ImmuCell Corp. (ICCC, Financial) filed Quarterly Report for the period ended 2011-03-31.
Immucell Corp. has a market cap of $14.04 million; its shares were traded at around $4.721 with and P/S ratio of 3.2.
Our loss before income taxes of $31,000 during the three-month period ended March 31, 2011 compares to our loss before income taxes of $65,000 during the three-month period ended March 31, 2010. Our income tax benefit was 27% and 18% of our loss before income taxes during the three-month periods ended March 31, 2011 and 2010, respectively. Our net loss for the three-month period ended March 31, 2011 was $23,000, or $0.01 per share, in comparison to a net loss of $53,000, or $0.02 per share, during the three-month period ended March 31, 2010.
Our decision to continue developing Mast OutĀ® after the product rights were returned to us in 2007 has caused us to increase our spending on product development expenses that were previously funded by Pfizer. After the nine consecutive years of profitability that we recorded during the years ended December 31, 1999 to December 31, 2007, we incurred net losses of $469,000, $216,000, and $385,000 during 2008, 2009, and 2010, respectively, and $23,000 during the three-month period ended March 31, 2011. We are projecting a net loss during the six-month period ending June 30, 2011. We have committed approximately $570,000 (50% paid during the fourth quarter of 2010 and the balance due upon completion) to Lonza (our API manufacturer) for the scale-up and testing of the Nisin Active Pharmaceutical Ingredient (API) manufacturing process required for a first submission of the CMC Technical Section. This work is expected to be completed during the second quarter of 2011. We are seeking a partner to fund the additional and larger financial commitments to Lonza to complete the manufacturing process development and to fund production facility modifications and full-scale manufacturing batches that would be required to make a second submission of the CMC Technical Section. Subject to obtaining this partner funding, we expect to have product to sell in a test market, subject to timely FDA approval, during 2012. We believe that the commercial prospects for Mast OutĀ® warrant this level of investment. We expect to return to positive net operating income (before other revenues (expenses), net and income taxes) during the six-month period ending December 31, 2011.
During the third quarter of 2010, we agreed to terms of certain credit facilities with TD Bank, N.A. aggregating up to approximately $2,100,000, which are secured by substantially all of our assets. These credit facilities are comprised of a of a $1,000,000 ten-year mortgage loan, a $600,000 fifty-four month note payable and a $500,000 line of credit. Proceeds from the $1,000,000 mortgage were received during the third quarter of 2010. Proceeds from the $600,000 note payable were received during the first quarter of 2011, and the $500,000 line of credit is available as needed. We believe that this debt financing (together with available cash and gross margin from ongoing product sales) provides us with sufficient funding to finance our working capital requirements while completing the first submissions to the FDA of all Technical Sections pertaining to Mast OutĀ®. We chose debt financing because we believe that in this market environment, the option to generate funds through the sale of equity securities at an acceptable level of stockholder dilution is very unlikely.
Cash, cash equivalents and short-term investments increased by 15%, or $683,000, to $5,309,000 at March 31, 2011 from $4,626,000 at December 31, 2010. Net cash provided by operating activities amounted to $235,000 during the three-month period ended March 31, 2011 in contrast to net cash used for operating activities of $167,000 during the three-month period ended March 31, 2010. Net working capital increased by 7%, or $440,000, to $6,881,000 at March 31, 2011 from $6,441,000 at December 31, 2010. Proceeds from bank debt received during the first quarter of 2011 aggregated $579,000, net of debt repayments made prior to April 1, 2011. Total assets increased by 6%, or $658,000, to $11,409,000 at March 31, 2011 from $10,751,000 at December 31, 2010. Stockholders equity decreased by less than 1% or $14,000, to $9,269,000 at March 31, 2011 from $9,282,000 at December 31, 2010. We believe that we have sufficient capital resources to meet our working capital requirements and to finance our ongoing business operations during at least the next twelve months. However, as noted above, in order to compete the planned development and commercialization of Mast OutĀ® we will need to receive approximately $6,000,000 in financial support from a marketing partner to complement the internally generated and borrowed funds that we are willing to commit to this initiative. The production of commercial batches of inventory for a market launch of Mast OutĀ® (if the product is approved by the FDA) would require a significant amount of additional capital. It is not necessary for this funding to occur within the next twelve months.
