Cumberland Pharmaceuticals Inc.

Thank you for joining the Cumberland Pharmaceuticals 3rd 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 Molly Agas, Senior Account Manager at the Dalton Agency, which handles Cumberland's communications. Molly, please go ahead.

Good afternoon, everyone. Today, Cumberland issued a press release containing a company update in financial results for the third quarter and its September 30th, 2021. That release with related financial tables is available on the company's 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. Because any such statements reflect the company's current views and expectations concerning future events, they may involve risks and uncertainties. Additionally, there are many factors that could affect Cumberland's future results, including, but not limited to, natural disasters, economic downturns, public health epidemics, 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 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 could differ materially from expectations, and information shared on this call should be considered current as of today only. Please remember that the company does not assume responsibility to update 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 can be found on the individual product websites. The links to those sites can be found on the corporate website at www.cumberlandpharma.com. Today, the company will also provide some non-GAAP financial measures with respect to performance. An explanation, reconciliation to GAAP measures can be found on the financial tables in the earnings release issued earlier today. With us on today's call are A.J. Kazemi, Cumberland's Chief Executive Officer, Marty Cornell, Chief Commercial Officer, and John Hamm, Chief Financial Officer. The report will start with an overview of Cumberland's progress during the third quarter and follow with a discussion of the company's commercial activities. There will then be a review of the financial results, followed by closing remarks before opening the call to any questions. So I'll now turn the call over to Cumberland's CEO, A.J. Kazemi, to begin the discussion of the corporate update and company performance.

Good afternoon, everyone. And thank you for joining us. As you heard, today we'll provide an overall company update along with a review of our third quarter results. Well, Cumberland delivered another steady quarterly performance when taking into account the challenges of operating during the pandemic. Fortunately, we're starting to see signs that our business environment is returning to normal. For example, we recently held our first in-person national sales meeting in two years. and we've also resumed enrollment in the clinical studies, which have been interrupted by the pandemic. Furthermore, we've worked hard to maintain operations while ensuring the health and safety of our team. We're optimistic as vaccination rates rise and case counts decline, and we continue to carefully monitor the situation. Over the past year and a half, we've reinvented the way we operate, to support our customers and the patients that can benefit from our medicines. We're fortunate to have a diversified product portfolio of FDA-approved brands that has helped us mitigate the negative effects of the pandemic on our business, with brands such as Vibative and Crystallos delivering a solid performance this year. We do partner with a group of FDA-approved manufacturers to supply our products and And throughout the pandemic, we've been successfully monitoring that supply chain, which includes the raw materials as well as the finished goods emerging from those facilities. Meanwhile, our clinical trials have resumed as we're beginning to emerge from the pandemic, and we are working closely with the sites as they reopen and enroll patients in the studies for our products. As a reminder, we're sponsoring three Phase II clinical programs, all evaluating our Ifitrabab product candidate. These studies involve patients with Duchenne muscular dystrophy, a rare fatal genetic neuromuscular disease, systemic sclerosis, a debilitating autoimmune disease, an aspirin-exacerbated respiratory disease, a severe form of asthma. Additionally, our board of directors has approved a new clinical program for the use of ifitroban to treat patients with progressive fibrosing interstitial lung diseases. The non-clinical program is complete. The resulting manuscript has been prepared, and we are now designing a phase two clinical studies as we work to help patients with this deadly condition. We will await results from all of these clinical programs before deciding on the best development path for the registration of iFiturban, our first new chemical entity. You see, the potential markets for these pipeline candidates are quite large for a company our size, and we believe success in any of these programs can have a positive impact on our company, our value, and the patients that we can support. Although Cumberland continues to be impacted by the pandemic, our business does remain steady. During the third quarter, our product portfolio delivered combined revenues of just over $8 million. And while shipments were a bit lighter than usual during the quarter, it's important to note that end-user demand and prescriptions for our products continues to grow. That's because, as we've noted before, our quarterly revenues do fluctuate because they're tied to our shipments and wholesaler buying patterns, and therefore our business is best evaluated on an annual basis. Year-to-date revenues have now totaled $27.7 million, resulted in year-to-date adjusted earnings of $.7 million, or five cents a share. We've also generated $4.4 million in cash flow for operations during the first three quarters of 2021. We ended the third quarter with just under $88 million in total assets, $41 million in liabilities, and $47 million in shareholders' equity. And in addition, I'm pleased to report that we recently extended our $15 million bank line of credit for a new three-year term, with Pinnacle, the largest independent bank here in the Mid-South region of the United States. During the third quarter, we implemented the national launch of our Readytrex line of pre-filled methotrexate syringes. As a reminder, Readytrex is FDA approved for the treatment of active rheumatoid, juvenile idiopathic, and severe psoriatic arthritis. Also, we were pleased to announce the results of our 2020 sustainability report, detailing Cumberland's activities pertaining to our environmental, social, and governance, or ESG matters. Highlights of this report included the delivery of nearly 2.5 million doses of our brands for patients, no product recalls, no studies terminated due to failure of GCPs, and no brands listed on the FDA MedWatch safety alerts for human medical products. Our employee base was 46% female and 18% minorities in 2020. As the largest biopharma company founded and headquartered in the Mid-South, we hold ourselves to the highest standards of ethical practice and understand the importance of addressing our impact on our constituents, the community, and the environment. And we do remain committed to sustainability and to maintaining transparency of our corporate operations. You can find a copy of that report under the investor relations sections of our website at www.cumberlandpharma.com. So with that overview and update, I'd now like to ask Marty Cornell, Cumberland's Chief Commercial Officer and President of our Sales Division, to share his update on the company's marketing and sales activities. Marty?

