Q1 2022 SIGA Technologies Inc Earnings Call
Welcome to the cigar business update call before I would turn the call over to Sigma 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.
<unk> 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 <unk> Securities and Exchange Commission, including without limitation. The company's annual report on Form 10-K for the year ended December 31st 2021, and its subsequent reports on Form 10-Q and form 8-K.
Thank you for taking the time to join today's call today I'm joined by Dan <unk>, 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.
On the last call, we discussed strong financial results for 2021 with $89 million of pre tax operating income. This financial performance followed $85 million of pretax operating income in 2020, we believe the financial results in 2021, and 2020 highlights the attractive financial capability of Seagate's business.
The results also highlight the current importance of orders under the BARDA 19 fee contract.
Also on our last call. We noted that since the U S. Government stockpile does not have scheduled explorations. This year. There is no immediate need for the U S government to secured deliveries of key products in 2022 to replenish exploration.
As such as previously noted our efforts are following two tracks on one track we continue to work with BARDA and the Asps were to exercise option further in advance and we continue to work on a longer term 10 year contract with annual options to smooth out deliveries and better manage budgets and supply chain.
On the other track we acknowledge that there are no stockpile exploration scheduled for 2022 that would be a catalyst for significant U S government orders of oral T parts. This year.
And as such were pursuing a series of ongoing initiatives that position the company for the next wave of procurement orders, we expect in the coming years, let me discuss the initiatives.
First I would like to talk about I V. T box as previously noted we have an NDA filing with the FDA that has a paducah date of May 28.
Regulatory approval would mark another milestone for <unk> and we believe that it also will be a key consideration for the U S government in terms of future procurement decisions.
Current with IV regulatory process, we have been working towards delivery of IV <unk> to the U S government stockpile as a reminder, there was an $8 million order for IV <unk> in the base 19th to the BARDA contract I am pleased to note that we made our first deliveries of IGT Pops in the first quarter, we delivered approximately $7 million of <unk>.
<unk> under the base contract order.
Also pleased to note that the use of our IV product was highlighted in a MSW or publication by the CDC in which a patient with monkey pox was treated in the U S.
The second initiative I would like to discuss involves the international sales.
This front, we continue to build on our base with respect to Canada. The public Health Agency of Canada, <unk> has placed an order for approximately $13 million of royalty Park, we expect to fill this order in 2022 <unk>.
Additionally, both meridian's Vega are coordinating in pursuit of a 2022 order where the Canadian military that we would expect to be consistent in approximate size to previous orders from the Canadian military.
Beyond Canada I am pleased to report that we have a 2022 order from a new country in the Asia Pacific region for approximately $2 $8 million of oral T. Pax. This initial order of approximately $2 $8 million is anticipated to be a recurring order from this country in the future, but solely at their discretion each year we play.
To ship product this year to the new customer.
With respect to international business development, we continue to have discussions in Europe , the middle East and the Asia Pacific region around additional procurement of T spot.
The third initiative I would like to discuss involves expanding our procurement footprint with the U S government.
With regard to this initiative there are multiple elements I will talk about too.
First we are pursuing procurement contracts with the U S government beyond aspirin BARDA, while we expect procurement contracts with aspirin to continue to be the primary source of U S sales of <unk>, we believe broadening the U S government procurement base would provide financial as well as strategic benefit.
On this front, we have been coordinating with the department of defense on a relatively small first procurement contract we expect to finalize details soon.
In connection with this procurement process. We are pleased <unk> has published the justification of other than full and open competition summary of their T box procurement highlighting why <unk> is the only drug suitable for use in pet.
The second element to the U S government centered expansion effort involves the Pep study.
As noted in prior Investor calls in terms of the ultimate sizing of the stockpile. We believe the clinical results from the Pep program could play an important role.
Substantial progress in the Pep program would be timely and that we believe that the COVID-19 pandemic has highlighted the importance of having access to broadly active antiviral drugs, especially those that can be used prophylactically from our perspective. The current stockpile of teapots in our smallpox outbreak would not be nearly sufficient to treat all of those who would need.
