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Cumberland Pharmaceuticals Reports 58% Increase in Net Revenue With Third Quarter 2009 Financial Results

- Caldolor(R) begins generating revenue
- 20% increase in revenue for Acetadote(R) and Kristalose(R)
- Profitability maintained through Caldolor(R) launch

NASHVILLE, Tenn., Nov 10, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Cumberland Pharmaceuticals Inc. (Nasdaq: CPIX), a specialty pharmaceutical company focused on the hospital acute care and gastroenterology markets, today announced third quarter 2009 financial results.

"With an earlier-than-anticipated Caldolor launch, we were able to dramatically exceed our earnings expectations in the third quarter," said A.J. Kazimi, Chief Executive Officer of Cumberland Pharmaceuticals. "Additionally, the completion of our initial public offering in August provides us with the strongest balance sheet in the history of the Company. We intend to put that capital to good use not only by supporting the Caldolor launch, but also by adding select new products to our portfolio that can benefit patients and enhance shareholder value."

Net Revenue: For the three months ended September 30, 2009, net revenue was $13.6 million, up 58% from the corresponding period in 2008. This growth was attributable to initial revenue from Caldolor (ibuprofen) Injection, the Company's recently approved IV treatment for pain and fever, as well as an increase in volume for Acetadote (acetylcysteine) Injection, Cumberland's treatment for acetaminophen overdose. Net revenue for the nine months ended September 30, 2009, was $32.8 million, up 30% from $25.3 million for the same period in 2008, also primarily due to the Caldolor launch and Acetadote sales growth.

Operating Expenses: Total operating expenses for the three months ended September 30, 2009, were $11.2 million, compared to $6.5 million for the same period in 2008. This increase was due primarily to sales and marketing expense associated with the Caldolor launch, higher cost of products sold resulting from sales growth and a change in product mix, as well as a significant, non-recurring payroll tax expense of $1.0 million related to the exercise of non-qualified options. For the nine-month period ended September 30, 2009, total operating expenses were $27.7 million, compared with $19.5 million for the corresponding period in 2008. This increase primarily reflected Caldolor milestone obligations related to FDA approval, the aforementioned payroll tax expense, costs incurred in connection with the Company's hospital sales force expansion, and increased marketing and advertising costs associated with the Caldolor launch.

Net Income: Net income for the three months ended September 30, 2009, grew to $1.3 million, or $0.07 per diluted share, compared to $1.2 million, or $0.07 per diluted share, for the same period in 2008. Excluding the non-recurring payroll tax expense, net income for the three months ended September 30, 2009, would have increased 54% to $1.9 million, or $0.10 per diluted share.

Net income for the nine months ended September 30, 2009, was $2.8 million, or $0.16 per diluted share, compared to $3.7 million, or $0.22 per diluted share, for the corresponding period in 2008. The decrease is due primarily to milestone obligations triggered by FDA approval of Caldolor in the second quarter of 2009, as well as the aforementioned sales force expansion and option-related payroll tax. Excluding Caldolor milestone payments and the non-recurring payroll tax expense, net income for the nine months ended September 30, 2009, would have grown 25% to $4.6 million, or $0.27 per diluted share.

Cash and Cash Equivalents: As of September 30, 2009, Cumberland had $79.5 million in cash and cash equivalents, a $67.7 million increase from June 30, 2009. The increase was largely due to the Company's initial public offering in August. At quarter's end, Cumberland had total debt of $19.8 million, including $4.5 million in current liabilities. The Company had net accounts receivable and inventories of $7.3 million and $1.7 million, respectively, at September 30, 2009.

Third Quarter Highlights

Caldolor Launch

In September 2009, Cumberland successfully launched Caldolor in the U.S., and the Company's hospital and field sales forces comprised of 113 experienced sales professionals are now promoting the product. Caldolor is fully stocked at wholesalers serving hospitals nationwide, and is available in both 400 mg and 800 mg vials. The Company is working to introduce Caldolor and secure formulary approval nationally. The product is now stocked in a number of medical facilities across the country. In addition to personal sales promotion Cumberland is supporting the product through a multi-faceted campaign, including internet and media advertising, medical society and convention presence, journal publications, and its medical information call center, among other initiatives.

Initial Public Offering

In August 2009, Cumberland completed its initial public offering of 5,000,000 shares of common stock at a price to the public of $17.00 per share, raising $85.0 million in gross proceeds. Net proceeds to the Company were $74.8 million after commissions and offering expenses. The proceeds from this offering are being used primarily for potential acquisitions, the launch of Caldolor, expansion of the Company's hospital sales force, product development, debt repayment and general corporate purposes. Cumberland's common stock began trading on the NASDAQ Global Select Market on August 11, 2009, under the trading symbol "CPIX."

