Cumberland Pharmaceuticals Inc. (NASDAQ:CPIX) reported a notable increase in net revenue and optimistic future prospects during its second quarter 2024 earnings call. CEO A.J. Kazimi highlighted the company's double-digit revenue growth and positive cash flow from operations. With a 16% increase in net revenue from its FDA-approved brands, Cumberland is moving forward with clinical programs and expanding its product portfolio.
Key Takeaways
- Cumberland Pharmaceuticals reports a 16% increase in net revenue to $9.9 million in Q2 2024.
- Adjusted earnings improved by $0.8 million, reaching $0.2 million.
- The company is optimistic about future prospects, expecting continued revenue growth and positive cash flow.
- Kristalose coverage expanded to Wisconsin Medicaid plans, potentially increasing market penetration.
- FDA approval for new Cumberland packaged Sancuso, with the first lots shipped.
- Progress in international markets for Vibativ, with a new product package launched.
- Positive results in Phase 2 clinical studies for ifetroban in orphan diseases.
- FDA designations applied for muscular dystrophy product candidate, with a response expected later in the year.
- Total assets reported at $78.5 million, including $17.3 million in cash and cash equivalents.
- Cumberland continues its share repurchase program, acquiring 77,000 shares.
- The company actively seeks FDA-approved brands for acquisition to bolster its portfolio.
Company Outlook
- Cumberland anticipates double-digit revenue growth and positive cash flow from operations in 2024.
- The company is expanding its oncology sales division to increase customer frequency and reach for Sancuso.
- Cumberland is actively seeking to acquire additional FDA-approved brands to add to its portfolio.
Bearish Highlights
- Liabilities stand at $52.5 million, with $16.1 million on their credit facility.
- The company's bank line of credit is currently at a maximum of $20 million but can be increased to $25 million under certain conditions.
Bullish Highlights
- Cumberland holds over $52 million in tax net operating loss carryforwards, which can be utilized to offset future taxable income.
- The company has seen successful production and distribution partnerships, such as the one for Vaprisol.
- Cumberland's clinical programs are showing promise, particularly the ifetroban product candidate in orphan diseases.
Misses
- There were no specific "misses" reported in the earnings call transcript summary provided.
Q&A Highlights
- The CEO discussed the expanded coverage for Kristalose and the positive impact of sales and marketing initiatives for Sancuso and Vibativ.
- Updates were given on the progress of clinical studies for ifetroban and the company's expectations for FDA designations for its muscular dystrophy product candidate.
In summary, Cumberland Pharmaceuticals is positioning itself for sustained growth with a strong second quarter performance, strategic product updates, and a focus on clinical development. The company's financial health, marked by an increase in net revenue and a solid asset base, supports its optimistic outlook for the remainder of the year.
InvestingPro Insights
Cumberland Pharmaceuticals Inc. (CPIX) has demonstrated a proactive approach to its financial strategy, as evidenced by the company's share repurchase program. This initiative signals management's confidence in the company's intrinsic value, aligning with the optimistic revenue and clinical development outlook presented in their Q2 2024 earnings call. Management's aggressive buyback activity is a noteworthy point for investors considering the company's stock performance and valuation.
In terms of valuation metrics, Cumberland's market capitalization stands at approximately $20.14 million, reflecting its position in the market. Despite the company's optimistic future prospects and revenue growth, it is important to note that Cumberland has been trading near its 52-week low, which could indicate a potential undervaluation or investor caution. This is particularly relevant given that the company is not currently profitable, as it has not reported a positive net income over the last twelve months.
From a financial health perspective, Cumberland operates with a moderate level of debt, which could be seen as a balanced approach to leveraging its operations without overextending its financial obligations. This is a key consideration for investors who are assessing risk in relation to the company's growth initiatives and clinical programs.
For those interested in further insights and metrics on Cumberland Pharmaceuticals, there are additional InvestingPro Tips available at https://www.investing.com/pro/CPIX, providing a more comprehensive analysis of the company's financial position and market performance.
Full transcript - Cumberland Pharmaceuticals Inc (CPIX) Q2 2024:
Operator: Good afternoon. And welcome to Cumberland Pharmaceuticals Second Quarter 2024 Financial Report and Company Update. This call is being recorded at the company's request and will be archived on its website for one year from today's date. I would now like to turn it over to Molly Aggas, Account Supervisor at the Dalton Agency, who handles Cumberland's communications. Molly, please go ahead.
