Q2 2021 SIGA Technologies Inc Earnings Call
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Welcome to the Seeger business update call.
During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct the question answer session at that time. If you have a question. Please press the 1 followed by the for on your telephone.
If at any time during the conference you need to reach an operator, Please press star and zero as a reminder of this conference is being recorded before we go on the call over to keeping that infant. Please note that any forward looking statements made during the call are based on management's current expectations and observations and are subject to risks and uncertainties that could cause actual results to the.
Her from the forward looking statements.
<unk> 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 please see the company's filings with the Securities Exchange Commission, including without limitation. The company's annual report on form 10-K for the year.
The ended December 31st 2020, and its subsequent reports on form 10-Q on 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 luxury of 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 questions. The.
The second quarter of 2021 reflects our continuing momentum for international sales, we delivered approximately $7 million of oral T box of the Canada. This quarter following $3 million in deliveries in the first quarter.
We believe these sales represent our first success and of multi year initiatives to build on international business for oral Deepak.
In coordination with Meridian medical technologies, we continue to actively work towards turning opportunities into additional sales specifically, we are currently working with meridian and the new foreign jurisdiction towards finalizing an order that would be similar in size of the initial orders received from Canada in 2020 and early 2021 the time.
Of the completion of the order has been and May continue to be impacted by the COVID-19 pandemic on.
On this last point regarding timing I would like to reiterate comments from the last investor call and provide some incremental color.
While we are currently having success and delivering international orders. This year of the pandemic has created a headwind.
The pace of activity, which we expect will continue in the near term subjecting to see you go to the continuing risk of international business development activities coming to fruition slower than we would of that we would have anticipated pre pandemic as.
As noted in the previous Investor calls it is clear to us that the impact of the Covid pandemic continues distressed countries the ability to organize and finalized funding contracting logistics and procurement activities that are outside of the COVID-19 response efforts.
As we actively pursue regulatory approvals for royalty parts with the European Medicines Agency and health, Canada, I would like to note that while some countries like Canada can purchase products like P parts by relying on FDA approval, others must wait for regulatory approval. Prior to purchase. This is the case with several large countries in Europe. So EMEA.
Approval would be an important step in the procurement discussion with these countries Dennis Hruby, our chief Scientific officer will provide an update on our next call on the regulatory review status in Europe and Canada.
For now I will summarize the current status by affirming that we continue to track. The late 2021 early 2022 approval dates in both Europe and Canada.
With regard to the procurement activities in the United States, We continue to work with aspirin BARDA staff on the performance of the 19th the contract and we continue to manage our supply chain to build inventory in anticipation and preparation for a procurement option exercise under the 19th to the contract. We are hopeful to receive clarity from the United States government in the near.
Term regarding of procurement option exercise considering that the new assistant Secretary for preparedness and response, Don O'connell with sworn into the role of approximately a month ago.
And we have seen some recent announcement of contract option exercise.
I'd like to note that since 2013, we have delivered a total of more than 2 million courses of T box with the 7 year shelf life to the strategic National stockpile under the Obama and Trump administration, and we expect the bite administration will continue to support this decade, plus long partnership in order to ensure at a minimum maintenance of the current stockpile levels of 1 <unk>.
7 million of courses of T box for smallpox.
With respect to pandemic preparedness I believe it's important to highlight that the smallpox should not be the only orthopoxvirus for which the United States government as well as other governments prepare in.
In June we announced that we provided T Pax as of compassionate treatment for a monkey pox case in the United Kingdom and last week, we announced that we have of collaboration with Oxford University to provide key parts of the compassionate treatment for Monkey pox case since cases in the Central African Republic.
Additionally in July it was announced there was a monkey pox case here in Texas.
These recent events in combination with recent reports highlighting the increase in monkey pox cases in Central Africa, which is likely due to the cessation of smallpox of immunization of the seventies that had provided some cross protection highlight the monkey pox should be of threat that is top of mind for public health officials, having an effect of treatment would be critical.
<unk> to treat patients and controlling the outbreak in the U S or elsewhere in terms of how <unk> fits within this discussion. We believe it has the potential to effectively treat several different orthopoxvirus is including monkey pox. The approval of <unk> for smallpox. The current label for <unk> was based in part on efficacy data in Monkey pox.
The non human primate and <unk> had no serious drug related adverse events during clinical development.
Relying on that same data he has applied for a broader label, which includes monkey pox and regulatory filings with the EMA and health, Canada, and we plan to seek the same broader labeling from the FDA next year on.
Now pass the call over to Dan who will provide a financial update Dan.
Thanks Bill.
For the 3 and 6 months ended June 30 of 2021.
<unk> revenue of approximately $8.7 million and $13.5 million respectively.
For the second quarter, approximately $6.9 million of revenue relates to the product sales of <unk>.
All of <unk> to the public Health agency of Canada.
For the 6 months ended June 30th approximately $10.3 million of revenue related to product sales of royalty Park.
2 of the public Health agency of Canada.
In comparison to the 6 months ended June 30 of 2020.
International product sales have increased $8 million for more than fourfold.
Operating income, which excludes interest income taxes and adjustments to the fair value of the warrants approximated zero for the 3 months ended June 30 of 2021.
For the 6 months ended June 30th operating loss was approximately $2 million.
Net income for the 3 months ended June 32021 was approximately $2 million.
For the 6 months ended June 30th net loss was $6 million.
In turn fully diluted loss per share for the 3 months ended June 30 of 2021 approximating zero.
And for the 6 months ended June 30th fully diluted loss per share was <unk> <unk>.
At June 30 of the cash balance for the company was approximately $98 million.
During the second quarter.
<unk> repurchased approximately 1 million shares.
Of its common stock for approximately $6.6 million.
As of June 30 of 2021 the.
Company has cumulatively repurchased approximately $6.5 million shares of its common stock at a total of approximately $42 million.
Since the inception of the share repurchase program in March of 2020.
This concludes the financial section of the call at this point I will turn the call back over it yourself.
Thanks, Dan a.
A few additional things I'd like to touch on before we turn to Q&A, we have approximately up to $450 million of <unk> procurement revenue tied to existing contracts and we continue to work to build on the space of procurement contracts of an international sales efforts and initiatives such as the Cipla collaboration. Additionally, we believe the pet.
Program supports consideration of a larger U S government stockpile, which in turn would result in a larger U S government procurement contract.
So as mentioned previously we continue development of the liquid suspension pediatric formulation of T box with support of part of.
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 on leverage our successful platform as.
As we announced on our earnings press release. This afternoon. The <unk> Board has authorized a new repurchase program under which the company may repurchase up to $50 million worth of the company's common stock through December 31, 2023 shares can be repurchased under this new repurchase program once the maximum amount allowed to be repurchased under the current <unk>.
Program, which was authorized in March 2020 has been repurchased or once such program has expired.
Please note that similar to the current program the timing and actual number of shares repurchased under the new repurchase program will depend on a variety of factors, including exercise of the procurement options under government contracts alternative opportunities for strategic uses of cash the stock price of the Companys common stock market conditions and other corporate liquidity.
Firemen and priorities.
In summary, we will continue to focus on key initiatives to finish out the year, such as securing a procurement option exercise for oral T box under 19 fee contract driving international business development and sales advancing on our Pep program, expanding our label with regulatory submissions in the EU and Canada, and ultimately FDA and expand.
On supporting our oncology collaborations and development of the second smallpox antiviral with a novel mechanism of action.
This concludes our prepared remarks, and we will now begin the Q&A session.
Yeah.
Thank you if you would like to register for a question today. Please press the 1 followed by the for on your telephone you will hear 3 total prompt technology of request you for your question has been answered and you would like to withdraw your registration. Please press. The 1 followed by the 3 once again to ask the question. Please press 1.
For.
Our first question comes from the line of Maxim Jacobs with Edison Group. Please go ahead.
Hi, guys. Thanks for taking my questions. So.
Just a couple of quick ones.
In terms of like the timing of U S. Revenues are at this point are the most likely to be in Q4, rather than Q3.
So Matt. Thanks, so much for the question of good to talk to you. So we're not giving specific guidance on Q3 versus Q4, because we haven't gotten the procurement option yes.
I would say once we get that we'll be able to provide a better sense of when deliveries would occur so for that to happen we need to have the procurement option and as we said I think with the confirmation of Don O'connell, we've seen some procurement options exercised and we do have the benefit of we're starting to get till the end of the fiscal year.
When the government wants to make sure they complete those.
We've also said we've been manufacturing in anticipation of delivery of product and so we need to have the procurement option, we need to have product manufacturer and we need to have the strategic national stockpile sites ready to receive products. So we can control the middle 1 which is having product available, but we also need the other 2.
Things, including access to those sites and unfortunately with Delta. The F&I sites are ramping back up we believe with some of the materials that are being used out of those so we'll have to wait and see but.
Not providing guidance right now, but our goal is to provide product.
Soon as possible and we've certainly been planning to do that as we said at the beginning of the year in the second half of this year. So we will keep everyone updated on that.
Another question Max.
Yeah, great that was very helpful.
Second question is just the.
The recent kind of monkey pox cases has that accelerated any of the discussions with international partners about the stockpiling the box.
Yeah. So I think the the impact has been on increasing interest.
And making sure they have a mitigation for surplus of viruses, obviously were not approved yet for monkey pox, but I think when you look at the landscape and the fact that we filed for regulatory approval.
Trees are concerned about smallpox, but now with the cases in the U K and others that have shown the peso concerns they want to be prepared if something shows up on the shores.
With the Monkey pox. So I think it has added another dimension is added in the urgency.
And it's added of very tangible public health impact for that occur could occur at really any moment.
Any country that has flights with people coming in and then they bring into the season. So yes, I think it has increased urgency.
Yeah.
Great.
That's all I have on thanks for answering my questions.
Thank you.
Thank you. Our next question comes from the line of Petty Green Private Investor. Please go ahead. Your line is open.
Hi, Phil on Dan. Thanks for the report could you see progress being made on on multiple fronts.
Have a couple of questions for you.
So the first 1 is tied into what Max attached to the ask about monkey pox and the EMA hopeful EMA approval end of 'twenty, 1 'twenty, 2 and it's tied into what I have been reading and seeing in testimony about how governments want to prepare for future pandemics.
1 of the things I continue to see is on the consistent basis.
Instead of of identifying a specific virus, it's possibly identifying of viral family with highly <unk>.
And obviously orthopoxvirus I think fits into that category, so with that Tom and again, what Max of SaaS.
And then demick of.
Mycotoxin Demick in Nigeria, and Central Africa.
If you do receive European medical approval for that broad label, you think that really kick starts.
Multiple countries, taking a look at <unk> and stockpiling it.
Yeah.
So I think we've certainly been working with meridian to educate people on the broad set of.
The national infections that occur Teddy so we've certainly been making people aware of the disease day.
And they know our regulatory filing around it but I do think getting of formal regulatory approval would certainly be helpful.
Especially with some of the larger countries in Europe as.
As I mentioned, some of which really aren't allowed to take care of something unless it is approved in their regulatory district. So I think.
That will certainly be important I'd also echo your comments on pandemic preparedness, there is theres kind.
Of the spectrum of potential antiviral drugs, there's always been the hope maybe you get a very broad spectrum antiviral drug visits of multiple viruses. That's proved to be exceedingly difficult getting drugs for families of viruses seems to be the sweet spot and we've really proved that we think with key parts of the animal models and hope to expand that with our.
Regulatory filings, we think that's an efficient effective and very cost the cost effective way to prepare for these viruses. So I'd agree with you on that from Israel.
Okay. Good that's glad that I'm glad to hear that.
Okay. Another question I see in the press release, you kind of gave a little more color.
I know, it's kind of hard for you to do in regards to finalizing a.
Uh Huh, that's for an order and you make a reference to it could be similar in size to the initial orders received in Canada of 2020 and early 2021. So I just wanted to clarify the way I look at the.
Order from the Canadian military and then the public Council of Canada. It looked like a total of 45000 courses. So is that what we should be looking at for this potential foreign jurisdiction at this point in time.
Yeah, and I think we're thinking of it more from an annual perspective and looking at what's the kind of delivering because as we've said before some some countries will do a purchase upfront and then ask for deliveries of year by year from Wil purchased just the year and then in Tonight that theyre going to the.
Do purchase of the multi years, so think of it more as an annual 1 but its order of magnitude that's what we think of.
Okay.
I'd be happy with that go ahead and for sure. The go ahead, Dan I'm, sorry, maybe just to add some more color for Ted.
On.
We met this as an order this is a country that tends to go year by year.
And just the frame of reference is.
The.
The delivery.
The Canada.
2020 ahead of value of $2.3 million.
And then the delivery in early 2.
2021 for.
For approximately $3.4 million just gives you a frame of reference for those borders.
Okay. Okay. Okay, I understand what you actually delivered okay. Yes, just the highlight again this is the 1 year, saying the idea is that the country has a history of.
The doing 1 on your orders on on a.
Regular basis, essentially so okay.
Understood.
Okay.
Great and then 1 more question.
Bill and obviously it would be.
The nice if Dennis was on the call too but.
Obviously there.
There are now 2 antivirals are approved.
For <unk>.
Smallpox.
1 of.
Has the black box label on 1 does not the Pax does not.
On <unk> it does and it has multiple.
Serious adverse events on that in that label. So it's.
Is it should should I look on CIT investors in general look at the government taking the look of these these 2 antivirals and again it was the mandate of back in 2006 step 2 with different mechanisms of action.
<unk> is 1 should should 1 be the standard of care and 1 not and then also tied into that with 1 with the black box label warning.
What is the progress on our 357 at this point in time chip.
Yes, so all of it.
It's a great point I'll just comment on our drug.
That we were very pleased that we had very high efficacy in the non human primate model with monkey pox and <unk> and.
In rabbits with rabbit with rebate costs, we did not have any serious drug related adverse events and development. So I think we have a very good drug and we continue to work with the government on the procurement strategies and ultimately they will determine what the what the outbreak use case for.
<unk> zone on the life.
I'm biased, but I, certainly like our drug and where where we are and so we continue to look to expand its label with Pep and the continued expanded label with other orthopoxvirus so stay.
Stay tuned on that on the 357. It is as we've said before preclinical lead optimization, we're doing some work there and as we've said before we're also seeking.
<unk> gained some additional government support in that program as you may have seen on the President's budget. They talked about continuing to look at increased efficacy and safety in drugs for smallpox and they did do.
For Biofact or so.
We believe we're well positioned and we certainly think $3.7 as early.
But we think it's a it's another potential.
Drugs that could be brought forward. So we'll probably have Dennis on as I mentioned in the opening remarks on the next call and so we can also provide updates there. Thanks.
Great and 1 on 1 final question I don't want to take up all your time, but the I.
I did see the reference to other companies receiving option exercises there in regards to the second option exercise from the 90 day contract.
Are you referring to EPS they received their another option for a cam.
The beginning of July on they expect to deliver the full option by the end of the year.
That something we can hopefully look at to again I know the.
The delivery schedule from the <unk>.
Original contract and I know what the company has stated in the last 2.
Quarterly filings and on.
