Cumberland Pharmaceuticals Inc.

Good afternoon and welcome to Cumberland Pharmaceuticals' second quarter 2026 company update and financial report. This call is being recorded at the company's request and will be archived on its website for one year from today's date. I would now like to turn it over to Emily Kent, the Dalton agency who handles Cumberland's communications. Emily, please proceed.

Hello everyone and thank you for joining us today. This afternoon, Cumberland will issue a press release announcing its second quarter financial results. The release will provide an overall company update, including key developments during the quarter. The release, which includes the related financial tables, will be found on the company's website at www.cumberlandpharma.com. During today's call, management will share an overview of those financial results and a company update, including recent developments and a discussion of Cumberland's clinical pipeline. Participating in today's call are A.J. Kazimi, 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 some 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 as well as uncertainties. There are many factors that could affect Cumberland's future results, including natural disasters, economic downturns, international conflicts, trade restrictions, public health epidemics and others that are beyond the company's control. Those issues are described under the caption risk factors in Cumberland's annual report on Form 10-K and any subsequent 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. Also, 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 Cumberland's new product candidates. For more information, please visit the corporate website at www.cumberlandpharma.com The company will also be providing 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 will be issued this afternoon. If you have any questions, please hold them until the end of the call, at which point we will be happy to answer them. Management is also prepared to hold a follow-up conversation with shareholders after the call, if you prefer. With that introduction, I'll turn the call over to Cumberland's Chief Executive Officer, A.J. Kazimi.

Thank you, Emily, and good afternoon, everyone. We appreciate your joining us today as we review Cumberland's second quarter results and discuss one of the most significant milestones in our company's history. In June, our shareholders overwhelmingly approved the strategic transaction with Apotex Health and on July 1st, we successfully closed the agreement to integrate our branded U.S. commercial businesses. This transformational transaction strengthened Cumberland's financial position, unlocked substantial value for our shareholders and established a solid foundation for the company's next phase of growth. I'd like to take this opportunity to thank our shareholders for their support throughout this process. Over 99% of the voting shareholders voted in favor of the transaction. Their approval affirmed our strategy and reflects confidence in Cumberland's future as an innovation-focused biopharmaceutical company. We're also delighted to recently announce and fund a special dividend to return capital to our shareholders. After the dividend, we've retained sufficient capital to fund operations for the long term while maintaining significant additional financial reserves for any special opportunities that may arise. Our strong financial position will provide the foundation for executing our plans as we pivot to a focus on developing new medicines for the future. As a reminder, under the terms of the transaction with Apotex, they acquired our portfolio of FDA-approved commercial brands and related US organization. Cumberland received $100 million in cash at closing with an additional $11 million due for inventory and transition payments along with a potential $10 million milestone payment. Importantly, this transaction enables us to sharpen our strategic focus while maintaining the financial strength needed to advance our development programs. It also provides additional capital to invest in our clinical pipeline, pursue new opportunities, and continue to create overall value for our shareholders. Our commercial portfolio served as the foundation of Cumberland's business for many years and facilitated our developing innovative therapies for patients with serious unmet medical needs. With the divestiture of our commercial brands, our strategy and focus now centers on advancing our iFitraBand clinical programs, which target multiple diseases with significant medical needs and substantial commercial opportunities. We believe monetizing the value of our commercial portfolio was well-timed as our clinical programs have made great strides benefiting from years of scientific investment and clinical research. Several have now advanced to a point where they've generated very promising data which has been highlighted in medical publications and in medical conferences. Following our strategic transaction, we are now in a financial position to accelerate the funding for these clinical programs and even if just one of our products in development goes on to receive FDA approval, that milestone has the potential to be a significant value creator for Cumberland. Now I'd like to turn it over to Todd Anthony for the clinical update. Todd?

