Q3 2023 ImmuCell Corp Earnings Call

[music].

Good day, everyone and welcome to the image So corporation's third quarter 2023 financial results conference call.

Good day, everyone, and welcome to the IMUSEL Corporation's third quarter 2023 Financial Results Conference Call. Our participants will be in the audience.

All participants will be in listen only mode.

Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone.

To ask a question, you may press star then 1 on a touch tone phone.

And if you need to withdraw your question. Please press Star then two.

And if you need to withdraw your question, please press star then 2. Please note this event is...

Please note this event is being recorded.

And now I would like to turn the conference over to Joe Diaz. Please, go ahead.

Now I would like to turn the conference over to Joe Diaz. Please go ahead.

Thank you, Marlise. Good morning and welcome to everyone. As Marlise indicated, my name is Joe Diaz. I'm with Latham Partners. We're the investor relations consulting firm for me.

Thank you Marty good morning, and welcome everyone.

Our lease indicated my name is Joe Diaz I'm with Lytham partners, we are the Investor relations consulting firm for them yourself.

I thank all of you for joining us today to discuss the unedited financial results for the quarter ended September 30, 2023. I'd like to preface today's discussion with a caution.

Thank all of you for joining us today to discuss the unaudited financial results for the quarter ended September 32023, I'd like to preface today's discussion with a caution.

Regarding forward-looking statements, listeners are reminded that statements made by management during the course of this call include forward-looking statements, which include any statement that refers to the future events or expected future results or predictions about steps the company plans to take in.

Regarding forward looking statements listeners are reminded that statements made by management. During the course of this call include forward looking statements, which include any statement that refers to the future events or expected future results of predictions about steps the company plan to take in the future.

statements are not guaranteed a performance and are subject to risks and uncertainties that could cause actual results, outcomes, or events to differ materially from those discussed today.

Statements are not guarantees of performance and are subject to risks and uncertainties that could cause actual results outcome or event to differ materially from those discussed today.

Additional information regarding forward-looking statements and the risks and uncertainties that could impact future results, outcomes, or events is available under the cautionary note regarding forward-looking statements or the Safe Harbor Statement.

Additional information regarding forward looking statements and the risks and uncertainties that could impact future results outcomes or event is available under the cautionary note regarding forward looking statements or the safe Harbor statement provided in the quarterly report on Form 10-Q that the company filed last night.

provided in the quarterly report on Form 10-Q that the company filed last night, along with the company's other periodic filings with the SEC. Information discussed on today's call.

Along with the company's other.

Got it.

With the FCC.

Information discussed on today's call speaks only as of today Tuesday November 14 2023.

speaks only as of today, Tuesday, November 14, 2023. The company undertakes no obligation to update any information discussed on today's call.

Company undertakes no obligation to update any information discussed on today's call.

Please note that references to certain non-GAAP financial measures may be made during today's call. The company included definitions of these terms as well as reconciliation of these figures to the most comparable GAAP financial measures in last night's press release in order to better assist you in understanding its financial performance.

Please note that references to certain non-GAAP financial measures may be made during today's call. The company included definitions of these terms as well as reconciliations of these figures.

The most comparable GAAP financial measures in last Night's press release in order to better assist you in understanding its financial performance with that said, let me turn the call over to Michael Brigham President and CEO of when we sell a corporation after which we will open the call for your questions Michael.

With that said, let me turn the call over to Michael Brigham, President and CEO of Emusil Corporation, after which we will open the call for your questions.

Okay. Thanks, Joe and good morning, everyone first though with regards to the financial results last Night's press release reports no change to our product sales results that were first reported on October 5th. The press release also provides the full unaudited P&L results and some on audited summary balance sheet data.

Okay, thanks Joe and good morning everyone. First, with regards to the financial results, last night's press release reports no change to our product sales results that were first reported on October 5th.

The press release also provides the full unaudited P&L results and some unaudited summary balance sheet data. We also followed our Form 10Q for the quarter ended September 30, 2023 last night. I won't take our time here to review those financial results in great detail.

We also filed our Form 10-Q for the quarter ended September 30, 20 choice three last night I wont take our time here to review those financial results in great detail.

Last night's press release also includes our non-GAAP earnings before income taxes, depreciation, and amortization, or EBITDA. Please see page 5 of the press release.

Last Night's press release also includes our non-GAAP earnings before income taxes, depreciation and amortization or EBITDA.

