What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-08 compared with 2024-08-09 · 186 added, 138 removed, 237 unchanged (58% of the section changed)

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• Caldolor ® ( ibuprofen ) injection, for the treatment of pain and fever;

• Kristalose ® ( lactulose ) for oral solution, a prescription laxative, for the treatment of constipation;

• Kristalose ® ( lactulose ) oral solution, a prescription laxative for the treatment of constipation;

• Sancuso ® ( granisetron ) transdermal, for the prevention of nausea and vomiting in patients receiving certain types of chemotherapy treatment;

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• Vibativ ® ( telavancin ) injection, for the treatment of certain serious bacterial infections including hospital-acquired and ventilator-associated bacterial pneumonia, as well as complicated skin and skin structure infections.

In addition to these commercial brands, we have Phase II clinical programs underway evaluating our ifetroban product candidate in 1) Systemic Sclerosis ("SSc") or scleroderma, a debilitating autoimmune disorder characterized by diffuse fibrosis of the skin and internal organs, 2) patients with cardiomyopathy associated with Duchenne Muscular Dystrophy ("DMD"), a rare, fatal, genetic neuromuscular disease results in deterioration of the skeletal, heart and lung muscles and 3) patients with Idiopathic Pulmonary Fibrosis ("IPF"), the most common form of progressive fibrosing interstitial lung disease.

Investigational new study applications ("INDs") have been cleared by the FDA enabling us to launch Phase II clinical studies in each of these areas.

In addition to these commercial brands, we have Phase II clinical programs underway evaluating our ifetroban product candidate in 1) Systemic Sclerosis or scleroderma, a debilitating autoimmune disorder characterized by diffuse fibrosis of the skin and internal organs, 2) patients with cardiomyopathy associated with Duchenne Muscular Dystrophy , a rare, fatal, genetic neuromuscular disease results in deterioration of the skeletal, heart, and lung muscles and 3) patients with Idiopathic Pulmonary Fibrosis , the most common form of progressive fibrosing interstitial lung disease.

Investigational new study applications have been cleared by the FDA enabling us to launch Phase II clinical studies in each of these areas.

Cumberland has built core competencies for the acquisition, development and commercialization of pharmaceutical products, and we believe we can leverage this existing infrastructure to support our growth.

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We also pursue opportunities to acquire additional marketed brands, as well as late-stage development product candidates in our target medical specialties.

We are supplementing these activities with the earlier-stage drug development at Cumberland Emerging Technologies ("CET"), our majority-owned subsidiary.

We are supplementing these activities with the earlier-stage product development at Cumberland Emerging Technologies ("CET"), our majority-owned subsidiary.

CET partners with academic research institutions to identify and support the progress of promising new product candidates, which Cumberland can further develop and commercialize.

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We believe it is important to build a pipeline of innovative new product opportunities, as we are doing through our ifetroban Phase II development programs.

We are also supplementing our acquisitions and late-stage development activities with the early-stage drug development activities at CET.

We are also supplementing our acquisitions and late-stage development activities with the early-stage product development activities at CET.

• Leveraging our infrastructure through co-promotion partnerships.

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We also look for strategic partners that can complement our capabilities and enhance opportunities for our brands.

For example, our co-promotion partnerships have allowed us to expand the support for Kristalose across the U.S.

For example, our co-promotion partnerships have allowed us to expand the support for Kristalose across the United States.

• Building an international contribution to our business.

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RECENT DEVELOPMENTS

Kristalose Covered on Wisconsin Medicaid Plans

We have found that Kristalose, our prescription-strength laxative, performs best in states where we have Medicaid coverage.

Wisconsin recently added Kristalose to its Medicaid formulary, and we are implementing a special initiative to announce this development in that market.

We also have Medicaid coverage for the brand in New York state and Texas, two of the largest states for the product.

Kristalose Recommended for Opioid-induced Constipation

We recently launched a campaign featuring the American Gastroenterological Association’s (“AGA”) guidelines that include Kristalose as a first-line treatment option for opioid-induced constipation.

As the guidelines state, “Constipation is by far the most common and debilitating gastrointestinal effect of opioids, and some degree of constipation is near universal in patients taking opioid medications.” We believe the AGA’s recommendation will support the use of Kristalose in those patients.

New Study Supports Vibativ as an Effective Treatment for Anthrax Infections

In June, Antimicrobial Agents and Chemotherapy published a study evaluating Vibativ (telavancin) as a novel therapeutic against anthrax inhalation, the most dangerous form of those infections.

Researchers were particularly interested in finding alternatives to current antibiotics in case anthrax bacteria become resistant to them.

Researchers tested telavancin against 17 different anthrax strains in the lab to determine how well it could stop their growth.

Additionally, they tested telavancin in rabbits that were infected with a deadly dose of airborne anthrax spores and compared telavancin’s effectiveness to another antibiotic (levofloxacin) and a placebo.

The results showed that:

Telavancin was very effective at killing all the anthrax strains tested in the lab.

In the rabbit study, all the animals treated with telavancin survived.

Telavancin was better at clearing anthrax from the blood and organs than levofloxacin.

Based on these results, the researchers concluded that telavancin could potentially be an effective new treatment option for anthrax infections, especially if current antibiotics become less effective due to resistance.

