Q2 2020 SIGA Technologies Inc Earnings Call
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Greetings and welcome to the she could technologies second quarter 2020 financial results Conference.
Hello.
This time all participants are in listen only mode. A question and answer session will follow the formal presentation. If he would like to ask a question you May press star one on your telephone keypad, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, today's conference is being recorded.
Before we begin todays call and turn it over to management. Please note that any forward looking statements made during this call. It based on management's current expectations and observations and are subject to risks and uncertainties that could cause actual ripple results to differ.
Forward looking statements for discussion of these factors that could cause results to differ please see the company's filings with the Securities and Exchange Commission, including without limitation. The company's annual report on form 10-K for the year ended December 31st 2019, and its subsequent reports on form 10-Q and forms 8-K.
At this time I'd like to turn the full floor over to Mr. silk almost to begin today's conference. Please go ahead Sir.
Thank you for taking the time to join todays call today I'm joined by doing what Shire CFO and we're pleased to have this opportunity to provide an update on the significant progress we made in 2020 and our goals for the remainder of the year.
On this call Deanna will be providing an update on our second quarter and your today 2020 financial result, recent deliveries will keep us the BARDA and the Canadian military and expectations related to the procurement contract with BARDA and the Canadian military military. Additionally, I will provide updates on our anticipated regulatory filings for 2020, and an overall business up.
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Before I hand, the call over to Dan I would like to provide an update on you got in the context of the continuing covert 19 pandemic.
It's evident in daily life, the global pandemic continues to impact our nation's healthy at our economy. Our talks with so many that had been dramatically impacted here in the U.S. and around the globe by this devastating disease and with all those in the public and private sector, who are working tirelessly to develop the tools to help bring this pandemic under control.
The pandemic has continually reminded us how impactful in infectious disease outbreaks can be to help them the economy and it has illustrated some of the challenges and responding once an outbreak occurs and the importance of preparedness.
Pets SIGA, we fortunately have not been adversely impacted in any material respect by the pen.
As evidenced by a recent deliveries the BARDA and the Canadian military we continue to manufacture and deliver t. pocs on a timely basis I'd like to express my gratitude for our employees for all their hard work to make this happen.
For our programs that a clinical trial, such as the post marketing commitments required by FDA approval oral teapot and potentially the post exposure prophylaxis or pop program, we do anticipate potential near term delays due to the covert Nike pandemic based upon adjustments, but must be made to protect the safety and welfare participants clinical trials.
Type in their partners, we do not expect any such delays would have had material impact on the overall timeline or requirements of these programs or any potential regulatory approvals.
On the call I will provide an update regarding progress within our business at this point I will turn the call over to Dan for financial.
Thanks, Phil.
Three and six months ended June Thirtyth 2020, she gets revenue was approximately 49 and 43 million respectively.
They did in these amounts is approximately 36, knowing your revenue.
They to be delivery of approximately 117000 courses for all cheap talks to the strategic national stockpile, We're SNS.
And approximately $2 million of revenue in connection with the World Ti package delivery to the Canadian military.
Operating income, which excludes costs in connection with the term loan to retirement.
Interest expense.
Interest income taxes and adjustments to the fair value of the war.
It's approximately 29 million and 25 million for the three six month ended June Thirtyth 2020, respectively.
Net income for the three and six months ended June Thirtyth 2020 was approximately 21 million and 12 million respectively. In turn fully diluted EPS was 26 cents per share at 15 cents per share respectively.
At June Thirtyth, the cash balance for the company was approximately $53 million.
During the second quarter, Seagate repurchased approximately 2.5 million shares of its common stock for approximately $15 million.
Looking forward, we expect to continue our momentum with respect to procurement activity.
Within the U.S. and internationally.
In the U.S. seek expects to deliver and approximately 246000 courses royalty pocs to the strategic National Stockpile. In addition to those courses recently delivered.
By April 2021, and such deliveries may occur in their entirety 2020.
He's deliveries of Georgia 46000 courses of all T. Pocs are expected to generate revenues of approximately $76 million.
In addition to these expectations.
And I didn't see BARDA contract, that's up to 414 million a procurement related options remaining for future exercise by BARDA.
With regard to the international market.
We'll discuss our overall progress on this front in a few minutes I.
