Q1 2022 Cumberland Pharmaceuticals Inc Earnings Call
Good afternoon, and thank you for joining Cumberland Pharmaceuticals, first quarter 2022 financial report and company update.
This call is being recorded at the company's Switzerland, and will be archived on Cumberland website for one week from today's date.
I would now like to introduce Molly Agi's.
So for a supervisor at the Delta in agency <unk>.
Who handles Cumberland as communications Mollie. Please go ahead.
Hi, everyone and good afternoon earlier today <unk> issued a press release containing our company update and financial results for the first quarter of 2022.
Lease which includes related financial tables can be found on <unk> website at www Dot Cumberland pharma Dot com.
Management will share an overview of these results during today's call.
With us today are a J Kazimi <unk>, Chief Executive Officer, Todd, Anthony Vice President and Jon Hamm, Chief Financial Officer.
Please keep in mind that today's discussion may include forward looking statements as defined in the private Securities Reform Act of 1095.
These statements reflect the companys current views and expectations concerning future events and may involve risks and uncertainties.
Additionally, there are many factors that could affect future results, including natural disasters economic downturn public health epidemics international conflicts and others that are beyond the Companys control.
Those issues are described under the caption risk factors in Cumberland 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 the information shared on this call should be considered current as of today only.
Please remember that the company is 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 be references to several of Cumberland marketed brands full prescribing and safety information for each brand is included on the individual product websites and the links to those sites can be found on our corporate website at www Dot Cumberland 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 in the financial tables in 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.
And with that overview I will turn the call over to <unk>, Chief Executive Officer, a J kazimi to begin the discussion.
Thank you Molly and good afternoon, everyone. We appreciate you joining us.
As you've heard today, we will provide a company update as well as a review of our financial results for the first quarter 2022.
And the first quarter progressed, we saw the headwinds from the pandemic begin to subside.
And we're excited to see patient procedure volumes, returning to a more normal customary level.
Our sales representatives getting more access to face to face meetings.
And it proved to be a difficult time to introduce our new caldolor presentation and to launch already tricks brand.
It also impacted our ability to advance our clinical trials as patient enrollment was significantly hampered by various restrictions Fortunately.
Now seeing the light at the end of the tunnel and if the return towards a more normal environment continues we anticipate a meaningful positive impact on our business.
With the pandemic didn't change was our ability to further diversify our product portfolio.
We started the year with an exciting significant announcement, our acquisition of San Cuso from the U S affiliate, Japan based Kyowa Kirin.
<unk> is the first and only FDA approved prescription patch for the prevention of nausea, and vomiting in cancer patients receiving certain types of chemotherapy.
We closed that transaction in early January and then assumed full commercial responsibility for the brand in the U S, including its marketing promotion distributor distribution manufacturing and medical support activities.
To support this transaction, we extended our bank line of credit for a new three year term and we expanded the facility to provide up to $20 million in capital that line was utilized to fund this Ain't Cuso acquisition.
Furthermore, ahead of today's call. We also announced that we've entered into a co promotion agreement with Verity Pharmaceuticals Foreseeing cuso.
Verities of specialty pharma company with an established presence in the U S and they will be supporting <unk> through their oncology commercial organization and customer network across the country.
We believe San Cuso has the potential to be a valuable product and we're honored to be able to bring it to patients throughout the United States.
Fueled by the addition of initial sand cuso sales our product portfolio of FDA approved brands delivered combined revenues of $11 2 million during the first quarter of 2022, 6% increase over the prior year period.
Adjusted earnings for the quarter were $45 million or <unk> <unk> a share.
We ended the first quarter with $97 million in total assets $56 million in liabilities and $41 million of shareholders equity.
Next we're going to discuss recent updates for several of our brands, but before we do so its with great sadness that I share with you that Marty <unk>, our chief commercial officer passed away in March.
<unk> enjoyed a successful 50 year career in healthcare, which included 20 years here at Cumberland.
And he played a key role in our initial public offering our business development initiatives and all of our product launches.
He was an outstanding leader of valued contact and a dear friend to many he will be greatly missed.
Fortunately, we have a strong marketing and sales leadership group, who have stepped up following marty's passing.
