Q3 2022 SIGA Technologies Inc Earnings Call
Welcome to the Seeger business update call.
Before we turn the call I'd like to take a 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 could differ 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 companys filings with the Securities and Exchange Commission, including without limitation. The company's annual report on Form 10-K for the year ended December 31 2021.
And if somebody can report on Form 10-Q and form 8-K.
I would now like to hand, the conference over to Mr. Phil Go ahead.
Thank you for taking the time to join today's call today I'm joined by Dan <unk> Our CFO .
Pleased to have this opportunity to provide a business and financial update to our shareholders will then be happy to take questions with.
With $61 million of international sales this quarter spread over 12 international customer.
<unk> third quarter financial results continue a trend of substantial financial diversification in.
In combination with the first sales of the intravenous formulation of key pox IV Teapots in the first quarter of 2022, and the first sale of oral <unk> to the U S Department of defense in the second quarter of 2022, the sale of oral <unk> or <unk> to 12 international customers in the third quarter of 2022 highlights the.
<unk> and substantial diversification of <unk> revenue base.
Importantly, I would like to note that the new procurement order in August for approximately $26 million of IGT Pops by BARDA and the new Dod procurement contract award in September or up to approximately $11 million of <unk>.
Royalty Pax highlight how diversification can lay the groundwork for future revenues.
In total we have received approximately $115 million of firm commitment procurement orders for <unk>. This year, a portion of which will be recognized as revenue in 2023.
Overall, we believe the expanded number of customers and recent repeat order activity by the Dod emphasizes the growing recognition by governments of the overall importance of health security preparedness, and thereby increasing both the scale and scope of <unk> stockpiling countries can better can be better prepared for the outbreak risks.
Smallpox monkey pox and other viruses in the Orthopoxvirus families.
We believe that broaden broaden procurement of <unk> is being driven by a combination of trends that have been in place for a while as well as by activity in connection with the current monkey pox outbreak with respect to the monkey pox outbreak in which there have been approximately 77000 global cases, and 28000 U S cases since may the outbreak.
Shining a light on the importance of T box given the T box, that's been used to compassionately treat approximately 4000 monkey pox cases in the U S. In many cases internationally and approximately 10 clinical trials have been launched or are planned to be launched in the near term all of which will study the use of key parts of our monkey pox and half of which are <unk>.
Randomized placebo controlled trials.
With regard to the randomized placebo controlled trials two of the trials are sponsored by the National Institute of allergy and infectious diseases or NIAID and the other one is funded by the National Institute for Health care and research in the U K the Ni HR.
Among vinaya trials, one study is U S based and the other study which is being done in collaboration with <unk> is based in the Democratic Republic of Congo.
The U S. Based study seeks to enroll more than 500 participants and will include an open label arm and the DRC based trial seeks to enroll more than 450 participants.
The NIH <unk> UK based study seeks to recruit at least 500 participants randomized placebo controlled trials such as the three trials just mentioned are important because they could provide required data that could be used in any submission with the U S. FDA for an approval approved monkey pox label for T box.
Hold trials is currently unknown in.
In turn this means the timing it likely composition of an F. D. A submission for Monkey pox label for Tee box is also currently on the.
Despite the variability of the specific paths of the monkey pox outbreak. We do believe there are some things related to the outbreak that offer a degree of clarity when viewed with a long-term perspective for.
For instance, we believe that monkey pox will have a continuing global impact going forward, while the short term path of the monkey pox outbreak is uncertain, what we have seen and learned to date indicates there's a meaningful high probability that the United States and other countries across the world will have to deal with Monkey pox cases in future years. It is just unknown as to the ultimate man.
[noise] to to to the cases, the scope of the cases across different communities and where the case levels become consistent or whether case levels come and go periodically.
We believe that in most scenarios there will be a need for T. Pax and at least some of the scenarios could lead to significant sales of two bucks.
Over the coming years, the ultimate amount of Teapots U S sales related that monkey pox will be impacted by case levels. Obviously Additionally, labeling of coupons for monkey pox likely will also materially impact future uses U S sales in connection with Monkey pox treatment.