Thank you, AJ. At the end of September, we held our first in-person national sales meeting in two years. Recall that we have approximately 50 sales and medical professionals across the country, and it was great to have everyone together again. With the attendees vaccinated and additional meeting precautions implemented, we were able to safely conduct our meeting and training activities. The goal of the meeting was to introduce the sales organization to a number of new marketing and promotional initiatives and continue to provide support and training to equip our sales teams to build our brands while navigating the current landscape. We have two national sales divisions, one calling on key hospital accounts across the country, and the other calling on select office-based physicians. Our primary target markets remain hospital acute care and office-based gastroenterology and now additionally rheumatology. These medical specialties are characterized by a relatively concentrated base that can be supported effectively by our team of experienced sales professionals. Both our sales divisions have altered many of their promotional tactics throughout the pandemic, using more electronic and telephonic communications. These innovative and efficient ways to expand our reach, add new coverage, and assure awareness of our products have allowed us to stay on a growth trajectory throughout the pandemic. As AJ mentioned earlier, we also implemented the full launch of ReadyTracks during the third quarter. Readytrex is our new line of pre-filled syringes specifically designed for ease of handling and dosing accuracy for subcutaneous administration of methotrexate. The product is FDA approved for the treatment of active rheumatoid arthritis, juvenile idiopathic arthritis, and severe psoriatic arthritis. Following the submission and filing of a new drug application for Readytrex in December of 2019, we received FDA approval and began planning for the launch of the product line. Upon the arrival of the initial product supplies, we provided shipments of ReadyTrex to select accounts in November of 2020, conducting a soft launch through our field sales force who began making contact with new physicians in the medical community in support of this brand. ReadyTrex treats patients who have difficulty tolerating or responding to orally delivered methotrexate. With the arrival of the remaining launch supplies, we began promoting the product line, targeting a group of medical practitioners in the rheumatology specialty. To date, we are receiving favorable feedback from physicians regarding the features of our methotrexate delivery system. Meanwhile, as we prepared for the national launch, we've been working to establish the needed reimbursement arrangements for the product. While this initiative has taken some time and considerable effort, we have recently seen growing acceptance and coverage by managed care plans across the country. We'll see limited additional sales of ReadyTrex this year as physician prescriptions pull product from the inventory already in the wholesaler distribution centers. We expect reorders with resulting shipments and increasing sales to begin to ramp up in 2022. Now let's turn our attention to Vibative, our potent antibiotic designed for difficult-to-treat infections. It's FDA approved to treat both hospital-acquired and ventilator-associated pneumonia that result from susceptible organisms, as well as complicated skin and skin structure infections. Over the past year, we've been pleased to learn that Vibative is being used to help COVID-19 patients who develop these secondary bacterial pneumonias and other gram-positive infections while in the hospital. We've compiled a case study dossier outlining several real-world instances where Vibative was used effectively and safely to treat COVID-19 patients. During the third quarter, our medical department supported a continuing medical education program discussing secondary bacterial infections, including pneumonia in COVID-19 patients. In the program, Dr. Ali Hassoun provided understanding of the importance of prompt and appropriate pharmacological treatment of secondary bacterial infections, supporting the use of Vibative. Additionally, we published discussions with Dr. Hassoun and Dr. Edward Dominguez regarding Vibative's dual mechanism of action, which inhibits cell wall synthesis by binding to peptoglycan precursors and disrupts bacterial membrane function. In August, we signed an agreement with Verity Pharmaceuticals International to license and commercialize Vibative in Puerto Rico. We look forward to Verity's launch of the product there and to delivering