Please see page five of the press release, you can see a significant swing of negative $3 6 million from positive EBITDA of $1 3 million. During the nine months ended September 32022 to negative EBITDA of $2 3 million during the nine months ended September 32023.

You can see a significant swing of negative 3.6 million from positive EBITDA of 1.3 million during the nine months ended September 30, 2022 to negative EBITDA of 2.3 million during the nine months ended September 30, 2023.

This negative swing in EBITDA pretty much matches a 3.8 million increase in our net loss from 826,000 during the nine months ended September 30, 2022 to 4.6 million during the seven months that came in and was our customeranasia control our buildings become greater and greater and worse than they could become as a team.

This negative swing in EBITDA pretty much matches, a 3.8 million increase in our net loss from 826000. During the nine months ended September 30, 22 to 4.6 million. During the nine months ended September 30, 23, the increase in the net loss was in turn largely caused by the 4 million.

ended September 30, 2023. The increase in the net loss was, in turn, largely caused by the $4 million decrease in gross margin earned from 6.7 million during the nine months ended September 30, 22 to 2.6 million during the nine months ended September 30, 23.

Dollar decrease in gross margin earned from $6 7 million. During the nine months ended September 30, $22 million to $2.6 million. During the nine months ended September 30 23.

In response to this loss in cash, we took on more bank debt in July and have cut some discretionary spending and frozen several planned capital expenditure projects for the time being. All this is unfortunate but necessary. We are focused intensely on working our way out of this tight situation by increasing production and sales. To be successful, we must avoid future significant contamination events and equipment breakdowns. So what is going on here?

In response to this loss in cash we took on more bank debt in July and have cut some discretionary spending and frozen several planned capital expenditure projects for the time being Oh. This is unfortunate but necessary we're focused intensely on working our way out of this tight situation by increasing production and sales.

To be successful, we must avoid future significant contamination events and equipment breakdowns.

So what is going on here, let me try to speak to that.

I'd like to point you to a disclosure beginning on page 29 of our quarterly report or page 31 of the <unk> version, that's filed with the SEC under the heading production capacity increase production contamination and related events in.

I'd like to point you to a disclosure being on page 29 of our quarterly report or page 31 of the agarized version that's filed with the SEC. Under the heading, production capacity increase, production contamination and related events.

in which we review some of the significant challenges we have faced over the last 12 months that contributed to our current financial results.

And which we review some of the significant challenges we have faced over the last 12 months that gets that contributed to our current financial results.

So after much work and some significant delays by the end of 'twenty 'twenty. Two we have completed all the facility improvements and the new equipment installations, including freeze dryer number four that are necessary to increase our estimated full production capacity to approximately $30 million per year.

So after much work and some significant delays, by the end of 2022, we had completed all the facility improvements and the new equipment installations, including freeze dryer number four, that are necessary to increase our estimated full production capacity to approximately $30 million per year.

Just as we began to operate at this higher level of capacity at the beginning of 2023, we were forced to slow down production to remediate a contamination event related to our incoming raw materials.

As we began to operate at this higher level of capacity at the beginning of 'twenty 'twenty. Three we were forced to slow down production to remediate a contamination event related to our incoming raw material.

At the very same time, freeze dryer number two stopped operating requiring a six month repair, netting us back to three operating freeze dryers. As of early July 23, 2021, the

The very same time freeze dryer number two stopped operating requiring a six month repair getting us back to three operating freeze dryers as of early July 23.

We were back to operating for freeze dryers and we now believe these contamination events are largely but not fully behind us. Finished goods produced increased steadily from approximately 3.3 million to 4 million and further to 5.3 million during the first, second and third quarters of 2023 respectively.

We were back to operating for freeze dryers and we now believe these contamination events are largely but not fully behind US finished goods produced increased steadily from approximately $3 3 million to 4 million and further to 5.3 million during the first second and third quarters of 2023.

Especially.

Our goal is to produce product with an estimated sales value of approximately 6 million per quarter, which would annualize to about 80% of our estimated full production capacity of approximately 30 million.

Our goal is to produce product with an estimated sales value of approximately 6 million per quarter, which would annualize to about 80% of our estimated full production capacity of approximately $30 million.

Our third quarter production was approximately 89% of our quarterly objective.

Our third quarter production was approximately 89% of our quarterly objective.

We have been driven by data as we resolve this temporary production problem. All production batches are routinely tested by our quality control team at the beginning, middle, and end of the production process. Improvements throughout the production process from the depth of the contamination problem in January are allowing us to come back into full production. We believe that the operational improvements we have implemented will help us run more effectively at higher output level going forward.

