Cumberland Pharmaceuticals Q4 2024 Earnings Call Transcript

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March 4, 2025

There are 5 speakers on the call.

Operator

Good afternoon, and welcome to the Cumberland Pharmaceuticals Fourth Quarter twenty twenty four 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 Agus, account supervisor of the Dalton Agency who handles Cumberland's communications. Molly, please proceed.

Speaker 1

Hello, everyone, and thank you for joining us today. This afternoon, Cumberland issued a press release announcing its fourth quarter and annual financial results for the year ending 12/31/2024. The release also provided an operational update, including key recent developments. The release, which includes the related financial tables, can be found on the company's website at www.cumberlandpharma.com. Management will share an overview of those financial results during today's call.

Speaker 1

They'll also provide an overall company update, including a discussion of Cumberland's brands, pipeline, and partners. Participating in today's call are AJ 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 some 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 as well as uncertainties. There are many factors that could affect Cumberland's future results, including natural disasters, economic downturns, public health epidemics, international conflicts, trade restrictions, and others that are beyond the company's control.

Speaker 1

Those issues are described under the caption Risk Factors in Cumberland's Form 10 ks 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. Also, 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.

Speaker 1

During today's call, there will 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 also 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, which was issued earlier this afternoon. If you have any questions, please hold them until the end of the call, at which point we will be happy to answer them.

Speaker 1

Management is also prepared to hold a follow-up conversation after the call if you prefer. So with that introduction, I'll turn the call over to Sunproin's Chief Executive Officer, A. J. Kazimi.

Speaker 2

Thank you, Molly, and good afternoon, everyone. We do appreciate you joining us today as we share financial results and provide an update on our progress here at Cumberland. As Molly mentioned during the call, we'll review both fourth quarter and full year 2024 financial performance and we'll also share a company update, which will include some highlights from a successful 2024 as well as some key recent developments. So let's begin. For those that have been following Cumberland over the years, recall our business strategy has been to acquire and commercialize a portfolio of branded pharmaceuticals that we can grow through our dedicated sales organization domestically and through our partners internationally.

Speaker 2

We've also built an internal development capability, which enables us to develop and register new medicines, establishing a long term pipeline for our business. And that pipeline is enhanced through our Cumberland Emerging Technologies or CET division, which is a joint initiative mainly with Vanderbilt University and their prominent academic research center. Well, despite various headwinds over the past several years, we've not deviated from these strategies. In fact, we continue to move forward by acquiring new brands, expanding our sales organization, advancing our development pipeline, securing a series of FDA approvals and broadening our reach through a series of international partnerships. And as you'll see in our comments today, that steadfast approach is gaining traction and it's now being recognized by the investment community for the dramatic growth in our share valuation.

Speaker 2

We recently reported significant progress on several fronts. We announced positive Phase two study data evaluating our ifitroband product candidate in patients with Duchenne muscular dystrophy. That breakthrough had a dramatic impact on our share price and trading volumes. And I believe it's the first time we're seeing investors beginning to recognize the value of our development capabilities and pipeline. And we learned that our potent antibiotic Vibativ received approval by the regulatory authorities in China, the world's second largest pharmaceutical market.

Speaker 2

And that milestone adds to our growing international business as we also began shipping Vibativ to Saudi Arabia and completed the needed product training to launch the product there. Before discussing these achievements in more detail, I'd like to take a few minutes and share a number of key developments during 2024 that enabled us to make significant progress in advancing our newly refined mission of working together to provide unique products that improve the quality of patient care. During 2024, we announced the publication of new real world outcomes research involving 150,000 patients, which compared our ibuprofen injection product Caldolor to its key competitor, Ketorolac. The results provided compelling evidence that Caldolor is associated with a significantly reduced incidence of adverse drug reactions and can also help provide cost savings through improved healthcare system utilization. Meanwhile, we reported the FDA approval of a supplemental new drug application for Acetadote, our IV treatment for preventing or lessening the liver injury that occurs after ingestion of potentially toxic quantities of acetaminophen.

