Cumberland Pharmaceuticals Prices IPO After a Two Year Wait

Cumberland Pharmaceuticals (NASDAQ:CPIX) has finally gone public after shelving its previous IPO attempt two years ago. The company sells specialty pharmaceuticals, including a new injectable treatment for pain/fever. The pricing came in below range; the company had hoped to price 5 million shares at a price range of $19.00 to $21.00.

Business Overview (from prospectus)

We are a profitable and growing specialty pharmaceutical company focused on the acquisition, development and commercialization of branded prescription products. Our primary target markets are hospital acute care and gastroenterology, which are characterized by relatively concentrated physician prescriber bases that we believe can be penetrated effectively by relatively small, targeted sales forces. In June 2009, we received FDA approval for Caldolor, our lead product for use in the hospital market. In addition to Caldolor, we market and sell Acetadote and Kristalose through our dedicated hospital and gastroenterology sales forces, which together comprise 66 sales representatives and managers as of July 1, 2009. For the years 2006, 2007 and 2008, our net revenue was $17.8 million, $28.1 million and $35.1 million, respectively, and our net income was $4.4 million, $4.0 million and $4.8 million, respectively.

Pricing: 5 million shares at $17 per share. Net proceeds of approximately $85 million dollars will be used for acquisitions of product candidates, new products, intellectual property rights to products or companies that complement the company's business; for ongoing clinical work and marketing of existing products; pay down debt; sales and marketing; for general corporate purposes.

Lead Underwriters: UBS Investment Bank, Jefferies, Wells Fargo Securities

Financial Highlights:

Net revenues for the three months ended March 31, 2009 totaled approximately $9.4 million, representing an increase of approximately $1.1 million, or 13%, over the same period in 2008... Cost of products sold for the three months ended March 31, 2009 totaled approximately $0.7 million, representing a decrease of approximately $22,000, or 3%, over the same period in 2008... Selling and marketing expense for the three months ended March 31, 2009 totaled approximately $4.1 million, representing an increase of approximately $0.8 million, or 23%, over the same period in 2008... Research and development expense for the three months ended March 31, 2009 totaled approximately $0.8 million, representing a decrease of approximately $0.3 million, or 31%, over the same period in 2008.

Competition:

The pharmaceutical industry is characterized by intense competition and rapid innovation. Our continued success in developing and commercializing pharmaceutical products will depend, in part, upon our ability to compete against existing and future products in our target markets. Competitive factors directly affecting our markets include but are not limited to:

  • product attributes such as efficacy,

  • safety, ease-of-use and cost-effectiveness;

  • brand awareness and recognition driven by sales and marketing and distribution capabilities;

  • intellectual property and other exclusivity rights;

  • availability of resources to build and maintain developmental and commercial capabilities;

  • successful business development activities;

  • extent of third-party reimbursements;

  • and establishment of advantageous collaborations to conduct development, manufacturing or commercialization efforts.

A number of our competitors possess research and development and sales and marketing capabilities as well as financial resources greater than ours. These competitors, in addition to emerging companies and academic research institutions, may be developing, or in the future could develop, new technologies that could compete with our current and future products or render our products obsolete.

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