Molly Aggas: Hello, everyone. Thanks for joining us today. Earlier this afternoon, Cumberland issued a press release announcing the company's financial results as well as an operational update for the second quarter of 2024. The release, which includes the related financial tables, can be found on the company's website at www.cumberlandpharma.com. Cumberland's management will share an overview of those financial results during today's call. They'll also provide an overall company update, including a discussion of Cumberland's brands, pipeline and partners. Participating in today's call are A.J. Kazimi, Cumberland's Chief Executive Officer; Todd Anthony, Vice President, Organizational Development; and John Hamm, Chief Financial Officer. Please keep in mind that their discussions may include forward-looking statements as defined in the Private Securities Reform Act. Those statements reflect the company's current views and expectations concerning future events and may involve risks and uncertainties. There are many factors that could affect Cumberland's future results, including natural disasters, economic downturns, public health epidemics, international conflicts and others that are beyond the company's control. Those issues are described under the caption, Risk Factors, in Cumberland's Form 10-K and any additional updates filed with the SEC. Any forward-looking statements made during today's call are qualified by those risk factors. Despite the company's best efforts, actual results may differ materially from expectations. So information shared on this call should be considered current as of today only. Please remember that the company isn't responsible for updating any forward-looking statements, whether as a result of new information or due to future developments. During today's call, there will also be references to several of Cumberland's marketed brands. Full prescribing and safety information for each brand is included on the individual product websites and you can find links to those sites on the corporate website at www.cumberlandpharma.com. The company will be providing some non-GAAP financial measures with respect to its performance. An explanation and reconciliation to GAAP measures can be found in the financial tables of the earnings release that was issued earlier this afternoon. If you have any questions, please hold them until the end of the call, at which point we'll be happy to answer them. Management is also prepared to hold a follow-up conversation after the call, if you prefer. With that introduction, I'll turn the call over to Cumberland's Chief Executive Officer, A.J. Kazimi.
A.J. Kazimi: Thank you, Molly. And good afternoon, everyone. We do appreciate your taking the time to join us today, as we share how the first half of the year has gone. On today's call, we'll provide a company update, as well as a review of our financial results for the second quarter of 2024. So let's get started. Given the number of ongoing positive developments here at Cumberland, which we'll cover in today's call, we remain very optimistic about our future prospects. And we do believe we're still on track to post double-digit revenue growth and deliver positive cash flow from operations in 2024. During the second quarter, our line of FDA approved brands provided $9.9 million in net revenue, which represented 16% in sequential growth from the first quarter of the year. We also generated adjusted earnings of $0.2 million, which was a $0.8 million improvement over the prior period. Our June ending balance sheet included $79 million in total assets. with $17 million in cash and investments. Total liabilities were $53 million, and shareholders' equity totaled $26 million. With that financial overview, I'd next like to share several updates regarding our products, including a number of growth opportunities. First, we're pleased to share that Kristalose, our prescription strength laxative, is now covered on Wisconsin Medicaid plans. Also, we recently launched a campaign featuring the American Gastroenterological Association's guidelines that include Kristalose as a first-line treatment for opioid-induced constipation. Next, recall the federal NOPAIN Act, which was passed last year, is designed to provide special, favorable reimbursement for non-opioid products like Caldolor. The act is scheduled to go into effect in early 2025 for an initial three-year period. There was recently another request from CMS for new products to be considered for this special reimbursement, and we will provide updated submission information next month. Regarding Vibativ, our potent antibiotic, we're pleased to announce that we launched a new product package this summer. It's designed for smaller accounts that either don't have the space to store or the patient volume to support investment in larger quantities of the product. And we've now introduced new Cumberland packaged Sancuso, following the successful manufacture of the product at the newly FDA approved facility. Additionally, we continue to work with our partners in their efforts to advance Vibativ in several international markets which can significantly contribute to the brand's growth in the future. Tabuk Pharmaceuticals has obtained the final approval needed to commercialize Vibativ in Saudi Arabia. They've now begun ordering the product in preparation for its launch there, which is planned for later this year. SciClone Pharmaceuticals, our partner for the Chinese market, continues to respond to regulatory inquiries as they seek the approval for Vibativ in their country. And DB Pharm, our partner in South Korea who also distributes Caldolor, plans to submit additional manufacturing information based on the feedback they received from the Korean regulatory authorities. So with that financial update and operational overview, I'd now like to turn to Todd Anthony, Cumberland's Vice President, Organizational Development, to further discuss our team and our brands. Tom?
