Cumberland Pharmaceuticals Inc (CPIX) 2014 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Cumberland Pharmaceuticals 2014 Q3 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Ms. Elizabeth Davis, Corporate Relations. Ma'am, please go ahead.

Hello, everyone. Before we begin, I would like to point out that the Company issued a press release containing financial results for the third quarter ended September 30, 2014. The release, including the financial tables, is available at the Company's website at www.cumberlandpharma.com. Before we begin, allow me to read the following Safe Harbor statement.

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 beliefs concerning future events, these forward-looking statements involve risk 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 results and could differ materially from those expressed in forward-looking statements contained in the Company's annual report on Form 10-K or other SEC filings or other public statements. The forward-looking statements are qualified by these risk factors. The Company assumes no obligation to publically update any forward-looking statement, whether as a result of new information, future developments or otherwise. Also, please note that this conference call is being webcast through our website and will be available there. I will now turn the call over to our Chief Executive Officer, A.J. Kazimi, to begin our discussion of the Company's quarterly performance.

Thanks, Elizabeth, and good afternoon, everyone. And thank you for joining us as we review our third quarter 2014 results. With me on today's call are Cumberland's Chief Commercial Officer, Marty Cearnal, and our Chief Financial Officer, Rick Greene. We will start by reviewing our recent developments and then we will provide an update on our products, followed by a discussion of our financial performance for the quarter. We will then conclude with a review of Cumberland's strategy and plans before opening the call to any questions. So, let's begin.

During the third quarter, I am pleased to report that our revenue was $9.7 million, and it was up nearly 50% compared to the prior year period. In addition, so far this year we have generated $1.7 million of net income and nearly $4 million in operating cash flow. Our balance sheet is strong with over $94 million in total assets, $54 million in cash and investments, and no debt at the end of September 2014. We also had over $47 million in tax net loss carry-forwards available at the end of the third quarter resulting from prior exercise of stock options.

Recently we further diversified our revenue mix with the addition of our two newest products, Omeclamox-Pak and Vaprisol. We are pleased with both products' immediate impact as well as their future potential. We are finding Omeclamox, the newest brand in ulcer treatment in this country, to be an excellent fit for our gastroenterology sales force. Also, our hospital sales team is reacquainting the medical community with the role of Vaprisol in treating the leading electrolyte disorder seen in American hospitals. Meanwhile, Kristalose is experiencing a particularly strong year following [the] brand's new positioning in early 2014. Acetadote continues to enjoy a majority market share between shipments of the brand and our authorized generic. And Caldolor continues a steady growth with additional hospitals stocking the product each month and growing pull-through sales in those stocked accounts. We also recently announced favorable Caldolor clinical results through a series of poster presentations at recent national medical meetings. So, with that overview, I would like to now ask Marty Cearnal, our chief commercial officer, to provide an update on our marketed products. Marty?

Thank you, A.J. During the third quarter, our hospital sales force continued their efforts to relaunch the promotion and support for Vaprisol, our newest injectable hospital product. I am pleased to report a favorable reception to Cumberland's promotional effort with many physicians expressing their interest in seeing support for this product's return. Vaprisol is the first and only intravenously administered vasopressin receptor antagonist. It is one of just two branded prescription products indicated for the treatment of hyponatremia. Vaprisol reduces excess water to increase serum sodium concentration and regulate the water-sodium balance in hospitalized patients.

Hyponatremia is the most common electrolyte imbalance in hospitalized patients. Studies have shown that patients with hyponatremia have longer hospital stays and poorer outcomes. Because of the symptoms of hyponatremia can be subtle, it can go unrecognized and untreated. Meanwhile, our huge sales force continues to promote Omeclamox-Pak. We have seen significant prescription increases among our target physicians since our launch in January of this year. As you may know, many stomach ulcers are caused by an infection from the bacteria Helicobacter pylori, or H. pylori, which colonize in the stomach and duodenum. When present, this bacterial infection has been proven to be the cause of over 90% of duodenal ulcers. These ulcers commonly cause abdominal pain and may lead to serious bleeding.

Our new marketing strategy for Kristalose, which was launched in the beginning of 2014, has continued to produce benefits. The new strategy allows us to provide increased support to patients through an enhanced coupon program for the product with redemptions continuing to increase. The resulting sales growth has contributed to Kristalose becoming our largest selling product.

We continue to support Caldolor, and I am very excited about the prospects for this brand. The growth in Caldolor sales slowed in the first quarter due to the severe winter weather and shortages of saline needed to reconstitute the product. The product sales began to rebound in the second quarter with hospital pull-through sales purchases achieving record levels in May and continuing on its growth trajectory through the third quarter. Our hospital sales organization continues to focus on increasing the use of product in key medical centers across the country where Caldolor is on formulary and stocked.

