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Cumberland Pharmaceuticals Reports Second Quarter 2010 Financial Results

- New Drug Applications for Caldolor submitted in Australia and South Korea -- Company converts Field Sales Force to Cumberland employees

NASHVILLE, Tenn., Aug 16, 2010 /PRNewswire via COMTEX News Network/ -- Cumberland Pharmaceuticals Inc. (Nasdaq: CPIX), a specialty pharmaceutical company focused on the hospital acute care and gastroenterology markets, today announces financial results for the second quarter ending June 30, 2010, and provides revenue guidance for full year 2010.

Net Revenue: For the three months ended June 30, 2010, net revenue was $10.7 million, up 9% from $9.8 million for the same period in 2009. This increase was primarily attributable to increased revenue from Acetadote. Net revenue for the six months ended June 30, 2010, was $20.9 million, up 9% from $19.2 million for the corresponding prior year period. This increase was also primarily due to an increase in Acetadote revenue over the prior year period.

Operating Expenses: Total operating expenses for the three months ended June 30, 2010, were $9.7 million compared with $9.2 million for the same period in 2009. This increase was due to a 33% increase in sales and marketing expense, from $4.4 million in the second quarter 2009 to $5.8 million in the second quarter 2010, and was primarily due to the expansion of the Company's hospital sales force for the launch of Caldolor. That increase was offset by a reduction in research and development expense, from $2.6 million in the second quarter 2009 to $1.0 million in the second quarter 2010 due to a milestone expense related to FDA approval of Caldolor in June 2009.

Operating expenses for the six-month period ended June 30, 2010, were $19.1 million compared with $16.5 million for the same period in 2009. This was due to the aforementioned increase in selling and marketing expense from expansion of the Company's hospital sales force offset by the decrease in expense related to research and development.

Net Income: Net income for the three months ended June 30, 2010, was $0.3 million, or $0.01 per diluted share, compared with $0.3 million, or $0.02 per diluted share, for the same period in 2009. The change in net income was due primarily to an increase in net revenue offset by increased operating expenses. While net income for the second quarter 2010 was consistent compared with the prior year period, earnings per share decreased due to an increase in shares outstanding from the Company's initial public offering in August 2009. Weighted-average diluted shares outstanding at June 30, 2009, was 16.0 million, growing to 21.2 million at June 30, 2010.

Net income for the six months ended June 30, 2010, was $0.6 million, or $0.03 per diluted share, compared with $1.5 million, or $0.09 per diluted share, for the same period in 2009. The decrease in net income was primarily a result of increased sales and marketing expense from the Company's hospital sales force expansion in the third quarter 2009. The decrease in earnings per share was affected by the decrease in net income as well as the aforementioned increase in shares outstanding.

EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for the three months ended June 30, 2010, was $1.2 million compared with $0.8 million for the same period in the prior year. Excluding $0.2 million and $1.2 million in non-cash stock compensation expense for the three months ended June 30, 2010, and 2009, respectively, adjusted EBITDA was $1.4 million and $2.0 million, respectively. For the six months ended June 30, 2010, EBITDA was $2.3 million compared with $3.1 million for the prior year period. Excluding $0.3 million and $1.3 million in non-cash stock compensation expense for the six months ended June 30, 2010, and 2009, respectively, adjusted EBITDA was $2.6 million and $4.4 million, respectively.

Balance Sheet: As of June 30, 2010, Cumberland had $71.5 million in cash and cash equivalents, compared with $73.8 million as of March 31, 2010. Total assets as of June 30, 2010, were $96.7 million compared with $98.7 million at March 31, 2010. The Company had $13.8 million in outstanding debt at the end of the second quarter, compared with $15.3 million at March 31, 2010. A large majority of proceeds from the Company's initial public offering remains available for planned portfolio expansion as well as continued development of currently marketed products.

"We are pleased to have achieved top line revenue growth in the second quarter and are committed to building our three marketed products while we pursue new portfolio additions," said A.J. Kazimi, Chief Executive Officer of Cumberland Pharmaceuticals. "Our business development and product development teams are evaluating several new product opportunities. We also remain acutely focused on expanding hospital formulary approval for Caldolor and have taken a fresh look at the market and our strategy to build that brand for long-term success."

