On August 14, 2019 Cumberland Pharmaceuticals Inc. (NASDAQ: CPIX), a specialty pharmaceutical company focused on hospital acute care and gastroenterology reported second quarter 2019 financial results with net revenues of $11.6 million, up 14% over the prior year quarter (Press release, Cumberland Pharmaceuticals, AUG 14, 2019, View Source [SID1234538745]). Year-to-date net revenues were $23.5 million, up 25% from the prior year period. While the GAAP net loss for the second quarter was $(0.5) million, or $(0.04) per share, the Adjusted Earnings for the quarter were $1.6 million or $0.10 per diluted share. As of June 30, 2019, Cumberland had $108 million in total assets, including approximately $30 million in cash and marketable securities.
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
QUARTER HIGHLIGHTS:
Continued a company-wide strategic review of products, partners, and organization
Increased sales team and national territories to improve support for acute-care key brands Caldolor, Vibativ and Vaprisol
Finalized Vibativ agreements with Hikma Pharmaceuticals LLC for the Middle East, R. Pharma LLC for Russia and the CIS, and Dr. Reddy’s Laboratories Ltd for India
Provided the U.S. Food and Drug Administration (FDA) with additional data in support of approval submission for a new line of methotrexate products designed for the treatment of patients with arthritis and psoriasis
Completed a submission to the FDA in support of an update to our Caldolor approval that included new geriatric, shortened infusion, pediatric, and safety data
"We continued to make progress in the second quarter towards our goal of building a company that offers long-term, sustainable growth," said A.J. Kazimi, Chief Executive Officer of Cumberland Pharmaceuticals. "We remain in a strong financial position with a solid balance sheet and positive cash flow from operations. The momentum we’ve generated during the first half of this year has put us on a path for a very strong second half, and we remain optimistic that 2019 will be a standout year for Cumberland."
KEY DEVELOPMENTS:
Methotrexate
In January 2019, the Company received notification from the FDA that the new drug application (NDA) for our new line of methotrexate products is complete and acceptable for filing. Furthermore, the FDA has set September 2019 as the Prescription Drug User Fee (PDUFA) action date for an approval decision.
In November 2018, we submitted the NDA for approval from the FDA. These products are designed to treat adult and pediatric patients with rheumatoid arthritis, as well as adults with psoriasis. During 2019, we provided additional data to the FDA to address a number of requests arising from their review of our NDA.
Caldolor
In January 2019, the FDA approved the application for Cumberland’s next generation Caldolor product, featuring a new, patented formulation in a more convenient to use package. In April 2019, the Company began initial shipments of the product to select customers. A full launch of this next generation product is planned for late 2019.
In addition, we completed a submission to the FDA in support of an update to our Caldolor approval that included new geriatric, shortened infusion, pediatric, and safety data. Aiming to further expand the product’s label, we provided important data generated from our clinical studies regarding an optimal infusion time, additional safety information, as well as geriatric and pediatric administration. The revised label will also include a class label update on the use of NSAIDs with aspirin.
Meanwhile, we completed enrollment in our study of Caldolor in newborns with ages ranging from birth to six months of age. Once the gathering and evaluation of the study data is complete, we will provide top line results from this trial.
Cumberland Strategic Review
On March 29, 2019, we announced that we had initiated a strategic review of our brands, capabilities and international partners. This review followed our accelerated business development initiative, which delivered a series of transactions. Because of that progress, we felt that it was prudent to take a fresh look at our portfolio, partners, and organization to ensure we have the proper focus and capabilities. As a result:
We executed a License and Distribution agreement with Hong Kong WinHealth Pharma Group Co. Limited (WinHealth) for our Caldolor and Acetadote brands in China and Hong Kong. We anticipate WinHealth will provide $2 million in milestone payments and up to an estimated $290 million in revenue contribution over a ten – year period for supplies of the products following their registration in China.
We also entered into a Strategic Alliance agreement with WinHealth to explore future business opportunities that will further the mission and goals of each organization. Founded in Hangzhou, China and currently headquartered in Hong Kong, WinHealth has developed a wide breadth of capabilities including drug licensing, product development and registration, and has established a strong network of distribution and sales promotional capabilities for the Chinese market. Further, WinHealth has established partnerships with international companies that include Boehringer-Ingelheim, Janssen, Novartis, Pfizer, and Roche, generating approximately $330 million in annual sales in 2018.
