E Why Immucell Corporation Is The Easiest Double In The Stock Market

  • Immucell is an almost completely overlooked biotech stock; this is an unique research report, that includes an interview with the CEO.
  • Immucell offers next gen treatments in animal biotech, a market Wall Street is also completely overlooking.  
  • I also expect the FDA, based on Immucell’s excellent fundamentals and trackrecord, to give a final approval for their lead drug called Mast Out, which could make the share price go parabolic.
  • As a consequence, shares are trading far below fair value. I expect a quick double.
  • Continuous insider buying and no selling whatsoever spurred my enthusiasm.

An often very profitable investment strategy is spotting companies just before they are about to capture a significant market share in a large, unknown, underserved and perhaps totally new market.  Think land grab availability here. What also helps is that the investment community hasn’t discovered the stock yet. If you then determine that the flipside of the trade, downside risk, is limited thanks to fundamentals that matter like profitability, continuing quarter-to-quarter revenue growth and a stock priced far below fair value, you may have discovered a phenomenal buying opportunity. 

I believe I have spotted such an opportunity in Immucell (ICCC); a NASDAQ listed biotech stock that somehow never has sprung up on investor’s radar screens. While many biotech companies focus on human beings, Immucell has developed technologies that prevent and treat costly cattle diseases; an egregiously underserved market. While I think this company is an easy double just based on its current sales growth and financials, a very compelling element in this story is that Wall Street doesn’t know yet that Immucell has a probable chance of becoming the sole company that may commercialize a paradigm shifting treatment against Mastitis, today’s most significant cause of economic loss to the dairy industry. Wall Street also doesn’t know that the FDA already has approved the effectiveness and safeness, so there’s no doubt this drug works. All that’s left is the completion and submission of the manufacturing technical section, and if final market approval is granted, and the odds are it will, this stock could go parabolic.

The investment community doesn’t know this company even exists.

I could not find any research on this stock. There is no activity on the Yahoo message boards, no comments that matter on Investorshub, Twitter and Stocktwits, and no articles on this website or similar websites. Isn’t this remarkable for a Nasdaq stock? Either way, the result of the total lack of coverage: the share price trading in deeply undervalued territory.

What does Immucell do?

Immucell operates at the forefront of animal biotechnology, by having developed and selling innovative treatments that improve animal health and productivity in the dairy and beef industries. They sell an USDA approved product for calf scours called ‘First Defense’. The annual growth in sales and market share prove that the market continues to accept the superiority of this product. This is a profitable segment.

Immucell has also developed a technology called ‘Mast Out’ that addresses mastitis, today’s most significant cause of economic loss to the dairy industry. As of now, the company is in the endgame in the process of acquiring market approval by the FDA. The potential of Mast Out is huge, because this treatment is unique and vastly superior over today’s antibiotic treatments.  

First Defense: an unique and approved solution for calf scours

First Defense is Immucell’s approved solution for calf scours, one of the most common and costly diseases in calves, resulting from lack of sufficient protection from colostrum. The first 12 hours of a calf’s life are critical for antibody absorption. ImmuCell continues to be on the forefront of scours prevention technology by manufacturing and selling First Defense, the most popular scours preventive administered to calves. First Defense dissolves readily upon reaching the calf’s stomach, providing protective levels of antibodies to potential sites of intestinal infection.

Here’s the interesting thing: First Defense is the only product on the market that is proven to aid in the prevention of calf scours caused by K99+ E. coli and coronavirus, two major causes of scours. Immucell's financial statements show the sales growth of this product is nothing but impressive, as the market continues to adopt First Defense as a solution proven by the increase of the market share (approaching 30%). By some estimates the total cost to society in North America of calf scours sum up to $770 million, so there’s clearly plenty of upside for this product. This is for North America only, but everybody knows that calf scours are a global problem.

Another interesting observation is that First Defense could be used for related diseases.

Therefore, management has initiated new studies to obtain market approval for applying First Defense to other purposes like bovine rotavirus.

The enrollment of calves should be completed by now, making USDA (United States Department of Agriculture) approval possible in 2015, if positive results are obtained. I have no doubt they will, because First Defense has proven to be so effective. Obviously, new approvals would cause a good boost in revenue.

Mastitis: an underserved problem in today’s diary industry

Mastitis in the lactating dairy cow is considered the costliest disease to animal agriculture in the US and major dairy producing regions of the world. Annual losses are presently estimated to be upwards of $2 billion in the US alone, and more than $2 billion worldwide. These losses are comprised of losses in milk production, discarded milk, costs of replacement animals, labor, costs of drug, treatment, etc. Mastitis refers to an inflammation of the udder, most commonly caused by a bacterial infection of the gland itself. This disease manifests itself in one of two forms, ‘clinical’ or ‘subclinical’ mastitis. Clinical mastitis has overt symptoms; the udder warm or hard, milk visibly abnormal, with clots and/or flakes. This form of mastitis usually requires intervention since the abnormal milk cannot be sold and the animal could have complications if left untreated. This is the major mastitis market for antibiotic treatments, which is at least a $40 million market in the US.

Subclinical mastitis however is considered the ‘silent mastitis’ or the ‘silent thief’ stealing profits by reducing productivity, leading to spread of infection and increased physical and reproductive problems in the cow; its prevalence is 15-40 times higher than clinical mastitis. The problem is that it’s very hard to detect let alone to treat it. If you are able to detect subclinical mastitis, there’s the requirement to discard milk after treatment of the infected udder until the level of antibiotic residues in the milk fall to levels deemed safe for human consumption. This comes with a high economic cost. All currently approved antibiotics unfortunately have such a discard requirement, which can range from 36 to 96 hours after treatment. What the market needs is a treatment without this very costly milk discard. 

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Disclosure: The author is long ICCC.

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SecretCaps 5 years ago Author's comment

Last week, the company announced a great earnings report; again a quarter of growth and profitability. But even better, the quarter we are in right now is traditionally the best quarter in the year. Since they enlarged the production facility of First Defense and hired some new sales managers, I expect revenue to grow even stronger from now on. This stock is a no-brainer double imo, and a good potential triple.

Kate Hayden 5 years ago Contributor's comment

I'm very enthusiastic about this stock! Thank you so much for cluing me in about it. I live in wine country, but the people are very agrarian-minded and think I'm very smart knowing about it.

SecretCaps 5 years ago Author's comment
Marcy Brown 5 years ago Member's comment

This really sounds very interesting. Veterinary biotech never occurred to me but the potential does seem enormous! Thanks to bringing it to our attention.

Ryan Lizotte 5 years ago Member's comment

Great article, with clearly stated risks vs. returns. Should we wait for Wall Street to analyze before we jump in on it? A proper valuation won't hurt investing, it just might excite everyone a little more.