Cumberland Pharmaceuticals Inc. (NASDAQ:CPIX) is a specialty pharmaceutical company focused on the acquisition, development, and commercialization of branded prescription pharmaceutical products. The company has built a portfolio of FDA-approved brands with outstanding safety and efficacy profiles that can make a difference in patients' lives.
Business Overview
Cumberland Pharmaceuticals operates in three primary target markets - hospital acute care, gastroenterology, and oncology. These medical specialties are characterized by relatively concentrated prescriber bases that the company believes can be served effectively by small, targeted sales forces. The company promotes its approved products through its hospital, field, and oncology sales divisions in the United States, while also building a network of international partners to register and provide its medicines to patients in their countries.
Cumberland's portfolio of FDA-approved products includes Acetadote® (acetylcysteine) injection for the treatment of acetaminophen poisoning, Caldolor® (ibuprofen) injection for the treatment of pain and fever, Kristalose® (lactulose) for oral solution, a prescription laxative, Sancuso® (granisetron) transdermal for the prevention of nausea and vomiting in chemotherapy patients, Vaprisol® (conivaptan) injection to raise serum sodium levels in hospitalized patients with hyponatremia, and Vibativ® (telavancin) injection for the treatment of certain serious bacterial infections.
In addition to its commercial brands, Cumberland has Phase II clinical programs underway evaluating its ifetroban product candidate in patients with Systemic Sclerosis, Duchenne Muscular Dystrophy, and Idiopathic Pulmonary Fibrosis.
Financials
For the full year 2023, Cumberland reported net revenues of $39.6 million, net income of -$6.3 million, operating cash flow of $6.1 million, and free cash flow of $5.6 million. The company's quarterly financial performance in 2024 has been mixed, with net revenues of $8.5 million in Q1 2024, compared to $9.2 million in Q1 2023. The decrease in Q1 2024 revenues was primarily due to timing of shipments to one of Cumberland's co-promotion partners for its Kristalose brand, as well as lower sales of Vibativ and Sancuso.
Despite the Q1 2024 revenue decline, Cumberland remains optimistic about its full-year 2024 performance, expecting to deliver double-digit revenue growth and positive cash flow from operations. The company cites the steady demand for its brands and a number of ongoing positive developments as reasons for its optimism.
Recent Developments
Product Updates and Growth Opportunities
Cumberland is implementing strategies to increase awareness of its products and their attributes throughout the medical community. In March 2024, the company published a special report in leading industry publications highlighting the growing clinical data supporting the use of its Caldolor (ibuprofen) injection as a standard of care for the treatment of pain and fever in adults, children, and infants.
Additionally, Cumberland expects Caldolor to be eligible for special Medicare reimbursement under the Non-Opioids Prevent Addiction in the Nation (NOPAIN) Act, which was enacted in 2023. The NOPAIN Act requires Medicare to provide separate and more favorable reimbursement for non-opioid products used to manage pain during surgeries conducted in hospital outpatient departments and ambulatory surgical centers. Cumberland submitted comments and supporting clinical evidence to the Centers for Medicare & Medicaid Services (CMS) in September 2023, explaining why Caldolor should be included and separately reimbursed under the NOPAIN Act.
Regarding the company's Vibativ brand, Cumberland has launched a new product packaging designed to overcome barriers for smaller hospitals and infusion centers that use less of the product at a time. The company is also supporting its international partners' efforts to advance Vibativ registrations in several markets, including Saudi Arabia, South Korea, and China.
Cumberland's prescription laxative Kristalose continues to benefit from the support of its two co-promotion partners, and the company is implementing a special initiative to increase its presence and share of voice in New York, where the product was recently added to the state's Medicaid formulary.
The company's Sancuso brand, acquired in 2022, is being supported through Cumberland's expanded oncology sales division to help cancer patients address certain side effects associated with their chemotherapy treatments. Cumberland has also completed the manufacturing of its Cumberland-branded Sancuso product at a new FDA-approved facility and will begin shipping these new supplies this year.
Regarding Cumberland's pipeline, the company is progressing its ifetroban product candidate through a series of Phase II clinical trials in patients with Systemic Sclerosis, Duchenne Muscular Dystrophy, and Idiopathic Pulmonary Fibrosis. Ifetroban has now been dosed in nearly 1,400 subjects and has been found to be safe and well-tolerated. Cumberland expects to have data available from these studies in 2024 and will then decide on the best development path for this product candidate.
Liquidity
As of March 31, 2024, Cumberland had $18.5 million in cash and cash equivalents and $16.1 million in borrowings outstanding under its $20 million revolving credit facility. The company's working capital position was $9.8 million, with a current ratio of 1.4.
Cumberland's primary sources of liquidity are cash equivalents, cash flows from operations, and its revolving credit facility. The company believes its internally generated cash flows, existing working capital, and line of credit will be adequate to finance internal growth, business development initiatives, and capital expenditures for the foreseeable future.
During the first quarter of 2024, Cumberland used $2.1 million in cash from operating activities, primarily due to a $1.9 million net loss, a $1.1 million increase in accounts receivable, and a $0.6 million decrease in accounts payable and other current liabilities, partially offset by $1.4 million in non-cash expenses. The company also repurchased $0.2 million of its common stock during the quarter.
Risks and Challenges
Cumberland's business is subject to various risks and uncertainties, including the availability of additional debt and equity capital, market conditions, the company's ability to continue to acquire branded products, product sales, management of growth and integration of acquisitions, and general unpredictable conditions in national and international markets.
The company also faces risks related to the development and commercialization of its pipeline products, including the ability to successfully complete clinical trials, obtain regulatory approvals, and effectively market and sell any new products. Additionally, Cumberland's business is subject to intense competition, pricing pressures, and the potential for increased generic competition for its branded products.
Outlook
Despite the mixed financial performance in the first quarter of 2024, Cumberland remains optimistic about its full-year 2024 outlook, expecting to deliver double-digit revenue growth and positive cash flow from operations. The company cites the steady demand for its brands and a number of ongoing positive developments, including the potential for Caldolor to benefit from the NOPAIN Act, the launch of new Vibativ packaging, the expansion of Sancuso sales through its oncology division, and the progress of its ifetroban pipeline, as reasons for its optimism.
Conclusion
Cumberland's diversified portfolio of FDA-approved brands, coupled with its focus on innovation and strategic acquisitions, positions the company well for long-term growth and value creation. As the company continues to execute on its multifaceted strategy, investors will be closely watching for updates on the performance of its existing products, the progress of its pipeline, and its ability to capitalize on emerging market opportunities.