ImmuCell(US:ICCC)2020-08-13 17:25Financial Data and Key Metrics Changes - Product sales increased by 9% in Q2 2020 compared to the same quarter in the prior year [7] - For the six months ended June 30, 2020, product sales were up 11% compared to the same period in the prior year [7] - Product sales rose by 19% for the trailing 12-month period ended June 30, 2020, compared to the trailing 12 months ended June 30, 2019 [8] - Gross margin dollars increased in all reported periods, but gross margin as a percentage of sales decreased for both the quarter and the six-month period compared to the same periods in the prior year [10] Business Line Data and Key Metrics Changes - The backlog of orders was approximately $945,000 as of June 30, down from about $1.4 million as of March 31 [9] - Product development expenses remained the largest operating expense line item, with non-cash expenses comprising about 39% of these expenses during the six-month period ended June 30, 2020 [11] Market Data and Key Metrics Changes - Class III milk prices were extremely volatile, dropping to around $12-$13 in April and May but rebounding to $24.54 in July, marking the second highest price since 1980 [18] Company Strategy and Development Direction - The company is focused on increasing production capacity with a $3.5 million investment, with the first phase completed and the second and third phases expected to be completed by year-end [9] - The introduction of Re-Tain, a novel treatment for mastitis, is expected to provide a more consistent sales profile throughout the year compared to the seasonal nature of First Defense [21] Management's Comments on Operating Environment and Future Outlook - The management expressed cautious optimism regarding the financial health of customers, noting the volatility in milk prices but indicating a strong recovery in July [18] - The company is navigating the challenges posed by the COVID-19 pandemic without significant production disruptions, although it has not met all budgetary objectives [13] Other Important Information - The company plans to submit the second phase of the CMC Technical Section to the FDA in Q4 2020, which will be subject to a six-month review [11][27] - The management emphasized the importance of cash flows over GAAP net loss at this stage of development [12] Q&A Session Summary Question: General financial health of customers - Management noted the volatility of milk prices, with a significant rebound in July indicating better economic conditions for dairy producers [18] Question: Comparison of First Defense and Re-Tain markets - First Defense targets calves, while Re-Tain targets cows, with the latter expected to have a larger market opportunity [19] Question: Timeline for Re-Tain submission to the FDA - The goal is to submit in Q4 2020, with a six-month review period following the submission [27] Question: Testing for subclinical mastitis - Management highlighted the need for education on testing and the importance of addressing the market's awareness of the benefits of treating subclinical mastitis [37][40] Question: Labeling process for Nisin products - The labeling process has begun, with a draft label established, and the final label will be detailed after the FDA review [56]