ImmuCell Corp. (NASDAQ:ICCC) Q2 2018 Earnings Conference Call - Final Transcript
Aug 14, 2018 • 09:00 am ET
Good morning, and welcome to the ImmuCell Corporation Reports Second Quarter Fiscal Year 2018 Financial Results Conference Call. (Operator Instructions) Please note, this event is being recorded.
I would now like to turn the conference over to Mr. Joe Diaz. Please go ahead.
Thank you, Andrea, and thank all of you for joining us today to review the unaudited financial results of ImmuCell Corporation for the second quarter of 2018, which ended on June 30, 2018. My name is Joe Diaz with Lytham Partners. We are the Investor Relations consulting firm for ImmuCell.
(Forward-Looking Cautionary Statements)
With that, let me turn the call over to Michael Brigham, President and CEO of ImmuCell Corporation. After which, we will open the call for your questions. Michael?
Thank you all for taking the time to join today's call. I'd like to highlight some key financial points and then review the current state of our business.
So customer demand for our products is up. Product sales are up 72% during the second quarter in comparison to the second quarter of 2017. These quarterly results do include the shipment of approximately $900,000 of our bivalent formats of First Defense that was on backlog as of March 31, 2018. During the first 6 months of the year, product sales increased by $602,000 or 11% to $5.9 million in comparison to the first 6 months of 2017. During the rolling 12 months ended June 30, 2018, product sales increased by $1.6 million or 16% to $11 million in comparison to the same period ended June 30, 2017.
Gross margin as a percentage of product sales decreased from 58% during the first 6 months of 2017 to 48% during the first 6 months of 2018. This decrease has been largely driven by lower biological yield from our milk and higher costs from the initial batches of our new product, Tri-Shield First Defense. We expect to improve this percentage going forward.
The market's response to our newly introduced Tri-Shield First Defense has been very strong, which is a good indication that dairy and beef producers value the ability to protect newborn calves with immediate immunity from the 3 most common scours-causing pathogens, being E. coli, coronavirus and rotavirus, in one preventative treatment at birth. Additionally, in the short time that the product has been on the market, we have gained substantial traction with our Beyond Vaccination message that positions the product as a viable substitute for traditional dam-level scours vaccine programs. This is a large, new market opportunity for us. The calf-level market is worth something like $17 million per year. The dam-level market for vaccines that are given to the mother cow for the purposes of improving the colostrum that is fed to newborn calves to protect them from scours is about double that size or somewhere near $34 million. Previously, we could not compete effectively for these sales because the vaccines include the rotavirus claim that we did not have until late last year. So now we are