Q2 2021 Cumberland Pharmaceuticals Inc Earnings Call
1 financial report and company update.
This call is being recorded at the company's request and will be archived on <unk> website for 1 week from today's date.
Now I would like to introduce Molly Argus senior account manager at the adult and agency, which handles Cumberland and communications Mollie. Please go ahead.
Good afternoon, everyone today, Cumberland issued a press release containing our company update and financial results for the second quarter ended June 30th 2020, 1 that released with related financial tables is available on the company's website at www Dot Cumberland farmer Mac dotcom.
Please note that today's discussion may include forward looking statements.
Signed and the private Securities Reform Act of 1995.
Because any such statements reflect the company's current views and expectations concerning future events.
And may involve risks and uncertainties.
Additionally, there are many factors that could affect Cumberland and future results, including but not limited to natural disasters economic downturn public.
Public health epidemics and other events beyond the company's control those issues are described under the caption risk factors and timberlands and form 10-K, and any additional updates filed with SEC.
And any forward looking statements made during today's call are qualified by those risk factors.
Despite the company's best efforts actual results could differ materially from expectations and information shared on this call should be considered current as of today on me.
Please remember that the company does not assume responsibility to update forward looking statements, whether as a result of new information or due to future developments.
During today's call there will be references to several of Cumberland marketed brands full prescribing and safety information for each brand can be found on the individual product website and a link to those products that can be found on our corporate website again at www Dot Cumberland pharma dotcom.
Today. The company will also provide some non-GAAP financial measures with respect to performance and explanation and reconciliation to GAAP measures can be found on the financial tables and the earnings release issued earlier today.
With us on today's call are a J kazimi, Cumberland and Chief Executive Officer, Marty pronounce Chief commercial officer, and Jon Hamm, Chief Financial Officer.
For photo start with it and overview of Cumberland and progress in the second quarter and follow with a discussion of the company's commercial activities and there.
And there wouldn't be a review of the financial results followed by closing remarks before opening the call to any questions.
I'll now turn the call over to a J kazimi to begin the discussion of the corporate update and company performance.
Thanks Molly.
Good afternoon, everyone and we appreciate you joining us.
Today, we'll provide an overall company update along with a review of our second quarter financial results.
During the past year and a half we face most challenging operating environment and the history of our company.
Throughout the pandemic, we worked hard to maintain operations, while also ensuring the health and safety of our organization.
Although we've been encouraged by the arrival and growing number of vaccinations and we do continue to carefully monitor the situation, especially as various calls and new spike in Covid cases.
During the pandemic, we adjusted our commercial activities by reinventing the ways in which we operate in order to support our customers as well as the patients who can benefit from our medicines.
Cumberland continues to face headwinds due to the pandemic and several of our brands have been negatively impacted.
We're fortunate to have a diversified product portfolio that includes brands such as 5 bad is christos and <unk> resolved that have all delivered a particularly strong performance during the first half of this year.
The combined net revenues from our portfolio of FDA approved brands totaled $9.1 million during the second quarter.
And that was a slight decline from the prior year period. However, net revenues for the first 6 months of this year were $19.6 million up $9.3 per cent compared to the same period and 2020.
In addition, we received a $1 million during the first half of this year associated with divested product rights for 2 brands that we no longer distribute.
As demonstrated in previous quarters, the company's products generate strong performances at different times during the year, which is why we always suggest you evaluate our progress on an annual basis as quarterly progressions and do vary.
Furthermore, our key promoted brands continue their favorable of prescription trends, which is not always apparent in our reported revenues, which represent a wholesaler purchases and can fluctuate due to the wholesaler buying patterns.
I would like to highlight crystals and as the brand has enjoyed and especially strong performance and the second quarter Crystal those delivered $5.3 million and revenue.
And the brand ended the first half of this year with $8.3 million and revenue up 22% over the same period last year.
Turning to our earnings we posted a profit of $1.4 million during the first half of this year a significant turnaround from the $2 million loss during the first half of last year.
During the second quarter. We also continued to deliver positive cash flow from operations, which is now totaled 4 and a half million year to date up from the $3.7 million and cash flow for the first 6 months of last year and.
As of June 30th we held just under $90 million and total assets.
$41 million and liabilities and a $48 million of shareholders equity.
Meanwhile, we've been pleased to announce the results of our 2020 sustainability report detailing Cumberland and activities pertaining to our environmental social and governance or ESG matters.
