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Annua l Report
2 01 7
Cumberland
Pharmaceuticals
is a specialty pharmaceutical company
founded with a clear mission to advance
patient care through the delivery of
high-quality medicines. We acquire,
develop, and commercialize branded
prescription products that are in line with
that mission, and we strive to provide
innovative products that address
poorly met medical needs.
To Our Shareholders, Employees & Partners:
A.J. Kazimi
Chief Executive Officer
Cumberland
Pharmaceuticals
I am pleased to report excellent progress in 2017 in advancing toward our goal of
sustainable growth and profitability. Over the past few years, we have taken steps
to transform our company. Those efforts have strengthened Cumberland’s market
presence and diversified our business.
Net revenues in 2017 were $41 million, an increase of 25% over the prior year. We continued to
maintain a strong financial position with $93 million in total assets and $50 million in cash and
investments at the end of the year.
During 2017, we expanded our commercial product line with the acquisition of the exclusive U.S.
rights to Totect® (dexrazoxane hydrochloride) - the second product to emerge from our alliance
with the Clinigen Group. Totect is an FDA-approved, hospital based oncology intervention drug,
indicated to treat the toxic effects of anthracycline chemotherapy. We launched Totect during a
national shortage of dexrazoxane, resulting in strong initial demand for the brand. To support
oncology patients during the shortage, we provided emergency shipments of the product to
cancer centers and children’s hospitals across the country.
1
Meanwhile, we were pleased to see that both Caldolor® and Vaprisol® were the subject of
favorable clinical publications in 2017. One study on Caldolor demonstrated its ability to
significantly reduce fever in hospitalized children. Another study provided evidence that Caldolor
can significantly improve post-operative pain control, while also significantly reducing opioid
use in patients undergoing surgery. Vaprisol was highlighted in a publication as a well-tolerated
solution for hyponatremia - a potentially serious condition that continues to be a leading type of
electrolyte imbalance seen in hospitalized patients.
In 2017, we also signed and fully implemented a new co-promotion arrangement with Poly
Pharmaceuticals, Inc. They’re a privately held U.S. specialty pharmaceutical company that
began introducing Kristalose® to medical specialties we don’t cover. Poly’s sales organization is
more than doubling the number of nationwide physicians called upon with Kristalose, bringing
the brand’s message to thousands of new medical professionals.
“
By design, Cumberland is a very
different company today than
we were just a few years ago.
“
Cumberland currently
markets seven FDA-
approved products for
sale in the United States.
Our primary target markets are
hospital acute care, gastroenterology,
and oncology supportive care.
We promote our approved
products through our hospital and
gastroenterology sales forces in the
U.S and are establishing a network
of international partners to bring our
products to patients in their countries.
Acetadote®
(acetylcysteine)
Injection, for
the treatment of
acetaminophen
poisoning
Caldolor®
(ibuprofen)
Injection, for the
treatment of pain
and fever
Kristalose®
(lactulose) for Oral
Solution, a prescription
laxative, for the
treatment of chronic
and acute constipation
2
Our clinical pipeline programs continued to advance in 2017. Patient enrollment progressed in
our Phase II Vasculan® and Portaban® studies, and we initiated our second Boxaban® study after
FDA clearance earlier in the year. All three product candidates address patient conditions for
which there is currently no effective treatment.
By design, Cumberland is a very different company today than we were just a few years ago. Our
product portfolio has grown, our reach has substantially increased, and our pipeline now addresses
several market opportunities in the hundreds of millions of dollars. This diversified strategy has
driven our double-digit top line growth over the last year, and our momentum is strong. We are
confident that we have put the key pieces in place to help us to deliver on our goals.
Finally, I’d like to acknowledge and thank our team for all their fine efforts, and for doing their
part in advancing our mission of improving patient care through the delivery of high-quality
pharmaceutical products.
With best wishes,
AJ Kazimi
Chairman and Chief Executive Officer
Omeclamox®-Pak,
(omeprazole,
clarithromycin,
amoxicillin) for the
treatment of Helicobacter
pylori (H. pylori) infection
and related duodenal
ulcer disease
Vaprisol®
(conivaptan) Injection,
to raise serum sodium
levels in hospitalized
patients with euvolemic
and hypervolemic
hyponatremia
Ethyol® (amifostine)
Injection for the reduction
of xerostomia (dry mouth)
in patients undergoing post-
operative radiation treatment
for head and neck cancer and
the renal toxicity associated
with the administration of
cisplatin in patients with
advanced ovarian cancer
Totect® (dexrazoxane
hydrochloride) Injection,
for emergency oncology
intervention, to treat the
toxic effects of anthracycline
chemotherapy in case of
extravasation (drug leakage
from the bloodstream into
the tissues).