Antimicrobial resistance continues to pose a significant challenge in the treatment of bacterial infections, necessitating the development of new antibiotic therapies.

While many recently introduced antibiotics are quickly losing the battle to fight the bacteria they were designed to kill because those bacteria have become drug-resistant, Vibativ was specifically designed to kill drug-resistant bacteria.

International Agreements

We continue to support our international partners in their efforts to register Vibativ in their countries.

In late 2022, we announced a new partnership with Saudi Arabia-based Tabuk Pharmaceutical to introduce Vibativ into the Middle East.

The arrangement provides Tabuk exclusive rights to distribute Vibativ in Saudi Arabia and Jordan, with the option to expand into other countries in the region.

Tabuk has obtained the final approvals needed to commercialize Vibativ in Saudi Arabia and has now begun ordering the product in preparation for its launch planned for this year.

Also in 2022, we entered into an agreement with D.B.

Pharm to register and commercialize our Vibativ product in South Korea.

Pharm also distributes our Caldolor product there.

They filed for the approval of Vibativ in November 2022 and we have been supporting their efforts through the review process of their application in the country.

The Korean regulatory authorities did not approve the submission, and indicated that additional manufacturing information will be required, which we will work with D.B.

Pharm to address.

Meanwhile, our Vibativ partner for the Chinese market, SciClone Pharmaceuticals, had their approval application in China accepted for review in September 2021.

We have since been supporting SciClone and their requests associated with the review of that submission.

They are working toward the approval and believe that there is significant potential for Vibativ in their country.

State Medicaid Coverage for Kristalose Grows

We continue to see that Kristalose, our prescription-strength laxative, performs best in states where we have Medicaid coverage, such as Texas, New York and Wisconsin.

The product is now also covered on certain Virginia, Louisiana and Maine Medicaid plans.

We are encouraged to see the positive impact on our business as more states provide favorable Medicaid coverage for Kristalose and we will continue working to increase awareness in those states.

New WHO Report Highlights Need for Antibiotics like Vibativ

A new report from the World Health Organization ("WHO") found that antimicrobial resistance is an urgent global health and socioeconomic crisis.

Further, the worldwide rise in antibiotic resistance poses a significant threat, diminishing the efficacy of many common antibiotics against widespread bacterial infections.

Unlike many antibiotics that are losing the battle to fight bacteria, Vibativ’s unique dual method of action was specifically designed to address drug-resistant bacteria and we therefore believe it has the potential to help many patients amid the growing resistance crisis.

Vibativ can serve as a potentially life-saving treatment in patients with hospital-acquired and ventilator-associated pneumonia resulting from infections including the flu and COVID-19.

It is designed to treat serious infections due to Staphylococcus aureus (S.

aureus) and other Gram-positive bacteria, including Methicillin-resistant Staphylococcus aureus (MRSA) and Methicillin-sensitive Staphylococcus aureus (MSSA ).

Vibativ addresses a range of Gram-positive bacterial pathogens, including those that are considered difficult-to-treat and multidrug-resistant.

Expanded Patient Support for Sancuso

During the third quarter of 2024 we launched a new sampling program for our oncology support medication, Sancuso, that broadens access to the product, allowing more patients to try it and experience its benefits.

We also introduced a new HUB services capability to provide enhanced patient support, ensuring patients receive comprehensive assistance throughout their treatment journey.

Vaprisol Supply Update

Demand for our Vaprisol product increased in 2020 during the COVID-19 pandemic, and we worked to support the expanded use of the product in hospitals and clinics during the health care crisis.

In 2021, we distributed all remaining inventory of the Vaprisol product we possessed and subsequently notified the FDA that supplies of the product are not currently available.

We have since transferred the manufacturing of the product to a new facility.

Our new manufacturing and distribution partner is working with the FDA to address several Form 483 issues in a timely manner.

As we await FDA approval for making the branded product there, our manufacturer is providing a special supply of compounded product in support of critically ill patients.

The companies share in the sales of this compounded product.

Vaprisol is the first and only intravenously administered vasopressin receptor antagonist.

It is used to raise serum sodium levels in hospitalized patients with hyponatremia, the most common electrolyte disorder among such patients.

Federal NOPAIN Act

In April 2023, we announced that we expect that our Caldolor product will be eligible for special Medicare reimbursement under the Non-Opioids Prevent Addiction in the Nation Act (the “NOPAIN Act”), which was enacted as part of the Consolidated Appropriations Act of 2023 .

This Act requires Centers for Medicare and Medicaid Services (“CMS”) to provide separate reimbursement for non-opioid products that are used to manage pain during surgeries conducted in hospital outpatient departments or in ambulatory surgical centers.

The NOPAIN Act applies, in part, to products that are indicated to provide analgesia, without acting upon the body’s opioid receptors.

The reimbursement for non-opioid pain alternatives under the NOPAIN Act will apply to those products that are furnished between January 1, 2025, and January 1, 2028.

Cumberland submitted comments to CMS in July 2023 and July 2024, arguing, among other things, that Caldolor meets the statutory requirements for separate payment under the NOPAIN Act because the U.S.

