Q2 2023 SIGA Technologies Inc Earnings Call

Welcome to the <unk> business update call.

Before we turn the call over to senior 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 forward looking statements.

Good 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 and Exchange Commission, including.

Without limitation the company's annual report on Form 10-K for the year ended December 31st 2022.

And its subsequent reports on Form 10-Q and form 8-K.

I'll now turn the call over to your host Phil Gomez Chief Executive Officer, Mr. Gomes, you may begin Sir.

Thank you for taking the time to join today's call today I'm joined by Dennis Hruby, Our Chief Scientific Officer, and Dan luck Shire. Our CFO . We are pleased to have this opportunity to provide a business R&D and financial update to our shareholders will then be happy to take questions.

I'd like to start this call by highlighting our expectations for the second half of 2023 that will be achievable based on the work we have done in the first half of the year in the second half of 2023, we expect the company to generate approximately $113 million of revenue from deliveries of oral T parts to the U S strategic national stockpile.

And another 30 million to $45 million of revenue from a broad cross section of domestic and international delivery.

Including the deliveries of oral T parts to the department of defense.

<unk> parts of the U S strategic national stockpile, and oral T pox two international customers.

Just on such revenue expectations, we expect to generate full year 2023 pretax operating income of between 90 and $100 million representing strong growth over the prior year.

These financial expectations reflects successful efforts to diversify our revenue base.

Bankers by the aforementioned 113 million dollar order from the U S Department of health and human services under our 19th see contract.

Expected deliveries of T box to a broad cross section of customers is another example of our commitment to consistently meet global demand for tea pot.

Beyond 2023, we will continue to execute on our strategic plan to maximize growth opportunity.

I'll ask Dennis to provide details on two growth related initiatives for sika, one the Pep program for royalty pox and two the <unk> randomized control trials and observation observational trials Dennis.

Thanks, Phil.

Regarding the Pep label expansion program, all cheap box as a quick background update earlier. This year, we noted that the company met enrollment targets for both the Immunogenicity trial and expanded safety trial for.

Or the expanded safety trial clinical trial results recently became available as expected we did not see any drug related serious adverse events.

Jennie O plus T box Immunogenicity trial as a quick reminder, the goal of this trial was to show the T box did not reduce the immune response to the vaccine.

A supplemental and separate through our current approval for the treatment of smallpox.

In the preliminary analysis of the trial data, we do not see a meaningful difference between the immunogenicity of those that received the Jennie O. This vaccine.

BOE compared with those that were seeing the genius vaccine, while the T box, which is consistent with what we expected.

For reasons, we don't currently understand the number of volunteers that has a measurable immune response to the Jennie o's vaccine in both the placebo and Tee box groups was lower than expected.

At this point in time pending further investigations and the effects of the lower that number lower than expected number of responders that we currently do not have sufficient numbers or data points to make the non inferiority statistical determination as originally planned as the primary endpoint of the Immunogenicity.

While.

We're investigating why we saw lower overall percentage of volunteers generating an immune response to the vaccine to be clear. We're investigating immune response levels of volunteers to the vaccine. The analyses are not about the efficacy or safety of T box, nor are they about T boxes impact on those individuals who are.

Selling an immune response.

In terms of getting the maximum and most time, we'd benefit from Immunogenicity trial in the context of the stockpile expansion conversations with the government. It's worth the extra time and effort default investigate reasons for the overall lower than expected response rate.

We plan to work through a review of the data political crowd processes and provide an update on the next investor call I went data becomes available.

As contextual comments before I shift gears I'd like to note that in regard with Pep program. We believe that the totality of the studies and trials that have been conducted including the image initially trial as well as previous our animal challenge experiments and clinical trials are supportive of the use of our T box and Pep.

Pending discussions and review with the FDA.

In the case on Orthopods epidemic being M Pax or smallpox use of T box per pad will be important to reduce the morbidity and mortality in the population.

With respect to impact trials, five randomized controlled trials as well as multiple observational studies continue to enroll patients and collect data for example, as of August 4th denial Stomp trial had enrolled 117 patients and then I had palm trial being conducted in the DRC.

He had enrolled 188 patients or.

While the Inbox case count this summer has been mild in comparison to last summer, we will continue to coordinate with government agencies on the ACA RCT and observational trials.