Cumberland is providing full year 2010 revenue guidance, which represents the Company's best estimate of likely future results and which may be affected by factors described below in "Forward-Looking Statements." The Company expects its net revenue for the twelve-month period ended December 31, 2010, to be between $42 and $43 million.

QUARTER HIGHLIGHTS

Product Development

Supplemental New Drug Application for Acetadote

In March 2010, Cumberland submitted a supplemental new drug application (sNDA) to the U.S. Food and Drug Administration (FDA) for use of Acetadote in patients with non-acetaminophen induced acute liver failure. The sNDA included data from a clinical trial at the University of Texas Southwestern Medical Center indicating that acute liver failure patients treated with Acetadote have a significantly improved chance of survival without transplant, and that patients requiring transplant can survive a number of days longer without transplant, providing more time for a donor organ to become available. In May 2010, the FDA accepted the sNDA and granted a priority review. In addition to expanded labeling, the Company has requested additional exclusivity for the product and, if approved, expects to begin marketing it with the new indication in 2011.

International Markets

Acetadote Approved for Marketing in Australia

Cumberland has granted an exclusive license to Phebra Pty Ltd., an Australian-based specialty pharmaceutical company, to commercialize Acetadote in Australia. In April 2010, the Therapeutics Goods Administration (TGA), which regulates drugs and medical devices in Australia, approved Acetadote for marketing. Phebra is preparing for the Australian launch of the product, which it expects to commence this year. Under the agreement, Phebra is responsible for ongoing regulatory requirements, marketing, distribution and sales of Acetadote in Australia, New Zealand and the Asia Pacific while Cumberland maintains responsibility for product formulation, development and manufacturing. Cumberland receives milestone payments and royalties on future sales in exchange for the product license.

Caldolor Launched for Compassionate Use in Australia

In 2009, Cumberland entered into an exclusive agreement with Phebra Pty Ltd. for distribution of Caldolor in Australia and New Zealand. The Therapeutics Goods Administration operates compassionate use programs allowing patients with critical clinical needs to access products not yet approved. In April 2010, Phebra made Caldolor available in Australia for compassionate use.

Submission of New Drug Application for Caldolor in South Korea

In December 2009, Cumberland entered into an exclusive agreement with DB Pharm Korea Co. Ltd., a Korean-based pharmaceutical company, for the commercialization of Caldolor in South Korea. Under the terms of the agreement DB Pharm Korea is responsible for seeking regulatory approval for Caldolor in South Korea, and in April 2010 submitted a New Drug Application to the Korean Food and Drug Administration. Following potential approval, DB Pharm Korea will handle ongoing regulatory reporting, product marketing, distribution and sales in the territory. Cumberland maintains responsibility for product formulation, development and manufacturing and will provide finished product for sale. In exchange for the license to the product, Cumberland will receive upfront and milestone payments as well as royalties on future sales.

License Agreement for Caldolor in Canada

In April 2010, Cumberland entered into an exclusive agreement with Alveda Pharmaceuticals Inc., a Toronto-based specialty pharmaceutical company, for commercialization of Caldolor in Canada. Under the agreement, Alveda will seek Canadian regulatory approval for Caldolor and will handle ongoing regulatory requirements, product marketing, distribution and sales upon potential approval. Cumberland will maintain responsibility for product formulation, development and manufacturing and will receive royalties on any sales in addition to upfront and milestone payments.

Share Repurchase Program

In May 2010, Cumberland's Board of Directors approved a share repurchase program that authorized the Company to repurchase up to $10 million of its outstanding common shares. During the second quarter, Cumberland repurchased approximately 200,000 shares pursuant to this program at an average price of $6.86 per share. Purchases may continue to be made from time-to-time on the open market over a period of several months. The Company continues to believe that its shares are currently undervalued and that they represent an attractive investment.

