Q4 2020 SIGA Technologies Inc Earnings Call
Greetings and welcome to the Seeger business update call.
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Before we turn the call over to seek of management. Please note. The any forward looking statements made during this call are based on management's current expectations of observations and are subject to risks and uncertainties that could cause actual results to differ from the forward looking statements.
She could does not undertake any obligation to update publicly any forward looking statement to reflect events or changed circumstances. After this call.
For a discussion of 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 31, 2020, and its subsequent reports on form 10-Q and form 8-K.
I would now like to turn the call over to your host Dr. Phil Gomez CEO of so you could technologies. Please go ahead Sir.
Thank you for taking time to join today's call today I'm joined by Dan luck Shire, our CFO and Dr. Dennis Hruby. Our CSO. We're pleased to have this opportunity to provide of quarterly update on our achievements and upcoming objectives. On this call I will provide a business update Dennis will provide an R&D update and Dan will provide a financial update.
We'll then be happy to take any questions I'm pleased to report on an outstanding year for <unk> for the year ending December 31, 2020, we reported approximately of $125 million in revenues as we began the resupply of the $1 7 million of course, he bought the stockpile with the U S government and as we made our first international delivery of oral <unk>.
Fox in connection with the international product delivery I'd like to highlight that over the last 12 months inclusive of the public Health Agency of Canada. The contract awarded in early 2021 $47 million worth of international contracts have been issued for the future of delivery of royalty Pax 17.
The 17 million of which relates to firm commitments on the remainder of subject the option exercise in.
In light of <unk> strong operating and financial performance, we were able to repay our term loan in full in March 'twenty 'twenty earlier, the maturity and our board of of our board of directors authorized the $50 million share repurchase program under which we repurchased approximately $28 million worth of shares in 2020, which amounted to more than.
5% of shares outstanding as of when the share repurchase program started in early 2020.
Of course of the state the obvious 2020 was not a year that anyone anticipated given the COVID-19 pandemic for.
From a strictly business perspective, one key impact of the pandemic has been heightened uncertainty with respect to the timing of certain procurement activity.
For the most part, whereas the company you have done a very good job of navigating the uncertainty.
One area on which the direct or indirect impact of pandemic related uncertainty has been magnified pertains to the timing of the international market builds for all of T box is.
As background government officials and departments across the world, who we and our partner Meridian work with in terms of stockpiling conversations and decision making on.
<unk> usually also of the same people on departments, who are exquisitely focused on responding to the myriad of complications of the pandemic.
And sometimes health security government departments in response to these new challenges are being restructured to meet the near or long term needs of pandemic response and preparedness as such we believe the result of the pandemic over time will be two fold as it relates to our business in the near term. The pandemic will continue to subject to the risk of international business development activities coming true.
Louis on slower than anticipated in some cases something that we expect will continue in 2020 one per.
The pandemic, we believe that international governments will be better situated in terms of resources experience and personnel of the fully appreciate the importance of health care security preparedness.
On the value of that oral teapots provides in that context.
As such we believe this post pandemic environment will have a net positive impact on our international business development success.
Importantly, I want to emphasize that the delay we've experienced with respect to an anticipated international order as noted in our last investor call does not change our long term view of the international prospects for T. Part with regard to the aforementioned anticipated order, we still expect the order to occur and conversations with the customer indicate that the order is on track.
Albeit at a slower pace than planned.
As I have said on previous calls international sales of complex and country specific often with long lead times of with many parts of the government required to act in concert to purchase our products and although one we have seen some delays due to the government staff rightfully focused on COVID-19 responses and two we have seen current government budgets across the world being dedicated to co.
The 19 responses, we remain optimistic about the potential for additional sales this year.
That being said, we're also continuing to dedicate ample resources to our R&D efforts and have made significant progress on this front over the past year.
We've advanced efforts to achieve regulatory approvals outside the U S for the use of key parts of a variety of orthopods diseases and to treat the.
During different stages of these diseases life cycles. We're also continuing to explore uses of T box on several disease areas and I will now pass the call of the Dennis the run through these updates in more detail Dennis.
Thank you Phil I'm pleased to have the opportunity to update our investors on the progress being made by the cigarette research and development team.
