Cumberland Pharmaceuticals Inc Q1 FY2026 Earnings Call

Good afternoon, and welcome to the Cumberland Pharmaceuticals First Quarter 2026 Financial Report and Company Update. This call is being recorded at the company's request and will be archived on its website for one year from today's date. I would now like to turn it over to Emily Kant from the Dalton Agency, who handles Cumberland's communications. Emily, please proceed.

Hello, everyone, and thank you for joining us today. This afternoon, Cumberland issued a press release announcing its first quarter financial results. The release also provided an overall company update, including key developments during the quarter. The release, which includes the related financial tables, can be found on the company's website at www.cumberlandpharma.com. During today's call, management will share an overview of those financial results and a company update, including recent developments and a discussion of Cumberland's brands, pipelines, and partners. Participating in today's call are A.J. Kazemi, Cumberland's Chief Executive Officer, Todd Anthony, Vice President, Organizational Development, and John Hamm, Chief Financial Officer. Please keep in mind that their discussions may include some forward-looking statements as defined in the Private Securities Reform Act. Those statements reflect the company's current views and expectations concerning future events and may involve risks as well as uncertainties. There are many factors that could affect Cumberland's future results, including natural disasters, economic downturns, international conflicts, trade restrictions, public health epidemics, and others that are beyond the company's control. Those issues are described under the caption, Risk Factors, in Cumberland's annual report on Form 10-K and any subsequent updates filed with the 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. Also, please remember that the company isn't responsible for updating any forward-looking statements, whether as a result of new information or due to future 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 website, and you can find links to those sites on the corporate site at www.cumberlandpharma.com. The company will also be providing some non-GAAP financial measures with respect to its performance. An explanation and reconciliation to GAAP measures can be found in the financial tables of the earnings release that I noted was issued earlier this afternoon. If you have any questions, please hold them until the end of the call, at which point we will be happy to answer them. Management is also prepared to hold a follow-up conversation with shareholders after the call, if you prefer. With that introduction, I'll turn the call over to Cumberland's Chief Executive Officer, A.J. Cazzini.

Well, thank you, Emily, and good afternoon, everyone. We appreciate you joining us today. As Emily mentioned, we'll provide a review of our financial results for the first quarter of 2026. We'll discuss key developments during the period, but we'll also share recent updates. Cumberland enjoyed an outstanding year in growth in sales, significant cash flow from operations, the addition of a new brand to our portfolio, new international product approvals, and breakthrough clinical study results. I believe those were certainly findings, and I'd like to congratulate our team that was responsible for delivering that performance. Pleased to report continued momentum in 2026, an excellent start with FDA approval for expanded Caldolore labeling, the initiation of our sales promotional efforts in support of Talisia, the first shipment of Vibatif to China, and FDA clearance of the manufacturing facility, the relaunch of Vaprazole. We entered into a transformational agreement that positions Cumberland for the next phase of our company's evolution, and we're delighted to discuss that agreement, which we'd enter into with this Canadian-based pharmaceutical company to integrate our branded U.S. commercial. In terms of the agreement, Apotex will acquire our portfolio of marketed products for cash consideration of $100 million subject to our shareholders' approval. We'll also receive $9 million in payments for inventory, fees for transitional support services, and a milestone payment tied to future product sales. This transaction represents a significant event for Cumberland as it unlocks substantial near-term value for our shareholders. ...of our marketed products, given Apotex tax basis associated with the assets involved, combined with the tax loss carry forwards, we are estimating the income taxes resulting from the transaction will be modest. As a result, the net consideration will significantly strengthen our balance sheet. At the close of the transaction, we tend to focus on advancing our robust pipeline of product candidates to address unmet medical needs which, if successful, can greatly benefit patients and shareholders alike. That strategic shift will position Cumberland as an innovation-driven organization, developing new medicines for the official value of our branded products. It considerably strengthens our balance sheet. It sharpens our strategic focus on developing new products that represent large market opportunities, and it enhances our ability to create and deliver additional value for our shareholders. It also creates a branded business platform with more critical mass that Appitex can broaden the distribution of our brands and deliver them to more patients. In short, We're confident in the direction of the company and in our ability to execute on this new strategy. I'll now turn the call over to Todd Anthony, Vice President, Organizational Development.

