire, U.S. Inc. In December 2011, Cubist acquired Adolor and with it, rights to Adolor's commercialized product, ENTEREG. Cubist assumed obligations to pay single-digit royalties on net sales of ENTEREG to Shire U.S. Inc., or Shire, Eli Lilly and Glaxo Group Limited, or Glaxo, as a result of its acquisition of Adolor. The option and license agreement with Shire, as successor-in-interest to Roberts Laboratories Inc., and the license agreement with Eli Lilly remain in effect through the last-to-expire of the licensed Eli Lilly patents. In connection with the acquisition, Cubist also assumed the obligation to pay to Glaxo: i) $25.0 million payable in annual installments through 2017, of which $2.5 million was paid by Adolor prior to Cubist's acquisition of Adolor, and $6.5 million has been paid by Cubist to Glaxo as of December 31, 2013; and ii) a one-time milestone of $15.0 million upon achievement of a predetermined level of sales in the U.S. in a given year. The agreement with Glaxo expires on the date of the last commercial sale of ENTEREG in the U.S. See Note F., "Fair Value Measurements," for additional information. Tedizolid Phosphate Agreements Bayer Pharma AG In connection with the Company's acquisition of Trius in September 2013, Cubist acquired a July 2011 collaboration and license agreement between Trius and Bayer Pharma AG, or Bayer. Under the terms of the agreement, Bayer was granted exclusive rights to develop and commercialize tedizolid phosphate in China, Japan and substantially all other countries in Asia, excluding North and South Korea, Africa, Latin America and the Middle East, or the Bayer Licensed Territory. Trius retained full development and commercialization rights outside the Bayer Licensed Territory, including the U.S., Canada and the EU, but excluding North and South Korea, where Dong-A ST Co., Ltd., or Dong-A, retained its rights. In exchange for development and commercialization rights in the Bayer Licensed Territory, Bayer made an upfront, non-refundable payment of $25.0 million to Trius, prior to Cubist's acquisition of Trius, and agreed to support approximately 25% of the future development costs of tedizolid phosphate required for global approval for treatment of acute bacterial skin and skin structure infections, or ABSSSI, and hospital-acquired bacterial pneumonia, or HABP, or ventilator-associated bacterial pneumonia, or VABP, subject to certain adjustments and limitations. In addition, Bayer agreed to support 100% of the future development costs required for local approval in the Bayer Licensed Territory. Cubist is also eligible to receive remaining payments of up to $55.0 million under the agreement upon the achievement of certain development, regulatory, and sales milestones and double-digit royalties on net sales of tedizolid phosphate in the Bayer Licensed Territory. Dong-A ST Co., Ltd. In connection with the Company's acquisition of Trius in September 2013, Cubist acquired rights to tedizolid phosphate. Trius licensed exclusive worldwide rights, excluding North and South Korea, to develop, manufacture and market tedizolid phosphate from Dong-A under a January 2007 license agreement. As a result of acquiring Trius, Cubist assumed obligations under the license agreement to pay Dong-A remaining milestone payments of up to $11.5 million if certain development and regulatory approval milestones are achieved. As of December 31, 2013, the Company has an obligation to make remaining milestone payments to Dong-A of up to $8.5 million. In addition, Cubist is obligated to pay Dong-A tiered single-digit royalties on worldwide net sales of tedizolid phosphate on a country-by-country basis, excluding North and South Korea, until the later of: (i) 12 years after the date of the first commercial sale of tedizolid phosphate in such country; and (ii) the expiration of the last-to-expire patent covering tedizolid phosphate in such country. The license agreement terminates upon the expiration of all of the royalty obligations under the agreement. Ceftolozane/tazobactam Agreements Astellas Pharma Inc. Cubist's development and commercialization rights to ceftolozane under Calixa's original November 2007 agreement with Astellas Pharma Inc., or Astellas, covered all territories of the world except certain Asia-Pacific and Middle Eastern territories. The agreement was amended in September 2010 to allow Cubist to develop ceftolozane/tazobactam and other products that incorporate ceftolozane in all territories of the world. In March 2013, the license agreement with Astellas was amended to expand the territory for which Cubist holds the rights to manufacture, market and sell any eventual products that incorporate ceftolozane, including ceftolozane/tazobactam, to include the Asia-Pacific and Middle East territories that Astellas had retained under the original agreement. As a result of this amendment, Cubist owns all worldwide rights to ceftolozane/tazobactam, subject to ongoing milestone and royalty obligations to Astellas. As consideration for these expanded rights, Cubist made a one-time payment of $25.0 million to Astellas in March 2013, which was recorded within research and development expense within the consolidated statements of income for the year ended December 31, 2013, as the acquisition of these rights was not accounted for as a business combination and the asset has no alternative future use. The Company has an obligation to make remaining milestone payments to Astellas that could total up to $40.0 million if certain specified development, regulatory and sales milestones are achieved. If the licensed products are successfully developed and commercialized, Cubist will be required to pay Astellas tiered single-digit royalties on net sales of such products. Unless terminated earlier in accordance with the agreement, the agreement expires on a country-by-country basis when the Company stops developing or selling licensed products in such country. Other In April 2011, the Company entered into a settlement and license agreement, or settlement agreement, with Teva Parenteral Medicines Inc., or Teva, and its affiliates to resolve the Company's patent infringement litigation with respect to CUBICIN that Cubist filed in response to Teva's notification that it had submitted an Abbreviated New Drug Application, or ANDA, to the FDA seeking approval to market a generic version of CUBICIN. The settlement agreement provides for a full settlement and release by both Cubist and Teva of all claims that were or could have been asserted in the patent infringement litigation and all resulting damages or other remedies. Under the settlement agreement, the Company granted Teva a non-exclusive, royalty-free license to sell a generic daptomycin for injection product in the U.S. beginning on the later of: (i) December 24, 2017; and (ii) if Cubist's daptomycin for injection product receives pediatric exclusivity, June 24, 2018. The license Cubist granted to Teva would become effective prior to the later of these two dates if the patents that were the subject of the patent litigation with Teva are held invalid, unenforceable or not infringed with respect to a third party's generic version of daptomycin for injection, if a third party sells a generic version of daptomycin for injection under a license or other authorization from Cubist, or if there are no longer any unexpired patents listed in the FDA's list of "Approved Drug Products with Therapeutic Equivalence Evaluations," or the Orange Book, as applying to Cubist's NDA covering CUBICIN. Teva may also sell the generic daptomycin for injection supplied by Cubist at an earlier date upon certain specified types of "at risk" launches of a generic daptomycin for injection product by a third party. The settlement agreement also provides that, for the period that the Company's license to Teva is in effect, Teva will purchase its U.S. requirements of daptomycin for injection exclusively from Cubist. The Company is required to use commercially reasonable efforts to satisfy Teva's requirements. The supply terms provide that the Company will receive payments from Teva for product supplied by Cubist reflecting two components: one based on the cost of product revenues plus a margin, and the other based on a specified percentage of gross margin (referred to as net profit in the supply terms) from Teva's sales of daptomycin supplied by Cubist. The supply terms also provide for a forecasting and ordering mechanism, and that Teva will determine the price at which any such generic daptomycin for injection product will be resold and the trademark and name under which it is sold, which may not be confusingly similar to Cubist's trademarks. In addition, under the supply terms, Teva may instead supply on its own or from a third party and sell its generic daptomycin for injection product in the event of specified Cubist supply failures or if the arrangement is terminated due to Cubist's uncured breach or bankruptcy. The settlement agreement will remain in effect until the expiration of the term of the license granted by the Company to Teva and the expiration of a non-exclusive, royalty-free license granted by Teva to the Company under any Teva U.S. patent rights that Teva has the right to license and that may be applicable to CUBICIN and the daptomycin for injection product to be supplied by the Company to Teva.