Recent Events

International Markets

In October 2009, the Company announced that it has entered into an exclusive agreement with Phebra Pty Ltd., an Australian-based specialty pharmaceutical company, for the commercialization of Caldolor in Australia and New Zealand. Phebra will be responsible for obtaining any regulatory approval for the product, and for handling ongoing regulatory requirements, product marketing, distribution and sales in the territories. Cumberland will maintain responsibility for product formulation, development and manufacturing, and will provide finished product to Phebra. Under the terms of the agreement, Cumberland will receive upfront and milestone payments as well as a transfer price, and will also receive royalties on any future sales of Caldolor in those territories.

New Intellectual Property Initiative for Caldolor

In addition to Cumberland's issued patent for Caldolor, the Company has filed the first of several expected new patent applications for the product. Cumberland's clinical research uncovered several new product-related discoveries, for which the Company filed several provisional patent applications. Part of an ongoing initiative to protect the Company's intellectual property, this new patent application addresses Cumberland's proprietary method of dosing intravenous ibuprofen.

Supplemental Financial Information

The following tables provide a reconciliation of Cumberland's reported (GAAP) statements of income to adjusted (non-GAAP) statements of income for the three- and nine-month periods ended September 30, 2009. The adjusted statements exclude certain non-recurring items, and are provided by management to assist investors in evaluating Cumberland's operating results. The adjusted statements should not be considered a substitute for Cumberland's reported statements of income.

    Three Months Ended September 30, 2009    As                        As
                                          reported   Adjustments    adjusted
                                          --------   -----------    --------
    Net revenues                       $13,597,760                $13,597,760
    Costs and expenses:
      Cost of products sold              1,761,069                  1,761,069
      Selling and marketing              6,087,807                  6,087,807
      Research and development             640,877                    640,877
      General and administrative         2,537,627   (977,258) (1)  1,560,369
      Amortization of product license
       right                               171,726                    171,726
      Other                                 26,595                     26,595
                                            ------   --------          ------
    Total costs and expenses            11,225,701   (977,258)     10,248,443
                                        ----------   --------      ----------
    Operating income                     2,372,059    977,258       3,349,317
    Interest income                         14,285                     14,285
    Interest expense                      (248,272)                  (248,272)
                                          --------    -------        --------
    Net income before income taxes       2,138,072    977,258       3,115,330
    Income tax expense                    (855,660)  (403,608) (1) (1,259,268)
                                          --------   --------      ----------
    Net income                           1,282,412    573,650       1,856,062
    Net loss at subsidiary attributable
     to noncontrolling interests             5,725                      5,725
                                             -----    -------           -----
    Net income attributable to common
     shareholders                       $1,288,137    573,650      $1,861,787
                                        ==========    =======      ==========
    Weighted-average shares
     outstanding - diluted              19,183,606                 19,183,606
    Earnings per share - diluted             $0.07                      $0.10

    Notes to reconciliation of reported statement of income to adjusted
    statement of income:
      1. To exclude payroll-related taxes and income tax benefit associated
         with the exercise of non-qualified options in 2009.




    Nine Months Ended September 30, 2009
                                         As                          As
                                      reported     Adjustments    adjusted
                                      --------     -----------    --------
    Net revenues                   $32,822,972                   $32,822,972
    Costs and expenses:
      Cost of products sold          3,271,363                     3,271,363
      Selling and marketing         14,611,796                    14,611,796
      Research and development       4,041,719   (1,950,362) (1)   2,091,357
      General and administrative     5,218,925   (1,093,464) (2)   4,125,461
      Amortization of product
       license right                   515,178                       515,178
      Other                             80,791                        80,791
                                        ------   ----------           ------
    Total costs and expenses        27,739,772   (3,043,826)      24,695,946
                                    ----------   ----------       ----------
    Operating income                 5,083,200    3,043,826        8,127,026
    Interest income                     42,041                        42,041
    Interest expense                  (430,207)                     (430,207)
                                      --------    ---------         --------
    Net income before income taxes   4,695,034    3,043,826        7,738,860
    Income tax expense              (1,919,356)  (1,257,100) (3)  (3,176,456)
                                    ----------   ----------       ----------
    Net income                       2,775,678    1,786,726        4,562,404
    Net loss at subsidiary
     attributable to noncontrolling
     interests                          26,420                        26,420
                                        ------    ---------           ------
    Net income attributable to
     common shareholders            $2,802,098    1,786,726       $4,588,824
                                    ==========    =========       ==========
    Weighted-average shares
     outstanding - diluted          17,143,348                    17,143,348
    Earnings per share - diluted         $0.16                         $0.27

    Notes to reconciliation of reported statement of income to adjusted
    statement of income:
      1. To exclude milestone expenses associated with the FDA approval of
         Caldolor.
      2. To exclude payroll-related taxes associated with the exercise of
         non-qualified options in 2009.
      3. To include the tax impact of adjustments.



