ICCC - Earnings call transcript Q2 2018

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Operator

Good day and welcome to the ImmuCell Corporation Reports Second Quarter Fiscal Year 2018 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Joe Diaz. ahead. go Please

Joe Diaz

on and today Andrea, ImmuCell of for Lytham which you for is My Thank Diaz, Joe review thank the us with ended XXXX, of to second of XX, unaudited joining XXXX. the name you, Partners. quarter all June financial Corporation results

firm We consultant for the are relations ImmuCell. investor

is forward-looking by discussed materially course of the we started, me let during statements. differ forward-looking get those could say call in management statements. include Before from results what that statements made Actual this

President available Additional the quarterly its press available results details let information release. they press Forms as recent the were the and to on the factors differences With we on well questions. that will could quarter over full night’s on on filed filings XX-Q call call I me company's such Corporation, to CEO second release open cause should SEC for Michael? XX-Q Form that, is as in are last your night. most and Brigham, of last ImmuCell and also XX-K, the note both after turn financial which company's with a the summary with report Michael that

Michael Brigham

I’d taking to the you points Thank for all highlight join like today's some then the time business. current our call. review to and financial key state of

was quarter as to the second product First $XXX,XXX March up, include that on XX% So, approximately our the second XXXX. results is in XXXX. for of sales formats were of up customer comparison products backlog of of XX, our demand during the These Defense shipment quarter bivalent do of quarterly

of by first year, XX% the of in X.X or six-months XXX,XXX six-months comparison to to first product sales million the increased the XXXX. During

XXXX. ended XXXX from during to XX% driven six-months million batches XX, the June of X.X period Defense. of margin or yield This of been cost product from sales comparison to million six-months XXXX, XX% decrease milk as product XX% decreased by sales our ended of percentage in during to form XX First initial June first Tri-Shield same Gross our a higher XX, XXXX. the first biological rolling largely has product the and increased XX-months During lower new the by the

E. forward. We three improve rotavirus, Tri-Shield for very the markets this in response at calves to good expect with which and immunity one percentage indication First the value going pathogens; that beef newly and is The has coronavirus most introduced dairy our ability from a coli, common strong, been preventative producers the treatment protect to immediate newborn Defense scours-causing birth.

short scours that vaccines the colostrum been these did late Additionally, that with scours product newborn market mother is per as is in worth market, year, to protect include have the near XX for year. about last sales purposes we is million. that are to not cow the rotavirus from given that fed compete effectively for somewhere to the until them we of vaccines claim because or calves double could size is million vaccine us. the Previously, new improving This the the not message for traction for dam-level our the a for The like calf has time Vaccination substantial traditional something market we that the positions Beyond that large programs. market have a substitute gained $XX opportunity dam-level the product viable on level

facility. able to of are market, injections, market by our pivoted operations approach want they new are will of supply half we has market increasing complete bigger during purified one. begin that to development limited compelling effect are future. our hands segment on as strategy as and such game to coming supply Because with no the the XXXX. basis to since we will broad producers but product sales we currently increasing also we and responsive the caused year a They to of benefits this large needle in incur we strengthen as controllable reducing dairy facility. into better product Interest with this increased bottom now years. expense development cows the debt. expense when marketing test cash the to reduce relaunching service the relationship is Nisin but is of is are the we supply the be that to are just expectation with name veterinarians. getting can this on on influential a expense target experiencing we Product This have Tri-Shield first our finance to We controlled So, stress expenses affect in a Nisin depreciate of our the Depreciation a the the inventory we of with has Nisin At our the on as launch the product our large Tri-Shield, line, flows. the we products, portion

the non-cash required against full second the This allowance record our in near reserve that the incurring given quarter we XXXX, a During project additional net we losses a valuation tax $XXX,XXX deferred of and net expense recorded to a net term. was loss approximately are of assets. currently income tax

they a and accounting we they expire. expire, record before me these to at we time. that these to if profitability require what’s utilize assets valuation that rules will That’s allowance benefits tax important this us to believe we before even However, utilize return the