Food and Drug Administration (“FDA”) approved Caldolor for a general acute pain indication that encompasses use for the reduction of postoperative pain based on clinical studies in patients with postoperative pain.

On November 1, 2024, CMS announced a list of products for separate payment under the NOPAIN Act through their Calendar Year 2025 Medicare Outpatient Prospective Payment System (“OPPS”) Ruling .

The list does not include Caldolor.

CMS concluded that Caldolor and certain other products do not qualify for separate payment under the NOPAIN Act because “there is no mention of post-operative or post-surgical use in the FDA-approved indications.”

The Company was surprised and disappointed with this determination, as the majority of Caldolor’s use is associated with surgery and the FDA approval of the product’s pain indication was based on studies of patients with post-surgical pain.

Furthermore, CMS’s November 1 list of products eligible for separate payment under the NOPAIN Act does not appear to add any new pharmaceuticals.

Cumberland does not believe that CMS’s determination regarding Caldolor is consistent with the intent of the NOPAIN legislation.

We are evaluating our potential options, and next initiatives for continuing to seek separate payment for Caldolor.

Ifetroban Clinical Studies

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This third program is our newest, with enrollment now underway.

We expect to close two of these ifetroban studies this year.

We recently applied for two FDA designations for our Duchenne Muscular Dystrophy product candidate:

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Upon FDA approval, this designation may result in a priority review voucher from the FDA for a different product.

We expect to hear back on both applications this year.

Cumberland subsequently was informed by the FDA that both the Orphan Drug Designation and the Rare Pediatric Disease Designation requests for this candidate have been granted.

We have also completed a pilot Phase II study involving 1) patients suffering from Hepatorenal Syndrome, a life-threatening condition involving liver and kidney failure, 2) patients with Portal Hypertension associated with chronic liver disease and 3) patients with Aspirin-Exacerbated Respiratory Disease, a severe form of asthma.

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Our plan going forward is to complete each of our Company-sponsored studies, analyze their final data, announce top-line results and decide on the best development path for the registration of ifetroban, which we continue to believe has the potential to benefit many patients with orphan diseases that represent unmet medical needs.

Federal NOPAIN Act

We announced in April 2023 that we expected that Caldolor would be eligible for special Medicare reimbursement under the Non-Opioids Prevent Addiction in the Nation Act (which was enacted as part of the Consolidated Appropriations Act of 2023 (the “NOPAIN Act”).

The NOPAIN Act requires Medicare to provide separate reimbursement for non-opioid products that are used to manage pain during surgeries conducted in hospital outpatient departments or in ambulatory surgical centers.

The NOPAIN Act applies, in part, to products that are indicated to provide analgesia, without acting upon the body’s opioid receptors.

As a result, we expected that the NOPAIN Act would affect Medicare reimbursement for Caldolor, our non-opioid analgesic injection product.

The reimbursement for non-opioid pain alternatives under the NOPAIN Act will apply to those products that are furnished between January 1, 2025 and January 1, 2028.

It is anticipated that in late 2024, the Centers for Medicare & Medicaid Services (“CMS”) will issue regulations implementing the NOPAIN Act and detailing the conditions for, and amount of, the separate reimbursement.

In July 2023, Medicare Hospital Outpatient Prospective Payment System (“OPPS”) Proposed Rule , CMS requested that manufacturers with potentially applicable non-opioid products submit comments and supporting clinical evidence regarding products that they believe should be eligible for separate payment.

We submitted a comment letter along with the requisite clinical information to CMS in September 2023, explaining why Caldolor should be included and separately reimbursed.

In July 2024 Medicare OPPS Proposed Rule, CMS proposed that, in 2025, several drugs that were previously eligible for separate payment via existing CMS policies continue to be eligible for separate payment in the hospital outpatient setting under the CAA of 2023 and solicited comments on whether there are additional drugs or biologicals that meet the statutory definition.

In response, we plan to submit a comment letter along with the requisite information in September 2024 and will then await information from CMS regarding the reimbursement status and price for Caldolor in the CY 2025 OPPS Final Rule.

New Manufacturing & Supplies of Sancuso

After acquiring U.S.

rights to Sancuso, we successfully completed the transition from Kyowa Kirin to Cumberland in 2023, including the NDA transfer.

A new facility was approved by the FDA for Sancuso and we have completed the manufacturing of Cumberland-packaged product there.

We began shipping these new supplies of our Cumberland-branded product this summer.

We continue to support the product through our expanded oncology sales division to help cancer patients by addressing certain side effects associated with their chemotherapy treatments.

Vaprisol Supply Update

Demand for our Vaprisol product increased in 2020 during the pandemic, and we worked to support the expanded use of the product in hospitals and clinics during the health care crisis.

In 2021, we shipped all remaining inventory of the product and notified the FDA that supplies of the product are not currently available.

We have since transferred the manufacturing of the product to a new facility.

Our new manufacturing and distribution partner, Nephron, is working with the FDA to address several Form 483 and warning letter issues in a timely manner.

As we await FDA approval for making the branded product there, Nephron is providing a special supply of compounded product in support of critically ill patients.

The companies will share in the sales of this compounded product.

Vaprisol is the first and only intravenously administered vasopressin receptor antagonist.

