ImmuCell Corporation (ICCC) Earnings Call Transcript & Summary

Good day and welcome to the ImmuCell Corporation Annual Shareholder Meeting. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Michael Brigham, President and CEO of ImmuCell Corporation. Please go ahead.

Okay. Thank you, Betsy. It's just a moment after 9:30. So let's jump in and get started. Good morning stockholders and other invited guests. I am pleased to welcome you to the 2024 Annual Meeting of Stockholders of ImmuCell Corporation in the form of both a dial-in conference call and an audio webcast. I am Michael F. Brigham, President and CEO and a Director of the company. I would like to now take a role call and introduce you to the other directors, officers and employees of the company who are participating remotely today. Gloria Basse could not join us. Bobbi Jo Brockmann is our Vice President of Sales and Marketing and a Director.

Present. Thank you, Mike.

Great, Bobbi. Bryan K. Gathagan is a Director.

Present.

Thanks, Bryan and Steven Rosgen is a Director.

Good morning, everyone.

Even David Tomsche was not able to join us today. He's our Chair of the Board of Directors. Paul Wainman, is a Director.

Good morning, everybody.

And also present with us today are the following employees. Gustavo Scaffa is our Senior Director of Quality.

Good morning.

Thanks. Gustavo, Beth Toothaker is our Director of Finance and Administration and she is the voting inspector for today's meeting.

Good morning.

And Betsy Williams is our Vice President of Manufacturing Operations.

Present.

And John, Dr. John Zinckgraf is our Director of Product Development.

Present.

Okay. Great, guys. Also with us today is Michael Anderson, a partner with the law firm of Pierce Atwood, the company's legal counsel.

Good morning, everyone.

Thanks, Mike. And also with us today is Tracy Heideman, a partner with the accounting firm of Wipfli, the company's independent registered public accounting firm.

Good morning, everyone.

Great. So I've asked some of the individuals who were just introduced to the -- make various motions necessary to keep the formal part of the meeting moving. After the formal part of the meeting is over, I would like to make some comments about the current status of our business. After that, we will have time for a brief and informal discussion to answer any business questions that you may have. Please note that only participants utilizing the dial-in conference call as opposed to the audio webcast, will be able to ask questions. That phone number is (844) 855-9502 for toll free or (412) 317-5499 for international access. I would now begin to conduct the formal business portion of today's meeting. I will ask the voting inspector to help get us started. Beth?

As evidence that notice of this meeting was duly given, I have here an affidavit of Equiniti Trust Company, the company's transfer agent, that notice of this meeting has been duly given and that a proxy statement has been furnished by the company to every holder of common stock of record as of April 15, 2024. There is also available for inspection a complete a list of the stockholders entitled to vote at this meeting. I will now report the number of shares held by persons attending this meeting in person or represented at this meeting by proxy. Out of a total of 7,760,885 shares outstanding and entitled to vote at this meeting, there are present at this meeting in person or by proxy, the holders of approximately 6,071,108 shares, which constitute more than 78% of the outstanding shares entitled to vote.

Thank you, Beth. On the basis of the figures just reported by the voting inspector, I declare the presence of a quorum at this meeting. As Secretary of the company, I will now present to the meeting the minutes of the Annual Meeting of Stockholders held on June 15, 2023. I have a copy of those minutes with me. Unless there is an objection, I will now entertain a motion to waive the reading of the minutes.

Michael, I move that the reading of the minutes of the Annual Meeting of Stockholders held on June 15, 2023 be and is hereby waived.

I second the motion.

Thank you, Steven and Beth. The proxy holder has voted in favor. Therefore, I declare the motion carried. I believe you have all received copies of the company's proxy statement containing a description of the matters which you were asked to consider and act upon for this meeting. We will now proceed to those matters. Beth?

We ask that any stockholder who wish to vote their shares in person rather than by proxy, contact the company in advance of this meeting to facilitate remote voting. I report that no stockholders contacted the company to vote in this manner.

Okay. Therefore, let's proceed right to voting. [Voting]

The first order of business is the election of directors of the company to serve until the next Annual Meeting of Stockholders and until their successors are elected and qualified.

I nominate for election Gloria J. Basse, Michael F. Brigham, Bobbi Jo Brockmann, Bryan K. Gathagan; Steven T. Rosgen, David S. Tomsche and Paul R. Wainman to act as the directors of the company until the next Annual Meeting of Stockholders and until their successors are elected and qualified.