As the largest Biopharma company founded and headquartered here in the mid South.
We hold ourselves to the highest standards of ethical practices and and we understand the importance of addressing our impact on our constituents the community as well as the environment.
This new report highlighted several activities, we've undertaken to fulfill our mission to fulfill our mission.
And during 2020, we delivered nearly $2.5 million doses of our brands for patient use.
None of our products were recalled and no studies were terminated due to failure to its clinical standards.
We continue to program to serialize, all of our commercial products and the United States, which helps prevent which helps prevent counterfeit drugs from entering the market under the Cumberland name and.
Additionally, the company had no brands listed and the Fda's Midwatch safety alerts and.
And we had no products identified by the FDA from its adverse event reporting system last year.
And this ESG report also highlighted Cumberland and engagement with the community as well as our investment and our employees and it does note that our work force is was 40 per success women and 18% of our employees are minorities.
And we do remain committed to sustainability and to maintain and transparency of our corporate operations.
Finally, we continue to develop our clinical pipeline of true.
Treatments for unmet medical needs many of our stuffs clinical sites have reopened during the first half of this year and started again screening of patients from potential admission into our studies and we are working closely with these centers as they resumed patient enrollment and the various trials for our products.
As a reminder, we're sponsoring 3 key phase 2 clinical programs that evaluate our eye fisherman product candidates. These studies involve patients with the cardiomyopathy associated with Duchenne muscular dystrophy, which is a rare fatal genetic neuromuscular.
<unk> disease.
And systemic sclerosis, or scleroderma, a debilitating autoimmune disease and.
And aspirin exacerbated respiratory disease, a severe form of asthma.
And the potential markets for these candidates are quite large for a company our size and we believe success and any of these programs had and cat can have a dramatic positive impact on our company.
We will await results from these studies before then deciding on the best development path, leading to the registration of a fit your bands our first new chemical entity.
So with that overview and update I'd now like to ask Marty Cornell Cumberland, <unk>, Chief commercial officer, and President from our sales operations to share his update on our marketing and sales activities Marty.
Hey, Jay.
And I'd like to start with our 2 largest brands Crystal OS and vibe out at once.
Have each grown significantly during the first half of 2021, as Ajay mentioned sales of Crystal OS of and especially strong this year, increasing 22% compared to the prior year.
Crystals is a prescription strength laxative, that's provided and pre measure as a pre measured powder dose. It dissolves quickly and just 4 ounces of water for virtually taste free and grid solution.
It is a unique form of Lactulose and compares favorably to the alternative syrup versions.
This is krista lowest performance has benefited from the support of our co promotion partners, who have expanded our reach for the product by featuring the brand with physicians and facilities that we don't cover.
Next our buy bad if product also delivered a strong performance during the first half of the year with sales growing 21% over the same period last year.
During the second quarter, we published a case study dossier, which demonstrates that our <unk> product was effectively used to help COVID-19 patients who develop secondary bacterial infections and their lungs.
<unk> is a potent antibiotic designed for difficult to treat infections, such as hospital acquired and ventilator associated pneumonia that result from susceptible organisms. This case study dossier outlined several real world instances, whereby battery of effectively and safely treat it.
And hospitalized COVID-19 patients.
2 of these case studies were provided by Dr. Joseph variety of clinical pharmacy specialist for infectious disease, and critical care and New Jersey.
Within 48 hours of administering 5 bad blood cultures for his patients with underlying health conditions, who presented with pneumonia and staph infections related to COVID-19 were cleared as of harmful bacteria, resulting in a rapid and effective eradication.
Life threatening infections.
Meanwhile, our that was all brand has also been helpful and treating COVID-19 and other hospitalized patients suffering from potentially deadly sodium and balance known as hyponatremia and.
And late 2020 and international study of over 4000 patients found that patients hospitalized with COVID-19 had a high risk of developing hyponatremia vs.
And these patients also had a higher incidence of mortality due to their hypernatremia.
The study results supported the use of an intravenous VAT and to treat hyponatremia and critically ill patients.
Afflicted with COVID-19.
Hypernatremia.
There's an imbalance of serum sodium to body of water.
This is the most common electrolyte disorder, among hospitalized patients Cumberland and VAT resolve product is the only intravenously administered raptor and treatment available and the U S.
That was all has a proven day, 1 response to help normalize serum sodium levels and hyponatremic patients and moving them out of the ICU as efficiently as possible.
Turning to Caldolor.