Economics of the dairy industry: The U.S. dairy industry has been facing very difficult economic pressures, which are forcing many dairy producers out of business. The size (annual average) of the U.S. dairy herd ranged from approximately 9,011,000 to 9,199,000 cows from 1998 to 2007. This annual average jumped to 9,315,000 cows in 2008. The annual average was 9,203,000 in 2009 and 9,117,000 in 2010. The size of the milking herd affects the price of milk. The impact on the milk supply from a decrease in cows is offset, in part, by an increase in milk production per cow. While the number of cows in the U.S. herd and the production of milk per cow directly influence the supply of milk to the market, demand for milk has been largely influenced by very volatile international demand for milk products. Sales of our products may be influenced by the prices of milk, milking cows and calves. The Class III milk price is an industry benchmark that reflects the value of product used to make cheese. The Class III milk price (which is largely out of the direct control of individual dairy producers) is an important indicator because it defines our customers revenue level. The average Class III milk price for 2008 was $17.44 per 100 pounds, which represented a 3% decrease from the 2007 average of $18.04. For 2009, this price level averaged $11.36, which represents a 35% decrease from 2008. The average price for 2009 was 36% lower than the average experienced during the two-year period ended December 31, 2008. For 2010, this price level averaged $14.41, which represents a 27% increase from 2009 but is well below the 2007 and 2008 levels. As of March 2011, this price level averaged $16.63. The actual level of milk prices may be less important than their level relative to costs. Recent improvement in milk prices has been offset by higher feed costs. One measure of this relationship is known as the milk-feed price ratio, which represents the amount of feed that one pound of milk can buy. Whenever this ratio meets or exceeds 3.0, it is considered profitable to buy feed and produce milk. For 2008, this ratio averaged 2.01. For 2009, this ratio averaged 1.78, representing a 12% decrease compared to 2008. For 2010, this ratio averaged 2.27, representing a 27% increase compared to 2009. As of March 2011, this ratio averaged approximately 2.05. This means that a dairy producer can buy only 2.05 pounds of feed for every pound of milk sold. An increase in feed costs also has a negative impact on the beef industry. Another indication of the economic condition of the dairy industry is the average price for animals sold for dairy herd replacement. In 2008, this average price (reported as of January, April, July and October) is estimated to have increased to approximately $1,953, which was a 6% increase over 2007. This price average dropped to approximately $1,385 in 2009, which represented a 29% decrease in comparison to the same period in 2008. This price averaged approximately $1,330 in 2010, which represented a 4% decrease in comparison to the same period in 2009. The price averaged approximately $1,360 as of April 2011. The dairy industry data reRead the The complete Report
Immucell Corp. has a market cap of $14.04 million; its shares were traded at around $4.721 with and P/S ratio of 3.2.
Highlight of Business Operations:
Product sales increased by approximately 19%, or $244,000, to $1,556,000 during the three-month period ended March 31, 2011 in comparison to $1,312,000 during the same period in 2010. The volatility of the global economy, and its impact on the dairy industry, continues to affect our product sales both domestically and internationally. During the first three months of 2011, domestic sales increased by 10%, or $118,000, and international sales increased by 78%, or $126,000, in comparison to the same period in 2010. Product sales increased by approximately 14% during the six-month period ended March 31, 2011 and by approximately 6% during the twelve-month period ended March 31, 2011, in comparison to the same periods ended March 31, 2010. We believe that this growth may reflect, at least in part, the success of our strategic decision to invest in additional sales and marketing efforts. It is our production and customer service objective to ship orders within one day of receipt. We have been operating in accordance with this objective since the third quarter of 2009. Competition for resources that dairy producers allocate to their calf enterprises has been increased by the severe economic challenges that producers have been facing since the start of the current down cycle in 2008 and by the many new products that have been introduced to the calf market. This competitive pressure increases the importance for us to be successful with new development initiatives such as product line extensions and the addition of a new rotavirus claim for First DefenseĀ®. In an effort to counter these market dynamics, we launched a communications campaign at the end of 2010 that is highlighting how the unique features of First DefenseĀ® provide a dependable return on investment for producers.Our loss before income taxes of $31,000 during the three-month period ended March 31, 2011 compares to our loss before income taxes of $65,000 during the three-month period ended March 31, 2010. Our income tax benefit was 27% and 18% of our loss before income taxes during the three-month periods ended March 31, 2011 and 2010, respectively. Our net loss for the three-month period ended March 31, 2011 was $23,000, or $0.01 per share, in comparison to a net loss of $53,000, or $0.02 per share, during the three-month period ended March 31, 2010.
Our decision to continue developing Mast OutĀ® after the product rights were returned to us in 2007 has caused us to increase our spending on product development expenses that were previously funded by Pfizer. After the nine consecutive years of profitability that we recorded during the years ended December 31, 1999 to December 31, 2007, we incurred net losses of $469,000, $216,000, and $385,000 during 2008, 2009, and 2010, respectively, and $23,000 during the three-month period ended March 31, 2011. We are projecting a net loss during the six-month period ending June 30, 2011. We have committed approximately $570,000 (50% paid during the fourth quarter of 2010 and the balance due upon completion) to Lonza (our API manufacturer) for the scale-up and testing of the Nisin Active Pharmaceutical Ingredient (API) manufacturing process required for a first submission of the CMC Technical Section. This work is expected to be completed during the second quarter of 2011. We are seeking a partner to fund the additional and larger financial commitments to Lonza to complete the manufacturing process development and to fund production facility modifications and full-scale manufacturing batches that would be required to make a second submission of the CMC Technical Section. Subject to obtaining this partner funding, we expect to have product to sell in a test market, subject to timely FDA approval, during 2012. We believe that the commercial prospects for Mast OutĀ® warrant this level of investment. We expect to return to positive net operating income (before other revenues (expenses), net and income taxes) during the six-month period ending December 31, 2011.
