Cumberland Pharmaceuticals (NASDAQ:CPIX) Inc. has announced a successful financial year with net revenues reaching $40 million in 2023. The company's key products, including Sancuso, Kristalose, Caldolor, and Vibativ, have been significant contributors to this achievement.
Despite facing challenges such as lower net sales of Sancuso due to sales deductions, the company has generated $6 million in cash from operations and remains focused on growth opportunities and clinical advancements.
Key Takeaways
- Cumberland Pharmaceuticals' net revenues hit $40 million in 2023.
- Gross margins remained strong, with $6 million in cash generated from operations.
- Growth opportunities include international expansion of Vibativ, pediatric use of Caldolor, and the transition of Sancuso to Cumberland.
- Ifetroban is advancing in three phase two clinical studies.
- The company has entered a funding agreement with Pinnacle Bank for up to $25 million.
- Cumberland repurchased 444,000 shares and holds over $51 million in tax net operating loss carry-forwards.
Company Outlook
- Cumberland aims to maximize commercial brands, progress their pipeline, and pursue acquisitions.
- The Federal No Pain Act's special reimbursement is expected to positively impact Caldolor's growth.
- FDA has approved expanded labeling for Caldolor to include infants.
Bearish Highlights
- The company reported a net loss for the year.
- Lower net sales of Sancuso were due to sales deductions, an issue being addressed.
Bullish Highlights
- Cumberland expanded its oncology sales division, positively impacting the business.
- Increased demand for Vaprisol during the pandemic has been met with support for hospital and clinic use.
- Kristalose and Vibativ sales are growing, and the company is optimistic about their future performance.
Misses
- Despite overall success, the company faced lower net sales for Sancuso and reported a net loss for the year.
Q&A Highlights
- The company discussed the potential benefits of ifetroban in ongoing clinical studies.
- Financial details were provided, including the impact of Vibativ and Sancuso acquisitions on financial statements.
- Cumberland's commitment to sustainability and patient care was emphasized.
Cumberland Pharmaceuticals (ticker: CPIX) has navigated the past year with a clear focus on growth and clinical progression. The company's financial results, though mixed with a reported net loss, have been bolstered by strong net revenues and effective cash generation from operations.
With strategic initiatives in place, such as the expansion of their oncology sales division and the transition of product lines, Cumberland is poised to continue its trajectory of growth. The company's dedication to improving patient care through its unique product offerings and clinical advancements remains at the core of its mission, as it seeks to build a robust portfolio of specialty pharmaceutical brands.
Cumberland's management team remains open to discussions with investors and is committed to providing updates on the company's progress in the future.
InvestingPro Insights
Cumberland Pharmaceuticals Inc. (ticker: CPIX) has shown a mix of challenges and opportunities in its recent financial performance. According to InvestingPro data, the company's market capitalization stands at $30.41 million as of the last twelve months ending Q4 2023, reflecting the scale of the business in the pharmaceutical industry.
Despite a decline in revenue growth by -5.85% in the same period, the gross profit margin remains high at 84.66%, indicating the company's ability to maintain profitability on its products.
InvestingPro Tips suggest that management's confidence in the company is demonstrated by aggressive share buybacks, which can often be a sign of undervalued stock. Additionally, the stock has experienced a notable decline over the last week, yet it has managed a strong return over the last three months, highlighting potential volatility but also the possibility of rebound.
While Cumberland Pharmaceuticals does not currently pay a dividend, the focus on reinvesting in the business and buying back shares may be appealing to growth-oriented investors. The company's valuation, with a P/E ratio of -4.53 and an adjusted P/E ratio for the last twelve months at -4.62, implies a strong free cash flow yield, which could be of interest to value investors looking for potential turnaround stories.
For those seeking more in-depth analysis, InvestingPro offers additional tips on Cumberland Pharmaceuticals, which can be accessed at https://www.investing.com/pro/CPIX. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 7 additional tips available on InvestingPro, investors can gain a more comprehensive understanding of the company's financial health and market position.