Thank you, AJ. Well, as previously noted, our key development programs are based on our first new chemical entity, efetroban. It's a potent and selective thromboxane receptor antagonist that has now been administered to approximately 1,400 subjects across multiple clinical studies, demonstrating a strong safety profile. We are evaluating Afitroban across several advanced clinical programs for patients with a series of unmet medical needs. I'll begin with our Duchenne muscular dystrophy or DMD program. DMD is a rare, fatal, genetic neuromuscular disease that results in deterioration of the skeletal, heart, and lung muscles. Our Cytroban product candidate is being developed specifically to preserve cardiac function and improve outcomes for patients living with DMD-associated cardiomyopathy. We previously announced positive top line results from our completed phase two fight DMD clinical trial, demonstrating encouraging safety and biomarker findings that support continued development of the program. Earlier this year, the FDA granted fast track designation for efetriban and DMD, recognizing both the seriousness of the disease and the significant unmet medical need that exists for these patients. This designation allows for more frequent FDA interaction, rolling data submissions, and earlier guidance throughout the approval process. The program has also previously received both orphan drug designation and rare pediatric disease designation from the FDA, further reinforcing the importance of this development effort. During the second quarter, New biomarker data from the FITE-DMD clinical study was presented at the Parent Project Muscular Dystrophy Annual Conference. Those findings provide additional evidence that the therapy can help preserve cardiac function in this patient population. You can review that presentation on our corporate website. We continue to hold discussions with the FDA regarding the regulatory pathway for this program with another meeting scheduled this fall as we remain focused on determining the most efficient path toward approval. We look forward to providing additional updates as those discussions progress. Turning now to our systemic sclerosis or SSC program. We are also studying efetroban in patients with systemic sclerosis, a rare autoimmune disease characterized by progressive fibrosis and vascular dysfunction that can affect multiple organs throughout the body. Patient enrollment in the study has been completed and evaluation of the phase two study data is underway with top line results anticipated this year. Our third advanced clinical program, Fighting Fibrosis, is evaluating a fitraban in patients with idiopathic pulmonary fibrosis, or IPF, the most common form of progressive fibrosing interstitial lung disease. The study's interim safety analysis was performed evaluating the first cohort of patients completing 12 weeks of treatment. The independent committee concluded no new safety signals were identified and no changes in study conduct were needed. Based on those findings, patient enrollment in the study has continued and we will expect to announce interim efficacy results as the next milestone In addition to our company-sponsored clinical programs, we have collaborated with Vanderbilt Health to evaluate efetroban for the prevention of cancer metastasis in patients with high-risk solid tumors. During the second quarter, we jointly announced positive results from their Phase II clinical trial. The study achieved its primary endpoint by demonstrating that efetroban was safe and well-tolerated in this patient population. In addition, the trial generated encouraging efficacy signals including fewer patients experiencing metastatic recurrence and fewer deaths related to metastasis in the efetroban treatment arm when compared with placebos. We are pleased with the progress in this collaboration and look forward to working with our partners at Vanderbilt as we determine the next steps for this oncology program. Next, I'd like to briefly discuss Cumberland Emerging Technologies, or CET. CET remains an important strategic asset for Cumberland and plays a valuable role in identifying, supporting, and advancing innovative biomedical technologies originating from leading research institutions. Through CET, We continue to collaborate with academic investigators, healthcare institutions, and emerging life sciences companies to help translate promising scientific discoveries into potential therapeutic products. These activities complement our internal development efforts while expanding our access to innovative technologies that may strengthen Cumberland's pipeline and create additional opportunities for future growth. Overall, We believe our portfolio of clinical development programs combined with our financial strength positions Cumberland exceptionally well for the future. I'll turn it back over to you now, AJ.

Thanks, Todd. I'll next look to our Chief Financial Officer, John Hamm, for the financial update. John?