Phil mentioned for all T box, we continue to advance our efforts to achieve regulatory approvals outside the U S book the E M. A N a and the Canadian N D. S applications, which were submitted last year had been validated by the respective agencies and are now undergoing for review.
We're responding to any comments or questions that arise in the timely manner in order to expedite the review process as much as possible and we hope to achieve those regulatory rules and of late 2020, one or early 2022.
As a reminder of the MAA and NDA applications are requesting an indication for <unk> for use against Orthopoxvirus is which is a broader indication than the current FDA approved label. This is important as conversations with a broad range of countries as well as Ngos.
Indicate that many government officials are thinking broadly about the best way to pursue our security and the therapy for a broad range of ortho pox viruses, such as smallpox vaccinia cowpox and monkey pox could resonate with this type of preparedness strategy.
We have seen monkey pox cases continued to be an issue in central Africa and cases outside of the Africa, and the U K, Singapore and Israel. It's important to note that we continue to get requests from around the globe to use T box to treat individuals infected book back.
Cowpox and monkey pox on the compassionate use basis, we were reviewed those requests on a case by case basis separately. We are working on the collaboration that would allow us to reach a broader number of individuals', who developed monkey pox and Central Africa and expect to announce that effort later this year.
On the FDA regulatory front, we continue to progress of our efforts to achieve regulatory approval of oral T box for post exposure prophylaxis.
As we have discussed previously the strategy for this program has the ball as we have talked with the FDA to get feedback on our plans and I'm pleased to say, we believe we have an agreement on the path to the ultimate approval together with our colleagues of the U S Department of Defense final protocols for the remaining two clinical studies have been done.
The op and shared and obtain the consensus with the FDA having.
Having now received agreement from the FDA with respect for our protocols, we're working towards potentially launching both studies concurrently as soon as the third quarter of this year, depending on a series of factors, including the general status of clinical trial of availability in light of the COVID-19 pandemic.
As a quick reminder of the two human studies, we are planning for Pep are one of a study to evaluate whether there is any interference with the ginnie arms vaccine and too and expand the safety study. We anticipate these studies will be completed in 2022 with data to support the Pep indication.
We're confident based on the mechanism action of T box, it will not interfere with the Jennie O. The vaccine. Moreover, the outcome of these studies are not required for the purchase of T box doses per person as we already have an FDA approved product and stockpiling may occur in advance of the label expansion if the government determined theirs.
The port.
With regard to I V. T box. The NDA is nearing completion and will be submitted to the FDA as soon as April if all goes well the U S. FDA submission for IV T box should receive an approval in the early 'twenty 'twenty two time frame.
Addition to the Pep and IV programs for key parks. We also continue to progress our pediatric formulation, which is of powder for reconstitution prototype formulations have been developed and tested for dissolution and sort of your ability versus the oral <unk> capsules, we're selecting the formulation with the best properties and on.
We're preparing to initiate human clinical trials shortly to evaluate and optimize pharmacokinetics performance. We've shared on development plans for these products of the FDA and they had no comments.
Lastly, we continue to explore new avenues for the use of keep box outside of auto parts of the diseases. We have collaborations with several companies in oncology that you do.
Wise vaccinia virus and the product strategy given.
Given the challenges of advancing products in this field to late stage development. This may still take time.
Continue to be interested in the long term for potential of T box to support these therapies, but recognize that most of the current investigational products are in early clinical testing and it will take time to determine what if any market potential there is for T box on this regard.
Yeah on T box, our efforts to develop the second smallpox antiviral S. T 357 continue in collaboration with the National Institutes of health, we're conducting of medicinal chemistry campaign to improve the chemical attributes of the molecule to produce a lead candidate for advancement into development, we continue to seek.
Additional outside funding to accelerate the separate.
Finally, let me close by thanking the segue of staff for their tireless efforts and tremendous contributions and these difficult and unprecedented times they've pivoted the working remotely and have continued to perform efficiently effectively and cooperatively. So.
That's the projects on time on schedule and simultaneously execute on her federal contracts and commitments.
First of all thanks, and second I T team for for providing us with the tools of the successful I'll now pass the call over to Dan who will discuss our fourth quarter and full year of financials Dan.
Thanks Dennis.
Three and 12 months ended December 31st 2020. She gets revenue was approximately 38 million the $125 million respectively.