As a reminder of the F. D. A has indicated that it wants efficacy data in the treatment of monkey pox for full approval of tea pots in the U S for the Monkey pox indications.
Moving to attend general topic, I would like to spend a few minutes discussing our initiative to get a pet label for peacocks, we believe that a post exposure prophylaxis or Pep label for T. Pax could be an important catalyst for U S sales growth in the coming years in the context of supporting an expansion of the U S strategic stockpile with.
With respect to Pep as a reminder, we are working with our D. O D colleagues and executing two clinical trials needed to support regulatory approval up to Fox for post exposure prophylaxis for.
The expanded safety study, we have setup nine clinical sites around the U S and such sites began dosing in the middle of the second quarter of this year enrollment continues to be strong a majority of the study has been enrolled in enrollment is on track to be completed within the next 90 days at the current rate of compliance and activity.
For the T Pax plus Gto's Immunogenicity trial, we have two sites recruiting and screening volunteers. As a reminder, this trial started in early 2022 and enrollment got off to a slow start. This was due in part to post COVID-19 vaccine hesitancy in the U S. Among other factors and.
In coordination with a D O D. We made protocol adjustments and other adjustments so as to normalize the speed of enrollment in light of the adjustments as well as the impact of the monkey pox outbreak enrollment has been running at a substantial rate. If the current rate of activity continues we expect enrollment will be complete in the fourth quarter.
[noise] and recap the goal is to have all the volunteers in both studies complete the active phase within the next 90 days if the studies show the expected results, we would commence assembly activities for a package re requesting regulatory approval of keep Hawks for pets.
At this point I would like to hand, the call over to Dan for the financial update.
Thanks.
Three nine months ended September 30th 2022, Shegetz revenue was approximately $72 million and $99 million respectively.
The third quarter, approximately $61 million of revenue relates to international sales that royalty pox 12 customers of which 10, our new customers.
<unk> also includes approximately $4 million of royalty pack sales to the U S Department of defense.
And the remainder mostly relates to research and development activity.
For the nine months ended September 30th approximately $66 million of revenue relates to international Royal Chief Hawks sales.
Approximately $7 million of revenue relates to sales royalty talks to the U S Department of defense approximately $7 million revenue relates to say is an ivy talks to the U S government and the remainder mostly relates to research and development activities.
Writing income, which excludes interest income taxes and adjustments to the fair value of the warrant was approximately $43 million.
Three months ended September 30th 2022.
For the nine months ended September 30th.
Operating income was approximately $45 million net.
Net income for the three months ended September 30th 2022 was approximately $43 million for the nine months ended September 30th.
Net income was approximately $45 million and taryn.
Diluted income per share for the three months ended September 30th was 45 cents per share and for the nine months ended September 30th.
<unk> income per share was 47 cents.
At September 30th 2022.
Cash balance for the company was approximately $110 million.
This concludes the financial update.
At this point I will turn the car back to Phil.
Thanks, Dan before returned to Q&A I'd like to reiterate a few points, which have been made in the past in support of our view that Sega offers an attractive combination of existing revenue streams that generate strong financial results. When product is ordered and delivered complemented by organic growth initiatives that hold significant potential when viewed collectively first I'd.
Like to reiterate that the monkey pox outbreak has heightened the importance of T. Pax in connection with the treatment of Monkey pox. It is our understanding that <unk> is the leading unlikely the only in many countries therapeutic that is being used or expected to be used in the U S. Europe , Canada Asia Pacific Region Africa, and other areas, we will continue to work with various levels of.
The medical community and governments to provide <unk>, the monkey pox patients and to pursue appropriate stockpile.
Second I would like to highlight that are the ongoing international sales growth initiatives is progressing at a valued creating manner. We now have more than 10 countries outside the U S. But the border tea pots and we continue to work hard to expand that base. While as noted many times before progress on this front is expected to be lumping in uneven given a variety of factors, we believe that a meaningful international market is gradually.
Taking shape.
Third I want to reiterate that the pet based development program represents represents a growth initiatives and that it would provide scientific and regulatory support for any stockpile expansion.
