Q3 2023 SIGA Technologies Inc Earnings Call

Speaker 1: Welcome to the SIGA Business Update Call. Before we turn the call over to SIGA 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.

Welcome to the Seeger business update call before we turn the call over to CECO management. Please note that any forward looking statements made during this call are based on management's current expectations and observations.

And is 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 a discussion of factors that could cluster.

Speaker 2: SIGA does not undertake any obligation to update publicly any forward-looking statement to reflect events or change circumstances after this call.

Speaker 3: For 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 31, 2022, and its subsequent reports on Form 10-Q and Form 8-K. I would now like to turn the conference over to Phil Gomez, Chief Executive Officer. Thank you. Please go ahead.

<unk>. 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 to want 2022, and its sub 60 with reports on Form 10-Q, and form 8-K, I would now like to turn the conference.

Back to Phil Commerce, Chief Executive Officer. Thank you. Please go ahead.

Speaker 4: Thank you for taking the time to join today's call. Today, I'm joined by Dennis Ruby, our Chief Scientific Officer, Jay Varma, our Chief Medical Officer, and Dan Luxchar, our CFO .

Thank you for taking the time to join today's call today I'm joined by Dennis Hruby, Our Chief Scientific Officer, J Verma, our Chief Medical Officer, and Dan <unk> CFO. We are pleased to have this opportunity to provide an update to our shareholders will then be happy to take questions.

Speaker 5: We are pleased to have this opportunity to provide an update to our shareholders. We'll then be happy.

Speaker 6: I'd like to start this call by highlighting key financial targets for 2023. We expect orders for oral and IVT pox to be approximately $164 million in 2023 with a substantial percentage of those orders to be delivered.

I'd like to start this call by highlighting key financial targets for 2023.

We expect orders for oral and IV <unk> to be approximately $164 million in 2023 with a substantial percentage of those orders to be delivered in 2023 as such as previously disclosed.

Speaker 7: As such, as previously disclosed, we are targeting 2023 pre-tax operating

We are targeting 2023 pre tax operating income of between $90 million and $100 million based on the timing of deliveries that are currently being coordinated among the company our supply chain and our government customers.

Speaker 8: of between $90 million and $100 million based on the timing of deliveries that are currently being coordinated among the company, our supply chain, and our government customers.

Speaker 9: target pre-tax operating income for 2023 is based on the following target revenue.

Target pretax operating income for 2023 is based on the following target revenues.

Speaker 10: Approximately $113 million of revenues from fourth quarter delivery of oral teapots to the U.S. Strategic National Stockpile. Approximately $5 million of revenue from fourth quarter deliveries of oral teapots to the U.S. Department of Defense.

Approximately $113 million of revenues from fourth quarter deliveries are all key parts to the U S strategic national stockpile.

<unk> $5 billion of revenue from fourth quarter deliveries of oral <unk> to the U S Department of defense.

Speaker 11: $15 to $18 million of revenue from fourth quarter international deliveries of oral teapot.

$15 million to $18 million of revenue for the fourth quarter international deliveries of oral <unk> to the two European countries in connection with the recently announced here a joint procurement framework contract and up to $50 million of revenue from fourth quarter deliveries of IGT talks to the U S strategic national stockpile.

Speaker 12: European countries in connection with the recently announced HERA Joint Procurement Framework contract, and up to $50 million of revenue from fourth-quarter deliveries of IV T-pox to the U.S. Strategic National Stockpile.

Speaker 13: To the degree that any target deliveries and related target revenues and pre-tap operating income do not occur in the fourth quarter of this year due to any timing constraints in connection with our customers or our packet

To the degree that any target deliveries and related target revenues and pre tax operating income do not occur in the fourth quarter of this year due to any timing constraints in connection with our customers or our packaging vendor, we expect that such deliveries and revenue would occur in January of 2024 in particular, one thing that could impact the timing of deliveries.

Speaker 14: We expect that such deliveries and revenue would occur in January of 2024. In particular, one thing that could impact the timing of deliveries between fourth quarter 2023 and January 2024 is the packaging of final drug products. This step of the process has been taking long.

Fourth quarter 2023 in January 2024 is the packaging the final drug product.

Step of the process has been taking longer this year than in prior years and longer than expected. So far this year Needless to say, we have been in daily contact with our packaging vendor and we continue to work together on getting packaging that as soon as possible and with an eye towards making the remaining target deliveries in 2023.

Speaker 15: and longer than expected so far this year. Needless to say, we've been in daily contact with our packaging vendor and we continue to work together on getting packaging done as soon as possible and with an eye toward making the remaining target deliveries in 2023.

Speaker 16: Beyond 2023, we will continue to execute on our strategic plan to maximize growth.