Early last year, we implemented the full national launch of our F. D. A approved next generation formulation of the product.
As a nonsteroidal anti inflammatory drug caldolor and may be used as the sole method of treatment for mild to moderate pain or as part of a multimodal treatment for severe pain.
The next generation product features and easier administration presentation, and an improved patented formulation. This ready to use product contains 800 milligrams of ibuprofen and a 200 ml formulation designed for injection.
It offers hospitals and medical facilities improved dosing accuracy and cost savings, while managing patient pain and significantly reducing the opioid consumption.
We're currently selling both the Caldolor vials and the Premixed bags and are pleased that the new ready to use presentation now comprises over half of the brand sales.
While the new presentation was off to a good start following the launch. It was then impacted by the pandemic and resulting postponement of elective surgeries and revenues from this product and begun to grow again, this year and as elective surgeries resume and more facilities gain access to the product.
While we're encouraged by the growth on a reported today and these 4 brands Crystal lows by bad is that was all and Caldolor. Our remaining brands are at different stages and their lifecycle are seeded out was our first product introduced in 2004 and continues to enjoy.
Sales and market share despite losing its orphan drug exclusivity in 2011.
Sales of a seat or don't have declined this year as more generic competitors entered the market, resulting in a decrease in prices and the business being shared by a growing number of products.
Also we have not shipped are recorded sales of the <unk> so far in 2021.
The product's packager and counted encountered difficulties.
During the pandemic and as a result their operations are currently suspended.
We are awaiting the resumption of the packaging at this facility to bring new inventory and provide the needed supply of the product.
Finally, we continue to prepare for the launch of ready trucks, our new line of injectable methotrexate products.
We're encouraged by the positive feedback we've received from physicians about this innovative delivery system.
Ready trucks is FDA approved for the treatment of active rheumatoid arthritis, juvenile idiopathic arthritis, and severe psoriatic arthritis, we began to introduce this product last November through a soft launch and.
Have modestly increased our sales force to expand our coverage of the rheumatology market and support of this brand.
We are introducing this product by targeting a new group of medical practitioners and their rheumatology specialty. We're also working through reimbursement arrangements for the product and are waiting additional supplies crumbling and has created a positioning and marketing strategy and.
Preparation for the full national product launch, which is scheduled for late September 'twenty 'twenty 1.
We believe that ready trucks will be a valuable addition to the portfolio and provide a significant contribution to our business for years to come.
That completes today's updates on our commercial efforts a J I'll turn the call back over to you. Thanks.
Thanks Marty.
I'd now like to introduce our new Chief Financial Officer, John Hanna, who assume that role in May.
And this position Johns responsibilities include managing all the company's finance and accounting activities. While also continuing to oversee our corporate development as well as our legal matters.
John brings to this role over 25 years finance and accounting experience, including 20 years and health care.
He previously held the position of Chief operating Officer, and Chief Financial Officer.
Pharmacy, and Health Spring, Inc, and managed care organization now operating at Cigna Health Spring.
He was also a vice president finance at M. D on business services M. D. On is it health care technology firm that now operates as change health care and NASDAQ listed company with over $3 billion and annual revenues.
John knows Cumberland, well, having most recently served as our director of corporate development. He has proven himself to be and integral part of our team and we're confident you'll continue to serve our company with the highest integrity.
While delivering quality financial support reports and helping to advance our mission.
John will now present, the financial review John.
A J and pleased to be here for the 3 months ended June 32021, net revenues from continuing operations were $9.1 million and we recorded an additional 500000 and revenue from discontinued operations associated with the return of rights to the 2 products we know.
Longer distribute we present their results as a discontinued business line.
Net revenues by product for the second quarter of 2021 included $5.3 million for Crystal House, $1.8 million provide that of <unk> 9 million for Caldolor and <unk> 4 million per <unk> resolved.
It is important to note that given the quarterly fluctuations and buying patterns from our customers. We believe that our performance should be based on annual sales results.
Year to date revenues were $19.6 million up 9.3% from the first half of 2020. In addition, we recorded $1 million and revenue from the discontinued operations net.
Net revenues by product for the first 6 months of this year included $8.3 million for Christos $6.9 million from <unk> $2.5 million for Caldolor and 1.5 million per GAAP result.
Total operating expenses for the second quarter were $10.5 million down from $11.2 million of expenses during the prior year period.
Net income was $1.2 million for the quarter or 8 a share a significant improvement from the $9 million loss during the second quarter of last year.