Conference Call and Webcast

A conference call and live webcast will be held on Tuesday, November 10, 2009, at 10:00 a.m. Eastern Time to discuss the Company's third quarter 2009 financial results. To participate on the call, please dial 888-417-8462 (for U.S. callers) or 719-457-2552 (for international callers). A rebroadcast of the teleconference will be available for one week and can be accessed by dialing 888-203-1112 (for U.S. callers) or 719-457-0820 (for international callers). The passcode for the rebroadcast is 9695498. The live webcast and rebroadcast can be accessed via Cumberland Pharmaceuticals' website at http://investor.shareholder.com/cpix/events.cfm.

About Cumberland Pharmaceuticals

Cumberland Pharmaceuticals Inc. is a Tennessee-based specialty pharmaceutical company focused on the acquisition, development and commercialization of branded prescription products. The Company's primary target markets include hospital acute care and gastroenterology. Cumberland's product portfolio includes Acetadote(R) (acetylcysteine) Injection for the treatment of acetaminophen poisoning and Kristalose(R) (lactulose) for Oral Solution, a prescription laxative. The Company also recently launched Caldolor(R) (ibuprofen) Injection, the first injectable treatment for pain and fever available in the United States. Cumberland is dedicated to providing innovative products which improve quality of care for patients. The Company completed the initial public offering of its common stock in August 2009. For more information on Cumberland Pharmaceuticals, please visit www.cumberlandpharma.com.

About Caldolor

Caldolor is indicated for the management of mild to moderate pain and management of moderate to severe pain as an adjunct to opioid analgesics, as well as the reduction of fever in adults. It is the first FDA-approved intravenous therapy for fever. Caldolor is contraindicated in patients with known hypersensitivity to ibuprofen or other NSAIDs, patients with asthma, urticaria, or allergic type reactions after taking aspirin or other NSAIDs. Caldolor is contraindicated for use during the peri-operative period in the setting of coronary artery bypass graft (CABG) surgery. Caldolor should be used with caution in patients with prior history of ulcer disease or GI bleeding, in patients with fluid retention or heart failure, in the elderly, those with renal impairment, heart failure, liver impairment, and those taking diuretics or ACE inhibitors. Blood pressure should be monitored during treatment with Caldolor. For full prescribing information, including boxed warning, visit www.caldolor.com.

About Acetadote

Acetadote is used in the emergency department to prevent or lessen potential liver damage resulting from an overdose of acetaminophen, a common ingredient in many over-the-counter painkillers. It is the only approved injectable product in the United States for the treatment of acetaminophen overdose, the leading cause of poisonings presenting in emergency departments in the country(1). Acetadote is contraindicated in patients with hypersensitivity or previous anaphylactoid reactions to acetylcysteine or any components of the preparation. Serious anaphylactoid reactions, including death in a patient with asthma, have been reported in patients administered acetylcysteine intravenously. Acetadote should be used with caution in patients with asthma, or where there is a history of bronchospasm. The total volume administered should be adjusted for patients less than 40 kg and for those requiring fluid restriction. To avoid fluid overload, the volume of diluent should be reduced as needed. If volume is not adjusted, fluid overload can occur, potentially resulting in hyponatremia, seizure, and death. For full prescribing information, visit www.acetadote.net.

About Kristalose

Kristalose is indicated for the treatment of acute and chronic constipation. It is a unique, proprietary, crystalline form of lactulose, with no restrictions on length of therapy or patient age. Initial dosing may produce flatulence and intestinal cramps, which are usually transient. Excessive dosage can lead to diarrhea with potential complications such as loss of fluids, hypokalemia and hypernatremia. Nausea and vomiting have been reported. Use with caution in diabetics. Kristalose is contraindicated in patients who require a low-galactose diet. Elderly, debilitated patients who receive lactulose for more than six months should have serum electrolytes (potassium, chloride, carbon dioxide) measured periodically. For full prescribing information, visit www.kristalose.com.

