Hello, and welcome to the ImmuCell Fireside Chat. My name is Joe Diaz. I'm one of the managing partners at Lytham Partners, and I'll be your host for today's Q&A discussion. I'm joined by Michael Brigham, President and CEO of ImmuCell Corporation, and Bobbi Brockmann, Vice President of Sales and Marketing. ImmuCell trades on the NASDAQ under the ticker ICCC. Let's dive in. Michael, to kick things off, can you give us your two-minute elevator pitch on ImmuCell and the markets that you serve?
Yeah. First, Joe, thanks for making this opportunity available to us to tell our story. It's a great time to reach out. I see 2025 as a year full of really important milestones and catalysts. Yeah, at the highest level, you know, we've just filed our Form 10-K for the year. A lot of detail in there. We'll touch on some of the key points, but I encourage the investor to both read that and consider all the forward-looking disclaimers as far as safe harbor protections to what we might discuss today. Yeah, at the highest level, Joe, we kind of do two things: one commercially and one soon-to-be commercially. I think Bobbi's going to speak a lot about First Defense. It's our core product. It's our number one asset. It's an amazing, effective product with USDA claims against a very important calf disease.
At the same time, we're nearing the end of a long FDA. Excuse me, First Defense is USDA regulated, and this new product is FDA regulated. It's called Re-Tain. I think we'll talk about that too, but I hope when we conclude, we'll say, "Look, this is what's happening in 2025: important milestones on the First Defense side commercially and important milestones on the Re-Tain side as far as finishing this long development path.
Yeah. Your core technologies are built around active ingredients like polyclonal antibodies and bacteriocins . Can you give us a little bit of an overview on that? What is a bacteriocin ?
Yeah, thanks. Joe, can I step back just for one second? I gave you sort of my view, my open-minded speaking here, but also in that K and in all our press releases, we make a statement that I think is very descriptive of the business. We say that ImmuCell is a growing animal health company that develops, manufactures, and markets scientifically proven and practical products to improve the health and productivity of dairy and beef cattle. You know, that's good formality. We also let go a little casual and say, you know, we're different. We're not big pharma. We like to see ourselves as a non-pharma pharma company because we're small and nimble, and we're doing some very novel things.
While many animal health firms focus on vaccines and antibiotics, often that are just slightly tweaked versions of existing technology, we will talk today about a very different path that we have taken. With that said, and back to your recent question, you know, public overuse of antibiotics is a public health concern. It is a big problem. The FDA talks about it, but it is a big public health concern. We use too many antibiotics too often, and we complain about it, but we do not really offer solutions. You know, and I think ImmuCell offers two solutions. One, when Bobbi details the First Defense a bit more, you will see we are natural, we are derived from colostrum. She is going to talk about that. We are not an antibiotic. Also, if you do not use our product and your calf does get sick, you are going to treat her with antibiotics.
We reduce that use of antibiotics right there with First Defense and perhaps more directly and more impactfully on the Re-Tain side. We'll talk about mastitis. Every treatment on the market today is a traditional antibiotic, and we're bringing this bacteriocin, as you mentioned. It's naturally occurring. It's commonly used as a food preservative. We eat nisin in a low, very low purity in food, cheese, preservatives. We're bringing what really is an alternative to that antibiotic. What you do by reducing the antibiotics and bringing a solution, bringing an alternative rather than just to talk about a caution, is you essentially save those antibiotics for more late-stage infection, more critical needs in human health. The less you use them, the more effective they're going to be when you really need them.
Fantastic. Bobbi, let's take that segue from Michael. Talk about First Defense. What makes it unique? I think you mentioned a few things. Why do producers, dairy producers, choose to use it?
Right. The First Defense line is available in five different SKUs, product SKUs, all of which are built around the value of bovine colostrum. Colostrum is rich in antibodies and growth factors, and it is absolutely critical for the development of a strong immune system in newborn calves. We are the only company on the market with licensed veterinary biologics that provide colostrum-driven antibody immediate immunity. That is pretty exciting, right? Our products are designed to prevent calf scours, which might not be very exciting to some, but we think it is pretty interesting. Calf scours is also known as diarrhea, and it is the number one cause of illness and death in pre-weaned calves. It accounts for 50% of calf deaths in the first few weeks of life.
You can imagine how devastating it is for producers to invest 12 months' care in a cow just to lose her calf, the future of their herd, only days after birth. Our antibodies target and neutralize E. coli, coronavirus, and rotavirus, which are the three most common pathogens that cause scours.
