ImmuCell enjoys spoils of success as demand for calf protector exceeds supply

Maine-based ImmuCell ($ICCC) announced Tuesday that sales in its first quarter skyrocketed 49% year over year to $3.1 million, with the majority of the boost coming from a 62% increase in sales of First Defense, a medicine that protects calves from a disease called scours. The company swung from a net loss of $13,000 in the first quarter of 2014 to a net profit of $479,000.

It was ImmuCell's most profitable quarter since 2003, and investors applauded, pushing shares of the company up 33% to $7.54 after the market opened on Wednesday.

But there was a bit of bad news in ImmuCell's good news: The demand for First Defense has created a $1.3 million backlog of orders. CEO Michael Brigham said during a conference call with analysts after the earnings release that the company is investing in building its manufacturing capacity, but that the improvements won't be completed until early 2016.

Sales of First Defense likely benefited from a supply interruption that affected a competing product made by Eli Lilly's ($LLY) Elanco animal health unit. But when an analyst asked during the earnings call exactly how much of ImmuCell's sales boost came from Lilly's shortfall, and what the impact will be if the rival product comes back on the market, Brigham said he didn't have enough information to provide an answer. "That product has been available stop-and-go on a spotty basis over the years," he said. "So without an official position from [Lilly], I don't know what their strategy is."

As ImmuCell scrambles to meet the demand for First Defense, it is also working hard to diversify its product line. During the first quarter, the company announced positive results of a pivotal trial of First Defense to prevent rotavirus in newborn calves. It is also developing a new product called Mast Out, a treatment for mastitis, a common disease among lactating dairy cows. The company hopes to earn FDA approval for Mast Out in 2017, Brigham told analysts.

ImmuCell will have plenty of competition to contend with in the mastitis market, too. Among the players in that market is Integrated Animal Health, an Australian company that recently set up shop in the Kansas City Animal Health Corridor.

Brigham remains optimistic. "All in all, we are pleased with the continued momentum and the consistent sales growth of our First Defense product line and the continuing progress we are making towards the FDA approval of Mast Out," he said during the earnings call.

- here's the earnings release (PDF)
- access a transcript of the earnings call here