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Cumberland Pharmaceuticals Reports First Quarter 2010 Earnings

NASHVILLE, Tenn., May 13, 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 announced first quarter 2010 financial results.

"We remain focused on gaining widespread hospital formulary approval for Caldolor and our efforts are producing meaningful results," said A.J. Kazimi, Chief Executive Officer of Cumberland Pharmaceuticals. "We will continue to extend our products into new markets and seek expanded labeling where new indications warrant. Our balance sheet remains strong following our initial public offering in 2009, and we are actively pursuing opportunities to selectively build our product portfolio."

Net Revenue: For the three months ended March 31, 2010, net revenue was $10.1 million, an increase of $0.7 million over the same period in 2009. Net revenue by product was $7.7 million for Acetadote(R) (acetylcysteine) Injection and $2.3 million for Kristalose(R) (lactulose) for Oral Solution. Net revenue attributable to Caldolor(R) (ibuprofen) Injection, which was launched in September 2009, was $19,000.

Operating Expenses: Total operating expenses for the three months ended March 31, 2010 were $9.3 million, compared with $7.3 million for the same period in 2009. This increase was due primarily to sales and marketing expense associated with the expansion of the Company's hospital sales force in connection with the launch of Caldolor.

Net Income: Net income for the three months ended March 31, 2010, was $0.3 million, or $0.02 per diluted share, compared to $1.2 million, or $0.08 per diluted share, for the same period in 2009. The decrease in earnings per share was due to the increase in costs associated with the Company's hospital sales force expansion and was also impacted by an increase in shares outstanding as a result of the Company's initial public offering. Weighted-average diluted shares outstanding at March 31, 2010 was 21.4 million, up from 16.1 million at March 31, 2009.

EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for the three months ended March 31, 2010 was $1.0 million compared with $2.3 million for the same period in the prior year. Excluding $0.1 million and $0.2 million in non-cash stock compensation expense for the three months ended March 31, 2010 and 2009, respectively, adjusted EBITDA was $1.2 million and $2.5 million, respectively.

Balance Sheet: As of March 31, 2010, Cumberland had $73.8 million in cash and cash equivalents, compared to $78.7 million as of December 31, 2009. Total assets as of March 31, 2010 were $98.7 million compared with $103.7 million at December 31, 2009. The decreases in cash and total assets were primarily related to scheduled debt repayments. A large majority of proceeds from the Company's initial public offering remain available for planned expansion of the Company's product portfolio and further product development support.


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 the use of Acetadote in patients with non-acetaminophen induced acute liver failure. The sNDA includes data from a clinical trial led by investigators 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 a transplant. This data also indicates that patients can survive a significant number of days longer without transplant, providing those who require transplant increased time for a donor organ to become available.


FDA Accepts Acetadote sNDA for Review

In May 2010, the FDA officially accepted the Company's aforementioned sNDA for Acetadote and granted a priority review. In addition to expanded labeling for Acetadote, the Company has requested additional exclusivity for the product. If approved, Cumberland expects to begin marketing Acetadote for the new indication in 2011.

International Markets

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 the commercialization of Caldolor in Canada. Under the agreement, Alveda will seek Canadian regulatory approval for Caldolor and, upon approval, will handle ongoing regulatory requirements as well as product marketing, distribution and sales throughout Canada. Cumberland will maintain responsibility for product formulation, development and manufacturing. In exchange for the license to the product, Cumberland will receive royalties on future sales of Caldolor in addition to upfront and milestone payments as well as a transfer price.

Caldolor Launched for Compassionate Use in Australia

In December 2009, Cumberland entered into an exclusive agreement with Phebra Pty Ltd., an Australian-based specialty pharmaceutical company, for distribution of Caldolor in Australia and New Zealand. In April 2010, Phebra made the product available in Australia for compassionate use. The Therapeutics Goods Administration (TGA), which regulates drugs and medical devices in Australia, operates compassionate use programs that allow patients with critical clinical need to access products not yet approved through their medical practitioner. Phebra is also planning to submit an application to the TGA for regulatory approval of Caldolor.

