Q3 2020 SIGA Technologies Inc Earnings Call

And then I guess.

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Welcome to the Seeger business update call.

Before we turn the call over to seek a management. Please note that any forward looking statements made during this call are based on management's current expectations and observations and are subject to risks and uncertainties that could cause actual results to differ differ.

Differ from the forward looking statements for a discussion of factors that could cause results to differ please see the companys filings with the Securities and Exchange Commission, including without limitation. The Companys annual report on form 10-K for the year ended December 31st 2019, and its subsequent reports on form 10-Q and form 8-K.

Thank you for taking the time to join today's call today I'm joined by Dan lots, our CFO and we are pleased to have this opportunity to provide a quarterly update on our achievements and upcoming objectives. On this call I will provide a business update and Dan will provide a financial update I'd like to start this call by acknowledging the pandemic.

Which we recognize it's something we're all still navigating together with regard to the COVID-19 pandemic, we continue to monitor its potential impact on our business and upon the general population. Our thoughts are with those who have been dramatically impacted here in the U.S. and around the globe by this devastating disease and with all those on the public and private sector, who are working tirelessly to.

Develop the tools to help bring this pandemic under control.

I'd sneak up we continue to be fortunate that the pandemic does not adversely impacted our business in any material was that in.

In fact, we continue to perform well and grow during this challenging period, which is primarily due to the incredibly hard work of our employees and partners to find effective ways to ensure we accomplish our goals well predominantly working remotely.

Because performance and growth in 2020 are evident on multiple fronts. The operating front the business development front end the regulatory front.

On the operating front, we have been delivering tepeaca on a timely basis under the 19th see BARDA contract in September we delivered approximately 134000 courses of oral t. pockets of the strategic national stockpile or EPS enough. This.

This brings total oral teapot FNF deliveries for the first nine months of 2022, approximately 251000 courses, which is reflected in the 10-Q financial results. Additionally, we delivered another approximate 112000 courses of worlds he pops to the SNS an October this delivery will be.

Reflected in the fourth quarter financial results.

And my MA filing in Europe includes indications for treatment of smallpox cowpox monkey pox and vaccinia complications.

We plan to file the same set of indications with health, Canada. When that application is filed as soon as late this year.

Subsequent to these filings we plan to pursue similar label expansion discussions with the F D a and the appropriate time.

With respect a regulatory activity and supportive domestic initiatives I'd like to briefly touch on the post exposure prophylaxis and Ivy programs.

With respect to the post exposure prophylaxis programmer Pep it continues to be an important development program in that it addresses the likely use of world tea pots for a majority of people in the event of a smallpox outbreak.

As such the Pep program is an important element in the overall discussion with the U S government about the merits of increasing the size of the S. N. S. We will provide a status update for this program on the next quarterly update in the first quarter of 2021.

With regard to the I V program is noted earlier in this call we expect to file the I V N D. A with the U S. F D. A in early in 2021.

From a public health perspective. This program is an important supplement to oral tee box as it seeks to ensure teapots would be available to those too sick or unable to swallow and oral capsule.

Finally, with Varda support so you get continues to conduct development work on a liquid suspension pediatric formulation of T. Pax that would be that would be important to serve the population not covered by the current label those under 13 kilograms, and those who are unable to swallow capsules.

At this point I would like to turn the call over to Dan for the financial update.

Next bill.

Three nine months ended September 30th 2020, she gets revenues approximately $44 million and $87 million respectively.

The third quarter approximately $41 million in revenue relates to the delivery of approximately 134000 courses of royalty pox to the strategic national stockpile or S. N S.

For the nine months ended September 30th approximately $78 million of revenue relates to the delivery.

<unk> 251000 courses of royalty parts to the S N S.

And approximately 2 million relates to the delivery of courses of royalty pox, So the Canadian military.

Operating income, which is clues costs in connection with the term lend retirement.

Interest expense interest income taxes and adjustments to the fair value of the Warren is approximately $33 million and 58 million for the three and nine months ended September 30th.

2020, respectively.

An income through the three and nine months end of September 30th 2020 is approximately $24 million and $36 million respectively.

And turn fully diluted EPS was 31 per share and 45 cents per share respectively.

September 30th.

Cash balance with the company was approximately $79 million during.

During the third quarter Tigger repurchased approximately 900000 shares of it's common stock for approximately five $6 million.

As of September 30th.

Company has cumulatively repurchased this year approximately three 7 million shares of it's common stock for approximately $22 million.

