Erin Smith - Corporate Relations A.J. Kazimi - Chief Executive Officer Marty Cearnal - Chief Commercial Officer Michael Bonner - Senior Director, Finance & Accounting and Chief Financial Officer Amy Rock - VP, Regulatory and Scientific Affairs.

Analysts:.

Thank you for joining the Cumberland Pharmaceuticals' Fourth Quarter and Fiscal 2015 Financial Results Conference Call. Please note that this call is being recorded at the company's request, and will be archived on the company's website for one week from today.

I would now like to introduce Erin Smith, who handles Corporate Relations for Cumberland Pharmaceuticals. Erin, please go ahead..

Hello, everyone. Before we begin today, I’d like to point out that earlier today the company issued a press release containing our financial results for the fourth quarter and fiscal year ended December 31, 2015. The release, including the financial tables is available on our company's website at www.cumberlandpharma.com.

I'd now like to provide the following Safe Harbor language. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Because these statements reflect the company's current views, expectations and belief concerning future events, these forward-looking statements involve risks and uncertainties.

Investors should note that many factors, as more fully described under the caption Risk Factors in our Form 10-K, Form 10-Q and Form 8-K filings with the SEC, could affect the company's future financial and operating results.

Those future results could differ materially from those expressed in today's forward-looking statements, which are qualified by these risk factors. The company does not assume any obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

Also please note that we'll be providing some non-GAAP financial measures with respect to our performance today. A reconciliation of this information to GAAP measures can be found in our earnings release and its related financial table. I'll now turn the call over to our Chief Executive Officer, A.J.

Kazimi, to begin our discussion of the company's performance..

Thank you, Erin. Good afternoon everyone. We appreciate your joining us as we review our fourth quarter and our fiscal year 2015 results. We'll also discuss recent developments, as well as our plans for 2016.

With me on today's call are Cumberland's Chief Commercial Officer, Marty Cearnal; our Chief Financial Officer, Michael Bonner; and Amy Rock, Vice President, Regulatory and Scientific Affairs. We'll start with some highlights, follow with a review of our product development activities, and also provide an update on our marketed products.

We will then discuss our financial performance, and conclude with a review of Cumberland's strategy and plans, before opening the call to any of your questions. So let's begin.

As you'll hear today, we have been extremely busy over the past year, taking steps towards maximizing the potential of our marketed products, entering into a series of key agreements, and furthering our clinical programs. We enter 2016 with great excitement that our path forward is on the right track.

In fact, in 2016 Cumberland expects to post double-digit growth in both revenue and in earnings. We did face a number of headwinds in 2015 which impacted our financial performance, but many of those issues are now behind us.

For example, both Caldolor and Acetadote had supply interruptions last year, and our Omeclamox-Pak received limited support from our former co-promotion partner. We're pleased to report those supply issues have been resolved and based on our new agreements, we're now free to secure a new co-promotion partner for Omeclamox-Pak.

Moreover our revised marketing strategy for Kristalose drove steady performance for the product in 2015, while Caldolor posted solid results for the year. There were numerous developments especially toward the end of the year that have positioned us well for future growth. Let's take a moment to review them.

I'll start with the exciting news that the recent FDA approval of Caldolor is now available for use in pediatric patients six months of age and older. You see Caldolor is the only injectable non-steroidal anti-inflammatory drug approved for the treatment of pain and fever in children.

We worked closely with the FDA throughout the review process and the pediatric approval for Caldolor represents another milestone in our mission to provide effective treatment options, particularly for hospitalized patients. Next I'm pleased to report that we have launched Caldolor in its second major international market.

We have partnered with Seqirus, part of the CSL Group, which is the largest independent biopharmaceutical company in Australia to offer a new level of care for patients in that country. We're encouraged by the introduction of Caldolor into Australia, as well as the continued growth in sales of the product in South Korea.

Here in the US, Caldolor will now be supported by Piramal Critical Care, based on our new co-promotion arrangements with that company. Piramal is a leader in providing aesthetic products to the hospitals in the United States and their sales organization will feature both Caldolor and Vaprisol to an expanded group of institutions in this country.