Full transcript - Cumberland Pharmaceuticals (CPIX) Q4 2023:
Operator: Good afternoon, and welcome to Cumberland Pharmaceuticals 2023 Financial Report and Company Update. This call is being recorded at Cumberland's request and will be archived on the company's 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. Good afternoon. Thanks for joining us today. This afternoon, Cumberland issued a press release announcing the company's annual financial results with an operational update for the year ending December 31, 2023. 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. They'll also provide an overall company update, including a discussion of Cumberland's brand, 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'll 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. You can find the links to those sites can be found 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 today. 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 preference. So 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 appreciate you joining us as we recap our progress here at Cumberland. As Molly mentioned, during today's call, we'll provide both a company update as well as a review of our 2023 financial results. So, let's begin. In many ways, 2023 was a productive and important year for Cumberland, as we were able to take key steps in laying the foundation for future success. We continued to integrate our newest products while also delivering a number of significant achievements, which we'll recap on today's call. In 2023, Cumberland delivered net revenues of $40 million. Sancuso has become a valuable addition to our product line with continued significant shipments during 2023, but also an unusual amount of sales deductions during that year. Meanwhile, Kristalose, Caldolor, and Vibativ continued their steady contributions to our revenue mix. In fact, Vibativ sales rebounded in 2023, with the brand beginning to deliver an attractive return on the investment associated with its acquisition. Our gross margins remained attractive in 2023, resulting in $6 million in cash generated from operations for the year. Our balance sheet also remained strong as we ended the year with $82 million in total assets, including $20 million in cash, $53 million in liabilities, and $30 million of shareholders' equity. Now, I'm pleased to share a series of exciting developments which occurred in 2023, including several growth opportunities for our brands. Throughout the year, we continued to work with our partners in their efforts to register and launch Vibativ in several international markets, which can provide significant catalysts for the brands in the future. SciClone Pharmaceuticals, our partner for the Chinese market, has continued to respond to regulatory inquiries as they seek approval for Vibativ in their country. Tabuk Pharmaceuticals has updated Vibativ's approval in Saudi Arabia with new manufacturing information as they plan to introduce the product into the Middle East. And DB Pharma, our partner in South Korea who also distributes Caldolor there, is awaiting the approval of Vibativ in their market. So we now await the clearance of these submissions associated with these three initiatives and look forward to the launch of Vibativ in these three countries. Meanwhile, following the FDA's approval to expand the labeling for Caldolor in 2023, our non-opioid agent may now be administered for the treatment of pain and fever in patients three to six months of age. In early 2023, the Federal No Pain Act was passed, which is expected to provide special favorable reimbursement for non-opioid products like Caldolor. We submitted a request to CMS that Caldolor be included in the favorable reimbursement and we look forward to learning more this year in preparation for the Act's implementation in 2025. During 2023, we also completed the expansion of our Oncology Sales Division. As we work to deliver our newest brand, Sancuso, to cancer patients. And our largest selling product, Kristalose, began benefiting from its listing on the New York State Medicaid formulary during the year. So with that overview, I'd now like to turn to Todd Anthony, Cumberland's Vice President, Organizational Development, to further discuss our brands and our teams. Todd?
