What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-07 compared with 2024-03-13 · 66 added, 62 removed, 235 unchanged (35% of the section changed)

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

Our commercial portfolio includes seven branded products approved for marketing by the FDA.

In addition to these commercial brands, we have Phase II clinical programs underway evaluating our ifetroban product candidate for patients with 1) cardiomyopathy associated with Duchenne Muscular Dystrophy, a fatal, genetic neuromuscular disease and 2) Systemic Sclerosis or scleroderma, a debilitating autoimmune disorder characterized by fibrosis of the skin and internal organs.

We are also developing an oral capsule to treat Idiopathic Pulmonary Fibrosis, the most common form of progressive fibrosing interstitial lung disease.

Following FDA clearance of our Investigational New Drug application in May 2023, we are in the process of initiating our Phase II study in patients in centers of excellence across the U.S.

Our commercial portfolio includes six branded products approved for marketing by the FDA.

In addition to these commercial brands, we have Phase II clinical programs underway evaluating our ifetroban product candidate for patients with 1) Systemic Sclerosis or scleroderma, a debilitating autoimmune disorder characterized by fibrosis of the skin and internal organs and 2) Idiopathic Pulmonary Fibrosis, the most common form of progressive fibrosing interstitial lung disease.

Additionally, we recently completed a Phase II study in patients with cardiomyopathy associated with Duchenne muscular dystrophy, a rare, fatal, genetic neuromuscular disease results in deterioration of the skeletal, heart and lung muscles.

Next steps include further data analysis and completion of a full study report in preparation for an end-of-Phase-II meeting with the FDA to determine next steps associated with the product’s development and commercialization.

Our primary target markets are hospital acute care, gastroenterology and oncology.

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For more information, please see Part I, Item I, Business of this Form 10-K.

• Announced our newly refined mission statement:

Working together to provide unique products that improve the quality of patient care.

• Obtained FDA approval for our Caldolor ® product, to include its use in infants.

The non-narcotic agent may now be administered for the treatment of pain and fever in patients 3 to 6 months of age.

With this newly approved labeling, Caldolor is the only non-opioid product approved to treat pain in infants that is delivered through injection.

• Shared the publication of positive results from a clinical study investigating the safety and pharmacokinetics of Caldolor in newborns.

Published in the journal Pediatric Drugs , the results of the study support the growing body of evidence that demonstrates Caldolor is a safe therapeutic option available to practitioners for the treatment of fever and pain in infants, children and adults.

• Announced a new publication in Antimicrobial Agents and Chemotherapy detailing the results of the first clinical study investigating the safety and pharmacokinetics of our Vibativ ® product in children 2 to 17 years of age.

The results of the study suggest that a single dose of Vibativ is safe in children.

• Completed the Sancuso ® transition from Kyowa Kirin to Cumberland, including the NDA transfer, and initiation of the product’s manufacture at a new facility.

We also expanded our oncology sales division to further support the brand.

• Helped advance the submissions for the approval of Vibativ in China, South Korea and Saudi Arabia.

• Completed the transition of our former RediTrex ® product to Nordic Pharma.

• Obtained FDA clearance of the Investigational New Drug application for a new ifetroban Phase II program in patients with Idiopathic Pulmonary Fibrosis, the most common form of progressive fibrosing interstitial lung disease.

• Shared our fourth annual Sustainability Metrics, which detail the Company’s activities pertaining to our environmental, social and governance matters.

• Entered into a new revolving credit loan agreement with Pinnacle Bank for a $20 million facility, expandable to $25 million over a three-year term.

• Continued our corporate share repurchase initiative, with a group of our board members also purchasing shares through Rule 10b5-1 trading plans in order to add to their holdings in the Company.

• Announced the publication of new real-world outcomes research involving 150,000 patients, which compared our Caldolor ® (ibuprofen) injection to its key competitor – ketorolac.

The results provided compelling evidence that Caldolor is associated with a significantly reduced incidence of adverse drug reactions and also improved healthcare utilization.

• Shared a Caldolor ® Special Report, which was published in Anesthesiology News , General Surgery News and Pharmacy Practice News that presented the growing amount of data supporting the use of Caldolor as a standard of care for the treatment of pain and fever.

The results demonstrated that the product is a safe and effective treatment for pain and fever in adults, children and infants as young as 3 months of age.

• Announced the FDA approval of a supplemental New Drug Application for Acetadote ® , our IV treatment for preventing or lessening liver injury after ingestion of potentially toxic quantities of acetaminophen.