3
CPIX Pipeline
The company has continued to take steps to
transform Cumberland by adding new products,
increasing the number of sales representatives
supporting the portfolio, launching new
marketing strategies, expanding product
labeling, protecting intellectual property,
and advancing our clinical pipeline. We have
continued to expand our pipeline and have
a total of four promising product candidates
in development. All four candidates are part
of our ifetroban program, with potential to
help multiple patient populations. All of our
candidates are also designed to treat conditions
for which there is currently no FDA - approved
pharmaceutical treatment.
4
Preclinical
IND
Phase 1
Phase 2
Safety PK
Phase 2
Efficacy
Phase 3
NDA
Our
pipeline
of product
candidates
includes:
Hepatoren®
(hepatorenal syndrome)
Boxaban®
(aspirin-exacerbated respiratory disease)
Vasculan™
(systemic sclerosis)
Portaban™
(portal hypertension)
Next
Milestone:
New Phase 2
Study Data
5
2017 Milestones
Cumberland has been building a foundation
upon which to provide long-term, sustainable
growth, while continuing our charge to make a
difference in the lives of patients. We continue
our strategy to build a diversified specialty
product portfolio and deliver long-term value to
our shareholders, as we remain focused on our
mission of advancing patient care through the
delivery of high-quality pharmaceutical products.
6
• During the year, we expanded our commercial product line with the acquisition of the
exclusive U.S. rights to Totect - an oncology support drug and second to emerge from our
alliance with the Clinigen Group. Totect is an FDA-approved hospital based emergency
oncology intervention drug, indicated to treat the toxic effects of anthracycline chemotherapy.
We launched Totect during a national shortage of dexrazoxane, resulting in strong initial
demand for the product.
• We were pleased to see that two of our products were the subject of favorable clinical
publications. In early 2017, there were a series of new manuscripts featuring our Caldolor
and Vaprisol products. One study on Caldolor demonstrated its ability to significantly reduce
fever in hospitalized children. Another study provided evidence that Caldolor can significantly
improve post-operative pain control, while also significantly reducing opioid use in patients
undergoing surgery. Vaprisol was also highlighted in a publication as a well-tolerated
solution for hyponatremic patients.
•
In early 2017, the FDA cleared Cumberland’s investigational new drug application for
Boxaban - the Company’s AERD clinical program. Following this clearance, we initiated a
follow-on multicenter Phase II efficacy study to evaluate the efficacy of Boxaban in seventy-
six patients with symptomatic AERD. Enrollment in this multi-center, placebo controlled
study is now underway at a growing number of allergy and asthma centers across the United
States. We also continued to advance our Vasculan and Portaban clinical pipeline programs,
with patient enrollment progressing in each of those Phase II studies.
• Additionally, during 2017, we reached agreement with the FDA to collect data on the use
of Caldolor in children ranging in age from birth up to six months of age. As a result, a
multicenter study is now underway at several United States centers to collect data from
twenty-four patients in this age range.
• During the third quarter 2017, we fully implemented our co-promotion arrangements with
Poly Pharmaceuticals, Inc. following a multi-year agreement signed in April 2017. Poly is
a privately held U.S. specialty pharmaceutical company that is featuring Kristalose to an
expanded number of physicians. Poly’s sales organization is more than doubling the number
of nationwide physicians called upon with Kristalose. Cumberland continues to manage the
national marketing, distribution, and regulatory activities associated with the product.
•
In December 2017 Cumberland was featured in the Nashville Business Journal as the fastest
growing Nashville health care company of 2017. Nashville is well known for the collection of
health care providers that call Music City home, so it was a great honor to receive this feature.
7
CET Cumberland Emerging Technologies
In order to be successful over the long-term, we believe it is important to have a
conduit of innovative new product opportunities. We formed Cumberland Emerging
Technologies (CET) for that purpose. CET is a joint initiative between Cumberland
Pharmaceuticals Inc., Vanderbilt University, LaunchTN, and Gloria Pharmaceuticals.