As stated on prior calls we believe the current size of the stockpile teapots in the U S would not be sufficient to treat all those who would need care and many outbreak scenarios a lesson from the COVID-19 pandemic, which is being reinforced by the monkey pox outbreak is that governments need to be more proactive in addressing the health and societal risks associated with virus families.
Fourth we continue to be focused on transitioning R. U S contract or a longterm medicine. That's contract that focuses unappropriate size requirements for the teapot stockpile as well as smoothing the annual deliveries, which will be critical to supply chain planning and financial predictability.
With our portfolio of customers is becoming more diversified this year. We've added the U S Department of defense to our customer list as well as 11 international customers.
We continue to pursue and support oncology collaborations and other strategies that could open new park, it's for tea pot.
As mentioned earlier, we believe these initiatives when viewed collectively a potential for significant value creation. This concludes our prepared remarks, and we will now begin the Q&A session.
Thank you and they will navigating the question and answer questions ask the questions pastime and one on your telephone keypad.
Yeah, you can speak I sign please pick up your handset with my package.
Can be Italia question. Please <unk>.
At the time little apartment entirely Los Angeles, Alaska.
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Hi, Thanks can you hear me I'm not I'm in my car today.
We can hear you fine good stock you damn alright perfect. Thank you. Thank you so much for your time.
Last corner you guys had a 45 cent dividend and 500000 shares I believe you Bob.
Update on that I'm wondering if you can kind of walk me through the.
Why we had that then and nothing in this corner.
Yeah, absolutely. So I appreciate the question Dan so over the past couple of years, we've certainly taken a very disciplined approach to boats share buybacks over the past couple of years, we've done about $60 million in buybacks and as we talked on the first quarter call around the special dividend when we looked at our balance sheet, we had an excess of cash.
<unk> in our needs and we did that dividend going forward will continue to take that disciplined approach.
In looking at all users for cash certainly dividend certainly share buybacks and as we've said over time, we've all we would also look at any.
Any potential M&A that could be accretive and diversify our income base, but the board and the management team take a very disciplined approach to that let me just hand it over to Dan. If you want to just give the numbers for the quarter and then we can take the next question. Thanks.
[noise] Hello.
Yeah, Oh I'm sorry go ahead.
Did you have another question sorry, yeah.
Yeah, I did I'm sorry.
And for me.
No Denver.
I'm sorry, the other question that I heard a lot of I heard a lot about.
On the call today.
Last year, mostly revenue was attributed to smallpox I mean, I think he had more revenue last year.
And that was all for smallpox.
<unk> I'm wondering what you can tell us about that and if there's any visibility into 2023 and you can kind of I don't know if there's any kind of high level guidance you can get in terms of revenue from the smallpox not following you.
Yeah, absolutely. So sorry, sorry, then so our smallpox predominantly our sales are with the U S government. They have a stockpile of 1.7 million courses and that is re supplied on a seven year shelf life basis. It is lumpy. It was not delivered evenly over a seven year.
Period, So we essentially and our current contract have four options each of about $112.5 million as product expired in 2020 in 2021, we had orders from the government to resupply that products. So you saw that in our revenue in 202021. This year at the beginning of the year, we highlighted there were.
Not a lot of explorations in the stockpile. So we did not anticipate an order this year, but in both 23 and 24 we.
We've projected out that we do anticipate product will expire and those options are anticipated to be exercise.
Next year and the year after that so we do anticipate those hundred 12.5 million dollar orders for oral tea pots to come through over the next couple of years. So we have that.
As we said on this call we've been diversifying with department of Defense. So we will continue to work with the U S Department of defense and will continue to work with international customers because as we highlighted on the last call. The orders that we received internationally for the most part are focused on getting immediate product available.
Monkey pox patients in the current outbreak, but what we are turning to in those conversations is the importance of stockpiling in the broader preparedness for things like Monkey pox, but also smallpox because as we talked about on the last call monkey pox, the <unk> or the strain of virus that.