Vibative to support patients in that market. Meanwhile, our partner for the Chinese market, Cyclone Pharmaceuticals, has informed us that they have submitted an application for approval of Vibative in China, and that application has been accepted for review by the regulatory authorities there. Earlier this year, Cyclone completed an initial public offering and listing of their shares on the Hong Kong Stock Exchange. They expect a review of up to 12 months for the approval of their submission and we believe that the potential for Vibative in their market may be significant. Turning to Caldolor. Early this year we implemented the full national launch of our FDA approved next generation formulation of the product. A non-steroidal anti-inflammatory drug, Caldolor may be used as the sole method of treatment for mild to moderate pain or as part of a multimodal treatment for severe pain. The next-generation product features an easier administration presentation and an improved patented formulation. This ready-to-use product contains 800 milligrams of ibuprofen in a 200-milliliter formulation designed for injection. It offers hospitals and medical facilities improved dosing accuracy and cost savings, while managing patient pain and significantly reducing their opioid consumption. We're currently selling Caldolor both in vials and in the premixed bags and are pleased that this new ready-to-use presentation now comprises well over half the sales of the product. While the new presentation was off to a good start following the launch, it was very impacted by the pandemic and the resulting postponement of elective surgeries. Revenues from this product have begun to grow again this year as elective surgeries resume and more facilities gain access to the product. In the third quarter, we announced the study supporting the use of ibuprofen in patients with kidney stones. The study shows that ibuprofen is more rapid-acting compared to ketorolac in controlling pain caused by kidney stones. with a rate of complete relief from pain two times that of Ketorolac. The findings build upon a body of medical evidence supporting the use of Caldolor to treat pain and reduce opioid use in patients. Additionally, Dr. Stephen Southworth provided support on a national podcast for the use of Caldolor as the foundational step in enhanced recovery after surgery, or ERAS protocols, as an alternative to opioids. Our Vaprazole brand has also been helpful in treating COVID-19 and other hospitalized patients suffering from a potentially deadly sodium imbalance known as hyponatremia. In late 2020, an international study of over 4,000 patients found that These hospitalized patients with COVID-19 had a high risk of developing hyponatremia. These patients also had a higher incidence of mortality due to hyponatremia. The results supported the use of an intravenous Vaptan to treat hyponatremia in critically ill patients affected with COVID-19. Hyponatremia is an imbalance of serum sodium to body water and it's the most common electrolyte disorder among hospitalized patients. Cumberland's Vaprazole is the only intravenously administered Vaptan treatment available in the United States. Vaprazole has a proven one-day response to help normalize serum sodium levels in hyponatremic patients and move them out of the ICU as efficiently as possible. Dr. Biff Palmer, a professor of internal medicine at UT Southwestern Medical Center in Dallas, Texas, recently discussed the results of this study on a podcast. Now let's turn our attention to Crystallose, our prescription-strength laxative product, which continues to be Cumberland's largest-selling product. It's provided in a pre-measured powdered dose that dissolves quickly in just four ounces of water immediately. for a virtually taste-free and grit-free solution. It's a unique form of lactulose that compares favorably to the alternative syrup versions. Crystallose's strong performance this year has benefited from the support of our co-promotion partners who have expanded our reach for the product by featuring the brand with physicians and facilities that we don't cover. We'll look for ways to build upon this successful partnership model to support other brands in our portfolio. As we've not shipped or recorded sales of a Mechlamox pack so far in 2021, the products packager encountered difficulties during the pandemic, and as a result, their operations are currently suspended. We're awaiting the resumption of packaging at this facility to build new inventory and provide the needed supply of the product. That completes today's updates on our key commercial efforts. A.J., I'll turn the call back over to you.