C. BUSINESS AGREEMENTS

CUBICIN Agreements

Novartis AG

In October 2003, Cubist entered into a license agreement and a manufacturing and supply agreement with Chiron Healthcare Ireland Ltd., or Chiron, for the development and commercialization of CUBICIN in Europe, Australia, New Zealand, India and certain Central American, South American and Middle Eastern countries. After the acquisition of Chiron by Novartis AG, or Novartis, in 2006, the license agreement and manufacturing and supply agreement were assigned to a subsidiary of Novartis. During each of the years ended December 31, 2013 and 2011, the Company received a $5.0 million sales milestone payment as a result of Novartis achieving a predetermined level of aggregate sales to third parties. Cubist recognized these sales milestones as other revenue upon achievement. Under the license agreement, Cubist is eligible to receive from Novartis' subsidiary additional remaining milestone payments of up to $15.0 million upon Novartis achieving certain sales milestones. Under the manufacturing and supply agreement, Novartis' subsidiary pays Cubist a transfer price for CUBICIN, and under the license agreement, Novartis' subsidiary pays Cubist royalty payments, net of the transfer price, based on Novartis' sales of CUBICIN. Unless terminated earlier, in accordance with its terms, the license agreement expires on the later of: (a) expiration of the last-to-expire of the CUBICIN patents owned by Cubist or jointly-owned by Cubist and Novartis' subsidiary; (b) the date on which there no longer exists a claim of a pending CUBICIN patent application owned by Cubist or jointly-owned by Cubist and Novartis' subsidiary; and (c) the earlier of: (i) generic daptomycin sales reaching a specified percentage of the total market share for all daptomycin sales in Novartis' territory, and (ii) June 30, 2020.