As noted in the last Investor call Rct's are contemplating and the aggregation of their data as it is a blinded with the idea of potentially reaching sufficient subject numbers for regulatory evaluation.

While the short term perhaps of the inbox outbreak is uncertain. We continue to believe is that there's a high probability that you that the United States and other countries across the world will have to deal with the impacts cases in future years.

Just unknown as to the ultimate magnitude of the cases.

Other cases.

Across different communities and while the case levels kind of consistent or one of the cases almost come in golf periodically.

We believe that in both scenarios there will be a need for T box.

At this point I'd like to turn the call over to Dan for financial update.

Thanks Dennis.

For the three and six months ended June 30th 2023 figures.

<unk> revenue was approximately $6 million and $14 million respectively.

For the second quarter.

And then the $1 million revenue relates to an international royalty pox and approximately $5 million relates to research and development activity.

Connection with the international sale, but royalty Pax. So is first made it was made to a first time customer.

For the six months ended June 30th.

Approximately $7 million of revenue relates to product sales and support of activities.

And approximately $7 million of revenue related to research and development activity.

In connection with product sales 5 million sales were to the U S Department of defense.

Pre tax operating loss, which excludes interest income and taxes.

It was approximately $5 million for the three months ended June 30th 2023.

For the six months ended June 30th.

<unk> operating loss was approximately $7 million.

Net loss for the three months ended June 32023 was approximately $3 million.

For the six months ended June 30th net loss was approximately $4 million.

In turn fully diluted loss per share for the three months ended June 32023, with four cents per share.

And for the six months ended June 30th.

Fully diluted loss per share was five cents.

At June 30 of 2023, the cash balance for the company was approximately $76 million.

During the second quarter figure declared and paid a special cash dividend of 45 cents per share or approximately $32 million in total.

Additionally for the six months ended June 30th.

The company repurchased approximately $11 million of its common stock.

As noted by Phil earlier in the call for the second half of 2023.

We are targeting approximately $113 million of revenues.

Deliveries of royalty pox, two the U S strategic national stockpile.

And between $13 billion at $45 million.

Of revenues from a broad cross section of domestic and international deliveries.

Including $10 million $15 million of revenues from deliveries of I V. T pox, two the U S national strategic National stockpile in connection with a $25 million out of the order by the U S government in 2022 under the 19 see contract.

Search revenues in the second half of the year when.

When combined with the financial results of the first half of 2023.

I expect you to generate full year 2023 pretax operating income.

Between $90 million and $100 million.

This concludes the financial update at this point I will turn the call back to Phil.

Thanks, Dan before we open the call to Q&A I'd like to reiterate a series of points in connection with our business.

First while the <unk> outbreak has receded over the past several months. It is likely to continue at some level and has also strongly highlighted the long term importance of T box in connection with the treatment of Orthopoxvirus says it is our understanding that <unk> continues to be the leading in many countries. The only therapeutic used to treat <unk> in the U S. Europe .

Canada, The Asia Pacific Region Africa in other areas.

The usage of stockpiling of T box across a broad range of customers highlights the differentiated value of key part.

Second our ongoing international sales growth initiative is progressing in a value creating manner, we have a solid base of international customers through which we continue to pursue additional customers as well as follow on orders order activity over the past 12 months shows that a meaningful international market is taking shape.

Third the pet based development program continues to represent a growth initiative and that it may provide scientific and regulatory support for any stockpile expansion as <unk>.

On prior calls we believe the current size of the stockpile of key Pax in the U S would not be sufficient to treat all those who would need care in many outbreaks scenarios.

The lesson from the Covid pandemic, which has been reinforced by the impasse outbreak is that governments need to be more proactive in addressing the health and societal risks associated with viral outbreak.

Fourth we continue to be focused on transitioning our U S government contract to a long term asset that's contract that focuses on appropriate size requirements for the teapot stockpile as well as smoothing the annual deliveries, which would be critical to supply chain planning and provide a higher degree of financial predictability.

With the expansion of our portfolio of customers is resulting in a diversification of the company's revenue base, that's enhancing for future revenue prospects.

Finally, I'd like to provide a brief update on the CEO search I am looking forward to retire later this year and I'm also focused on ensuring a smooth transition to the next CEO . The board continues to conduct the search in a diligent and deliberate manner and Segal will provide an update when the search concludes.

