Q3 2021 Cumberland Pharmaceuticals Inc Earnings Call
Thank you for joining the Cumberland Pharmaceuticals third quarter, 2021 financial report and company update.
This call is being recorded at the company's request and will be archived on <unk> website for one week from today's date.
Now I would like to introduce Molly I guess senior account manager at about an agency, which handles Cambria lines Communications Mollie. Please go ahead.
Good afternoon, everyone today, Cumberland issued a press release containing a company update and financial results for the third quarter ended September 32021.
That release with related financial tables is available on the company's website at www Dot Cumberland pharma Dot com.
Please note that today's discussion may include forward looking statements as defined in the private Securities Reform Act of 1995.
Any such statements reflect the company's current views and expectations concerning future events.
And involve risks and uncertainty.
Additionally, there are many factors that could affect <unk> future results, including but not limited to natural disasters economic downturns public health epidemics and other events beyond the Companys control.
Those issues are described under the caption risk factors in <unk> 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 could differ materially from expectations and information shared on this call should be considered current as of today only please.
Please remember that the company does not assume responsibility to update any forward looking statements, whether as a result of new information or due to future developments.
During today's call there'll be references to several of Cumberland marketed brands full prescribing and safety information for each brand can be found on the individual project product websites links to those sites can be found on our corporate website at www Dot timberland pharma dot com.
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 on the financial tables in the earnings release issued earlier today.
With us on today's call are a J Kazimi <unk>, Chief Executive Officer, Marty Karnow, Chief Commercial officer, and Jon Hamm, Chief Financial Officer.
Therefore, I'll start with an overview of Cumberland progress during the third quarter and follow with a discussion of the company's commercial activities.
There will then be a review of the financial results followed by closing remarks before opening the call to any questions.
So I'll now turn the call over to Cumberland CEO, a J kazimi to begin the discussion of the corporate update and company performance.
Good afternoon, everyone and thank you for joining us.
<unk> heard today will provide an overall company update along with a review of our third quarter results.
<unk> delivered another steady quarterly performance when taking into account the challenges of operating during the pandemic.
Fortunately, we are starting to see signs that our business environment is returning to normal for.
For example, we recently held our first in person National sales meeting in two years and we have also resumed enrollment in the clinical studies.
Has been interrupted by the pandemic.
Furthermore, we've worked hard to maintain operations, while ensuring the health and safety of our team.
We're optimistic as vaccination rates rise in case counts decline.
We continue to carefully monitor the situation.
Over the past year to half.
Reinvented the way, we operate to support our customers and the patients that can benefit from our medicines.
<unk> fortunate to have a diversified product portfolio because FDA approved brands that has helped us mitigate the negative effects of the pandemic on our business with brands such as like that and Crystal those delivering a solid performance this year.
We do partner with a group of FDA approved manufacturers to supply our products throughout the pandemic. We've been successfully monitoring that supply chain, which includes the raw materials as well as the finished goods emerging from those facilities.
Meanwhile, our clinical trials have resumed as we are beginning to emerge from the pandemic and we are working closely with the sites as they reopen and enroll patients in the studies for our products.
As a reminder, we're sponsoring three phase two clinical programs all of evaluating our <unk> product candidate.
These studies involve patients with duchenne muscular dystrophy, a rare fatal genetic neuromuscular disease.
Systemic sclerosis, a debilitating autoimmune disease, and aspirin exacerbated respiratory disease, a severe form of asthma.
Additionally, our board of Directors has approved a new clinical program for the use of IV <unk> to treat patients with progressive fibrosis interstitial lung diseases.
Non clinical program is complete.
The resulting manuscript has been prepared and we are now designing a phase II clinical studies as we work to help patients with this deadly condition.
We will await results from all of these clinical programs before deciding on the best development path for the registration of <unk>, our first new chemical entity.
You see the potential markets for these pipeline candidates are quite large for a company our size and we believe success in any of these programs can have a positive impact on our company our value and the patients that we can support.
Although Cumberland continues to be impacted by the pandemic our business does remain steady during.
During the third quarter, our product portfolio delivered combined revenues of just over $8 million and while shipments were a bit lighter than usual during the quarter. It is important to note that end user demand in prescriptions for our products continues to grow.
That's because as we've noted before our quarterly revenues do fluctuate because they are tied to our shipments in wholesaler buying patterns and therefore, our business is best evaluated on an annual basis.
Year to date revenues have now totaled $27 7 million resulted in year to date adjusted earnings of <unk> 7 million or five cents a share.
