ImmuCell Corp. hopes investors ultimately will see the benefits of a move to sell additional shares to help the company grow.

The Portland-based animal health products maker said it is offering for sale 1.1 million shares of stock to fund a production facility for a new product it is developing, a novel treatment for mastitis in dairy cows. The shares are priced at $5.25 each, far lower than the $7.74 at which the company’s stock was trading when the announcement was made late Thursday.

If successful, the public offering, which closes Wednesday, would generate about $5.3 million for the company after fees, and it would dilute the value of ImmuCell’s current pool of 3.1 million outstanding shares by roughly one-third.

Shareholders responded quickly to news of the planned offering. After the first hour of trading on Friday, the value of a share had fallen from Thursday night’s closing price of $7.74 to $5.60, a loss of about 28 percent. It rebounded slightly and ended the day’s trading at $5.87.

ImmuCell intends to use the net proceeds from the offering to build and equip a facility that will produce nisin, the active ingredient in the company’s mastitis treatment, called Mast Out. Mastitis is inflammation of breast tissue, which afflicts lactating dairy cows. Existing antibiotic treatments render the milk unsalable temporarily, causing a loss of revenue to the farmers.

Mast Out, which is still awaiting approval by the U.S. Food and Drug Administration, would be different because nisin is a naturally occurring substance that already is approved for use as a food preservative in the U.S. Milk from cows being treated with nisin still could be sold.

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ImmuCell’s flagship product, called First Defense, is a natural treatment for scours, which causes diarrhea and dehydration in dairy and beef calves. The product has been selling well, but company President and CEO Michael Brigham said having a second major product would take ImmuCell to the next level.

The strength of First Defense sales had to be weighed against the risk of pursuing the development of Mast Out when pricing the public offering, Brigham said.

“On the one hand, First Defense is selling like crazy,” he said, “But on the other hand, Mast Out is a big investment that is still several years out.”

While the offering would decrease the value of existing shares in the short term, Brigham said it is part of a long-term strategy to boost the company’s sales and diversify its product offerings.

“What this does is help us grow,” he said.

ImmuCell is one of a handful of publicly held companies based in Maine. It trades on the Nasdaq exchange under the symbol ICCC. The company was on its way to having a banner year in the first nine months of 2015, with sales up 40 percent from the previous year. Net income for the relatively small company for the first three quarters of 2015 was $924,000, and revenue was $7.5 million.

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Its fourth-quarter earnings report has not yet been released, but the company estimated its total sales for the year at $10.2 million.

ImmuCell shares increased in value by 47 percent in 2015, making it the best-performing Maine-based stock for the year.

Widespread drought across the U.S. that has boosted the price of cattle contributed to ImmuCell’s recent growth, along with increased sales efforts, Brigham has said.

 


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