As a general no.
We believe the contract with the Canadian military.
As a starting point for expanding or opportunities in the international market.
Under this contract that Canadian military has procurement options for the delivery of up to 12825 courses of royalty Pocs.
Try the value of approximately $12 million.
We are anticipating determined under these options to occur under the contract with Meridian medical technologies Inc.
After regulatory approval royalty, Pocs, and Canada, which we are targeting for 2021.
This concludes the financial section of the call at this point I'll turn the call ever just though.
Thank you Dan.
As you heard from dam the second quarter was important from a financial point of view I'd like to highlight that the second quarter represented an important milestone as we started delivering meaningful amounts of T. Pos.
That's an ass under the Nike BARDA contract, we expect to deliveries made in the second quarter to be the starting point us to definitely product deliveries to occur in the upcoming second half of 2020 years. The call. Furthermore, the recent deliveries are a demonstration of the importance of T. box to our customers and the ability of so you got to deliver value to our shareholders, including.
To purchase a $15 million worth of shares as part of our active stock repurchase plan.
Shifting gears I'm happy to report the good news extends to the international regulatory front I'm pleased to note that we filed for you may approval of T. Pos in late July. We believe this is an important step in positioning so you got for accelerating future you products sales of all T. Paul.
Please note that this is the first time, we've applied for a broader label indication for T. Pocs are application includes treatment of smallpox Cal Pocs Monkey Pox Index, India complications, we pay we plan to file the same set of indications with health, Canada late this year and to pursue similar label expansion discussions with the FDA into future.
As previously noted these international regulatory submissions are being pursued in support of international business development on this front, we continue to advance conversations with a broad range of countries and based on the current status of conversations. We believe prospects are good for additional international contracts indoor orders for oral T. Pops to materialize within the next steps.
Stepping back and looking at the broader international picture our comments on the last business update call are still very relevant as noted down the cobot Nike pandemic has slowed some conversations in the short term, but we believe it will increase focus on pandemic preparedness broadly which is good for T. box.
Before I my closing remarks, I'd like to briefly touch on the past and I'd be program.
With respect to tap it continues to be an important development program in that it addresses the likely uses of oral t. Pos where majority of people in the event of a small parts outbreak. We will provide updates on this program as we hit milestones in the coming years with regard to the Ivy program, we expect to file the IB M.D.A. with the U.S.S. yeah, either late this year early.
2021. This is an important programs and shirky pocs would be available to those too sick or unable to swallow in old capsule.
This concludes the business update for my closing remarks, I'd like to highlight that SIGA has significant financial momentum with the delivery of approximately 120000 courses of royalty pots and the second quarter and at least twice. This number of course is expected to be delivered in the coming near term.
Additionally, I'd like to note that as part of our $50 million share repurchase authorization, we pre repurchased approximately $15 million of our common stock in the second quarter, which amounts to total year to date repurchases of $16 million as of June Thirtyth in summary, we believe the future. He goes right and we will continue to execute.
On our strategy, which includes continued delivery of all teapot horses under than I can see BARDA contract expanding the U.S. stockpiled to cover Pat pursuit of additional international sales with Meridian medical technologies seeking approval for label expansions for T. Pocs to include Pep. Another ortho pox virus is expanding and supporting.
Going oncology collaborations for T. Bucks, and finally, leveraging our capabilities for new formulations and products. This concludes our prepared remarks, and we will now begin the queuing it especially.
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Our first question is coming from Paul Sanders much capital. Please go ahead.
Hey, guys. Thanks for the call.
And congrats on a good quarter and and all the progress you've made.
My question really is just a if you can provide anymore color sort of commentary around.
And an increase of the U.S. stockpile U.S. stockpile expansion presumably.
No for pet purposes, like you mentioned and really I would say with regard to kind of accelerating maybe the stockpile expansion before the Pep label expansion.
And I say that really just just obviously given the coping 19.
Pandemic, we kinda have Oh real life case study here of a virus and how quickly can spread and tell you just just from the numbers that I see we've got.
Almost 5 million cobot cases in about four months.
People are or are generally an agreement that the numbers probably around 10 times that amount. So you're talking about 50 million people for a virus that's anywhere from a third or half is contagious smallpox. So I guess I'm just kind of wondering the rationale and the government side that that $1.7 million.