We have been driven by data as we resolve this temporary production problem. All production batches are routinely tested by our quality control team at the beginning middle and end of the production process improvements throughout the production process from the depth of the contamination problem in January are allowing us to come back into full production.

We believe that the operational improvements we have implemented will help us run more effectively at higher output level going forward.

Despite this significant diversion of our resources, we made our third submission of the CMC technical section for retain to the FDA in August .

Despite this significant diversion of our resources, we made our third submission of the CMC technical section for retain to the F. D. A N August this type of submission is subject to a six month review by the F D. A.

This type of submission is subject to a six month review by the FDA.

has disclosed on page 35 of our quarterly report or page 37 of the Egerized version has filed with the FCC.

As disclosed on page 35 of our quarterly report or page 37 of the <unk> version as filed with the SEC.

The FDA notified us in late October that they have refused to review our August submission because of a misunderstanding about where and by whom we intend to have our drug product formulated and filled.

The F D. A notified us in late October that they have refused to review our August submission because of a misunderstanding about where and by whom we enter and intend to have our drug product formulated and filled.

The FDA thought our plan was to bring those services in-house.

The FDA thought our plan was to bring those services in house.

which we might do down the road post approval rather than to continue with our contract manufacturer, which is still our current plan. In response to this notification from the FDA, we refiled our submission in November .

Which we might do down the road post approval rather than to continue with our contract manufacturer, which is still our current plan in response to this notification from the F. D. A we refiled this.

Our submission in November.

We are in communication with the F D. A to resolve this unfortunate miscommunication, but if we fail to reach agreement. They expect a response stayed from their review could be delayed past February 'twenty 'twenty, four which is six months from the August submission date to as late as May 'twenty 'twenty, four which is six months from the November.

We are on communication with the FDA to resolve this unfortunate miscommunication, but if we fail to reach agreement, the expected response date from their review could be delayed past February 2024, which is six months from the August submission date, to as late as May 2024, which is six months from the November resubmission date.

Resubmission date, regardless, we remain poised and excited to revolutionize the way that subclinical mastitis is treated in today's dairy market with a novel alternative to traditional antibiotics with zero milk discard and zero meat withhold claims.

Regardless, we remain poised and excited to revolutionize the way that subclinical mastitis is treated in today's dairy market with a novel alternative to traditional antibiotics.

with zero milk discard and zero meat withhold claim.

As I said, the last 12 months have been very challenging for us, for sure. We have worked incredibly hard to address these challenges and move forward. Based on our responses and progress, I am optimistic about what we can do in the coming quarters.

As I said the last 12 months have been very challenging for us for sure. We have worked incredibly hard to address these challenges and move forward based on our responses and progress I'm optimistic about what we can do in the coming quarters.

Lastly, I encourage you to review the press release and the quarterly report that we filed last night. Please also have a look at our corporate presentation slide deck I believe it provides a very good summary of our business strategy and our objectives as well as our current financial results and November update was just posted to our website last night.

See the investors section of our website and click on corporate presentation or contact us for a copy.

But that said I will be happy to take your questions. So let's have more lease to open up the lines.

Thank you very much and now we'll begin the question and answer session.

Thank you very much, and we'll begin the question and answer session.

To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing.

To ask a question you May Press Star then one on your Dutch Dunstone and if youre using a speakerphone. Please pick up your handset before pressing the keys.

If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

Anytime Youre question has been addressed and you would like to withdraw your question. Please press Star then two.

At this time, we will pause to assemble a rod.

At this time, we will pause to assemble our roster.

Yeah.

Yeah.

And again, if you would like to answer the question you Press Star one.

And again, if you would like to answer the question queue, press star 1.

Since no questions are posed at this moment I will then turn the conference back over to Joe Diaz for closing remarks go ahead Sir.

Since no questions are posed at this moment, I will then turn the conference back over to Joe Diaz for some closing remarks. Go ahead, Joe. Thank you, Marilis, and thanks all of you for participating in today's call. We look forward to talking with you again to review the results for the full year ended on December 31, 2023, sometime around late February 2024. Again, thanks for your time. Have a great day.

Thank you Marley and thanks, all of you for participating in today's call.

We're talking with you again to review the results for the full year ended on December 31, 2023. Some time around late February 2024, again accurate time have a great day.

And the conference has now concluded. Thank you so much for attending today's presentation you may now disconnect.

And the conference has now concluded. Thank you so much for attending today's presentation. You may now disconnect.