Todd Anthony: Thank you, A.J. As a reminder, we support our portfolio of FDA-approved medicines through three national sales divisions. Our hospital sales division calls on key institutional accounts across the country, while our field sales division covers select office-based physicians. And our newest, Cumberland Oncology, focuses on cancer clinics. So now, an update for each of our major brands. As A.J. mentioned, we launched a new package for our Vibativ product this summer. This additional presentation is designed to overcome a barrier at smaller hospitals and infusion centers that use less of the product at a time, allowing them to better manage their costs and their workflow associated with the product. Vibativ is an intravenous antibiotic approved by the FDA for the treatment of hospital-acquired and ventilator-associated bacterial pneumonias as well as complicated skin and skin structure infections caused by certain gram-positive bacteria. In June, Antimicrobial Agents and Chemotherapy published a study evaluating Vibativ, which is telavancin for injection, its generic name, as a novel therapeutic against anthrax inhalation in the most dangerous forms of those infections. Researchers were particularly interested in finding alternatives to current antibiotics in case anthrax bacteria become resistant to them. Researchers tested telavancin against 17 different anthrax strains in the lab to determine how well it could stop their growth. Additionally, they tested telavancin in rabbits that were infected with a deadly dose of airborne to another antibiotic, levofloxacin, and a placebo. The results show that telavancin was very effective at killing all the anthrax strains tested in the lab. In the preclinical study, all the animals treated with telavancin survived, and telavancin was better at clearing anthrax from the blood and organs than levofloxacin. Based on these results, the researchers concluded that telavancin could potentially be an effective new treatment option for anthrax infections, especially if current antibiotics become less effective due to resistance. Antimicrobial resistance continues to pose a challenge in treating bacterial infections. While many recently introduced antibiotics are quickly losing the battle to fight the bacteria they were designed to kill because those bacteria have become drug resistant, Vibativ was specifically designed to kill drug resistant bacteria. Moving next to Kristalose, our prescription strength laxative packaged in a convenient pre-measured powder dose that dissolves quickly in just 4 ounces of water for a clear taste-free and grit-free solution. We found that Kristalose performs best in states where we have Medicaid coverage. Wisconsin recently added Kristalose to its Medicaid formulary and we are implementing a special initiative to announce the development in that market. Recall that we also have Medicaid coverage for the brand in both New York and Texas, two of the largest states for this product. We recently launched a campaign featuring the American Gastroenterological Association's, or AGA's, guidelines that include Kristalose as a first-line treatment option for opioid-induced constipation. As the guidelines state, constipation is by far the most common and debilitating gastrointestinal effect of opioids and some degree of constipation is near universal in patients taking opioid medications. We believe the AGA's recommendation will support the use of Kristalose in those patients. Kristalose continues to be our largest selling product and it's benefiting nicely from the support of our two co-promotion partners. Let's shift now to Caldolor, our intravenous ibuprofen product. Recall that in April, we shared a special report evaluating the growing amount of data supporting the use of Caldolor as a standard of care for the treatment of pain and fever in adults, children, and infants as young as three months of age. Takeaways from this special report included that intravenous ibuprofen results in significant reductions in temperature compared to placebo in adults and to acetaminophen in pediatric patients. Also administration of the product prior to surgery leads to patients waking up in significantly less post-surgical pain while also lessening or even eliminating the need for opioids. And the use of intravenous ibuprofen in a hospital emergency department for acute pain can minimize opioid requirements while achieving significant pain control. Finally, Caldolor should be considered a foundation for any multimodal pain regimen. Pain management has become one of the most common healthcare problems in the United States. As this new report states, comprehensive multimodal pain regimens have become key in preventing pain and optimizing pain control while minimizing the need for opioids. A non-steroidal anti-inflammatory drug like Caldolor can provide a cornerstone for many treatment protocols, and we are encouraged by the substantial database emerging from our studies in patients