It is used to raise serum sodium levels in hospitalized patients with hyponatremia, the most common electrolyte disorder among such patients.

International Agreements

During the third quarter of 2024, PiSA Pharmaceutical, our partner for Caldolor in Mexico, submitted a dossier to COFEPRIS, Mexico’s equivalent to the FDA, for the product’s approval in that country.

Meanwhile, we continue to support our international partners in their efforts to register Vibativ in their countries.

In late 2022, we announced a new partnership with Saudi Arabia-based Tabuk Pharmaceutical to introduce Vibativ into the Middle East.

The arrangement provides Tabuk exclusive rights to distribute Vibativ in Saudi Arabia and Jordan, with the option to expand into other countries in the region.

Tabuk has obtained the final approvals needed to commercialize Vibativ in Saudi Arabia and has now begun ordering the product in preparation for its launch planned for this year.

Also in 2022, we entered into an agreement with D.B.

Pharm to register and commercialize our Vibativ product in South Korea.

Pharm also distributes our Caldolor product there.

They filed for the approval of Vibativ in November 2022 and we have been supporting their efforts through the review process of their application in the country.

The Korean regulatory authorities did not approve the submission, and indicated that additional manufacturing information will be required, which we will work with D.B.

Pharm to address.

Meanwhile, our Vibativ partner for the Chinese market, SciClone Pharmaceuticals, had their approval application in China accepted for review in September 2021.

We have since been supporting SciClone and their requests associated with the review of that submission.

They are working toward the approval and believe that there is significant potential for Vibativ in their country.

CET Program Developments

Through our work at CET, we continue to build a long-term pipeline of innovative new biopharmaceutical products.

CET represents a joint initiative among Cumberland Pharmaceuticals Inc., Vanderbilt University, the state-supported Launch Tennessee and an international partner – WinHealth Pharma.

CET’s mission is to bring biomedical technologies and products conceived at Vanderbilt and other regional research centers to the marketplace.

There have been two recent developments among the programs CET is supporting.

Enrollment concluded and top-line results have become available for the MENDING Trial, a Phase II investigator-initiated study evaluating the safety and efficacy of a new treatment for delirium in critically ill patients.

The study was conducted in partnership with Vanderbilt University Medical Center and funded by the National Institute of Health (“NIH”).

The MENDING Trial enrolled 97 critically ill patients who were admitted to the Vanderbilt Intensive Care Unit (“ICU”) for treatment of respiratory failure or shock and treated 39 who, while in the ICU, developed delirium.

Delirious patients received twice-daily IV treatment or placebo and were evaluated over the course of 14 days.

The primary endpoint for this study was the safety of this new treatment.

The study also evaluated patient days without delirium or coma.

Additional endpoints included ventilator-free days;

hospital-free days;

drug exposure for antipsychotics, opioids, and sedatives;

and cognitive function.

The MENDING Trial successfully demonstrated that the new treatment was well-tolerated in these ICU patients diagnosed with delirium.

In addition the new treatment was associated with 1) a reduction in days with delirium;

2) reduced use of antipsychotics, opioids, and sedatives;

and 3) a decrease in delirious patients experiencing comas.

While the efficacy results were not statistically significant given the limited number of patients treated, the findings are considered clinically meaningful by physician investigators involved in the study and support continued development.

Delirium is characterized as a serious alteration in mental state which may present with confusion, poor attention or lack of awareness.

Additionally, delirium is the most common presentation of neurologic dysfunction in critically ill patients and affects between 30-75% of patients admitted to the ICU.

Development of delirium is associated with several poor outcomes including increased length of hospital stays, long-term cognitive deficits, additional hospital costs, impaired quality of life and mortality.

Despite the prevalence and impact of delirium, there are currently no FDA-approved therapeutics for the prevention or treatment of delirium, highlighting an unmet medical need for these patients.

Additionally, CET has entered into a Development Agreement with Octapharma AG ("Octapharma") for a new product designed to locate sites of internal bleeding.

In exchange for an option to worldwide rights to the technology, Octapharma will provide development funding.

With the option exercise, Octapharma will also provide milestone payments and royalties on product sales.

Most clinically significant internal bleeding occurs in the gastrointestinal (GI) tract, especially the lower tract.

Intestinal hemorrhage ranks among conditions having the highest number of all-cause readmissions and among the most common causes of nonmalignant mortality.

Current treatment for GI hemorrhage begins with identifying the bleeding site through diagnostic testing.

Colonoscopy is the recommended first-line diagnostic procedure, while computed tomographic angiography is advised for a subset of high-risk patients who are unlikely to tolerate bowel preparation.

Both angiography and tagged red blood cell scintigraphy – older, less commonly used tests – require a minimum rate of active bleeding for accurate results.

Diagnosis using colonoscopy is also more challenging without active bleeding or when excessive bleeding obscures the visual field.

The new technology represents a paradigm shift as it identifies the naturally formed clot at the injured vessels, allowing for the potential to pinpoint GI bleeding sites even if bleeding has ceased temporarily.

The product is designed as a proprietary radiochemical preparatory kit for generating a medical imaging agent for injection.

It has been developed through a collaboration between CET, researchers at Vanderbilt University Medical Center and Cold Springs Diagnostics, Inc.

