Thank you for joining Cumberland Pharmaceuticals First Quarter 2021 Financial Report and Company Update. This call is being recorded at the company's request and will be archived on Cumberland's website for one week from today's date. Now I would like to introduce Erin Gull, who is responsible for Corporate Relations at Cumberland.

Erin, please go ahead..

Good afternoon, everyone. Today, we issued a press release containing the company's financial results and corporate update for the first quarter ended March 31, 2021. That release with related financial table is available on our website at www.cumberlandpharma.com.

Please note that today's discussion may include forward-looking statements as defined in the Private Securities Reform Act of 1995. And because any such statements reflect the company's current views and expectations concerning future events, they may involve some risks and uncertainties.

Additionally, there are many factors that could affect the company's future results, including, but not limited to, natural disasters, public health epidemics, economic downturns and other events beyond our control. Those issues are described under the caption Risk Factors in our Form 10-K and any additional updates we filed with the SEC.

And any forward-looking statements made during today's call are qualified by those risk factors. Also despite our best efforts, actual results could differ materially from our expectations and the information shared on this call should be considered current as of today only.

Please remember that the company does not assume any responsibility to update any forward-looking statements, whether as a result of new information or due to future developments.

During today's call, we will be referring to several of our marketed brands and full prescribing and safety information for each brand can be found on the individual product websites, and the links to those product sites can be found via our corporate site at cumberlandpharma.com.

Also today, we'll provide some non-GAAP financial measures with respect to our performance, and explanation and reconciliation to GAAP measures can be found in the financial tables in our earnings release that was issued earlier today. So with us on today's call are A.J.

Kazimi, Cumberland's Chief Executive Officer; Martin Cearnal, our Chief Commercial Officer; and Michael Bonner, our Chief Financial Officer. We will start today with an overview of our progress during the first quarter and will follow with a discussion of our commercial activities.

We'll then review our financial results and then finish with closing remarks before we open the call to any questions. I will now turn the call over to A.J. Kazimi, Cumberland's Chief Executive Officer, to begin the discussion of our corporate update and company performance..

Well, good afternoon, everyone, thank you for joining us. As Erin noted, today, we'll provide an overall company update, along with the review of our first quarter financial results. While, the novel Coronavirus continues to affect our lives over a year after its arrival in the U.S. However, we remain hopeful.

With a growing number of Americans fully vaccinated new cases of the virus in decline, it's good to see an overall reopening of our country, which is now underway. Throughout the pandemic, Cumberland encountered the most challenging operating environment we've ever faced as a company.

Our business and our clinical staff are affected as fewer patients sought elective surgeries and our access to medical facilities was substantially limited. As a result, we adjusted our market strategies, we tooled our sales communications, and we reinvented the way in which we operate our business.

Our brands were negatively impacted at times, we're fortunate to have a diversified product portfolio, which provided an overall revenue growth of 9% for the full year 2020.

Now as you've previously seen, our products generates strong performances at different times during the year, which is why we always suggest that you evaluate our progress on an annual basis, as our quarterly progressions could vary.

During the first quarter of 2021, I'm pleased to report a strong financial performance despite the continued influence of the pandemic. Total revenues were 10.5 million, a 26.5% increase over the prior year period. This favorable performance was led by growth in our Vibativ and Rabeprazole brands.

Adjusted earnings for the period were $1.1 million or $0.07 a share a significant improvement compared to a loss of $0.03 a share during the same period last year. And cash flow from operating activities was 1.8 million for the quarter double of the prior year period amount.

Additionally, we ended the first quarter, with over 93 million in total assets 46 million in total liabilities, and 47 million in shareholders equity. Meanwhile, we have been closely monitoring our supply chain, including the facilities that provide the raw materials, along with those that manufacture our products.

And we overseeing the resulting finished goods shipped to us and then on to the warehouses that support our country's hospital and retail pharmacies. While enrollment of new patients was limited during much of 2020, many of our clinical sites have recently reopened and resumed screening of patients for potential admission into our clinical studies.

And as a reminder, we're sponsoring phase two clinical programs that evaluate ifetroban product candidate in patients with cardiomyopathy associated with Duchenne muscular dystrophy, systemic sclerosis or scleroderma, a debilitating autoimmune disease and aspirin exacerbated respiratory disease, a severe form of asthma.

Our plan is to await results from all of these studies before deciding on the best development path for the registration of ifetroban our first new chemical entity. So with that overview, I'd now like to turn to Marty Cearnal.

Marty is Cumberland's Chief Commercial Officer, and he's also our newly appointed President of the Cumberland Pharma Sales Corp. Marty, can you please share your update on our marketing and sales activities..

Thank you, AJ. During the first quarter this year, we held a successful national sales meeting to help support and equip our sales teams in their efforts to build our brands while navigating the current health care landscape. The meeting was held virtually among our sales personnel who participated from across the country.

