Hello, everyone, and thank you for joining us at the 2025 Lytham Partners Fall Investor Conference. My name is Joe Diaz. I'm a Managing Partner at Lithium Partners. Today, I'll be moderating a Q&A discussion with Michael Brigham, CEO, and Tim Fiori, CFO of ImmuCell Corporation, which trades on the NASDAQ under the ticker ICCC. Let's get started. Michael, Tim, thanks for joining us today. Michael, for the benefit of those in the audience not familiar with ImmuCell, please give us a brief introduction to the company, your technologies, and the markets in which you compete and operate.
Yeah, sure, Joe. Great. I appreciate the opportunity to chat a little bit about ImmuCell. We're a company located in Maine, with about 80 employees, with about $28 million in trailing 12-month sales ending June 30. Primarily, one product, First Defense, a First Defense product line. I look forward to chatting a little bit more about how we, what we do for baby calves and what we hope to be doing, subject to FDA approval, for the mother cow.
Again, as you indicated, your flagship product or the First Defense product line, primarily for newborn dairy calves. Give us an overview of the products and how they are unique from one another, First Defense and Tri-Shield.
Yeah. Tri-Shield was part of that First Defense product line. It's the new addition, newest addition to the line, came out in about 2018. We've kind of split the business into two categories: the biologics and the functional feeds. The biologics came to market with USDA approval, WABECT in 1991 as a bivalent product with claims against E. coli and coronavirus. When we talk about Tri-Shield, what we did is we took that bivalent technology, the E. coli and corona, and we added rotavirus, which has been really well received by the market. That's our trivalent application. All that, whether you want that product in a tube or a capsule, all that is USDA licensed. What's new and coming, just getting started, is what we call a functional feeds, sort of expansion of our product line. This will be without USDA claims.
It will be a different process, but the same antibodies. The different process means the fill rate or the dose size is bigger. It's to address a different market that we don't address well with the single dose to a newborn baby on the biologics. It'll be a feed, large volume feed going into calf ranches where they're feeding large volumes of milk and mixing or adding our antibodies to that feed without the USDA claim.
What does the First Defense line of products actually do? What is the mode of action for that product line?
Yeah, so we're looking to prevent scours. Scours is a big problem to the calf raising industry. These newborns hit the ground in a dirty environment with an immune system that's not ready to protect themselves yet. It's not mature. It's a naive immune system at birth. Mother Nature is providing that protection through mom's milk, antibodies in mom's milk. We're just doing that just a little better because we're specific and we're concentrated. Specific, again, the E. coli, coronavirus, and rotavirus, the big causes of scours, and in a concentrated dose where it's very specific and very effective if it's given right after birth. It essentially gives that calf that protection in that first 12-24 hours as she matures and grows up and her immune system, you know, matures.
She can provide that protection for herself, but we want to get her off to a really, really strong start right at birth. We've shown calves that don't scour just grow up bigger, faster, stronger, produce better, better milk. Scours really, really sets the calf back just after birth if they do get it.
At that early point, scours will have a significant impact on the future of that calf as it grows up, its ability to produce milk and things of that nature.
Yeah, right in those early weeks, she's going to be using energy to fight the disease rather than to grow up. She'll come into milk a little later, not quite as strong, and she will have suffered through a period where she's treated with antibiotics. Again, just redirecting the immune system, redirecting her energy to fighting disease rather than getting up and growing up strong and healthy and fast.
Now, it's obvious why dairy producers should use First Defense or Tri-Shield. Why would they not use it?
Joe, I'll take that one. I think the primary argument against our product versus the competition is that it is a bit higher priced. It's a premium price product, but it is also a premium performance product and has some characteristics. I think Michael could probably talk about that best.