I would think that the government is still going on with the standby that.
Maybe even have a little bit more sense of urgency. It seems like the smallpox portfolio is kind of picking up in regards to the SNS right now.
Yes, so as I mentioned in the in the response the Max we're certainly working diligently and have been working and building inventory we need the option. We also need to make sure of the asbestos ready to receive it and we can work through all of the final thing.
To be able to get things across the finish line I'd be remiss, if I didn't acknowledge.
The COVID-19 shortages here and there we continue to fight little fires in our supply chain to make sure we stay on track and so far of there hasn't been.
Any of that impact the at least our schedules, but we certainly wanted the careful and acknowledged that the things do and can pop up these days in the supply chain given how long the pin debit is growing so we'll certainly provide guidance as we get closer.
Okay, great. Thank you so much guys.
Thank you. Our next question comes from the line of Paul Saunders with Hutch Capital. Please go ahead.
Hi, Phil on Dan Thanks for taking my question.
Just a quick 1 for me.
I notice.
SG&A this quarter was a little higher coming on at $5.2 million.
Where when it seems to typically be kind of in the threes.
So just wanted to get a little color on what caused that day.
That uptick and if if that's what we should sort of assume going forward or just the.
The increase of a million of half or so is that.
Just on.
This quarter, specifically of should we expect that going forward.
Yes.
Hi, Paul.
I would characterize it as representing of trends.
SG&A as well as R&D does move around.
So I would not characterize that as necessarily starting a new true.
Right.
David I'll turn right to the.
Right.
If you sort of look at history.
Popped up in the different times, depending on the composition within the SG&A.
1 thing to highlight is that within the SG&A. It includes the marine day.
Oh got it okay. That's what I was missing then okay. That's helpful.
Okay.
Yeah.
Yeah.
Thank you and as a reminder, if you'd like to register for a question. Please press 1 for our next question comes from the line of fatty Antoon private Investor. Please go ahead. Your line is open.
Okay.
Hi.
Thanks, Dan and now sell for them.
For the inflammation.
As a private investor I'm more interested to know your long term vision.
So my question to you of how are you going to each.
$1 billion in sales.
Within the next for years.
So part of my question as well on interested to know.
Psychosis zinc repurchasing share how are you going to use the cash flow you have on your balance.
Sheets in the $98 million.
You're planning to acquire other companies with the same industry on a different industry and I will just increase your ourselves.
That's my question. Thanks.
Hi, Thank you for the question. We appreciate you joining and I appreciate you asking the question.
We've been specific we haven't talked about very specific revenue targets in the long term because we think we are of great product, we certainly have an ability to.
To generate cash from that product and we want to do what's best for our investors on on what we do of that cash and how we look for opportunities. So we're having said that we do have on that.
The active share repurchase program as we described and we do look for opportunities to grow the business. We have looked for opportunities that would have earnings that would be able to diversify our business, but we have not made specific.
Targets around that because we don't want to bind ourselves into a circumstance, where we have to do.
To deliver on acquisitions that don't make sense. So we've been very selective and very careful with our cash. So broadly I would continue to say we look at all uses for cash we look at ways. The return to shareholders. We look at acquisition targets.
That could grow our business and provide an opportunity for us to diversify.
Also thanks to the growing involvement of the U S government in the pharmaceutical industry, so where there might be opportunities for us to expand on that we'll certainly look at it but we've also talked about being disciplined about that so our board just authorized the additional share repurchase program that we talked about and when we.
Look at opportunities, we'll continue to look at infectious disease, where we have a lot of expertise.
The actions with governments broadly, where we have a lot of expertise and things of that could add accretive to our revenue.
As we go forward. So we'll continue to look at that so thank you for the question.
Okay.
Thank you and there are no further questions at this time.
Okay.
Thank you operator, and thank you everyone for joining today, we look forward to talk to you next quarter take care.
Yeah.
That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your line.
Yeah.
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