The mission of CET is to bring biomedical technologies and products conceived at
Vanderbilt and other regional research centers to the marketplace.
Through CET, we collaborate with a select group of academic research institutions
located in the mid-south region of the U.S. Our business development team is
responsible for identifying appropriate CET product candidates and negotiating with
our university partners to secure rights to these candidates.
CET currently has collaboration agreements with Universities to co-develop
promising biomedical technologies, including: Vanderbilt University, the
University of Tennessee and the University of Mississippi. These agreements
allow us to play an important role in fostering and shaping early-stage biomedical
research to improve patient care and provide CET and Cumberland.
In addition to its partnerships with leading academic centers, CET fosters innovation
through the CET Life Sciences Center, a business incubator facility that provides
laboratory and office space, equipment, and infrastructure for its own operations and
also to early-stage biomedical companies. It provides services tailored to inventor
scientists seeking a corporate partner to assist in developing their biomedical
technologies, as well as life sciences companies seeking facilities in which to locate
their headquarters, grow their businesses and develop their technologies.
Our team is working closely with
academic research scientists to
advance their technologies toward
a successful proof of concept.
Josh Trantum
Director
Corporate Development
Cumberland Emerging Technologies
8
CET Cumberland Emerging Technologies
Memphis
Oxford, MS
Nashville
Knoxville
CET
Collaboration
Partners
9
TENNESSEE Partnerships Around the World
We rely on carefully selected partners for the
international distribution and commercialization
of our products. Through these arrangements,
we are expanding our global impact and bringing
our products to patients throughout the world.
Partnering with companies with established
infrastructure and capabilities allows us to
focus resources on our core capabilities—the
acquisition, development and commercialization
of innovative prescription products.
1
2
3
4
1 Canada—
Teligent Inc. is our
commercial partner
for Caldolor®
4 Latin America—
Grifols International, S.A.
is our commercial
partner for Caldolor®
5 Spain & Portugal—
Grifols International, S.A.
is our commercial
partner for Caldolor®
2 Tennessee—
Cardinal Health Inc.
provides warehousing,
shipping and other
distribution support for
our products in the U.S.
3 Venezuela—
Valmorca is our commercial
partner for Caldolor®
10
5
6
7
8
9
10
11
11
6 Arabian Gulf —
GerminMed is our commercial
partner for Caldolor®
7 India—
Sandor Medicaids Pvt. Ltd.
is our commercial partner
for Caldolor®
8 China—
Harbin Gloria Pharmaceuticals Co. Ltd
is our commercial partner for Caldolor®
and Acetadote®, as well as an investor
in Cumberland Emerging Technologies
9 South Korea—
DB Pharm Korea Co. Ltd.
is our commercial partner
for Caldolor®
10 Indonesia—
The PT. ETHICA Group is our
commercial partner for Caldolor®
11 Australia & New Zealand—
Seqirus™, is a CSL Company, is our
commercial partner for Caldolor®
Phebra Pty Ltd., is our commercial
partner for Acetadote®
11
Selected Financial Data
(dollars in thousands except per share data)
2013
2014
2015
2016
2017
Net Revenues
Operating Income (Loss)
Operating Margin
Net Income (Loss)
Diluted Earnings (Loss) per Share
Total Assets
Long-Term Obligations
Shareholders’ Equity
$ 32,027
(3,801)
$ 36,902
3,559
$ 33,519
1,112
$ 33,026
(1,433)
$ 41,150
(4,081)
(11.9) %
9.6 %
(2,152)
(0.11)
87,614
776
79,292
2,362
0.14
95,405
903
80,753
3.3 %
671
0.04
91,919
2,687
76,820
(4.3) %
(9.9) %
(1,004)
(0.06)
93,405
5,491
73,248
(8,050)
(0.5)
93,232
11,616
64,120
Supplemental Financial Measures (1)