Providing today's update regarding our commercial activities as Todd Anthony our Vice President organizational development, who joined US on our last call and he's been with Cumberland now for 12 years.
<unk> has a total of 25 years of experience in the pharmaceutical industry, including a variety of positions with growing responsibilities at Bayer healthcare pharmaceuticals before coming over to Cumberland originally as our director of sales training.
Todd is now responsible for all our HR office administration and organizational development activities.
How long is accomplishments is the establishment of the Cumberland way, which provides consistent direction procedures and training for our sales professionals, who have joined us with experience and background for many other biopharmaceutical companies. So Todd ill turn it over to you.
Thank you very much.
<unk> heard today, we've expanded our portfolio of FDA approved medicines with the recent acquisition of St Cuso, and oncology support drug and we're excited about its potential.
The active drug in Saint <unk> slowly dissolves in thin layer of adhesive that sticks to the patient skin leased.
Leased into their bloodstream over seven days working continuously to prevent chemotherapy induced nausea and vomiting.
Applied 24 to 48 hours before receiving chemotherapy and can then prevent the nausea and vomiting for up to five consecutive days.
Alternative oral treatments must be taken several times a day to deliver the same therapeutic doses and can be difficult for some patients who are experiencing nausea to swallow.
We formed a new sales division to support the brand called Cumberland oncology.
Which is initially comprised of a couple of former kyowa Kirin employees as well as a group of their contracted inside sales individuals.
Our commercial integration of the product is nearing completion, including the transition of key managed care and group purchasing contracts over to Cumberland.
Through the co promotion partnership that AJ mentioned Verity pharmaceuticals will deploy their national oncology sales organization to cover a majority of the United States in support of the brand Verity and Cumberland will share in the incremental contribution margin, resulting from <unk>.
Efforts.
Turning now to Caldolor, so I'd like to remind you that late last year, we received FDA approval for its use just prior to surgery.
Which results in patients waking up from their procedures and significantly less pain and requiring significantly fewer opioids.
Recent market research predicts a significant increase in elective surgeries with the decrease in active Covid cases, so we are anticipating growth in the ready to use caldolor product.
We have also secured pediatric approval for Caldolor and we will continue to seek expanded labeling and additional patient populations for the brand.
I would now like to turn to <unk>, our potent FDA approved injectable antibiotic product, which is which is designed to treat certain serious bacterial infections, including hospital acquired or ventilator associated pneumonia as well as complicated skin infections.
Yes.
We continue to support the product in the outpatient marketplace driven by our national accounts team.
And our hospital sales force continues to focus their efforts on <unk> use in the acute care setting.
To help patients in both settings.
We supported two very well attended national symposiums with recognized infectious disease experts to provide medical guidance and education in the treatment of difficult infections.
I'd next like to discuss crystals, which continues to be our largest selling product.
It's a prescription strength laxative that is packaged in a convenient pre measured powder dose, which dissolves quickly in just four ounces of water, it's clear taste free and grit three.
Crystals continues to benefit from the support of our co promotion partners, who feature the brand with physicians and facilities that Cumberland doesn't cover.
The award winning marketing campaign is also being refresh for 2022 to support increased engagement with our customers.
Next I'd like to share an update on our ready trucks product line, which we launched nationally late last year.
Recall that ready tracks is FDA approved to treat patients with acute rheumatoid arthritis, juvenile idiopathic arthritis, or severe psoriatic arthritis, who have difficulty tolerating or responding to orally delivered methotrexate.
The pre filled syringes assure accurate and safe dosing and have an automatic retractable extra thing 29 gauge needle, which reduces pain and the risk of needle sticks.
As a J mentioned launching the product during the pandemic was difficult, especially as we were working to establish relationships with a new group of Rheumatologists. Additionally.
Additionally, analysis and coverage by managed care plans for the product has progressed slowly but is growing with continued coverage by new insurance plans the.
The product is now covered by plans managed by Cigna anthem and United.
While ready Trek sales during 2021 in the first quarter of 2022 have been limited we are encouraged by the positive feedback we've received about the products innovative delivery system.
Regarding the supply of our macro box pack product, we're still awaiting the packagers facility to resume operations after having encountered difficulties that forced them to suspend operations during the pandemic.
