Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ImmuCell Corp (NASDAQ:ICCC) reported a significant sales growth of 52% during both the fourth quarter and the full year of 2024 compared to the previous year.
• The company achieved a gross margin increase of 125% in the fourth quarter of 2024, reaching $2.8 million, indicating improved financial performance.
• ImmuCell Corp (NASDAQ:ICCC) successfully remediated previous production contamination issues, with no new events since April 2024, suggesting improved operational stability.
• The company raised net proceeds of almost $4.4 million during 2024, enhancing its cash position to approximately $3.8 million by the end of the year.
• ImmuCell Corp (NASDAQ:ICCC) is poised to revolutionize the treatment of subclinical mastitis with its novel product, Retain, which is pending FDA approval and could offer a significant market opportunity.

Negative Points

• The company's gross margin percentage, although improved, is still below the target of over 40%, indicating room for further operational efficiency.
• Production contamination events in 2023 and early 2024 led to reduced manufacturing output and delayed capacity expansion, impacting sales and operations.
• The company faces challenges in maintaining consistent production yields due to biological processing variances, which could affect future output and margins.
• ImmuCell Corp (NASDAQ:ICCC) has a significant investment of about $50 million and 25 years in developing Retain, with ongoing regulatory hurdles delaying its market launch.
• The company experienced a substantial increase in inventory levels due to contracted milk deliveries and unforeseen production slowdowns, impacting cash flow management.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with ICCC.

Q: Can you explain the factors affecting the gross margin and what steps are being taken to improve it? A: Michael Brigham, President and CEO, explained that the gross margin improvement to 36.5% is due to several factors, including product mix and pricing. Tri-Shield, a more expensive product to produce, has contributed to growth despite its higher costs. The company is focusing on increasing production yield and throughput, which were previously affected by contamination issues. The goal is to return to a gross margin of over 40% by maintaining higher production levels and leveraging a 25% price increase.

Q: What is the current status of inventory, and how is it being managed? A: Michael Brigham noted that the company had contracted for increased milk deliveries in anticipation of growth, but unforeseen events like syringe shortages and contamination led to excess inventory. This inventory is now being used to explore a new product format, which involves bulk feed rather than individual doses. This initiative is expected to progress in 2025, with potential market decisions in 2026.

Q: How is the company addressing the variation in doses per batch? A: Michael Brigham acknowledged that biological processing inherently involves yield variance. The company is working to minimize this variance by improving production processes and aiming for more consistent batch yields. The focus is on resuming previous yield levels rather than creating new ones.

Q: What is the timeline for the new product format to reach the market? A: The new product format, which does not require regulatory approval, is expected to be tested with customers in 2025. This will inform decisions for a broader market launch in 2026. The absence of regulatory hurdles allows for a faster market entry.

Q: Can you provide an update on the FDA approval process for the Retain product? A: Michael Brigham stated that the company is awaiting FDA clearance for inspectional observations and the review of their non-administrative NADA submission. The submission includes product labeling and responses to previous FDA feedback. The company is seeking expedited review and remains committed to achieving regulatory approval for Retain.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.