of all ages. With its new pediatric labeling, which was just approved last year, Caldolor is now the only non-opioid product approved to treat pain in infants that's delivered via an injection. The new indication was further supported by the publication of positive results from a clinical study investigating the safety and pharmacokinetics of Caldolor in newborns. We're very pleased to have further expanded the products labeling for use in patients of nearly all ages and have launched a marketing initiative highlighting this new indication. Turning now to Sancuso, the first and only FDA approved prescription patch for the prevention of nausea and vomiting in patients receiving certain types of chemotherapy. A new manufacturing facility for Sancuso was approved by the FDA, and we have successfully completed the first lots of Cumberland packaged product there. We began shipping these new supplies of our Cumberland branded product this summer. We continue to support the product through our expanded oncology sales division. And we're already seeing a favorable impact from that expansion, leading us to plan to build upon to increase customer frequency and reach. Meanwhile, our new manufacturing and distribution partner for Vaprisol has successfully produced the product in their facility. As we await FDA approval for making the branded product there, our partner is providing a special supply of compounded product in support of these critically ill patients. The companies will share in the sales of this compounded product. Recall, Vaprisol is the first and only intravenously administered vasopressin receptor antagonist, and it's used to raise serum sodium levels in hospitalized patients with hyponatremia, which is the most common electrolyte disorder among these patients. Well, that completes my updates for today, and so I'll turn it back to you, A.J.
A.J. Kazimi: Thank you, Todd. I'd like to take a few minutes to provide an update on our ongoing clinical programs. We've been evaluating our ifetroban product candidate, a selective thromboxane receptor antagonist and a series of clinical studies. It's now been dosed in nearly 1,400 subjects, resulting in an excellent safety profile as it's been well tolerated in those individuals. We currently have three Phase 2 clinical programs underway evaluating ifetroban in patients with orphan diseases that represent unmet medical needs. We've initiated our newest clinical program in medical centers across the country with enrollment now underway for patients with idiopathic pulmonary fibrosis, the most common form of progressive fibrosing interstitial lung disease. This fighting fibrosis study is designed to enroll 128 patients in over 20 medical centers of excellence across the United States. Recent studies have shown that ifetroban can help both prevent and enhance resolution of lung fibrosis in multiple preclinical models. Meanwhile, enrollment has significantly progressed in our two other company-sponsored Phase 2 clinical programs. The first involves patients with systemic sclerosis or scleroderma, a debilitating autoimmune disorder characterized by the diffuse fibrosis of skin and internal organs. And the other study is evaluating ifetroban in patients with cardiomyopathy associated with Duchenne muscular dystrophy, a rare and fatal genetic neuromuscular disease that results in deterioration of the skeletal, heart, and lung muscles. We've now received over $1 million in grant awards from the FDA to support this muscular dystrophy study. Enrollment in the younger patient group is complete, and we are now working to address enrollment in the older patient cohort. Well, today I'm pleased to announce that we've applied for two FDA designations for our muscular dystrophy product candidate. The first is orphan drug designation, which is granted to products that address rare or orphan diseases. Such designation can result in an expedited FDA review process, waiver of FDA fees, and an extended exclusivity period after product approval. The second is a rare pediatric disease designation. which is given to products that address diseases that primarily affect children. Upon FDA approval, this designation may result in a valuable priority review voucher from the FDA that can be used to accelerate approval of another product. And we should hear back on both these applications later this year. In addition to these company-sponsored programs, there are other preclinical and pilot patient studies of ifetroban underway, including several investigator initiated trials. We expect to have data available this year from studies, and we look forward to then sharing the results with you, and as we then decide on the best development path for ifetroban, our first new chemical entity, which we believe has the potential to benefit many patients. So with that update on our clinical studies, I'd now like to turn it over to our Chief Financial Officer, John Hamm, to review our second quarter financial results. John?