Thanks, Marty. I'd now like to hand the call over to our Chief Financial Officer, John Hamm, to present the financial review, Joe.

Thank you, A.J. For the three months ended September 30, 2021, net revenues from continuing operations were $8.1 million. We recorded an additional $500,000 in revenue from discontinued operations associated with return of 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 third quarter of 2021 included $4 million for Crystalos, $1.9 million for Vybatov, $1.3 million for Caldolor, and $0.3 million for VAP resolve. It's important to note that given the quarterly fluctuations in buying patterns from our customers, we believe that our performance should be assessed based on annual sales results. Year-to-date net revenues were $27.7 million, up 2% from the first nine months of 2020. Year-to-date sales totaled $12.3 million for Crystalos, $8.8 million for Vibatov, $3.7 million for Caldolor, and $1.9 million for Vaprazole. In addition, we recorded a total of $1.5 million in revenue from the discontinued operations. Total operating expenses for the third quarter were $9.6 million, an improvement over the $10.5 million of expenses during the prior year period. Year-to-date expenses totaled $31 million, which also represented an improvement over the $31.8 million in expenses during the same prior period last year. We had an adjusted loss of $340,000 during the third quarter. However, year-to-date adjusted earnings were $700,000, a $1 million improvement over the prior year period. Cash flow from operating activities totaled $4.4 million year-to-date. As a reminder, our financial statements have been significantly impacted by the Vibatop transaction, our largest acquisition to date. The financial terms for the transaction included a $20 million payment upon closing. We subsequently provided a $5 million milestone payment and are also providing royalties based on product sales. From the product's launch in late 2018 to the end of the third quarter of 2021, the product has delivered a total cash contribution of approximately $25 million which is now equal to the upfront payments to acquire the brand. Product revenues going forward will generate a return on that investment. We accounted for the Vibatav 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 amortization of intangibles and the sales of inventory, the value of these assets totaled $17.5 million at the end of the third quarter. Turning to our balance sheet as of September 30, 2021, we had $87.6 million in total assets, including $25.8 million in cash and equivalents, Liabilities totaled $41 million, including $15 million on our credit facility. Total shareholders' equity was $48.6 million at the end of the third quarter. As AJ noted, we recently renewed our line of credit for a new three-year term. The line provides us with a $15 million facility with an expansion feature of up to $20 million. During the pandemic, During the pandemic, we continued our corporate share repurchase program, but did decrease the number of shares repurchased. Through the end of September 2021, we repurchased an additional 326,000 Cumberland shares. These repurchases included those on the open market as well as those needed to fund the taxes associated with employee vested restricted shares. There is also a 2021 share repurchase initiative underway for members of our board of directors who wish to increase their holdings in the company. Six of our board members are participating through share purchase plans and collectively purchased a total of 36,000 shares through the third quarter. Finally, I'd like to note that Cumberland has over $56 million in tax net operating loss carry-forwards primarily resulting from the prior exercise of stock options. That completes our financial report. I'll turn it back over to you, AJ. Thank you, John.

Well, although Cumberland continues to be impacted by the pandemic, our business does remain steady. Our diversified line of FDA-approved brands has allowed us to weather the external challenges, and we remain responsive to the evolving medical market. We continue working to fulfill our mission by building a diversified portfolio of innovative products through a multifaceted strategy. And that includes the internal development of new candidates, as well as the acquisition of established brands. We continue to progress our clinical pipeline and incubate future product opportunities at Cumberland Emerging Technologies, or CET. We're also leveraging our infrastructure through international partnerships and co-promotion arrangements, such as those we have in place for Vivativ, Crystalos, and Calblor. We've advanced several key initiatives throughout the year, including those outlined in our new sustainability report. And as part of our ESG activities, we are proud to have recently sponsored the Nashville Women's Healthcare to Watch event again this year. Throughout the pandemic, we've remained dedicated and focused on our mission of advancing patient care through the delivery of high-quality medicines. We do expect to deliver another year of meaningful developments and growth in 2021. And I'd like to note that shareholder and management interests are closely aligned, given the significant insider ownership in this company today. And in addition, as you heard, a majority of our board members are participating in share purchases through plans designed to increase their holdings in the company. So with that review and update, now let's open the call to any questions you may have. Operator, please proceed.

Thank you, sir. Ladies and gentlemen, that concludes the company's presentation. And we will now open the call for any questions. If you would like to ask a question, please press the star key followed by the digit one on your touchtone telephone. Again, if you would like to ask a question, just press the star key followed by the number one on your telephone keypad.

Okay, well thanks everyone for joining our call today. And as I've noted in the past, we understand that many of you prefer a private discussion with management. And so please just reach out to us, and we'll be glad to get it scheduled and hold it with you. We do appreciate your time and interest in Cumberland, and we look forward to providing another update after the new year.