For the quarter, approximately 112000 courses of royalty Pax, which delivered to the S. In net.
Generating revenue of approximately $35 million for.
For the year, approximately 363000 courses of royalty pox.
Where does the labor to the net.
Resulting in the recognition of approximately of hydro and $13 million of revenue.
Revenue for the year also includes approximately $2 million of revenue in connection with the delivery of royalty Pax, the Canada, reflecting concentration of our first international sale.
Operating income, which excludes costs in connection with the term loan retirement interest expense interest income taxes and adjustments to the fair value of the warrant was approximately $27 million and $85 million respectively for the.
The three and 12 months ended December 31st 2020.
Net income for the three and 12 month period was approximately $20 million and $56 million respectively.
In turn fully diluted EPS was <unk> 26 cents per share for the quarter and 71 cents per share for the year.
At December 31st the cash balance for the company was approximately $118 million.
During the fourth quarter, she got repurchased approximately 1 million shares of its common stock for approximately $6 $7 million.
For the full year 'twenty 'twenty. The company has cumulatively repurchased approximately four 6 million shares of its common stock for approximately $28 $5 million.
As Phil mentioned is more than 5% of outstanding shares of the company as of the beginning of the year.
Looking beyond the 'twenty 'twenty financial results.
Up to $459 million of T Parkes of procurement revenues tied to existing contracts.
Most of which is currently expected to be earned over the next for years.
These revenues would come for the 19th the BARDA contract and the Canadian contracts. The 19 see part of contract is up to $414 million of procurement related options remaining for future exercise by BARDA.
Okay.
And there is up to $45 million of revenues tied to the Canadian contracts for all of T pox.
With regards to the $45 million of revenues related to Canada.
Only $3 million of the revenues are tied to the recently announced contract issued by the public Health Agency of Canada P hack the.
The remaining revenues tied to the contract with the Canadian military.
The <unk> contract specifies the firm commitments for the purchase of approximately $17 million of royalty Pax by March 31st 2023.
The remaining of course is under the <unk> contract are scheduled to be purchased after March 31st 2023 and are subject the option exercise by T hack.
We expect to do the labor of approximately $10 million of royalty pox, two P hack in 2020 one.
With the initial delivery and acceptance in March of approximately $3 million of where all of cheap Hawks.
As a quick reminder, the Canadian contracts you bet of awarded the Meridian Medical technologies under the international promotion agreement that was.
Entered into by the parties in 2019.
This concludes the financial section of the call at this point I will pass it back to Phil for a brief summary.
Thanks, Dan.
I want to underscore that we strongly believe that our achievements in 2020 of them with respect to key Pax in combination with the additional formulation label expansion and geographic expansion goals. We are pursuing provide a bright future for seagate, we have a combined 459 million of Teapots procurement revenue is tied to the existing contracts that we anticipate.
It will be mostly recognized over the next for years.
We anticipate building on the space with additional international sales off.
So we believe the Pep program supports the consideration of a larger S on that stockpile, which in turn would result in larger U S government procurement contracts, while revenue from the government contracts can be lumpy. We believe that the earnings power of the tea parts of business is substantial as evidenced by the 2020 financial results.
It will not be without challenges however, as ive discussed previously our current contract for procurement of royalty boxes with BARDA and we are now post FDA approval of this means we will ultimately be transitioning to a contract with the strategic national stockpile and we're working with the U S government on offshore option exercises under the BARDA contract and long term procurement.
Planning it is however challenging to do this during the start of the New administration and in the COVID-19 pandemic. We are focused on ensuring the stockpile is maintained at 1.7 million of courses and our management and our manufacturing product for delivery this year.
Given these realities I expect deliveries to begin in the second half of 2021.
As the earnings generate cash we will continue to examine the best use of our cash, including continuing share buybacks as well as potential investments or acquisitions that provide an opportunity to grow earnings and leverage our successful platform.
Before I close out with some goals for 2021 I'd like to share a brief corporate update I would like to welcome Edison group as our new Investor Relations Advisory firm Edison Group as a global Investor Relations firm that has unique expertise and global reach which we believe can help secret continue to broaden its footprint worldwide and enhances visibility with key audiences.
We look forward to working with Edison.