John Hamm: Thank you, A.J. For the three months ended June 30th, 2024, net revenue from continuing operations was $9.9 million, an increase of 16% sequentially from the first quarter of 2024. Given the significant revenue growth, we continue to believe that our performance is best evaluated on an annual basis. Net revenue by product for the second quarter of 2024 included $4.1 million for Kristalose, $2.5 million for Vibativ, $2.2 million for Sancuso, and $0.8 million for Caldolor. Total year-to-date net revenues were $18.3 million. Year-to-date product revenues totaled $7.3 million for Kristalose, $4.1 million for Vibativ, $4 million for Sancuso, and $2.3 million for Caldolor. Turning to our expenditures, total operating expenses for the second quarter were $10.9 million. Year-to-date expenses totaled $21.2 million. Net loss for the quarter was $1.1 million. And when the non-cash expenses are added back, the resulting adjusted earnings were $0.2 million, which was a $0.8 million improvement over the prior-year period. Also please note that the adjusted earnings calculations do not include the additional benefit of the $0.6 million of Vibativ and Sancuso cost of goods during the second quarter. Those goods represent a non-cash item as they were received as part of each product's acquisition. We're pleased to see that the additions of Vibativ and Sancuso to our product portfolio continually to positively impact our financial performance. As a result of the Vibativ acquisition, a total of $34 million in new assets were added, including approximately $21 million in inventory, $12 million of intangible assets, and $1 million of goodwill. The financial terms for the Vibativ transaction included a $20 million payment upon closing, and a subsequent $5 million milestone payment. We also continue to provide royalties tied to product sales. Sancuso added a total of $19 million in new assets, including $4 million in inventory and $14 million of intangibles. The estimated value of those assets was $11.6 million at the end of the second quarter. We provided $13.5 million at closing for the Sancuso acquisition, and we also paid $1.5 million in milestone payments. There are ongoing royalties that we pay based on the brand sales. Turning to our balance sheet, as of June 30th, 2024, we had $78.5 million in total assets, including $17.3 million in cash and cash equivalents. Liabilities totaled $52.5 million, including $16.1 million on our credit facility. Total shareholder's equity was $26 million at the end of the quarter. We continue to hold a bank line of credit, which holds up to $20 million in capital and provides the ability for Cumberland to increase the amount to $25 million under certain conditions. The interest rate is based on benchmark term SOFR and is subject to one financial covenant determined on a quarterly basis. During the second quarter, we continued our corporate share repurchase program, buying a total of 77,000 shares. These repurchases included those on the open market and those needed to fund the taxes associated with employee-vested restricted shares. We are also continuing the process of implementing new trading plans for our board members who will purchase Cumberland shares throughout the year to increase their holdings in the company. Lastly, I'd like to note that Cumberland continues to hold over $52 million in tax net operating loss carry forwards, primarily resulting from the prior exercise of stock options. And that completes our financial report for the second quarter of 2024. Back to you, A.J.
A.J. Kazimi: Thank you, John. Well, overall, we've had a successful first half of the year and we're pleased to report a strong second quarter financial performance. We remain dedicated to our mission of working together to provide unique products that improve the quality of patient care. We've pursued our mission by building a portfolio of FDA approved grants that feature outstanding safety and efficacy profiles and that can make a difference in patient lives. We're particularly encouraged to see the growing number of states adding Kristalose to their Medicaid formularies. And we continue to see the positive impact of our sales and marketing initiatives that are supporting Sancuso and Vibativ. Pleased to also share the publication highlighting Vibativ's potential as an effective treatment for anthrax inhalation, as well as the launch of our new packaging for the product. We're also encouraged by the progress of ifetroban clinical studies as we continue to pursue therapeutic solutions for unmet medical needs. And we'd like to point out, we have an active acquisition initiative underway as we seek selective FDA approved brands to add to our portfolio and bolt on to our infrastructure. We'll continue in our efforts and look forward to future opportunities to carry out our mission and report on our progress through the remainder of this year and beyond. So now let's open the call to any questions. Operator, please proceed.
Operator:
A.J. Kazimi: Well, as we don't have any questions, we'd just like to thank everyone for joining today's call. We do understand that many of you prefer a private discussion with management. And if so, please feel free just to reach out and we'll be happy to get such a call held with you and have such a discussion. As always, we appreciate your time and your interest in Cumberland and we'll look forward to providing another update in the coming months.
Operator: Thank you. Ladies and gentlemen, that concludes today's call. If you would like to listen to a replay of the discussion, please visit the Investor Relations section on Cumberland's website. I would now like to thank you all for your participation. You may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.