Q1 2021 SIGA Technologies Inc Earnings Call
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Could you speak a business update call during the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question answer session at that time. If you have a question. Please press the one followed by the four on your telephone.
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Star and zero as a reminder, this conference is being recorded before we turn the call over to keep it hadn't been 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 from the forward looking statements.
And it does not undertake any obligation to update publicly any forward looking statements to reflect events or changed circumstances. After this call for a discussion of factors that could cause results to differ.
The company's filings with the securities.
Mission, including without limitation, the company's annual report on form 10-K for the year ended December 31, and 2020 and.
And subsequent reports on form 10-Q and form 8-K.
I would now like to turn the conference over to Phil Gomez Chief Executive Officer. Please go ahead.
Thank you for taking the time to join today's call today I'm joined by Dan <unk>, Our CFO, Dan and I are pleased to have this opportunity to provide a quarterly update on our business and upcoming objectives. On this call I will provide a business update and Dan will provide a financial update we'll then be happy to take any questions. You may have the first quarter 'twenty.
And 21 reflects our continuing momentum for international sales, we delivered approximately $3 million worth of oral <unk> to the public Health agency of Canada in the first quarter and in April we delivered an additional $7 million worth of oral <unk> to PHH.
Supplementing these international deliveries, we are working towards further sales to one or more new jurisdictions in 2021 with the second quarter being the most likely scenario for the next sales.
And as general background on the international market.
I'd like to reiterate comments from the last Investor call. While we are currently having success and generating international orders. This year. We expect the pandemic will continue to subject to the risk of international business development activity is coming to fruition slower than anticipated and contrast post pandemic, we believe that international governments will be better situated and.
<unk> of resources experience focus and personnel to fully appreciate the importance of health security preparedness and the value that <unk> provides and that content.
And as such we believe that the post pandemic environment should have a net positive impact on our international business development staff.
And some we expect international sales and 2021 may be concentrated in the first half of the year and gain additional momentum in 2022.
With respect to the BARDA 19 fee contract. We continue to expect sales related to this contract based upon an option exercise to be concentrated in the second half of 2021 as the New administration leadership gets confirmed and COVID-19 response activities hopefully become less burdensome on the staff with whom we work on our programs.
Like many people here and the U S. We are encouraged by the progress and addressing COVID-19, especially the rapid rollout of vaccines led by our government partners at BARDA and the <unk> to HHS we.
We know this year has been extremely challenging, especially for them as well as many others, but support for the development and rollout of the vaccines, it's been an amazing accomplishment.
With regard to the pandemic, we continue to monitor its impact on our operations.
As a general comment where are we as a company have done a good job navigating the uncertainty of the pandemic the filing of our intravenous formulation of <unk> with the FDA announced this week is an example of continuous and steady progress toward our corporate objectives amidst the evolving environment.
And concurrent with the FDA filing process for IV <unk>, we have started commercial manufacturing for ICT Park with a goal of delivering this year approximately 20000 IV courses of key parts under the base period activities within the 90 day contract as referenced the revenue value of 'twenty with IV courses that $8 million.
As we look at planning for IGT pox, and the context of option exercises under the 19 key contracts. It should be noted that the production of COVID-19 vaccine has significantly impacted the availability of materials for sterile products.
This includes items like vials filters excipient and among other things.
And we will work with BARDA should be exercised options for IV <unk> in terms of securing necessary supplies and manufacturing capacity in the interim we are able to fully support the $1 7 million for stockpile with oral courses as long as we receive option exercises and timely manner.
At this point I'd like to take a few minutes and talk about our new partnership with simple therapeutics.
By way of background, there are a number of products that the U S government and seeking to support through development and procurement for the strategic national stockpile or an answer that.
One category is novel antibiotics to replace the generic antibiotics and the SNS for bacterial pathogen threats.
For example, and 2019 the U S government awarded a contract for a novel antibiotic, which potentially could be used for <unk> biodefense indication. This contract includes up to approximately $150 million and procurement funding as well as over $100 million of potential development funding.
Last year prior to issued a request for information or RFID for other potential novel antibiotics, which could potentially lead to a contract awards and similar to the awards made in 2019.
As such we have teamed with Cipla and to pursue a potential future RFP in this area as background surplus antibiotics cemetery is approved by the FDA and the U S for a commercial indication, but was supported by BARDA during its development for treatment of bacterial threats and the collaboration with Cipla and we are seeking to leverage our extensive expertise and <unk>.
Animal rule product development to support new Biodefense indications for <unk> and to be the prime contractor with the U S government if theres a contract award and turn Cipla brings to the table <unk> and extensive experience with manufacturing and a global supply chain and.
