Q3 2021 SIGA Technologies Inc Earnings Call
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Greetings welcome to the cigarette business update call before we turn the call over to figure 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 from the forward looking statements figure does not undertake any obligation.
To update publicly any forward looking statement to reflect events or changed circumstances. After this call for.
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 end December 31, 2020, and its subsequent reports on Form 10-Q and form eight Q.
I'd now like to turn the conference over to your host today, Mr. Phil Gomez Chief Executive Officer. Thank you you may begin.
Thank you for taking the time to join today's call today I'm joined by Dan luxury here, our CFO and Dr. Dennis Hruby. Our CSO. We're pleased to have this opportunity to provide a business R&D and financial update to our shareholders will then be happy to take questions.
We had a significant third quarter with the exercise of 113 million procurement option under the 19th the BARDA contract in connection with this option exercise we are targeting multiple deliveries of oral T. Pox two the U S government in the fourth quarter, which would have a cumulative value of $113 million.
In October we delivered approximately $33 million of oral T box towards its goal to.
To complete all targeted deliveries by year end, we will need to complete manufacturing secure transportation and have available delivery slots at the U S government locations, where teapot the stockpile.
As we have all read in the news supply chain disruptions continue to be a challenge and our team is working extremely hard to ensure we do not have delays or barriers to completing the delivery model.
On a related note we are proactively coordinating manufacturer of active pharmaceutical ingredient or API to ensure we are well positioned in the future for domestic and international procurement orders given the ongoing supply chain risks.
Looking beyond 2021, the 19 see contract has approximately $300 million of procurement options available for future exercised by the U S government.
This amount includes two remaining procurement options of approximately $113 million each for oral T box and a series of intravenous or IV procurement options that have a total value of $77 million.
If these options are exercised when product in the U S. Government stockpile expires, then we would expect these options to be exercised in the next three years.
At some point during the next three years. The COVID-19 see contract could be replaced with a longer term 10 year contract, which could provide a more consistent and transparent product delivery timeline.
Such a contract format is being used for other contracts that cover products delivered to the strategic national stockpile in turn if the T box contract has transitioned it would be natural for the smallpox stockpile size and by extension the Teapots contract size to reflect consideration of our post exposure prophylaxis indication under development. Please.
Note that with respect to COVID-19, even with the highly effective vaccines. The U S. Government has contracted to purchase nearly $5 7 million courses of Covid therapeutics for over $4 billion we.
We believe the stockpile of $1 7 million courses of T box and a smallpox outbreak would not be sufficient to treat all of those who would need care and that is an active part of our ongoing conversations with the U S government.
Shifting gears slightly I'd like to talk about another U S. Stockpile the antibiotics stockpile as described on previous calls we have a collaboration with Cipla. The goal of that collaboration is to respond to an anticipated BARDA RFP for antibiotics to be developed for bio threats and stockpile.
The request for information or RFID was posted last fall, but the RFP has not yet issued.
We now anticipate the RFP will issue early next year, and we will continue to track it closely with our colleagues at Cipla.
Given the COVID-19 related work that BARDA is doing it's not entirely surprising that this initiative has been delayed. However, we believe the antimicrobial resistant initiative that BARDA EMR is a continuing focal point and we look forward to responding when the RFP is issued.
On the international sales front, it's been a quarter with progress in many areas, but continued delay on a target contract issuance.
On the progress side of the Ledger, we delivered $2 $3 million of oral T. Pax to the Canadian military during the third quarter, which is ahead of schedule as we anticipated they would not exercise this option until after health Canada approval.
And beyond Canada, we have seen a pickup in opportunities for travel and meetings with customers.
As such Seeger presented at conferences in Germany, and Italy, this quarter with our colleagues at Meridian medical technologies with respect to the aforementioned delay we continue to work with meridian and a new foreign jurisdiction toward finalizing an order that would be similar in size to the initial orders received from Canada in 2020, and early 2020 one.
The timing of the completion of the order has been and May continue to be impacted by the COVID-19 pandemic.
As background it is becoming clear that as countries order T box for the first time, there are extensive logistics questions that arise as to how the country will import the product what waivers may be necessary given that the product will be stockpiled and not immediately used by patients regulatory requirements and detailed terms and conditions we remain optimistic.
Mystic about future sales potential as we gain MAA approval in advanced discussion with customers in Europe, the middle East and Asia.
