Cumberland Pharmaceuticals Inc.

Good afternoon and welcome to Cumberland Pharmaceuticals' third quarter 2022 financial report and company update. This call is being recorded at Cumberland's request and will be archived on the company's website for one year from today's date. I would now like to turn it over to Molly Agass, Account Supervisor at the Dalton Agency, who handles Cumberland's communications. Molly, please go ahead.

Hello, everyone, and good afternoon. Thanks for joining today's call. Earlier this afternoon, Cumberland issued a press release containing financial results for the third quarter of 2022, along with a company update. The release, which includes the related financial tables, can be found on Cumberland's website at www.cumberlandpharma.com. Company management will share an overview of those financial results during today's call. They'll also provide an overall company update, including a discussion of its brands, pipeline, and partners. Participating in today's call are A.J. Kazemi, Cumberland's Chief Executive Officer, and John Hamm, Chief Financial Officer. Please keep in mind that their discussions 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. It 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 others that are 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 may differ materially from expectations, so information shared on this call should be considered current as of today only. 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 websites. And the links to those sites can be found on the corporate website at www.cumberlandpharma.com. The company will also provide some non-GAAP financial measures with respect to performance. An explanation and reconciliation to GAAP measures can be found in the financial tables in the earnings release that was issued earlier this afternoon. If you have any questions, please hold them until the end of the call, at which point we'll be happy to answer them. With that overview, I'll turn the call over to Cumberland's Chief Executive Officer, A.J. Kazemi.