In addition to the near term focus on a potential RFP. We continue to look for additional opportunities to collaborate with cipla and other companies to bring needed products to the U S government.
I'll now pass the call over to Dan, who will provide a financial update and.
Thanks, Phil.
Earlier in the call, we expect international sales likely to be concentrated in the first half of the year and.
Sales to the U S government to be concentrated in the second half of the year following an option to exercise.
And as such product revenues for the first quarter reflect approximately $3 $4 million of international royalty Pax deliveries.
And already surpasses total international sales for the entirety of last year.
Total revenues for the quarter income.
<unk> research and development related revenues were approximately $4 $8 million.
Operating loss for the first quarter.
<unk> excludes interest income taxes and adjustments to the fair value of the warrant.
Approximately $2 million.
Net loss for the first quarter was approximately $1 million.
And in turn and fully diluted loss per share was <unk> <unk> per share for the quarter.
At March 31, the cash balance for the company was approximately $107 million.
During the first quarter sales.
And repurchased approximately 1 million shares of its common stock for approximately $6 $5 million.
And as of March 31, 2021.
The company has cumulatively repurchased approximately five 6 million shares of its common stock.
And the inception of the share repurchase program.
And March of 2020.
Looking beyond the first quarter financial results, there remains approximately $450 million of T box procurement revenues tied to existing contracts.
And most of which is currently expected to be earned.
Proximately over the next four years.
It is between March 31, 2021, and the end of 2024.
These revenues would come from the 19 key BARDA contract and.
And the Canadian contracts, but the 19 keep BARDA contract containing up to $414 million.
Chairman related options remaining for future exercised by BARDA.
And April the company delivered approximately $7 million of royalty talks to the public health agency of Canada.
Under an existing contract.
Such amount will be included in the second quarter financial results.
As a quick reminder, the Canadian contracts were awarded to 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 and the first quarter of 2021 and provide a solid foundation to continue to grow our business.
Approximately $450 million of key parts procurement revenues tied to existing contracts and we are working to build on this space a procurement contract with international sales and initiatives such as the simple collaboration I noted earlier and this call. Additionally, we believe the Pep program supports consideration of the larger rest of that stockpile, which in turn will result, and larger U S. Gulf.
And the procurement contract Mauro.
Moreover, as mentioned previously we also continued development of our liquid suspension and pediatric formulation of <unk> with the support of BARDA.
While revenue from government contracts can be lumpy, we believe the earnings power of this deposit business and substantial.
And as 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 diversify our business and leverage our successful platform.
Before I close out with some goals for 2021 and I'd like to share a brief corporate update and as many of you have seen in our proxy filing we have two long standing board members retiring in June and I'd like to personally thank Dr. Eric Rose and Tom constant and both of whom have served on speaker board from 20 years. They.
And they came to see go before the horrible events from 911, and the COVID-19 pandemic and thanks to their leadership. He has helped make the world and more secure place with a highly effective smallpox antiviral and in the U S. Stockpile, Our board and management team are dedicated to building on their legacy.
And some as we look ahead, we will continue to pursue a full range of avenues, and 2021 and beyond to create value, including continued delivery of oral <unk> courses under the 19 see BARDA contract per.
Pursuit of use stockpile expansion to cover Pep pursuit of additional international sales through Meridian and international regulatory approvals in Canada, and the EU to support those sales.
Seeking approval for label expansions for <unk> to include Tech and other orthopoxvirus it.
Expanding and supporting ongoing oncology collaborations for key parts.
And leveraging our capabilities for new formulations and potential new products.
This concludes our prepared remarks, and we will now begin the Q&A session.
Thank you.
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One moment please for the first question.
Our first question comes from the line of Maxim Jacobs with Edison Group. Please go ahead.
Hi, guys. Thanks for taking my questions.
Just wondering on the international deal that you mentioned that might be coming up.
Anything you could say about what the deal might look like.
Hey, Matt Thanks, so much for joining the call and thanks for the question.
Yes, there is not much we really can comment on this point until we get there I would say.
We continue to partner with Meridian.
Continue to understand the international market and what I mean by that is we.
And we understand that military and civilian agencies tend to think about these things separately. We also see that unlike in the U S where there was a large bolus of funds put in and some project Bioshield, which allowed for multiyear procurements, what we tend to see is people thinking about starting to procurement and having that be a bit of and.
Annual procurement, which allows them to build the stockpile over a number of years. So that's certainly what we saw in Canada and I wouldn't be surprised as we go forward to see that as other countries.
Develop.
I would say as I said and the last call.
And.
Agreements do take time and governments have many approval processes folks are focused on COVID-19 and many of the agencies, we work with but we continue to work closely with meridian and the countries to advance the sales and ensure that they have access to what we think is an important product. So stay tuned Max thanks for the question.
