Cumberland Pharmaceuticals Inc. (NASDAQ:CPIX) Q4 2023 Earnings Call Transcript

Cumberland Pharmaceuticals Inc. (NASDAQ:CPIX) Q4 2023 Earnings Call Transcript March 5, 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 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.

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Q&A Session

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.