The facility is now under new ownership and management and we await the reopening.
Meanwhile, we have transferred manufacturing of our vapor salt product to a new facility and are awaiting the fda's approval of that plant before resuming shipments.
As a reminder, our <unk> product is the only intravenously administered fab tan treatment available in the United States.
And it has a proven day, one response to help normalize serum sodium levels in hyponatremic patients. So that they can be moved out of the ICU.
An international study of over 4000 patients found that hospitalized patients with COVID-19, we are at high risk of developing hyponatremia.
Thereby increasing there are mortality risks as well <unk>.
<unk> provides clinicians with an effective treatment for these patients with hyponatremia.
We support our portfolio of FDA approved medicines through three national sales divisions, including Cumberland oncology, which was formed to feature our newly acquired San Cuso product.
Our hospital sales division calls on key institutional accounts across the country, while our field sales division covers select office based physicians.
Lastly, we announced in the fourth quarter of 2021, we're moving our corporate headquarters to the new broad West campus later this year.
The new location will keep us close to the internationally recognized Vanderbilt Medical center, with whom we regularly collaborate.
As the largest independent biopharmaceutical company founded and headquartered in this part of the country. We were pleased to receive grant awards from both the state of Tennessee, and the Tennessee Valley authority totaling $250000 to help support the buildup.
Out and relocation of this new space.
And that completes my updates for today, a J. So I will turn the call back over to you. Thank you Todd.
Next we are excited and encouraged to see continued improvement regarding enrollment in our clinical programs following interruption during the pandemic.
As a reminder, we have three phase II clinical studies underway to evaluate alright, <unk> candidate in patients with a series of unmet medical needs. These studies involve duchenne muscular dystrophy Jeanette.
Genetic neuromuscular disease, systemic sclerosis, debilitating autoimmune disorder and.
An aspirin exacerbated respiratory disease or <unk> or <unk>.
The year form of asthma.
We're also designing a fourth phase III program to evaluate the use of a future ban in treating patients with progressive fibrosis interstitial lung diseases and we're currently preparing the application for the FDA to support this new program.
In addition to our company sponsored studies Harvard clinical investigators have led a phase II trial in patients with the severe form of asthma that I mentioned.
In their study has been designed to understand the mechanism whereby picture ban in those patients and therefore complements the work that we have underway.
They've been supported by a $5 million grant from the NIH and patient enrollment is now closed and their data analysis is underway.
We look forward to sharing the results of the study once we receive the study report from them in the coming months.
We also look forward to sharing the results from each of our other phase II studies, what's their complete.
At that point, we'll then decide on the best development path for registration of a future ban, which we believe has the potential to help many patients.
Now today I'd also like to provide an overview of a few of the international activities underway for our vibe out of product.
Remember that it's a potent antibiotic used to treat patients with pneumonia and serious skin infections, while Cumberland remains focused on promoting by bad in the United States. We've been building a network of other established companies to bring their product to patients in their countries.
In March 2022, we announced the launch of iPad is in Puerto Rico.
Again through a partnership with Verity Pharmaceuticals, who has a particular strength and expertise in the Puerto Rican market.
We also announced a new partnership with Saudi Arabia base to <unk> pharmaceuticals to introduce <unk> into the middle East.
That arrangement provides to book with the exclusive rights to distribute five out of into Saudi Arabia, and Jordan with an option to expand into other countries in that region.
Two books, a fully owned subsidiary of the Astra Industrial group, a leading publicly traded industrial conglomerate in Saudi Arabia.
So well respected pharmaceutical company with a strong distribution network across the middle East, where they have the resources and experience to ensure that if I batted reaches as many patients as possible throughout that territory and we do look forward to a success successful partnership.
Meanwhile, <unk> partner in the Chinese market Sky Club Pharmaceuticals had their submission application in China accepted for review in September of 2021.
Sky called informed US then that the review period would be about 12 months.
Also advised that <unk> has significant potential in their market the Chinese market and they expect to share updates on the approval process later this year.
So with that I'd now like to turn it over to John hand, Cumberland, Chief Financial Officer to present, a review of the first quarter financial results John .
For the first three months ended March 31, 2022, net revenues from continuing operations were $11 2 million, a 6% increase over the $10 $5 million in revenue recorded during the prior year period.