Cash flow from operating activities have remained positive and totaled $4.5 million year to date.
<unk> to $3.7 million last year.
As a reminder, our financial statements have been significantly impacted by the <unk> acquisition. The financial terms for this transaction included a $20 million payment. Upon closing we subsequently provided a $5 million milestone payment and are also providing royalties based on product sales.
From the products launch in late 2018 through the end of the second quarter of 2021 day product has delivered a total cash contribution of approximately $24 million, which we believe compares favorably to the $25 million and upfront payments to acquire the brand we accounted for the <unk> acquisition.
As a business combination a total of $34 million and new assets were added as a result of the acquisition, including approximately $21 million and inventory $12 million of intangible assets and $1 million of goodwill.
Due to the amortization of intangibles and the sales of inventory the value of these assets totaled $23 million at the end of the second quarter.
Turning to our balance sheet as of June 32021, we had $88.9 million and total assets, including $25.7 million and cash and equivalents liabilities totaled $41 million, including $14 million on our credit facility.
Total shareholders equity was $48 million at the end of the second quarter.
And in early 2020, Cumberland received a paycheck protection loan totaling $2.2 million the loan help prevent the need for any employee layoffs or furloughs and due to the pandemic. The proceeds of the loan were used to fund payroll and related qualifying expenses.
At the end of 2020, we submitted a request for the loans forgiveness.
In June of this year, we research we received formal notice from the U S. Small business administration that the full amount of the loan was forgiven.
The loan was previously listed on our balance sheet as a current liability and we eliminated the debt and recorded as other income after receiving notice of full forgiveness.
Additionally, during the pandemic, we continued our corporate share repurchase program, but did decrease the number of shares repurchase.
During the second quarter of 2021, we repurchased an additional 158000 Cumberland shares.
These repurchases included dose on the open market as well as those needed to fund the taxes associated with employee vested restricted shares there.
There is also a 2021 share purchase initiative underway from members of our board of directors, who wish to increase their holdings and the company.
6 of our board members are participating through share purchase plans and collectively purchased a total of 11006 hundred 35 shares during the first half of this year.
And finally I'd like to note that Cumberland has over $44 million and tax net operating loss carry forwards, resulting from the prior exercise of stock options.
That completes our financial report I'll turn it back over to you a J and thank you John.
Overall, our second quarter and first half of the year. We're successful in spite of the continued difficulties related to the pandemic our.
Our diversified line of FDA approved brands has allowed us to weather the external challenges and we remain responsive to the evolving medical market.
During 2021, the company has delivered a solid financial performance and advanced key initiatives, including those outlined in our new sustainability report.
And we're working to fulfill our mission by building a diversified portfolio of innovative products through a multifaceted strategy that includes both the development of new candidates and the acquisition of established brands and we.
We continue to progress our clinical pipeline and we continue to incubate future product opportunities at Cumberland emerging technologies.
We're also leveraging our infrastructure through international partnerships and through co promotion arrangements such as those we have in place for crystals and we do look forward to the launch of already <unk> product line. This fall.
Over the past year, and a half we quickly adjusted market strategies and promotional activities and reinventing the way, we interact with our customers and supporting the patients who need our medicines, we do expect to deliver another year of meaningful revenue growth in 2021.
We remain dedicated and focused on our mission of advancing patient care through the delivery of high quality medicines, and we will do so the rest of this year and beyond.
And finally I'd just like to note that our shareholders and management interests are closely the line given the significant insider ownership and the company and.
In addition to as mentioned a majority of our board members are participating and share purchase plans designed to increase their holdings Cumberland.
So with that review and that update now let's open the call to any questions. Operator. Please proceed.
Thank you, Sir ladies and gentlemen that concludes the company's presentation and we will now open the call for any questions. If you would like to ask a question. Please press the star key followed by the day 1 on your Touchtone telephone.
Well. Thank you everyone for joining the call today as I've mentioned in the past, we do understand that many of you prefer a private discussion with management and if so please just reach out to us if you'd like to hold such a call and we'll get it scheduled.
We do appreciate your time and interest and our company and we look forward to providing the next update after the end of the third quarter.
Yeah.
Thank you Sir.
Ladies and gentlemen that concludes our conference for today.
If you would like to listen to a replay of today's conference. Please dial 855859056, using the access code 3.9 and 8.5 for 16 and Alternatively, a replay of the webcast will be available on the company's website.
I would like to thank you for your participation you may now disconnect.
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