Looking beyond the financial results as of September 30th.

We expect to continue our momentum with respect to procurement activity within the U S and internationally.

Nine states.

I labored approximately 112000 courses of <unk> in October.

This product delivery will be reflected in the fourth quarter financial results.

As such total deliveries of royalty passed under the 19 keep arda contract are expected to total approximately 363000 courses for the calendar year 2020.

Holding an annual revenues of approximately 113 million adults.

Yeah, I'm 2020, and 19 cheap already contract is up to 414 million of procurement related option too.

Painting for future exercise by Bart.

With regard to the international market.

Public Health agency of Canada.

Or P. H H E announced in October it's intend to purchase up to 30000.

Two courses of cruel cheap box within five years as specified in the advanced contract Awards notice.

3700 courses to be delivered by March 31, 2021.

A cumulative total of 18500 courses are expected to be delivered by March 31st 2023.

And an additional 14800 courses can be delivered after March 31, 2023 subject to option exercise.

It's still mentioned earlier.

P H a C a contract and the contract issued.

Canadian military in April in total what position Sega cumulatively deliver up to approximately 46000 courses abroad.

Royalty epoxy candidate over the next five years, if all options are exercise.

If the ph AC contract is executed at pricing.

To the pricing of the Canadian military contract and cumulative deliveries would generate revenues up to approximately 43 million if all the options are exercise.

This concludes the financial section of the call at this point I would turn the call over to Phil.

Thanks, Dan in closing I want to reiterate that we believe that the achievements in 2020 in combination with goals. We are pursuing for the future provide a bright future for Sega we will continue to pursue a full range of avenues to create value, including continued deliver a royalty box courses under the 19 see BARDA contract person.

Are you a stockpile expansion to cover path.

Pursuit of additional international sales for Meridian and international regulatory approvals to support those sales.

[laughter] approval for label expansions for tea pots to include Pep Another orthopoxvirus is.

Expanding and supporting ongoing oncology collaborations for tea pots and leverage our capability for new formulations and products.

This concludes our prepared remarks, and we will now begin the Q&A session.

Thank you.

At this time movie now conducting a question and answer session if.

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[noise] once again as you May press Star one to ask a question at this time.

Here's that I'm going to use it will have maybe.

As much as 150 million by the end of the year.

In cash.

Any thoughts of what you might do with that.

So as we've talked about before we have a authorized share repurchase program in since March of this year, we repurchase 22 million of stock 3.7 million shares of stock. So we've certainly been active under that authorized share repurchase plan. We also continue to look.

At our their assets products that we could layer on our platform to also help us continue to grow the business. So we look at those and then we look broadly capital management on an ongoing basis, you know to look at the best way, we can return value to our shareholders. So certainly our board and our management team continued.

Evaluate that and we think at 22 million in progress as a good first step on an active share repurchase program and will continue to look at that.

Well I mean on the you.

You seem to be price constrained on your purchases last quarter.

Is there a price constrained on that.

So we look at a number of factors as we said when we authorized to share repurchase program that our prospects for <unk>.

And exercises R capital that we have the price all of the items are considered as part of a share repurchase programs.

No because they were so he's 62 days of trading missile last quarter.

Only about 900000 shares it wasn't room and insurance per day.

Anyway.

That's all I had for this just conference call and look forward to the next one.

Good luck guys.

Thanks, So much walking I appreciate you dialing in and asking questions.

Thank you are.

Our next question is from the line of Teddy Green a private investor. Please just you a few questions.

Uhm, congrats and a quarter, so and then I'd like to see those numbers I can see what we can.

Anticipate in the fourth quarter also let the completion of the first got some exercise cause that's supposed to do what that was my first question to Harper is rigorous too the potential second option exercise in 19 C contract.

Could we sort of or should we expect it to be the delivery. The same as in the person is divided up into four different parts or could it be done an entirely different matter.

Yeah. So tiny good did to talk to you and thanks for joining so your correct. The the the the number nine was divided into for the government has not asked us to divide content into four parts and as you can see we we essentially exercise almost all the delay.

He is under nine you know in pretty short order of this year. So I I don't have insights if the government by asked us to change that but as of right now it is still Ah one Quinn for the entire $112 5 million.

Okay, and then cause I'm just looking at your deliveries back in 2014.

Into 20th so keen on December 2014, It was 600 milligrams until it was a test it up.

So how confident are you in receiving a an announcer for the second option exercise.

In the next couple of months do you expect something anticipate something in the first quarter.