This concludes our prepared remarks, and we will now begin the Q&A session.

If you would like to ask a question. Please press star one on your telephone keypad now.

You'll be placed into the queue.

Received please.

Please be prepared to ask your question when prompted.

Once again, if you have a question. Please press star one on your phone now.

And our first question comes from Paul Yeah.

Hi, Mommy from Edison Group.

Your line is.

Yes. Thank you very much for taking my questions.

Just a question is has there been any further discussion under the 19 T BARDA contract regarding incremental orders.

We're stockpiling after 2024.

Yeah.

Yes. Thank you for the question so certainly with the exercise of the options. This year, we have two remaining options one for oral one for IV, which we've.

Indicated would be required in 2024 to be able to maintain the stockpile and we continue to have discussions with the U S government on the next phase contract.

Which would go beyond 2024.

Those are progressing well, we were able to discuss the requirements as they go forward. The U S. Government at Asper has indicated they are reviewing requirements broadly in this space. So it is an opportune time to have those conversations and we'll certainly keep.

Everyone updated as those conversations result, and ultimately what we anticipate would be an RFP for resupply of tea pods as well as ultimately a contract award, but those are continuing with the goal of getting it in place as the options and the current contract are fully executed.

Okay. Thank you and as a follow up on I guess relating to this have you seen any incremental traction for international orders or.

For instance, do you see any interest for international jurisdictions for smallpox and monkey pox relating to stop.

Stockpiling.

Yes, we certainly do I think international sales this year will follow U S government sales, we anticipate higher numbers.

In the second half of the year, we have had countries do follow on orders.

We have had.

Countries start talking much more about smallpox stockpiling versus just getting material for <unk>. So as we've said on this call. Many times. It is an evolutionary process with governments needing to acknowledge the need for T. Pax identify a requirement and get funding to be able to do it but we do see.

Those conversations progressing.

Look forward to the second half of the year as we start to recognize some of those sales.

Hi, Thank you just one last question on the PDP enrollment status that ESI, how well you had mentioned that there were some.

Just any data that was different from expectations. How does this affect your timing or for in terms of potential next.

Next after label expansion or our study readouts.

Yes, as we noted we've completed the safety study and we didn't see any drug related serious adverse events and we're focused on a more detailed review of the Immunogenicity statistics of the tea pots, plus Jennie O set of given we didn't see the number of volunteers have a positive Immunogenicity result, Virginia supposed than placebo.

And of those receiving T box.

Clearly this is a month or so later than we anticipated and doing the readout.

And we will prepare our filing in parallel to the analysis of the Immunogenicity study it would be speculative right. Now however to comment on how much. This may delay our submission, but we're certainly very focused on finalizing that data.

Okay. Thank you very much.

And our next question comes from Scott Sibley from the Equis group.

Your line is open.

Hey, how are you guys doing I'm glad to see we bought $11 million.

Stock back so I guess, that's about 2 million shares which is almost 3% of the company.

According to my math, we only have about <unk>.

$12 million less than if we're already buying this quarter were.

Be about done this quarter is the company planning on doing another re up another stock buyback keep going with this at these prices.

So I'll, let Dan update on the on the statistics that we had Scott good to talk to you I will say.

At a high level the board and management as we have said review a multitude of factors as we think about buybacks and special dividends and other uses of cash, but as you know over the past couple of years.

We have done the special dividend as well as buybacks.

At a level of I think in aggregate about $145 million, but Dan do you want to comment on the specifics.

Yeah, certainly so the existing program has $21 million.

Remaining authorization left and then.

Once that is used or expires, we would always talk to the board about next steps.

Gotcha, Okay I didn't realize we had 21 I felt were.

Half of that reservoir.

Alright, well that's good news good job.

Yeah.

Yeah.

And if there are any final questions. Please press star one on your Touchtone keypad now.

Okay.

And seeing no final questions I'll turn the call back over to our house.

I'd like to thank everybody for joining today, we look forward to providing additional updates as we get information on the Pep study and talking to you next quarter. So thanks for everybody for taking the time to take care Bye bye.

The meeting has now concluded.

Thanks for joining and have a pleasant day.

Thank you.

Okay.

Yeah.

Okay.

The host has ended this call goodbye.