Circulating is fortunately one that historically at a very low fatality rate less than 1% in Africa, but there's a second played that circulated predominantly in the Central African Republic Democratic Republic of Congo, and Nigeria.
That has up to 10% fatality rate and we kind of dodged the bullet by having the one with a lower mortality, but certainly concerns that could come out. This concerns the virus could evolve et cetera. So we are talking with governments globally that they need to be ready for an immediate potential outbreak of monkey pox and their geography, but they have to consider.
Could the virus evolve and very importantly, I have to think about smallpox, which we just much more devastating much more fast moving.
So we certainly talk about that opportunity broadly with our international customers as well.
Great. Thank you just final question, if I can just circled back to the question.
Back.
Much lower than it was I believe than what your precious.
Corner.
100 million cash.
Is there any reason why you wouldn't want to pursue some buybacks now at these prices.
Yeah, we we certainly have a an active share buyback authorization that our board did we have demonstrated over the past couple of years as you highlight we bought back about $60 million worth of shares we certainly with the <unk>.
A large increase in uncertainty around the monkey pox outbreak, we're not in the market as we reported this quarter, but it's something the board is very focused on we certainly had many conversations with investors on the importance of share buyback. So stay tuned on that I. Appreciate the question.
Thank you. Thank you so much.
Your next question kind of <unk> like appetite.
Good afternoon, guys. Once congrats again on the solid results.
Calling in for our suite Romanov today.
I guess my first question is you talked about countries kinda looking to build up their stockpiles of treatments like cheap pups.
What kind of levels of coverage are you, saying, then consider say Europe or in the Asia Pacific say tended to the population of 100 deaths or even higher.
What are you kind of saying on first place.
Yeah. So can appreciate the question and and thanks for the comments.
We're seeing governments historically have certainly thought about smallpox.
In terms of its ability to transmit it typically transmits through respiration speaking et cetera, and so they recognize that the.
The threat is quite large they also recognize and we've seen this in the monkey pox outbreak that you can't order product. When you have an outbreak you have to have it on.
On on hand, and ready to deploy as I've also talked about a lot of times on this call. It is a it is a multi dimensional.
Discussion with those customers. So we typically start with our partner Meridian Medical technology is talking to policymakers public health people on educating them on the availability of T. Pox in the role of anti viral would play in addition to a vaccine.
Some countries do modeling internally, sometimes they'll share that sometimes they do their internal monitoring and we don't bottling and we don't see.
The results until we get an order.
But the main thing that they also have to do is gain the support and find the essentially the dollars in their in their budgets for their governments and one of the things we learned in Covid was a lot of governments don't have the infrastructure.
Four pandemic planning that is pre set up the good news is we now have organizations like HERA in Europe .
Better working broadly with the E U to ensure that they think about preparedness you saw them in the last quarter do an emergency procurement with us. They also announced that press release, they're working on broader requirements and having another procurement with us so it's.
It is certainly evolving but you know in in in Canada, We saw about $50 million in initial orders thinking about their.
Their requirements around smallpox I think they're certainly as we're seeing reevaluating that with a monkey pox outbreak. So we really have to see the final results before we project that out and what both the requirement in the budget is at the end of the day, but the last quarter shows.
Monkey pox is certainly elevated the urgency of those discussions and elevated the importance of being prepared.
Great. Thank you.
You know recently.
Several dash in the U S I'm, multipacks and and how it, especially domestically has that kind of impacted demand or interest or keep us even vaccines.
Okay.
Four four treatments.
Yeah. So one of the unfortunate things in this outbreak was there wasn't a lot of investigation. There certainly was great work by researchers understanding monkey pox in Africa, where it. Unfortunately has had ongoing outbreaks for a number of years, but there wasn't a real understanding of what the morbidity and mortality would be and so.
There's really been an evolution of the perspective of the disease and I would say upfront. There was a initial thought that well it seems self limiting at a lot of patience, we haven't seen a lot of deaths and so there are certainly was.
Lack of urgency and I think I talked about that on the last call with the initial outbreak.
What is it that we've learned an incredible amount of things about monkey pox, but most of them have been.