Speaker 2

The new streamlined approach reduces the frequency of medication errors and potentially serious non allergic anaphylactoid reactions without compromising the effectiveness of Acetadote. By simplifying the product's dosing regimen, healthcare providers can administer this life saving treatment more efficiently, potentially improving patient outcomes. And thirdly, we received both orphan drug designation and rare pediatric disease designation from the FDA for the use of our ifitroband product in treating Duchenne muscular dystrophy heart disease, reflecting its potential significance and helping with this devastating condition. Turning to the Q4 financial results, I'm pleased to report our portfolio of FDA approved brands delivered strong net revenues of $10,400,000 which represented an 11.6 percent increase over the prior year period. So with that overview, I'd now like to turn it over to Todd Anthony, Cumberland's Vice President, Organizational Development to further discuss both our brands and our organization.

Speaker 2

Todd?

Speaker 3

Well, thank you, A. J. I'll start with an update on each of our major brands. Vibativ is our potent intravenous antibiotic designed for difficult to treat infections, such as hospital acquired and ventilator associated pneumonia, as well as complicated skin and skin structure infections caused by certain gram positive bacteria, including those that are multi drug resistant. A 2024 report from the World Health Organization found that antimicrobial resistance is becoming an urgent global health and socio economic crisis.

Speaker 3

Further, they noted that the worldwide rise in antibiotic resistance poses a significant threat, diminishing the effectiveness of many common antibiotics against widespread bacterial infections. And according to a recent article in The Lancet, the global number of deaths from antimicrobial resistance is expected to reach nearly two million by the year 02/1950. Unlike many antibiotics that are losing the battle to fight bacteria, Vibativ's unique dual method of action was specifically designed to address drug resistant bacteria. We therefore believe it has life saving potential to help many patients amid this growing antibiotic resistance crisis, which faces a fragile pipeline of new antibiotic development. To reinforce this message, we are conducting a series of infectious insights, which are discussions with infectious disease experts and we're disseminating these results across the country.

Speaker 3

These video vignettes share the opportunity to utilize Vibativ as a solution for select patient types where other products have failed. Also in 2024, antimicrobial agents and chemotherapy published a study evaluating Vibativ as a novel therapeutic against anthrax inhalation, the most dangerous form of those infections. Researchers were particularly interested in finding alternatives to current antibiotics in case anthrax bacteria become resistant to them. They concluded that Vibativ could potentially be an effective new treatment option for anthrax infections, especially if current antibiotics become less effective due to resistance. Moving next to Chrysalose, our prescription strength laxative, which is provided in a convenient pre measured powder dose that dissolves quickly in just four ounces of water, resulting in a clear, taste free and grit free solution.

Speaker 3

We have found that the brand performs best in states where we have Medicaid coverage, such as Texas, New York and Wisconsin. In 2024, we also reported that Cristalose was being covered on certain Medicaid plans in Virginia, Louisiana and Maine. We are implementing a special initiative to increase our presence and share of voice in these states and believe that this new coverage is contributing to the growth

Speaker 2

of the product. Also, as

Speaker 3

a reminder, we launched a campaign featuring the American Gastroenterological Association's guidelines that include Crystallose as a first line treatment option for opioid induced constipation. We believe this important recommendation will support the use of Crystallose in patients suffering from these side effects of opioid medications. Let's shift now to Caldolor, our intravenous ibuprofen product. In March, a Caldolor special report was published in Anesthesiology news, General Surgery News and Pharmacy Practice News, and it presented the growing amount of data supporting the use of Caldolor as a standard of care for the treatment of pain and fever. The results demonstrated that the product is a safe and effective treatment for pain and fever in adults, children and infants.