Todd Anthony: Thank you, A.J. There certainly was a lot of activity at Cumberland throughout 2023, so I'd like to offer a further update on each of our major brands. In October, we announced a new publication in Antimicrobial Agents and Chemotherapy, detailing the results of the first clinical study investigating the safety and pharmacokinetics of our Vibativ product in children two to 17 years of age. Vibativ is an intravenous antibiotic approved by the FDA for the treatment of hospital acquired and ventilator associated bacterial pneumonia, as well as complicated skin and skin structure infections caused by certain gram positive bacteria. The results of the study suggest that a single dose of Vibativ is safe in children and that they experienced reduced exposure to Vibativ compared with the same body weight based dosing in adults. Antimicrobial resistance continues to pose a significant challenge in the treatment of bacterial infections, necessitating the development of new antibiotic therapies. We're pleased to see that Vibativ sales continue to improve and were up 18% in 2023, reflecting the several new initiatives underway to improve the brand's performance. Touching next on Kristalose, which is our prescription strength laxative packaged in a convenient pre-measured powder dose that dissolves quickly in just four ounces of water for a clear, taste-free and grit-free solution. Kristalose continues to be our largest selling product and is benefiting nicely from the support of our two co-promotion partners, with 2023 sales up 5% over the prior year. Moreover, we found that the brand performs best in states where we have Medicaid coverage. New York State recently added Kristalose to its Medicaid formulary and we are implementing a special initiative to increase our presence and share a voice in that market. We believe that this new coverage is contributing to the growth of the product. Moving next to Caldolor, our non-opioid analgesic injection product. With the newly approved pediatric labeling A.J. mentioned, it's now the only non-opioid product approved to treat pain in infants that's delivered via an injection. Other products in this class, such as Ketorolac and meloxicam are not approved for use in children, as the safety and efficacy of those drugs have not been established for pediatric patients. Additionally, acetaminophen injection is not approved for treating pain in children less than two years of age, as the safety and efficacy of that drug has not been established for treating pain in those younger children. In 2023, we also shared the positive results from a clinical study investigating the safety and pharmacokinetics of Caldolor in newborns. The study evaluated the safety and drug exposure profile of Caldolor in 24 hospitalized infants between the ages of one and six months who require treatment for pain or fever. The results of the study, which were published in the Journal Pediatric Drugs, supports the growing body of evidence that demonstrates Caldolor is a safe, therapeutic option available to practitioners for the treatment of fever and pain in infants, children, and adults. We're very pleased to have further expanded the product labeling for use in patients of nearly all ages and have launched a marketing initiative highlighting this new indication. Additionally, we believe Caldolor will be eligible for special Medicare reimbursement under the new Non-Opioids Prevent Addiction in the Nation, or No Pain, legislation, which was enacted as part of the Consolidated Appropriations Act of 2023. The No Pain Act requires Medicare to provide separate and more favorable reimbursement for non-opioid products that are used to manage pain during surgeries conducted in hospital outpatient departments or in ambulatory surgical centers. This legislation applies to products that are indicated to provide analgesia without acting upon the body's opioid receptors. As a result, we believe that the No Pain Act will affect Medicare reimbursement for Caldolor. In the Medicare Hospital Outpatient Prospective Payment System proposed rule, the CMS requested that manufacturers with potentially applicable non-opioid products submit comments in supporting clinical evidence regarding products that should be eligible for separate payment. We submitted a comment letter along with the requisite clinical information to the CMS in September of 2023 explaining why Caldolor should be included and separately reimbursed. We are now awaiting further information from CMS expected this year, including the potential new reimbursement level for Caldolor. The Act itself is scheduled to go in effect in early 2025 and will initially apply to those products that are furnished between January 1st, 2025 and January 1st, 2028. Shifting 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. After acquiring U.S. rights to the brand in 2022, we successfully completed the transition from Kyowa Kirin to Cumberland in 2023, which included the NDA transfer. We also successfully transferred manufacturing of the product to a new facility. Following FDA approval of that site, we have now received new supplies of Cumberland packaged product, which we will begin shipping this year. I'd like to note that 2023 Sancuso net sales were significantly lower than those we experienced in the prior year due to an inordinate amount of sales deductions. We are working to address and improve those deductions, which include fees, rebates, and product returns. During the year, we expanded our oncology sales division as we work to deliver the brand to help cancer patients tolerate their chemotherapy treatments. We are already seeing a favorable impact from this expanded sales division, which we plan to build upon to increase customer frequency and reach in 2024. Demand for our Vaprisol product increased during the pandemic, and we work to support the expanded use of the product in hospitals and clinics during that healthcare crisis. We then shipped all remaining inventory of the product and notified the FDA that supplies of the product were not currently available. We have since transferred the product's manufacturing to a new facility, and our new manufacturing partner is working with the FDA to address several Form 483 and warning letter issues in a timely manner. Meanwhile, we've been working with them to support a special interim supply of compounded product for critically ill patients, which we will introduce to the market -- which we introduced to the market in late 2023 and we'll begin selling in early 2024. The companies will share in the sales of this interim compounded product, and then we will expect to file for the approval to manufacture branded Vaprisol once all FDA issues at the new site are resolved. As for RediTrex, a line of pre-filled syringes, recall that we amended our agreement with Nordic Pharma, who previously provided us with the license for the U.S. rights for the product line. As of July 1, 2023, Nordic has assumed responsibility for the product in the United States. We support our portfolio of FDA-approved medicines through three national sales divisions, including our newest, Cumberland Oncology, which is comprised of both field-based and inside sales personnel. Our hospital division calls on key institutional accounts across the country, and our field sales division covers select office-based physicians. Lastly, I'd like to highlight Cumberland's ongoing focus and our commitment to sustainability. We have updated our metrics, and today I'm pleased to announce the key findings for 2023, which include providing 3 million doses of our products to patients, safely disposing of nearly 6,000 pounds of damaged and expired product, and having no products recalled and no clinical trials terminated due to failure to practice good clinical standards. That completes my update for today, and so now I'll turn it back over to you, A.J.