Thank you, sir. Ladies and gentlemen, that concludes our conference for today. If you would like to listen to our replay of today's conference, please dial 855-859-2056. using the access code 947-6299. 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. Thank you. Thank you. Thank you. Music. you Bye. I'm

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Thank you for joining the Cumberland Pharmaceuticals Third 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 Molly Agas, Senior Account Manager at the Dalton Agency, which handles Cumberland's communications. Molly, please go ahead.

Good afternoon, everyone. Today, Cumberland issued a press release containing a company update in financial results for the third quarter and its September 30th, 2021. That release with related financial tables is available on the company's 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. Because any such statements reflect the company's current views and expectations concerning future events, they may involve risks and uncertainties. Additionally, there are many factors that could affect Cumberland's future results, including, but not limited to, natural disasters, economic downturns, public health epidemics, 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 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 could differ materially from expectations, and information shared on this call should be considered current as of today only. Please remember that the company does not assume responsibility to update 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 can be found on the individual product websites. The links to those sites can be found on the corporate website at www.cumberlandpharma.com. Today, the company will also provide some non-GAAP financial measures with respect to performance. An explanation, reconciliation to GAAP measures can be found on the financial tables in the earnings release issued earlier today. With us on today's call are A.J. Kazemi, Cumberland's Chief Executive Officer, Marty Cornell, Chief Commercial Officer, and John Hamm, Chief Financial Officer. The report will start with an overview of Cumberland's progress during the third quarter and follow with a discussion of the company's commercial activities. There will then be a review of the financial results, followed by closing remarks before opening the call to any questions. So I'll now turn the call over to Cumberland's CEO, A.J. Kazemi, to begin the discussion of the corporate update and company performance.

Good afternoon, everyone. And thank you for joining us. As you heard, today we'll provide an overall company update along with a review of our third quarter results. Well, Cumberland delivered another steady quarterly performance when taking into account the challenges of operating during the pandemic. Fortunately, we're starting to see signs that our business environment is returning to normal. For example, we recently held our first in-person national sales meeting in two years. and we've also resumed enrollment in the clinical studies, which have been interrupted by the pandemic. Furthermore, we've worked hard to maintain operations while ensuring the health and safety of our team. We're optimistic as vaccination rates rise and case counts decline, and we continue to carefully monitor the situation. Over the past year and a half, we've reinvented the way we operate, to support our customers and the patients that can benefit from our medicines. We're fortunate to have a diversified product portfolio of FDA-approved brands that has helped us mitigate the negative effects of the pandemic on our business, with brands such as Vibative and Crystallos delivering a solid performance this year. We do partner with a group of FDA-approved manufacturers to supply our products and And throughout the pandemic, we've been successfully monitoring that supply chain, which includes the raw materials as well as the finished goods emerging from those facilities. Meanwhile, our clinical trials have resumed as we're beginning to emerge from the pandemic, and we are working closely with the sites as they reopen and enroll patients in the studies for our products. As a reminder, we're sponsoring three Phase II clinical programs, all evaluating our Ifitrabab product candidate. These studies involve patients with Duchenne muscular dystrophy, a rare fatal genetic neuromuscular disease, systemic sclerosis, a debilitating autoimmune disease, an aspirin-exacerbated respiratory disease, a severe form of asthma. Additionally, our board of directors has approved a new clinical program for the use of ifitroban to treat patients with progressive fibrosing interstitial lung diseases. The non-clinical program is complete. The resulting manuscript has been prepared, and we are now designing a phase two clinical studies as we work to help patients with this deadly condition. We will await results from all of these clinical programs before deciding on the best development path for the registration of iFiturban, our first new chemical entity. You see, the potential markets for these pipeline candidates are quite large for a company our size, and we believe success in any of these programs can have a positive impact on our company, our value, and the patients that we can support. Although Cumberland continues to be impacted by the pandemic, our business does remain steady. During the third quarter, our product portfolio delivered combined revenues of just over $8 million. And while shipments were a bit lighter than usual during the quarter, it's important to note that end-user demand and prescriptions for our products continues to grow. That's because, as we've noted before, our quarterly revenues do fluctuate because they're tied to our shipments and wholesaler buying patterns, and therefore our business is best evaluated on an annual basis. Year-to-date revenues have now totaled $27.7 million, resulted in year-to-date adjusted earnings of $.7 million, or five cents a share. We've also generated $4.4 million in cash flow for operations during the first three quarters of 2021. We ended the third quarter with just under $88 million in total assets, $41 million in liabilities, and $47 million in shareholders' equity. And in addition, I'm pleased to report that we recently extended our $15 million bank line of credit for a new three-year term, with Pinnacle, the largest independent bank here in the Mid-South region of the United States. During the third quarter, we implemented the national launch of our Readytrex line of pre-filled methotrexate syringes. As a reminder, Readytrex is FDA approved for the treatment of active rheumatoid, juvenile idiopathic, and severe psoriatic arthritis. Also, we were pleased to announce the results of our 2020 sustainability report, detailing Cumberland's activities pertaining to our environmental, social, and governance, or ESG matters. Highlights of this report included the delivery of nearly 2.5 million doses of our brands for patients, no product recalls, no studies terminated due to failure of GCPs, and no brands listed on the FDA MedWatch safety alerts for human medical products. Our employee base was 46% female and 18% minorities in 2020. As the largest biopharma company founded and headquartered in the Mid-South, we hold ourselves to the highest standards of ethical practice and understand the importance of addressing our impact on our constituents, the community, and the environment. And we do remain committed to sustainability and to maintaining transparency of our corporate operations. You can find a copy of that report under the investor relations sections of our website at www.cumberlandpharma.com. So with that overview and update, I'd now like to ask Marty Cornell, Cumberland's Chief Commercial Officer and President of our Sales Division, to share his update on the company's marketing and sales activities. Marty?