The development has been supported by an NIH grant awarded to CET under the STTR program.

The next steps include scaling up the drug formulation and conducting the additional preclinical testing needed to file and obtain clearance for an Investigational New Drug application, paving the way for an initial clinical study.

We are dedicated to our mission of working together to provide unique products that improve the quality of patient care.

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We continue to build our portfolio of innovative and differentiated products through a multifaceted strategy that includes the development of new candidates, as well as the acquisition of established brands.

Our resulting, diversified product line has enabled us to weather external challenges while our team remains responsive to the evolving market.

We will continue in those efforts and look forward to future opportunities to carry out and our mission and report on our progress throughout the remainder of the year and beyond.

We will remain focused on those efforts and look forward to future opportunities to carry out our mission and report on our progress throughout the remainder of the

year and beyond.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

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RESULTS OF OPERATIONS

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

The following table presents the unaudited interim statements of operations for continuing operations for the three months ended June 30, 2024 and 2023:

Three months ended June 30,

Three months ended September 30, 2024 compared to the three months ended September 30, 2023

The following table presents the unaudited interim statements of operations for continuing operations for the three months ended September 30, 2024 and 2023:

Three months ended September 30,

2024 2023 Change

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Total costs and expenses 10,780,258 11,952,529 (1,172,271)

Operating income (loss) (1,026,688) 22,859 (1,049,547)

Operating loss (1,694,432) (1,866,603) 172,171

Interest income 69,190 98,603 (29,413)

Other income — 981,806 (981,806)

Other income - settlement — 475,000 (475,000)

Other income - insurance proceeds 237,089 346,800 (109,711)

Interest expense (137,374) (110,081) (27,293)

Income (loss) before income taxes (1,091,194) 869,091 (1,960,285)

Loss before income taxes (1,525,527) (1,056,281) (469,246)

Income tax expense (11,442) (6,938) (4,504)

Net income (loss) $ (1,102,637) $ 862,154 $ (1,964,791)

Net loss $ (1,536,969) $ (1,063,219) $ (473,750)

The following table summarizes net revenues by product for the periods presented:

Three months ended June 30,

Three months ended September 30,

2024 2023 Change

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Acetadote 21,374 120,052 (98,678)

Vaprisol (941) 8,062 (9,003)

Omeclamox-Pak (18) 23,288 (23,306)

Vaprisol (135,765) — (135,765)

RediTrex 36,950 (122,556) 159,506

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Net revenues.

Net revenues for the three months ended June 30, 2024, were $9.8 million compared to $10.9 million for the three months ended June 30, 2023.

Kristalose revenue of $4.1 million for the second quarter of 2024, was similar to the same period in the prior year.

Net revenues for the three months ended September 30, 2024, were $9.1 million compared to $10.1 million for the three months ended September 30, 2023.

As detailed in the table above, net revenue increased for two of our marketed products during the third quarter of 2024, Sancuso and Caldolor.

Kristalose revenue was $3.6 million for the third quarter of 2024 and $3.9 million for the same period in the prior year.

The decrease was the result of higher sales deductions.

Acetadote revenue includes net sales of our Acetadote brand and our share of net sales from our Authorized Generic.

During the second quarter of 2024, there was a decrease of $0.1 million in the product's revenue when compared to the prior year period due to a decrease in shipments.

There were no Vaprisol branded product sales for the second quarter of 2024 as Cumberland is currently out of inventory of the product as we await FDA approval on a new manufacturer.

The revenue stated represents our share of sales of the compounded product offset by expired product returns.

Caldolor revenue was $0.8 million for the second quarter of 2024, compared to $1.2 million for the second quarter of 2023 primarily due to decreased international shipments in the current quarter.

Vibativ revenue was $2.5 million for the three months ended June 30, 2024, an increase of $0.3 million from the same prior year period.

The increase in net revenue of the product was the result of international shipments and the introduction of our 4-pak carton.

Sancuso revenue was $2.2 million for the second quarter of 2024, compared to $1.9 million for the second quarter of 2023 resulting in an increase of $0.3 million.

During the third quarter of 2024, there was a decrease of $0.1 million in the product's revenue when compared to the prior year period due to a decline in shipments.

There were no Vaprisol branded product sales for the third quarter of 2024 as Cumberland is currently out of inventory of the product as we await FDA approval on a new manufacturer.

The amount represents charges for product returns.

Caldolor revenue was $1.3 million for the third quarter of 2024, compared to $1.2 million for the third quarter of 2023.

The increase results from higher international sales.

Vibativ revenue was $1.0 million for the three months ended September 30, 2024, and $2.8 million for the same prior year period.

The decrease in net revenue of the product was due to lower sales volume.

Sancuso revenue was $2.6 million for the third quarter of 2024, compared to $1.9 million for the third quarter of 2023 resulting in an increase of $0.7 million.

The increase resulted primarily from increased sales volume, along with lower sales deductions associated with the product.

Other revenue was $0.2 million for the three months ended June 30, 2024, compared to $1.3 million for the three months ended June 30, 2023.

The prior year period included two $500,000 milestone payments associated with Vibativ.