And wonderful that was very helpful and then.
Just one other question.
Anything you can say about the economics of the collaboration and what that might look like.
Yes so.
I think a key part of that collaboration is where both bringing a lot to the table.
Part of what the RFID and wants to do is develop these products for things like two <unk> anthrax and plague. So it requires animal rule development. So we think we bring some real expertise there and as I mentioned the plan there is for us to be the prime contractor.
And there's two parts of the contract is the cost reimbursement part so our investors that have been with US a long time know we get.
Reimbursed for R&D expenses, so we expect that to be there and the previous contract from 2019 awarded to another company that was about 100 million.
And so those tend to be net very slightly positive for us, but more importantly, there will be procurement and it will not be we don't anticipate the order of magnitude a key part the last contract was for about $150 million.
And certainly we will share the economics look slip below recognizing the substantial benefits to both of US will provide so it will be competitive so stay tuned as it gets released and we compete for it and then we will provide update on the economics going forward, but I hope that outline of the contract gives you a general sense of what the opportunity is we think it's meaningful but certainly.
Not anywhere near the opportunities and so that we have whats and box.
Yes that was very helpful. Thank you and Thats all my questions. So yes.
And for taking my questions.
Thanks, Matt.
Okay.
As a reminder, who wish to register for a question. Please press the one followed by the four on your telephone.
When you do have a question from the line of Teddy Green. Please go ahead.
Good afternoon guys.
Thanks for the press release, and the info you providing Phil.
And just to clarify again, you said that.
Another foreign order could come and the second quarter not from Canada.
That's correct Betty and thanks for joining and thanks for the question. So yes. This will be another jurisdiction outside Canada correct.
Okay and then.
And so I'd like here.
And put on there. So if you see say you see.
Yeah.
Our country order say the smallpox vaccine would it make sense for them to not order and antiviral or would it make sense for them to also have a smallpox antiviral and addition to the smallpox vaccine.
And Thats, a great question and <unk>. So we actually as we as we think about the market and certainly with our partners at Meridian, We think about a lot of variables, we actually think.
Our country the stockpiles of smallpox vaccine is more likely to also.
Purchase T pox and the reason I say that is it is the inertia of getting a country to really focus on such an important and spread it smallpox tends to be the bigger lift once they understand the threat, we're very confident they see the value and anti viral drug like key parts because they have certainly gone through the exercise of knowing it.
If smallpox emerged it would take a while to diagnosis a 14 day, it's symptomatic stage and there would be a substantial risk that people, even with a relatively rapid vaccination. So we actually think thats supporting indication.
There are potential purchase of peoples.
Okay. Thanks for that answer and I agree with that I would just like to then.
Clarify did see Bavarian Nordic did announce delivery.
Three unnamed European countries.
They're a smallpox vaccine so hopefully.
Those countries are.
Maybe looking at purchasing <unk>.
Obviously timing, it's hard with the pandemic, but.
And I feel pretty confident that those three countries theyre unnamed obviously, but would hopefully.
I'd be looking at purchasing <unk> and addition to.
And the smallpox vaccine.
I have another question for you and this is actually two questions for the 19th fee contract.
Let's talk about the IV first and I am just looking at Aspen.
Justification for budget request for fiscal year, 2021, and I will quote from them.
And they will say.
Project Bioshield and fiscal year 'twenty, one budget request supports late stage development and procurement of an IV formulation currently stockpile smallpox antiviral drug.
And this will support execution.
And existing contract option and they requested $20 million.
So I know I heard you say that you are going to be delivering IV from the base contract. So are you anticipating and I'm assuming that's just for claims. There is there are six so could there be another order on top of the base contract deliveries of IV formulations.
So I'll, let Dan answer the clean number I just want to make sure I have that right.
So we certainly will work with BARDA on the IV and any orders they have we're not giving guidance on it we just haven't been to a place where we understand their intention certainly day supported the development day put 180000 roughly courses and then AT&T contract with options. So we anticipate that we'll have additional options.
And we'll work with it I assume youre, probably looking at the multi year budget justification the multiyear professional judgment budget.
Which they do project out on that doesn't always have the timing that they hope to have but certainly we believe IV is a very important part of the stockpile and will work with partners to make sure we exercise options and get the right amount for them and the stockpile, Dan and do you want to just to clarify on the base contract. The IV option that we're talking about.
Ivy Park clean and the base contract.
Great. So.
Yeah.
And it's Clinton for I believe that's related to the IV within the base and that's a 20000 courses and then there's a series of options within.
The contract for the IV.
And there's a Clinton and <unk> and then another one is clean and 18 and then the other ones claim and 23.
So theres a series of okay.
I just went through the numbers.
Okay I did see though I think it was earlier this month there was like a very very small nominal amount of money.
For <unk> there are six which also was for an IV formulation, maybe is that for more and.
Is that a procurement more like.
Money for clinical studies, and our non clinical studies.
Yes, so I appreciate it and appreciate the question we do have.
And I imagine you're probably looking at.
Sam Dot Gov website.
We have a variety of non material type modifications like that I think it was $10000 for various R&D activities. So it could be a variety of things that are slightly more expensive or less expensive and we work with the government to say, okay. If it's more do they agree it's a reasonable reason that its more so thats modified but that would be.
And those types of things are typically associated with our R&D cost reimbursement work, we're doing under the others.
And those contracts.
Understood and I look I mean, just.
See movement on that as a positive and and.
And my interpretation confirms that.
You will be delivering IV formulation, and hopefully sooner rather than later.
And also Phil just you know.
What I was quoting from not from the multiyear budget, but for the.
Just the vacation of the budget request for fiscal year 2020.
Solely.
And so.
And so here's my my next question just maybe my final question and this is for oral and now from 19 see contract.
And also from that same document the S and that budget request, they say that fiscal year 'twenty, one prioritize funding for <unk> and that's a smallpox and anthrax portfolios.
And then I'm looking at your 10-K.
From your 10-K that came out that and.
March based on prior product delivery activity and current FDA approved shelf life of royalty epoxy company estimates.
That approximately 1 million courses of smallpox antiviral treatment would need to be delivered to the U S. Government between 2021 and 2023 in order to maintain stockpile levels and unexpired smallpox antiviral treatment during this period.
First of all and I look at your product deliveries.
Starting in 2013, all the way up to 2018.
Marie with that estimate.
I also note for the 19 key contract there was only 1.089 million oral courses remaining after the first option was exercised so that we'll look to me that the majority of the three on exercise options would.
<unk> be procured between this purion and I'm, assuming the second half of 'twenty one into the end of 2023.
So after all that stuff I, just said can you.
Give me your opinion on whether.
I am thinking correctly on that.
Sure. So I appreciate it as always if you do a very good diligence, which have very detailed question. So I appreciate that.
And the strategy very well.
The details so.
From a strategy perspective look we know when they established the contract in 2018, the intent was to essentially resupply oral and IV and maintain their stockpile I am and careful not to speak obviously for the government is entirely under their prerogative, but we certainly believe.
And that what we put in the queue and as everyone knows we continue to manufacture products and make sure we can support that stockpile. So we.
We continue to work closely with the strategic National stockpile with BARDA and with the assistant Secretary for repair and with some response office who is not.
Who is not confirmed yet.
And by the by the Ministry of <unk>, but certainly what you.
You outlined is how we've been thinking about it and we continue to work with our government partners to execute on that Dan anything else want net.
Yeah, just as background is.
We delivered product and creating the stockpile between 2013 in 2017 and that product and a seven year shelf life. So when you roll forward that means that that the whole stockpile would turnover between 2020 and 'twenty 'twenty four.
So far under the 19 and see contract when you take into account the option exercise as well.
And I was a small amount of oral courses delivered under the base period activities.
We've delivered approximately 400000 courses.
So that leaves.
Approximately $1 3 million courses.
That will.
Expenses of any material nature haven't been incurred.
Okay, great. Thank you and then my last question.
The president and put forth and.
And this infrastructure Bill and I think one of the iteration and catch them.
And commentary.
<unk> borrowed to fund and Biodefense funding and.
And specifically not necessarily related to COVID-19.
Do you have any color around that and bill and.
Sort of where where things are at the moment.
Suddenly and important for us to to reiterate with everybody now is the time with the lessons we've had and the last year to prepare and certainly something like smallpox is at the top of the list given the potential threat that opposes and that's been articulated by countries around the world as Teddy pointed out by buying smallpox vaccine bill gates pointing out it can be unfortunately some.
Fedak, we made pretty easily and a whole host of other threat. So we continue to monitor it closely but unfortunately infrastructure village and passed yet so we'll continue to monitor thank you.
Okay, great. Thank you guys and thanks for taking my question and I look forward to hearing the day for the room.
And the second half that first day. Thank you.
I'm showing no further questions at this time, I'll try and a call back or whatever percentage.
[noise] Hyattsville again, I'd just like to thank everybody for joining today's call I. Appreciate your following and and we'll look forward to continue and you reporting updates and providing and update next quarter. Thank you all very much.
Thank you that does conclude the conference call for today and we thank you all for your participation and ask that you. Please disconnect your lines.
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