October 26, 2010 - 11:25am EST by
2010 2011
Price: 6.64 EPS $0.05 $0.60
Shares Out. (in M): 21 P/E 0.0x 11.0x
Market Cap (in $M): 139 P/FCF 0.0x 0.0x
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 145 TEV/EBIT 0.0x 0.0x

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              Cumberland Pharmaceutical- CPIX- is a specialty drug company with three FDA

approved drugs, $71 million in cash, 20 million shares outstanding with modest long term

debt. Insiders own  32%  of the stock, with institutions holding another 32%   of the shares. It's strategy is to stay away from the expensive drug R&D cycle in the hope of having a product to sell but rather find late-stage development product where they can complete an FDA approval and product launch. This strategy has kept the company profitable for past six years.



              The company markets and sells its products thru a hospital and gastroenterology

sales force with  over 100 sales representatives and managers and work to partner the products to reach international markets. The product portfolio includes Acetadote Injection for the treatment of acetaminophen poisoning, Caldolor Injection, the first injectible treatment for pain and fever available in the United States, and Kristalose for Oral Solution, a prescription laxative.



               Caldolor represents CPIX's most significant product opportunity based on its large potential for pain and fever in the intravenous market. It should be noted that Caldolor, intravenous ibuprofen, is the first injectible product approved in the United States for the treatment of both pain and fever. The product is used for controlling mild to moderate pain and the management of moderate to severe pain as an adjunct to opioid analgesics (think morphine) and for the reduction of fever. The market for injectible analgesics exceeded $329 million in 2009- 671 million units sold. The market for injectible opioids such as morphine, fentanyl accounted for 622 million units sold in 2009. Widely used for acute pain management, many side effects are present- nausea,  vomiting, sedation, headache, constipation, reduced GI motility and respiratory depression. Side effects from opioids can cause a need for further medication or treatment, and can cause longer hospital stays.


                In addition,  Caldolor is the only US -approved injectible treatment for fever.

Temperatures greater than 102 can cause confusion, hallucinations, convulsions, and

death. Patients with reduced gastric motility, nausea, recent surgery or endotracheal

intubation  are frequently unable to ingest, digest or tolerate oral products to reduce fever.

Alternative treatments would include ice packs, cooling blankets, and rectal delivery of

medications among others. Clinical studies have shown Caldolor to be safe and effective in providing IV fever reduction within 30 minutes.


                   Acetadote is an intravenous formulation of N-acetylcysteine, or NAC, for

the treatment of acetaminophen poisoning. It has become a standard of care for treating liver damage associated with Acetaminophen overdose. Acetaminophen overdose is a major problem in the US as it is a distinctly overused pain reliever. While NAC in oral form can be used  to treat poisoning victims, the IV product is the only alternative to many of the victims suffering nausea and vomiting.


                    In March 2010, CPIX  submitted to the FDA a supplemental NDA for the use of patients with non-acetaminophen induced liver damage based on clinical data at the University of Texas indicating a significantly improved chance of survival without a liver transplant. In August, the company announced that the FDA has extended its review of the supplemental NDA for three months.


                       The company has collaboration agreements with Vanderbilt University to develop a palliative treatment for fluid buildup in the lungs of cancer patients and the University of Tennessee to develop a novel asthma therapeutic to reduce asthmatic reaction in pediatric patients.


                          Sales for 2010 appears to be in excess of $40 million with a consensus eps estimate of $0.05. Currently about 100 sales representatives are marketing to hospitals, medical institutions and doctors. About 20 million shares are outstanding, $71 million in cash and only $6 million in long term debt. Three insiders in May were buyers of stock in the current price area. Board in early 2010 approved a $10 million buyback of which the company bought $1.4 million dollars of stock at $6.86 in the second quarter. Five Wall Street analysts provide coverage with a consensus 2011 estimate of $0.60. Over past 12 months, stock has traded between $16.19 and $4.70.


                           We  like the risk reward profile of this cash rich drug company.


Improved guidance re:sales outlook with subsequent analyst upgrades
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