Other revenue was $0.6 million for the three months ended September 30, 2024, compared to $0.3 million for the three months ended September 30, 2023.

The increase relates to the development funding received from Octapharma in the third quarter of 2024.

Cost of products sold .

Co st of products sold for the second quarter of 2024 and 2023 were $1.7 million and $1.5 million, respectively.

Cost of products sold, as a percentage of net revenues, were 17.4% during the three months ended June 30, 2024, compared to 14.0% during the three months ended June 30, 2023.

The increase is primarily due to the mix of products sold.

Co st of products sold for the third quarter of 2024 and 2023 were $1.3 million and $1.8 million, respectively.

Cost of products sold, as a percentage of net revenues, were 14.6% during the three months ended September 30, 2024, compared to 17.5% during the three months ended September 30, 2023.

The decrease is primarily due to the mix of domestic and international products sold.

Selling and marketing .

Selling and marketing expense for the second quarter of 2024 decreased $0.4 million compared to the same period last year.

This decrease is primarily attributable to the timing of advertising costs and accrual adjustments.

Selling and marketing expense for the third quarter of 2024 decreased $0.3 million compared to the same period last year.

This decrease is primarily attributable to a decline in personnel and the related compensation.

Research and development .

Research and development costs for the second quarter of 2024 and 2023 were relatively the same at $1.1 million.

A portion of our research and development costs is variable as we continue to fund the ongoing clinical initiatives associated with our pipeline product candidates.

Research and development costs for the third quarter of 2024 were $1.3 million compared to $1.9 million for the same period in 2023.

The decrease is primarily due to a portion of our research and development costs is variable as we continue to fund the ongoing clinical initiatives associated with our pipeline product candidates.

These variable costs depend on the number of active trials, study sites and patients as well as the cost per patient in each of our clinical programs.

In addition, FDA fees are lower in 2024.

General and administrative .

General and administrative expense for the second quarter of 2024 was $2.8 million compared to $2.4 million for the same period in 2023.

General and administrative expense for the third quarter of 2024 was $2.7 million compared to $2.3 million for the same period in 2023.

The increase is due to higher salaries and contract labor costs.

The components of the statements of operations discussed above reflect the following impacts from Vibativ:

Financial Impact of Vibativ Three months ended June 30,

Financial Impact of Vibativ Three months ended September 30,

Net revenue (1)

$ 1,029,301 $ 2,789,579

Cost of products sold (2)

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Vibativ contribution $ 494,995 $ 1,603,950

(1) Net revenue includes $1,288 related to other income received.

(2) The Vibativ inventory included in the costs of product sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during 2018.

The components of the statements of operations discussed above reflect the following impacts from Sancuso:

Financial Impact of Sancuso Three months ended June 30,

Financial Impact of Sancuso Three months ended September 30,

Net revenue $ 2,607,559 $ 1,933,222

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Sancuso contribution $ 1,400,562 $ 825,833

(1) The Sancuso inventory included in the costs of product sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during 2022.

(1) The Sancuso inventory included in the costs of product sold during 2023 was acquired and paid for by Cumberland as part of the acquisition of the brand during 2022.

Amortization.

Amortization expense is the ratable use of our capitalized intangible assets including product and license rights, patents, trademarks and patent defense costs.

Amortization for the three months ended June 30, 2024 and 2023, totaled approximately $1.1 million and $1.2 million, respectively.

The decrease in amortization expense resulted from the write down of Omeclamox-Pak intangible assets as we discontinued the sales of the product in late 2023.

Amortization for the three months ended September 30, 2024 and 2023, totaled approximately $1.1 million and $1.2 million, respectively.

Income taxes .

Income tax expense for the three months ended June 30, 2024, was comparable to the income tax expense for the three months ended June 30, 2023.

Income tax expense for the three months ended September 30, 2024 and for the three months ended September 30, 2023 was $0.01 million.

RESULTS OF OPERATIONS

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

The following table presents the unaudited interim statements of operations for continuing operations for the six months ended June 30, 2024 and 2023:

Six months ended June 30,

Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

The following table presents the unaudited interim statements of operations for continuing operations for the nine months ended September 30, 2024 and 2023:

Nine months ended September 30,

2024 2023 Change

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Other income — 2,828,871 (2,828,871)

Other income - settlement — 475,000 (475,000)

Other income - insurance proceeds 237,089 346,800 (109,711)

Interest expense (382,247) (489,069) 106,822

Income (loss) before income taxes (2,982,224) 1,048,315 (4,030,539)

Loss before income taxes (4,507,751) (7,966) (4,499,785)

Income tax expense (34,327) (20,813) (13,514)

Net income (loss) $ (3,005,109) $ 1,034,440 $ (4,039,549)

Net loss $ (4,542,078) $ (28,779) $ (4,513,299)

The following table summarizes net revenues by product for the periods presented:

Six months ended June 30,

Nine months ended September 30,

2024 2023 Change

4 unchanged sentences

Acetadote 144,973 440,071 (295,098)

Vaprisol 7,081 39,866 (32,785)

Omeclamox-Pak (2,574) 28,832 (31,406)

Vaprisol (128,684) 39,866 (168,550)

RediTrex 71,350 (254,108) 325,458

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Net revenues.