Thank you, Molly, and good afternoon, everyone. We appreciate you joining us. As you'll hear today, we had another active and productive quarter here at Cumberland. We'll provide an update on the latest developments and review our financial results for the third quarter 2022. So let's get started. I'm pleased to report that Cumberland had a very successful third quarter delivering on our goal of double digit revenue growth for the period. Our line of FDA-approved brands generated $11.4 million in revenue and $1.4 million in adjusted earnings, or 10 cents a share. Our sales organization continues to navigate the challenges in the marketplace, and we are starting to see a return to a more typical selling environment. However, We are still seeing staffing shortages at hospitals, clinics, and physician offices, which are impacting the number of patient procedures and their facility visits. Still, we experience strong year-over-year financial performance, led by contributions from our newest brand, Stancuso. It's off to a great start, and we're supporting the product through our new sales division, Cumberland Oncology. During the third quarter, we largely completed the transition of Sancuso from Kiowa Kirin to here at Cumberland. We've now assumed full commercial responsibility for the product in the U.S., including its marketing, its promotion, distribution, and medical support activities. Already, we've seen Sancuso quickly becoming one of our most important brands and a significant contributor to our business. To fund this acquisition, recall we extended our bank line of credit for a new three-year term and expanded that facility to provide up to $20 million in capital. Sanjusa is the first and only FDA-approved prescription patch for the prevention of nausea and vomiting in patients receiving certain types of chemotherapy treatment. By addressing these issues, we can help patients tolerate and continue the needed treatment for their cancers. To support Sancuso, as I mentioned, we formed a new specialty sales division, Cumberland Oncology, and we also entered into a new co-promotion agreement with Faraday Pharmaceuticals to feature Sancuso through their national oncology sales organization. Verity's team completed their training and then launched their promotion during the third quarter. Verity will promote the product across the U.S. for an initial three-year term with an option to extend for an additional two years and Verity and Coverli will share in the incremental contribution margin resulting from their efforts. Our teams are working closely on joint marketing and sales initiatives and and we look forward to expanding the number of cancer patients who can benefit from this brand. With the addition of Sancuso sales, our product portfolio delivered combined revenues of $11.4 million during the third quarter, a 41% increase over the prior year period. Adjusted earnings for the third quarter were $1.4 million, or 10 cents a share, While year-to-date cash flow from operations was $5.6 million, a 28% increase over the same period last year. As a result of the San Juso acquisition, our total assets grew to $91 million by the end of the third quarter, including $19.5 million in cash. Total liabilities were $53 million, including $17.7 million on our revolving line of credit. Shareholders' equity was $38 million as of September 30, 2022. Now, I typically hand the call over to our Vice President, Todd Anthony, for an update on our team and our brands, but unfortunately, Todd is out today recovering from a recent elective surgery. We wish him well, and I'll go ahead and give a brief update on his behalf. I'd first like to touch on Vibative, our potent injectable antibiotic designed to treat certain serious bacterial infections, including hospital-acquired or ventilator-associated pneumonia, as well as complicated skin infections. Earlier this year, our marketing and sales leadership took a fresh look at how we can best support Byvative, and they launched a series of new initiatives to increase the brand's awareness and use of this important, potentially life-saving brand. Based on the implementation of those initiatives, we are beginning to now see an improvement in the brand's performance. Next, I'd like to discuss Crystalos. Our prescription strength laxative packaged in a convenient pre-measured powder dose, which dissolves quickly in just four ounces of water, providing a clear, taste-free, and grip-free solution. Priscilla's continues to benefit from the support of our co-promotion partners. We feature the brand with physicians and facilities that Cumberland does not cover. The award-winning marketing campaign has also been refreshed for 2022 to support increased engagement with our customers, and we've expanded patient support for the brand, which has recently been added to the GoodRx platform. Turning now to Caldolor, I'd like to remind you that late last year we received FDA approval for its use just prior to surgery. which results in patients waking up from their procedures in significantly less pain and also needing significantly fewer opioids. We continue to see growth in our ready-to-use presentation of Caldor as more patients return for elective surgeries. Additionally, international shipments have contributed nicely to the brand's performance over the years. I'd now like to touch on our newest product in the portfolio, Sancuso, which I did mention earlier. And you see when Sancuso is applied 24, 48 hours before receiving chemotherapy, it can help prevent nausea and vomiting for up to five consecutive days. Alternative oral treatments must be taken several times a day during this five-day period to deliver the same therapeutic doses, and they can be difficult for some patients who are experiencing nausea when they try to swallow. We're very excited about and believe in the potential of Sanjusso, and we're honored to deliver it to cancer patients throughout the country. Next, I'd like to share an update on our ReadyTREX product line, which we launched in fourth quarter of last year. It's our methotrexate line of pre-filled syringes designed for the safe, simple treatment of active rheumatoid, juvenile idiopathic, and severe psoriatic arthritis. These pre-filled syringes assure accurate and safe dosing with an automatic, retractable, extra-thin 29-gauge needle that reduces pain as well as the risk of needle stings. While ReadyTREX sales last year and early this year were limited as our initial stocking of the product began moving to the distribution channels, quarterly prescriptions for the product are now growing steadily, and that's resulting in an increase in our shipments and our quarterly sales. As we announced during our prior earnings call, ReadyTREX is now covered by a growing number of managed care plans. including those associated with Cigna, Anthem, and United. Meanwhile, during the third quarter, we entered into an amendment to our agreement with Nordic Pharma, who previously provided us with a license for the U.S. rights for our Redetrex line. Based on the amendment, Nordic may assume responsibility for distributing methotrexate products in the U.S. after March 31st of next year. Until then, we'll continue to commercialize and support ReadyTrax during a transition period. Following any return of the license, Nordic will provide Cumberland the royalty on their future sales of the product through April 2035. Cumberland will transfer the marketing authorization associated with the ReadyTrax line to Nordic, and in return, Nordic's returning 180,000 shares will be issued to them associated with the original license, and they'll refund the million dollars we paid them following the brand's approval in the United States. Nordic's also issuing the credit note in favor of Cumberland in the amount of another $1 million for the unpaid milestone due from us, which was associated with our launch of the line. Together, the companies will continue to collaborate on any transition and ongoing commercialization of the product line. Meanwhile, during the third quarter, we worked closely with the FDA-approved manufacturers that supply our products, monitoring our supply chain, including the raw materials as well as the finished goods emerging from those facilities. As previously reported, the packager for our Omeklomox pack brand has been unable to provide us with supplies of that product, having encountered difficulties their operations during the pandemic. Their facility is now under new ownership and new management, and we're currently awaiting its availability in order to potentially engage in the packaging of new supplies for the product. Also, we're transitioning to a new manufacturer for our Vaprizol product. Last year, we shipped all remaining inventory of Vaprizol, and we notified the FDA that supplies for the product were no longer available at that time. Since then, we've transferred the manufacturing to a new facility, and we do await FDA approval for that plant before resuming shipments of the brand. Our new manufacturing partner is working with the FDA to address several Form 483, 4483, and warning letter issues that they received in a timely manner. Meanwhile, we are working with them to support a special interim supply of compounded product critically ill patients while we're awaiting the needed facility approval to relaunch Vaprazole. We support our portfolio of FDA-approved medicines through our three national sales divisions, including our newest, Cumberland Oncology. Our hospital division calls on key institutional accounts across the country. And our field sales division covers select office-based positions. So with that overview, I'd now like to turn to John Hamm, Cumberland's chief financial officer, to present a review of the third quarter financial results. John?