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<SEC-DOCUMENT>0001193125-05-126258.txt : 20060518
<SEC-HEADER>0001193125-05-126258.hdr.sgml : 20060518
<ACCEPTANCE-DATETIME>20050616111619
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-05-126258
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20050616

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			IMMUCELL CORP /DE/
		CENTRAL INDEX KEY:			0000811641
		STANDARD INDUSTRIAL CLASSIFICATION:	IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835]
		IRS NUMBER:				010382980
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		56 EVERGREEN DR
		CITY:			PORTLAND
		STATE:			ME
		ZIP:			04103
		BUSINESS PHONE:		2078782770

	MAIL ADDRESS:	
		STREET 1:		56 EVERGREEN DRIVE
		CITY:			PORTLAND
		STATE:			ME
		ZIP:			04103
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML><HEAD>
<TITLE>SEC RESPONSE LETTER</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">May 20, 2005 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">Mr. Jim B. Rosenberg </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">Senior Assistant Chief Accountant </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT
FACE="Times New Roman" SIZE="2">Securities and Exchange Commission </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">Division of Corporation Finance </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">Washington, D.C. 20549 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT
FACE="Times New Roman" SIZE="2">Mail Stop 03-09 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">RE:</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">ImmuCell Corporation </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">Form 10-K for the fiscal year ended
December 31, 2004 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">File No. 001-12934 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">Dear Mr. Rosenberg: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">I have reviewed your letter dated May 9, 2005. We appreciate your comments and look forward to working with you to facilitate the Commission&#146;s review of the
Company&#146;s filing. I will respond to your comments in the order outlined in your letter. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2"><U>Critical Accounting Policies, page 18</U> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">1. We did not disclose these items, principally because the financial amounts in question are not material to our financial statements or related disclosures. Product
sales returns aggregated less than $3,000 per year during each of the three years ended December 31, 2004. We provide for a 50% account credit on expired product, but our product generally has a two-year shelf life, resulting in minimal returns. Bad
debt write-offs aggregated less than $5,000 per year during each of the three years ended December 31, 2004. This information is presented to investors in summary form on Schedule 2 &#150; Supplemental Valuation and Qualifying Accounts on page F-21.
We do not offer our customers cash rebates or other forms of rebates or allowances. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">a.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The amounts are so small and our historical experience is so consistent that we do not see a need to consider other likely assumptions, ranges or other types of sensitivity
analysis. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">b.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">We have disclosed that our estimates are based on historical experience and that our primary product, First Defense<FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><SUP>&reg;<FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></SUP><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></FONT> has a two-year shelf life and is subject to a 50% return value for expired product.
Although we do not actively monitor levels of inventory in the distribution channel, we do not offer inventory loading incentives and our ongoing review of customer sales does not indicate that customers are buying quantities in excessive amounts
(which could yield higher returns). We generally ship on the day of order and encourage customers to order only quantities needed to meet current sales. We believe that price changes from competitors and the introduction of generics and/or new
products would not have a material impact on this expense or balance. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">c.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">We do not use external sources or third-party market research data in determining such accruals. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT
SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">d.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Not applicable (see b. above). </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">e.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">We believe the summary information for the allowance for doubtful accounts presented in Schedule 2 on page F-21 is adequate to meet the requirements of investors and consider the
table that you suggest for other items to be not applicable due to immateriality, as discussed above. </FONT></TD></TR></TABLE>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Jim B. Rosenberg </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">f.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">As discussed above, the Company&#146;s experience has been that none of the adjustment items has a material effect on gross revenues. </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">In light of the above, the Company requests that the Commission allow the Company to clearly
specify in its next filing that it does not offer cash rebates or similar incentives. The other items discussed above are not material. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">2.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">We have capitalized and are amortizing the $965,000 payment to Nutrition 21 in accordance with the provisions of SFAS No. 142, <I>Goodwill and Other Intangible Assets</I>. In
addition to the discussion on page 18 of our Form 10-K, we also refer you to additional disclosure in the notes to the financial statements, specifically Note 2(e) &#150; Summary of Significant Accounting Policies &#150; Intangible Assets on page
F-8, and Note 10(a) &#150; Licensing and Sale of Technology on page F-19. Additional background and details of our transaction with Nutrition 21 are included in a Form 8-K filing made on November 17, 2004. </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">The November 2004 payment to Nutrition 21 resulted in the Company obtaining
a fully paid-up, perpetual, exclusive, world-wide license to develop, manufacture and sell Mast Out<FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>&reg;<FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></SUP><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></FONT> and other Nisin products within a designated field of use. In our view, a product rights license clearly meets the definition of intangible asset contained within SFAS No. 142 (&#147;an
asset that lacks physical substance&#148;), is consistent with the discussion beginning with paragraph B28 of that pronouncement, and is comparable to the examples cited in Appendix A thereto. It is also consistent with our understanding of current
industry accounting practice, including our own past practice as described on page F-8 of our Form 10-K. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">ImmuCell made a $1,000,000 payment to Nutrition 21, based on an arms-length negotiation with that company. As part of the transaction, we received a small
amount of Nisin inventory which we valued at $35,000 based on its commercial value. We allocated the remaining $965,000 to the license. In terms of the underlying business decision, our judgment was that a one-time payment in that amount was
reasonable in light of our then-existing, contingent financial obligations to Nutrition 21. These obligations included the prospect of future milestone payments and royalties from us, as described in detail in the November 17, 2004 Form 8-K filing.