Tell us about Tri-Shield, Bobbi. I presume it's one of the five First Defense product SKUs. What's its differentiator?
Yeah. Tri-Shield is one of the more recent products added to the line. Historically, our product line protected against just E. coli and coronavirus. With Tri-Shield, we've added in a rotavirus claim through the USDA. So we can protect against all three of those pathogens, which is pretty significant for one single product to do.
Yeah. Some dairy producers choose not to use First Defense or Tri-Shield. Why would that be the case?
In our customer base, it's both dairy and cow-calf. That comment would be true for cow-calf producers as well, beef-cow-calf producers. It boils down to most producers have some form of scour prevention in place, but not all. Some are more reactive, choosing to treat scours if and when calves get sick rather than investing in a preventative strategy upfront. For example, in a cow-calf segment, if calves are born in large open pastures with low pathogen pressure and favorable weather conditions, there are a lot of things that have to line up there. If they do, the overall risk of scours can be pretty low. In those cases, a producer may be able to get by treating a few individual cases rather than apply a prevention program across the entire herd.
However, I think it's important to point out that those sick calves, if they do get sick, often never really recover. Their long-term productivity is likely reduced. Now, sometimes that's easy to ignore because it's an impact so far off in the future. Bottom line, it really depends on the operation's risk level and comprehension of what drives their long-term financial success. That's where they build their scour prevention programs or not.
Competing products for scour prevention. What's out there? What are you facing on a daily basis?
Yeah, is it hard to say? I love my competitors, but I really do because they're all vaccines. And quite frankly, based on decades-old technology, you know, just like we saw breakthrough illness in humans who received a COVID vaccine, we see breakdowns from a scour vaccine program. Vaccines require an immune system to respond for them to be effective. An immune system response is inherently variable. Now, when you're talking newborn calves, they have the lowest immune response capacity of any animal on the farm. I mean, they can barely regulate their own body temperature, let alone mount an effective response to a vaccine. Pregnant cows aren't too far behind in terms of immune capacity. Much of their energy and resources are directed towards supporting fetal development, and that naturally suppresses their immune system.
In contrast, our First Defense line delivers a measured dose of protective antibodies directly to every calf, no immune response required, right? Every calf is equally protected with immediate immunity. We are one of a kind in this category. It's pretty fun to talk about verified antibodies when the competition is a variable vaccine response.
Those vaccines that your competitors are giving to newborn calves, it sounds like they're actually stressing their immune system even more. Is that correct?
There is a basis for that argument. I mean, energy and nutrients, the pie is only so big. There's only so many energy and nutrients to go around. It would make sense to keep that energy and nutrient focused on productive function, particularly in a newborn, right? You've been in a nine-month hot tub, and now you're out in the cruel real world. Just focus on regulating your body temperature and getting your feet underneath you. That is where hitting a newborn with a vaccine and expecting a big result is pretty slim, and it actually diverts energy and nutrients away from productive function. Where our antibodies, because they're colostrum-derived, are very easily utilized by the calf because bovine colostrum to a calf is how Mother Nature intended it.
All we're doing is concentrating those antibodies and really targeting them against the first three bad guys through the door that are going to affect that calf, which is E. coli, corona, and rotavirus.
How large is the market for scour prevention in the U.S.?
Yeah. If we're just looking at the U.S. alone, the licensed veterinary biologic market for scour prevention is worth about $83 million. That covers approximately 3.5 million calves annually. We've got 15% of that market today.
Why does 85% of the market continue to use an inferior product?
I know. I don't like that either, but we're changing it. These vaccines have been on the market for a long time. All major animal health companies like Zoetis, Merck, and Elanco, they all have a version. Because of that, they're fairly ingrained in existing protocols. They also come in at about half the cost or half the price of our product line. Half the price, that word is important, because that lower price does come at a cost. When you consider how valuable each calf is, using a cheap vaccine that doesn't perform consistently ends up costing more in the long run. I'm confirming that by tallying up sick calves, the labor and hassle to nurse those calves, increased death loss, and decreased productivity.
We like to say cheap and ineffective is still expensive, where we provide immediate uniform protection to every calf and deliver a more reliable return on your investment.
Michael, as it relates to the manufacturing process for First Defense product line, colostrum is your raw material. You've had some production constraints in the last couple of years. Where do things stand now? What are you doing differently than the previous manufacturing process?