Very unfortunate and surprising one is it can be have debilitating pain that can have complications as we know with orthopoxvirus as it could lead to blindness. If you have an infection in the eye.
And what you are highlighting with the deaths is unfortunately that especially in severely immunocompromised patients. It can.
Can be deadly.
And that is not that's not a big surprise any anti viral drug does not kill a virus. What it does is it stops the replication. So unfortunately for people in the C. D. C reported on this if you have a severely compromised immune system and are able to eventually generated immune response those people.
<unk> have succumbed to infection. So I think it has raise the awareness in the public health community. It's certainly raised awareness with patient groups who realize.
With their communities the impact it's had not only with them are bidding them retaliate, but having to quarantine for six weeks, which has a huge economic implications. So I think we are in a better place where people understand the implications of the disease much better than they did early on and we're certainly hopeful that will result in.
Better understanding of the requirements for stockpiling and access for patients, which we're working very hard on.
Great.
So I guess my last question.
You kind of talk about the treatments in the U S with a C. D. C is expanding access protocol for T Pax, what sort of <unk>.
You seem so far from.
From patients practitioners.
Anyone involved.
Yeah. So is certainly is an F D. A regulated company, we we want to be very transparent.
About the fact that all of those would be anecdotal and reported but certainly we've read.
With great Pride some of the reports from C. D C and the M. M. W. R from the results from patients that had been interviewed in the media and from physicians who.
We've worked with over this time period to deliver teapot, we certainly encouraged when people have reported within a day or two they've seen symptoms dramatically improve that's consistent with animal data that was used to gain approval, but as I said at the end of the day regulators are very focused on.
Control the placebo controlled studies, that's where you get the most important data to show the benefits of drug provided and.
And we're very focused on collecting that while also looking at the details of the process.
Process that C. D. C is collecting a supportive data to help us understand the benefit of the drug but one of the most encouraging things that has been very consistent with validated pivotal studies that were done with monkey pox and nonhuman primates. So that's that's certainly vintage encouraging and obviously the reason the EMEA approved coupons for Monkey pox.
Earlier this year.
Great. Thank you that's all the questions I have to go back.
Again, if you have a question.
Mmm bye.
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Once again, if you have any questions <unk>.
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Your next question comes from time to time.
Yes, hi, Thank you very much for taking my call I just had a couple of quick questions.
Regardless of the pricing.
Especially with a foreign buyers.
Buyers you had alluded to in the last call that the numbers were in kind of the roughly.
Roughly 800 to $1000 per dose is that can you give us a confirmation that that still is the case.
Yeah. We are pricing is is based on volume.
So the publicly disclosed numbers based on the contracts that have been published a lotta times governments will publish as in Canada. It was a little north of $900 for the orders we had there and we're seeing certainly consistent with that in for smaller volume higher than that but I think that's a pretty good surrogate.
For what we're seeing with government sales in in in bulk.
Certainly I would reiterate for those that are new to the call. All of these are bulk sales <unk>.
Directly to governments that are done, we're certainly evaluating and planning.
As we get these randomized controlled trials to think about the private market the value that we believe after we get placebo control data would provide the patients.
That would be a separate sales channel, but just wanted to make that point. Appreciate your question, Let me get another one.
And then.
In regards to the trials and I know this was came up and the last question and.
It was ordered to as you were describing some of the press releases and some of the anecdotal evidence.
Do you have an idea of what the actual endpoint is that either the F D a or the C. V. C. R. I was actually looking for is it a.
You know specific number of days, you know as far as alleviation of of of symptoms.
Is it the the pain scale.
You know dropping and have do you have any kind of anecdotal or firm.
You know a clues as to what exactly that they're looking for.
Yeah, we do certainly the primary one that's being evaluate it is time to resolution of symptoms. So when lesions heal over scab falls off and and you see the resolution of symptoms and we're looking for the impact of the drug on that there are a variety of secondary endpoints around viral load and other things that will be looked at.
But the primary one.
Is is the resolution of symptoms and the speed at which that happens in placebo versus those that are on drugs.