Net revenues by product for the first quarter of 2022 included $3 9 million for Crystal us $3 $4 million for St. Cuso, $2 5 billion provide data and nearly $1 million for caldolor.
Total operating expenses for the first quarter were $12 5 million compared to $10 9 million for the prior year period.
The primary driver of this increase were the addition of <unk> expenses, including those associated with our products amortization and marketing.
The net loss for the quarter was $1 4 million or nine cents per share when noncash expenses are added back the resulting adjusted earnings for the first quarter were $5 million or <unk> <unk> per share.
Also please note that those adjusted earnings do not include the additional benefit of the $900000 of vivat of Ensign cuso cost of goods during the quarter. Those goods were received as part of each product's acquisition.
Recall that our financial statements have been significantly impacted by the <unk> and <unk> acquisitions, the financial terms for the Vivat transaction included a $20 million payment upon closing and a subsequent $5 million milestone payment. We're also providing royalties based on product sales.
Pleased to report that since the product's launch in late 2018. It has delivered a total cash contribution of approximately $29 million to our business and therefore has now begun generating a return on our $25 million 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, including approximately $21 million in inventory $12 million of intangible assets and $1 million of goodwill due to the amortization of intangibles and the sale of inventory the value of these assets totaled.
$16 million at the end of the first quarter.
The financial terms of the <unk> acquisition included a $13 $5 million payment upon closing up to $3 $5 million in milestone payments and tiered royalties of up to 10% on net product sales that product is off to a fine start delivering $2 $6 million in cash card.
<unk> during the first quarter.
Previously we renewed our line of credit for a new three year term during the first quarter of 2022, we expanded our use of the facility to provide $20 million in capital. This new line of credit allowed us to acquire the U S rights to <unk>.
We accounted for the <unk> acquisition as a business combination we are developing the final valuation of the <unk> transaction, but on a preliminary basis, we estimate a total of $19 million in new assets added as a result of the acquisition, including approximately $5 million in inventory.
$12 million of intangible assets and $1 million of goodwill.
As of March 31, 2022, we had $96 $7 million in total assets, including $17 3 million in cash and equivalents liar.
Liabilities totaled $55 9 million, including $20 million on our credit facility totaled.
Total shareholders equity was $41 million at the end of the first quarter.
During the quarter, we continued our corporate share repurchase program and repurchased a total of 174000 shares. These repurchases included those in the open market as well as those needed to fund the taxes associated with employee vested restricted shares.
Also a share repurchase initiative underway for members of our board, who wish to increase their holdings in the company. Several of our board members are participating through share purchase plan initiated in April lastly, I'd like to note that comprehend continues to hold over $57 million.
Tax net operating loss carry forwards, primarily resulting from the prior exercise of stock options and that completes our financial report for the first quarter of 2022.
Okay, John Thank you.
We recently held our annual shareholder meeting where three of our board members were reelected.
So overall, our first quarter 2022 are successful and we do remain focused on our mission of advancing patient care to the delivery of high quality medicines, we're particularly encouraged by our acquisition of <unk> and our related new National co promotion partnership with Verity with.
The contributions from the new product, we do expect to deliver double digit revenue growth this year, while continuing to generate positive cash flow from operations.
We look forward to sharing updates with you throughout the year and now let's open the call to anyone who has a question operator. Please proceed.
Yes.
Thank you Sir.
And gentlemen that concludes the <unk>.
Company's presentation, and we will now open the call for any questions.
If you'd like to ask a question please press <unk>.
Followed by the digit one on your phone.
Yes.
Well, thanks, everyone for joining the call today, and we do understand that many of you prefer a private discussion with management and if so please just reach out to us and we're happy to get them scheduled and has such a discussion.
As always we very much appreciate your time and interest in Cumberland, and we look forward to providing a mid year update in a few months.
Yes.
Thank you, Sir ladies and gentlemen that concludes today's call. If you would like to listen to a replay of the discussion. Please dial eight bye bye.
5920.
Nick.
The access code.
Seven.
Seven eight.
A replay of the webcast will be available on <unk> website.
I would like to thank you for.
And for your participation you may now disconnect.
Okay.
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