Acetadote Approved for Marketing in Australia

In April 2010, the Therapeutic Goods Administration approved Acetadote for marketing in Australia. Cumberland previously granted an exclusive license to Phebra Pty Ltd. to commercialize Acetadote in Australia. Phebra is now preparing for the Australian launch of the product, which it expects to commence this year.

Under their 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, a transfer price and royalties on future sales in exchange for the product license.

Share Repurchase Program

In May 2010, Cumberland's Board of Directors approved a share repurchase program that authorizes the Company to repurchase up to $10 million of its outstanding common shares. Purchases will be made from time-to-time, at the Company's discretion, on the open market over a period of several months. Any share repurchases will be funded by excess cash flow. The Board believes the repurchase program demonstrates its confidence in Cumberland's long-term potential and that the Company's shares are currently undervalued, and as such that the shares represent an attractive investment alternative.


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 March
                                     2010            2009
                                     ----            ----

    Net income                   $313,498      $1,205,851
    Income tax expense            211,737         831,059
    Depreciation &
     amortization                 231,332         196,059
    Interest expense, net         285,273          80,115
                                  -------          ------
    EBITDA                      1,041,840       2,313,084
       Non-cash stock
        compensation              135,899         157,062
    Adjusted EBITDA            $1,177,739      $2,470,146
                               ==========      ==========


A conference call and live webcast will be held on Thursday, May 13, 2010, at 5:00 p.m. Eastern Time to discuss the Company's first quarter 2010 financial results. To participate on 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 72042780. The live webcast and rebroadcast can be accessed via Cumberland Pharmaceuticals' website at


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


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


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

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


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


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.

                      Condensed Consolidated Balance Sheets

                                                 March 31,          31,
                                                        2010          2009
                                                        ----          ----

    Current assets:
      Cash and cash equivalents                  $73,752,814   $78,701,682
      Accounts receivable, net of allowances       3,814,947     6,176,585
      Inventories                                  7,406,402     4,822,873
      Other current assets                         3,369,809     3,472,455
                                                   ---------     ---------

        Total current assets                      88,343,972    93,173,595

    Property and equipment, net                      948,580       918,412
    Intangible assets, net                         7,818,394     7,956,009
    Other assets                                   1,578,723     1,676,304
                                                   ---------     ---------

         Total assets                            $98,689,669  $103,724,320


    Current liabilities:
      Current portion of long-term debt           $6,000,000    $9,061,973
      Current portion of other long-term
       obligations                                    88,739       144,828
      Accounts payable                             6,813,974     5,632,796
      Other accrued liabilities                    2,556,585     3,784,777
                                                   ---------     ---------

        Total current liabilities                 15,459,298    18,624,374

    Revolving line of credit                       1,825,951     1,825,951
    Long-term debt, excluding current
     portion                                       7,438,027     8,938,027
    Other long-term obligations, excluding
     current portion                                 181,455       184,632
                                                     -------       -------

        Total liabilities                         24,904,731    29,572,984
                                                  ----------    ----------

    Commitments and contingencies

    Redeemable common stock                          100,000     1,930,000

      Shareholders' equity:
         Common stock -no par value;
          100,000,000 shares authorized;
          20,413,605(1) and 20,180,486(1) shares
          issued and outstanding as of March 31,
          2010 and December 31, 2009,
          respectively                            68,861,850  67,711,746
         Retained earnings                         4,865,704     4,542,126
                                                   ---------     ---------
           Total shareholders' equity             73,727,554    72,253,872
                                                  ----------    ----------

      Noncontrolling interests                       (42,616)      (32,536)
        Total equity                              73,684,938    72,221,336
                                                  ----------    ----------

         Total liabilities and equity            $98,689,669  $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
    March 31, 2010 and December 31, 2009 was 9,497 and 142,016,