RECENT DEVELOPMENTS

Submission of New Drug Application for Caldolor in Australia

In August 2010, Phebra submitted a New Drug Application to the Therapeutics Goods Administration for regulatory approval of Caldolor in Australia. If approved, Phebra will handle all ongoing regulatory requirements, product marketing, distribution and sales in the territory. Cumberland maintains responsibility for product formulation, development and manufacturing, and receives upfront and milestone payments as well as royalties on future sales in exchange for the product license.

Field Sales Force Conversion

In July 2010, Cumberland began the process of converting its field sales force, which promotes Kristalose and Caldolor, from contract representatives with Ventiv Health to Cumberland employees. The contractual relationship with Ventiv provided Cumberland with a right to convert the sales force to Cumberland employees at its discretion. In 2007, Cumberland converted its hospital sales force from its contractual status in the same manner. The Company expects to complete the field sales force conversion in September 2010 and is pleased to welcome these individuals as Cumberland employees.

SUPPLEMENTAL FINANCIAL INFORMATION

The following table presents a reconciliation of Cumberland's net income to EBITDA and adjusted EBITDA. The Company defines EBITDA as net income plus interest, income tax, depreciation and amortization, and presents these measures to assist investors in evaluating Cumberland's operating performance and comparing the Company's results with those of other companies. EBITDA and adjusted EBITDA should not be considered in isolation from or as a substitute for net income.

 
                                                Three Months Ended June 30,
                                                ---------------------------
                                                      2010             2009
                                                      ----             ----

    Net income                                    $279,777         $287,415
    Income tax expense                             374,461          232,637
    Depreciation & amortization                    232,344          202,282
    Interest (income) expense, net                 355,622           74,064

    EBITDA                                       1,242,204          796,398
    Adjustments:
       Non-cash stock compensation                 204,343        1,164,383
    Adjusted EBITDA                             $1,446,547       $1,960,781
                                                ==========       ==========

                                              Six Months Ended June 30,
                                              -------------------------
                                                      2010             2009
                                                      ----             ----

    Net income                                    $593,275       $1,493,266
    Income tax expense                             586,198        1,063,696
    Depreciation & amortization                    463,676          398,341
    Interest (income) expense, net                 640,895          154,179

    EBITDA                                       2,284,044        3,109,482
    Adjustments:
       Non-cash stock compensation                 340,242        1,321,445
    Adjusted EBITDA                             $2,624,286       $4,430,927
                                                ==========       ==========



CONFERENCE CALL AND WEBCAST

A conference call and live Internet webcast will be held on Monday, August 16, 2010, at 5:00 p.m. Eastern Time to discuss the Company's second quarter 2010 financial results. To participate in the call, please dial 877-303-1298 (for U.S. callers) or 253-237-1032 (for international callers). A rebroadcast of the teleconference will be available for one week and can be accessed by dialing 800-642-1687 (for U.S. callers) or 706-645-9291 (for international callers). The Conference ID for the rebroadcast is 90510603. The live webcast and rebroadcast can be accessed via Cumberland's 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, Caldolor(R) (ibuprofen) Injection, the first injectable treatment for pain and fever available in the United States, and Kristalose(R) (lactulose) for Oral Solution, a prescription laxative. Cumberland is dedicated to providing innovative products which improve quality of care for patients. For more information on Cumberland Pharmaceuticals, please visit the Company's website at 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.

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

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, which are subject to certain risks and reflect Cumberland's current views on 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 factors outside its control, and any one or combination of these factors could materially affect Cumberland's results of operations. These factors include market conditions, competition, an inability of manufacturers to produce Cumberland's products on a timely basis or a failure of manufacturers to comply with regulations applicable to pharmaceutical manufacturers, maintaining an effective sales and marketing infrastructure and other factors set forth under the headings "Risk factors" and "Management's discussion and analysis of financial condition and results of operations" in Cumberland's Form 10-K filed with the SEC on March 19, 2010. There can be no assurance that results anticipated by the Company will be realized or that they will have the expected effects. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company does not undertake any obligation to publicly revise these statements to reflect events after the date hereof.