our or a of net the XXXX. comparison as per period share, XX, during during ended share, $X.XX XXXX our $X.XX income net of So, was six-month during net contrast XX, first of XXXX loss all $X.XX ended And the or or the per $X,XXX,XXX period the this, June share, net June $X.XX result three-month loss was XXX,XXX, share, per during a or XXX,XXX, in diluted ended to per period three-month loss XX, in XXXX. of to six-months June $XXX,XXX,

is how much loss growth on our net market this this topline creating primarily important focus time, to note, and products is non-cash through new we expenses. to bringing of result of As it at

and As in X.X we line of XXXX, on bank of addition cash XXX,XXX $XXX,XXX available hand to of credit. of our June debt XX, had million

the let’s treatment of mastitis. about our status for Lastly, subclinical Nisin-based talk development intramammary

As concern other by bacteria as you is known of know, ingredient, No product milk of in offer withhold and of human is meat treatment. and a this making the bacteriocin not revolutionize our many antibiotics is growing that period encourages during eliminating a to goal mastitis time requirement proposition. the widespread active infections, economically antibiotic-resistant would way of treatment not Nisin, standard to can the use the superbugs. treated subclinical of by after the the feasible growth and is contribute that the to used medicines, value for

final FDA requirements approval. We consistent making meeting progress are the for towards

project the During registration Technical the Section of end product which submission the quarter second as first of at would approval phase $XX XXXX. include the drug of to CMC June to in the its XXXX, to anticipate XX, had anticipated XXXX. during the XXXX to responses timeline began in for batches during half with and on the is this making remaining third We at the under XXXX late we substance of early million drug the submission, of obtaining about bringing A quarter launch. Adherence quarter this third well to FDA first of market just by fourth first filed XXXX, subsequent or the be phase facility data, $XXX,XXX expected Nisin as production phase the fund supports or budget. FDA middle as review, Nisin

in numbers on other financial I rather not last will Form you. our in hear access can this from release out or read press it So, that I’d you XX-Q, call nights

So, said, for lines up let’s questions. with have the that open Andrea your

Operator

Craig-Hallum. go And Kevin ahead. Ellich our comes of Thank [Operator Please question you. Instructions] from first

Kevin Ellich

Michael. morning, Thanks for for the noise. questions, background sorry Good taking the

wanted Just couple ask a of to questions.

know soft are you clearly talk potential you impact just have that still I any change impact think how wanted the supply the that market, prices you could of the see the can don’t weak, First, might road, expectations dairy about to down if business? dairy

Michael Brigham

to a normal very cycles. [indiscernible] used is is is It time. Yes. also but rough time, rough a It these it

not do a will but it around. are come price, down it good We for $XX not low especially milk [ph] Milk we with That’s pleased XXX hitting price yes, pretty are for business. first results customer. weight, tough growth, continuing is cycle, – that small does us, good one of can level this under a These that’s producers months right. this we per hitting are six sales, our out with of of go level to

through run it. will We

we’re Our ready turns. through as and it, customer cycle for that upswing runs the

Kevin Ellich

guess Tri-Shield, think what’s then some outlook you're you do that about market, there? And sounds your there, and share in gaining can future it talk are I you and getting Great. traction like you

Michael Brigham

have is reaction to initial anticipated. it’s exciting been inventory. enough a than challenge product very The don't we The stronger product. Yes, this has we

now this and So, this making beginning six product is inventory cycle will we’re the for production be market of fixes long. in the available doses to XXXX. months of The

to you I Great think want we those story really a interested demand. with supply. against our So, really our are level work instead are the to to our mentioned, of not to as do to have a approach product about continue circumstances get that instead with everyone. complete using rather of these customers front in product, calf level people considering customers the just that a but Great of We’ll you. to are using reliable can our than put product the couldn't best I vaccine. be that we dam-level in where calf shift We customer you to another supplier broad-based in product big getting have hearing able

relaunch is we So, feedback working buildings of a of are that to the sort good six over broader-based build initiate this XXXX. relationship to initial inventory product next months just and good. into are coming Those

