Cumberland Pharmaceuticals Q1 2026 Earnings Call - Apotex Deal Unlocks $109M Cash, Pivots to Pipeline

Operator: Good afternoon, and welcome to the Cumberland Pharmaceuticals first quarter 2026 financial report and company update. 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 Kant from the Dalton Agency, who handles Cumberland’s communications. Emily, please proceed.

Emily Kant, Communications Representative, Dalton Agency: Hello, everyone, and thank you for joining us today. This afternoon, Cumberland issued a press release announcing its first quarter financial results. The release also provided an overall company update, including key developments during the quarter. The release, which includes the related financial tables, can be found on the company’s website at 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 brands, pipelines, and partners. Participating in today’s call are A.J. Kazimi, Cumberland’s Chief Executive Officer, Todd M. Anthony, Vice President, Organizational Development, and John M. Hamm, Chief Financial Officer. Please keep in mind that their discussions may include some forward-looking statements as defined in the Private Securities Litigation 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 several of Cumberland’s marketed brands.

Full prescribing and safety information for each brand is included on the individual product website, and you can find links to those sites on the corporate site 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 I noted was issued earlier 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.

A.J. Kazimi, Chief Executive Officer, Cumberland Pharmaceuticals: Well, thank you, Emily, and good afternoon, everyone. We appreciate you joining us today. As Emily mentioned, we’ll provide a review of our financial results for the first quarter of 2026. We’ll discuss key developments during the period, but we’ll also share recent updates. Recall that Cumberland enjoyed an outstanding year in 2025 with double-digit growth in sales, significant cash flow from operations, the addition of a new brand to our portfolio, new international product approvals, and breakthrough clinical study results. I believe those were certainly terrific findings, and I’d like to congratulate our team that was responsible for delivering that performance.

We’re pleased to report continued momentum in 2026 as we’re off to an excellent start with FDA approval for expanded Caldolor labeling, the initiation of our sales promotional efforts in support of Talicia, the first shipment of Vibativ to China, and FDA clearance of the manufacturing facility which will enable the relaunch of Vaprisol. We’ve also entered into a transformational agreement that positions Cumberland for the next phase of our company’s evolution and growth. Today, I’m delighted to discuss that agreement, which we’d enter into with Apotex, the largest Canadian-based pharmaceutical company, to integrate our branded U.S. commercial businesses. Under the terms of the agreement, Apotex will acquire our portfolio of marketed products for cash consideration of $100 million, subject to our shareholders’ approval.

Cumberland will also receive $9 million in payments for inventory, fees for transitional support services, and a milestone payment tied to future product sales. This transaction represents a significant event for Cumberland as it unlocks substantial near-term value for our shareholders. Moreover, our hope and our expectation is that even more patients will benefit from the array of our marketed products given Apotex’s larger market presence. It’s important to note that with the tax bases associated with the assets involved, combined with the tax loss carryforwards, we are estimating the income taxes resulting from the transaction will be modest. As a result, the net consideration will significantly strengthen our balance sheet. Following the close of the transaction, we intend to focus on advancing our robust pipeline of product candidates to address unmet medical needs, which, if successful, can greatly benefit patients and shareholders alike.

That strategic shift will position Cumberland as an innovation-driven organization, developing new medicines for the future. We believe this transaction is very beneficial on several fronts. It unlocks the near-term value of our branded products. It considerably strengthens our balance sheet. It sharpens our strategic focus on developing new products that represent large market opportunities. It enhances our ability to create and deliver additional value for our shareholders. It also creates a branded business platform with more critical mass that Apotex can build upon to broaden the distribution of our brands and deliver them to more patients. We’re confident in the direction of the company and in our ability to execute on this new strategy. With that, I’ll now turn the call over to Todd Anthony, Vice President, Organizational Development. Todd?

Todd M. Anthony, Vice President, Organizational Development, Cumberland Pharmaceuticals: Well, thank you, A.J. You know, in February, we hosted our spring national sales meeting in Nashville, and in attendance were the 50 individuals across the country who interact with our medical community in support of our FDA-approved products through our 3 national sales divisions. Our hospital sales division, which calls on key institutional accounts across the country, our field sales division that covers select office-based physicians, and the Cumberland Oncology Division, which calls on cancer patients. I’d now like to share our first quarter brand updates. Let’s start with Caldolor, our intravenous ibuprofen product. In April, we announced approval from the FDA for an expanded indication for Caldolor. The indication now includes the management of post-operative pain. This approval enhances the clinical utility of Caldolor and supports its role in non-opioid and opioid-sparing pain management strategies.