Yeah, sure, Joe. The raw ingredient, the colostrum, that's where it starts. That's key. In these recent years of growth in the production output, production capacity, we had to contract with a lot more farms. We work with commercial farms. We don't get in their way. We take the early milk, and they have their milk for the rest of the lactation for commercial sale. We had to recruit a lot more farms to grow. We made investments in facility and in equipment, which would be pretty much worthless unless we had more colostrum to feed into it. That's been successful. We have plenty of farms. We have plenty of inventory. We have plenty of colostrum.
The real secret, the real trick right now is just to maintain that, maintain that at high quality, make sure all new farms are onboarded properly, that they operate clean and in accordance with our outline of production. By the time we bring that milk into our production facility, we're ready to roll with basically twice the production capacity that we had just a couple of years ago.
In the meantime, for the last couple of years, you had to take some actions as it relates to slowing down production, doing your analysis of what happened, things of that nature. Where are you at in that process?
Yeah. You know, it's well disclosed again in the K, we're not going to dodge any bad news here. We had a rough 2023. We had a rough 2024. That expansion was definitely more difficult than we expected and took longer than we had hoped. I think the fourth quarter of 2024 results show that we did get through it. Doubling capacity was, I guess what I'll say is our process is very complicated. It's very tricky. That's the good news. We don't have patents for this kind of technology. We have intellectual property. We have a very complicated, tricky recipe to make it, to get it down to what Bobbi described as the right level of concentration to fit in a capsule or to fit into a tube, right level of specification. We're focused on, as she said, the E. coli, the corona, the rota.
Yeah, as we did that, we had contaminations. As we created that capacity increase, we had significant contamination problems. Some of them did start from the farm in that rapid escalation, that rapid growth of new farms and obviously new cows. Some of that happened in our process. Running the same old process at twice the level of output was complicated. That hampered us. That challenged us hard in 2023, 2024. I feel like we got through that. Maybe took longer, maybe cost us some cash. It did. Look at fourth quarter. I think it is evidence now of what moves from a projection to a delivered result. Fourth quarter is the result of that investment. Fourth quarter results is benefits from the learnings and the fixes we made to run that larger capacity without contamination.
We have not had a contamination in our production process since April of 2024. It was chaos. It was crises. It was difficult. It was challenging. We are moving up on to one year now of clean operations at this higher level of output.
Right. So assuming that the farms that you collect colostrum from have made significant changes, you've made changes to your manufacturing processes, are you now operating at full capacity?
Yeah, we've targeted about 30 million. I think we can stretch that a little bit. We do have a longer-term plan to move that capacity to 40 million. That plan has been deferred for the time being just due to the cash being a little tight on cash. Yeah, that fourth quarter, you can take that and multiply by four, and we're in that 30 zone. We want to get to that 40 million pretty quick. Obviously, longer-term plans to go beyond that. To speak to your question about what about that 85% of the market that's not using First Defense.
Bobbi, talk about your sales force and their ability to manage their respective sales territories during the manufacturing issues of the past couple of years. How have they been holding up? How have they been succeeding?
Oh, Joe, I couldn't be prouder of this team. I appreciate the question, so I can brag on them a little bit. You know, our territories are large, and it requires a lot of travel, and that can be grueling. On top of that, our narrow portfolio demands a true hunter mindset. Our reps aren't managing a book of existing business. They're out there creating opportunities. That takes a different kind of energy and drive. Yeah, on top of that, the supply volatility we faced, I mean, this team showed incredible adaptability and grit. They stayed laser-focused on keeping critical end users supplied, even when it meant making the tough calls on allocation. Deciding who gets product and who doesn't is just heart-wrenching, especially when you worked so hard to close every sale and bring in every customer, right?
You know, I built this team from the ground up, and I'll be honest, during the worst of the supply crunch, there were moments it felt like everything that I built is crumbling around us. It is one thing to ride a wave. It is another thing to rebuild. This team has the fortitude and the skill to do that. It is exactly what we did in 2024. Our rebound from 2023 was phenomenal. We sold every dose that Portland produced in 2024. We are going to keep rebounding in 2025 as we finally emerge from this backorder status.
Michael, early on, right when we started our discussion here, you mentioned alternative ways of delivering your antibody technology to the market. What's going on in that regard? What other alternative ways are there of delivering your product?
Yeah, let me take a piece of that and then pass it over to Bobbi because she's leading perhaps the most important answer to your question. I'll take the history part, and she'll take the future part. Yeah, essentially, we can deliver our antibodies in different formats. We can deliver them as a scoop of loose powder for a feed. The original First Defense format was a capsule. We still keep the capsule. The challenge with the capsule, it doesn't have room for the third important claim of rotavirus. The other format is the tube, a little bigger gel formula inside a tube. It's a customer focus. If the customer wants it, we're going to try and deliver it.
