Good afternoon. And thank you for joining Cumberland Pharmaceuticals 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.

I would now like to introduce Molly Aggas, Account Supervisor at the Dalton Agency, who handles Cumberland’s Communications. Molly, please go ahead..

Hi, everyone. Good afternoon. Earlier today, Cumberland issued a press release announcing a company’s annual financial results, as well as an operational update for the year ending December 31, 2021. The release includes related financial tables and can be found on Cumberland’s website at www.cumberlandpharma.com.

Company management will provide an overview of these results and the recent developments during today’s call. With us today are A.J. Kazimi, Cumberland’s Chief Executive Officer; Todd Anthony, Vice President, Organizational Development; and John Hamm, Chief Financial Officer.

Please note that today’s discussion may include forward-looking statements as defined in the Private Securities Reform Act of 1995. These statements reflect the company’s current views and expectations concerning future events and may involve risks and uncertainties.

Additionally, there are many factors that could affect Cumberland’s future results, including natural disasters, economic downturns, public health epidemics, international conflicts and other events beyond the company’s control.

Those issues are described under the caption Risk Factors in Cumberland’s Form 10-K and any additional updates filed with SEC. Any forward looking statements made during today’s call are qualified by those risk factors. Despite the company’s best efforts, actual results may differ materially from expectations.

So information shared on this call should be considered current as of today only. Please remember that the company is not responsible for updating any forward-looking statements, whether as a result of new information or due to feature developments. During today’s call, there will be references to several of Cumberland’s marketed brands.

Full prescribing and safety information for each brand is included on the individual product websites. And links to those sites can be found on the corporate website at www.cumberlandpharma.com.

Today the company will be providing some non-GAAP financial measures with respect to performance and explanation and reconciliation to GAAP measures can be found in the financial tables in the earnings release issued earlier this afternoon.

And with that background and commentary, I’ll now turn the call over to Cumberland’s Chief Executive Officer, A.J. Kazimi to begin the discussion. .

Good afternoon, everyone. We’re glad you could join us and appreciate your participation in today’s call. This afternoon we’ll share highlights of our company’s progress and review our commercial activities. We’ll also discuss our 2021 financial results and finish with closing remarks before then opening the call to any questions you may have.

I’ll start by sharing an exciting and significant development. In December of 2021, we signed an agreement with Japan based Kyowa Kirin for the acquisition of the U.S. assets and rights associated with their oncology support brand, Sancuso.

It’s the first and only FDA approved prescription patch for the prevention of nausea and vomiting in cancer patients receiving certain types of chemotherapy. Sancuso will be supported by our new sales division, Cumberland Oncology.

We closed the transaction in early January, and then assumed full commercial responsibility for the brand in the United States, including its marketing, promotion, distribution, manufacturing and medical support activities. Following the closing in early January, we began making product shipments.

Kyowa Kirin will retain international rights to Sancuso, continuing to deliver the product to support oncology patients throughout the rest of the world. The financial terms of the acquisition included a $13.5 million payment to Kyowa Kirin upon closing up to $3.5 million in milestone payments and tiered royalties of up to 10% on net product sales.

In 2021, net sales of the brand in the U.S. were approximately $13 million. I’d also like to report that in the fourth quarter of 2021, we extended our bank line of credit for a new three-year term and expanded the facility to provide up to $20 million in capital and that alliance supported the acquisition of the Sancuso.

In addition, during the fourth quarter of 2021, we received FDA approval for the expanded labeling of our Caldolor product, a non-narcotic pain reliever. This intravenously delivered formulation of ibuprofen is now approved for use prior to surgery. Orthopedic surgeon Dr.

Stephen Southworth, who has published extensively on intravenous ibuprofen, supported this development stating that, when administered immediately prior to surgery, patients given Caldolor experience less postoperative pain and a decrease in their opioid use.

We’re proud of our regulatory team successful efforts to expand the FDA approved labeling for Caldolor use in surgical care.

And now we’ll incorporate this important development into our promotional and medical support for the product, which can provide additional insight into how intravenous ibuprofen can help healthcare professionals manage patient’s pain as elective surgeries if resumed.

In 2021, we also implemented the national launch of RediTrex, our FDA approved line of injectable methotrexate products. RediTrex is prefilled syringes featuring innovative delivery system for easy handling and dosing accuracy.