As a reminder, we have two national sales divisions, one calling on key hospital accounts across the country and the other division, calling on select office based physicians. Our primary target markets are hospital acute care and office based gastroenterology.

These medical specialties are characterized by relatively concentrated prescriber basis that can be supported effectively by our team of experienced sales professionals. Both of our sales divisions altered many of their promotional tactics, using more electronic and telephonic communications.

Additionally, we augment those activities with an enhanced internal sales capability, reaching out to hospitals and physician offices directly from our headquarters. These innovative and efficient ways to expand our reach, add new coverage and ensure awareness of our products allowed us to stay on a growth trajectory during the pandemic.

Moving to our commercial products, we were pleased to see recent publications supporting the use of our rabeprazole brand in patients with COVID-19.

The health outcomes predictive evaluation or HOPE, COVID-19 registry analysis was an international study of over 4000 COVID-19 patients was recently published and showed that patients hospitalized with COVID-19 had a high risk of developing hyponatremia while hospitalized.

Hyponatremia is an imbalance of the serum sodium to body water and is the most common electrolyte disorder among hospitalized patients. Severe hyponatremia has long been recognized as a direct cause of death or permanent neurological problems in hospitalized patients.

The HOPE study demonstrates the high prevalence of hyponatremia in COVID-19 patients and the need to treat this electrolyte imbalance. Rabeprazole treats hyponatremia and can normalize serum sodium levels with a proven day one response helping these patients spend fewer days in the intensive care unit.

Rabeprazole is the only intravenously administered brand for the treatment of hyponatremia and is essential for patients who are incubated are not able to take medications orally, which is especially important for COVID-19 patients.

Additionally, our Vibativ product was used to help COVID-19 patients who developed these types of bacterial infections in their lungs. Vibativ is a potent antibiotic designed for difficult to treat infections is FDA approved to treat both hospital acquired and ventilator associated pneumonia that results from susceptible organisms.

During the last year, we were pleased to hear Vibativ being used to help COVID-19 patients who develop these secondary bacterial pneumonias and other gram positive infections while in the hospital. We subsequently compiled a case study dossier outlining several real-world instances whereby Vibativ effectively and safely treated these COVID patients.

Recently, the Centers for Medicare and Medicaid Services have changed their reimbursement for certain procedures conducted at ambulatory care outpatient surgery centers. These changes now allow for reimbursement of certain procedures conducted at outpatient to surgery centers that were previously reimbursed only in hospitals.

These ambulatory centers typically provide easier physician access and may eliminate the lengthy formulary approval process with their focus on patient throughput such centers are an excellent environment for the ready to use Caldolor product, especially since they typically do not have a pharmacist on staff.

Lastly, we continued the soft launch of our RediTrex, methotrexate line of products during the first quarter and are very encouraged by the positive feedback we've been receiving regarding this innovative delivery system.

RediTrex is FDA approved for the treatment of active rheumatoid arthritis, juvenile idiopathic arthritis and severe psoriatic arthritis.

We've implemented a modest increase in our sales force to expand our coverage of the rheumatology market for this brand and created a positioning and market strategy in preparation for the full launch of the product.

Given the ongoing issues with physician office access during the pandemic, along with the need to manufacture additional product supplies, we will undertake the full launch of RediTrex, once the country fully reopens, and we have a majority of third-party reimbursement approvals in place.

For that reason we're targeting the fall of 2021 for the launch. Based on the positive feedback we're receiving since the soft launch, we believe that RediTrex will be a valuable addition to the product portfolio and provide a significant contribution to our business for years to come. That completes today's updates on our key commercial efforts.

AJ I'll turn the call back over to you..

Thanks, Marty. I'd like to ask our Senior Director and Chief Financial Officer, Michael Bonner for the Financial Review.

Michael?.

My pleasure AJ. For the three months ended March 31, 2021, net revenues from continuing operations were 10.5 million, a 26.5% increase over the 8.3 million during the prior year period.

We also recorded an additional 0.5 in the first quarter of this year as discontinued operations associated with the return of rights to the two products that we no longer distribute. Net revenues by product for the first quarter include 5.1 million for Vibativ, 3 million for Kristalose, 1.5 million for Caldolor and 1.1 million for rabeprazole.

Total operating expenses for the quarter were 10.9 million, compared to 10.2 million for the prior year period. This increase in expenses resulted primarily from the additional cost of goods associated with our growth in Vibativ sales during the quarter.

Recall that significant Vibativ inventory was transferred to Cumberland as part of the acquisition of the assets associated with the brand. Based on the acquisition accounting, the fair value of the inventory included a significant step up over actual manufacturing cost.