We've also generated $4 $4 million in cash flow from operations during the first three quarters of 2021.
We ended the third quarter with just under $88 million in total assets $41 million in liabilities and $47 million in shareholders' equity.
And in addition, I'm pleased to report that we recently extended our $15 billion Bank line of credit for a new three year term with pinnacle.
Large as independent bank here in the mid South region of the United States.
During the third quarter, we implemented the national launch of already trekked slide of pre filled methotrexate syringes.
As a reminder, ready tracks is FDA approved for the treatment of active rheumatoid juvenile idiopathic and severe psoriatic arthritis.
Also we were pleased to announce the results of our 2020 sustainability report.
Detailing <unk> active Cumberland activities pertaining to our environmental social and governance or ESG matters.
Highlights of this report included the delivery of nearly $2 5 million doses of our brands for patients.
No product recalls no studies terminated due to failure of Dcp's and no brands listed on the FDA Midwatch safety alerts for human medical products.
Our employee base was 46% female and 18% minorities in 2020.
As the largest Biopharma company founded and headquartered in the mid South we hold ourselves to the highest standards of ethical practice and understand the importance of addressing our impact on our constituents the community and the environment and.
And we do remain committed to sustainability and to maintaining transparency of our corporate operations you.
You can find a copy of that report under the Investor Relations sections of our website at Www Dot cover wind farm of Dot com.
With that overview and update I'd now like to ask Marty <unk>.
As Chief commercial officer, and President of our sales division to share his update on the Companys marketing and sales activities Marty.
Thank you Jay.
End of September we held our first in person National sales meeting in two years recall that we have approximately 50 sales and medical professionals across the country and it was great to have everyone. Together again with the attendees vaccinated and additional meeting precautions implemented we were a.
Well to safely conduct our meeting and training activities. The goal of the meeting was to introduce the sales organization to a number of new marketing and promotional initiatives.
And continue to provide support and training to equip our sales teams to build our brands while navigating the current landscape.
We have two national sales divisions, one calling on key hospital accounts across the country and the other calling on select office based physicians our primary target markets remain hospital acute care and office based gastroenterology and now. Additionally, rheumatology these medical.
Specialties are characterized by a relatively concentrated base that can be supported effectively by our team of experienced sales professionals.
Both our sales divisions have altered many of their promotional tactics throughout the pandemic using more electronic and telephonic communications.
These innovative and efficient ways to expand our reach add new coverage and ensure awareness of our products have allowed us to stay on a growth trajectory throughout the pandemic.
As Adrian mentioned earlier, we also implemented the full launch of <unk> during the third quarter ready tracks as our new line of pre filled syringes, specifically designed for ease of handling dosing accuracy for subcutaneous administration of methotrexate the product is FDA approve.
For the treatment of active rheumatoid arthritis, juvenile idiopathic arthritis, and severe psoriatic arthritis.
Following this submission and filing of a new drug application for ready tracks in December of 2019, we received FDA approval and began planning for the launch of the product line.
Upon the arrival of the initial product supplies, we provided shipments already tracks to select accounts in November of 2020 conducting a soft launch through our field sales force, who began making contact with new physicians in the medical community in support of this brand.
Ready to treat patients who have difficulty tolerating or responding to orally delivered methotrexate.
With the arrival of the remaining launch supplies, we began promoting the product line.
Targeting a group of medical practitioners in the rheumatology specialty.
We are receiving favorable feedback from physicians regarding the features of our methotrexate delivery system.
Meanwhile, as we prepare for prepared for the National launch we've been working to establish the needed reimbursement arrangements for the product.
While this initiative has taken some time and considerable effort.
We have recently seen growing acceptance and coverage by managed care plans across the country.
We will see limited additional sales of ready trucks. This year as physician prescriptions pull product from the inventory already in the wholesaler distribution centers, we expect reorders with resulting shipments and increasing sales to begin to ramp up in 2022.
Now, let's turn our attention to provide battery are potent antibiotic designed for difficult to treat infections.
It's FDA approved to treat both hospital acquired and ventilator associated pneumonia that result from susceptible organisms as well as complicated skin and skin structure infections.
Over the past year, we've been pleased to learn that by bad it is being used to help COVID-19 patients who develop these secondary bacterial pneumonia and other gram positive infections, while in the hospital.
We've compiled a case study dossier outlining several real world instances, whereby batted was used effectively and safely to treat COVID-19 patients.
