Cubist issues third recall in 12 months after another CMO quality failing

Cubist ($CBST) is going through a bad patch with outsourced production. The problems began in August 2013, when CMO quality failings prompted Cubist to recall four lots of its injectable antibiotic Cubicin. Having summoned back another lot in April, Cubist has now issued a much larger recall, with about 100 lots affected.

The Lexington, MA-based drugmaker has again pinned the blame on its CMO, although it is unclear if the same supplier is responsible for all three of the recalls. Cubicin lots that were shipped as long ago as November 2011 and as recently as April 2014 are included in the latest recall notice. The two previous recalls covered a similar time period, but were much smaller. In each instance, the discovery of glass particles has triggered the recall.

Cubist has used similar language to describe the underlying manufacturing problem too, with the last two recall notices both referring to problems at a single production line at a CMO. Last month Cubist CFO Michael Tomsicek told investors the company had kept back $6 million worth of Cubicin from the problematic fill and finish line. All of the vials in the latest recall were shipped on or before the date of the April warning about a single lot.

So far, the only effect of the recalls on Cubist has been an uptick in cost of goods sold in the second quarter, a trend Tomsicek attributed to reserving the $6 million worth of Cubicin. And while the latest recall is much bigger than the previous two, Cubist is still confident it can keep supplying Cubicin and won't suffer financially.

- read the recall notice
- here's the SEC filing