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Worst IPOs of 2009: Biggest Stock Flops

Cumberland Pharmaceuticals

Investors are finding limited potential in Cumberland Pharmaceuticals (CPIX). The company went public on Aug. 11, raising $85 million with an IPO price of $17 a share, but since then the stock has fallen 22% to close at $13.25 on Dec. 8.

The small drug maker only produces three drugs: Acetadote, an antidote for overdoses of acetaminophen; Kristalose, a powder laxative; and recently approved Caldolor, an intravenous form of ibuprofen.

Kristalose and Acetadote have just $45 million in annual revenue combined, according to Morningstar. So Cumberland is relying to Caldolor to boost profits.

So far, it's working. In the third quarter, profit rose 6% to $1.3 million, or 7 cents a share, from $1.2 million, or 7 cents in the year-ago period. Revenue spiked 58% to $13.6 million, driven by Caldolor sales, the company said in a statement.

And earlier this week Cumberland said it signed a licensing deal with DB Pharm Korea to sell Caldolor in South Korea.

But since Cumberland has minimal research capabilities, growth is predominantly dependent on acquisitions, with about $70 million of unallocated IPO proceeds, according to Morningstar.

"There couldn't be a worse time for a small drug company to launch an acquisition program," Morningstar wrote in a note. "Most big and specialty pharma companies we cover are desperate to rebuild sparse pipelines and have access to pile of cash. It's highly unlikely that Cumberland, with its limited resources, will attract a sizable or promising opportunity for a reasonable price."

-- Reported by Jeanine Poggi in New York.

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