ImmuCell Corporation
Q3 2020 Earnings Call Transcript

Published: 13 Nov 2020

[Operator:]

Good morning and welcome to the ImmuCell Corporation reports Third Quarter Fiscal Year 2020 Financial Results Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note, this event is being recorded. I would now like to turn the conference over to Joe Diaz with Lytham Partners. Please go ahead.

[Joe Diaz:]

Thank you Grant and good morning to everybody on today's call. As the operator indicated my name is Joe Diaz, I'm with Lytham Partners, we’re the Investor Relations consulting firm for ImmuCell. Thanks all of you for joining us today to discuss the unaudited financial results for the third quarter which ended September 30, 2020.

[Michael Brigham:]

Thanks, Joe. Appreciate the opportunity to provide some updates on what is going on at ImmuCell. Thank you all for taking the time to join today's call. Just last night, we filed our Form 10-Q for the three month and nine month periods ended September 30, 2020 and issued a press release summarizing some of the key results. I'm not going to rehash a lot of the detail, you can pick up from the queue and the press release. But I would like to highlight a few of what I see as the more important disclosures. First, as you may know, on October 6th, we issued a press release covering our preliminary top line sales results only. We are doing that to give investors a very timely look at what I view as the most critical measure of our operations and financial performance early in the reporting period. There has been no change to those preliminary numbers. Product sales were up 25% during the third quarter. That follows on a 9% increase during the second quarter of 2020 and an 11% increase during the first quarter of 2020. Product sales were up 15% during the nine months period ended September 30, 2020. They were up 17% during the trailing 12 months period ended September 30, 2020. All the increases that I have just described are in comparison to the same period a year earlier. This growth is really exciting for us and it comes with consistent market share gain as well. Our sales team has been focused on disrupting the traditional scour vaccine market by replacing very old vaccine technology with our preformed antibodies. Our production team is working hard to catch up with that demand. We had a backlog of orders worth about $945,000 as of June 30th. We reduce that to about $130,000 as of September 30th. As market demand for First Defense continues to strengthen meeting that demand is a good, problem or challenge for us to have.

[Operator:]

We will now begin the question and answer session. Our first question today will come from Sam Rebotsky with SER Asset Management. Please go ahead.

[Sam Rebotsky:]

Good morning, and congratulations, Michael. I'm excited to see the submission to the FDA before this December. We've presumably tested many, many times. Is there any need to submit earlier than December 31 or how do we look at the time of submission?

[Michael Brigham:]

Yeah, there's a need, but it won't go till it's ready. I mean, the sooner the better, but there's still a little bit of work to do. A lot of that has to do with stability. So, a lot of this is just time passage. You got to submit with a certain amount of stability on this product. But I think what Betsy Williams, our VP of Manufacturing Operations has done with the team to set this up, the whole science team, Joe Crabb, Jonathan and perhaps others, many others. They're all pushing this as hard as possible. And, yeah, I think our position was just hold that line and get it in this year, but get it in right.

[Sam Rebotsky:]

And, okay. That's -- it's a long time coming and exciting to hear that. And as far as the money from the federal government, that's good to that own proof, the balance sheet also. Was that pretty much boilerplate or did you have to spend any time explaining the process that you followed? Or how did that go?

[Michael Brigham:]

Yeah, Sam, I would not, -- I guess, maybe boilerplate, but I don't -- I think we did had to spend a lot of time explaining. I guess what I'm trying to say is, our application was pretty straightforward, but I never take anything for granted. It was so important for us to achieve that forgiveness. As much as I was confident we would get it is not done until it's done. And our application was simpler than many. And maybe that's why we're sort of at the front tier of the forgiveness pipeline here with other companies, not been forgiven yet, because we were just a 100% payroll. So we didn't even have to get into rent and mortgage interest and overheads and supplies and different qualified expenses. We just said, look, this is Paycheck Protection Program, we're 100% payroll, I think that may have helped us. I think that may have facilitated the application going through.

[Sam Rebotsky:]

Okay. And as far as Tri-Shield and First Defense, are we able to increase the sales in the current quarter from the September quarter? We have finished, basically, completed the backlog. And are we able to increase the sales based on demand?

[Michael Brigham:]

Yeah. I mean, so that product continues to see great demand. And we're really happy to see what's going on there. The dairy industry is having some good -- reasonably good economic measures, like mo price is very strong right now. So that's good for our customer, what's good for our customers good for us. Ultimately, we'd report those results early, just like we did this quarter. So say January 5, 6, 7, somewhere in there, we'll get a top-line number together and a pulmonary press release obviously way in advance of the year-end audit and the full P&L. But I'd like to continue that practice. I think it's my best way to answer your question on the most timely basis possible.