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

Speaker 17: I will now ask Dennis to provide an update on the PEP and MPOT's programs for oral PEPOT.

I'll now ask Dennis to provide an update on the Pep and <unk> programs for our LP box Dennis.

Thanks Bill.

Speaker 18: I'd like to provide a summary of the strategy for PEP as we received some questions on this topic after the last investor call.

To provide a summary of the strategy per pad as we received some questions on this topic after the last investor call.

Speaker 19: Based on the studies and trials that have been conducted, we believe TPOX will work for PEP.

Just on the studies and trials have been conducted we believe T box of work per pack.

Speaker 20: The FDA has not asked for any additional studies to prove the efficacy of TPOX for PEP. They have asked for extended safety data in humans for treatment for 28 days, which we've completed.

The FDA has not asked for any additional studies to prove the efficacy of T box per cap.

I have asked for extended safety data in humans, where treatment for 28 days, which will be completed.

Speaker 21: In a smallpox outbreak, teapots would likely be used in combination with a smallpox vaccine.

And our smallpox outbreak T box would likely be used in combination with a smallpox vaccine. So the Jennie O plus <unk> study, we will discuss designed to slowly evaluate T box interferes with the generation of an immune response to the vaccine.

Speaker 22: So the GENIOSMOS T-POX study we will discuss is designed to solely evaluate if T-POX interferes with the generation of an immune response to the vaccine.

Speaker 23: Let me now provide a quick recap of what was noted in the last semester call.

Let me now provide a quick recap of what was noted in the last investor call.

Speaker 24: Earlier this year, the company met enrollment targets for both the immunogenicity trial and the expanded safety trial. For the expanded safety trial, as expected, the clinical trial result did not show any drug-related serious adverse events.

Earlier this year the company met enrollment targets for both the Immunogenicity trial and the expanded safety trial for.

For the expanded safety trial as expected.

<unk> result did not show any drug related serious adverse events.

Speaker 25: For the JYNNEOS plus T-POX immunogenicity trial, as a quick reminder, the goal of this trial was to show that T-POX did not reduce the immune response to the vaccine.

Jennie O 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.

Speaker 26: This is supplemental and separate to our current approval for the treatment of smallpox.

Supplemental and separate to our current approval for the treatment of smallpox in the preliminary analysis of the trial data performed by our CRO.

Speaker 27: In the preliminary analysis of the trial data performed by our CRO, the results did not show a meaningful difference between the immunogenicity of those that received JYNNEOS vaccine while on placebo compared with those that received JYNNEOS vaccine while on T-PARTS, which is consistent with what we expected.

<unk> did not show a meaningful difference between the image misdeeds of those that received genius vaccine, while on placebo compared with those that receive genius vaccine quality box, which is consistent with what we expected. However, as noted on the last investor call. The CRO results indicated that a number of.

Speaker 28: However, as noted on the last investor call, the CRO results indicated that a number of volunteers that had measurable immune response to the JYNNEOS vaccine in both placebo and T-box groups was lower than expected.

Tiers that had measurable immune response to the genius vaccine in both placebo and Tee box groups was lower than expected.

Speaker 29: Given that this result, one, would prevent non-inferior statistical determination from being the primary endpoint as originally planned, two, is unexpected.

Given that this result, one would prevent non inferior statistical determination from being the primary endpoint as originally planned two is unexpected.

Speaker 30: and three is scientifically odd. We've been investigating the CRO results over the past series of months.

And three scientifically odd we've been investigating <unk> results over the past several months.

Speaker 31: Since the last investor call, in addition to conducting many other investigations.

That's the last Investor call. In addition to conducting many other investigations, we said a subset of the Jennie O. Both T box samples for our colleagues at CDC.

Speaker 32: We sent a subset of the Jynneos most TPOX samples for our colleagues at CDC who performed their validated TRNT analyses on them. These samples showed the expected immune response.

Performed they're validated <unk> analysis on these samples showed the expected immune responses.

As such, we're not working on getting the entire set of samples, re-analyze, and in parallel, working toward a supplemental NDA submission in 2024. We're grateful to our colleagues at CDC for this collaboration, and are pleased to have identified a path forward.

Such we're now working on getting the entire set of samples, we analyze and in parallel working towards a supplemental NDA submission in 2024.

<unk> to our colleagues at CVC for this collaboration are pleased to have identified a path forward.

In terms of getting the maximum and most timely benefit from the immunogenicity trial in the context of stockpile expansion conversations with the government

In terms of getting the maximum and most timely benefit from the Immunogenicity trial.

Context stockpile expansion conversations with the government.

We believe the stuff taken over the past series of months is worth the extra time and effort to ensure the highest quality data. To be clear, we're working on finalizing the immune response levels of volunteers in the vaccine. The analyses are not about the efficacy or safety of TPOX, nor are they about TPOX's impact on those individuals who are showing an immune response.