With this update, Caldolor is indicated for use in adult and pediatric patients ages 3 months and older for the treatment of pain and fever. This expanded labeling further broadens Caldolor’s use across perioperative and acute care settings. Additionally, we resubmitted our application to CMS for Caldolor’s inclusion under the NOPAIN Act in the first quarter. This program is designed to support the use of non-opioid pain management therapies. Now let’s turn to Sancuso, our transdermal patch, FDA-approved for the management of chemotherapy-induced nausea and vomiting. During the first quarter, we announced the launch of the new Sancuso website, which is designed to provide healthcare professionals and patients with enhanced access to educational resources, clinical information, and expert insights related to the prevention of chemotherapy-induced nausea and vomiting. Next, I’d like to share an update for Talicia, an FDA-approved leading treatment for Helicobacter pylori infection.

In February, we announced the launch of our national sales promotion for Talicia under our co-commercialization agreement with Talicia Holdings, Incorporated, which we jointly own. As a reminder, under that agreement, we assumed responsibility for the distribution and sales promotion of the brand in the United States. As part of the launch, we leveraged our existing field sales division with supporting marketing initiatives designed to increase awareness among gastroenterologists and other prescribers. Recall, we have been awaiting FDA clearance of the site where we have successfully transferred the manufacturing of Vaprisol. Today, I am pleased to announce that the FDA has just reinstated their approval status for that facility, which will enable us to submit for manufacture of Vaprisol there. With approval for our submission, we will then arrange for commercial supplies to support the relaunch of the brand, which is expected this year.

That completes my updates for today. I’ll turn it over now to our Chief Financial Officer, John M. Hamm, to review our financial results. John?

John M. Hamm, Chief Financial Officer, Cumberland Pharmaceuticals: Thank you, Todd. During the first quarter, our portfolio of FDA-approved brands delivered combined revenue of $9.1 million, which represented a 5% increase after removing the one-time $3 million milestone payment last year associated with the approval of Vibativ in China. Net revenue by product for the first quarter of 2026 included $1 million for Kristalose, $2.9 million for Sancuso, $2.1 million for Vibativ, $1 million for Caldolor, and $1.9 million for Talicia. Turning to our expenditures, total operating expenses for the first quarter were $12.3 million, resulting in a net loss of approximately $3.3 million for the first quarter. When non-cash expenses are added back, the resulting adjusted loss for the first quarter was $1.9 million or $0.13 a share.

We’re pleased to see that our most recent acquisitions resulting in additions of Vibativ, Sancuso, and Talicia to our portfolio have provided a significant positive impact on our financial performance. Note that the shipments for individual brands fluctuate from quarter to quarter based on customer buying patterns, which include the timing of international orders. There’s also some seasonality to our business, with orders being strongest in the fourth quarter and traditionally lightest in the first quarter. Therefore, we believe our sales performance is best evaluated on an annual basis. Meanwhile, we did continue to achieve our goal of generating positive cash flow from operations, which totaled $387,000 during the first quarter. As a reminder, we participated in the formation of a new company named Talicia Holdings, Inc., which holds the worldwide rights to the Talicia brand and its related product assets.

Cumberland invested $4 million in exchange for a 30% ownership positions in the new company. We are accounting for this holding using the equity method. Turning to our balance sheet as of March 31, 2026, we had $71 million in total assets, including $11 million in cash and cash equivalents. Liabilities totaled $49.7 million, including $5 million on our credit facility. Total shareholders’ equity was $21.6 million at the end of the first quarter. As A.J. Kazimi mentioned, we had signed an agreement to enter into our strategic transaction. In exchange for the assets associated with our portfolio of commercial products, we expect to receive $100 million cash at closing. We will also receive $9 million in payments for our commercial product inventory and a milestone payment.

Cumberland will support the transition of the products for a monthly fee associated with the transition services agreement. I’d like to note that Cumberland continues to hold over $53 million in tax net operating loss carryforwards, primarily resulting from the prior exercise of stock options. The assets involved in our pending strategic transaction have a tax basis of $30 million. We therefore believe that the income taxes resulting from the transaction will be modest. Given the announced strategic transaction, we are no longer targeting a goal of double-digit revenue growth for the year. Our expenses will be significantly decreased after closing as Apotex will assume responsibility for the sales, marketing, medical, manufacturing, and FDA fees associated with the brands.

I would also point out at this time that we do not see any significant change to our current clinical spending levels for 2026 as we continue to advance our line of product candidates, which are in the advanced stages of development. That completes our financial report for the first quarter of 2026. Back to you, A.J.