I second the nomination.

Thank you, Steven and Beth. I declare the polls are now closed. I ask the voting inspector to report the results of the voting. Beth?

I report that each of the 7 persons nominated for the Office of Director has received a plurality of the votes cast at the meeting.

With that, I declare that Ms. Basse, Mr. Brigham, Ms. Brockmann, Mr. Gathagan, Mr. Rosgen, Dr. Tomsche and Mr. Wainman, are elected Directors of the company. The second order of business is to consider a nonbinding advisory resolution on the company's executive compensation program. [Voting]

I move the adoption of the following resolution resolved that the compensation paid to the named executive officers of the company as disclosed in the company's proxy statement pursuant to Item-402 of Regulation S-K, including the summary compensation table and outstanding equity awards table is hereby approved.

I second the motion.

Thank you, Steven and Beth. I declare the polls are now closed and I ask the voting inspector to report the results of the voting. Beth?

I report that of the shares present and entitled to vote on this matter, 4,013,133 shares voted for, 114,706 shares voted against and 294,212 shares abstained. The shares voted in favor of this nonbinding advisory resolution represents 66% of the shares represented at the meeting, including broker non-votes.

Thanks, Beth. With that, I declare that the nonbinding advisory vote on executive compensation has been approved and move to the third item of business, which is to consider and act on and it's the proposal to ratify the appointment by the Audit Committee of the Board of Directors of Wipfli LLP as the independent registered public accounting firm for the company for the year ending December 31, 2024. [Voting]

I move the adoption of the following resolution resolved that the appointment by the Audit Committee of the Board of Directors of Wipfli LLP as the independent registered public accounting firm for the company for the year ending December 31, 2024 be and it hereby is ratified.

I second the motion.

Okay. Great. Thank you, Steven and Beth. I declare the polls are now closed. I ask the voting inspector to report the results of the voting. Beth?

I report that of the shares present and entitled to vote on this matter, 6,041,186 shares voted for, 10,089 shares voted against and 19,833 shares abstained. The shares voted in favor of this ratification represent 99.5% of the shares that voted at this meeting.

Okay. Thank you, Beth. I declare that the proposal to ratify the appointment by the Audit Committee of the Board of Directors of Wipfli LLP as the independent registered public accounting firm for the company for the year ending December 31, 2024, has been approved. I believe that all stockholders received, along with the company's proxy statement, a copy of the company's annual report on Form 10-K for the fiscal year ended December 31, 2023. The annual report contains the audited financial statements for the year. I will be commenting on the current business of the company following the adjournment of the formal part of this meeting. There being no other business to properly come before this meeting, then this completes the formal business of the meeting. A motion to adjourn would now be in order.

I move that the meeting be adjourned.

I second the motion.

Okay. Thank you, Steven and Beth. The meeting is now adjourned. So next, I would like to make some comments about the current status of our business and then open the floor to an informal discussion and Q&A session. Please remember that you must dial into the conference call line as opposed to the live audio webcast to ask a question. Again, that phone number is (844) 855-9502 toll-free or (412) 317-5499 for international access. Before proceeding, I would like to ask our attorney to provide you with a disclaimer regarding any forward-looking statements made at this meeting. Michael?

