Cumberland Pharmaceuticals Reports Second Quarter 2010 Financial Results
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.
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.
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.
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.
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.
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
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.
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.
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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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