Thank you, AJ. I'll begin with a review of our financial results for the second quarter, followed by an update on the financial impact of our recently completed strategic transaction. During the second quarter, we reorganized our income statement to classify revenue and expenses associated with the Apotex transaction as discontinued operations. Our ongoing investment in research and development, supported by our remaining general administrative expenses, resulted in an operating loss of $3.1 million for the quarter. With the addition of the discontinued operations, the net loss for the quarter was $4.1 million. As of June 30, 2026, Cumberland had total assets of $63 million, including approximately $4 million in cash and cash equivalents. Please note that we retired our bank line of credit through a payment of $5.2 million at the end of the second quarter. Therefore, total liabilities were reduced to $46 million, resulting in shareholders' equity of approximately $17 million at quarter end. The successful completion of our strategic transaction with Apotex Health marks a significant change in the company's financial profile. The agreement closed on July 1st, and therefore will further impact our financial statements in the third quarter. We received $100 million at closing and estimate the taxes associated with the transaction to be less than $1 million due to our tax loss carry forwards and R&D tax credits. The net proceeds along with the $11 million in additional funds due over the next 12 months will result in significant net proceeds from the transaction estimated at $108 million. In July, our board met and evaluated alternatives for this new capital. They declared a special dividend of $1.50 per share, which totaled $22 million based on the approximately 15 million shares outstanding. We believe that our strengthened cash position provides Cumberland with the financial flexibility to advance our clinical development programs, evaluate additional strategic opportunities, and support the company's long-term growth initiatives. We project that the remaining cash will fund company operations for over five years as we continue to invest in our new product candidates. We also currently estimate significant additional cash reserves of over $50 million should be available for unexpected expenses, special opportunities that may arise. I'd also like to further discuss the accounting for the strategic transaction. Accordingly, our financial statements will differ meaningfully from prior periods as Cumberland transitions from a commercially oriented specialty pharmaceutical company to an innovation focused biopharmaceutical company centered on product development. We will no longer be recording the revenue from the commercial brands nor the related expenses which include cost of goods, sales and marketing. As a reference, please note those expenses totaled nearly $32 million in 2025. It should be noted that future operating results will primarily reflect our investment in clinical development and regulatory activities supported by manufacturing and corporate administrative expenses and any future milestone or collaboration payments associated with our development programs. We expect the transaction to significantly strengthen our balance sheet while simplifying our ongoing operating structure. Looking ahead, Cumberland enters this next phase for a position of considerable financial strength. The proceeds from the transaction provide the resources necessary to advance our clinical pipeline while we maintain disciplined financial management. Our primary financial priorities remain clear. First, funding the investment of our program. Second, maintaining a strong balance sheet and preserving financial flexibility. And third, continuing to maintain significant financial reserves for opportunities that can enhance shareholder value. Going forward, investors should increasingly evaluate Cumberland based on the advancement of our clinical pipeline, execution against key development milestones, and the management of the company's capital resources. Overall, we believe Cumberland is exceptionally well-positioned to execute on its strategy and create long-term value for shareholders. With that, I'll turn the call back over to you, AJ.

Thank you, John. As you heard today, the successful completion of our strategic transaction marks a defining moment in Cumberland's evolution. With the completion of the transaction, we've sharpened our strategic focus, strengthened our financial position, and assembled an advanced clinical pipeline targeting serious diseases with significant unmet medical needs. With important multiple clinical milestones anticipated during the remainder of 2026, we believe we're entering one of the most exciting periods in our company's history. For our Duchenne muscular dystrophy program, we'll continue our discussions with FDA as we define the regulatory pathway forward. For our systemic sclerosis program, we're completing the final analysis of our study data and look forward to announcing top line results this year. Patient enrollment in our idiopathic pulmonary fibrosis study is progressing very well and we remain on track to report interim efficacy findings this year. And in addition, we'll continue evaluating opportunities to advance our oncology collaboration with Vanderbilt Health following the encouraging results from the recently completed metastases prevention study. These milestones represent opportunities to advance our development programs while continuing to build value for patients and shareholders alike. Importantly, we now have the financial resources, organizational focus, and experienced development team We're working to bring differentiated therapies to patients with rare diseases and other serious medical conditions where treatment options remain limited. Before concluding, I'd just like to once again thank our employees for their dedication throughout this transformational year. Their hard work has made a successful completion of our strategic transaction possible while ensuring continued progress across each of our development programs. I'd also like to thank our board of directors and shareholders for their continued confidence and support. We appreciate the trust you've placed in Cumberland as we begin our next chapter. We're excited about the opportunities that lie ahead and look forward to updating you on our continued progress. Thank you again for joining us today. And so with that, operator, let's now open the call for questions.

Thank you, sir. Ladies and gentlemen, that concludes the company's presentation, and we will now open the call for any questions. If you'd like to ask a question, please press the star key on your phone followed by the digit 1 twice. That's star 1 1. Please stand by while we compile our Q&A roster.

Well, there are no questions. I just want to thank everybody for joining us for today's call and we do understand many of our shareholders prefer a private discussion with management. If so, please just reach out and we'll be happy to get such a call scheduled and have such a discussion. As always, we appreciate your time and interest in our company and we look forward to providing another update in the coming months.

Thank you, sir. Ladies and gentlemen, that concludes today's call. If you would like to listen to a replay of the discussion, please visit the investor relations section on Cumberland's website. I would like to thank you for your participation. You may now disconnect.