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RediTrex® and Vibativ® | 12 Months Ended
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Dec. 31, 2021
Business Combinations [Abstract] |
RediTrex® and Vibativ® | RediTrex® and Vibativ® RediTrex In November 2016, the Company announced an agreement with the Nordic Group B.V. ("Nordic") to acquire the exclusive U.S. rights to Nordic’s injectable methotrexate product line designed for the treatment of active rheumatoid arthritis, juvenile idiopathic arthritis, severe psoriatic arthritis, and severe disabling psoriasis. As consideration for the license Cumberland paid a deposit of $0.1 million at closing. The Company provided $0.9 million in consideration through a grant of 180,000 restricted shares of Cumberland common stock to be vested upon the FDA approval of the first Nordic product. Cumberland also agreed to provide Nordic a series of payments tied to the products’ FDA approval, launch and achievement of certain sales milestones. Under the terms of the agreement, Cumberland is responsible for the product registration and commercialization in the U.S. Nordic is responsible for product manufacturing and supply. On November 27, 2019, Cumberland received FDA approval for the first Nordic injectable product and authorization to market them under the RediTrex brand name. The 180,000 shares of restricted Cumberland common stock previously provided to Nordic vested upon approval and were valued at $0.9 million on the vesting date. The FDA approval also resulted in a $1.0 million milestone payment due to Nordic. This milestone payment was paid in July 2020 and was recorded as an other current liability at December 31, 2019. During December 2020, Cumberland began distributing RediTrex which also resulted in a $1.0 million milestone payment due to Nordic and recorded in accounts payable at December 31, 2020. The full launch of RediTrex occurred in October 2021 and this milestone payment will be paid during 2022. Cumberland has approximately $2.6 million and $2.8 million in net intangible assets related to RediTrex at December 31, 2021 and 2020, respectively. Vibativ During November 2018, the Company closed on an agreement with Theravance Biopharma ("Theravance") to acquire the global responsibility for Vibativ including the marketing, distribution, manufacturing and regulatory activities associated with the brand. Vibativ is a patented, FDA approved injectable anti-infective for the treatment of certain serious bacterial infections including hospital-acquired and ventilator-associated bacterial pneumonia and complicated skin and skin structure infections. It addresses a range of Gram-positive bacterial pathogens, including those that are considered difficult-to-treat and multidrug-resistant. Cumberland acquired Vibativ to further add to its product offerings, increase its net revenue and positively contribute to the Company's operating results. Cumberland expects to deduct the goodwill acquired in the acquisition for tax purposes. Cumberland has accounted for the transaction as a business combination in accordance with ASC 805 and the product sales are included in the results of operations subsequent to the acquisition date. The Company paid an upfront payment of $20.0 million at closing and a $5.0 million cash payment during early 2019. In addition, Cumberland agreed to pay a royalty of up to 20% on future net sales of the product. The future royalty payments were required to be recognized at their acquisition-date fair value as part of the contingent consideration transferred in the business combination. The following table summarizes the initial payments and consideration for the business combination:
Consideration: |
Cash paid at closing | $ | 20,000,000 |
Cash payment during early 2019 | 5,000,000 |
Fair value of contingent consideration - net sales royalty | 9,182,000 |
Total consideration | $ | 34,182,000 |
The contingent consideration liability represents the future net sales royalty payments discussed above. Cumberland prepared the valuations of the contingent consideration liability and the intangible assets utilizing significant unobservable inputs. As a result, the valuations are classified as Level 3 fair value measurements. The following table presents the changes in the Company's Level 3 contingent consideration liability that is remeasured at fair value on a recurring basis. The contingent consideration earned and accrued in operating expenses is paid to the seller quarterly.
| Contingent consideration liability
Balance at November 12, 2018 | $ | 9,034,000 |
Change in fair value of contingent consideration included in operating expenses | (40,000) |
Contingent consideration earned and accrued in operating expenses | 508,000 |
Balance at December 31, 2018 | $ | 9,502,000 |
Adjustment to initial fair value of the contingent consideration liability | 148,000 |
Cash payment of royalty during the period | (1,033,108) |
Change in fair value of contingent consideration included in operating expenses | (804,167) |
Contingent consideration earned and accrued in operating expenses | 820,864 |
Balance at December 31, 2019 | $ | 8,633,589 |
Cash payment of royalty during the period | (819,180) |
Change in fair value of contingent consideration included in operating expenses | (1,160,202) |
Contingent consideration earned and accrued in operating expenses | 1,546,346 |
Balance at December 31, 2020 | $ | 8,200,553 |
Cash payment of royalty during the period | (2,166,682) |
Change in fair value of contingent consideration included in operating expenses | (1,147,750) |
Contingent consideration earned and accrued in operating expenses | 1,629,506 |
Balance at December 31, 2021 | $ | 6,515,627 |
The following table summarizes the allocation of the fair values of the assets acquired as of the acquisition date for Vibativ:
Finished goods inventory | $ | 6,624,000 |
Work in process - unlabeled vials | 3,970,000 |
Work in process - validation vials | 1,827,000 |
Raw materials | 9,129,000 |
Total inventory | $ | 21,550,000 |
Intellectual property amortizable intangible assets | $ | 11,750,000 |
Goodwill | 882,000 |
Total intangibles and goodwill | 12,632,000 |
Total assets acquired | $ | 34,182,000 |
The Company's contingent consideration liability is a Level 3 fair value measurement that is updated on a recurring basis at each reporting period using a valuation model. Consistent with Level 3 fair value measurements, there are significant inputs to the valuation model that are unobservable. The current portion of the contingent consideration liability is $2.7 million and the non-current portion is $3.8 million, as of December 31, 2021.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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