Speaker 3

As A. J. Mentioned, we also announced the publication of new real world outcomes research demonstrating the safety and healthcare resource advantages of Caldolor over its main competitor, Ketorilac, in both adult and pediatric populations. The study was published in Frontiers of Pain Research and provides compelling evidence that Caldolor is associated with a significantly reduced incidence of adverse drug reactions and improved healthcare utilizations when compared to cetorolac. With its new pediatric labeling cleared with the FDA, we're very pleased to have further expanded the product's use in patients of nearly all ages.

Speaker 3

Caldolor is now the only non opioid product approved to treat pain in infants that's delivered by an injection. We are featuring Caldolor through sales and marketing initiatives highlighting this new indication, resulting in growing use of the product in our country's children's hospitals. Moving next to Sancuso, the only transdermal patch FDA approved for the management of chemotherapy induced nausea. Manufacturing for the product was successfully transferred to a new facility that received FDA approval. We then introduced our newly Cumberland package product supported by an expanded oncology sales division from which we're seeing a favorable impact on our business.

Speaker 3

Recall that we launched a new sampling program that broadens access to Sancuso, allowing more patients to try the product and experience its benefits. We also introduced the new hub services capability to provide enhanced patient support, ensuring that they receive comprehensive assistance throughout their treatment journey. As a reminder, we now have a total of 50 individuals across the country interacting with the medical community in support of our FDA approved medicines. We support our portfolio of FDA approved products through three national sales divisions. Our hospital sales division calls on key institutional accounts across the country in support of Caldolor and Vibativ.

Speaker 3

Our field sales division covers select office based physicians featuring Crystallose and also promotes Caldolor to select outpatient surgery centers. And finally, our recently expanded Cumberland Oncology division calls on cancer clinics promoting our Sankuso product. That completes my updates for today. And so I'll turn it back to you, A. J.

Speaker 2

Thanks, Todd. Now I'd like to provide an update on our product development activities. We continue to progress our pipeline of innovative products designed to improve patient care and their quality of life. Our ifitroban product candidate, a potent and selective thromboxane receptor antagonist is being evaluated in Phase II clinical trials for patients with a series of unmet medical needs. It's now been dosed in nearly 1,400 subjects and has been found to be safe and well tolerated in those individuals resulting in an outstanding safety database.

Speaker 2

We recently completed a Phase two study in patients with cardiomyopathy associated with Duchenne muscular dystrophy or DMD, a rare fatal genetic neuromuscular disease, which results in the deterioration of the skeletal, lung and heart muscles. This marks a breakthrough for these patients as it's the first successful Phase two study that specifically targeted the cardiac complications of their condition. Recall a previous study conducted at Vanderbilt University Medical Center demonstrated that ifitroban is protective against cardiomyopathy in several preclinical models of muscular dystrophy. And those results were published in the Journal of the American Heart Association. And based on those promising findings, we became the first recipient of an FDA Office of Orphan Products clinical trial grant for DMD, which provided us with over $1,000,000 in funding for our Phase two clinical study.

Speaker 2

The trial enrolled 41 DMD patients who received either a low dose of ifitroban, one hundred and fifty milligrams a day, a high dose of ifitroban at three hundred milligrams a day or placebo. The study's primary endpoint was improvement in the heart's left ventricular ejection fraction or LVEF. Key findings from the trial include that compared to the placebo group, high dose ifitroban treatment resulted in an overall three point three percent improvement in LVEF. That difference resulted from the high dose ifitroband group showing a 1.8% increase or improvement in LVEF, while the placebo group showed the expected decline, which was 1.5%, again, a difference of 3.3%. Compared with propensity matched natural history controls, the difference was even more pronounced with high dose treatment providing a significant 5.4% overall improvement in LVEF as the natural history control patients experienced a larger 3.6% decline and both doses were well tolerated with no serious drug related events.