Net revenues for the six months ended June 30, 2024, were $18.3 million compared to $20.1 million for the six months ended June 30, 2023, a decrease of $1.8 million.

Kristalose revenue was $7.3 million during the first six months of 2024, compared to $8.4 million for the prior year period.

Net revenues for the nine months ended September 30, 2024, were $27.4 million compared to $30.2 million for the nine months ended September 30, 2023, a decrease of $2.8 million.

Kristalose revenue was $10.9 million during the first nine months of 2024, compared to $12.3 million for the prior year period.

Revenue decreased due to the result of timing of shipments to one of our co-promotion partners.

Acetadote revenue includes net sales of our Acetadote brand and our share of net sales from our Authorized Generic.

During the six months ended June 30, 2024, there was a decrease of $0.2 million in the product's revenue when compared to the prior year period due to a decrease in shipments.

Sancuso revenue was $4.0 million for the six months ended June 30, 2024, compared to $3.8 million for the same period last year.

During the nine months ended September 30, 2024, there was a decrease of $0.3 million in the product's revenue when compared to the prior year period due to a decrease in shipments.

Sancuso revenue was $6.6 million for the nine months ended September 30, 2024, compared to $5.7 million for the same period last year.

The increase resulted primarily from reduced sales deductions for product returns.

Vibativ revenue was $4.1 million for the six months ended June 30, 2024, compared to $4.0 million for the same period last year.

The increase in net revenue of the product was the result of international shipments in 2024.

There was $0.01 million of Vaprisol revenue for the six months ended June 30, 2024 related to the sales of our compounded product.

Omeclamox-Pak had no sales for the six months ended June 30, 2024, as Cumberland is currently out of commercial inventory of this product.

Vibativ revenue was $5.1 million for the nine months ended September 30, 2024, compared to $6.8 million for the prior year period.

The decrease in net revenue of the product was the result of lower sales volume in 2024.

There were no Vaprisol branded product sales for the nine months ended September 30, 2024 and 2023.

The sales of our compounded product for the current year-to-date period was offset by normal sales deduction adjustments.

Omeclamox-Pak had no sales for the nine months ended September 30, 2024, as Cumberland is currently out of commercial inventory of this product.

The packager for our Omeclamox-Pak product encountered financial difficulties and currently is under new management and a reorganization.

Caldolor revenue was $2.3 million for the six months ended June 30, 2024, a $0.2 million increase over the same period in 2023.

Caldolor revenue was $3.6 million for the nine months ended September 30, 2024, an increase of $0.3 million over the same period in 2023.

Higher international revenue is driving the increase.

Other revenue was $0.5 million for the six months ended June 30, 2024, representing a $1.0 million decrease from the same period in 2023, as a result of a settlement recognized in 2023.

Other revenue was $1.1 million for the nine months ended September 30, 2024, representing a $0.7 million decrease from the same period in 2023, as a result of a settlement recognized in 2023.

Cost of products sold .

Co st of products sold for the first six months of 2024 were $3.3 million, an increase of $0.5 million compared to the same period last year due to higher international sales with corresponding higher cost of goods.

Co st of products sold for the first nine months of 2024 were $4.6 million, consistent when compared to $4.5 million for the first nine months of 2023.

Selling and marketing .

Selling and marketing expense for the six months ended June 30, 2024, decreased $0.5 million compared to the prior year period.

Selling and marketing expense for the nine months ended September 30, 2024, decreased $0.9 million compared to the prior year period.

This decrease is primarily attributable to the timing of the expenditures.

Research and development .

Research and development costs were $2.2 million for the first six months of 2024 compared to $2.6 million for the same period last year.

Research and development costs were $3.5 million for the first nine months of 2024 compared to $4.6 million for the same period last year.

A portion of our research and development costs is variable as we continue to fund the ongoing clinical initiatives associated with our pipeline product candidates.

These variable costs depend on the number of active trials, study sites and patients as well as the cost per patient in each of our clinical programs.

The year over year reduction results from lower FDA fees in 2024.

The year over year reduction results from lower FDA fees and consulting expenses in 2024.

General and administrative .

General and administrative expense for the six months ended June 30, 2024, increased to $5.1 million compared to $4.9 million during the six months ended June 30, 2023.

General and administrative expense for the nine months ended September 30, 2024, increased to $7.8 million compared to $7.2 million during the nine months ended September 30, 2023.

The increase is due to higher salaries and contract labor costs.

The components of the statements of operations discussed above reflect the following impacts from Vibativ:

Financial Impact of Vibativ Six months ended June 30,

Financial Impact of Vibativ Nine months ended September 30,

Net revenue (1)

1 unchanged sentence

Cost of products sold (2)

1,060,584 1,081,001

Royalty and operating expenses 1,378,848 1,738,568

Vibativ contribution $ 2,649,839 $ 4,966,023

(1) Net revenue includes $1,288 related to other income received.

(2) The Vibativ inventory included in the costs of product sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during 2018.

4 unchanged sentences

Vibativ contribution $ 30,155,381

(1) Net revenue includes a $1,000,000 payment to Cumberland related to a settlement agreement of milestone payments.

(1) Net revenue includes a $1,000,000 payment to Cumberland related to a settlement agreement of milestone payments and $1,288 of other income.