We also completed both our Boxaban and our Hepatoren Phase II clinical studies in 2015. Top line results from both trials were favorable, and we are now reviewing the full datasets for both of these studies, as we plan the next steps for the two programs.

We had a favorable ruling in our Acetadote patent case late last year, upholding our patent, protecting our new Acetadote formulation through August 2025. And our heightened focus on business development has led to a key strategic alliance with the Clinigen Group plc.

We'll now work with Clinigen to deliver important medicines for the care of hospitalized patients and believe that this new alliance will establish an important growth driver for both of our companies. And lastly, we've also assumed full commercial rights for Omeclamox-Pak, based on a new agreement with Gastroenterologic LLC.

Based on that new contract we will now manage Omeclamox supply, distribution, and national account activities, in addition to our sales and marketing responsibilities that we have held for that product.

So these key eight developments we believe will help position Cumberland for significant long-term growth, and have led to a fast start this year here in 2016. I'll now look to Dr. Amy Rock, our Vice President, Scientific and Regulatory Affairs, to provide further detail on our product development activities.

Amy?.

Thanks A.J. As A.J. mentioned, we've been working to expand the labeling on our Caldolor brand. During the fourth quarter of 2015, we announced the submission of a supplemental new drug application, or sNDA to the FDA for our Caldolor product. This submission requested updates to the package insert to include pediatric dosing.

During the first quarter, we were very pleased to announce FDA acceptance and approval of a pediatric indication for the brand. Caldolor has been approved for use in adults for the management of pain, as well as the reduction of fever since 2009.

Pediatric approval came after FDA's review of safety and efficacy data from clinical trials in hospitalized febrile children, and in children undergoing tonsillectomy surgery. A total of 143 pediatric patients ages six months and older received Caldolor in controlled clinical trials.

The pivotal fever study demonstrated a significantly greater reduction of temperature in pediatric patients as compared to acetaminophen. We also announced the publication of an integrated safety analysis of all Phase II through IV study data for Caldolor. Over 1,750 adult patients were included in safety and efficacy trials over several years.

Data from the surgical studies demonstrated that integrating Caldolor into a multimodal analgesic regimen, results in a reduction of side effects typically associated with opioids. This safety analysis published in the Journal of Pain Research, adds to the growing body of literature supporting the safety of Caldolor.

As we wrap-up these studies and publications in support of Caldolor, we began placing more focus on expanding and developing our product pipeline. During the fourth quarter of 2015, we completed initial Phase II clinical trials for Hepatoren and Boxaban product candidates.

The top line results for each study were favorable, and we are further analyzing the data collected from these trials, in order to progress both development programs. Hepatoren and Boxaban are intravenous and oral formulations of ifetroban, a new chemical entity, or NCE.

We are developing ifetroban through a collaboration with scientists at Vanderbilt University. Ongoing work there has provided additional favorable pre-clinical findings, providing greater insight into ifetroban's mechanism of action and potential.

Encouraged by these findings, we are now evaluating a number of additional potential clinical indications for this molecule. Our goal is to add a third product candidate and development program for this NCE in 2016. And lastly, I am pleased to report that we have just had a study published on Vaprisol, our intravenous treatment for hyponatremia.

This pivotal study used to support the product's FDA approval, evaluated both 20 and 40-milligram per day doses of Vaprisol in hyponatremic patients. The new publication provides important favorable data on the product's safety, efficacy and pharmacokinetic profiles.

It is currently available as an open access article in the Journal, Drug Design Development and Therapy. That complete our clinical and regulatory update. I'll now turn the call back over to you, A.J..

Thank you, Amy. We're excited about these developments, and we look forward to providing further updates as these clinical and regulatory initiatives progress. So now let's look to Marty Cearnal, Cumberland's Chief Commercial Officer, to provide an update on our marketed products.

Marty?.