In summary, we will continue to pursue a full range of avenues on 'twenty 'twenty, one and beyond the great value, including the continued delivery of royalty box of courses under the 19th the BARDA contract pursuit of U S. Stockpile of expansion to cover of Pep pursuit of additional international sales through Meridian and the international regulatory approvals to support those sales <unk>.
Seek approval for label expansions for T box to include pass on other ortho pox viruses expand and support ongoing oncology collaborations for key parts and leverage our capabilities for new formulations and potential new products.
This concludes our prepared remarks, and we will now begin the Q&A session.
Yeah.
Thank you.
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One moment, please where we now poll for questions.
The first question comes from Max Jacobs with Edison Group. Please proceed with your question.
Hi, guys. Thanks for taking my call I just wanted to know.
Just a couple of quick questions I wanted to confirm that there there are no additional animal requirements for the the Pep study.
This is Dennis the is that is correct. We've had the conversation with the FDA and then confirm the no additional animal studies required.
Okay, Great and then just another quick question, which is just.
Yeah in terms of the stock repurchase program I mean did you do any repurchasing during the first quarter of 2021.
Dan I'll hand that for Ya.
Yeah.
Sure.
We are we have continue that program in the 2021 we're.
We're not going to share any details, but are consistent with what we've been doing are in the in 2020, we have continued into 2021.
Okay, great. Thanks for taking my questions.
Thanks Mac.
Thank you.
As a reminder, two of our audience. If you would like to ask a question. Please press star one on your telephone keypad.
Yeah.
Our next question comes from Joaquin Horton of private Investor. Please proceed with your question.
Hi, Phil.
They're working for like they ask you I like to ask you. The question is can you give us any guidance as to what are your first quarter all of it looked like a sales wise.
My recollection is we have quite of bit of PAH.
All that being delivered to our cash.
Canada this quarter.
And.
Probably some continued R&D.
Revenues from.
Yeah.
So of Joaquin. Thanks, so much for that question.
On the R&D expenses and reimbursements, we obviously have continuing work there and we will of reimbursements Dan did describe.
Right.
One delivery that we recently planned to do here in March on that we're not giving overall quarterly guidance on revenue, but Dan do you want to reiterate the delivery that you did highlight in the script.
Certainly so for the year, we expect it to deliver $10 million worth of product to Canada of the 10 million, we expect to deliver a $3 million of product of Canada in the first quarter.
Okay. So.
It was my understanding from the of mill.
Military contract, we were supposed to deliver.
Significantly more in the first quarter of this year.
Is it am I wrong with that.
Okay.
Dan kind of hand it over.
Yeah sure yeah. So.
Yeah, I believe the military contract specify that we made our initial delivery and then they were looking toward our for.
The regulatory approval.
Within Canada before are resuming deliveries.
So in other words, you had to wait for the approval in Canada first.
That's how they're set up right now the reserve the right to the just but at least as of the time of the issuance.
We're looking to work on approval.
Before receiving additional deliveries.
Yeah.
Okay. Now there's this next question has something to do with.
We've all watched the government in action here with the Covid.
And I think two of them.
Performs.
Fairly well getting the vaccine.
How do you think that they would perform.
With such a small stockpile of if something should happen.
And the way of smallpox I mean are they just planning to cover Washington D C or.
What about the rest of the country.
And so Joaquin I agree with you on that I think COVID-19 and an outbreak of a of the virus that we've talked about previously as not as infectious and not as deadly having simply $1 7 million of courses does not seem like a reasonable amount to be able to cover and what would be some.
Each of deadly outbreak and as you know we've actually debt given the fact that it would our drug would be used ultimately in a prophylactic way and that's why we're pursuing approval of it.
So we certainly agree with you on that the government has many threats that they assessed and we continue to talk with them on it but I think it's an excellent point that you make.
Thank you Okay. The next point is.
Being out here.
Just the public.
And we've got on an approved product.
The sell of the government what does it take to <unk>.
Having an approved product to sell the the public in case.
We can't depend on the government to provide.
Plus with <unk>.
Some T box.
Yeah. So that's a I appreciate that question of Joaquin as we've senator of filings our label is for the strategic National stockpile only currently on.
It requires a couple of things we have a very lean supply chain that had some additional.
The additional items that of normal commercial supply chain would have that we didn't have to do as we went through after the approval, namely the realization which is putting.