I'll now pass the call over to Dennis who will provide an R&D update Dennis.
Thank you Phil.
Our R&D team has had a very busy quarter advancing regulatory filings and directing earlier stage development activities.
First an update on regulatory filings and progress.
The I V T parks NDA application is under active review by the F T a.
We are responding to questions and providing information as requested.
Barring any unforeseen delays, we're targeting an approval to be received during the first quarter of 2022.
Health, Canada application is also under active review and approval could come as soon as late fourth quarter of 2021.
Of note health, Canada is falling FDA guidance on approval of products under the animal rule guidance and as such will restrict the label to treatment of smallpox.
Finally, our EMA MAA application is being actively advanced as well we've responded to the 180 day questions and are awaiting the M. A response the MAA approval is targeted for the first quarter 2022.
Thus far the EMA has not objected to a request for a broader indication that includes all human orthopoxvirus pathogens, vaccinia, cowpox, smallpox and monkey pox and.
An approval for Monkey pox would greatly facilitate the use of T box against this growing disease threat in Africa, as well as export cases elsewhere.
In support of this effort. So again has provided T box for use in a clinical trial manage by Oxford University and collaboration with Institute that store. The studies that use of T box in monkey pox patients in the Central African Republic.
All the necessary paper work is in place drug is on site and they are preparing to treat their first patients.
It's also in the process of setting up additional clinical trials with other international partners and additional African countries.
We are hopeful the acquisition of safety and efficacy data for the use of T box and monkey pox patients will afford us the opportunity to revisit what the F. D. A broadening the T box indication to include Monkey pox and potentially other orthopedics pathogens for which there was strong animal data.
Several development activities of our underwear way for oral T box first we've completed a post marketing commitment to conduct a PK study in volunteers weighing more than 120 kilograms, which is approximately 13% of the U S population.
Based on the results and after discussions with the FDA. The T box Lake will be modified to suggest 600 milligrams three times a day and these patients have note in case of an outbreak. This adjustment will effectively reduce the size of the stockpile to treat the overall population.
Second we continue to advance our powder for reconstitution pediatric formulation and as such our two leading formulations have been transitioned to our CRO partner to begin adaptive PK clinical trials.
But most importantly in terms of T box development activities, our collaboration with the department of defense to obtain approval for post exposure prophylaxis use of T box continues to progress after iterative discussions with the FDA. We have agreement on clinical trial design. The T box plus journey of Immunogenicity clinical.
While we will start patient recruitment during the fourth quarter of 2021.
The larger T box 28 day safety trial should commence patient recruitment in the first quarter of 2022. If the results are as expected upon completion of these studies, we will file for regulatory approval.
The Immunogenicity data from the T box for Jennie O study will be the most important data to support the use of T box and Pep and we anticipate that data will be available in the second half of 2022.
With respect to earlier stage programs, we continue to advance our S. T. E 357, smallpox antiviral current efforts are aimed at developing coke crystals of S. T 357, and as protein target and conducting computer modeling to predict analogs with improved drug characteristics. Additionally.
Additionally, we're actively developing the experimental plan for conducting animal experiments so to support the development of plays of mice and against plague into Arabia. This work is being done as part of a broader preparation for an anti microbial resistance RFP that we expect to launch in the coming months to which we will reply and coordination.
With somewhat as part of our collaboration.
With that update I'll hand, you over to Dan to provide a financial update.
Thanks Dennis.
For the three and nine months ended September 32021.
<unk> revenue was approximately $4 8 million and $18 $3 million respectively.
For the third quarter, approximately $2 $3 million of revenue relates to product sales of royalty pox two the Canadian military.
For the nine months ended September 30th 'twenty, 'twenty, one approximately $12 $8 million of revenue relates to product sales of royalty back to the public Health agency of Canada and the Canadian military.
In comparison to the nine months ended September 30th Twenty-twenty International product sales have increased approximately $10 million for more than four fold.
Operating loss, which excludes interest income taxes and adjustments to the fair value of the warrants.
Approximately $2.9 million for the three months ended September 32021 for.
For the nine months ended September 30th 2021 operating loss was approximately $4 $9 million.
Net loss for the three months ended September 30th 2021 he was approximately $3 $1 million.
For the nine months ended September 32021, net loss was approximately $3 $8 million in turn fully diluted loss per share for the three and nine months ended September 30th 2021.