Thank you, AJ. At the end of September, we held our first in-person national sales meeting in two years. Recall that we have approximately 50 sales and medical professionals across the country, and it was great to have everyone together again. With the attendees vaccinated and additional meeting precautions implemented, we were able to safely conduct our meeting and training activities. The goal of the meeting was to introduce the sales organization to a number of new marketing and promotional initiatives and continue to provide support and training to equip our sales teams to build our brands while navigating the current landscape. We have two national sales divisions, one calling on key hospital accounts across the country, and the other calling on select office-based physicians. Our primary target markets remain hospital acute care and office-based gastroenterology and now additionally rheumatology. These medical specialties are characterized by a relatively concentrated base that can be supported effectively by our team of experienced sales professionals. Both our sales divisions have altered many of their promotional tactics throughout the pandemic, using more electronic and telephonic communications. These innovative and efficient ways to expand our reach, add new coverage, and assure awareness of our products have allowed us to stay on a growth trajectory throughout the pandemic. As AJ mentioned earlier, we also implemented the full launch of ReadyTREX during the third quarter. Readytrex is our new line of pre-filled syringes specifically designed for ease of handling and dosing accuracy for subcutaneous administration of methotrexate. The product is FDA approved for the treatment of active rheumatoid arthritis, juvenile idiopathic arthritis, and severe psoriatic arthritis. Following the submission and filing of a new drug application for Readytrex in December of 2019, we received FDA approval and began planning for the launch of the product line. Upon the arrival of the initial product supplies, we provided shipments of ReadyTrex to select accounts in November of 2020, conducting a soft launch through our field sales force who began making contact with new physicians in the medical community in support of this brand. ReadyTrex treats patients who have difficulty tolerating or responding to orally delivered methotrexate. With the arrival of the remaining launch supplies, we began promoting the product line, targeting a group of medical practitioners in the rheumatology specialty. To date, we are receiving favorable feedback from physicians regarding the features of our methotrexate delivery system. Meanwhile, as we prepared for the national launch, we've been working to establish the needed reimbursement arrangements for the product. While this initiative has taken some time and considerable effort, we have recently seen growing acceptance and coverage by managed care plans across the country. We'll see limited additional sales of ReadyTrex this year as physician prescriptions pull product from the inventory already in the wholesaler distribution centers. We expect reorders with resulting shipments and increasing sales to begin to ramp up in 2022. Now let's turn our attention to Vibative, our potent antibiotic designed for difficult-to-treat infections. It's FDA approved to treat both hospital-acquired and ventilator-associated pneumonia that result from susceptible organisms, as well as complicated skin and skin structure infections. Over the past year, we've been pleased to learn that Vibative is being used to help COVID-19 patients who develop these secondary bacterial pneumonias and other gram-positive infections while in the hospital. We've compiled a case study dossier outlining several real-world instances where Vibative was used effectively and safely to treat COVID-19 patients. During the third quarter, our medical department supported a continuing medical education program discussing secondary bacterial infections, including pneumonia in COVID-19 patients. In the program, Dr. Ali Hassoun provided understanding of the importance of prompt and appropriate pharmacological treatment of secondary bacterial infections, supporting the use of Vibative. Additionally, we published discussions with Dr. Hassoun and Dr. Edward Dominguez regarding Vibative's dual mechanism of action, which inhibits cell wall synthesis by binding to peptoglycan precursors and disrupts bacterial membrane function. In August, we signed an agreement with Verity Pharmaceuticals International to license and commercialize Vibative in Puerto Rico. We look forward to Verity's launch of the product there and to