Cumberland Pharmaceuticals Inc. (NASDAQ:CPIX) Q1 2024 Earnings Call Transcript

Cumberland Pharmaceuticals Inc. (NASDAQ:CPIX) Q1 2024 Earnings Call Transcript May 11, 2024

Cumberland Pharmaceuticals Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon, and welcome to Cumberland Pharmaceuticals First Quarter 2024 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. Thanks for joining us today. This afternoon, Cumberland issued a press release announcing the company’s financial results with an operational update for the first quarter of 2024. 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 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.

These 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.

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Q&A Session

A.J. Kazimi: Thank you, Molly, and good afternoon, everyone. We appreciate you joining us today as we share how the year has gone so far. As Molly mentioned during today’s call, we’ll provide a company update and a review of our financial results for the first quarter ending March 31, 2024. The first quarter came in generally as expected, given the backdrop of a higher interest rate environment and typical first quarter consumer buying patterns. Recall our first quarter sales are usually lighter as patients work through their new insurance deductibles before purchasing more expensive medicines. Also, our sales in Q1 this year were impacted by wholesaler buying patterns, which do fluctuate during the year. However, it’s important to note that the overall demand for our brands was steady during the period.

And for that reason, we believe it’s best to evaluate our financial performance on an annual basis. We remain very optimistic about our company’s fundamentals and future given the number of ongoing positive developments, which we’ll elaborate on during today’s call. And finally, we believe we are still on track to post double-digit revenue growth and positive cash flow from operations in 2024. You see Cumberland has built a portfolio of FDA-approved brands with outstanding safety and efficacy profiles that can make a difference in patients’ lives. These are valuable brands with attractive margins. And we continue to build our portfolio of innovated and differentiated products through a multifaceted strategy that includes both the development of new candidates as well as the acquisition of established brands.

Our resulting diversified product line has enabled us to weather external challenges while our team remains responsive to the evolving marketplace. I’d next like to share several updates regarding our products, including a number of growth opportunities. We’re implementing a strategy to increase the overall awareness of our products and their attributes throughout the medical community. In March, a special report was published in anesthesiology news, general surgery news, and pharmacy practice news, which presented the growing amount of clinical data supporting the use of Caldolor our ibuprofen as a standard of care for the treatment of pain and fever in adults, children and infants. As a reminder, FDA approved expanded labeling for Caldolor in 2023 to include its use in patients from 3 to 6 months of age.

Additionally, recall that the Federal NOPAIN Act was passed last year, which is designed to provide special, favorable reimbursement for non-opioid products like Caldolor. We look forward to learning more this year regarding Caldolor’s inclusion and reimbursement in preparation for the Act’s implementation in early 2025. This could be a very meaningful revenue growth opportunity for Caldolor. Regarding Vibativ, our potent antibiotic, we’re pleased to announce the launch this quarter of new product packaging. This additional presentation is designed to overcome a barrier as smaller hospitals and infusion centers that use less of the product at a time in order to help them manage their investment and workflow associated with the product. Turning to Kristalose.

Our prescription strength laxative, we continue to build on the growing number of states where it has favorable Medicaid coverage. And meanwhile, we also continue to feature Sancuso through our recently expanded oncology sales division in order to support patients by helping address certain side effects associated with their chemotherapy cancer treatments. And additionally, we continue to work with partners in their efforts to advance our potent antibiotic Vibativ in several international markets, which can contribute to the brand’s growth in the future. To book Pharmaceuticals has obtained final approval for Vibativ in Saudi Arabia and will next be discussing with them their plans for the product in that market. In SciClone Pharmaceuticals, our partner for the Chinese market continues to respond to the regulatory inquiries there as they seek approval for Vibativ in their country.

DB Pharm, our partner in South Korea, who also distributed Caldolor there, did receive an update during the first quarter on their submission to approve and distribute Vibativ in their country. The Korean regulatory authorities did not yet approve the submission and indicated that some additional manufacturing information will be required and will work with the DB Pharm to address. Regarding our financial performance during the first quarter, we recorded $8.5 million in net revenues. And again, overall, demand for our brands was steady during the period, and we, therefore, continue to suggest evaluating our performance on an annual basis. So with that overview, I’d now like to turn to Todd Anthony, Cumberland’s Vice President, Organizational Development, to discuss our team and our brands.

Todd?

Todd Anthony: Thank you, A.J. In March, we hosted our spring national sales meeting here in Nashville as we launched new marketing initiatives and equipped our sales teams and their efforts to build our brands. As a reminder, we support our portfolio of FDA-approved medicines through 3 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. Our newest sales group, Cumberland Oncology focuses on cancer clinics. I’d now like to share an update on each of our major brands. Starting with Vibativ. Recall that last year, we announced a new publication in antimicrobial agents in chemotherapy, detailing the results of the first clinical study investigating the safety and pharmacokinetics of Vibativ in children 2 to 17 years of age.

The results of this study suggest that a single dose of Vibativ is safe in children and that they experience reduced exposure to Vibativ compared with the same body weight-based dosing in adults. 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. Antimicrobial resistance continues to pose a significant challenge in the treatment of bacterial infections, which necessitates the development of new antibiotic therapies. 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.