Courses of T. Poxes is sufficient to really.
Provide much protection for for potential smallpox outbreak.
Hey, Paul so thanks. Thanks, so much for your question. So a couple of things are in response to that I think there's the short answer is as you know from our calls is we believe the 1.7 million would not be sufficient and especially given the concept of pep the stockpile should increase that process.
So is done with inside the U.S. government through threat to terminations. The 1.7 million was articulated our piece and the the method for that of course is not publicly disclosed by the U.S. government I would agree with you that there's a couple of things that are encouraging around potential future stockpile expansion that is the current epidemic has shown.
Exactly how impactful and infectious disease can be not only on health, but also in economy and ensuring rapid response that allows treatment of those that it would be too late to vaccinate would be an important part of that and having the flexibility to use path would be very important the second encouraging part I would say is that there is a recognition that we have not spent.
So sufficiently in being prepared to this day and has the budgeting process. These are going through the U.S. government. There are encouraging signs there's nothing that's been finalized yet, but we certainly believe that the spending in this space has not been commensurate with the threats that we face and getting us fully prepared and that is always a lens that the government has to.
Used at the end of the day as to how much. They can purchase so it is encouraging on the funding from the bottom line, though when I. Appreciate your question, we accelerate that we certainly have had conversations with leadership within the U.S. government that leadership, though is very focused on cobot. There's just no question there working round the clock in I wish I could say they have.
Bandwidth to do be assessments around smallpox I just wouldn't be optimistic on that in the short term, having said that we've seen great progress inside the government on that seems that diagnostics and therapeutics. So we standards are ready to have those conversation as soon as we can and finally I would reiterate but we do not have to wait for ultimate.
Google as we had previously would see Pocs. It was procured starting in 2011, and we started delivering in 2013 with a ft equivalent 28. So clearly we can deliver product previous to that so so appreciate the question Paul.
That's great yeah. Thanks for all of that that commentary and again congrats on a good color. Thanks Phil.
It's Paul.
Thank you. Our next question is coming from Joachim Horn of Raymond James. Please go ahead.
Hi, good quarter guys.
Well softness was have resigned from the board will that have any effects.
What's going on with the firm.
Hey, walking a good to talk to you in <unk> and I. Appreciate the question. We have actually filed an 8-K, we do have a new board member whose name is TV is the senior executive macandrews imports.
And think that Ed has as you'll see in the K a great background has been it the from a long time and has brought expertise. So we're very pleased with the board. We've got a great set of expertise there and so although Paul status was along any member and certainly great person. We believe we have the right skills on the board to execute on our strategy.
So we don't anticipate looking b.
A couple of other quick questions.
Shortly on the stock buyback.
Where are you able to buy any any stock and.
Since the ended the quarter.
So I'll hand over to Dan typically we don't comment on active or share repurchase thing, but Dan do you have any other comments overall on the stock repurchase program.
Yes, Hello, walking or so we did disclose or what we did for the quarter and what we plan to do is continuing to disclose a inner accused the activity. So right now we don't have a comment on a recent activity for July.
Okay.
And then a one thing on the as long as you're on the follow on the taxes, we have a tax loss carry forward.
So I see where we made a provision for taxes, but.
It doesn't look like we will be paying any or is that right.
Correct, we do have the deferred tax asset and so while you see that provision in the income statement you are correct and that that's really a bring down the tax.
Deferred tax asset on the balance sheet.
So is there any comments on our second molecules doing were.
Yeah. So what gives great question, we continue to collaborate with the NIH. It is preclinical. So it's early it's in lead optimization and as we get the points, where we get read outs on kind of a go no go where it goes next we'll certainly provide those updates but as of right now it continues to advance in Africa.
Cynical phase in the teams were focused on finding out do we have a molecule we did weaken a bit so we'll certainly provide updates as we.
Come to that those decision points.
Great Great quarter, guys will talk too soon.
Appreciate it working thanks, so much.
Okay.
Thank you. Our next question is coming from Teddy Green <unk> private Investor. Please go ahead.
Hi, guys I congratulate you on a quarter or look to see those numbers are very happy to see the share buyback also that you were hearing out there I'm very happy to see that a couple of good questions earlier and your question I had there are in regards to you know what a BARDA.