Sure.
I will now turn the call over to Dr. Dennis Hruby, who will provide a regulatory and R&D update including details on the Pep clinical program Dennis.
Thank you.
As Phil mentioned, we're working with our colleagues on executing the two clinical trials needed to support regulatory approval of <unk> for post exposure prophylaxis for.
With the expanded safety study, we've set up 10 clinical sites around the U S, which have initiated screening and will begin dosing shortly.
For the T box, plus Jennie O in the Immunogenicity trial, we have two sites recruiting and screening volunteers. Although the first volunteers have been enrolled in the study enrollment has been on the slow side.
This is due in part to the post Covid vaccine hesitancy in the U S. Among other factors.
We're working with DMD to broaden the recruitment effort and to expand the eligibility criteria so as to accelerate enrollment.
For both studies the goal is to have all of the volunteers complete the active phase by the third quarter of 2022.
If the study showed the expected results, we would commence assembly activities for a package requesting regulatory approval of T box for Pep.
That's still also discussed our <unk> pox IV NDA is under active review by the FDA. We've responded to all information requests and believes the submission is well positioned for approval in may this.
This will be a valuable addition to our orthopoxvirus countermeasures to be used in patients with advanced disease, and then those unable to swallow and oral medication life.
Likewise, we continue to advance our powder for reconstitution formulation targeted for use in pediatric patients less than 13 kilograms in weight.
Clinical studies with our most promising pediatric formulation will commence this fall.
As mentioned in previous Investor calls, we think about T box through the lens of being a treatment for the ortho parks family of viruses not just smallpox.
First we continue to work towards tree monkey box patients with T box as.
As you know there are increasing numbers of cases in Africa and infections have been exported to a number of other countries, including the U K and the U S where in both cases T box was used to effectively treat these patients.
We're currently collaborating with Oxford University on a critical field study in the Central African Republic, and have successfully treated a number of patients.
It is important to note that these cases, most mostly occur in extremely difficult areas to access patients and health care facilities are rare.
For this reason we received EMA approval for Monkey box based on our extensive animal testing and safety trials in humans. We're also working with a different group of collaborators to set up a second much larger clinical study and a different African country. As we continue to make progress we will provide updates in the future.
Finally, with the <unk> box approvals, we've received in the U S, Canada and Europe . There are various post marketing commitments associated with these approvals the.
The R&D team is diligently working to provide the requested information and in some cases initiated studies requested by the various jurisdictions with that update I'll turn the call over to Dan.
Thanks Dennis.
For the three months ended March 31, 2022, <unk> revenue was approximately $11 million of which approximately $7 million relates to the first sales of IV <unk> to the U S government under the 19 see BARDA contract.
The remainder of revenues related to research and development activity.
Pre tax operating loss, which excludes interest income taxes and adjustments to the fair value of the warrants.
Approximately $1 $4 million for the three months ended March 31 2022.
Net loss for the three months ended March 31, 2022 was approximately.
$4 million.
Fully diluted loss per share was one cent.
At March 31 2022.
Cash balance at the company was approximately $153 million during the first quarter.
<unk> repurchased approximately 1 million shares of its common stock.
Were approximately $6 $6 million.
Since the start of the share repurchase program in March of 2020.
Cumulatively repurchased approximately $61 million of sika shares as of March 31, 2022.
Please note that in addition to allocating cash into capital management initiatives.
Also allocating cash into proactively building work in price it processed inventory.
The pharmaceutical ingredient as a risk management tool given the general environment of heightened.
Fly chain risks.
This concludes the financial update at this point I will turn the call back to Phil.
Thanks, Dan.
Complement to the operational and tactical initiatives discussed earlier in this call we've announced the special cash dividend of 45 per share that will be payable on June <unk> 2022 based on a record date of May 17th 2022 is.