    Investor Contact:            Media Contact:
    Angela Novak                 Rebecca Kirkham
    Corporate Relations          Lovell Communications
     (615) 255-0068              (615) 297-7766
    anovak@cumberlandpharma.com  rebecca@lovell.com


           CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES
                 Condensed Consolidated Balance Sheets
                              (Unaudited)



                                                   June 30,      December 31,
                                                        2010             2009
                                                        ----             ----
    ASSETS

    Current assets:
      Cash and cash equivalents                  $71,495,305      $78,701,682
      Accounts receivable, net of
       allowances                                  3,960,129        6,176,585
      Inventories                                  7,967,089        4,822,873
      Other current assets                         3,238,151        3,472,455
                                                   ---------        ---------

        Total current assets                      86,660,674       93,173,595

    Property and equipment, net                      958,766          918,412
    Intangible assets, net                         7,705,084        7,956,009
    Other assets                                   1,377,506        1,676,304
                                                   ---------        ---------

         Total assets                            $96,702,030     $103,724,320

    LIABILITIES AND EQUITY

    Current liabilities:
      Current portion of long-term debt           $6,000,000       $9,061,973
      Current portion of other long-term
       obligations                                    24,592          144,828
      Accounts payable                             5,993,006        5,632,796
      Other accrued liabilities                    3,409,097        3,784,777
                                                   ---------        ---------

        Total current liabilities                 15,426,695       18,624,374

    Revolving line of credit                       1,825,951        1,825,951
    Long-term debt, excluding current
     portion                                       5,938,027        8,938,027
    Other long-term obligations,
     excluding current portion                       209,327          184,632
                                                     -------          -------

        Total liabilities                         23,400,000       29,572,984
                                                  ----------       ----------

    Commitments and contingencies

    Redeemable common stock                                -        1,930,000

    Equity:
      Shareholders' equity:
         Common stock -no par value;
          100,000,000 shares authorized;
           20,358,586 and 20,180,486(1) shares
            issued and outstanding
           as of June 30, 2010 and December 31,
            2009, respectively                    68,199,165       67,711,746
         Retained earnings                         5,153,008        4,542,126
                                                   ---------        ---------
           Total shareholders' equity             73,352,173       72,253,872
                                                  ----------       ----------

      Noncontrolling interests                       (50,143)         (32,536)
        Total equity                              73,302,030       72,221,336
                                                  ----------       ----------

         Total liabilities and equity            $96,702,030     $103,724,320



    (1) Number of shares issued and outstanding represent total shares of
    common stock regardless of classification on the consolidated
    balance sheet. The number of shares of redeemable common stock at
    December 31, 2009 was 142,016.

          CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES
            Condensed Consolidated Statements of Income
                            (Unaudited)


                             Three months ended
                                  June 30,
                               ------------------
                               2010            2009
                               ----            ----

    Net revenues        $10,739,935      $9,820,613

    Costs and
     expenses:
      Cost of products
       sold                 863,725         777,076
      Selling and
       marketing          5,848,123       4,383,802
      Research and
       development        1,034,800       2,630,725
      General and
       administrative     1,782,834       1,236,435
      Amortization of
       product license
       right                171,726         171,726
      Other                  28,867          26,733
                             ------          ------
    Total costs and
     expenses             9,730,075       9,226,497
                          ---------       ---------

    Operating income      1,009,860         594,116

    Interest income          50,334          10,160
    Interest expense       (405,956)        (84,224)
                           --------         -------

    Net income
     before income
     taxes                  654,238         520,052

    Income tax
     expense               (374,461)       (232,637)
                           --------        --------

    Net income              279,777         287,415

    Net loss at
     subsidiary
     attributable to
      noncontrolling
       interests              7,527           8,456
                              -----           -----

    Net income
     attributable to
      common
       shareholders        $287,304        $295,871
                           ========        ========


    Earnings per
     share
     attributable to
     common
     shareholders
      - basic                 $0.01           $0.03
      - diluted               $0.01           $0.02
    Weighted-
     average shares
     outstanding
      - basic            20,445,560      10,467,781
      - diluted          21,207,645      16,046,844



                            Six months ended June
                                       30,
                             ----------------------
                               2010              2009
                               ----              ----