Well, thank you, AJ. You know, in February, we hosted our Spring National Sales Meeting in Nashville, and in attendance were the 50 individuals across the country who interact with our medical community in support of our FDA-approved products through our three national sales divisions, our hospital sales division, which calls on key institutional accounts across the country, our field sales division that covers select office-based physicians, and our Cumberland Oncology Division, which calls on cancer patients. I'd now like to share our first quarter brand updates. Let's start with Caldolore, our intravenous ibuprofen product. In April, we announced approval from the FDA for an expanded indication for Caldolore. The indication now includes the management of postoperative pain. This approval enhances the clinical utility of Caldolore and supports its role in non-opioid and opioid-sparing pain management strategies. With this update, Caldolore is indicated for use in adult and pediatric patients ages three months and older for the treatment of pain and fever. This expanded labeling further broadens caldative and acute care settings. Additionally, we resubmitted our application to CMS for Caldolore's inclusion under the No Pain Act in the first quarter. This program is designed to support the use of non-opioid pain management therapies. Now let's turn to Sancuso, our transdermal patch, FDA-approved for the management of chemotherapy-induced nausea and vomiting. During the first quarter, we announced the launch of the new Sancuso website, which is designed to provide healthcare professionals and patients with enhanced access to educational resources, clinical information, and expert insights related to the prevention of chemotherapy-induced nausea and vomiting. Next, I'd like to share an update for Talicia, an FDA-approved leading treatment for Helicobacter pylori infections. In February, we announced the launch of our national sales promotion for Talicia under our co-commercialization agreement with Talicia Holdings Incorporated, which we jointly own. As a reminder, under that agreement we assumed responsibility for the distribution and sales promotion of the brand in the United States. As part of the launch, we leveraged our existing field sales division with supporting marketing initiatives designed to increase awareness among gastroenterologists and other prescribers. We have been awaiting FDA clearance of the site where we have successfully transferred the manufacturing of Vaprasol. Today, I am pleased to announce that the FDA has just reinstated their approval status for that facility, which will enable us to submit for manufacture of Vaprasol there. With approval for our submission, we will then arrange for commercial supplies to support the relaunch of the brand, which is expected this year. That completes my updates for today. I'll turn it over now to our Chief Financial Officer, John Hamm, to review our financial results.

Thank you, Todd. During the first quarter, our portfolio of FDA-approved brands delivered combined revenue of $9.1 million, which represented a 5% increase after removing the one-time $3 million milestone payment last year associated with the approval of Vibatib in China. Net revenue by product for the first quarter of 2026 included $1 million for Crystallos, $2.9 million for St. Cusso, $2.1 million for Vibatov, $1 million for Caldolore, and $1.9 million for Talicia. Turning to our expenditures, total operating expenses for the first quarter were $12.3 million, resulting in a net loss of approximately $3.3 million for the first quarter. When non-cash expenses are added back, the resulting adjusted loss for the first quarter was $1.9 million, or $0.13 a share. We're pleased to see that our most recent acquisitions resulting in additions of Ibada, Sancuso, and Talisia to our portfolio have provided a significant positive impact. Note that the shipments for individual brands fluctuate from quarter to quarter based on customer buying patterns, which include the timing of international orders. There's also some seasonality to our business with orders being strongest in the fourth quarter and traditionally lightest in the first quarter. Therefore, we believe our sales performance is best evaluated on an annual basis. Meanwhile, we did continue to achieve our goal of generating positive cash flow from operations, which totaled $387,000 during the first quarter. As a reminder, we participated in the formation of a new company named Talisia Holdings Incorporated, which holds the worldwide rights to the Talicia brand and its related product assets. Cumberland invested $4 million in exchange for a 30% ownership position in the new company. We are accounting for this holding using the equity method. Turning to our balance sheet as of March 31st, 2026, we had $71 million in total assets, including $11 million in cash and cash equivalents. liabilities totaled forty nine point seven million dollars including five million dollars on our credit so equity was twenty one point six million dollars at the end of the first quarter as AJ mentioned we had signed an agreement to enter into a strategic transaction in exchange for the assets associated with our portfolio of commercial products we expect to receive 100 billion dollars cash at closing we will also receive nine million dollars in payments for our commercial product inventory and a milestone payment. Cumberland will support the transition of the products for a monthly fee associated with a transition services agreement. I'd like to note that Cumberland continues to hold over 53 million dollars in tax net operating loss carry forwards primarily resulting from the prior exercise stock options. The assets involved in our pending strategic transaction have a tax basis of 30 million dollars. We therefore believe that the income taxes resulting from the transaction will be modest. Finally, given the announced strategic transaction, we are no longer targeting a goal of double-digit revenue growth for the year. However, our expenses will be significantly decreased after closing as Apotex will assume responsibility for the sales, marketing, medical, manufacturing, and FDA fees associated with the brands. I would also point out at this time that we do not see any significant change to our current clinical spending levels for 2026 as we continue to advance our line of product candidates, which are in the advanced stages of development. And that completes our financial report for the first quarter of 2026. Back to you, AJ.