Forward Looking Statements

This press release contains "forward-looking statements", including statements regarding estimated results of operations in future periods. These statements are subject to the finalization of Cumberland's quarterly financial and accounting procedures and reflect Cumberland's current views with respect to future events, based on what it believes are reasonable assumptions. No assurance can be given that these events will occur. As with any business, all phases of Cumberland's operations are subject to influences outside its control. Any one or a combination of these factors could materially affect the results of Cumberland's operations. These factors include, among other things, market conditions, commercialization of Caldolor, competition from existing and new products, which could diminish the commercial potential of Cumberland's products, an inability of manufacturers to produce Cumberland's products on a timely basis or a failure of manufacturers to comply with stringent regulations applicable to pharmaceutical manufacturers, maintaining and building an effective sales and marketing infrastructure, Cumberland's ability to identify and acquire rights to products, government regulation, the possibility that Cumberland's marketing exclusivity and patent rights may provide limited protection from competition, and other factors discussed in the Company's Registration Statement declared effective by the SEC on August 10, 2009. There can be no assurance that the results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected effects on the Company's business and operations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company does not undertake any obligation to release publicly any revisions to these statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

(1) National Poison Data System, American Association of Poison Control Centers

SOURCE: Cumberland Pharmaceuticals Inc.

                          CUMBERLAND PHARMACEUTICALS INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                             December 31,     September 30,
                                                2008              2009
                                                ----              ----
    ASSETS

    Current assets:
      Cash and cash equivalents             $11,829,551       $79,541,274
      Accounts receivable, net of
       allowances                             3,129,347         7,282,371
      Inventories                             1,762,776         1,687,591
      Prepaid and other current assets          481,312         2,536,202
      Deferred tax assets                       507,212           505,617
                                                -------           -------
        Total current assets                 17,710,198        91,553,055

    Property and equipment, net                 432,413           597,238
    Intangible assets, net                    8,528,732         8,099,612
    Deferred tax assets                       1,000,031           990,661
    Other assets                              3,447,813           415,170
                                              ---------           -------
        Total assets                        $31,119,187      $101,655,736
                                            ===========      ============
    LIABILITIES AND EQUITY

    Current liabilities:
      Current portion of long-term debt      $1,250,000        $4,500,000
      Current portion of other long-term
       obligations                              457,915           204,027
      Accounts payable                        3,257,164         5,797,596
      Other accrued liabilities               2,640,855         3,056,915
                                              ---------         ---------
        Total current liabilities             7,605,934        13,558,538

    Revolving line of credit                  1,825,951         1,825,951
    Long-term debt, excluding current
     portion                                  3,750,000        13,500,000
    Other long-term obligations, excluding
     current portion                            382,487           180,652
                                                -------           -------
        Total liabilities                    13,564,372        29,065,141
                                             ----------        ----------
    Commitments and contingencies

    Redeemable common stock                           -         1,930,000

    Shareholders' equity:
      Cumberland Pharmaceuticals Inc.
       shareholders' equity:
        Convertible preferred stock -
         no par value; 3,000,000 shares
         authorized; 812,749 and 0 shares
         issued and outstanding               2,604,070                 -
         as of December 31, 2008 and
         September 30, 2009, respectively
        Common stock - no par value;
         100,000,000 shares authorized;
         9,903,047 and 20,129,791(1) shares
         issued and outstanding as of
         December 31, 2008 and
         September 30, 2009, respectively    13,500,034        66,434,206
      Retained earnings                       1,450,711         4,252,809
                                              ---------         ---------
        Total shareholders' equity           17,554,815        70,687,015
                                             ----------        ----------
    Noncontrolling interests                          -           (26,420)
                                                -------           -------
      Total equity                           17,554,815        70,660,595
                                             ----------        ----------
      Total liabilities and equity          $31,119,187      $101,655,736
                                            ===========      ============
    -----------------------------
    (1) Number of shares issued and outstanding represents total shares of
        common stock regardless of classification on the consolidated balance
        sheet. The number of shares of redeemable common stock at September
        30, 2009 was 119,209.