As background, we continually evaluate the best use of cash and we are focused on a disciplined process to deploy cash work and generate the best long term return for our shareholders.
Part of that as part of this process, we consider a wide range of possibilities in a wide range of considerations in place us among the consideration with strong 2020 in 2021 financial performance, it's solid balance sheet and $300 million of procurement options remaining on our BARDA contract that we currently expect to be exercised in the 2002.
Two to 2024 time period, we believe it is an appropriate time to declare a special cash dividend. We also believe that the sizing of the special dividend will allow the company to continue to pursue a full range of growth related initiatives. The implementation of this action reflects confidence that comes from the financial performance of 2020.
And 2021 and also reflects optimism about the business going forward on a related note. We plan to continue to repurchase shares the timing and amount of future repurchases will reflect a range of considerations, including stock price potential timing of procurement orders and cash balance.
Before we turn to Q&A I'd like to reiterate a few points that have been made in the past in support of our view that Seeger offers an attractive combination of existing revenue streams 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. We now have three countries, including the U S that have recognized the need to stockpile, a smallpox antiviral and we continue to work hard to expand that base, while as I have noted many times before our progress on this front is expected to be lumpy and uneven given that.
The international market for Biodefense products 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 and that it would provide scientific and regulatory support for any stockpile expansion as stated on earlier calls we believe the current size of the stockpile of T box and a smallpox outbreak would not be sufficient to treat all those who would need care. If we've learned anything from COVID-19 that certainly appears to be the case.
<unk>.
Third we will be focused on transitioning our U S contract to a long term SNS contract that focuses on appropriate size requirements for the teapot stockpile as well as smoothing out the annual deliveries, which will be critical to supply chain planning and financial predictability.
Fourth our portfolio of growth initiatives has diversified including anticipated success at adding the U S Department of defense to our customer base.
And fifth we continue to pursue and support oncology collaborations and other strategies that could open new markets for T. Pax.
As mentioned earlier, we believe these growth initiatives when viewed collectively have potential for significant value creation and we believe the declaration of a special dividend reinforces. This message. This concludes our prepared remarks, and we will now begin the Q&A session.
Thank you.
Now begin the question and answer session to join the question you May Press Star then one on your telephone keypad.
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Using a speakerphone please pick up your handset before pressing any key to withdraw your question. Please press Star then two.
We will pause for a moment as Colin just joined the queue.
Once again, if you have a question. Please press Star then one please press Star then one now.
Okay.
The first question comes from Ken massive measure.
Please go ahead.
Thank you.
Again, congratulations team on the solid results this quarter.
I had several questions.
First one just for clarification.
You had mentioned.
The Pep trials talking about the volunteers and I wanted to make sure I heard that correctly is it they're going to be registered by the end of <unk> is that correct.
Yeah, Dennis why don't you provide a little more comment on the Pep trial timelines if that's helpful.
Yes.
Timeline calls for both studies to be fully enrolled and the volunteers completing the active phase of their treatments by the third quarter after which the data will have to be QA and QC study reports, but we'd like to be done with the patient part of the study by the end of the third quarter.
Great. Thank you.
And so if the two pet trials go well do you believe that you could file with the FDA for Seth and say 2023.
Yeah.
Dennis.
Okay.
That will depend a little bit on how long it takes to get the data written up as it is.
Scientists have been continually surprised how long it takes to QA QC data and then get the final reports, but certainly it would be our goal to be starting to assemble the FDA package in 2023.
Great.
Switching a little bit you mentioned the DSD summary.
Why they are buying the <unk> and the C.
They'll source supplier and what might be some key points.
Thank were made in that.
Yes, it's a great point, Ken and one I do want to say explicitly that <unk> is approved for smallpox treatment only in the U S. So pep is a label that we're looking to expand as we've been talking about with this study but.