The new, streamlined approach reduces the frequency of medication errors and potentially serious non-allergic anaphylactoid reactions without compromising the effectiveness of Acetadote.

By simplifying the dosing regimen, health care providers can administer the life-saving treatment more efficiently, potentially improving patient outcomes.

• Introduced our newly Cumberland-packaged Sancuso ® , supported by our expanded oncology sales division, after successfully transferring its supply to a new facility that previously received FDA approval for manufacturing the product there.

• Helped advance the submissions for the approval of Vibativ ® in China and Saudi Arabia.

• Progressed our clinical trials evaluating ifetroban for patients with Systemic Sclerosis, Duchenne muscular dystrophy and Idiopathic Pulmonary Fibrosis.

• Received both Orphan Drug Designation and Rare Pediatric Disease Designation from the FDA for the use of ifetroban for the treatment of Duchenne muscular dystrophy heart disease, reflecting its potential significance in treating this devastating condition.

• Continued our corporate share repurchase initiative, with a group of our board members also purchasing shares through trading plans in order to add to their holdings in the Company.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

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Other revenue, which is a component of net revenues, includes non-refundable upfront payments and milestone payments under licensing agreements along with grant and rental income.

Other revenue was approximately 5.2% percent of net revenues in 2023 and 3.2% in 2022.

Our financial statements reflect accounts receivable allowances of $0.6 million at December 31, 2023 and 2022, for chargebacks and early pay discounts for products.

Other revenue was approximately 3.5% of net revenues in 2024 and 5.2% in 2023.

Our financial statements reflect accounts receivable allowances of $1.1 million and $0.6 million at December 31, 2024 and 2023, respectively, for chargebacks and early pay discounts for products.

The following table reflects our sales-related accrual activity for the periods indicated below:

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Changes in our estimates would be recorded in our statement of operations in the period of the change.

Non-current inventories consist of active pharmaceutical ingredients which typically has an extended life and selected finished good products with extended life longer than one year.

Non-current inventories consist of active pharmaceutical ingredients which typically have an extended life and selected finished good products with an extended life longer than one year.

We provide for deferred taxes using the asset and liability approach.

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

Other income - insurance proceeds 346,800 611,330 (264,530)

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

Interest expense (605,508) (667,861) 62,353

Loss before income taxes (6,466,384) (6,284,997) (181,387)

Income tax (expense) benefit (45,769) (68,850) 23,081

Income tax benefit (expense) 22,669 (45,769) 68,438

Net loss $ (6,443,715) $ (6,330,766) $ (112,949)

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Kristalose $ 15,315,259 $ 15,981,850 $ (666,591)

Vibativ 8,812,692 7,487,462 1,325,230

Sancuso 9,005,129 8,096,788 908,341

Vibativ 7,160,125 8,812,692 (1,652,567)

Caldolor 4,959,385 4,333,923 625,462

Acetadote 185,182 458,759 (273,577)

Omeclamox-Pak 20,030 29,145 (9,115)

Omeclamox (3,075) 20,030 (23,105)

Vaprisol (174,538) 151,336 (325,874)

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As detailed in the table above, net revenue increased during 2024 for two of our marketed products:

Kristalose and Vibativ.

These increases were mainly offset by decreased net product sales of Sancuso and Caldolor.

Kristalose revenue increased by $0.8 million, or 5.1%, compared to December 31, 2022, primarily as a result of increased shipments of the product.

Vibativ revenue increased to $8.8 million for the year ended December 31, 2023, compared to $7.5 million in the same prior year period.

The increase of $1.3 million, or 17.7%, reflected fewer product returns in the current year.

Sancuso revenue was $8.1 million compared to $13.2 million in the prior year.

This decrease in net revenue was primarily a result of an inordinate amount of product returns and higher commercial rebates.

Sancuso and Caldolor.

These increases were mainly offset by decreases in net product sales of Kristalose and Vibativ.

Kristalose revenue decreased by $0.7 million, compared to December 31, 2023, primarily as a result of decreased shipments of the product.

Sancuso revenue was $9.0 million compared to $8.1 million in the prior year, an increase of $0.9 million or 11.2% for the year ended December 31, 2024.

This increase in net revenue was impacted by an improvement in product returns in 2024.

Vibativ revenue decreased to $7.2 million for the year ended December 31, 2024, compared to $8.8 million in the same prior year period.