[Sam Rebotsky:]

Well, that's wonderful. And are we prepared yet to do any further shipping selling of First Defense and Tri-Shield overseas? And when do you think that would happen?

[Michael Brigham:]

I appreciate your interest there. You've definitely kept us focused on that goal, but we've been a little careful. I mean, I want to get some distance from this backlog before we open up new markets. So Bobbi Brockmann, our VP of Sales and Marketing has done a great job of qualifying certain new markets in this new international markets. But they're going to be stays a little bit, they're going to be paused a little bit later into '21 and into '22. I want to make sure we've got North America totally covered, totally out of backlog with some buffer stock before we create that extra demand through new international markets beyond the Japan and South Korea where we are today.

[Sam Rebotsky:]

Well, congratulations. And let's hope the COVID keeps getting better that we improve everything and everybody should have if not this year, next year, a Happy Thanksgiving and Happy Holidays. Hope so.

[Michael Brigham:]

So I have to look at it that way Sam, I think you're right. I'm staying put this here. Stays home, stay safe. Let's get through this all together.

[Sam Rebotsky:]

Yes, good luck, everybody. All ImmuCell shareholders, employees and everybody. Thank you.

[Michael Brigham:]

Thank you, Sam. Very nice.

[Operator:]

Our next question will come from Frank Gasper, who’s a Private Investor. Please go ahead.

[Unidentified Analyst:]

Yeah, my quick glimpse on sales. Could you --

[Michael Brigham:]

Thanks, Frank, good to hear your voice.

[Unidentified Analyst:]

Yes, it's been a while. Could you just -- can you maybe give some idea as to once a farmer knows that his cow or how does he know that his cow has subclinical mastitis? And how does it progress from you to him? To what chain of events?

[Michael Brigham:]

Well, so the first part it's largely monitoring somatic cell counts in the milk. So they're watching a cow's behavior, temperature and the quality of the milk or the level of somatic cell counts in the milk. I don't know, if I quite understood the second part, Frank, how does it progress to us?

[Unidentified Analyst:]

Yeah. In other words, what -- now that he knows. And now let me ask, does the farmer know specifically, which cow or are they doing both test on the somatic cell count?

[Michael Brigham:]

So they'd be doing both, so they'd have an idea of their herd health level, and then they have specific cow ID. So I guess, I'm catching up to your question. Yeah. We would want them to be watching and actually selecting the highest somatic cell count cows. These are cows that are otherwise healthy, they're eating, they're moving with the herd, they're not often a sick cow pen, they're being milked, but they're becoming sick. They're not producing as much milk. They're not as producing the highest quality milk. So we want to find those cows, select them for treatment to one, before they get sicker and two, so that we can improve their quality of milk, their quantity of milk production as soon as they pick them off those herd checks.

[Unidentified Analyst:]

Once known, what does -- how does the farmer get your product into his hands? He just goes buy it. Or is there some kind of veterinarian channel?

[Michael Brigham:]

Yes. It's very much, we're not recreating that part of the practice. So it's -- what they're doing today, it's our delivery, our tube, our syringe looks very much like the common antibiotics that are on the market today. So they know how to go to the fridge, grab that tube. It's a simple infusion into the teat opening. They would just be infusing the Nisin and the Re-Tain products instead of one of those traditional antibiotic products, but otherwise very similar mode of delivery. The infusion and they're very familiar with that and pretty simple to do.

[Unidentified Analyst:]

Just one more thing, presently, you're -- you have two major suppliers listed in the 10-Q that you sell to. How you envision them playing into this launch?

[Michael Brigham:]

Huge role down the road initially, maybe a pretty small role as we get started. But ultimately, it’s just like First Defense, all of our First Defense goes right through distribution, and you're right, MWI and Animal Health International are the two biggest for us, and they're two biggest for, I think, for all animal health manufacturers. They just have a network throughout the country. So, it's really just the same people, the same network, the same warehouses as First Defense moves through, so will Re-Tain.

[Unidentified Analyst:]

And that's all that I had Mike and again, congratulate everyone. And I have been following ImmuCell for quite some time. You got a great workforce there. Thank you.

[Unidentified Analyst:]

I agree. I agree totally Frank. Thank you so much for that.

[Operator:]

All right, well, there are being no further questions at this time. This will conclude our question-and-answer session. I'd like to turn the conference back over to Joe Diaz for any closing remarks.

[Joe Diaz:]

Thank you, Grant, and thanks to all of you for participating in today's call. We look forward to talking with you again to review the results of the fourth quarter of 2020 sometime in February of 2021. Have a great weekend. Please stay safe and well. Thank you.

[Operator:]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.