Kevin Ellich

And anyone made lastly, to you or team could I noticed and any other Thank That or company, you positions some fill? about to think then and the hired you talk you. else sounds the who additions recently you you need also guys management good. that

Michael Brigham

Yes.

a you So, why Senior press some of out about a Quality. did Director release hiring people said, put

was operation an the newsworthy felt XX an years Nisin plant. just well. progress plus It’s as So, USDA maybe FDA operation continuing of show like that’s from to internal but our we it the bit matter, the to step-up a becoming of

just Scaffa So, week. us this joined Gustavo

He up operations is years of Manufacturing signaling Zoetis Just two were to Operations. Health. Monday. depth And ago, joined our working Betsy up that closely Pfizer comes our initial entire at our that is got communicating these product a Williams, our this just we from the staff or experience at investors quality of we’re and team to these people work online level. brings VP Animal can team mean, they us ago. operations have our development with were week we’ve investors and with as She running who the manufacturing over with and to of that staffing just I He facility experience kind leading of, batches the dedicated

in hiring the making that these USDA moving run and we So, world that world. to progress people the need from batches both to operation, the registration again FDA

Kevin Ellich

good. Sounds you. Thank

Michael Brigham

That’s Thanks Kevin. great.

Operator

next Instructions] Management. Asset comes SER of question ahead. go [Operator from And Sam Rebotsky our Please

Sam Rebotsky

Good morning, Michael.

Tri-Shield, the fourth quarter of Let’s dealing the is to see, being of Q, was spoke able the of I the XXXX? part believe in sell you XXX,XXX, it with that

Michael Brigham

low, trying were to a accurate. little you to very going little forward-looking indication, We little projection but bit give a off, be Yes. know a is some high, directionally

fourth with where the this quarter we since the per significantly corner sales, $X.XX we million XXXX. that launch turn up ramping been level but million of as $X.XX see in into quarter Sort into we’ve

level of in steady, more we then volume doubling up steady, the of So, three that the of production double, we and as was less sale and first the and available quarters ramps into that XXXX. that for or inventory fourth a quarter anticipate steady for that turn sort it

Sam Rebotsky

and and believe in which and you $XX XX about which need I the of market you getting you ability Q, increase you say, do the I Tri-Shield talked is is First both Tri-Shield, I talking sales? about think the that will you First that the million, getting Defense sales and Tri-Shield expectation you manufacture out could do Gustavo So, could of you feel a the and help combination to guide assume started Defense product and need in product million, you your of achieve you what

Michael Brigham

Yes, Sam. great. Thanks

sort two we projections. One, market thoughts. where So, just clarifying as out put of

XX% we big at and around long of three or felt total the the where level, compete are. So, market against XX calf sales and in today two companies million sales, is we our that’s have

get Tri-Shield, There into So, then sold. market. XX with this of There double these dam is is vaccine we that. dam about vaccines million about

with access market we Tri-Shield. So, that a much bigger

is result today will XX to production it being or that take XX million million, the So, million trailing net. to will XX be XX be of Tri-Shield, able months, a up capacity capacity million, but XX XX that

a will business, uses switches product before, So, is before dam-level level some a even product that a that’s get new that’s and somebody and product brand-new just product and tried Tri-Shield someone switches. someone calf never calf-level tried using dam-level or customers never maybe somebody that a or

think I afford FDA with the the have made is line, First net the cannibalization that’s the really focus bivalent how call quality Again, USDA batches not business. kind market. And the through it’s bivalent going product forward we’re plan, working Defense of a side, but going CMC as is the in no. by getting – really factor as So, each distracted new trivalent. comes Dual-Force, plan answer to to be focused our reporting First where it cannot we on care, He of objectives from, and the Gustavo, and growing to documentations. what to entire him product really the we remaining on some line don't to much the just I some all growth Defense. long the And is the and of as