Yes, and I said about maintaining the stockpiled existence, that's about 1.7 million courses.
Notice or the house I passed an eight a resolution 757 or and also the Americas scored the current word but to incorporate et cetera and personnel stockpiling because this is Rick so.
Let's see if the government seems to want to guarantee that the content of the stockpile at function effectively.
And they don't expire so what I would like to know is Howe Barnes.
Daughter, and astronaut start looking at the courses that are expiring from the original contractor bitterly, which are more of a nuance version of that.
So today, it's a great question I. Appreciate it you had a couple of comments there I want to make sure I talk about and then and then answer your question. So the maybe I'll answer. The question you had at the end first so the government really only talk through there are peas in their procurement documents on statements.
Oh requirements and so in the RPT they've stated they want to maintain the 1.7 million courses.
We work closely with them and have ongoing conversations around that I don't think they talk exactly about you know what they have when and where in the specifics of it but but suffice it to say they stated there and path in their RFP our option exercise this year allow them to continue that and so we look forward to seeing that happened in the years.
The other point you brought up which I think is because it really important one is you know co. Good showed that the U.S. and that did not have a everything that we probably wish it would have had in retrospect, there's been a variety of people, including Greg Ral who is the path. That's an S director, who has repeatedly said in public interviews that.
Yes, and that's what's not fully funded that they had wanted to get additional products. They felt like they didn't have enough funding the assistant Secretary for preparedness responsible Catholic that said similar statements over the years and had said you know, we really need to fully fund that and what you point out is that at least in the house budget they've included some attend.
Phil to increase that funding substantially and make sure that we have a fully funded as an asset. We do think there's a there's a greater recognition in the policy makers that we don't want to be caught short again and that we have to not only look at what's in the sabal, what really should be there and have broader conversation. So we're encouraged by that and continue to work.
Through policy organizations and <unk> in our conversations to educate the stakeholders, including those on Capitol Hill in the administration of the importance of ensuring that everything's. There that we know is gonna be needed should we ever habit, Albert smallpox, which we know would be much more devastating didn't cobot. Unfortunately, so we have to be really well prepared thank you.
Great Oh, yes, I do believe that you know provides a very good fundamental backdrop for or your company in other companies in medical countermeasures I type two other quick questions. I Hope you can just answer them I should take long has the contract transition fully from project bar show to the SNS budget, yet and then.
What is the minimum amount at the time that she can needs to produce a pie core the other options.
So Ah Tony I'll answer the second question maybe for it.
I don't like this answer but on the lead times it it depends.
We've had a variety of conversations both with asper and quite frankly with people in capital held administration that it would be advantageous for industry and the government yeah. They were able to do options well in advance of when they needed to be delivered and so companies could plan well in advance <unk> start production after an order.
It was made you able to do delivery. The reality is the the the organizations within the government haven't caught up with their budgets to what they can deliver in place orders in advance. So would you saw we had an option exercise we delivered soon thereafter, and obviously, we do that and in consultation with the government, but they were there they're hamstrung because they have to wait until then.
He actually get their their funding every year. So I wish we could have a longer cycle time, we have enough supply chain the ability to forward place materials, whether their raw materials active ingredient and so we we are being proactive in managing our ability to manufacture and what we believe is it.
Response, a timeline to the U.S. government. So you know there's an answer that says if you went from a GETCO. We've said previously it's over year, but we know that we want to be responses to customers here in the U.S. and internationally. So we're proactively managing our supply chain like most pharmaceutical companies to make sure that we can be as responses as possible to customers.
Gotcha Okay.
And then and maybe other my first question up yeah on the up enough on so that's not visible to the outside world. It. It's a BARDA contract. So funding comes there they do negotiations internally and that's not disclosed we do anticipate.
In the long run as we've seen with other medical countermeasures, we would transition to an S.N.S. contract or under that contract would be for a longer time period. We've seen recently several issued for 10 year time period. So that's the type of contract we would like to move two weeks certainly started discussions on and so that would be our next.
Phase into your points that goes away from a the BARDA funding why not into the SNS side, so stay tuned on that development.
Okay, great. Thank you couldn't access and again congrats on the quarter.