Eli Lilly & Co.

Cubist licensed the exclusive worldwide rights to develop, manufacture and market daptomycin, the active ingredient in CUBICIN from Eli Lilly & Co., or Eli Lilly, pursuant to an amended and restated October 2000 license agreement. Cubist is required to pay royalties to Eli Lilly on worldwide sales of CUBICIN. In July 2003 and March 2005, Cubist entered into amendments to the restated license agreement and issued to Eli Lilly an aggregate 2,599,792 shares of common stock valued at an aggregate of $28.0 million in consideration for single-digit reductions in the royalty rates payable to Eli Lilly. In September 2003, Cubist issued 38,922 shares of common stock valued at $0.5 million as a milestone payment to Eli Lilly upon Cubist receiving FDA approval for the commercial sale of CUBICIN. The aggregate payments of $28.5 million were recorded as intangible assets within the consolidated balance sheets and are being amortized through 2016, which was the estimated remaining life of the license agreement with Eli Lilly on the dates of the transactions. The amortization of these intangible assets is included in cost of product revenues within the consolidated statements of income.

As of December 31, 2013, in addition to the milestone payments made in stock, Cubist has made payments to Eli Lilly of approximately $588.6 million for royalties on sales of CUBICIN, which were paid in cash. Unless terminated earlier in accordance with its terms, Cubist's license agreement with Eli Lilly expires on the later of: (a) the expiration of the last-to-expire of the patents assigned or licensed under the agreement; and (b) the end of the tenth year from the date of first sale of CUBICIN in any of the U.S., Canada, Japan, the United Kingdom, or UK, Germany, France, Italy, Spain, Switzerland, Netherlands or Belgium in which know-how royalties are due under the agreement.

DIFICID Agreements

Astellas Pharma Europe Ltd.

In connection with the Company's acquisition of Optimer in October 2013, Cubist acquired a collaboration and license agreement and a supply agreement, which were entered into by Optimer and Astellas Pharma Europe Ltd., or Astellas Europe, in February 2011. Under the terms of the collaboration and license agreement, Astellas Europe was granted an exclusive, royalty-bearing license to develop and commercialize fidaxomicin, the active ingredient in DIFICID, in Europe and certain other countries, or the Astellas Territory. Cubist is the exclusive supplier of fidaxomicin for Astellas Europe's development and commercialization activities in the Astellas Territory, for which supply Astellas Europe is obligated to pay Cubist an amount equal to cost plus an agreed upon margin.

In March 2011, Astellas Europe paid Optimer an upfront fee of $69.2 million under the terms of the agreement. In June 2012, Astellas Europe paid Optimer 50.0 million euros, which consisted of a regulatory approval milestone payment of 40.0 million euros and a milestone payment for the first commercial launch of DIFICLIR in an Astellas Territory of 10.0 million euros. Cubist is eligible to receive additional remaining milestone payments totaling up to 65.0 million euros if certain sales milestones are achieved. In addition, Cubist is entitled to receive escalating double-digit royalties ranging from the high teens to low twenties on net sales of fidaxomicin products in the Astellas Territory, which royalties are subject to reduction in certain, limited circumstances. The agreements expire on a product-by-product and country-by-country basis when a generic product accounts for a specified market share of the applicable fidaxomicin product in the applicable country.

Par Pharmaceutical, Inc.