Speaker 2

Recall late last year, ifitroban received both orphan drug designation and rare pediatric disease designation from the FDA, highlighting its potential significance in treating this devastating condition. Other products for DMD patients typically target their neuroskeletal impact of the disease. And importantly, our ipitroban program is designed to address the patient's cardiomyopathy, which is a thickening of the muscle that weakens the heart. Therefore, our product is applicable to all DMD patients targeting the cardiovascular condition that often leads to their death. Next steps for this program include completion of the full data analysis and the study report in preparation for a meeting with the FDA to determine the remaining path for the product's development and commercialization.

Speaker 2

Meanwhile, our two other company sponsored Phase II clinical programs are also well underway. The first now nearing completion involves patients with systemic sclerosis or scleroderma, a debilitating autoimmune disorder characterized by diffuse fibrosis of the skin and internal organs. And we're also developing ifitroban to treat idiopathic pulmonary fibrosis, the most common form of progressive fibrosing interstitial lung disease. Recent studies have shown that ifitroban can both prevent and enhance resolution of lung fibrosis in several preclinical models. In addition to these sponsor studies I've covered, there are also other preclinical and pilot patient studies of ifitroban underway, including several investigator initiated trials.

Speaker 2

You see, we believe ifitroban, our first new chemical entity has the potential to benefit many patients. We look forward to sharing our further progress with the DMD program, as well as results from our other company sponsored studies as they emerge. Meanwhile, through our work at Cumberland Emerging Technologies or CET, we're continuing to build a long term pipeline of innovative new biopharmaceutical products. Last year, we announced two developments among the programs that CET is supporting. We announced favorable top line results from an investigator led Phase two study evaluating our new treatment for delirium in critically ill patients.

Speaker 2

CET also entered into a development agreement with a corporate partner to fund the development of a new product designed to locate the site of internal bleeding in the digestive tract. We believe this innovation can lead to faster diagnosis, reduced costs and less trauma to the patient. So with that update on our new product development programs, I'd now like to turn it over to our Chief Financial Officer, John Hamm, to review our 2024 financial results.

Speaker 4

John? Thank you, A. J. For the three months ending 12/31/2024, net revenues from continuing operations were $10,400,000 which represented a $1,100,000 or 11.6% increase over the prior year period. Net revenue by product for the fourth quarter of twenty twenty four included $4,400,000 for Crystallose, two point four million dollars for Sancusso, two point one million dollars for Vibata and $1,400,000 for Caldolor.

Speaker 4

As a reminder, due to quarterly fluctuation in our customers' purchases, we believe our performance should be assessed based on annual sales results. With that in mind, I'm pleased to report that net revenue for the full year 2024 were $38,000,000 Full year product revenue totaled $15,300,000 for Crystallose, nine million dollars for Sancusso, six point nine million dollars for Vibativ and $5,000,000 for Caldolor. Turning to our expenditures, total operating expenses for the fourth quarter were $12,300,000 compared to $15,500,000 for the prior year period. Total operating expenses for 2024 were $44,300,000 a $5,000,000 improvement down from $49,100,000 during the prior year. The net loss was approximately $1,900,000 for the fourth quarter and $6,500,000 for the full year.

Speaker 4

However, when non cash expenses are added back, the resulting adjusted loss for the year is reduced to $1,500,000 or $0.11 a share. Also please note that the adjusted earnings calculations do not include the additional benefit of the $300,000 of Vibativ and Sancusso cost of goods during the fourth quarter. That benefit was $1,300,000 for the full year of 2024. Those goods were received as part of each product's acquisition. As a reminder, we're pleased to see that the additions of Vibativ and Sancuso to our product portfolio continue to positively impact our financial performance.

Speaker 4

As a result of the Vibativ acquisition, a total of $34,000,000 in new assets were added, including approximately $21,000,000 in inventory, $12,000,000 of intangible assets and $1,000,000 of goodwill. The estimated value of those assets was $12,200,000 at the end of twenty twenty four. The financial terms for the Vibativ transaction included a $20,000,000 payment upon closing and a subsequent $5,000,000 milestone payment. We also continue to provide royalties tied to product sales. Sancuso added a total of $19,000,000 in new assets, including approximately $4,000,000 in inventory and $14,000,000 of intangibles.