Thank you. Our next question is coming from Andrew So Oh, the Southeast Creek. Please go ahead.
Hi, Phil Hi, Dan. Thank you for taking my question. Thank you for your excellent work on behalf of the company.
There have been some published reports, where Colorado researchers seem to be utilizing your nexidia virus in the development of a potential cobot 19 vaccine.
You have any thoughts around this research that's going on there and when do you think t. packs could play any sort of rule in light of the risks administering indexing of Iris.
Could possibly address coated.
So thanks, Andrew I'm not entirely sure the one you're referring to most of what I've seen I think there was a city of hope publication are using whats called backs in the HM modified zinnia on her up which is the virus used in the GENEOS vaccine as Dennis will explain my.
Better than either that's replication incompetent that's been specifically developed it was developed by the Germans as they quote unquote safer smallpox vaccine many years ago. It was passage so that it loses the ability to replicate so you don't have the risks associated with adverse event, if the Colorado researchers and.
I believe there's one company that's considering a replication confident vaccina then yes, we would have relevance to potentially the rescue therapy. The live ones. As you know however, do have higher probability for adverse events into historically not been used for prophylactic vaccine development, but I. Unfortunately, I don't know the specific one.
You mentioned, but we'll certainly look it up okay. Yeah. It was.
From what I saw was coming out of Colorado State University.
And I can like in Germany article and thank you very much and really thanks for a great quarter and on a wonderful.
Oh team are doing.
Appreciate it thanks much younger.
Once again, ladies and gentlemen, if you do have a question. Please press star one on your telephone keypad at this time.
Our next question is coming from Matthew Mark of Jet capital. Please go ahead.
Hi, guys.
Right.
Couple of questions I'm on the international side.
First did I hear you right felt it did you say you expect international orders.
Within the next six months.
Yes, we expect to have additional orders and or contracts within the next six months. We believe our conversations are progressing and so we hope to make continued progress on that front.
That's very very good to hear so fingers crossed or not.
<unk> <unk> are those orders going to require regulatory approvals do you think for the product or not.
So it's a mix as we saw with Canada. They did a smaller procurement upfront and then potentially larger after we do see countries that are apparently willing and interested in getting deliveries before regulatory approval and we've also had conversations with countries that want to wait until after.
A regulatory approval, we focused on the European application as our highest priority because Europe is where we've gotten some of that feed back a few countries have said they would not want to have deliveries orders until we get a DNA approval, but there's been other countries that have said they would so it's a mixed bag. We think we have a great package in the U.S. up the they'd be low risk.
For someone but it is up to their internal procedures.
Got it.
Thanks, very much best of luck and and thanks Hallmark.
Thanks, Matt.
Thank you. Our next question is coming from raw steel of our wheel investment management. Please go ahead.
Okay very nice quarter.
I'm aware Oh, the emergent biosolutions work on smallpox vaccine.
And and they worked things with the with the government also are can you just libraries are they a direct competitor or do they do something which is somewhat different from what seek it does.
Well, thank you Ralph pleasure to talk to you and I appreciate the the the question from you so.
Given the response to smallpox there are multiple what we call medical countermeasures that are important to mitigate the outbreak and so emergent biosolutions makes a vaccine called ATM 2000, which historically was used to eradicate smallpox if you get the vaccine before infection or.
Within a few days after it provides quite good protection. If you do not get vaccinated. However, as we've talked about smallpox has a 14 day asymptomatic incubation period, and so you can be asymptomatic you might have been exposed a after you've got the vaccine or you may not have gotten the vaccine and when you start to have fever effort.
14 days and go on to lesion, you up about a 30% chance of mortality. So at that stage only t. possible work, where the only after the approved therapeutic for smallpox and so it's very important to have a therapeutic because not everyone. We'll get a vaccine in time, because we're not routinely immunized against smallpox.
And so that's why the government in the U.S. is focused so much on a therapeutic and we're so pleased ours has a a good safety profile great efficacy in the animal models and so we're not direct competitors a we certainly are complementary in helping mitigate the devastating impact so the smallpox elsewhere. So thank you for the question.
I.
Gentlemen that brings us to the end of today's question and answer session.
Thank you for your interest in ticket technologies you may now disconnect. Your lines just talk off the webcast and have a wonderful day.
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