That's what I'm I guess I'm curious about right now.

Yeah. So I I appreciate the precision of the of the question around you know when exactly it would be option exercise given the nature of these contracts with the government given the way the government works I tend to think a little longer term around that that they have stated they want to maintain 1.7 million courses.

As we've shown in our management presentation over a five year period there.

Glad to do four options to maintain that we're now down to four years and three options and as you point out we provided deliveries in 2014. So it would it would it would expect there would be expires next year part of it is driven by the U S government budgeting process. So the U S government has the approve.

A federal budget and so last year. What we saw was there was a continuing resolution for a number of months that wasn't actually cleared until March of this year. Once a federal budget is approved it takes sometimes amongst even two months for the federal budget to work its way into the operating divisions and then that allows.

Places like the S N S and BARDA actually issue contracts with the new money. They have so part of the answer to your question has to be when will there be a federal budget approved part of the answer. Your question is is around how fast can BARDA exercise that they are working on covid, but we're certainly optimistic that we will we will see another ops.

And exercise so that we can continue to read delivered to the S. N. S. Just as we did this year, we are planning and manufacturing product in anticipation of that to make sure. We can deliver on future international contracts on domestic contracts et cetera. So we want to be ready for that we supply.

For the one yesterday Oh no. That's okay. That's actually that's a great answer because they do have a lot of detail and actually what I was able to read from that is that correct.

Perhaps the Christopher Johnson exercise when they made the announcement to purchase.

Or or provide you know for the act a pharmaceutical ingredient. It then took there was a big lead time and it sounds like he might not need that lead time. This this time around that you have product ready and it could be delivered much quicker at the option is exercise is that an accurate <unk> and what you said.

Yeah. So we're certainly manufacturing product in anticipation of future delivery. So yes, that's certainly okay. Perfect. That's that's that's excellent and another one at a question uhm.

You said that you are expecting one international order within the next three months.

D.A. before they bought in advance for a couple of reasons, one the theoretical or the scientific rationale for no interference with the GENEOS vaccine is very high there is no real scientific reason that it would increase here. So we don't anticipate that.

And second I go back to our FDA Advisory Committee meeting, where most public health experts said look that's the way it's going to be used and if that's the way it's going to be used product would be used a lot faster than the way the government had contemplated at and even if you go back to our original 2011 contract. There was discussion of Pep and it's a need to increase the stockpile should.

It would be annual orders.

Got it and.

Do those kind of considerations tie back to budget and funding or is there any anything.

Anything from a negotiating standpoint or anything else that would kind of explain that.

It is as our colleagues at Meridian who've been doing this for a very long time say it every country just has its own style and bureaucracy and how they like to do things. It is astounding how in the U.S., we have BARDA, which has kind of a unified approach to these things and other countries there are not.

Standardized places sometimes its the military buying sometimes it's a public health group that made by normally commercial items and this is unusual for them to do so it's really just a function.

Of the the business processes that are inside each country that that result in these types of approaches there.

There was an announcement a few months ago that for example, Europe is thinking about putting together a BARDA to kind of do this type of work having learned some things from the COVID-19 pandemic. It's early days on that but it would be nice if if countries start to realize especially with the COVID-19 pandemic that having a centralized place that thinks about these things build.

Stockpiles manager stockpiles that could certainly be good for us as we go forward. So were encouraging that an educated countries on on how that can be done.

Got it.

So can you talk.

A little bit more expansively on the cash balance in the use of cash.

Two I understand the share buyback plan and everyone sees that it was barely execute on this quarter.

Just a little bit more about why and especially in light of the fact that as someone else already asked.

Cash balances is is going to grow its kind of you know become meaningfully larger number so.

Shareholders have a right to understand management's point of view.

On that I think in more detail, but you've expressed to date.

So I appreciate the question Matthew I know you have asked that before we certainly appreciate that.

That we have a number of uses for cash there's certainly the active share buyback program. We do look for assets that would be accretive that we could layer on to our business. We do need to manage cash for operations as I mentioned, we do manufacture product as we go forward and I will say sort.

At a high level with the board we look at all potential uses for cash that's been discussions about share buybacks and other.

You are tend to be a lumpy. So we had to take that into account as you think about time, they give cash usage.

Which is one one more question with a company blacked out from share repurchase during the quarter for anything other than the typical blackout periods.

No.

[laughter] thank God.

Thank you. That's just finally if reached the end of a question and answer session and this will also concludes today's conference. Thank you for your participation have a wonderful day.

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