Small specialty biopharmaceutical companies that are dependent on one drug for all their fortunes either sink or swim on how that drug does in its product development. Cubist Pharmaceuticals (NASDAQ:CBST) fits this mold, with almost all the company's fortunes riding on one drug, Cubicin, that treats skin infections.

Cubist doesn't have much of a drug pipeline (only one other drug in human testing), but Cubicin should be enough to keep the company rolling in dough for a while. To that end, the company announced Cubicin sales of $48 million in the second quarter, which represented 22% quarter-over-quarter and 78% year-over-year growth.

Cubicin sales should exhibit a robust growth rate for some time, since the Food and Drug Administration just approved Cubicin for new indications in late May. Based on this label expansion and an increase in sales force by 36% a couple of months ago, Cubist has guided for Cubicin U.S. sales to be in the $190 million-$205 million range for the year. Eventually, Cubist predicts this U.S.-based revenue will grow to $500 million in peak annual sales.

Another growth driver for Cubist will be the royalties that it will start receiving from Europe for Cubicin. Cubist's European marketing partner Novartis (NYSE:NVS) is only now beginning to sell the drug in Europe, and a rollout of Cubicin throughout the European Union countries will be commencing during the year. Cubist hasn't revealed much about the royalty rate they will receive, except to say that it is a "tiered" royalty structure. From past experience I'm expecting a mid-teens or low-20s percent royalty rate for at least the first couple hundreds of millions in sales of Cubicin.

Cubicin does have potential competitive threats to worry about down the road. Several companies, including Pfizer (NYSE:PFE) and Theravance (NASDAQ:THRX), are developing similar drugs to treat bacterial infections.

Sporting a $1.2 billion market cap, Cubist is not cheap for a pharmaceutical company that has little developmental pipeline and is relying on one drug for all its success. Lately, Cubist management has been firing on all cylinders and has generally delivered good results to investors, so maybe Cubist is deserving of this market cap. For my tastes, though, with peak annual Cubicin sales expectations of only $500 million, I'd much prefer to see a cheaper valuation for Cubist to account for all the inherent risks involved with biotech investing.

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Fool contributor Brian Lawler does not own shares of Cubist or any other company mentioned in this article. He welcomes your feedback. The Fool has a disclosure policy .