Adjusted Earnings (Loss)
Adjusted Margin
Adjusted Diluted Earnings
(Loss) per Share
$ (1,825)
$ 6,310
$ 4,477
$
1,816
$
(5.7) %
17.1 %
13.4 %
5.5 %
54
0.1%
$
(0.10)
$
0.35
$
0.26
$
0.11
$
0.00
Reconciliation of Net Income (Loss) Attributable to Common Shareholders to
Adjusted Earnings and Adjusted Diluted Earnings Per Share (1)
(Unaudited)
(dollars in thousands except per share data)
2013
2014
2015
2016
2017
Net Income (Loss) Attributable to
Common Shareholders
Less: Net Loss at Subsidiary Attributable
to Noncontrolling Interests
Net Income (Loss)
Adjustments to Net Income (Loss)
Income Tax Expense (Benefit)
Depreciation and Amortization Expense
Share-Based Compensation Expense
Other Adjustments to Net Income (1)
Interest Income
Interest Expense
Adjusted Earnings
Adjusted Diluted Earnings per Share
Diluted Weighted-Average Common
Shares Outstanding:
$ (2,105)
$ 2,424
$
731
$
(945)
$ 7,979
47
(2,152)
62
2,362
60
671
59
(1,004)
(1,523)
1,302
675
–
(230)
103
$ (1,825)
1,381
1,990
761
–
(251)
67
$ 6,310
576
2,247
623
495
(209)
74
$ 4,477
$
(0.10)
$
0.35
$
0.26
(331)
2,397
852
–
(204)
106
1,816
0.11
$
$
71
8,050
4,175
2,648
1,115
372
(299)
93
54
0.00
$
$
18,333
17,900
17,095
16,559
16,325
(1) The supplemental financial measures are Non-GAAP as defined, the reconciliation of these supplemental measures is above.
12
Officers and Directors
Board of Directors
A.J. Kazimi
Chairman
Cumberland Pharmaceuticals
Joey A. Jacobs
Chairman and Chief Executive Officer
Acadia Healthcare Co. Inc.
Dr. Gordon R. Bernard
Executive Vice President for Research
Vanderbilt University Medical Center
James R. Jones
Former Managing Partner
KPMG LLP-Nashville
Martin E. Cearnal
Executive Vice President and
Chief Commercial Officer
Cumberland Pharmaceuticals
Jonathan I. Griggs
Former Vice President Human Resources
Warner Lambert Corporation
Kenneth J. Krogulski
President and Chief Investment Officer
Berkshire Asset Management, LLC
Caroline R. Young
Executive Director
NashvilleHealth
Former President
Nashville Health Care Council
Management Team
A.J. Kazimi
Chief Executive Officer
Martin E. Cearnal
Executive Vice President, Marketing & Sales
and Chief Commercial Officer
Leo Pavliv, R.Ph.
Executive Vice President, Chief Development
and Operations Officer
James L. Herman
Senior Vice President, National Accounts and
Chief Compliance Officer
Michael P. Bonner
Senior Director, Finance & Accounting and
Chief Financial Officer
Tan Cheow Choon
Senior Director, International Business
Cindy B. Patton
Senior Director, Field Sales & Marketing
Todd M. Anthony
Senior Director, Organizational Development
Barry L. Lee
Director, Hospital Products
Todd W. Rice, M.D.
Director, Medical Affairs
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Corporate Information
Stock Listing
NASDAQ Global Select
Market Ticker Symbol: CPIX
Annual Meeting
9:30 a.m. Central Time
Tuesday, April 24, 2018
Cumberland Headquarters
2525 West End, Suite 950
Nashville, Tennessee 37203
Independent Registered Public
Accounting Firm
BDO USA, LLP
Bank of America Plaza
414 Union St #1800
Nashville, Tennessee 37219
(615) 248-2125
Transfer Agent and Registrar
Continental Stock Transfer & Trust
Company
1 State Street, 30th Floor
New York, New York 10004
(800) 509-5586
(212) 509-4000
cstmail@continentalstock.com
Forward Looking Statement
This annual report includes forward-
looking statements regarding
expected future results of the
company. A variety of factors could
cause actual results to differ
materially from expected results.
Please see the risk factors more fully
described in our Annual Report on
Form 10-K for the year ended
December 31, 2017, which is
filed with the U.S. Securities and
Exchange Commission.
Company Headquarters
Cumberland Pharmaceuticals Inc.
2525 West End Avenue, Suite 950
Nashville, Tennessee 37203
Phone: (615) 255-0068
Toll Free: (877) 484-2700
Fax: (615) 255-0094