In connection with the Company's acquisition of Optimer, Cubist is obligated, under the terms of a January 2007 buy-back agreement entered into by Optimer and Par Pharmaceutical, Inc., or Par, to pay Par a single-digit royalty on net sales of fidaxomicin by: (i) Cubist, its affiliates or licensees in the U.S., Canada and Israel and (ii) Cubist and its affiliates in all countries outside the U.S., Canada and Israel. Cubist is also obligated to pay Par a royalty on net revenues received by Cubist in connection with licensing or granting rights to commercialize fidaxomicin to a third party in any country outside of the U.S., Canada and Israel. Cubist is obligated to pay the net sales royalties on a country-by-country basis for seven years following the applicable commercial launch in each such country and is obligated to pay the net revenues royalties for seven years following the first commercial launch in any such country.

Optimer Pharmaceuticals, Inc.

In April 2011, the Company entered into a co-promotion agreement with Optimer, pursuant to which Optimer engaged Cubist as its exclusive partner for the promotion of DIFICID in the U.S. Optimer and Cubist co-promoted DIFICID from July 2011 until October 2013, at which point the agreement was terminated in connection with the completion of the Company's acquisition of Optimer. See Note D., "Business Combinations and Acquisitions," for additional information.

ENTEREG Agreements

Glaxo Group Limited, Eli Lilly & Co., Shire, U.S. Inc.

In December 2011, Cubist acquired Adolor and with it, rights to Adolor's commercialized product, ENTEREG. Cubist assumed obligations to pay single-digit royalties on net sales of ENTEREG to Shire U.S. Inc., or Shire, Eli Lilly and Glaxo Group Limited, or Glaxo, as a result of its acquisition of Adolor. The option and license agreement with Shire, as successor-in-interest to Roberts Laboratories Inc., and the license agreement with Eli Lilly remain in effect through the last-to-expire of the licensed Eli Lilly patents.

In connection with the acquisition, Cubist also assumed the obligation to pay to Glaxo: i) $25.0 million payable in annual installments through 2017, of which $2.5 million was paid by Adolor prior to Cubist's acquisition of Adolor, and $6.5 million has been paid by Cubist to Glaxo as of December 31, 2013; and ii) a one-time milestone of $15.0 million upon achievement of a predetermined level of sales in the U.S. in a given year. The agreement with Glaxo expires on the date of the last commercial sale of ENTEREG in the U.S. See Note F., "Fair Value Measurements," for additional information.

Tedizolid Phosphate Agreements

Bayer Pharma AG

In connection with the Company's acquisition of Trius in September 2013, Cubist acquired a July 2011 collaboration and license agreement between Trius and Bayer Pharma AG, or Bayer. Under the terms of the agreement, Bayer was granted exclusive rights to develop and commercialize tedizolid phosphate in China, Japan and substantially all other countries in Asia, excluding North and South Korea, Africa, Latin America and the Middle East, or the Bayer Licensed Territory. Trius retained full development and commercialization rights outside the Bayer Licensed Territory, including the U.S., Canada and the EU, but excluding North and South Korea, where Dong-A ST Co., Ltd., or Dong-A, retained its rights. In exchange for development and commercialization rights in the Bayer Licensed Territory, Bayer made an upfront, non-refundable payment of $25.0 million to Trius, prior to Cubist's acquisition of Trius, and agreed to support approximately 25% of the future development costs of tedizolid phosphate required for global approval for treatment of acute bacterial skin and skin structure infections, or ABSSSI, and hospital-acquired bacterial pneumonia, or HABP, or ventilator-associated bacterial pneumonia, or VABP, subject to certain adjustments and limitations. In addition, Bayer agreed to support 100% of the future development costs required for local approval in the Bayer Licensed Territory. Cubist is also eligible to receive remaining payments of up to $55.0 million under the agreement upon the achievement of certain development, regulatory, and sales milestones and double-digit royalties on net sales of tedizolid phosphate in the Bayer Licensed Territory.

Dong-A ST Co., Ltd.

In connection with the Company's acquisition of Trius in September 2013, Cubist acquired rights to tedizolid phosphate. Trius licensed exclusive worldwide rights, excluding North and South Korea, to develop, manufacture and market tedizolid phosphate from Dong-A under a January 2007 license agreement. As a result of acquiring Trius, Cubist assumed obligations under the license agreement to pay Dong-A remaining milestone payments of up to $11.5 million if certain development and regulatory approval milestones are achieved. As of December 31, 2013, the Company has an obligation to make remaining milestone payments to Dong-A of up to $8.5 million. In addition, Cubist is obligated to pay Dong-A tiered single-digit royalties on worldwide net sales of tedizolid phosphate on a country-by-country basis, excluding North and South Korea, until the later of: (i) 12 years after the date of the first commercial sale of tedizolid phosphate in such country; and (ii) the expiration of the last-to-expire patent covering tedizolid phosphate in such country. The license agreement terminates upon the expiration of all of the royalty obligations under the agreement.

