A Drug Stock IPO! Finally!

The drought is over. Except for Bristol-Myers Squibb's (NYSE: BMY) spinoff of Mead Johnson Nutrition (NYSE: MJN), there hasn't been an IPO of a drug company in nearly two years.

The dry streak may be broken, but don't expect this one to signal that there's a flood of interest in baby biotech IPOs quite yet. Today's offering, Cumberland Pharmaceuticals (Nasdaq: CPIX), is in a special breed of small drugmakers: it's actually profitable.

The company has two drugs on the market already, and a third was recently approved by the Food and Drug Administration and should be on the market later this year. Acetadote is an antidote for overdoses of acetaminophen, the active ingredient in Johnson & Johnson's (NYSE: JNJ) Tylenol. The company's other marketed drug, Kristalose, is a laxative, which has the same active ingredient as generic competitors, but has the advantage of being a powder rather than a liquid form, so it doesn't have to be refrigerated and it's easier to transport.

The company's recently approved drug, Caldolor, is an intravenous form of ibuprofen, the active ingredient in Wyeth's (NYSE: WYE) Advil. It won't have to compete directly with Advil, because Caldolor will likely only be given to patients who can't take drugs orally. It'll have to compete with other injectable pain relievers, but considering the mild nature of ibuprofen, Caldolor will find a place in doctors' arsenals and should be able to grab some of the $330-million-plus injectable-pain-reliever market.

With just $35 million in sales last year, Cumberland has a long ways to go before becoming the next Pfizer (NYSE: PFE). The company has been profitable for the last five years, most recently bringing in $4.8 million in earnings last year, so at least it's ahead of a lot of other drugmakers in that quest.

Investors are pricing Cumberland at a market cap of $290 million, which gives it a whopping P/E based on last year's earnings. Somewhere about 60, in fact. But keep in mind that sales of Caldolor should contribute to earnings and it'll realize about $75 million or so from the IPO, which Cumberland can use to license a drug or two to make better use of its sales force.