But I think the two critical point that I saw as they have gone through this procurement and published their thinking on why they are doing a <unk> procurement as a sole source is they've already drafted and expanded access protocol, which they indicated it could be used for pet purchase purposes until the FDA approves tee box for Pap. So as we've said the government can.
Certainly purchase product before we have FDA approval.
For use in path and that's exactly what we saw in the Dod document and then the second point that I think it was important was they highlighted our adverse event profile. The tolerability the ability to dose and said really that <unk> is the only product they consider.
To be appropriate.
Four four path and so I think it was nice to see them publish both of those points in those documents and as we said in our comments, we continue to work with them on finalizing that procurement.
Great.
Thank you and then the again congrats on the APAC sales that's exciting to see.
That expand.
So you mentioned the new country wood.
Potentially.
Make it purchases annually do you see that as a model.
Maybe how many other countries will purchase it.
Yes, we're certainly seeing.
A whole variety of models most of which do depend on some type of decision on an annual basis. So for those of you. Following the Canadian orders there was a base order and then there were options in the contract what we see in other countries are they simply do an order every year.
Or intend to do in order every year, it's at their discretion, but it may be just a single contract issued and then a new one in the new year.
But theres no question that since most appropriations from governments are annual.
We see people thinking about a stockpile not as a large initial order, but rather something that they want to build over a period of time recognize this shelf life. So that it become simply an annual purchase which is exactly the way we are hopefully moving to the U S. Government as we have these conversations and think about a 10 year contract where you are you're able.
To have predictability for your supply chain for your annual budget on the government side and for us in being able to plan manufacturing and finances. So we think thats where were headed and certainly we're seeing different models, but the same intent in the international markets.
Great. Thank you.
That's all the questions I had again congratulations on the excellent results.
The next question comes from Kyle Chung private Investor. Please go ahead.
Hi, Thank you for taking my question.
Roughly about a month ago I believe there were press reports.
That you would create a strategic stockpile.
The population against chemical biological radiological radiological nuclear threats.
You know if the <unk>.
Plan is to have either pax or some sort of a smallpox defense included in desktop file.
Hi, Kyle Thanks, Thanks, very much for your question. So the landscape in Europe . As you highlight is is evolving so one of the things that was announced actually now going back over a year was they are going to create a BARDA like entity called hero.
And we've been tracking that very closely with our colleagues at meridian.
The initial focus of that is actually COVID-19.
Vaccines drugs et cetera, and influenza, but their intent is to eventually be a centralized entity that develops those types of products. So that they are available in Europe .
The stockpiling in Europe still remains with country by country decisions. There are at the EU level discussions about the threat there are some pool procurements through NATO.
NATO that can that can provide some benefits, but there isn't yet a fully kind of European stockpiled as articulated chemical biological radiological and nuclear stockpiling intend, yet, but I can say.
You can imagine that is a very active set of conversations that meridian.
And so you have with both national EU, NATO and European colleagues as they start to figure out what the best strategy is for Europe as they think about having this very important product stockpiled.
Thank you.
Thank you.
Once again, if you have a question. Please press Star then one.
Please press Star then one now.
There are no more questions on the phones. This concludes the question and answer session I would like to turn the conference back over to Phil Gomez for any closing remarks.
So I'd like to thank everybody for joining today's call as we talked about we've had a strong 2000 22021, a very strong balance sheet and I think we've demonstrated over the past couple of years, a disciplined approach to use of deploying cash ensuring that we make good.
Good investments and good return of capital, we'll continue to look at potential M&A assets that might be accretive, but again I think we've demonstrated a discipline to make sure that if we deploy cash through share buybacks through forms of dividends.
Certainly the board and the company is very focused on being efficient and disciplined as we approach that and we will continue to evaluate all options as we go into what is essentially kind of the second half of the BARDA 19 see contract with as we said over $300 million in options remaining on it. So I look forward to providing additional updates to our shareholders and we greatly.
Appreciate you joining the call today, and we'll look forward to talking with you on the next quarter's call. Thank you so much.
Thank you.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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