Speaker 4

The estimated value of those assets was $11,000,000 at the end of twenty twenty four. We provided $13,500,000 at the closing for the San Cuso acquisition and we paid $1,500,000 in milestone payments. There are also royalties we can pay based on the brand sales. Turning to our balance sheet, as of 12/31/2024, we had $76,000,000 in total assets, including $18,000,000 in cash and cash equivalents. Liabilities totaled $53,000,000 including $15,300,000 on our credit facility.

Speaker 4

Total shareholders' equity was $23,000,000 at the end of twenty twenty four. We continue to hold a bank line of credit, which provides up to $20,000,000 in capital and provides the ability for Cumberland to increase the amount to $25,000,000 under certain conditions. The interest rate is based on benchmark terms so far and is subject to one financial covenant determined on a quarterly basis. During 2024, we continued our corporate share repurchase program and through the December, we repurchased a total of 339,000 shares. Those repurchases include those on the open market as well as those needed to fund the taxes associated with employee vested restricted shares.

Speaker 4

We also continue the process of implementing new trading plans for our Board members who purchased Cumberland shares throughout 2024 to increase their holdings in the company. Lastly, I'd like to note that Cumberland continues to hold $53,000,000 in tax net operating loss carryforwards, primarily resulting from the prior exercise of stock options. And that completes our financial report for the final quarter and year end of 2024. Back to you, Ajay.

Speaker 2

Thank you, John. Well, overall 2024 was a successful year as we continue to add key components to our foundation that can drive further value creation. We're encouraged by the progress of our clinical studies evaluating ifitroban in patients with unmet medical needs and we believe the product has the potential to benefit many patients. Given the large market those clinical programs are addressing, success in just one can potentially transform our company. It's also been encouraging to see the literature featuring the benefits of our Caldolor product, as well as the favorable international developments, which can result in a significant expansion of our vivativ business.

Speaker 2

We continue to see the positive impact of our sales and marketing initiatives that are now supporting the growth of Santuso and it's been good to see the growing number of states adding Crystallose to their Medicaid formularies. Further, I'd like to remind you, we have an active acquisition initiative underway as we continue to seek additional FDA approved brands that complement our portfolio and can be bolted on to our infrastructure. And finally, we expect our momentum to continue as we are still in the early stages of capitalizing on the numerous opportunities available to us. We'd often point out in previous updates that while many of the positive developments announced didn't impact those quarters' revenues, they could become important contributors to future shareholder value creation. And those predictions are now coming to fruition just as we anticipated.

Speaker 2

Our ongoing success can be driven by continued momentum from our approved brands, increased contributions from international partnerships, ongoing advancement of our clinical development programs and the potential addition of select acquisitions. Importantly, Cumberland remains in a solid financial position, which provides us with the ability to execute on our strategy and our objectives. We expect to deliver double digit revenue growth this year as well as positive cash flow from operations. We're entering an exciting time for our company. And with that report, we'll now open the call to any questions.

Speaker 2

Operator, please proceed.

Operator

Thank you, sir. Ladies and gentlemen, that concludes the company's presentation and we will now open the call for any questions.

Speaker 2

Well, if there's no questions, that's fine. Just want to thank everybody for joining us today's call. We do understand many of our shareholders prefer a private discussion with management. And if so, please reach out and we'll be happy to get such a call scheduled with you and hold such a discussion. As always, we appreciate your time and interest in Cumberland and we look forward to providing another update in the coming months.

Operator

Thank you, sir. Ladies and gentlemen, that concludes today's call. If you'd like to listen to a replay of the discussion, please visit the Investor Relations section on Cumberland's website. I would like to thank you for your participation. You may now disconnect.

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