They’re designed for patients with arthritis to increase the efficacy of their treatment, while also providing greater continuation rates and less discomfort. It has been a difficult launch for such a new brand during the pandemic, but we are making steady progress in the adoption and in the insurance coverage needed for the brand.

Meanwhile, we were pleased to share a number of new publications regarding our Vibativ, Caldolor and Vaprisol brands during 2021. We issued a series of case studies describing the effectiveness of Vibativ in treating secondary bacterial infections in COVID-19 patients.

And we’ll discuss those publications in a little more detail during the marketing and sales portion of today’s call. Well turning to our 2021 financial performance, total net revenues for the year were $36 million, that resulted in an adjusted loss of $1 million or $0.08 a share and cash flow from our operations increased to over $6 million in 2021.

We ended the year with $85 million in total assets, including $27 million in cash and investments, $42 million in total liabilities and approximately $43 million in shareholder’s equity. So, with that overview, I’d now like to introduce Todd Anthony, who was recently promoted to our Vice President, Organizational Development.

Todd has 25 years experience in the pharmaceutical industry, including 12 years here at Cumberland, after joining us as Director of Sales Training. Prior to that, he held a variety of positions with growing responsibilities at ayer HealthCare Pharmaceuticals.

Todd responsible for our human resource, office administration and organizational development activities, among his accomplishments, is the establishment of the Cumberland way, which provides consistent, direction, procedures and training for our sales organization who have all joined with experience for many other biopharmaceutical companies.

So, Todd, I will turn it over to you..

Thank you, A.J. There certainly has been a lot of activity at Cumberland and we’re especially proud to share these developments amid the ongoing challenges we have faced throughout the COVID-19 pandemic. During the past two years, we have faced the most challenging operating environment in the history of our company.

Throughout the pandemic, we have worked hard to maintain operations, while also ensuring the health and safety of our organization. We have taken measures to improve the safety features of our offices and support our team through flexible working arrangements.

We are encouraged to see COVID cases declining especially after the spikes associated with the Delta and the Omicron variants. We are optimistic about the future and remain committed to keeping our operations running smoothly, while also keeping the health and safety of our team a top priority.

During the pandemic we adjusted our commercial activities by reinventing the way we operate in order to support our customers and the patients who can benefit from our medicines.

We work with our sales professionals across the country to develop a series of new ways for them to continue indicate and interact with the medical community, including the use of virtual engagements.

Cumberland continues to face headwinds due to the pandemic which have included decreased access to medical facilities and postponement of surgical and other patient procedures.

However, our diversified product portfolio of FDA approved brands has helped us to mitigate the negative effects of the pandemic on our business, delivering a steady overall performance in 2021. During the year, we also maintain compliance with the many requirements that apply to us as a publicly traded pharmaceutical company.

Additionally, we work closely with the FDA approved manufacturers that supply our products, closely monitoring our supply chain, including the needed raw materials, as well as the finished goods emerging from those facilities. I’m excited to share that during the fourth quarter we announced the new agreement to relocate our corporate headquarters.

Later this year, we will be moving to the new Broadwest campus, which is also located in Nashville’s West End Vanderbilt corridor. This new location keeps us close to the internationally recognized Vanderbilt Medical Center with whom we regularly collaborate.

It will also provide us with a long-term home with increased efficiency and convenience for our overall operations. That completes my update for now. A.J, I’d like to turn it back to you..

Thank you, Todd. Meanwhile, enrollment has begin to pick up in our clinical programs that have been interrupted by the pandemic. As many of you who’ve been following us know, we’re sponsoring three Phase 2 clinical programs featuring our ifetroban product candidates.

These studies involve patients with Duchenne Muscular Dystrophy, a genetic neuromuscular disease, systemic sclerosis, a debilitating autoimmune disorder and aspirin-exacerbated respiratory disease, a severe form of asthma.

We’re also designing another Phase 2 program to evaluate the use of ifetroban to treat patients with Progressive Fibrosing Interstitial Lung Diseases and we’re currently preparing an application to the FDA to support this new program.

In addition to our company sponsored studies, an NIH funded Harvard Clinical Investigator led trial has also been enrolling patients with aspirin-exacerbated respiratory disease. That Phase 2 placebo controlled study complements the work we’re doing to help those asthma patients.