So, all on thinking focused his mean on FDA the he’ll focus indirectly team, we’re his the day-to-day and Nisin and but operation. really, to benefit team, there’s indirectly be I Nisin is having one

Sam Rebotsky

one So, thing. further

First had to based for manufacture quarter, the I words, to XXX,XXX all the if produce, we get need we we the We have much to larger Defense, order are production get parts ability able sales? we get now, so sales? in the product getting could the So, which solved, other above to produce, in a is and the we to if believe larger it on improve could we

Michael Brigham

Yes.

twofold. margin challenges, production gross to, loss One were as available margin gross yield decrease, I challenges, challenges, these a from the in really and referred So, was supply the milk.

the simply doses So that first quarter enough the batch. each really We Dual-Force, backlog. out bivalent, impacted the of getting weren’t

are problem but that they milk. problem also So production the because has both challenge, affect fixed. from yield been sourced biological would our cows, different from That same the Tri-Shield milk,

the to nagging and we’ve the quarter that the of Tri-Shield of So, we’re or fixed vaccine. fixed here, The feel I with that supply like number on we’ve number one, shown problem. That’s addressing is problem – problem lack as second really trailing two now.

the that’s then fourth will lags our that cows and being ramp you higher address so fixed As problem, in we that XXXX. now, into vaccine we in see out, use donor ramp it the quarter, going but

underway and is fix seeing we’re quarter six-month that being that So into going XXXX. fix and that lag fourth evidenced

Sam Rebotsky

good good Michael, luck. Sounds

and a we First of accomplishments, market made Tri-Shield of The seems You’ve to to get hopefully it. want could lot and Defense more sell.

Michael Brigham

We all appreciate Sam. that

continual got is want that think number don't Nisin I – objectives the are you one objective I and right, side. and because to one, we definitely say Defense growth number First two on

Sam Rebotsky

Thank you.

Operator

Irwin Please Irwin our Investments. next comes go [Operator Goldberg of from And Instructions] question ahead.

Irwin Goldberg

R&D do the you expect of kind What [last sales]? morning. from Good expenses

Michael Brigham

rate expenses the you months first not running Regular development because margins. don't at into through sort gross of time going yet what’s is far are that that expenses big have that development where six Yes. we it’s the expenses, plant. it’s as in neighborhood. sales, as a to new on pretty the stay are going product plant know going but expense product These recurring, to necessary The run run

to don't XXXX. So, quicker, going it’s to of in I happen drop second expense love half to be not the that – but I would able

Irwin Goldberg

ramping, starts now? do And you to expect inventory what you your inventory, compared once have kind what show, of Tri-Shield eventually

Michael Brigham

companies some lot these, cycle, go to a look longer of We do. being tend a we months like to supplies. other six-month six than out critical In Yes. on would production most

got that to So, inventory counts build up.

pulling got the have where avoid just We product point to another can shelf. of get we to backlog the by

to We first happened little about supply what as the flexible diverted versus avoid the other capsule we can the six end, don’t really six-month say to milk’s to lease answer a So, and and more the as months. what gets repeat in we tube, processed want is supply a – at like there, want far of processed most that. need milk stage into, we be quarter, about critical early but shorter

Irwin Goldberg

Thank you much. very

Michael Brigham

sure. Thanks Yes, question. for your

Operator

Mr. for session. conference like This would Diaz, question-and-answer turn concludes any our closing I back the to Joe over to remarks.

Joe Diaz

mid-November. conclusion Thank all you, Andrea. on around again, of quarter, And sometime to thanks for today's talking look of at again participating third call. the We you to you with forward the

So, day, again. we great great wish week. the and a balance a you of Thanks

Operator

presentation. you The is for Thank concluded. attending today's conference now

now disconnect. You may

ImmuCell (ICCC) 14 Aug 182018 Q2 Earnings call transcript