Ceftolozane/tazobactam Agreements

Astellas Pharma Inc.

Cubist's development and commercialization rights to ceftolozane under Calixa's original November 2007 agreement with Astellas Pharma Inc., or Astellas, covered all territories of the world except certain Asia-Pacific and Middle Eastern territories. The agreement was amended in September 2010 to allow Cubist to develop ceftolozane/tazobactam and other products that incorporate ceftolozane in all territories of the world.

In March 2013, the license agreement with Astellas was amended to expand the territory for which Cubist holds the rights to manufacture, market and sell any eventual products that incorporate ceftolozane, including ceftolozane/tazobactam, to include the Asia-Pacific and Middle East territories that Astellas had retained under the original agreement. As a result of this amendment, Cubist owns all worldwide rights to ceftolozane/tazobactam, subject to ongoing milestone and royalty obligations to Astellas. As consideration for these expanded rights, Cubist made a one-time payment of $25.0 million to Astellas in March 2013, which was recorded within research and development expense within the consolidated statements of income for the year ended December 31, 2013, as the acquisition of these rights was not accounted for as a business combination and the asset has no alternative future use.

The Company has an obligation to make remaining milestone payments to Astellas that could total up to $40.0 million if certain specified development, regulatory and sales milestones are achieved. If the licensed products are successfully developed and commercialized, Cubist will be required to pay Astellas tiered single-digit royalties on net sales of such products. Unless terminated earlier in accordance with the agreement, the agreement expires on a country-by-country basis when the Company stops developing or selling licensed products in such country.

Other

In April 2011, the Company entered into a settlement and license agreement, or settlement agreement, with Teva Parenteral Medicines Inc., or Teva, and its affiliates to resolve the Company's patent infringement litigation with respect to CUBICIN that Cubist filed in response to Teva's notification that it had submitted an Abbreviated New Drug Application, or ANDA, to the FDA seeking approval to market a generic version of CUBICIN. The settlement agreement provides for a full settlement and release by both Cubist and Teva of all claims that were or could have been asserted in the patent infringement litigation and all resulting damages or other remedies. Under the settlement agreement, the Company granted Teva a non-exclusive, royalty-free license to sell a generic daptomycin for injection product in the U.S. beginning on the later of: (i) December 24, 2017; and (ii) if Cubist's daptomycin for injection product receives pediatric exclusivity, June 24, 2018. The license Cubist granted to Teva would become effective prior to the later of these two dates if the patents that were the subject of the patent litigation with Teva are held invalid, unenforceable or not infringed with respect to a third party's generic version of daptomycin for injection, if a third party sells a generic version of daptomycin for injection under a license or other authorization from Cubist, or if there are no longer any unexpired patents listed in the FDA's list of "Approved Drug Products with Therapeutic Equivalence Evaluations," or the Orange Book, as applying to Cubist's NDA covering CUBICIN. Teva may also sell the generic daptomycin for injection supplied by Cubist at an earlier date upon certain specified types of "at risk" launches of a generic daptomycin for injection product by a third party.

The settlement agreement also provides that, for the period that the Company's license to Teva is in effect, Teva will purchase its U.S. requirements of daptomycin for injection exclusively from Cubist. The Company is required to use commercially reasonable efforts to satisfy Teva's requirements. The supply terms provide that the Company will receive payments from Teva for product supplied by Cubist reflecting two components: one based on the cost of product revenues plus a margin, and the other based on a specified percentage of gross margin (referred to as net profit in the supply terms) from Teva's sales of daptomycin supplied by Cubist. The supply terms also provide for a forecasting and ordering mechanism, and that Teva will determine the price at which any such generic daptomycin for injection product will be resold and the trademark and name under which it is sold, which may not be confusingly similar to Cubist's trademarks. In addition, under the supply terms, Teva may instead supply on its own or from a third party and sell its generic daptomycin for injection product in the event of specified Cubist supply failures or if the arrangement is terminated due to Cubist's uncured breach or bankruptcy.

The settlement agreement will remain in effect until the expiration of the term of the license granted by the Company to Teva and the expiration of a non-exclusive, royalty-free license granted by Teva to the Company under any Teva U.S. patent rights that Teva has the right to license and that may be applicable to CUBICIN and the daptomycin for injection product to be supplied by the Company to Teva.