The decrease was the result of decreased shipments of the product and higher product returns.

Caldolor revenue was $5.0 million during the year ended December 31, 2024, compared to $4.3 million in the same period last year.

This decrease in Caldolor revenue for the year ended December 31, 2023, w as the result of the timing of international shipments.

This 14.4% increase in Caldolor revenue for the year ended December 31, 2024, w as impacted by an increase in international shipments.

There was no Vaprisol revenue for the year ended December 31, 2024, as Cumberland is currently out of commercial inventory of the product.

Net revenue was positively impacted by various sales deduction adjustments.

Net revenue was negatively impacted by various sales deduction adjustments.

Acetadote revenue included net sales of our branded product and our share of net sales from our Authorized Generic.

For the year ended December 31, 2023, the Acetadote net revenue was $0.5 million, similar to the prior year period.

Omeclamox-Pak had no sales for the year ended December 31, 2023, as Cumberland is currently out of commercial inventory of this product.

For the year ended December 31, 2024, the Acetadote net revenue was $0.2 million, as compared to $0.5 million from the prior year period.

This decrease results from lower sales for our Authorized Generic.

Omeclamox-Pak had no sales for the years ended December 31, 2024 and 2023 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 is reorganizing.

Reditrex revenue decreased $0.2 million in 2023 compared to 2022.

We discontinued sale of the product in 2023.

We discontinued the product RediTrex in 2023.

Net revenue was positively impacted by various sales deduction adjustments.

Other Revenue.

Other revenue increased due to the litigation settlement based on two $500,000 milestone payments due to us for the license associated with our Vibativ product.

Other revenue decreased from 2023 when milestone payments of $1 million associated with our Vibativ product were recorded.

Cost of products sold .

Cost of products sold for the year ended December 31, 2023, were $6.1 million compared to $9.1 million in the prior year, a decrease of $3.1 million.

These cost savings were due to the availability of lower cost inventory and fewer inventory write downs.

Cost of products sold for the year ended December 31, 2024, were $6.6 million compared to $6.1 million in the prior year, an increase of $0.5 million.

The gross margin for the years ended December 31, 2024 and 2023, were 82.6% and 84.7%, respectively.

Selling and marketing .

Selling and marketing expense for the year ended December 31, 2023, were $18.5 million compared to $16.7 million in the prior year, which was an increase of $1.8 million.

This increase was primarily a result of an increase in marketing expenses associated with the Sancuso acquisition including royalty costs, promotional spending and the cost associated with our expanded Oncology division.

Selling and marketing expense for the year ended December 31, 2024, were $17.0 million compared to $18.5 million in the prior year, which was a decrease of $1.4 million.

This decrease was primarily a result of a decrease in marketing expenses associated with royalty costs and promotional spending.

Research and development .

Research and development costs for the year ended December 31, 2023, were $5.8 million, compared to $6.7 million last year, representing a decrease of $0.9 million due to reduced FDA fees.

Research and development costs for the year ended December 31, 2024, were $4.8 million, compared to $5.8 million in the prior year, representing a decrease of $1.0 million due primarily to reduced FDA fees, salaries and consulting expenses.

A portion of our research and development costs is variable based on the number of trials, study sites, number of patients and the cost per patient in each of our clinical programs.

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General and administrative expenses for the year ended December 31, 2024, were $11.1 million compared to $10.7 million in the prior year.

The change resulted from an increase in hiring costs and deferred compensation expenses.

The primary driver of the increase was higher salary costs.

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

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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.

Amortization and impairment.

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

Amortization and impairment for 2023 totaled approximately $8.1 million which is an increase of $3.0 million due to a $3.3 million write down of our Omeclamox intangible assets.

Amortization.

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

Amortization for 2024 totaled approximately $4.7 million which is a decrease of $3.4 million due to a $3.3 million write down of our Omeclamox intangible assets for the year ended December 31, 2023.

Income taxes .

Income taxes totaled $45,769 for the year ended December 31, 2023, and $68,850 for the year ended December 31, 2022.

Income taxes totaled $22,669 as a benefit for the year ended December 31, 2024, and $45,769 tax expense for the year ended December 31, 2023.

Other income.

In 2023, we recognized a $2.8 million refund of FDA fees for the periods of 2023 and 2022 to be used to further our product research efforts.

For the year ended December 31, 2024, we recognized a gain of $0.2 million for a payout earned on a company owned insurance policy.