               Condensed Consolidated Statements of Income

                                           Three Months Ended March
                                               2010            2009
                                               ----            ----

    Net revenues                        $10,130,652      $9,404,599

    Costs and expenses:
      Cost of products sold                 859,288         733,218
      Selling and marketing               5,607,512       4,140,187
      Research and development              773,868         770,117
      General and
       administrative                     1,881,203       1,444,863
      Amortization of product license
       right                                171,726         171,726
      Other                                  26,547          27,463
                                             ------          ------
        Total costs and expenses          9,320,144       7,287,574
                                          ---------       ---------

    Operating income                        810,508       2,117,025

    Interest income                          60,679          17,596
    Interest expense                       (345,952)        (97,711)
                                           --------         -------

    Income before income tax expense        525,235       2,036,910

    Income tax expense                     (211,737)       (831,059)
                                           --------        --------

    Net income                              313,498       1,205,851

    Net loss attributable to
     noncontrolling interests                10,080          12,239
                                             ------          ------

    Net income attributable to common
     shareholders                          $323,578      $1,218,090
                                           ========      ==========

    Earnings per share attributable to
     common shareholders
      - Basic                                 $0.02           $0.12
      - Diluted                               $0.02           $0.08
    Weighted-average shares outstanding
      - Basic                            20,233,267      10,321,175
      - Diluted                          21,395,419      16,127,240

                 Condensed Consolidated Statements of Cash Flows

                                                    Three Months Ended March
                                                        2010            2009
                                                        ----            ----

    Cash flows from operating activities:
      Net income                                    $313,498      $1,205,851
      Adjustments to reconcile net income to net
       cash flows from operating activities:
        Depreciation and amortization
         expense                                     231,332         196,059
        Nonemployee equity compensation                3,972          37,760
        Stock-based compensation -
         employee stock options                      130,915         143,902
        Excess tax benefit derived from
         exercise of stock options                  (206,418)    (2,842,825)
        Noncash interest expense                      67,380          14,256
        Net changes in assets and liabilities
         affecting operating activities:
          Accounts receivable                      2,361,638        (267,892)
          Inventory                              (2,583,529)         415,948
          Other current assets and other
           assets                                    132,847         955,169
          Accounts payable and other accrued
           liabilities                               127,104     (1,187,558)
          Other long-term obligations                (59,266)       (405,801)
                                                     -------        --------
        Net cash provided by (used in)
         operating activities                        519,473     (1,735,131)
                                                     -------      ----------

    Cash flows from investing activities:
      Additions to property and equipment            (64,085)        (15,601)
      Additions to patents                                 -         (16,345)
                                                         ---         -------
        Net cash used in investment
         activities                                  (64,085)        (31,946)
                                                     -------         -------

    Cash flows from financing activities:
      Costs of initial public offering                     -        (114,428)
      Principal payments on note payable         (4,561,973)               -
      Costs of financing for long-term
       debt and credit facility                      (27,500)        (15,475)
      Proceeds from exercise of stock
       options                                       807,496           4,296
      Excess tax benefit derived from
       exercise of stock options                     206,418       2,842,825
      Payments made in connection with
       repurchase of common shares               (1,828,697)     (2,707,419)
                                                  ----------      ----------
        Net cash (used in) provided by
         financing activities                    (5,404,256)           9,799
                                                  ----------           -----

        Net decrease in cash and cash
         equivalents                             (4,948,868)     (1,757,278)

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

    Cash and cash equivalents at end of
     period                                      $73,752,814     $10,072,273
                                                 ===========     ===========

    Supplemental disclosure of cash flow
      Cash paid during the year for:
        Interest                                    $276,288         $33,517
        Income taxes                                  12,376          80,000
    Non-cash investing and financing activities:
      Increase in accounts payable and
       accrued expenses of initial public
       offering                                            -           5,311

SOURCE Cumberland Pharmaceuticals Inc.

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