During the third quarter, our medical Department supported a continuing medical education program discussing second secondary bacterial infections, including pneumonia in COVID-19 patients in the program. Dr. Allen, how soon provided understanding of the importance of prompt and appropriate.
Preet pharmacological treatment of secondary bacterial infections supporting the use of buyback.
Additionally, we published discussions with Doctor has soon and Dr. Edward Domingos regarding by bad its dual mechanism of action, which inhibits cell wall synthesis by binding to <unk> precursors and disrupts bacterial membrane function.
In August we signed an agreement with <unk> Pharmaceuticals International to license and commercialized by battery in Puerto Rico.
Look forward to <unk> launch of the product, there and to delivering by bad and to support patients in that market.
Meanwhile, our partner for the Chinese market Cyclone Pharmaceuticals has informed us that they have submitted an application for approval of <unk> in China.
And that application has been accepted for review by the regulatory authorities there.
Earlier this year cyclone compete completed an initial public offering and listing of their shares on the Hong Kong stock exchange. They expect to review of up to 12 months for the approval of their submission and we believe that the potential provide that even their market may be significant.
Turning to Caldolor.
Early this year, we implemented the full national launch of our FDA approved next generation formulation of the product a nonsteroidal anti inflammatory drug Calvin or 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 an easier administration presentation.
And an improved patented formulation this ready to use product contains 800 milligrams of ibuprofen and a 200 milliliter formulation designed for injection.
Offers hospitals and medical facilities improved dosing accuracy, and cross savings, while managing patient pain and significantly reducing their opioid consumption.
We're currently selling caldolor, both in vials and in the premix bags and are pleased that this new ready to use presentation now comprises well over half the sales of the product.
While the new presentation was off to a good start following the launch it was impacted by the pandemic and the resulting postponement of elective surgeries.
Revenues from this product have begun to grow again this year as elective surgeries resume and more facilities gain access to the product.
In the third quarter, we announced the study supporting the use of ibuprofen in patients with kidney stones.
Study shows that ibuprofen is more rapid acting compared to ketorolac and controlling pain caused by kidney stones with a rate of complete relief from pain, two times that of Ketorolac.
Findings build upon a body of medical evidence supporting the use of caldolor to treat pain and reduce opioid use in patients. Additionally.
Additionally, Dr. Steven Southworth provided support on a national podcast for the use of Caldolor as the foundational step and enhanced recovery after surgery or <unk> protocols as an alternative to opioids.
Our VAT resolve brand has also been helpful. In treating COVID-19, and other hospitalized patients suffering from a potentially deadly sodium imbalance known as hyponatremia.
In late 2020, and international study of over 4000 patients found that.
These hospitalized patients with COVID-19 had a high risk of developing hypernatremia. These patients also had a higher incidence of mortality due to hypernatremia. The results supported the use of an intravenous that can to treat hyponatremia and critically ill.
<unk> affected with Covid.
COVID-19 <unk>.
<unk> is an imbalance.
Serum sodium to body water and it's the most common electrolyte disorder among hospitalized patients.
Cumberland that result is the only intravenously administered <unk> treatment available in the United States.
That Brazil has proven one day response to help normalize serum sodium levels in hyponatremic patients and move them out of the ICU as efficiently as possible.
Dr. Palmer, a professor of internal medicine at UT Southwestern Medical Center in Dallas, Texas recently discussed the results of this study on a podcast.
Now, let's turn our attention to crystallize, our prescription strength laxative product, which continues to become berlin's largest selling product.
As provided in our pre mixed.
Pre measured powder dose that dissolves quickly and just four ounces of water for a virtually taste free and grit free solution.
It's a unique form of lack the lowest that compares favorably to the alternative versions.
Kristen <unk> strong performance. This year has benefited from the support of our co promotion partners, who have expanded our reach for their product by featuring the brand with physicians and facilities that we don't cover.
We will look for ways to build upon this successful partnership model to support other brands in our portfolio.
As we've not shipped a recorded sales of the Macklowe marks pack so far in 2021.
The product's packager encountered difficulties during the pandemic as a result their operations are currently suspended.
We are awaiting the resumption of packaging at this facility to build new inventory and provide the needed supply of the product.
That completes today's updates on our key commercial efforts a J I'll turn the call back over to you.
Yes.
Thanks, Marty I'd now like to hand, the call over to our Chief Financial Officer, John hand to present, the financial review Jeff.
