Cumberland Pharmaceuticals Inc.

Good afternoon, and welcome to Cumberland Pharmaceutical's second quarter 2023 company update and financial report. 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 Agus, Account Supervisor at the Dalton Agency, who handles Cumberland's communication. Molly, please go ahead.

Hello, everyone. Good afternoon. Thanks for joining today's call. Earlier this afternoon, Cumberland issued a press release announcing the company's financial results, an operational update for the second quarter ending June 30th, 2023. 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, Todd Anthony, Vice President, Organizational Development, 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. Those statements reflect the company's current views and expectations concerning future events and may involve risks and uncertainties. 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, as well as any additional updates filed with 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 the information shared on this call should be considered current as of today only. Please remember that the company is not 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 several references to 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 its performance. An explanation and reconciliation to GAAP measures can be found in the financial tables of the earnings release that was issued earlier today. 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 do appreciate you've taken the time to join us today and we'll share how the first half of the year has gone. On today's call, we'll provide both a company update as well as a review of our financial results for the second quarter 2023. So let's get started. I'm pleased to report an overall successful second quarter and first half of the year. In the second quarter, our team worked diligently to advance our business as the operating environment continued to slowly improve from the pandemic and post-pandemic challenges that we've been facing. Revenues for the second quarter this year were $10.9 million, up 6% over the same period last year, and up 18% sequentially from the first quarter. Operating expenses were down for the second quarter in a row, and our gross margin continued to improve to 86% for the quarter. We also delivered positive earnings for the second consecutive quarter, growing adjusted earnings, and $3.8 million of cash flow from operations during the first half of the year. Moreover, there were many positive developments during the quarter. In June, we launched our newly expanded oncology sales division to support our Sancuso product. It's the first FDA-approved transdermal prescription patch to help oncology patients tolerate their chemotherapy treatments, and it's been contributing to our business since it joined our portfolio last year. We're also completing the transfer of the product's manufacturer to a new facility. Following FDA approval of that site, We're now planning for the first supplies of Cumberland packaged product to be manufactured there over the second half of the year. Meanwhile, as of July 1st, the transition of ReadyTrex to Nordic Pharma is largely completed. In May, the FDA approved expanded labeling for our Caldolor product, an intravenously delivered formulation of ibuprofen to now include its use in infants three to six months of age. And in June, we announced the publication in the Pediatric Drugs Journal of positive results from a clinical study investigating the safety and pharmacokinetics of Kaldalor in those newborn infants. As a reminder, regarding Kaldalor, we believe it will be eligible for special Medicare reimbursement starting in 2025 under the new no pain legislation. That act was approved earlier this year and requires Medicaid to provide separate and more favorable reimbursement for non-opioid products used to manage pain during surgeries conducted in an outpatient hospital department or in an ambulatory surgical center. Touching next on our clinical programs, we're continuing to sponsor a series of studies to evaluate ifitroban, a potent and selective thromboxane receptor antagonist in patients' unmet medical needs. In May, the FDA cleared the investigational new drug application for a phase two study of ifetriban in patients with idiopathic pulmonary fibrosis, the most common form of progressive fibrosing interstitial lung disease. We look forward to launching that fighting fibrosis trial soon. And additionally, we closed and completed the analysis of the data from our Phase II study in patients with a severe form of asthma known as aspirin-exacerbated respiratory disease. And an update on our FITE-DMD Phase II study results in patients with Duchenne muscular dystrophy was presented at the annual Parent Project Muscular Dystrophy Conference in late June. and we plan to await results from all of these Phase II clinical programs before we decide on the best path to further develop the product towards its approval. During the second quarter, the FDA informed Cumberland that it had granted us a second barrier to innovation waiver that would bring the total to approximately $3 million in refunds of prescription drug fees that we had previously paid. The FDA granted each waiver after concluding that Cumberland did meet the statutory criteria based on the innovation associated with our iFitraBand clinical development programs, as the funds could be better used to advance those studies. we did receive both of those refunds in June. Turning next to some further highlights on our financial performance during the second quarter, as I mentioned, net revenues were at $10.9 million, up 6% over the prior year period, and up 18% over the first quarter of this year. Taking a look at our product performance during the second quarter, Crystal low sales were up 15% over the prior year period and the product continues to be our largest selling brand. It's benefiting from its addition on the New York Medicaid formulary and also the support from our two co-promotion partners. Viabative sales are rebounding and they were up 35% over last year as we do have a number of new initiatives underway to improve that brand's performance. We're also working with our partners in their efforts to register and launch Vibative in several international markets, which should provide further significant catalysts for the product's future growth. Cal-dollar sales were up 3%, and we look forward to that special Medicare reimbursement I mentioned that will become available in the future. And Sencuso is the only of our four major brands that underperformed so far this year. And that's due to an inordinate amount of sales deductions associated with returns and rebates that were part of the brand's transition. Sencuso has been impacted also by the loss of our co-promotion partner. But looking ahead, we believe those sales deductions I mentioned are largely behind us now, And to replace our co-promotion partner, we recently expanded our oncology sales division. So with that overview, now I'd like to turn to Todd Anthony, Cumberland's Vice President, Organizational Development, to further discuss our team and our brand. Todd?