Strategic transaction. Cumberland will be an innovation-driven pipeline of new product candidates designed to improve patient care and their quality of life. Our FITRABAN new chemical entity, which is a potent and selective thromboxane receptor antagonist, is being evaluated in several advanced clinical programs for patients with a series of unmet medical needs. It's now been dosed in nearly 1,400 subjects and has been found to be safe and well-tolerated in those individuals, resulting in an outstanding safety database. We previously announced positive top-line results from our completed Phase II study in patients with Duchenne muscular dystrophenetic neuromuscular disease that results in deterioration of the skeletal lung and heart muscles. During the first quarter, the FDA granted fast-track designation for our fitraband candidate in these DMD patients. This designation is intended to accelerate the development and review of therapies addressing serious conditions with unmet medical needs. Importantly, it allows for more frequent FDA interaction, rolling data submissions, and earlier guidance throughout the approval process so previously received both orphan drug and rare pediatric disease designations from the FDA. An end of Phase 2 meeting was held with the FDA last fall and we had a follow-up meeting during the first quarter of 2026 to discuss both the DMD study results and to determine the regulatory pathway and requirements for approval. We're We're finalizing our plans for this important program now, and once completed, we'll announce additional results and expected timelines. In a while, we've also been evaluating our iFitraBand product candidate in a clinical program in patients with systemic sclerosing top-line findings, which will be forthcoming. In addition, we have a Phase II clinical study, the Fighting Fibrosis Trial, in patients with idiopathic pulmonary fibrosis, the most common form of progressive fibrosing interstitial lung disease. Patient enrollment in that study is well underway in centers across the United States. An interim safety analysis was conducted evaluating the first cohort of patients who completed their 12 weeks of treatment. The independent committee concluded there were no new safety signals and therefore no changes in the study conduct were needed. Based on those findings, enrollment in the study has continued and we next expect to announce interim efficacy results. Pilot patient studies by Fitzgerald Banner are also underway through several investigator initiated trials on select patient populations helping to address unmet medical needs in and markets that are very large from a commercial perspective for a company our size. Our strategic transaction support the transition of our candidates and appreciation to all of those at Cumberland for their unwavering dedication towards the patients we aim to serve every day. We're confident in the direction of the company. We're here to continue to support and interest in Cumberland, and with that, we can open the call for any questions.

Thank you, sir. Ladies and gentlemen, that concludes the company's presentation, and we will now open the calls for questions. If you'd like to ask a question, please press the star key on your phone, followed by the digit 1 twice. That's star 1-1. Please stand by. Our first question comes from Alyssa Nye from IQ Solutions. Your line is now open. Alyssa, you can ask your question. We'll go on to the next question. One moment, please. Our next question is Brandon Bishop. The line is now open, Brandon.

Well, since we're having difficulty hearing the questions, it's very unfortunate, but I suppose what we can do is, if you would like to follow a conversation, please reach out to the company, and we're happy to schedule a call with you. And I just want to thank everybody for joining us on today's call, and we'll look forward to providing another update in the coming months.

And this does conclude today's conference. You may now disconnect.