For the year ended December 31, 2023, we recognized a $2.8 million refund of FDA fees for the periods of 2023 and 2022 to further our product research efforts.

In addition, in 2023 we recognized a gain of $0.5 million to settle a manufacturing dispute and a gain of $0.3 million for a payout earned on a company owned insurance policy.

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$ (357,440) $ (1,436,346)

The net $0.4 million decrease in cash and cash equivalents for the year ended December 31, 2024, was attributable to cash used in operating activities offset by cash provided by financing and investing activities.

Cash used in operating activities of $0.6 million is primarily due to an increase in accounts receivable of $1.9 million, a decrease in non-cash contingent consideration of $1.5 million, an increase in CSV of life insurance policies over premiums paid of $0.1 million, the gain on insurance proceeds of $0.2 million and a $1.0 million decrease in operating lease liabilities, partially offset by an increase in inventory of $2.4 million and an increase in accounts payable and other accrued liabilities.

Cash provided by investing activities less than $0.1 million was the result of more life insurance proceeds received offset by additions of intangibles and property.

Cash provided by financing activities of $0.2 million was primarily due to a $2.5 million net borrowing, partially offset by payments of $1.7 million of contingent consideration for Vibativ and Sancuso, and $0.6 million in cash used to repurchase shares of our common stock.

As noted above, we continue to repurchase shares of our common stock, as discussed in Part II, Item 5, "Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities", of this Form 10-K.

The net $1.4 million decrease in cash and cash equivalents for the year ended December 31, 2023, was attributable to cash provided by operating activities offset by cash used in investing and financing activities.

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Our financing activities included payments of $3.3 million of contingent consideration for Vibativ and Sancuso, a pay down on our line of credit of $3.4 and $0.7 million in cash used to repurchase shares of our common stock.

The net $7.3 million decrease in cash and cash equivalents for the year ended December 31, 2022, was attributable to cash provided by operating activities offset by cash used in investing and financing activities.

Cash provided by operating activities of $8.5 million includes a decrease of inventory of $0.9 million, most of which was Vibativ and Sancuso related, an increase in accounts payable and other accrued liabilities of $14.5 million, partially offset by a $6.1 million increase in accounts receivable and a decrease in non-cash contingent consideration of $2.1 million.

Cash used in investing activities of $13.7 million was the result of the acquisition of Sancuso of $13.5

million, additions to intangibles of $2.0 million, additions to property and equipment of $0.1 million and the proceeds of officer life insurance proceeds of $0.9 million.

Our financing activities included payments of $2.2 million of contingent consideration for Vibativ and Sancuso and $1.1 million in cash used to repurchase shares of our common stock.

Shelf Registration

In December 2023, the Company filed a Shelf Registration on Form S-3 with the SEC associated with the sale of up to $100 million in corporate securities which also was declared effective in December 2023.

The Company intends to enter into an At the Market Sales Agreement in March 2024, in order to allow the Company to sell shares at market prices.

On December 14, 2023, the Company filed a Shelf Registration on Form S-3 with the SEC associated with the sale of up to $100 million in corporate securities which also was declared effective on December 26, 2023.

The Company entered into a Sales Agreement (the “Sales Agreement”) with H.C.

Wainwright & Co., LLC (“H.C.

Wainwright”) on March 20, 2024, in order to allow the Company to sell shares at market prices.

The Company did not issue any shares under its ATM program during the year ended December 31, 2024.

On February 5, 2025, the Company utilized the Sales Agreement with H.

Wainwright and sold 1,000,000 shares of Cumberland’s common shares.

These shares sold at a volume weighted average price of $5.4688 per share for aggregate gross proceeds of $5,468,800.

On February 14, 2025, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable under the Sales Agreement with H.C.

Wainwright for to up to $10 million and filed a prospectus supplement under the Sales Agreement for that aggregate offering amount.

Debt Agreement

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Borrowings under the line of credit are collateralized by substantially all of our assets.

On May 6, 2024, the Company entered into a First Amendment to the Loan Agreement which provides an alternative to the financial covenant by delivering to the lender a borrowing base certificate and complying with certain borrowing base requirements which set forth a maximum revolver amount equal to the lessor of (a) up to $20 million or (b) the sum of the Company's cash balances and eligible accounts receivable.

Minimum Product Purchase Requirements

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Contractual obligations (1)

2024 2025 2026 2027 2026 and thereafter

2025 2026 2027 2028 2029 and after

Line of credit (2)

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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-K

Item 7. Management’s Discussion and Analysis