    Net revenues        $20,870,587       $19,225,212

    Costs and
     expenses:
      Cost of products
       sold               1,723,013         1,510,294
      Selling and
       marketing         11,455,635         8,523,989
      Research and
       development        1,808,668         3,400,842
      General and
       administrative     3,664,037         2,681,298
      Amortization of
       product license
       right                343,452           343,452
      Other                  55,414            54,196
                             ------            ------
    Total costs and
     expenses            19,050,219        16,514,071
                         ----------        ----------

    Operating income      1,820,368         2,711,141

    Interest income         111,013            27,756
    Interest expense       (751,908)         (181,935)
                           --------          --------

    Net income
     before income
     taxes                1,179,473         2,556,962

    Income tax
     expense               (586,198)       (1,063,696)
                           --------        ----------

    Net income              593,275         1,493,266

    Net loss at
     subsidiary
     attributable to
      noncontrolling
       interests             17,607            20,695
                             ------            ------

    Net income
     attributable to
      common
       shareholders        $610,882        $1,513,961
                           ========        ==========


    Earnings per
     share
     attributable to
     common
     shareholders
      - basic                 $0.03             $0.15
      - diluted               $0.03             $0.09
    Weighted-
     average shares
     outstanding
      - basic            20,340,000        10,394,883
      - diluted          21,302,119        16,087,448


             CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES
             Condensed Consolidated Statements of Cash Flows
                               (Unaudited)


                                                  Six Months Ended June 30,
                                                  -------------------------
                                                       2010             2009
                                                       ----             ----

    Cash flows from operating activities:
      Net income                                   $593,275       $1,493,266
      Adjustments to reconcile net income to
       net cash flows from
        operating activities:
        Depreciation and amortization expense       463,676          398,341
        Non-employee equity compensation             45,554        1,008,381
        Stock-based compensation - employee
         stock options                              318,139          313,064
        Excess tax benefit derived from
         exercise of stock options                 (462,814)      (2,842,825)
        Non-cash interest expense                   132,866           29,376
        Net changes in assets and liabilities
         affecting operating activities:
          Accounts receivable                     2,216,456         (125,024)
          Inventory                              (3,144,216)         654,400
          Other current assets and other assets     349,777          743,951
          Accounts payable and other accrued
           liabilities                              337,995         (986,592)
          Other long-term obligations               (95,541)         582,254
                                                    -------          -------
        Net cash provided by operating
         activities                                 755,167        1,268,592
                                                    -------        ---------

    Cash flows from investing activities:
      Additions to property and equipment          (126,315)         (85,863)
      Additions to patents                          (80,734)         (34,551)
                                                    -------          -------
        Net cash used in investment activities     (207,049)        (120,414)
                                                   --------         --------
    Cash flows from financing activities:
      Costs of initial public offering                    -         (154,179)
      Principal payments on note payable         (6,061,973)        (416,667)
      Costs of financing for long-term debt
       and credit facility                          (55,000)         (15,475)
      Proceeds from exercise of stock
       options                                      979,292            4,296
      Excess tax benefit derived from
       exercise of stock options                    462,814        2,842,825
      Payments made in connection with
       repurchase of common shares               (3,079,628)      (2,707,419)
                                                 ----------       ----------
        Net cash used in financing activities    (7,754,495)        (446,619)
                                                 ----------         --------

        Net (decrease) increase in cash and
         cash equivalents                        (7,206,377)         701,559

    Cash and cash equivalents at beginning
     of period                                   78,701,682       11,829,551
                                                 ----------       ----------

    Cash and cash equivalents at end of
     period                                     $71,495,305      $12,531,110
                                                ===========      ===========

    Supplemental disclosure of cash flow
     information:
      Cash paid during the year for:
        Interest                                   $503,250         $116,848
        Income taxes                                 50,650           93,969
    Non-cash investing and financing
     activities:
      Increase in accounts payable and
       accrued expenses
        of initial public offering                        -          119,646
      Common shares repurchased during
       period but not paid
        as of the end of the period                 203,802                -




SOURCE Cumberland Pharmaceuticals Inc.

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