Thank you a J for the three months ended September 32021, net revenues from continuing operations were $8 1 million.
We recorded an additional $500000 in revenue from discontinued operations associated with the return of rights to the two products, we no longer distribute we present that additional revenue in a discontinued business line.
Net revenues by product for the third quarter of 2021 included $4 million for Crystal is one 9 million provide that of $1 3 million for Caldolor and <unk> 3 million for GAAP results.
It is important to note that given the quarterly fluctuations in buying patterns from our customers. We believe that our performance should be assessed based on annual sales results.
Year to date net revenues were $27 7 million up 2% from the first nine months of 2020.
Year to date sales totaled $12 3 million for Crystal OS $8 8 million provide that of $3 7 million for Caldolor and $1 9 million for GAAP results. In addition, we recorded a total of $1 $5 million in revenue from the discontinued.
<unk>.
Total operating expenses for the third quarter were $9 6 million.
An improvement over the $10 $5 million of expenses during the prior year period.
Year to date expenses totaled $31 million, which also represented an improvement over the 31 $8 million and expenses during the same prior period last year.
We had an adjusted loss of $340000 during the third quarter. However year to date adjusted earnings were 700.
A $1 million improvement over the prior year period.
Cash flow from operating activities totaled $4 $4 million year to date.
As a reminder, our financial statements have been significantly impacted by the Vivat transaction are our largest acquisition to date the financial terms for the 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 to the end of the third quarter of 2021. The product has delivered a total cash contribution of approximately $25 million, which is now equal to the upfront payments to acquire the brand.
Product revenues going forward will generate a return on that investment.
We accounted for the <unk> acquisition as a business combination a total of $34 million in new assets were added as a result of the acquisition include.
Including approximately $21 million in inventory $12 million of intangible assets and $1 million of goodwill.
Due to amortization of intangibles and the sales of inventory the value of these assets totaled $17 5 million at the end of the third quarter.
Turning to our balance sheet as of September 32021, we had $87 $6 million in total assets, including $25 8 million in cash and equivalents liabilities totaled $41 million, including $15 million on our credit facility.
Total shareholders equity was $48 6 million.
At the end of the third quarter.
As Jay noted, we recently renewed our line of credit for a new three year term. The line provides us with a $15 million facility with an expansion with an expansion feature of up to $20 million.
During the pandemic during the pandemic, we continued our corporate share repurchase program, but it did decrease the number of shares repurchased through the end of September 2021, we repurchased an additional 326000 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 is also a 2021 share re purchase initiative underway for members of our board of directors, who wish to increase their holdings in the company six of our board members are participating through share purchase plans and collectively purchased a total of 36000 shares through the third quarter.
Finally, I'd like to note that <unk> has over $56 million in tax net operating loss carry forwards, primarily resulting from the prior exercise of stock options that completes our financial report I'll turn it back over to you a J. Thank you John.
We'll also Cumberland continues to be impacted by the pandemic our business does remain steady.
Our diversified line of FDA approved brands has allowed us to weather the external challenges and we remain responsive to the evolving medical market.
Continue working to fulfill our mission by building a diversified portfolio of innovative products through a multi faceted strategy and that includes the development internal development of new candidates.
Shareholder at management interests are closely allied given the significant insider ownership in this company and in addition, as you heard a majority of our board members are participating and share purchases through plans designed to increase their holdings in the company.
So with that review and update now let's open the call to any questions. You may have operator. Please proceed.
Thank you, Sir ladies and gentlemen that concludes the company's presentation and we will now open to call for any questions. If you would like to ask a question. Please press the psyche followed by the digit one on your Touchtone telephone.
Again, if you would like to ask a question just press the spiky followed by the number one on your telephone keypad.
Okay, well, thanks, everyone for joining our call today and as I've noted in the past we understand that many of you prefer a private discussion with management.
So please just reach out to us and we will be glad to get it scheduled and hold it with you.
We do appreciate your time and interest in Cumberland, and we look forward to providing another update after the new year.
Thank you, Sir ladies and gentlemen that concludes our conference for today, if you would like to listen to already play of today's conference. Please dial 8558592056, using the access code 94762.
299.
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.
[music].
Uh-huh.
[music].
[music].
[music].
[music].
Thank you for joining the Cumberland Pharmaceuticals third quarter, 2021 financial report and company update.
This call is being recorded at the company's request and will be archived on <unk> website for one week from today's date.
Now I would like to introduce Molly I guess senior account manager at the adult on agency, which handles Cumberland Communications Mollie. Please go ahead.