delivering Vibative to support patients in that market. Meanwhile, our partner for the Chinese market, Cyclone Pharmaceuticals, has informed us that they have submitted an application for approval of Vibative in China, and that application has been accepted for review by the regulatory authorities there. Earlier this year, Cyclone completed an initial public offering and listing of their shares on the Hong Kong Stock Exchange. They expect a review of up to 12 months for the approval of their submission and we believe that the potential for Vibative in their market may be significant. Turning to Caldolor. Early this year we implemented the full national launch of our FDA approved next generation formulation of the product. A non-steroidal anti-inflammatory drug, Caldolor may be used as the sole method of treatment for mild to moderate pain or as part of a multimodal treatment for severe pain. The Next Generation product features an easier administration presentation and an improved patented formulation. This ready-to-use product contains 800 milligrams of ibuprofen in a 200-milliliter formulation designed for injection. It offers hospitals and medical facilities improved dosing accuracy and cost savings, while managing patient pain and significantly reducing their opioid consumption. We're currently selling Caldolor both in vials and in the premixed bags and are pleased that this new ready-to-use presentation now comprises well over half the sales of the product. While the new presentation was off to a good start following the launch, it was very impacted by the pandemic and the resulting postponement of elective surgeries. Revenues from this product have begun to grow again this year as elective surgeries resume and more facilities gain access to the product. In the third quarter, we announced the study supporting the use of ibuprofen in patients with kidney stones. The study shows that ibuprofen is more rapid-acting compared to ketorolac in controlling pain caused by kidney stones. with a rate of complete relief from pain two times that of Ketorolac. The findings build upon a body of medical evidence supporting the use of Caldolor to treat pain and reduce opioid use in patients. Additionally, Dr. Stephen Southworth provided support on a national podcast for the use of Caldolor as the foundational step in enhanced recovery after surgery, or ERAS protocols, as an alternative to opioids. Our Vaprazole brand has also been helpful in treating COVID-19 and other hospitalized patients suffering from a potentially deadly sodium imbalance known as hyponatremia. In late 2020, an international study of over 4,000 patients found that These hospitalized patients with COVID-19 had a high risk of developing hyponatremia. These patients also had a higher incidence of mortality due to hyponatremia. The results supported the use of an intravenous Vaptan to treat hyponatremia in critically ill patients affected with COVID-19. Hyponatremia is an imbalance of serum sodium to body water and it's the most common electrolyte disorder among hospitalized patients. Cumberland's Vaprazole is the only intravenously administered Vaptan treatment available in the United States. Vaprazole has a proven one-day response to help normalize serum sodium levels in hyponatremic patients and move them out of the ICU as efficiently as possible. Dr. Biff Palmer, a professor of internal medicine at UT Southwestern Medical Center in Dallas, Texas, recently discussed the results of this study on a podcast. Now let's turn our attention to Crystallose, our prescription-strength laxative product, which continues to be Cumberland's largest-selling product. It's provided in a pre-measured powdered dose that dissolves quickly in just four ounces of water for a virtually taste-free and grit-free solution. It's a unique form of lactulose that compares favorably to the alternative syrup versions. Crystallose's strong performance this year has benefited from the support of our co-promotion partners who have expanded our reach for the product by featuring the brand with physicians and facilities that we don't cover. We'll look for ways to build upon this successful partnership model to support other brands in our portfolio. As we've not shipped or recorded sales of a Mechlamox pack so far in 2021, the products packager encountered difficulties during the pandemic, and as a result, their operations are currently suspended. We're awaiting the resumption of packaging at this facility to build new inventory and provide the needed supply of the product. That completes today's updates on our key commercial efforts. A.J., I'll turn the call back over to you.