As we go forward, I alluded to Bobbi, chat a little bit about what's in your pushing so effectively forward as far as a new market niche and a new format.
Let me make sure we're grounded in what makes our colostrum different. There's other companies out there that collect colostrum and process it and bring it to the market. Not a lot, because it is challenging, as Mike alluded to, with some of our processing struggles. There's not many companies that do that, but there are others. What makes us completely unique in terms of a colostrum processor is the fact that our colostrum is hyper-immunized with our proprietary vaccines that are uniquely designed to increase that concentration of the E. coli, corona, and rotavirus. The specificity of our colostrum is completely unique to anything else on the market.
That said, our purification processes that reside in Portland that we've leaned on all along do a phenomenal job of taking that already unique colostrum, purifying and concentrating it into a very, very small dose that, as Mike indicated, would fit in a capsule, would fit in a single-dose syringe. One of the avenues we're exploring in a new product development effort is to take that unique colostrum and instead of running it through all of the concentration steps, take it to a contract manufacturer to spray dry. Spray drying is different from what we do in our current processes. Our current processes rely on freeze drying, which is a different technology to dry the antibody. With the spray drying technology and not concentrating it as much, your dose size is going to be larger.
We're looking at somewhere between a 30-50 gram dose per calf to provide the same level of protection that you would get in, say, our capsule or a single-dose syringe. That higher dose, though, is very manageable for calf ranchers who feed in batches. They'll simply mix this into the milk and get it to the calf that way. One of the advantages, we're not removing the colostral fat in the spray dry process. That increases the dose size, but that also is really important to support energy and thermal regulation in the calf. This format lets us expand our reach, expand our capacity, our ability to sell more product. What's also interesting is that appears to be coming in at a lower production cost. That's going to be ideal for our more price-sensitive customers.
I think that'll help us chip away at that 85% market share that's yet- to- get yet.
Sounds interesting. Mike, you've obviously built a tremendous product line at First Defense, but let's switch over to Re-Tain, your FDA-regulated product that could be a real catalyst for the business. Tell us about that and where you're at and what do you see coming from it.
Yeah, I mentioned 2025 being a big year for us, milestones, catalysts. It's just a lot of accumulated work. It's coming to visibility this year. On the Re-Tain side, that's very, very true. I mean, we're talking about a 20-year development program here, this high, high bar of FDA regulation. We're close. I know I've been saying that for a while because we've suffered setbacks that have extended this timeline. Now where we're at very specifically is there are essentially five technical sections that cover all the primary objectives that the FDA wants to see before you move a product into the market commercially. Four of them are complete. They issue a technical section complete letter. For some time now, we've been working on that fifth one. It's now in its fourth submission.
The fourth submission is very solid, but it will not be approved until the inspection at the contract manufacturer that we use to fill our tubes. We make the drug substance. We make the highly purified nisin, but we do not aseptically fill it into a tube. That CMO needs to pass inspection. That inspection is current, is present. On the other end of that, we are very confident once they are back to good status that the FDA is going to push this license forward.
There is very little left to answer, very little left for them to review. It is present. What is very encouraging, and I think it reflects the mutual agreement. I am not just saying this. I think the FDA sees this as a very innovative product, getting back to alternatives to antibiotics, getting back to reducing the resistance to antibiotics that is created by overuse of antibiotics.
They see our innovation. They see us late stage here. They know our safety is check the box, done. They know our label is check the box, done as far as claims. They do want to, again, see that inspection cleared at the CMO. It is a special circumstance that they have allowed us just very, very recently to go out with investigational product. Even before a licensure, we are going to be able to move some product to market under this investigational product use and then back that up with the license that we definitely want. We have anticipated this for a long time, but it will just allow us to get some of this inventory out to market quicker. We are real excited about that.
That is part of the Re-Tain 2025 catalyst, move from 20 years of development to ask a customer, "Does this product help you manage mastitis on your farm, in your cows, in the real world?
Fantastic. Michael, Bobbi, thank you for being with us today. Thanks to everyone for watching. If any of you in the audience have any questions or would like to schedule a meeting with ImmuCell, please do not hesitate to give me a call at 602-889-9660 to make an appointment. We have additional presentations and fireside chats coming up next. Stick around for more. Thank you and have a great rest of your day.
Thanks, Joe, and the ImmuCell team for your insight.