Yeah, I mean, you get what you pay for is one way I look at it. Some of the other products, you know, they're really, our competition is largely vaccines. You can vaccinate the newborn, but you really shouldn't expect a very good result. As I said before, her immune system's not functioning yet. Now you're vaccinating her and expecting that immune system to respond well to the vaccine. If it does, it will certainly divert energy to that vaccine response rather than growing up. We really just compete against the alternatives because the other one is vaccinate the mother, and we can show how variable the response to that vaccine is. There are a lot of damn vaccines sold, but the response is variable. I'm not saying there's not a response because there is, but it's variable.
What we do is with this measured dose, let's take out that variability. We don't rely on mom to take a needle, get immunized and suffer that challenge to her. We do believe less needles are better, save those vaccines for, you know, for diseases. We'll take, we'll do the work. We do the work in our production plant. We're delivering that measured dose, and, directly, you know, with those specificity and the right, the right antibody and the right amount of that antibody.
Who are your main competitors and how does ImmuCell differentiate from them in terms of the product?
I think that I'm going to go back to that prior comment. The main competitors are vaccines, whether you're giving an oral vaccine to a newborn baby or immunizing mom and hoping she'll produce better milk. It's Zoetis , it's Merck, it's big companies that are selling vaccines. One of our positions in the market is go beyond vaccination. I mean, consider this, leave mom alone. Don't challenge the newborn baby. Go beyond vaccination with our product. We'll deliver the preformed antibodies.
You're competing against some very large companies. I mean, you are the David to everybody else's Goliath. How do you do it?
Efficacy. It works. I mean, it's not me bragging. It's what the customers say. Tim's going to talk a little later in our discussion about our backlog and our capacity expansion. We saw very painfully how much the market missed this product while we were in short supply. It really is efficacy. It's just a nice way to save a needle and get an effective protection to that newborn baby.
What is the size of the overall market that you're competing in?
There's some good information in our investor deck, and the way, you know, we see it is there's a potential opportunity for a calf-level treatment of around $31 million domestically, $31 million in revenue domestically. That's total market. Of course, we have a piece of that, and then around $82 million in total when you add in the dam-level treatment.
On an operating basis, you've overcome a number of contamination issues in the manufacturing of the First Defense product line in the past few years. Can you bring us up to date on how things are going after you've successfully addressed those challenges?
Yeah, you know, this is not a widget. It's bioprocessing. It's a very complex process we run here to purify those antibodies. We did see the demand increase with that addition to Tri-Shield, the addition of the rotavirus claim, a real spike in demand. We went out to double production from around $15 million to $30 million or more. For sure, that took longer than we hoped. For sure, that was more challenging than we would have anticipated. We ran into significant contaminations. Essentially, we needed to just continue to work to keep that process clean and do the same thing, just twice as much. That took us through the latter part of 2022, all of 2023 into the beginning of 2024. We've been running very clean since then. I think we, you know, again, that double is in place. We can produce more than $30 million.
It was hard to get there, but we're going into 2025 and into 2026 here. We're in a way better place and happy to be there.
During our discussion of the mode of action on the First Defense line, although we don't hear about this very much anymore, the idea of superbugs as it relates to the overuse of antibiotics, where does that all stand right now?
Yeah, we talk a lot about animal welfare and about sustainability. Part of the answer to this question is going to bring a chance to Re-Tain. That's a totally different product that's subject to FDA approval. Even on the First Defense side, if you do get scours, you will treat with antibiotics. We're saying prevent scours and don't use those antibiotics. When we get into Re-Tain, every product on the market today that's used to treat mastitis is an antibiotic, penicillins and cephalosporins. We are bringing in a new bacteria called niacin that is not used in human medicine. I think that's very consistent with the sustainability objectives of using less antibiotics because we know the overuse is not a good thing. The FDA is on it. The human health demands it, less antibiotics. We do that commercially with First Defense.
We hope to contribute to achieving that objective with Re-Tain in the near future.
Now, the raw material for your products is colostrum. Have you adjusted your collection processes for colostrum? What safeguards have been introduced into the process?