Thank you, A.J. We are working diligently to strengthen Caldolor's position through the addition of pediatric dosing. We anticipate the addition of this pediatric indication for Caldolor to be a catalyst for overall growth of the brand. We'll be launching this new indication at a national meeting of our sales organization this month.

We started the marketing process with a meeting of our advisory Board, comprised of prominent pediatric practitioners from across the country. We then identified the appropriate positioning and messaging, and created a series of promotional tools to support the launch.

Particularly helpful is the new manuscript Amy mentioned featuring Caldolor's outstanding safety profile, as well as the pain study publication, which provides important data on the product safety and efficacy in pediatric tonsillectomy patients.

It's important to note that the other injectable non-steroidal anti-inflammatory products do not have a pediatric indication. So this new development provides us with an important competitive advantage.

In fact, the pediatric approval and data also have important ramifications for the adult market, as they reinforce the product's positive favorable profile. We look forward to introducing Caldolor for its value in treating children's pain and fever in hospitals across the country.

Vaprisol is the only branded product available to treat hypernatremia, the most common electrolyte imbalance seen in US hospitalized patients. This brand had not been actively promoted for some time prior to our acquisition in 2014. Many physicians have been pleased to see support return for this product.

Our hospital sales division built on this momentum throughout 2015 and the product is now widely stocked in hospitals across the country. In fact, it's stocked in more hospitals than we can reach with our own hospital sales organization.

For that reason, we began a new initiative to expand the reach of our promotional messages for both Caldolor and Vaprisol. We entered into a co-promotion agreement with Piramal Critical Care to expand the support for both brands.

Piramal will provide coverage for an additional group of hospitals, where their critical care sales force has existing relationships. A collaboration will provide expanded sales promotion and increased communication to medical professionals, to support patient care throughout the US. Next Omeclamox-Pak, our branded triple therapy treatment for H.

pylori went through a transition last year. Performance lagged as the product received reduced support from our co-promotion partner.

While we targeted our efforts to gastroenterologists who account for 40% of the prescriptions in this category, our co-promotion partner was responsible for the primary care group of physicians that generate the majority of prescriptions in this market.

Our partner was not able to provide the expected primary care support, given the arrival of their newly acquired products. In the therapy where compliance is critical Omeclamox-Pak requires the fewest tablets or capsules, the fewest doses, and dosing just twice a day for the fewest number of days.

We continue to believe Omeclamox-Pak remains the best product in the class. To better communicate this message, we have now entered into an agreement directly with Gastroenterologic LLC, to assume full rights and responsibilities for the brand.

Under this new arrangement, we will work diligently to assure reliable supply of the product, and we will continue to the promotion of Omeclamox-Pak to the gastroenterology community through our field sales force, and seek a new co-promotion partner with national primary care capabilities in the United States. Moving on to Kristalose.

Our prescription strength laxative product became our largest selling product in 2015. Kristalose is a crystalline form of lactulose for acute or chronic constipation, and is available in convenient highly portable pre-measured single-dose sachets, that provides a clear virtually taste free treatment when reconstituted in four ounces of water.

Unlike many other products in this category, there are no age restrictions for the product's use. Kristalose patients can access either through their physician or directly online, a coupon program designed to reduce the expense of the co-pay required by some third-party payors. That completes the update on marketed products A.J.

I’ll turn it back over to you..

Thank you, Marty. Before we discuss our financial results, I would like to introduce Michael Bonner, who was recently named our Senior Director, Finance and Accounting, and Cumberland's Chief Financial Officer.

Michael has over 16 years experience in financial management, accounting and reporting, and prior to joining Cumberland, Michael held positions at Ernst & Young, LifePoint Hospitals, and Advocate, which is a $300 million NASDAQ listed company, where he was – healthcare, and where he was Vice President, Finance and Accounting.

Michael joined Cumberland in 2013, and has been responsible here for our stellar record of SEC and IRS reporting. He knows the Company well, and he provides a seamless shift during the transition into his now role. Welcome, Michael..

Thank you, A.J., I am pleased to be here. For the full year ended December 31, 2015, Cumberland's total net revenues were $33.5 million, compared to $36.9 million in the prior year.