                          CUMBERLAND PHARMACEUTICALS INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                    (UNAUDITED)

                                  Three months ended      Nine months ended
                                     September 30,           September 30,
                                     -------------           -------------
                                   2008        2009        2008       2009
                                   ----        ----        ----       ----
    Net revenues               $8,602,709 $13,597,760 $25,264,068 $32,822,972

    Costs and expenses:
      Cost of products sold       735,492   1,761,069   2,228,213   3,271,363
      Selling and marketing     3,620,243   6,087,807  10,629,045  14,611,796
      Research and development    730,640     640,877   2,759,042   4,041,719
      General and
       administrative           1,167,687   2,537,627   3,272,420   5,218,925
      Amortization of product
       license right              171,726     171,726     515,178     515,178
      Other                        26,413      26,595      77,635      80,791
                                   ------      ------      ------      ------
    Total costs and expenses    6,452,201  11,225,701  19,481,533  27,739,772
                                ---------  ----------  ----------  ----------
    Operating income            2,150,508   2,372,059   5,782,535   5,083,200

    Interest income                53,257      14,285     186,276      42,041
    Interest expense              (48,647)   (248,272)   (172,628)   (430,207)
                                  -------    --------    --------    --------
    Net income before income
     taxes                      2,155,118   2,138,072   5,796,183   4,695,034

    Income tax expense           (946,109)   (855,660) (2,133,501) (1,919,356)
                                 --------    --------  ----------  ----------
    Net income                  1,209,009   1,282,412   3,662,682   2,775,678

    Net loss at subsidiary
     attributable to
     noncontrolling interests           -       5,725           -      26,420
                                   ------       -----      ------      ------
    Net income attributable to
     common shareholders       $1,209,009  $1,288,137  $3,662,682  $2,802,098
                               ==========  ==========  ==========  ==========

    Earnings per share
     attributable to common
     shareholders - basic           $0.12       $0.08       $0.36       $0.23
    Earnings per share
     attributable to common
     shareholders - diluted         $0.07       $0.07       $0.22       $0.16
    Weighted-average shares
     outstanding - basic       10,165,824  15,745,069  10,128,238  12,197,876
    Weighted-average shares
     outstanding - diluted     16,644,395  19,183,606  16,501,805  17,143,348




                            CUMBERLAND PHARMACEUTICALS INC.
                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)

                                            Nine Months Ended September 30,
                                            -------------------------------
                                                 2008              2009
                                                 ----              ----
    Cash flows from operating activities:
      Net income                             $3,662,682        $2,775,678
      Adjustments to reconcile net income
       to net cash flows from operating
       activities:
        Gain on early extinguishment of other
         long-term obligations                  (38,577)                -
        Depreciation and amortization expense   589,721           605,514
        Nonemployee stock granted for services
         received                               104,716           205,693
        Nonemployee stock option grant expense        -           840,499
        Stock-based compensation - employee
         stock options                          274,584           455,502
        Excess tax benefit derived from
         exercise of stock options             (254,681)       (2,842,825)
        Noncash interest expense                 67,523            83,420
        Net changes in assets and liabilities
         affecting operating activities:
          Accounts receivable                  (828,880)       (4,054,710)
          Inventory                            (849,460)           75,185
          Prepaid, other current assets
           and other assets                     849,062           936,286
          Accounts payable and other
           accrued liabilities                  613,983         3,299,235
          Other long-term obligations            48,681          (455,723)
                                                 ------          --------
        Net cash provided by operating
         activities                           4,239,354         1,923,754
                                              ---------         ---------
    Cash flows from investing activities:
      Additions to property and equipment       (60,996)         (199,312)
      Additions to patents                      (62,671)          (71,358)
                                                -------           -------
        Net cash used in investment
         activities                            (123,667)         (270,670)
                                               --------          --------
    Cash flows from financing activities:
      Proceeds from initial public offering
       of common stock                                -        85,000,000
      Costs of initial public offering         (445,562)       (7,385,124)
      Proceeds from borrowings on long-term
       debt                                           -        18,000,000
      Principal payments on note payable     (1,375,002)       (5,000,000)
      Net borrowings on line of credit          500,000                 -
      Payment of other long-term
       obligations                           (2,760,000)
      Costs of financing for long-term
       debt and credit facility                       -          (189,660)
      Proceeds from exercise of stock
       options                                   59,097            64,275
      Excess tax benefit derived from
       exercise of stock options                254,681         2,842,825
      Payments made in connection with
       repurchase of common shares                    -       (27,273,677)
                                                 ------       -----------
        Net cash (used in) provided by
         financing activities                (3,766,786)       66,058,639
                                             ----------        ----------
        Net increase in cash and cash
         equivalents                            348,901        67,711,723

    Cash and cash equivalents at beginning
     of period                               10,814,518        11,829,551
                                             ----------        ----------
    Cash and cash equivalents at end
     of period                              $11,163,419       $79,541,274
                                            ===========       ===========

SOURCE Cumberland Pharmaceuticals Inc.

http://www.cumberlandpharma.com

Copyright (C) 2009 PR Newswire. All rights reserved

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