Thanks, Marty. I'd now like to hand the call over to our Chief Financial Officer, John Hamm, to present the financial review, Joe.

Thank you, A.J. For the three months ended September 30, 2021, net revenues from continuing operations were $8.1 million. We recorded an additional $500,000 in revenue from discontinued operations associated with return of 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 third quarter of 2021 included $4 million for Crystalos, $1.9 million for Vibatov, $1.3 million for Caldolor, and $0.3 million for VAP result. It's important to note that given the quarterly fluctuations in buying patterns from our customers, we believe that our performance should be assessed based on annual sales results. Year-to-date net revenues were $27.7 million, up 2% from the first nine months of 2020. Year-to-date sales totaled $12.3 million for Crystalos, $8.8 million for Vibatov, $3.7 million for Caldolor, and $1.9 million for Vaprazole. In addition, we recorded a total of $1.5 million in revenue from the discontinued operations. Total operating expenses for the third quarter were $9.6 million, an improvement over the $10.5 million of expenses during the prior year period. Year-to-date expenses totaled $31 million, which also represented an improvement over the $31.8 million in expenses during the same prior period last year. We had an adjusted loss of $340,000 during the third quarter. However, year-to-date adjusted earnings were $700,000, a $1 million improvement over the prior year period. Cash flow from operating activities totaled $4.4 million year-to-date. As a reminder, our financial statements have been significantly impacted by the Vibatop transaction, our largest acquisition to date. The financial terms for the transaction included a $20 million payment upon closing. We subsequently provided a $5 million milestone payment and are also providing royalties based on product sales. From the product's launch in late 2018 to the end of the third quarter of 2021, the product has delivered a total cash contribution of approximately $25 million which is now equal to the upfront payments to acquire the brand. Product revenues going forward will generate a return on that investment. We accounted for the Vibatav 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 amortization of intangibles and the sales of inventory, the value of these assets totaled $17.5 million at the end of the third quarter. Turning to our balance sheet as of September 30, 2021, we had $87.6 million in total assets, including $25.8 million in cash and equivalents, Liabilities totaled $41 million, including $15 million on our credit facility. Total shareholders' equity was $48.6 million at the end of the third quarter. As AJ noted, we recently renewed our line of credit for a new three-year term. The line provides us with a $15 million facility with an expansion feature of up to $20 million. During the pandemic, During the pandemic, we continued our corporate share repurchase program, but did decrease the number of shares repurchased. Through the end of September 2021, we repurchased an additional 326,000 Cumberland shares. These repurchases included those on the open market as well as those needed to fund the taxes associated with employee vested restricted shares. There is also a 2021 share repurchase initiative underway for members of our board of directors who wish to increase their holdings in the company. Six of our board members are participating through share purchase plans and collectively purchased a total of 36,000 shares through the third quarter. Finally, I'd like to note that Cumberland has over $56 million in tax net operating loss carry-forwards primarily resulting from the prior exercise of stock options. That completes our financial report. I'll turn it back over to you, AJ.

Thank you, John. Well, although Cumberland continues to be impacted by the pandemic, our business does remain steady. Our diversified line of FDA-approved brands has allowed us to weather the external challenges, and we remain responsive to the evolving medical market. We continue working to fulfill our mission by building a diversified portfolio of innovative products through a multifaceted strategy, and that includes the internal development of new candidates, as well as the acquisition of established brands. We continue to progress our clinical pipeline and incubate future product opportunities at Cumberland Emerging Technologies, or CET. We're also leveraging our infrastructure, through international partnerships and co-promotion arrangements, such as those we have in place for Vivativ, Crystalos, and Calblor. We've advanced several key initiatives throughout the year, including those outlined in our new sustainability report. And as part of our ESG activities, we are proud to have recently sponsored the Nashville Women's Healthcare to Watch event again this year. Throughout the pandemic, we've remained dedicated and focused on our mission of advancing patient care through the delivery of high-quality medicines. We do expect to deliver another year of meaningful developments and growth in 2021. And I'd like to note that shareholder and management interests are closely aligned, given the significant insider ownership in this company today. And in addition, as you heard, a majority of our board members are participating in share purchases through plans designed to increase their holdings in the company. So with that review and update, now let's open the call to any questions you may have. Operator, please proceed.

Thank you, sir. Ladies and gentlemen, that concludes the company's presentation. And we will now open the call for any questions. If you would like to ask a question, please press the star key followed by the digit one on your touchtone telephone. Again, if you would like to ask a question, just press the star key followed by the number one on your telephone keypad.

Okay, well thanks everyone for joining our call today. And as I've noted in the past, we understand that many of you prefer a private discussion with management And so please just reach out to us, and we'll be glad to get it scheduled and hold it with you. We do appreciate your time and interest in Cumberland, and we look forward to providing another update after the new year.

Thank you, sir. Ladies and gentlemen, that concludes our conference for today. If you would like to listen to our replay of today's conference, please dial 855-859-2056. using the access code 947-6299. 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.