Yeah, it was quite a learning experience, quite honestly. I mean, again, back to the widget analysis, we didn't just say we have X farms. Okay, we want to be bigger. Let's have 2X farms. There is a lot involved with just that kind of growth farm management. It was implementing a lot of quality standards, not only up front at the farm, and especially again at the new farms that, you know, weren't familiar with our hyperimmunization vaccination process, our collection process, the work that our farm team does on farm every day. It was a lot of education, a lot of improved quality that went right through from the farm to the final processing.
Just to be clear, explain to us, who are not in the dairy business, what colostrum is and what is it that you have to do to process this to make it usable for your products?
By definition, colostrum is the early milk. That's mother's nature's way of saying, "Hey, hey, this milk is loaded with antibodies. It's to help my baby." It's the early milk. It isn't usually sold for commercial use. It's full of antibodies. It's full of blood. It's not the latter milk and so much goes to the dairy processors. It's just loaded with antibodies and we enhance that with our hyperimmunization program. Our colostrum really is quite special.
Now, a consequence of the manufacturing challenges that you had was a buildup of a sizable backlog of orders, which presented a number of challenges to your sales team. Where does that stand now, and how are your customers feeling about First Defense nowadays?
Yeah, it's an interesting question. I think I can speak pretty well for Bobbi Jo Brockmann, our VP of Sales and Marketing, who suffered through this short supply, leading her team really well to manage short supply. That's not what these people are wired to do. They're wired to solve calf-raising problems on the farm. They're wired to sell product, and they were forced to deal with irritated customers who just couldn't get the product. We did a lot of work to allocate product. We went direct to key customers and had to avoid distribution at times. This is a new transition to having supply. This is what I refer to as the $30 million+ in capacity. They're rebooting and getting back to what they love to do, which is selling.
We're finding, I think I would summarize the customer, and it may be a little too simply, but in this regard, are you irritated with ImmuCell? For sure, I am. Are you coming back to our product because it's now available? For sure, I am. We're working that transition really here in the second half of 2025.
As it relates back to the contamination issue, how likely is that to occur again?
There are going to be times where we have to scrap inventory, to scrap some production run or whatever. We've been running really, really clean since about April of 2024. I think the losses we're seeing now are manageable. They're expected. It is, like I said, a biological process. It's not sterile.
That said, what's the state of your manufacturing capacity? Will you be expanding anytime in the near future? Give us a sense of that.
Yeah, we like to talk about manufacturing capacity in terms of the approximate revenue that it could support, you know, given a lot of variables, price and so on. As an estimate, our current production capacity can support right around that $30 million or more in revenue. On the expansion, we continually evaluate adding additional capacity. That would involve an investment in a fifth freeze dryer, a lyophilizer, and that would cost around $3 million to do. If we did do that, it would increase the capacity to support $40 million or more in revenue.
I might join and just add, I agree with what Tim said. The freeze dryer itself is a piece of the investment. The investment we're evaluating and getting ready to trigger involves facility renovations too. I just don't want an investor to think that's a pretty expensive freeze dryer. We have to build out some space for it. I think that's a pretty good estimate, around $3 million for what would be an important expansion from four to five key machines. Those are the machines that turn our concentrated antibodies, you know, after the liquid processing into a powder, essentially taking the water out, turning liquid into powder. It's a key measure.
When the decision is made to expand your capacity, how long does it take to actually bring new capacity online? What might that look like in the next two years, let's say?
We have a really good group of suppliers and engineers that we've worked with in the past and that support our operations now. Their estimates are that it would take around 18 months. Of course, we'll push them to do that a little bit quicker, like always.
Yeah.
Tim, turning to the financials, can you give us a brief overview of the financials for the first half of 2025?
Yeah, of course. We had great top line revenue growth in the first half with year-over-year revenue growth of approximately 14%. Net income was approximately $1.9 million for the first half. The adjusted EBITDA was approximately $3.7 million. We like to look at that because it's representative of cash coming in. I would like to note that we benefited from restocking of distribution during the distribution channel during the first half after a long period of backlog. That's definitely something to note.