(2) The Vibativ inventory included in the costs of product sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during 2018.

Financial Impact of Sancuso Six months ended June 30,

Financial Impact of Sancuso Nine months ended September 30,

Net revenue $ 6,624,103 $ 5,736,981

4 unchanged sentences

(1) The Sancuso inventory included in the costs of product sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during 2022.

The acquired inventory was completely sold by the end of the second quarter 2024.

Financial Impact of Sancuso Since Acquisition

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(1) The Sancuso inventory included in the costs of product sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during 2022.

The acquired inventory was completely sold by the end of the second quarter 2024.

Amortization.

Amortization expense is the ratable use of our capitalized intangible assets including product and license rights, patents, trademarks and patent defense costs.

Amortization for the six months ended June 30, 2024, and six months ended June 30, 2023, totaled approximately $2.2 million and $2.4 million, respectively.

Amortization for the nine months ended September 30, 2024, and nine months ended September 30, 2023, totaled approximately $3.3 million and $3.6 million, respectively.

The decrease was attributable to a reduction to the valuation of Omeclamox acquisition recognized in December 2023.

Income taxes .

Income tax expense for the six months ended June 30, 2024, was $0.02 million, comparable to the income tax expense recognized for the six months ended June 30, 2023.

As of June 30, 2024, we had approximately $52.1 million in federal net operating loss carryforwards including approximately $44.1 million of net operating loss carryforwards resulting from the exercise of nonqualified stock options that have historically been used to significantly offset income tax obligations.

Income tax expense for the nine months ended September 30, 2024, was $0.03 million, compared to the income tax expense recognized for the nine months ended September 30, 2023 of $0.02 million.

As of September 30, 2024, we had approximately $51.9 million in federal net operating loss carryforwards including approximately $44.1 million of net operating loss carryforwards resulting from the exercise of nonqualified stock options that have historically been used to significantly offset income tax obligations.

We expect to continue to pay minimal income taxes during 2024 and beyond, through the continued utilization of these net operating loss carryforwards, on any taxable income generated from our operations.

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We believe that our internally generated cash flows, existing working capital and our line of credit will be adequate to finance internal growth, finance business development initiatives, and fund capital expenditures for the foreseeable future.

The following table summarizes our liquidity and working capital as of June 30, 2024 and December 31, 2023:

June 30, 2024 December 31, 2023

The following table summarizes our liquidity and working capital as of September 30, 2024 and December 31, 2023:

September 30, 2024 December 31, 2023

Cash and cash equivalents $ 17,464,754 $ 18,321,624

2 unchanged sentences

Revolving line of credit availability $ 3,908,408 $ 7,215,856

The following table summarizes our net changes in cash and cash equivalents for the six months ended June 30, 2024 and June 30, 2023:

Six months ended June 30,

The following table summarizes our net changes in cash and cash equivalents for the nine months ended September 30, 2024 and September 30, 2023:

Nine months ended September 30,

Net cash provided by (used in):

3 unchanged sentences

Net decrease in cash and cash equivalents $ (856,870) $ (1,250,005)

The net $1.0 million decrease in cash and cash equivalents for the six months ended June 30, 2024, was primarily attributable to cash used in operating activities partially offset by cash provided by financing activities.

Cash used in operating activities totaled $3.0 million for the six months ended June 30, 2024, primarily is due to the result of $3.0 million net loss, a $1.9 million decrease in accounts payable and other current liabilities and a $1.9 million increase in account receivable partially offset by a $2.3 million increase in depreciation and amortization expense and a $1.2 million decrease in inventories.

Cash provided by financing activities totaled $2.1 million for the six months ended June 30, 2024, primarily due to $3.3 million borrowings net on our line of credit, partially offset by the $0.8 million used for the payment of a Sancuso milestone, plus royalties on sales of Vibativ and Sancuso and the $0.4 million in cash used to repurchase shares of our common stock.

The net $0.9 million decrease in cash and cash equivalents for the nine months ended September 30, 2024, was primarily attributable to cash used in operating activities partially offset by cash provided by financing and investing activities.

Cash used in operating activities totaled $2.5 million for the nine months ended September 30, 2024, primarily due to the $4.5 million net loss, a $1.6 million increase in accounts receivable, a $0.7 million decrease in accounts payable and other accrued liabilities, a $0.9 million decrease in non-cash contingent consideration and a $0.4 million decrease in other long-term liabilities.

This was partially offset by a $3.4 million increase in depreciation and amortization expense, a $1.1 million decrease in inventory and a $1.0 million decrease in other current assets and other assets.

Cash provided by financing activities totaled $1.6 million for the nine months ended September 30, 2024, primarily due to $3.3 million borrowings net on our line of credit, partially offset by the $1.3 million used for the payment of royalties on sales of Vibativ and Sancuso and the $0.5 million in cash used to repurchase shares of our common stock.

Debt Agreement

8 unchanged sentences

OFF-BALANCE SHEET ARRANGEMENTS

During the six months ended June 30, 2024 and 2023, we did not engage in any off-balance sheet arrangements.

During the nine months ended September 30, 2024 and 2023, we did not engage in any off-balance sheet arrangements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis