PORTLAND — A biotech company is seeking some help from the city to bring and keep the cows home.
Councilors on Monday had a first reading of a tax increment financing proposal from Immucell Corp., a publicly traded company with headquarters at 56 Evergreen Drive, off Riverside Street.
“It’s a piece of a complicated, four-legged stool,” Immucell President and CEO Michael Brigham said Monday. “It is good to have the city say, ‘We want you here.'”
The 12-year TIF would allow Immucell to recapture 65 percent of the increased property tax valuations for the first 11 years on company land at Caddie Lane, where it plans to build a facility to manufacture an innovative drug to treat mastitis.
The last year of the TIF would return 30 percent of the increased valuation to Immucell, for a total of $374,000 over the life of the TIF. The city would earn $231,000 in new tax revenue, according to a memo from city Economic Development Director Greg Mitchell.
Production of the drug, called Mast Out, will also bring jobs, Brigham said. A vice president of operations has been hired, and 13 more jobs with pay ranging from $63,000 to $105,000 will be added.
A second council reading, public hearing and vote are expected Sept. 7.
The city would also earn tax revenue from equipment installed at the 12,600-square-foot manufacturing site. Brigham estimated construction costs at $3 million, with $14.5 million in new equipment.
“It is not just building a warehouse,” he said.
Mastitis in dairy cattle can force farmers to discard milk from the sick cows, Brigham said. Immucell has gained initial approval for Mast Out, which treats mastitis as it is discovered and will not require farmers to dump milk.
“This changes the practice of treating mastitis and ignoring early infections,” Brigham said.
Mitchell estimated Immucell has spent $11 million in research and development on the drug. Brigham said development has taken 10 years. Because Mast Out involves milk consumed by humans, it is subject to oversight by the U.S. Food and Drug Administration, as opposed to the U.S. Department of Agriculture.
Before the new plant can operate, it also needs FDA approval in the final step to approve Mast Out for the market. The company hopes to have Mast Out on the market in 2019, after building the manufacturing plant and obtaining final FDA approval.
“At the end of the day, the biggest challenge is the FDA,” Brigham said. “The bar is a whole lot higher.”
To fund the expansion, Immucell raised $5.3 million in equity and added $4.5 million in debt to go with the city tax relief.
“We are putting our cash and future cash into it,” Brigham said.
Immucell has been on Evergreen Drive since 1993, and earns 90 percent of its revenues from First Defense, which treats calf scours – diarrhea in newborn calves – by orally adding needed antibodies.
Company sales have grown in the last 18 months, and Immucell used its own capital to expand production at the current location. The key to expansion to meet demand was adding more machinery to freeze-dry cheese made at the plant to separate the antibody, Brigham said.
Expansion also came as the company built a pilot plant to develop Mast Out. It would not meet FDA standards for consumer production, Brigham said, and the company prefers a separate location for operations with FDA oversight.
Immucell has drawn interest from other cities, notably Kansas City. Brigham said offers of land and the proximity to the cattle industry were potential benefits, but Portland is still home.
“This is our dirt,” he said, walking on the land Immucell bought in December 2015.
Immucell President and Chief Executive Officer Michael Brigham stands near a tank used to make cheese that eventually produces antibodies to treat calves. Portland-based Immucell has doubled its production in the last year to meet demand.
First Defense, which generates 90 percent of Immucell’s revenue, treats newborn calves for diarrhea that could be fatal.