Well, today, I’m pleased to announce that patient enrollment in that study has closed. And next following the data analysis, we’ll be announcing the results from that study. Also look forward to sharing results once each of the other Phase 2 programs are completed and then we’ll decide on the best development path for the registration of ifetroban.

Ifetroban has the potential to help many patients and we look forward to learning more from the studies now underway. And we believe that success in any one of these programs can provide significant benefits for our company and for the patients we serve.

As Marty Cearnal, our Chief Commercial Officer can’t be with us today, I’d also like to ask Todd Anthony, Vice President for an update on our marketing and sales activity.

Todd?.

Thank you, A.J. As you’ve heard today, we continue to expand our portfolio of FDA approved medicines with the recent acquisition of Sancuso, an oncology support drug acquired from Kyowa Kirin.

The active drug in Sancuso granisetron slowly dissolves in the thin layer of adhesive that sticks to the patient’s skin and is released into their bloodstream over seven days, working continuously to prevent chemotherapy induced nausea and vomiting or CINV.

It’s applied 24 to 48 hours before receiving chemotherapy and then can prevent CINV for up to five consecutive days. Alternative oral treatments must be taken several times day and night to deliver the same therapeutic doses. In 2020, there were nearly 2 million new cases of cancer in the United States.

Each year, over half a million Americans undergo chemotherapy, with many suffering from the side effects of their treatment. Our new Sancuso product provides patients a simple, easy to apply preventative solution that doesn’t require swallowing any pills, which can be difficult for patients experiencing nausea. As A.J.

mentioned earlier, we have created a new division called Cumberland Oncology to support the promotion of the product throughout the country. This new group represents our third national sales division. Of the other two divisions one calls on key hospital accounts across the country, while the other details select office based physicians.

We are honored to take responsibility for the Sancuso brand and introduce it through our commercial organization ensuring that it’s delivered to the oncology patients across the country who needed. As A.J.

also noted, we implemented the national launch of our RediTrex line in 2021, which is FDA approved to treat patients with active rheumatoid arthritis, juvenile idiopathic arthritis or severe psoriatic arthritis, who have difficulty tolerating or responding to orally delivered methotrexate.

The prefilled syringes assure accurate and safe dosing and have an automatic retractable extra thin 29 gauge needle to reduce pain and the risk of needle sticks. They also have a large grip and concave plunger that allow patients with limited dexterity to self administer the injection at a controlled speed.

RediTrex’s provides these benefits, while also being less expensive than autoinjectors. Launching this new brand during the pandemic has proved difficult, especially as we establish relationships with a new group of physicians that focus on rheumatology. In addition, analysis and coverage by managed care plans for the product has progressed slowly.

Sales during 2021 were limited as physician prescriptions began to pull through the product that we had stocked into the distribution channels. We are encouraged by the positive feedback we received about the innovative delivery system and we believe that with time RediTrex can be a valuable contributor to our business.

Regarding the new publications that we shared in 2021, let’s first discuss those concerning Vibativ. As a reminder, Vibativ is a patented FDA approved anti-infective injectable product designed to treat certain serious bacterial infections, including hospital acquired or ventilator associated pneumonia and complicated skin infections.

While many recently introduced antibiotics are losing the battle to fight infections, because bacteria have become drug resistant. Vibativ was specifically designed to address that resistance problem. During 2021, we helped raise awareness of the prevalence of secondary bacterial infections by supporting a continuing medical education program.

We have been very pleased to see Vibativ being used to help COVID-19 patients who develop these secondary bacterial pneumonias and other gram positive infections while in the hospital.

Last year, we released a dossier of patient case studies outlining real world instances in which Vibativ was used to effectively and safely treat COVID patients, particularly those with significant health problems, such as obesity, diabetes and heart disease. Turning now to Caldolor, I’d like to touch on several developments from last year.

Most significantly, the FDA approved the use of Caldolor just prior to surgery, which results in patients waking up from their procedure in significantly less pain and needing significantly fewer opioids. Last year, we also announced the study showing that ibuprofen ex twice as fast as ketorolac in controlling kidney stone pain.

These findings build upon a body of medical evidence supporting the use of Caldolor to treat pain and reduce opioid use in patients. Additionally, during a national podcast, Dr. Stephen Southworth put forward as the Caldolor as the foundational step in enhanced recovery after surgery or ERAS protocols as an alternative to opioids.