Net revenues by product in 2015 were $15.7 million for Kristalose, $8.5 million for Acetadote, including $4.5 million of our authorized generic, $3.1 million for Caldolor, $3 million for Omeclamox, and $2.6 million for Vaprisol. For the three months ended December 31, 2015, net revenues were $8 million compared to $9.3 million for the prior year.

Net revenues by product for the fourth quarter were $3.6 million for Kristalose, $2.1 million for Acetadote, including $1 million of our authorized generic, $1.1 million for Caldolor, $0.6 million for Omeclamox and $0.5 million for Vaprisol.

For the year-ended December 31, 2015, our total operating expenses were $32.4 million, compared to $33.3 million for 2014. These expenses include a $1.2 million FDA filing fee during the first quarter of 2015, associated with the submission of our Caldolor pediatric data and request to update the product's label.

Total operating expenses for the three months ended December 31, 2015 were $7.9 million, compared to $8.4 million for the prior year period. These decreases resulted from our initiatives to maintain expenses in line with our revenues. Adjusted earnings for 2015 were $4.5 million or $0.26 per share, compared to $6.3 million in 2014 or $0.35 per share.

Adjusted earnings for the fourth quarter were $0.6 million or $0.3 per share, compared to $1.8 million for the prior-year period. As of December 31, 2015 we had $91.9 million in total assets, including $52.8 million in cash and marketable securities.

Liabilities totaled $15.1 million, including $1.7 million on our credit facility at the end of the quarter, resulting in total shareholders' equity of $76.9 million at the end of the period. Please note that we have tax loss carry-forwards of $43 million, related to the prior exercise of stock options.

Meanwhile we continue to execute on our share repurchase initiative. During the fourth quarter we repurchased another [116,869] [ph] Cumberland shares, bringing the 2015 total to [829,000] [ph] shares. Earlier this year our Board approved another $10 million for our share repurchases and we expect to continue this program throughout 2016.

That completes our financial report for both the full year and fourth quarter of 2015. I'll turn the call back over to you, A.J..

Thanks, Michael. As you heard today, our development and regulatory team has been pursuing expanded labeling in new patient populations for our approved brands. They also continue to expand and progress our product pipeline.

Meanwhile our sales and marketing team is working to support and maximize the potential of our five commercial products, the Caldolor pediatric launch, Piramal promotional support, and new international markets, all represent important growth drivers for our approved products.

We'll continue to focus on business development initiatives as we seek additional co-promotion partners, as well as select additions to our portfolio, and we look forward to introducing Clinigen's products into the United States to the benefit of both companies.

Our key accomplishment in 2015 have laid important groundwork for successful 2016 and beyond. Now I'm confident that our best days are ahead of us. As I mentioned in my introductory comments, we expect double-digit growth in revenue and earnings in 2016.

We'll continue to manage our expenses in line with revenue to deliver profitable and cash flow operations, positive cash flow operations. And we remain in a strong financial position with high margins, a clean and strong balance sheet, and little debt.

We do believe our shares represent an attractive investment opportunity, and will continue our ongoing share repurchase program based on the newly authorized $10 million tranche. You see our strategy is to deliver near-term growth to the sales of our marketed products, augmented by select new additions.

And meanwhile we're building a pipeline of late stage development candidates, that have the potential to deliver significant value over the longer term. Supported by a strong financial position and an outstanding Cumberland team, we're well-positioned to support these aspirations.

And as an organization, we remain focused on our mission of advancing patient care through the delivery of high quality pharmaceutical products. So with that, now let's open the call to any questions you may have. Operator, please proceed..

Just want to thank everybody for joining us on today' call. We appreciate your time and interest in Cumberland and we look forward to provide you with another update following the end of the first quarter..

Thank you, sir. Ladies and gentlemen, that concludes our conference for today. If you would like to listen to our replay of today’s conference, please dial (855) 859-2056, using the access code 61386233. Alternatively, a replay of the webcast will be available on the company's website. I would like to thank you for your participation.

You may now disconnect..