Four cents a share in five cents a share respectively.
At September 30th the cash balance for the company was approximately $93 million.
During the third quarter <unk> repurchased approximately one 1 million shares of its common stock for approximately $7 $1 million as of September 30th 'twenty 'twenty. One the company has cumulatively repurchased approximately seven 7 million shares of its common stock at a total of <unk>.
Proximately $49 million since the inception of the share repurchase program in March of 'twenty 'twenty.
This concludes the financial section of the call at this point I will turn the call over to Phil.
Thanks, Dan.
Before we turn to Q&A I'd like to reiterate a few points that have been made in the past and supportive of our view that Seeger offers an attractive combination of existing contracts that are currently generating strong financial results complemented by organic growth initiatives that hold significant potential when viewed collectively.
First I'd like to highlight that the ongoing international sales growth initiative is progressing in a value creating manner. In 2020. This initiative generated our first international sale and $2 million of revenue.
Year to date. This year. This initiative has generated approximately $13 million of revenue while as noted many times before our progress on this front is expected to be lumpy and uneven given that the international market for Biodefense is not well developed we believe that a meaningful international market is gradually taking shape.
Second I want to reiterate that the pet based development program represents a growth initiative in that it would provide scientific and regulatory support for any stockpile expansion as stated earlier, we believe a stockpile of $1 7 million courses of key Pax in the smallpox outbreak would not be sufficient to treat all of those who would need care.
Third we believe collaborations such as the one with Cipla could be an important avenue in the future to expand our government portfolio of products and contracts and in fact, the aforementioned RFP that we expect to respond to in coordination with simple it would be a first shot on goal for this growth initiative.
And fourth our portfolio of growth initiatives is diversified including ongoing efforts to broaden the U S customer base to potentially include the U S Department of defense and others.
As mentioned earlier, we believe these growth initiatives when viewed collectively have potential for significant value creation.
And one last point as we generate cash over time through existing contracts and organic growth initiatives. 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.
As we announced at our last call. The Sega Board authorized a new repurchase program under which the company may repurchase up to $50 million of the company's common stock through December 31 2023.
This concludes our prepared remarks, and we will now begin the Q&A session.
Thank you at this time, we will conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
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Our first question comes from Maxim Jacobs with Edison Group. Please proceed.
Hi, guys. Thanks for the the very detailed update it's much appreciated.
My My only question is just on the potential contract transition to a 10 year contract I was wondering if you could provide any color on what the timing of that might be I figure you I mean, you probably can't get too detailed on that.
Yeah, Hi, Max it's Phil and thank you very much for the question. So it is very difficult to predict the U S government and their timeline on it but I would say historically, which products get FDA approval.
There is usually a multi year transition over to a contract in a separate part of the government. So we are currently under contract with BARDA BARDA develops and supports the advanced development the R&D as well as the first procurement.
Into the stockpile, which we did we in fact got resupply under BARDA because of the ongoing work with IV and the pediatric formulation, but ultimately it makes sense to transition over to a different part of the assistant Secretary for preparedness and response historically, that's been the strategic national stockpile Theres a lot of ongoing.
So the government as to where that's going to settle out and how that organization is going to be structured post the learnings of COVID-19, but as I said in my remarks, we have an opportunity over the next three years for the remainder of our BARDA contract and certainly we'll be working hard over that time period to make sure. We have a smooth transition. So thanks again for the question.
One vote that was very helpful. Thank you so much.
Once again, ladies and gentlemen to ask a question at this time. Please press star one on your telephone keypad.
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Our next question comes from <unk> <unk>.
Green private Investor. Please proceed.
Okay.
Oh, Hello, guys, Hi, Phil Dr. Caribbean.
Dan could.
Good to see the progress on the Canadian.
Military order that was I think a little surprising.
I wasn't expecting that until you actually received the approval.
That's good to see.
First question I have for you are the existing label for key pox.
Obviously only in the U S. Its only to be sold and marketed as a product for stockpiling is that correct.
That's correct that is the way the label is structure.
For the future or at least at least with the application and and.
The European Union and in Canada are you, including the ability to sell outside of the stockpile for those labels.
So that would be an ongoing conversation that comes near the end of the process as to what the final label has 30. So certainly we're thinking broadly, but I will say there could be a lot of conversations that happened near the end that we will have to wait and see how the regulators feel about the product and the requirements of the neck.