Good afternoon, everyone today, Cumberland issued a press release containing a company update and financial results for the third quarter ended September 30th 2021.
That release with related financial tables is available on the company's website at www Dot Cumberland pharma Dot com.
Please note that today's discussion may include forward looking statements as defined in the private Securities Reform Act of 1995, because any such statements reflect the company's current views and expectations concerning future events and they involve risks and uncertainties.
Additionally, there are many factors that could affect Cumberland future results, including but not limited to natural disasters economic downturns public health epidemics and other events beyond the company's control.
Those issues are described under the caption risk factors in timberlands 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 could differ materially from expectations and information shared on this call should be considered current as of today only.
Please remember that the company does not assume responsibility to update any forward looking statements, whether as a result of new information or due to future developments.
During today's call there'll be references to several of Cumberland marketed brands full prescribing and safety information for each brand can be found on the individual product websites links to those sites can be found on our corporate website at www Dot timberland 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 on the financial tables in the earnings release issued earlier today.
With us on today's call are a J Kazimi Cumberland, Chief Executive Officer, Marty CRO, now Chief commercial officer, and Jon Hamm, Chief Financial Officer.
There are four I'll start with an overview of Cumberland progress during the third quarter and follow with a discussion of the company's commercial activities.
There will then be a review of the financial results followed by closing remarks before opening the call to any questions.
So I'll now turn the call over to Cumberland CEO, a J kazimi to begin the discussion of the corporate update and company performance.
Good afternoon, everyone and thank you for joining us.
You heard today will provide an overall company update along with a review of our third quarter results.
Cumberland delivered another steady quarterly performance when taking into account the challenges of operating during the pandemic.
Fortunately, we're starting to see signs that our business environment is returning to normal.
For example, we recently held our first in person National sales meeting in two years and we've also resumed enrollment in the clinical studies.
Has been interrupted by the pandemic.
Furthermore, we've worked hard to maintain operations, while ensuring the health and safety of our team.
We are optimistic as vaccination rates rise in case counts decline.
We continue to carefully monitor the situation.
Over the past year and a half we reinvented the way we operate to support our customers and the patients that can benefit from our medicines.
We're fortunate to have a diversified product portfolio because FDA approved brands that has helped us mitigate the negative effects of the pandemic on our business with brands such as like that and Crystal those delivering a solid performance this year.
We do partner with a group of FDA approved manufacturers to supply our products throughout the pandemic. We've been successfully monitoring that supply chain, which includes the raw materials as well as the finished goods emerging from those facilities.
Meanwhile, our clinical trials have resumed as we are beginning to emerge from the pandemic and we are working closely with the sites as they reopen and enroll patients in the studies for our products.
As a reminder, we're sponsoring three phase two clinical programs all evaluating alright fit your band product candidate.
These studies involve patients with Duchenne muscular dystrophy.
A rare fatal genetic neuromuscular disease.
That makes sclerosis.
Rehabilitating autoimmune disease.
Aspirin exacerbated respiratory disease, a severe form of asthma.
Additionally.
Our board of Directors has approved a new clinical program for the use of IV <unk> to treat patients with progressive fibrosis interstitial lung diseases.
Non clinical program is complete the resulting manuscript has been prepared and we are now designing a phase two clinical studies as we work to help patients with this deadly condition.
We will await results from all of these clinical programs before deciding on the best development path for the registration of our hits your bad our first new chemical entity.
You see the potential markets for these pipeline candidates are quite large for a company our size and we believe success in any of these programs can have a positive impact on our company our value and the patients that we can support.
Although Cumberland continues to be impacted by the pandemic our business does remain steady.
During the third quarter.
Product portfolio delivered combined revenues of just over $8 million and while shipments were a bit lighter than usual during the quarter. It is important to note that end user demand in prescriptions for our products continues to grow.
That's because as we've noted before our quarterly revenue to do fluctuate because they are tied to our shipments in wholesaler buying buying patterns and therefore, our business is best evaluated on an annual basis.
Year to date revenues have now totaled $27 $7 million resulted in year to date adjusted earnings of $7 million or five cents a share.
We've also generated $4.4 million in cash flow from operations during the first three quarters of 2021.
We ended the third quarter with just under $88 million in total assets $41 million in liabilities and $47 million in shareholders' equity.
And in addition, I am pleased to report that we recently extended our $15 million Bank line of credit for a new three year term with pinnacle the largest independent bank here in the mid.