Cumberland Pharmaceuticals Inc. (Nasdaq: CPIX), a specialty pharmaceutical company focused on the hospital acute care and gastroenterology markets, today announces financial results for the second quarter ending June 30, 2010, and provides revenue guidance for full year 2010.
Net Revenue: For the three months ended June 30, 2010, net revenue was $10.7 million, up 9% from $9.8 million for the same period in 2009. This increase was primarily attributable to increased revenue from Acetadote. Net revenue for the six months ended June 30, 2010, was $20.9 million, up 9% from $19.2 million for the corresponding prior year period. This increase was also primarily due to an increase in Acetadote revenue over the prior year period.
Operating Expenses: Total operating expenses for the three months ended June 30, 2010, were $9.7 million compared with $9.2 million for the same period in 2009. This increase was due to a 33% increase in sales and marketing expense, from $4.4 million in the second quarter 2009 to $5.8 million in the second quarter 2010, and was primarily due to the expansion of the Company's hospital sales force for the launch of Caldolor. That increase was offset by a reduction in research and development expense, from $2.6 million in the second quarter 2009 to $1.0 million in the second quarter 2010 due to a milestone expense related to FDA approval of Caldolor in June 2009.
Operating expenses for the six-month period ended June 30, 2010, were $19.1 million compared with $16.5 million for the same period in 2009. This was due to the aforementioned increase in selling and marketing expense from expansion of the Company's hospital sales force offset by the decrease in expense related to research and development.
Net Income: Net income for the three months ended June 30, 2010, was $0.3 million, or $0.01 per diluted share, compared with $0.3 million, or $0.02 per diluted share, for the same period in 2009. The change in net income was due primarily to an increase in net revenue offset by increased operating expenses. While net income for the second quarter 2010 was consistent compared with the prior year period, earnings per share decreased due to an increase in shares outstanding from the Company's initial public offering in August 2009. Weighted-average diluted shares outstanding at June 30, 2009, was 16.0 million, growing to 21.2 million at June 30, 2010.
Net income for the six months ended June 30, 2010, was $0.6 million, or $0.03 per diluted share, compared with $1.5 million, or $0.09 per diluted share, for the same period in 2009. The decrease in net income was primarily a result of increased sales and marketing expense from the Company's hospital sales force expansion in the third quarter 2009. The decrease in earnings per share was affected by the decrease in net income as well as the aforementioned increase in shares outstanding.
EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for the three months ended June 30, 2010, was $1.2 million compared with $0.8 million for the same period in the prior year. Excluding $0.2 million and $1.2 million in non-cash stock compensation expense for the three months ended June 30, 2010, and 2009, respectively, adjusted EBITDA was $1.4 million and $2.0 million, respectively. For the six months ended June 30, 2010, EBITDA was $2.3 million compared with $3.1 million for the prior year period. Excluding $0.3 million and $1.3 million in non-cash stock compensation expense for the six months ended June 30, 2010, and 2009, respectively, adjusted EBITDA was $2.6 million and $4.4 million, respectively.
Balance Sheet: As of June 30, 2010, Cumberland had $71.5 million in cash and cash equivalents, compared with $73.8 million as of March 31, 2010. Total assets as of June 30, 2010, were $96.7 million compared with $98.7 million at March 31, 2010. The Company had $13.8 million in outstanding debt at the end of the second quarter, compared with $15.3 million at March 31, 2010. A large majority of proceeds from the Company's initial public offering remains available for planned portfolio expansion as well as continued development of currently marketed products.
"We are pleased to have achieved top line revenue growth in the second quarter and are committed to building our three marketed products while we pursue new portfolio additions," said A.J. Kazimi, Chief Executive Officer of Cumberland Pharmaceuticals. "Our business development and product development teams are evaluating several new product opportunities. We also remain acutely focused on expanding hospital formulary approval for Caldolor and have taken a fresh look at the market and our strategy to build that brand for long-term success."
Cumberland is providing full year 2010 revenue guidance, which represents the Company's best estimate of likely future results and which may be affected by factors described below in "Forward-Looking Statements." The Company expects its net revenue for the twelve-month period ended December 31, 2010, to be between $42 and $43 million.
QUARTER HIGHLIGHTS
Product Development
Supplemental New Drug Application for Acetadote
In March 2010, Cumberland submitted a supplemental new drug application (sNDA) to the U.S. Food and Drug Administration (FDA) for use of Acetadote in patients with non-acetaminophen induced acute liver failure. The sNDA included data from a clinical trial at the University of Texas Southwestern Medical Center indicating that acute liver failure patients treated with Acetadote have a significantly improved chance of survival without transplant, and that patients requiring transplant can survive a number of days longer without transplant, providing more time for a donor organ to become available. In May 2010, the FDA accepted the sNDA and granted a priority review. In addition to expanded labeling, the Company has requested additional exclusivity for the product and, if approved, expects to begin marketing it with the new indication in 2011.
International Markets
Acetadote Approved for Marketing in Australia
Cumberland has granted an exclusive license to Phebra Pty Ltd., an Australian-based specialty pharmaceutical company, to commercialize Acetadote in Australia. In April 2010, the Therapeutics Goods Administration (TGA), which regulates drugs and medical devices in Australia, approved Acetadote for marketing. Phebra is preparing for the Australian launch of the product, which it expects to commence this year. Under the agreement, Phebra is responsible for ongoing regulatory requirements, marketing, distribution and sales of Acetadote in Australia, New Zealand and the Asia Pacific while Cumberland maintains responsibility for product formulation, development and manufacturing. Cumberland receives milestone payments and royalties on future sales in exchange for the product license.
Caldolor Launched for Compassionate Use in Australia
In 2009, Cumberland entered into an exclusive agreement with Phebra Pty Ltd. for distribution of Caldolor in Australia and New Zealand. The Therapeutics Goods Administration operates compassionate use programs allowing patients with critical clinical needs to access products not yet approved. In April 2010, Phebra made Caldolor available in Australia for compassionate use.
Submission of New Drug Application for Caldolor in South Korea
In December 2009, Cumberland entered into an exclusive agreement with DB Pharm Korea Co. Ltd., a Korean-based pharmaceutical company, for the commercialization of Caldolor in South Korea. Under the terms of the agreement DB Pharm Korea is responsible for seeking regulatory approval for Caldolor in South Korea, and in April 2010 submitted a New Drug Application to the Korean Food and Drug Administration. Following potential approval, DB Pharm Korea will handle ongoing regulatory reporting, product marketing, distribution and sales in the territory. Cumberland maintains responsibility for product formulation, development and manufacturing and will provide finished product for sale. In exchange for the license to the product, Cumberland will receive upfront and milestone payments as well as royalties on future sales.
License Agreement for Caldolor in Canada
In April 2010, Cumberland entered into an exclusive agreement with Alveda Pharmaceuticals Inc., a Toronto-based specialty pharmaceutical company, for commercialization of Caldolor in Canada. Under the agreement, Alveda will seek Canadian regulatory approval for Caldolor and will handle ongoing regulatory requirements, product marketing, distribution and sales upon potential approval. Cumberland will maintain responsibility for product formulation, development and manufacturing and will receive royalties on any sales in addition to upfront and milestone payments.
Share Repurchase Program
In May 2010, Cumberland's Board of Directors approved a share repurchase program that authorized the Company to repurchase up to $10 million of its outstanding common shares. During the second quarter, Cumberland repurchased approximately 200,000 shares pursuant to this program at an average price of $6.86 per share. Purchases may continue to be made from time-to-time on the open market over a period of several months. The Company continues to believe that its shares are currently undervalued and that they represent an attractive investment.
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