Next, turning to our Vaprisol brand, which also has proven helpful in treating COVID-19 and other hospitalized patients. Vaprisol addresses a potentially deadly sodium imbalance known as hyponatremia, which is the most common electrolyte disorder among hospitalized patients.

We reported on an international study of over 4,000 patients which found that those hospitalized with COVID-19 were at high risk of developing hyponatremia and dying from it. The results supported the use of an intravenous vaptan to treat hyponatremia in critically ill patients suffering from serious COVID-19 and related infections.

Our Vaprisol product is the only intravenously administered vaptan treatment available in the United States and it has a proven day one response to help normalize serum sodium levels in hyponatremia patients so that they can be moved out of the ICU. I’d like next to discuss Kristalose, our prescription strength laxative product.

It comes in a pre-measured powder dose that dissolves quickly in just 4 ounces of water for a taste free and grit free solution. Kristalose our largest selling product benefited greatly from the support of our co-promotion partners in 2021.

Through these partnerships, we were able to put the brand in front of physicians and facilities that Cumberland does not cover. And finally, I’d like to note that our Omeclamox-Pak packager was unable to provide us with supplies of the product, having encountered difficulties and therefore suspending operations during the pandemic.

We are currently awaiting the facilities packaging to resume before we build new inventory and resupply the market with this product. That completes our updates for our key commercial efforts and I’ll turn the call back over to you, A.J..

Thanks, Todd. Before we review our 2021 financial results, I’d like to share an update on our international activities. As we focus our efforts on the U.S. market, we’re building a network of other established companies to bring our products like Vibativ to patients in their countries.

We have reached an agreement to launch Vibativ in Puerto Rico with our partner there, Verity Pharmaceuticals. We’re glad to report that Vibativ is now available for order in that territory. Verity has a strong presence in Puerto Rico, which they say is in need of a product, which features -- with the features of Vibativ.

The island has a high number of elderly citizens and residents living with chronic diseases like diabetes, which increase the risk of hospitalization and infection. Meanwhile, SciClone Pharmaceuticals, our partner in the Chinese market for Vibativ had their approval application in that country accepted for review during 2021.

SciClone Pharmaceuticals advised us that the review period would be about 12 months and they also believe that Vibativ has significant potential in the Chinese market and we look forward to providing more updates on this initiative later in the year.

So with that international update, I’d now like to introduce John Hamm, who assumed the role of Cumberland’s Chief Financial Officer in early 2021. John has over 25 years finance and accounting experience including 20 years working in healthcare.

Prior to joining Cumberland, he was Chief Operating Officer and CFO of Pharmacy at HealthSpring, a managed care organization that now operates as Cigna HealthSpring.

He was also the Vice President of Finance at Emdeon Business Services, which is a healthcare technology firm that now operates as Change Healthcare, a NASDAQ listed company with over $3 billion in annual revenue. So, John, let’s now present the financial review..

Thank you, A.J. For the three months ended December 31, 2021, net revenues from continuing operations were $8.3 million. We also recorded an additional $500,000 in revenue from discontinued operations associated with return rights to the two products we no longer distribute. We present that additional revenue in a discontinued business line.

Net revenues by product for the fourth quarter of 2021 included $3.7 million for Kristalose, $2.9 million for Vibativ, $1.2 million for Caldolor and $0.2 million for Acetadote.

It’s important enough that given the quarterly fluctuations in buying patterns from our customers, we believe that our performance should be assessed based on annual sales results.

Annual 2021 net revenues by product include $16 million for Kristalose, $12 million for Vibativ, $5 million for Caldolor, $0.9 million for Acetadote and $1.9 million for Vaprisol. Net revenues for the full year 2021 were $36 million.

In addition, we recorded a total of $2 million during the full year for discontinued operations associated with the two products we no longer distribute. Total operating expenses for the fourth quarter were $12.7 million. Total operating expenses for the full year 2021 were $43.6 million.

We had an adjusted loss of $1.9 million during the fourth quarter. Adjusted loss for the full year were $1 million or $0.08 per share. Please note that the adjusted earnings calculation does not include the benefit of the $2 million in payments received for the two products returned.

It also does not include the benefit of the $3.7 million of Vibativ cost of goods associated with sales of the product during the year, which was received with the product acquisition. We recorded an additional $1.2 million in a one-time write-off of expired inventory, also received as part of the acquisition.