A.J. Kazimi, Chief Executive Officer, Cumberland Pharmaceuticals: Thank you, John. Following the close of the strategic transaction, Cumberland will be an innovation-driven, development-focused company. We’ll continue to progress our valuable pipeline of new product candidates designed to improve patient care and their quality of life. Our ifetroban new chemical entity, which is a potent and selective thromboxane receptor antagonist, is being evaluated in several advanced clinical programs for patients with a series of unmet medical needs. It’s now been dosed in nearly 1,400 subjects and has been found to be safe and well-tolerated in those individuals, resulting in an outstanding safety database. We previously announced positive top-line results from our completed phase II study in patients with Duchenne muscular dystrophy, a rare fatal genetic neuromuscular disease that results in deterioration of the skeletal, lung, and heart muscles. During the first quarter, the FDA granted Fast Track designation for our ifetroban candidate in these DMD patients.

This designation is intended to accelerate the development and review of therapies addressing serious conditions with unmet medical needs. Importantly, it allows for more frequent FDA interaction, rolling data submissions, and earlier guidance throughout the approval process. The program also previously received both Orphan Drug and Rare Pediatric Disease designations from the FDA. An end-of-Phase II meeting was held with the FDA last fall, and we had a follow-up meeting during the first quarter of 2026 to discuss both the DMD study results and to determine the regulatory pathway and requirements for approval. We’re finalizing our plans for this important program now, and once completed, we’ll announce additional results and expected timelines. Meanwhile, we’ve also been evaluating our ifetroban product candidate in a clinical program in patients with systemic sclerosis or scleroderma.

Enrollment in that study has been completed. We look forward to announcing top-line findings which will be forthcoming. In addition, we have a Phase II clinical study, the Fighting Fibrosis trial, in patients with idiopathic pulmonary fibrosis, the most common form of progressive fibrosing interstitial lung disease. Patient enrollment in that study is well underway in centers across the U.S. An interim safety analysis was conducted evaluating the 1st cohort of patients who completed their 12 weeks of treatment. The independent committee concluded there were no new safety signals. Therefore, no changes in the study conduct were needed. Based on those findings, enrollment in the study has continued. We next expect to announce interim efficacy results later this year. Additional pilot patient studies of ifetroban are also underway through several investigator-initiated trials.

In summary, our clinical programs are focused on select patient populations to helping to address unmet medical needs in markets that are very large from a commercial perspective for a company our size. As we look ahead, we’ll work to close our strategic transaction, support the transition of our commercial operations, and sharpen our focus on advancing our exciting pipeline of new product candidates. Lastly, I’d just like to extend my sincere thanks and appreciation to all of those at Cumberland for their unwavering dedication towards the patients we aim to serve every day. We’re confident in the direction of the company, our future prospects, and in our ability to execute on our strategy. Thank you again for your continued support and interest in Cumberland. With that, we can open the call for any questions. Operator, please proceed.

Operator: Thank you, sir. Ladies and gentlemen, that concludes the company’s presentation, and we will now open the calls for questions. Our first question comes from Alyssa Nye from IQ Solutions. Your line is now open. Alyssa, you can ask your question.

A.J. Kazimi, Chief Executive Officer, Cumberland Pharmaceuticals: Operator, are there other questions?

Operator: Yes. We’ll go on to the next question. One moment, please. Our next question is Brandon Bishop. The line is now open, Brandon.

A.J. Kazimi, Chief Executive Officer, Cumberland Pharmaceuticals: Operator, there appears to be difficulties with the questions coming through. There is also an echo.

Operator: Yes. Let me see one second. If we can hold for a second, please.

A.J. Kazimi, Chief Executive Officer, Cumberland Pharmaceuticals: Since we’re having difficulty hearing the questions, it’s very unfortunate. I suppose what we can do is if you would like to follow a conversation, please reach out to the company. We’re happy to schedule a call with you and to answer your questions. Meanwhile, just wanna thank everybody for joining us on today’s call. We’ll look forward to providing another update in the coming months. Operator?

Operator: We have someone coming to fix the situation right now if we wanna hold for just one second.

A.J. Kazimi, Chief Executive Officer, Cumberland Pharmaceuticals: No, that’s okay. We will hold any questions. You can reach out to the company. Make sure that we can get those questions answered.

Unknown, Technical Support/Queue Manager: Hi, everyone. I apologize. I have jumped into the queue. If you’d like, I can go over the Q&A instructions again, and I will open the lines for anyone that’s gotten into the queue.

A.J. Kazimi, Chief Executive Officer, Cumberland Pharmaceuticals: That’s okay. We will take our questions privately, if you don’t mind.

Unknown, Technical Support/Queue Manager: Absolutely. I apologize for the inconvenience. Thank you.

A.J. Kazimi, Chief Executive Officer, Cumberland Pharmaceuticals: Thank you.