Sorry to do stockpiling versus more wide sales clearly with a monkey pox indication there are patients that routinely have monkey pox. So we'd want to have an ability to get that to patients, but in Europe. As you know theres a lot more government involvement in health care and so the distinction between what is a private sale and what is the government sales certainly much neck.
But it is something certainly we're looking at as we progress our development and regulatory filings going forward.
Okay. That's good to hear and then.
Carrying over into the Monkey pox question this might be a better answered by Dr. Ruby.
It's been my observation just with a bullet that Theyre Bullock late pay in Central Africa appear to be more virulent than the Clayton and West Africa.
And I know that you have it's a trial set up in the Central African Republic, with Oxford University.
And I'm curious if the monkey pox equated that holds true for the Monkey pox equates also.
Are the monkey pox equation in Central Africa, more virulent than say, the Clayton in Nigeria, and West Africa.
This is Dennis thanks for the question, you're absolutely correct that central App in place are more variable.
Based on sequence analysis, we expect <unk> to be equally effective against both.
Africa, and Central Africa quite.
Okay, great. Thank you.
And then also the Doctor who would be in regards to <unk> 57, I had read there were some say ability issues.
And have those had those issues have been identified and and has there been any kind of dizzy.
Design now come up to to overcome those issues.
We've certainly identified issues and come up with the analogs that we think will address them, we need to initiate a chemistry after the optimization campaign and we hope to receive external funding soon to do that.
Okay, great. Thank you for that.
Okay, and then Phil.
Final question I have.
Is obviously what's in.
October you had a notice of intent to sole source from the department of Defense U S Army to purchase <unk>.
<unk> and then there was just a source of Sop notice that came out.
Actually I am speaking I think that was in the middle of September and then assess sources sought notice came out at the end of October which is kind of just the evolution of the original notice of intent to sell source and this is obviously the joint project manager medical is asking to see the capabilities.
Industry capabilities too.
Produce courses at <unk>. So I guess my question is are they asking to see what the company's capabilities are over and above and beyond the 19 see contract to produce a course 50 box.
Okay.
So we will be responding to that I think that's a pretty.
Common asked to continue to get capability broadly.
Im organizations to ensure they can respond to the needs of the D O D.
And so we will certainly be responding to that and feel like we have that only.
A very good product with a great safety profile and efficacy profile, but we certainly have the ability as we've demonstrated to deliver key parts as the government needs. It. So yes, we will be responding and continuing to work with them and any questions.
Okay, and then just a follow up on that serious I'm curious.
Is this solely to purchase keep Hawks.
Just with the NDA.
An indication of symptomatic to treat symptomatic smallpox or could this be a kind of getting their ducks in a row.
In anticipation of a pet.
Label going forward and you know because I understand how these.
You know that they the contracting and procurement process works and the government and it does take a lot of time and they have to submit this and one one thing and then another thing and you have to respond to it and there's 15 days after that before it goes inactive I'm just curious what your thoughts are on that.
So certainly that's not in their intent to purchase keep us there's no details that they have described which is not surprising as to what it's going to be useful I guess I would highlight two levels. One the D. O D has been working very closely with Dennis and his team on the Pep program, we've received substantial funding.
Certainly been a focus for them and I think.
Something that certainly they have a point of pride that we've been collaborating getting this clinical study.
Ready to go.
And launching and contract vehicles are important when you talk to people that work in government contracting broadly, having a contract vehicle, meaning a contract and the ability to sell to an agency is a first step in opening up business and being able to broaden isn't half conversation. So we're very excited that <unk>.
Posted a notice for sole source for T box and.
We think that's a great first step and we will work with them on responding to this on responding to pep and having the broad conversation.
About what's the best strategy is.
For the use of sea parts, both on the Vod and with other.
Clients within the U S government. So certainly I think it's a great first step as you say, but the data is still evolving and there hasnt been anything formally said baidu.
Okay.
Thank you very much guys I appreciate it.
Thank you. Thank you.
Thank you at this time there are no further questions in queue I would like to turn the call back over to Mr. Phil Goldman for closing comments.
So I'd like to thank everybody for joining the call today I'd also like to thank the <unk> team for a whole lot of work in ensuring our supply chain continues to function.
And our R&D programs continue to advance.