We hosted a national sales meeting late in the third quarter here in Nashville. The meeting was highly successful with the sales team very positive about the growing progress of our brand. We invited a nationally recognized nephrologist to speak to our team about Vaprisol as a part of our ongoing education within our sales organization. That completes the update on our marketed brands and I'll now turn it back over to our Chief Executive Officer, A.J. Kazimi.

Okay, thanks for that update, Marty. A series of reports on new Caldolor studies were released in October. These studies included an investigator-initiated laparoscopic cholecystectomy study from the University of Medicine and Dentistry of New Jersey, Rutgers Medical Center, and New York Methodist Hospital, which was presented at the 2014 American Anesthesiology Meeting in New Orleans, Louisiana. The study concluded that Caldolor provided favorable inflammatory response results in laparoscopic cholecystectomy surgery patients. Caldolor taken before surgery improved the overall quality of recovery, including comfort, emotion and pain, and also reduced fatigue in the early postoperative period. Further, the study results indicated that preoperative administration of Caldolor decreased levels of stress hormones and catecholamines following the surgery.

Two more Caldolor abstracts were presented at the American Academy of Pediatrics National Meeting in San Diego, California. The abstract presentations were both provided by Dr. Corrie Chumpitazi of Texas Children's Hospital based in Houston, Texas. The abstracts reported on a study design to evaluate the safety and efficacy of intravenous ibuprofen when compared to oral or suppository acetaminophen in the treatment of hospitalized febrile pediatric patients. This study demonstrated that when given intravenous ibuprofen, the children experienced significant reduction in temperature compared to those receiving acetaminophen. Both single and multiple doses of intravenous ibuprofen were well tolerated and no significant adverse events were noted.

Our lead development candidate, Hepatoren, is progressing through a Phase 2 study in patients suffering from life-threatening liver and kidney failure. We are monitoring the performance of the medical centers involved in enrolling these study patients, and we continue to add new centers in order to conclude this important trial. I will now turn it over to our Chief Financial Officer, Rick Greene, for a financial review. Rick?

Thank you, A.J. For the three months ended September 30, 2014, net revenues were $9.7 million, nearly a 50% increase over the prior year period. Net revenues by product were $4 million for Kristalose, $3.2 million for Acetadote, including $1.4 million of our authorized generic; $1 million for Omeclamox, $0.8 million for Caldolor, and $0.7 million for Vaprisol. Net revenues for the nine months ended September 30, 2014 were $27.6 million compared to $23.9 million for the prior year period. Total operating expenses for the third quarter were $8.7 million compared to $8 million for the prior year period. Operating expenses for the nine months were $25 million compared to $25.2 million in 2013. We continue to manage our expenses in line with our revenues.

Net income for the quarter was $0.7 million compared to a loss of $0.8 million for the prior year period. Net income for the nine months ended September 30, 2014 was $1.7 million compared to a loss of $0.6 million in 2013. Diluted earnings per share for the third quarter were $0.04, up from a loss of $0.04 in the third quarter of 2013. For the nine-month period, diluted earnings per share were $0.10 compared to a loss of $0.03 in 2013. Cash flow from operations for the nine months ended September 30, 2014 was $4 million compared to $0.9 million for the nine months ended September 30, 2013.

We continue to believe our shares represent a valuable investment and continue our buyback program each quarter. During the third quarter we repurchased approximately 237,000 shares and have now repurchased over 4.1 million shares through this program since its inception.

As of September 30, 2014, we had over $54 million in cash and securities with $39.6 million in cash and cash equivalents, and $14.6 million in marketable securities. We have no debt, and total assets were approximately $94 million. With that, A.J., I'll turn the call back over to you.

Thanks, Rick. Our strategy is straightforward. We aim to maximize the full potential of our commercial brands, be vigilant on expenses, and remain active on the business development front. Let me outline why we are confident Cumberland is in a strong position to do just that.

We are optimistic about the opportunities that Vaprisol and Omeclamox-Pak are bringing to our Company. We expect them to be solid contributors as we increase their visibility in their respective areas. We also continue to seek and evaluate commercial and late-stage development assets that will fit well with our organization. Moreover, we continue to make progress advancing our internal pipeline and our label expansion efforts. And, lastly, our strong financial results and position give us the resources to achieve our goals. So, with that, now let's open the call to any questions you may have. Operator, please proceed.

Thank you. (Operator Instructions) I am showing no questions on the phone lines at this time. I would like to turn the call back to A.J. Kazimi for any closing remarks.

Okay. Thank you, everyone, for joining our call today. We do understand that many investors prefer a private discussion with management regarding the quarter results and we remain prepared to host those type of calls. We do appreciate your time and interest in our Company and we look forward to providing you with another update after the end of the fourth quarter. Goodbye.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.