Okay. Thank you very much I appreciate it.
You are next question at the phone will that work.
The other thing.
Thank you guys for taking my another question.
One thing that's really interesting like you were talking about expanding to 10 other countries.
Outside the U S and especially with a lot of the new customers.
You had mentioned in a couple of calls ago about getting kind of your first pet customer and growing out there.
Can you share any progress on what sort of countries are areas are you seeing a lot of attention from shapes, Indonesia, Japan, China some of those areas.
Yeah. So I appreciate the follow up Ken as we've said a lot of countries requires not to disclose some have publicly announced the arrival of products. So there was a press release out of South Korea. For example that they had their first delivery that they talked about broadly we have multiple customers in the Pacific.
Asia region continue to have conversations with additional countries. There we've had our first customers in this quarter in the Middle East region. So certainly continuing discussions broadly in that region and then as you highlighted we have both the hero procurement, which was an emergency procurement on behalf of the European.
Union and we've had specific sales inside the European Union. So it's been geographically very broadly diverse. We also talk to schools procurement organizations that help regional areas purchase products like this to deliver so some of our contracts ultimately be with.
People liked HERA on behalf of pools of countries. So it is very broad geographically and we certainly expect that is countries in specific regions start to announce and talk about the arrival of the product. It's we've seen that pick up conversations in that region with other players that don't Wanna be caught with.
Having drug on hand, so we continue to press the sales with a partner Marie.
Great. Thank you that's all I ask.
Again congrats.
One question contact Scott.
Craft.
Hey, guys How're you doing.
Radio.
I'm. Good my main question was about the stock buyback with one of the things you've been excited about over the last couple of years and I know.
The queue to stop by the end of May when it got around $758 a Sharon.
The fact that this quarter, we had bought anything back but now moving past that more are prices I just want to reiterate that I hope that we're getting aggressive and the buyback, especially since.
It's tied to a P E ratio nauseous price because I feel like a better value you know cause the company's growing so.
Hopefully we're still.
Active against that and.
The higher volume two that hopefully where.
Getting a big share of it back.
That's just a statement I Wanna make the only question I had as I was kind of a little bit involved in the government.
The continuing resolution go with some of my representatives in such stripped out at the last minute do some politics and works I mean expecting that hopefully be put back in the bill.
In December with Covid money and stuff and debated on some merits heavy did you guys have any light to shed on that.
Of what's going on with any more funding for monkey pox.
Yeah. So it's got appreciate the question and you know it is it's always hard to predict what's the U S government's gonna do but we certainly are very active in.
Those conversations both with administration and Capitol Hill, emphasizing the importance of Monkey pox. We're also.
Importantly, different congressional representatives have different perspectives on preparedness I would say some are.
Very concerned about the biological threat of smallpox and the way the world has a lot of conflict surround it that we should be very concerned about that and so we certainly think that's a stakeholder community. That's important to talk about there are others that are very worried about emerging infectious disease and the fact these viruses can show up over and over again and they worry about.
Other strains of Monkey pox that could show up so we're certainly focused on whatever the best supplemental funding strategy could be.
The White house updated their Biodefense strategy recently, they do it every coupla years is nothing dramatically new in it but they reiterate that in a virus family in one of the things you want is an antiviral that has efficacy and pre pre develop and this was a perfect example.
For both Congress and administration that having at least in the U S 1.7 million courses.
Put us in a good position now we kind of fell down and how we distributed that efficiently and effectively and there's a lot of discussions around that but I would broaden your your question to <unk>.
Broader preparedness for both of the the threat of National Security smallpox, but also monkeypot. So I appreciate the question right.
Great. Thanks.
This complaint that question and answer my question.
Okay.
I can relax.
So I'd just like to thank everybody for joining the update call. It's been a very busy quarter for us with working on international sales and <unk>.
Getting a lot of clinical studies up and running as always like to extend a great. Thanks to all the members of the senior team and our partners for doing incredible volume of work. This past quarter to launch. These studies get product delivered throughout the world and we look forward to talk to you on the next quarterly call in and I'm sure in between so take care and thank you again.
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