As a result and taking into account all these items, a total of $6.4 million in cash flow was provided from operations in 2021. As a reminder, our financial statements have been significantly impacted by the Vibativ transaction, our largest acquisition today.

The financial terms for the transaction included a $20 million payment upon closing and we subsequently provided a $5 million milestone payment and are also providing royalties based on product sales. Since the products launch in late 2018, it has delivered a total cash contribution of approximately $26.5 million.

It is now beginning to generate a return on our investment. We accounted for the Vibativ acquisition as a business combination, a total of $34 million in new assets were added as a result of the acquisition including approximately $21 million in inventory, $12 million of intangible assets and $1 million of goodwill.

Due to the amortization of intangibles and the sales of inventory, the value of these assets total $21.5 million at the end of 2021. Looking at our balance sheet as of December 31, 2021, we had $84.5 million in total assets, including $27 million in cash and equivalents. Liabilities totaled $42 million, including $15 million on our credit facility.

Total shareholder’s equity was $41.8 million at the end of 2021. Meanwhile, as we previously mentioned, we renewed our line of credit for a new three-year term. During the fourth quarter of 2021, we expanded a facility to provide up to $20 million in capital. This new line of credit allowed us to acquire the U.S.

rights to Sancuso, which was mentioned earlier. We continued our corporate share repurchase program in 2021 and through the end of December, we repurchased a total of 438,000 shares during the year. These repurchases included those in the open market, as well as those needed to fund the taxes associated with employee vested restricted shares.

We also had a share repurchase initiative for our Board of Directors in 2021, enabling them to increase their holdings in the company. Six of our Board members participated through share repurchase trading plans and collectively purchase 67,300 shares in 2021.

Lastly, I’d like to note that Cumberland continues to hold over $66 -- over $56 million in tax net operating loss carry-forwards primarily resulting from the prior exercise of stock options. And that completes our financial report..

Well, thank you, John. So like other companies that rely on hospital admissions and patient visits to drive revenue, Cumberland certainly faced its challenges in 2021 as the pandemic carried on.

However, our team remained focused on our mission of advancing patient care to the delivery of high quality medicines and I’d like to extend my sincerest thanks to my colleagues here at Cumberland, for their valuable contributions over the past year and we look forward to a successful 2022 and we’ll keep you updated on our progress along the way.

Our strategy involves advancing our clinical pipeline and incubating future opportunities and Cumberland emerging technologies. We will continue to build a diversified portfolio of innovative products, both through internal development, as well as the acquisition of established brands such as Sancuso.

We will also continue to look for strategic partners that can complement our capabilities and enhance the opportunity for our brands, additional international partnerships and additional co-promotion arrangements, such as those we have in place for Vibativ and Kristalose will allow us to leverage our commercial portfolio and reach many more patients and physicians.

And we look forward to the expanded use of Caldolor, especially now that we’ve received FDA approval for its use prior to surgery and as we do our part to help address the nation’s opioid epidemic. And lastly, I’d like to highlight Cumberland’s ongoing focus on and commitment to sustainability.

In 2021, we issued our latest Sustainability Report, detailing Cumberland’s activities pertaining to our environment, social and governance matters. As noted in the report, we provided nearly 2.5 million patient doses, safely disposed of over 4,000 pounds of expired and damaged products and had no recalls.

We also active -- actively supported our team and engage with our community. And we look forward to continuing the sustainability initiatives and providing such reporting annually.

We look forward to returning to a more normal operating environment here in 2022 and with the contributions from our newest product Sancuso, we do expect to deliver double-digit revenue growth this year, while continuing to generate positive cash flow from our operations.

So, with that review and update, now let’s open the calls for any questions you may have. Operator, please proceed..

Thank you, sir. .

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At this time….

Thanks, everyone, for joining today’s call. As always, we understand that many of you prefer a private discussion with management and if so please just reach out to us and we’ll gladly get it scheduled and hold such a call with you.

But we very much appreciate your time and your interest in Cumberland and we look forward to providing another update following the end of the first quarter..

Thank you, sir. Ladies and gentlemen, that concludes today’s call. If you’d like to listen to a replay of the discussion, please dial 855-859-2056 using the access code 1497637. Alternatively, a replay of the webcast will be available on Cumberland’s website. I would like to thank you for your participation. You may now disconnect..