Thank you, Michael. During the course of this meeting, company representatives might make reference to future events or expected future results or predictions about steps the company plans to take in the future. It is important for you to understand that these so-called forward-looking statements are subject to significant risks and uncertainties and are based on current expectations and that the actual results or outcomes might differ materially from those projected or anticipated in the forward-looking statements. The company's most recent annual report on Form 10-K and its most recent quarterly report on Form 10-Q contain more detailed descriptions of risk factors that make the company's future performance uncertain, as well as other cautionary statements that should be considered in connection with any such forward-looking statements. These will not be read aloud to you today but please note that copies of the company's 10-K and 10-Q are available online or by request to the company and the company encourages you to familiarize yourself with the type of risk factors that affect its business. To summarize, to the extent the company representatives make statements here today about future events or developments or expectations, please recognize that there are many, many known and unknown factors that could keep these from happening in the way that those representatives might suggest or predict. The company undertakes no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Okay. Thank you, Michael. Our updated May 2024 corporate presentation slide deck provides an overview of the company's business with a fair amount of detail. To view that, please go to the Investors tab on our website at www.immucell.com or call (207) 878-2770, extension 0 or send an e-mail to [email protected] for help, and Jen will be very happy to send the slide deck to you directly. So to keep things simple in this virtual meeting format, I'm going to just speak directly to Slide #9, which outlines our 3 most critical items -- action items. The other slides in the deck are in one way or another related to what we are doing to achieve these 3 objectives. We are recovering from some significant production contamination events. We think that the last 2 months of '23 and the first quarter of 2024 demonstrate the production output we can deliver with our increased production capacity. Growth can be difficult to manage at both the farm level and in the production plant. But we believe we are emerging from this very difficult period with a stronger production system from start to finish. We think that this work has well positioned us to clear the backlog of orders and meet customer demand. Second, we have hoped our third submission of the CMC technical section will be completed by the FDA. But as previously disclosed, the FDA issued a technical section incomplete letter to us just about 1 month ago. Having investigated the situation in depth, since then and communicated with the FDA, we issued a very detailed press release on June 5, clarifying the current status. In summary, once all inspectional observations at the facilities of our drug product contract manufacturer are cleared, we plan to make a fourth submission of the CMC technical section addressing some observations that we believe are not complex. As soon as the CMC technical section is completed by the FDA, we plan to implement our previously disclosed limited distribution control launch of Re-Tain. We are very hopeful and excited to have the opportunity to see if we can begin to revolutionize the way that subclinical mastitis is treated in the dairy industry. With that, let's now move to the Q&A session. Again, only participants utilizing the dial-in conference call as opposed to the audio webcast will be able to ask questions. Let's pause just a moment to allow the operator to assemble the roster.

[Operator Instructions] The first question today comes from [ Frank Gasper ] who is a private investor.

Yes, good morning Mike and all the other directors. And as much as it's a stockholders' meeting, I want to address something about the stock. It's at multiyear lows. And in particular, I guess, the Board has kind of set a value at the equity at a rather low level by selling stock, as you indicated from the last conference call. I don't even know if you can comment on that.

Yes, a little bit, Frank. I mean it is disappointing to see the current market price. It's definitely a priority that we work on every single day. So coming out of the first quarter, I do see 2 events that investors are not pleased with. The gross margin earned on sales of [ first events ] was not adequate, always has been and continues to be a top priority to fix that. I do anticipate some very detailed disclosures on that progress and that plan with the 2Q filing on or about August 13th. And in my brief comments, I did also discuss this FDA situation, very frustrating. I did mention we anticipated an approval. I think that would had a much different market reaction. But we have to work through this final stage here, as I said, with that inspectional observations at our contract manufacturer. More directly to your question about the ATM, we do and will continue to make disclosures on that quarterly in our filings with the SEC of activity. I can just comment at a higher level, in general, the ATM, I think, was a very good vehicle for us to put in place. It gives our Board the opportunity to evaluate opportunities in respecting the cost of dilution and evaluating that against the benefit of certain investments. But -- so we just continually evaluate the current market and look at the ability to raise money at different prices versus the expected return from the investments of several, I should mention -- I'd like to mention at this point that several capital expenditure investments have been paused. I'd love to get them back in place. They're important for capacity -- further capacity expansion beyond the $30 million that we have reached, going forward. But -- that's #1. And #2 is the question on aseptic fill. We have paused that investment as well to replace the contract manufacturer. And we just look at those opportunities and what return that could bring to the investor versus the cost of dilution. And I think, again, it's a good vehicle that we can be careful and very reactive to current market situations. And a little bit of a vague answer, I would say, Frank, because I think my best public answer is activity per quarter in each of the forward filings with the SEC. But for sure, as you would and we do also, continue to try and balance that cost of dilution versus the lost opportunity cost on the investments that we have, the opportunities in front of us. Does that help, Frank? We see from the screen that we may have lost Frank. So Betsy, is there another question?

[Operator Instructions] There are no further questions at this time.

Okay. Frank, if you're there, I'd give you a last call here but I think I'm going to move forward. Betsy, nothing from Frank? Okay. So okay, I see that there are no more questions. And this concludes the informal portion of our meeting. Thank you all for attending this virtual meeting. I look forward to speaking with many of you again to review our second quarter financial results on or about Wednesday, August 14. Be well and be safe. Have a great rest of the week.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.