Future lots of the product manufactured for Cumberland are expected to have a much lower cost associated with their supply and sale. Adjusted earnings for the first quarter were 1.1 million or $0.07 per share a significant turnaround from the loss of 0.4 million, a loss of $0.03 per share during the prior year period.

Please note that the adjusted earnings calculation does not include the benefit of the $0.5 receive for the return of two products we no longer distribute. It also excludes the benefit of the Vibativ cost of goods sold during the quarter, which was paid for as part of the products acquisition.

As a reminder, the financial terms for the Vibativ acquisition included a $20 million payment upon closing. This initial payment was funded by revolving credit facility. We subsequently provided a $5 million milestone payment and are providing royalties based on products.

From the products launch in late 2018 through the end of the first quarter of 2021, the product has delivered a total cash contribution of approximately 23 million, which we believe compares favorably to the 25 million in upfront payments to acquire the brand.

We accounted for the Vibativ acquisition as a business combination, a total of 34 million and new assets were added as a result of the acquisition, including $21 million in inventory, 12 million of intangible assets and 1 million of goodwill due to amortization of intangibles and sales of inventory.

The value of these assets totaled 24 million at the end of the first quarter. Net income was 0.2 million for the quarter, a significant improvement of the $1 million loss in the prior year period. Cash flow from operating activities was 1.8 million during Q1 of 2021, which was double the 0.9 million for the prior year period.

Turning to our balance sheet as of March 31, 2021, we had 93.3 million total assets, including 24.9 million in cash and equivalents. Liabilities totaled 46.5 million, including 15 million on our current facility. Total shareholders equity was 47 million at the end of the quarter.

Meanwhile, as we previously announced, Cumberland received the funding of a loan in the amount of 2.2 million at the beginning of the second quarter 2020 pursuant to the paycheck protection program under the Federal CARES Act.

The resulting loan hoped for the need for any employee layoffs or furloughs as we experienced the impact and uncertainty of the pandemic. The proceeds of the loan were used to fund payroll and related qualifying expenses. As a result, at the end of 2020, we submitted a request for the loans forgiveness.

The request was approved by a lender and is pending the approval of the U.S. Small Business Administration. The loan is listed on our balance sheet as an other current liability and we will eliminate the debt and record it as other income if and when the forgiveness is fully approved.

Additionally, during the pandemic, we began to decrease the number of shares repurchased. During the first quarter of 2021, we were purchasing an additional 155,000 Cumberland shares. These repurchases include those on the open market as well as those needed to fund the taxes associated with employee vested restricted shares.

Finally, I like to note the Cumberland has over 44 million in tax net operating loss carryforwards resulting from the prior exercise of stock options. That completes our financial report. I'll turn it back over to you AJ..

Okay, thank you, Michael. Well, as we reported today, Cumberland was able to deliver another successful quarterly performance in spite of the challenges of operating during the pandemic. And as I stated earlier, we're grateful we're able to keep our business operating and our organization intact during those difficult times.

We once again posted solid year-over-year revenue growth and improve cash flow from operations, which speaks to the strength of the business, the diversity of the product portfolio and the steadfastness of the commercial organization.

Over the past year, when we quickly adjusted market strategies that are promotional activities and we reinvented the way we interact with our customers and support the patients who need our medicines. We've continued to expand our product portfolio through a series of successful business development initiatives.

And we now feature seven FDA approved brands, along with a robust pipeline of new product candidates in late stage development. Given what we're seeing with the markets we serve, we do anticipate double-digit revenue growth for the full year 2021. We also expect continued cash flow from operations and positive adjusted earnings in 2021 as well.

Our goal is to deliver sustainable growth and profitability. During this year, we'll focus on maximizing the potential of our existing brands, while continuing to build a portfolio of differentiated products.

As a result, we are pursuing opportunities to expand the use of our FDA approved products into additional patient populations, while also developing several new product candidates that address poorly met medical needs.

Our commercial brands, combined with the new products from our pipeline can be important growth contributors to our business for years to come. And the addressable markets for these products are quite large for a company of our size, and maximizing these opportunities can have a significant impact on our value.

Additionally, we are actively pursuing opportunities to acquire new marketed products, as well as late stage development product candidates in our target medical specialties.

We will continue to efficiently manage the business as we emerge from the pandemic, while remaining dedicated and focused on our mission of advancing patient care to deliver high quality medicines. So with that, review, and update now let's open the call to any questions you may have. Operator, please proceed..

Operator:.

Well, thank you everyone, for joining our call today. And as I mentioned in the past, we do understand that many of you prefer a private discussion with management. And so please just reach out if you want to us if you'd like to hold such a call. We do appreciate your time and your interest in our company.

And we look forward to providing another update after the end of the second quarter..

Thank you, sir. Ladies and gentlemen, that concludes our conference call for today. If you would like to listen to a replay of the conference, please dial 855-859-2056 using the access code 7973325. 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..