A. J. Kazimi: Thank you, Todd. Now I'd like to take a few minutes to provide an update on our clinical program. We continue to progress our pipeline of innovative products designed to improve patient care and patients' quality of life. Our ifetroban product candidate, a potent and selective thromboxane receptor antagonist, is being evaluated in three phase, two clinical studies 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. Patient enrollment is well underway in two of those company-sponsored Phase II clinical programs. The first involves patients with systemic sclerosis or scleroderma, a debilitating autoimmune disorder characterized by diffuse fibrosis, the skin, and internal organs. The other is evaluating ifetroban in patients with cardiomyopathy associated with Duchenne Muscular Dystrophy or DMD. It's a rare and fatal genetic neuromuscular disease that results in deterioration of the skeletal heart and lung muscles. We're sponsoring the FIGTH DMD trial, a multi-center randomized placebo-controlled Phase II study, which is enrolling patients across 10 centers across the United States and centers that specialize in DMD. We've completed enrollment in the younger age group of patients and are now working to finish enrollment in the older patient cohort with DMD. Recall the FDA has provided grant awards of over a million dollars to support the study. We're also developing an oral capsule of ifetroban to treat idiopathic pulmonary fibrosis or IPF, the most common form of progressive fibrosing interstitial lung disease. Following FDA clearance of our investigational new drug application in May of 2023, we're now in the process of initiating our Phase II FIGHTING FIBROSIS trial designed to enroll 128 patients in over 20 medical centers of excellence across the U.S. Recent studies have shown, ifetroban can both prevent and enhance resolution of lung fibrosis in multiple preclinical models. Well, in addition to these sponsored studies, there are several other preclinical and pilot patient studies of ifetroban underway, including several investigator initiated studies. We believe ifetroban has the potential to benefit many patients and we look forward to sharing the results from our company sponsored studies as they emerge. Our plan is to then decide on the best development path for the product, which represents our first new chemical entity. So with that update on our ongoing clinical trials, I'd now like to turn it over to our Chief Financial Officer, John Hamm, to review our 2023 financial results. John?
