ImmuCell(US:ICCC)2020-03-27 19:22Financial Performance - ImmuCell Corporation's cash, cash equivalents, and investments increased by 34% from $6.524 million in 2015 to $8.774 million in 2019[17]. - Net working capital rose by 52%, from $7.056 million in 2015 to $10.694 million in 2019[17]. - Total assets surged by 165%, increasing from $14.601 million in 2015 to $38.692 million in 2019[17]. - Stockholders' equity grew by 173%, from $10.614 million in 2015 to $28.991 million in 2019[17]. - Product sales for fiscal 2019 reached $13.723 million, a 25% increase from $10.986 million in fiscal 2018[130]. - Gross margin for fiscal 2019 was $6.740 million, compared to $5.194 million in fiscal 2018, reflecting a 29.8% increase[130]. - Net loss for fiscal 2019 was $1.296 million, an improvement from a net loss of $2.322 million in fiscal 2018[130]. - Basic net loss per share for fiscal 2019 was $0.19, compared to a loss of $0.42 per share in fiscal 2018[130]. - The net operating loss was reduced to $954,000 in 2019 compared to $1,447,000 in 2018, with non-cash expenses exceeding the net operating loss[179]. - The net loss for the year ended December 31, 2019, was $1.3 million, or $0.19 per share, compared to a net loss of $2.3 million, or $0.42 per share, for the year ended December 31, 2018, indicating an improvement in financial performance[185]. Product Development and Sales - Cumulative sales of the First Defense product line exceeded 24 million doses since its inception in 1991[20]. - The new product Tri-Shield First Defense achieved USDA approval in Q4 2017 and combines antibodies against E. coli, coronavirus, and rotavirus[23]. - The First Defense product line is the only USDA-licensed, orally delivered scours preventive product on the market for calves[20]. - The company has achieved FDA approval for four out of five significant regulatory submissions required for the Re-Tain™ product[14]. - The company aims to increase annual product sales from nearly $14 million to approximately $20 million, with a long-term goal of exceeding $30 million within five years after the launch of Re-Tain™[44]. - Sales of the First Defense product line accounted for 97% of total product sales in both 2019 and 2018, with 89% and 87% of sales coming from U.S. dairy and beef industries respectively[76]. - Sales of the First Defense product line rose by 24% in 2019, accounting for 97% of total product sales, with growth primarily driven by Tri-Shield First Defense[153]. - The company's market share of scour preventative products administered at the calf-level increased to approximately 36% in 2019, up from 34% in 2018[154]. Market Conditions and Economic Impact - Market conditions in the dairy and beef industries have weakened since 2014, with milk prices declining by 10% in 2018 compared to 2017[28]. - The U.S. dairy industry incurs approximately $2 billion in economic harm annually due to mastitis, making it the most costly disease affecting the industry[36]. - Subclinical mastitis is estimated to affect 20-30% of the U.S. dairy herd, with a potential market for the new product estimated at $5.8 million in the first year and growing to $36.1 million by the fifth year post-launch[41]. - The average Class III milk price increased by 16% to $16.96 in 2019, following a decline to $14.61 in 2018, which could positively impact customer profitability[87]. - The milk-to-feed price ratio increased by 9% to 2.24 in 2019, indicating improved conditions for dairy farmers compared to the previous year[89]. Regulatory and Compliance - The FDA's Veterinary Feed Directive, effective January 1, 2017, restricts the use of medically important antibiotics, creating a favorable environment for the introduction of Re-Tain™[40]. - The company has received USDA and Canadian Food Inspection Agency approval for various product formats, ensuring compliance with regulatory requirements[67]. - The FDA's phased submission process for Re-Tain™ is ongoing, with the second phased submission anticipated before the end of 2020[168]. - Regulatory compliance risks are heightened as the company relies on subcontractors for the production of Re-Tain™, which must also meet specific regulatory requirements[85]. Investments and Financial Obligations - ImmuCell Corporation raised approximately $12.24 million from common stock sales in 2017 and 2016, and $8.3 million in Q1 2019[16]. - The production facility for Re-Tain™ was constructed at a cost of approximately $20.8 million, with initial capacity projected to meet around $10 million in sales[41]. - The company has invested approximately $17.3 million in the development of Re-Tain™ over a twenty-year period, excluding facility costs[45]. - The company plans to invest approximately $4 million to construct and equip its own Drug Product formulation and aseptic filling capability for Re-Tain™[72]. - The company is obligated to make principal and interest payments totaling approximately $871,000 over the first twelve months of its new debt obligations[97]. - The company has a lease liability of approximately $1.3 million over the initial ten-year term for new office and warehouse space to expand production capacity[121]. - As of December 31, 2019, the company had outstanding debt totaling approximately $5.9 million, with $2.6 million under two mortgages hedged by interest rate swap agreements[190]. Operational Challenges and Risks - The concentration of sales and accounts receivable with two large distributors poses a risk, as they accounted for 69% and 76% of product sales and trade accounts receivable respectively in 2019[76]. - The company faces challenges in estimating the market size and future sales growth potential for both the First Defense product line and Re-Tain™, due to various uncertainties[93]. - The company has increased the number of farms supplying colostrum for its First Defense product line, but risks losing these sources could impact inventory production[99]. - The company has a small workforce of 54 employees, relying on key personnel for multiple operational functions, which poses a risk if any key employee departs[100]. - The company’s product sales are heavily influenced by the economic conditions of the dairy market, which is currently under extreme pressure[105]. Future Outlook - The company expects the FDA to grant a five-year market exclusivity for its product Re-Tain™[53]. - The company plans to expand the number of countries for First Defense product line export approvals, aiming to hold product registrations directly rather than relying on distribution partners[34]. - The company expects to complete in-house investment for drug product formulation and aseptic filling services during 2022, subject to FDA inspection[99]. - The company anticipates implementing annual price increases in line with current inflation rates moving forward[156]. - The company aims to invest less than 20% of product sales in sales and marketing expenses annually, with expectations for this ratio to decrease as sales grow[174]. - The company aims to increase future sales of products outside the United States, which may be influenced by currency fluctuations affecting international pricing[190].