In addition, WinHealth entered into an agreement with Cumberland Emerging Technologies (CET) to make a $1 million investment through the purchase of shares of CET stock. As part of that agreement, WinHealth obtained a Board position at CET and the first opportunity to license CET products for the Chinese market.
We completed the assignment and amendment of a Commercialization Agreement with Hikma Pharmaceuticals LLC (Hikma) to register and distribute Vibativ in a number of countries throughout the Middle East. Hikma is a multinational pharmaceutical company currently headquartered in London, United Kingdom. Originally founded in Amman, Jordan the company now has market representation throughout the world, with a particular focus in the Middle East and North African regions. Hikma develops, manufactures, and markets a broad range of branded and non-branded generic medicines, generating over $2 billion in gross sales during 2018.
We also completed the assignment and amendment of a Commercialization Agreement with R-Pharma JSC (R Pharma) associated with ongoing distribution of Vibativ in Russia and a number of adjacent countries in Eastern Europe. R-Pharma is one of the leading multinational pharmaceutical organizations based in Russia. Headquartered in Moscow and focusing in a wide breadth of therapeutic areas in the specialty and hospital care markets, R-Pharma generated over $1.6 billion in revenues in 2018.
Cumberland also completed the assignment and amendment of a Commercialization Agreement with Dr. Reddy’s Laboratories Limited (Dr. Reddy’s) for the registration and distribution of Vibativ in India. Dr. Reddy’s is a multinational pharmaceutical company based in Hyderabad, India. The company currently markets over 190 medications through their commercial operations in over 35 countries. Combined with their extensive network of manufacturing capabilities, Dr. Reddy’s generated over $2.2B in sales during their 2018 – 2019 fiscal year.
In addition, we also signed a new License and Distribution agreement with DB Pharm Korea Co., Ltd. (DB Pharm) for Vibativ in South Korea. DB Pharm is also currently distributing our Caldolor product in that market.
Our hospital product efforts will now be focused on our three key acute care products – Caldolor, Vibativ and Vaprisol. In order to support this acute care business, we have completed the expansion of our hospital sales division, as well as our field-based medical science team.
Lastly, we also concluded the License and Distribution agreement with Teligent Inc. for Caldolor in Canada.
FINANCIAL RESULTS:
Net Revenue: For the three months ended June 30, 2019, net revenues were $11.6 million, up 14% from $10.2 million the prior year period.
Net revenue by product for the three months ended June 30, 2019, included $3.5 million for Kristalose and $2.6 million for Vibativ. Net revenue for the Company’s other brands included $2.0 million for Ethyol, $1.1 million for Caldolor, $1.0 million for Acetadote (including the brand and Company’s Authorized Generic), and $0.8 million for our other brands.
For the six months ended June 30, 2019, net revenues were $23.5 million, up 25% from $18.8 million for the six months ended June 30, 2018.
Operating Expenses: Total operating expenses for the three months ended June 30, 2019 were $12.2 million, compared to $11.0 million during the prior year period. The primary drivers of this increase were the increase in sales, new cost of goods, and amortization expenses associated with the addition of Vibativ.
Total operating expenses for the first six months of 2019 were $24.3 million compared to $22.1 million for 2018.
Earnings: Net income (loss) for the second quarter 2019 was $(0.5) million or $(0.04) a share, compared to $(0.7) million or $(0.05) a share for the prior year period.
Adjusted Earnings for the second quarter were $1.6 million or $0.10 per diluted share, up from $0.2 million or $0.01 per diluted share for the prior year period. The definition and reconciliation of Adjusted Earnings to net income (loss) is provided in this release.
Balance Sheet: At June 30, 2019, Cumberland had $30.4 million in cash and marketable securities, including approximately $21.0 million in cash and equivalents. Total assets at June 30, 2019 were $107.5 million. Total liabilities were $53.9 million, including $20.0 million outstanding on the Company’s revolving line of credit, resulting in Total shareholder’s equity of $53.9 million.
Cumberland also has approximately $44 million in tax net operating loss carryforwards, resulting from the prior exercise of stock options.
Conference Call and Webcast
A conference call and live Internet webcast will be held on Wednesday, August 14, 2019 at 4:30 p.m. Eastern Time to discuss the Company’s second quarter 2019 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 855-859-2056 (for U.S. callers) or 404-537-3406 (for international callers). The Conference ID for the rebroadcast is 3198706. The live webcast and rebroadcast can be accessed via Cumberland’s website at
View Source