John Hamm: Thank you, A.J. For the three months ended December 31, 2023, net revenue from continuing operations were $9.4 million, an increase over the $9.1 million in revenue recorded during the prior year period. Net revenue by product for the fourth quarter of 2023 included $2.4 million for Sancuso, $3.7 million for Kristalose, $2 million for Vibativ, and $1 million for Caldolor. 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 2023 were $40 million. Full year product revenue totaled $16 million for Kristalose, $8.1 million for Sancuso, $8.8 million for Vibativ, and $4.3 million for Caldolor. Turning to our expenditures, total operating expenses for the fourth quarter were $15.5 million compared to $11.4 million for the prior year period. Total operating expenses for 2023 were $49.1 million up from $47.7 million during the prior year. The net loss for the quarter and the year was approximately $6.3 million, which includes a $3.3 million one-time write-down of Omeclamox in tangible assets. When non-cash expenses are added back, the resulting adjusted earnings for the year were $2.4 million, or $0.17 a share. Also, please note that the adjusted earnings calculations do not include the benefit of the $0.6 million of Vibativv and Sancuso cost of goods during the fourth quarter, which was a $2.3 million benefit for the full 2023 year. Those goods were received as part of each product's acquisition. As a result, when taking into account all these items, total cash flow from operations was $6 million in 2023. As a reminder, the additions of Vibativ and Sancuso to our product portfolio have continued to significantly impact our financial statements. 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. Vibativ was our largest acquisition, and I'm pleased to report that since we assumed responsibility for the product in late 2018, it has delivered a total cash contribution of $38.4 million to our business and therefore is now generating a return on our $25 million investment. Sancuso added a total of $19 million in new assets, including approximately $4 million in inventory and $14 million of intangibles. The estimated value of those assets was $13.3 million at the end of 2023. We provided $13.5 million at closing for the Sancuso acquisition, and there are also royalties that we pay based on the brand sales. Since we started shipping Sancuso in early 2022, the product has already provided a total cash contribution of approximately $13.3 million and therefore is expected to begin generating a return on our $14.5 million investment in 2024. Turning to our balance sheet, as of December 31, 2023, we had $82 million in total assets, including $18 million in cash and cash equivalents. Liabilities totaled $53 million, including $12.8 million on our credit facility. Total shareholders' equity was $30 million at the end of 2023. In September 2023, we entered into a new revolving credit loan agreement with Pinnacle Bank for a three-year term. The agreement provides for an aggregate principal funding amount of up to $25 million. It provides an initial revolving credit line with $20 million of availability and the ability of 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. We continued our corporate share repurchase program in 2023, and through the end of December, we repurchased a total of 444,000 shares. These repurchases included those on the open market, as well as those needed to fund the taxes associated with employee-vested restricted shares. We also continued the process of implementing new trading plans for our board members who purchased Cumberland shares throughout 2023 to increase their holdings in the company. Lastly, I'd like to note that Cumberland continues to hold over $51 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 final quarter and year-end of 2023. Back to you,
A. J. Kazimi: Thank you, John. Well, as you may recall, in 2023, we took a fresh look at our mission statement, and we refined it to better capture the spirit of what we do each day here at Cumberland. Our mission is now working together to provide unique products that improve the quality of patient care. In designing this statement, we considered several factors. First, we wanted it to address the constituencies we serve, which includes patients in need of care, as well as the health care providers, our employees, shareholders, partners, and our community. We also sought to reflect Cumberland's culture, where teamwork is prized, emphasized, and expected in order to achieve our goals. Next, we needed to demonstrate our focus on developing, acquiring, and distributing differentiated brands. And finally, we wanted to emphasize that the patient is at the core of everything we do. Our collective efforts are directed at providing unique products that serve as better alternatives for poorly met medical needs. We remain committed to fulfilling this mission by building a portfolio of specialty pharmaceutical brands, which we do by maximizing the potential of our commercial brands, progressing our pipeline, and also pursuing select acquisitions. Overall, it was a good year, and we are encouraged by the developments that we've shared with you today. It's been particularly encouraging to see the recent growth in our Kristalose business, along with the rebound in Vibativ sales. We're excited about the expansion of our oncology sales division and the opportunity to further help cancer patients. And we believe the special reimbursement associated with the Federal No Pain Act can have a meaningful impact on Caldolor's future growth. We're pleased to share the recent pediatric studies involving favorable results for both Vibativ and Caldolor in children, as well as FDA's approval of the expanded labeling for Caldolor to now include infants. So, with that, let's open the call to any questions you may have. Operator, please proceed.
Operator:
A. J. Kazimi: Well, thank you, everyone, for joining today's call. We do understand many of you prefer a private discussion with management, and if so, please just reach out, and we'd be happy to get a call scheduled with you and hold such a discussion. As always, we appreciate your time and interest in our company, and we look forward to providing another update in the coming months.
Operator: Thank you. This concludes today's program. Thank you all for participating. 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.