During the third quarter of 2010, we agreed to terms of certain credit facilities with TD Bank, N.A. aggregating up to approximately $2,100,000, which are secured by substantially all of our assets. These credit facilities are comprised of a of a $1,000,000 ten-year mortgage loan, a $600,000 fifty-four month note payable and a $500,000 line of credit. Proceeds from the $1,000,000 mortgage were received during the third quarter of 2010. Proceeds from the $600,000 note payable were received during the first quarter of 2011, and the $500,000 line of credit is available as needed. We believe that this debt financing (together with available cash and gross margin from ongoing product sales) provides us with sufficient funding to finance our working capital requirements while completing the first submissions to the FDA of all Technical Sections pertaining to Mast OutĀ®. We chose debt financing because we believe that in this market environment, the option to generate funds through the sale of equity securities at an acceptable level of stockholder dilution is very unlikely.
Cash, cash equivalents and short-term investments increased by 15%, or $683,000, to $5,309,000 at March 31, 2011 from $4,626,000 at December 31, 2010. Net cash provided by operating activities amounted to $235,000 during the three-month period ended March 31, 2011 in contrast to net cash used for operating activities of $167,000 during the three-month period ended March 31, 2010. Net working capital increased by 7%, or $440,000, to $6,881,000 at March 31, 2011 from $6,441,000 at December 31, 2010. Proceeds from bank debt received during the first quarter of 2011 aggregated $579,000, net of debt repayments made prior to April 1, 2011. Total assets increased by 6%, or $658,000, to $11,409,000 at March 31, 2011 from $10,751,000 at December 31, 2010. Stockholders equity decreased by less than 1% or $14,000, to $9,269,000 at March 31, 2011 from $9,282,000 at December 31, 2010. We believe that we have sufficient capital resources to meet our working capital requirements and to finance our ongoing business operations during at least the next twelve months. However, as noted above, in order to compete the planned development and commercialization of Mast OutĀ® we will need to receive approximately $6,000,000 in financial support from a marketing partner to complement the internally generated and borrowed funds that we are willing to commit to this initiative. The production of commercial batches of inventory for a market launch of Mast OutĀ® (if the product is approved by the FDA) would require a significant amount of additional capital. It is not necessary for this funding to occur within the next twelve months.
Economics of the dairy industry: The U.S. dairy industry has been facing very difficult economic pressures, which are forcing many dairy producers out of business. The size (annual average) of the U.S. dairy herd ranged from approximately 9,011,000 to 9,199,000 cows from 1998 to 2007. This annual average jumped to 9,315,000 cows in 2008. The annual average was 9,203,000 in 2009 and 9,117,000 in 2010. The size of the milking herd affects the price of milk. The impact on the milk supply from a decrease in cows is offset, in part, by an increase in milk production per cow. While the number of cows in the U.S. herd and the production of milk per cow directly influence the supply of milk to the market, demand for milk has been largely influenced by very volatile international demand for milk products. Sales of our products may be influenced by the prices of milk, milking cows and calves. The Class III milk price is an industry benchmark that reflects the value of product used to make cheese. The Class III milk price (which is largely out of the direct control of individual dairy producers) is an important indicator because it defines our customers revenue level. The average Class III milk price for 2008 was $17.44 per 100 pounds, which represented a 3% decrease from the 2007 average of $18.04. For 2009, this price level averaged $11.36, which represents a 35% decrease from 2008. The average price for 2009 was 36% lower than the average experienced during the two-year period ended December 31, 2008. For 2010, this price level averaged $14.41, which represents a 27% increase from 2009 but is well below the 2007 and 2008 levels. As of March 2011, this price level averaged $16.63. The actual level of milk prices may be less important than their level relative to costs. Recent improvement in milk prices has been offset by higher feed costs. One measure of this relationship is known as the milk-feed price ratio, which represents the amount of feed that one pound of milk can buy. Whenever this ratio meets or exceeds 3.0, it is considered profitable to buy feed and produce milk. For 2008, this ratio averaged 2.01. For 2009, this ratio averaged 1.78, representing a 12% decrease compared to 2008. For 2010, this ratio averaged 2.27, representing a 27% increase compared to 2009. As of March 2011, this ratio averaged approximately 2.05. This means that a dairy producer can buy only 2.05 pounds of feed for every pound of milk sold. An increase in feed costs also has a negative impact on the beef industry. Another indication of the economic condition of the dairy industry is the average price for animals sold for dairy herd replacement. In 2008, this average price (reported as of January, April, July and October) is estimated to have increased to approximately $1,953, which was a 6% increase over 2007. This price average dropped to approximately $1,385 in 2009, which represented a 29% decrease in comparison to the same period in 2008. This price averaged approximately $1,330 in 2010, which represented a 4% decrease in comparison to the same period in 2009. The price averaged approximately $1,360 as of April 2011. The dairy industry data reRead the The complete Report