Our unique numbers on each of the the containers. So we would have to do that.
We'd have to work with F D a.
To get a label on the a product that would allow for a broader prescriptions.
Prescriptions of it I think our strategy in Europe of going more broadly being able to not only look at smallpox, but monkey pox cowpox cutbacks has cases smoky box has cases allows us to have that broader conversation and certainly our plan is to ultimately look back with the U S. F D. A.
As we go through our regulatory strategy and I do agree with you. It is something that we do want to do we think it is helpful. And you know I think the last year and Covid has really highlighted that it's important for.
The people to have access the things because you can't always depend on the government for everything so I think that would be a more robust health security strategy for us as the nation to happen not only the government, but the private sector etcetera, etcetera able to access.
Countermeasures and be able to ensure they have access to them. So I. Appreciate your questions. Thank you so much.
Thank you.
Thanks for asking.
Thank you.
Our next question comes from Matthew Mark with Jet Capital. Please proceed with your question.
So I apologize if I missed this on the call.
In your in your opening but can you review what the prospects are for international orders in the coming quarters outside of.
The performance.
Canada.
Yeah. So we what we highlighted was as we talked about last year. We had another order debt, where you were anticipating coming from other country that was delayed based on our initial estimate last year.
The feedback from the customer was that was due to their resource focus on on COVID-19. So we continue to have conversations I would say Matthew with multiple countries.
It is especially difficult to predict right now because we need to have both access to those people, which we have to do remotely and we need a variety of folks on each of those countries. The all agree and allocate dollars for purchase so the guidance that we're giving as we are confident we will have additional orders this year, but we do have the monitor at close.
Lee and we certainly have had delays like the one I described from last year. So the the the nice thing that I think we saw last year was we were extremely impressed with Canada both of their military and civilian organizations worked in parallel with COVID-19 to execute on our.
Meaningful stockpiling of T box, and we'll certainly continue to work with our colleagues at meridian to make it as easy as possible for us to be able to bid.
Bid on and provide product.
Two customers internationally and then the last part as Dennis mentioned, we are getting.
Getting our health Canada approval late this year early next year and our MAA review late this year early next year.
Not all countries require approval before sale of for example, Canada has taken a deliveries before approval, but there are signs of some countries, especially in Europe that we'd like to see that so we think that's also an important step we're taking this year as we advance of the sales.
Thank you.
The second question the.
The federal government has he knows on the middle of the very large expansion of its budget and the very large investment and preparedness.
In addition, the administrations.
And Congress are working on it a further expansion of the budget and the investment in infrastructure.
The infrastructure.
Among other items later this year.
Is it a realistic prospect to think that any of that activity will be to an expansion of the stockpile in 2021 in the U S.
Okay.
So yeah I think you highlight one of the key factors around the ability of the U S government to expand the stockpile, which is budget.
Because they do have many products they want to buy and they've certainly articulated they need more budget to do that.
So we do think this is a critical year, both because there have been a.
The draft. The legislation for example for the most recent Covid relief package that allows the procurement of countermeasures for COVID-19, and other pathogens that might cause pandemic. So we'll have to wait and see what gets passed but there seems to be a growing recognition that the COVID-19 is what's here now, but we do have to prepare more broadly.
And Theres also a rethink of what preparedness means and how the securities. So I.
I would I would agree that there is some optimism about the budgetary.
Potential to increase which which does help us and others in this field to do it. The other requirement is for the government make that policy decision and look at the stockpile size and actually have the group that makes those decisions get together and agreed to by the government. So it's the it's a diverse group of people we.
We continue to have conversations with them educate them provide analyses et cetera to make sure. They understand the implication and we'll work very hard on that.
I know this is not a pleasant answer as with the international It is the government and its hard to predict exactly when they're going to act on things.
So we continue to educate them and we'll have to see how their process develops it is something that would be hard to see in months not years, but we'll continue to push on it and I do think we have of window here with COVID-19 to certainly get people to understand the broader implications of not only <unk>.
But economic impact, which is so critical and as Joaquin pointed out in the I certainly agree theres just not enough on the stockpile that would really be needed. If there was an outbreak. So thank you.
Yeah.
Thanks.
Thank you.
There are no further questions at this time, ladies and gentlemen. This concludes today's web conference you may now disconnect your lines at this time.
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