We also took into account how the transaction might benefit us in the context of a proposed licensing deal we were negotiating with Pfizer (which was finalized on December 21, 2004). In fact, our October 21, 2004 draft term sheet with Pfizer
included a condition that the Company &#147;&#133;complete its acquisition of rights from Nutrition 21&#133;&#148; </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">You also inquired about the amortization period selected. Although the license is perpetual and has no contractual term, we believe it has a finite
&#147;useful life,&#148; as defined in paragraph 11 of SFAS No. 142. That paragraph also guided our selection of the initial term of amortization. Specifically, the benefit of the Nutrition 21 payment is most closely associated with our ability to
enter into and perform under the related Pfizer agreement. Our current estimate is that Pfizer should be in a position to complete product development and make related FDA/EU applications by the target date of December 31, 2007. Straight-line
amortization was chosen because it will result in a proper matching with the $1.5 million </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Jim B. Rosenberg </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT FACE="Times New Roman" SIZE="2">payment received from Pfizer in December of 2004. We understand that this estimate is subject to
future change. In accordance with SFAS No. 142, in future periods we will assess this intangible asset for potential changes in carrying value, whether due to changes in the amortization period or method, impairment indicators, or other factors.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2"><U>Statement of Operations, page F-4</U>
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">3. The promotional merchandise about which you inquire consists of items like
hats, shirts, jackets, pens, note pads, coffee mugs and other items that advertise the name of our products. It is classified as a selling expense because it helps us to get veterinarians and producers to carry around and talk about the names of our
products. We fund this program because we believe that it helps sales. The promotional merchandise is not delivered at the time of sale of our product. There is some (vague) correlation between sales and the amount of merchandise received, but not
all customers receive merchandise and there is no contractual obligation tying the distribution of this kind of promotional merchandise to the purchase of our products. We purchased less than $10,000 of promotional merchandise during 2004. We
anticipate that we might distribute about $12,000 worth of merchandise in 2005 based on sales levels achieved in 2004, but with no contractual obligation to do so. Any reclassification would not have a material impact on either product costs or
product selling expenses (and would have no impact whatsoever on net income). </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT
FACE="Times New Roman" SIZE="2"><U>Note 7. Segment and Significant Customer Information, page F-17</U> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">4. We operate in one business segment, that being the development, manufacture and sale of products that improve animal health and productivity in the dairy and beef industries. We disclose that one customer accounts
for more than 10% of our sales and accounts receivable. Our sales are further broken down into domestic and foreign sales. We believe that we have only one group of similar products, based on our understanding of Paragraph 37 of SFAS No. 131. The
products in this group of animal health products for the dairy and beef industries are more fully described beginning on page 1 of our Form 10-K. Therefore, we respectfully request that the SEC withdraw its request that we amend our Form 10-K for
the year ended December 31, 2004 to provide even more detailed disclosures. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">* * * </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">As requested, I confirm that the Company
is responsible for the adequacy and accuracy of the disclosures in our filings; that SEC staff comments, or changes to disclosures in response to staff comments in the filing reviewed by the staff, do not foreclose the Commission from taking any
action with respect to the filing, and the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Mr. Jim B. Rosenberg </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">
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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">I trust that you will find this information responsive to your request. At this time, subject to your review and
acceptance of our comments, we do not anticipate amending our Form 10-K filing for the year ended December 31, 2004. Please let me know if you have further questions or if there is anything else that you would like from us at this time. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">Regards, </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">Michael F. Brigham </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT FACE="Times New Roman" SIZE="2">President and CEO and </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:2%; text-indent:-2%"><FONT
FACE="Times New Roman" SIZE="2">Principal Accounting Officer </FONT></P>
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