You recently reworked some of your bank financing. Can you give us an overview of that? What's the benefit to the company?
Yeah, we refinanced two loans that we've had and rolled them into one new loan approximating $2.3 million. That's really great for two reasons. One is that the rate's lower, the interest rate that we're paying on the new loan. The even bigger benefit is that it removed large balloon payments that were going to be due in Q3 of 2026. You can see a lot of details about that in the subsequent events section of our 10-Q.
Michael, can you bring us up to date on Re-Tain, which you mentioned earlier? Where does it stand in the FDA approval process? Where are we right now?
Yeah, so that's an important sort of transition. We've mostly been talking about First Defense. That's the USDA-approved product. That's what's generating the revenue that Tim just spoke about. We have this other product under development. That's the Re-Tain. We moved from calf scours with First Defense to mastitis with Re-Tain. Again, we bring a bacteria that is not used in human medicine. It's not a traditional antibiotic. It's not cephalosporin. It's not penicillin. Again, back to sustainability. It really plays well into this idea of don't overuse antibiotics. Where are we? One way to answer that is we're frustrated. It's taking way longer than we hoped. We're very, very late stage at this point. What we're doing is working with the FDA. There are five technical sections required for a new animal drug approval. Four of them have been complete for a while. The fifth open one is manufacturing.
We did invest $22 million to build our commercial scale production plant to show the FDA how we're going to make the product at scale. All those inspections are done. Really, the CMC, Chemistry Manufacturing Controls, or the manufacturing technical section is virtually complete with the exception of we do use a CMO, a contract manufacturer, for aseptically filling the drug substance that we make into drug product, into a syringe. They are out of compliance. They need to resolve their inspection with the FDA. It's our belief that once that's resolved, the license will get issued. That's the frustrating part, just time's going by. The offset to take care of some of that, address some of that frustration is the FDA. We are working with the FDA under what's called investigational product use.
We are taking the inventory that we produce for what was going to be our controlled initial launch and using it on an investigational basis to gather current data on today's dairy farms. The efficacy trial was completed. The one for the technical section complete on effectiveness was back to 2013. New data, new data coming around the first quarter. At this point, we're leaning on First Defense for the revenue, disappointed, but dealing with it. We don't have that initial revenue from Re-Tain. I always quote Tim when he said, "Yeah, it'd be nice to have the sales, but we're getting, if we're not getting paid in dollars, we're getting paid in data." This data should really inform our strategic options of what we do with Re-Tain next.
Right. Okay. The company recently issued a press release regarding succession planning. Michael, you've been at the company almost from day one and have essentially guided it to where it is today. Why are you stepping down? Why now? How is the search for a worthy successor coming along?
Yeah, a little personal, of course, but we were a little different in this. We put out a press release at the end of June to announce this plan. We said very clearly in that, and it's really nothing more than this, that I'm turning 65 this fall and I don't want to work full-time anymore. That's really just straight from me. I wanted to sort of take out some of the rumors and the curiosity and what's going on and just straight talk it. That initiated a really extensive process to recruit and interview a successor. That process is largely driven by our Board, and it's going very well. I think we'll hit our objective of having this transition around year-end. I'm really happy and excited to stay involved through the Board because that's a part-time commitment.
I look forward to that role and helping out however I can with Tim and the new CEO and the new team.
That's our allotted time for today. Michael, Tim, thank you for carving out some time for us today. We greatly appreciate it. Thanks to everyone that is watching. If you have any questions or would like to schedule a meeting with ImmuCell, send a meeting planner to iccc@lythampartners.com. We'll schedule a meeting for you. If you'd like to learn more about Lytham Partners, you can visit our website at lythampartners.com or follow us on LinkedIn to stay connected about future events. We hope you all enjoy the rest of the conference and have a great day. Thanks again, guys.
Thank you.
Thanks, Joe.