We believe the steps taken over the past surges of months is worth the extra time and effort to ensure the highest quality data.

To be clear we are working on finalizing the immune response levels of volunteers in the vaccine.

Analyses are not about the efficacy or safety of T box, nor are they about T box impact on those individuals', we're showing an immune response.

To reiterate contextual comments made on the prior investor call, we believe that in regard to the PEP program, the totality of the studies and trials that have been conducted, including the immunogenicity trial, as well as previous animal challenge experiments and clinical trials, are supportive of the use of TPOX for PEP pending discussions and review with the FDA.

To reiterate contextual comments made on the prior investor call. We believe that in regard to the Pep program.

Holiday at the studies and trials that have been conducted including the Immunogenicity trial as well as previous animal challenge experiments.

The trials are supportive of the use of T box for patent pending discussions and review with the FDA.

In the case of an orthopox virus epidemic, it impacts or smallpox. Use of keypox for pets will be important to reduce the morbidity and mortality in the population.

In the case of an ortho pox virus epidemic impacts for smallpox use of T box for Pep will be important to reduce the morbidity and mortality in the population.

15 years, let me also provide an update on the current inbox trials involving T-Pox, which include five randomized control trials, as well as multiple observational studies.

Shifting gears, let me also provide an update on the current impacts trials involving T box, which includes five randomized controlled trials as well as multiple observational studies.

As a general comment, these studies continue to enroll patients and collect data.

As a general comment these studies continue to enroll patients and collect data.

to provide a couple of specific data points. In Africa, as of October 19th, the NIAID PALM trial being conducted in the DRC had enrolled 314 patients, a big jump from the 188 patients noted in the last investor call.

To provide a couple of specific data points in Africa as of October 19th.

I'd Palm trial being conducted in the DRC had enrolled 314 patients a big jump from the 188 patients noted in the last investor call.

In the NIAID STOMP trial, as of October 31st, there were 169 patients.

I.

Stomp trial as of October 31.

169 patients.

The increase in patient numbers in the aforementioned trials highlights the case counts continue to accumulate, especially in Africa. Importantly, it also provides a glimpse to the overall global health risk posed by orthopoxviruses. Jay will provide further comments on mpox and orthopoxviruses.

<unk> patient numbers and the aforementioned trials.

The case counts continue accumulate, especially in Africa importantly, it also provides a glimpse to the overall global health risks caused by Orthopoxvirus, Jay will provide further climate impacts and orthopoxvirus.

Before I turn the call over to Jay, I'd like to provide a quick update on our pediatric program for T-POX. Having completed a clinical trial that demonstrates equivalence of drug exposure and volunteers given the T-POX oral capsules or the powder for reconstitution liquid formulation, we're commencing advanced development. We've chosen a scale-up manufacturer to prepare clinical supplies, and we're in the process of designing a clinical development program which would support licensees.

Before I turn the call over to Jay I'd like to provide a quick update on our pediatric program for deep box.

<unk> completed the clinical trial that demonstrates equivalents of drug exposure.

<unk> given the T box oral capsules or the powder for reconstitution liquid formulation, we're commencing advanced development, we've chosen a scale up manufactured to prepare clinical support.

And we're in the process of designing a clinical development program, which will support licensure.

We consider this program to be an exciting path for potentially providing protection to the pediatric population. At this point, I'll turn to...

We consider this program to be an exciting path for potentially providing protection to the pediatric population.

At this point I'll turn the call over to Jay.

Thanks, Dennis. As Phil and Dennis have mentioned on this call in prior calls, and pox preparedness in more broadly orthopox fibrous preparedness are essential from a public health perspective. As such, I am glad to have joined. Thank you.

Thanks Dennis.

And Dennis had mentioned on this call and prior calls and Tox preparedness and more broadly orthopoxvirus preparedness, our essential from a public health perspective.

As such I am glad to have joined <unk> as an officer.

As the chief medical officer, I am responsible for leading medical affairs. This means that I am providing support for the overall goals of CIGA, and in particular, I'm leading our efforts to build broader awareness of the risk and public health impacts of smallpox, mpox, and other orthopedic diseases.

As the Chief Medical Officer, I am responsible for leading medical affairs.

I am providing support for the overall goals of Seagate and in particular in leading our efforts to build broader awareness of the risks and public health impact of smallpox.

<unk> in other words, the pox virus outbreak.

and to promote strategies and procurement and treatment that can support the highest levels of public and individual safety. I will represent SEGA, an engagement with leaders from patient advocacy, medical organizations, professional societies, global and regional health agencies, and other public health and defense organizations around the world.

To promote strategies in procurement and treatment that can support the highest levels of public individual safety I will represent so you get an engagement with leaders from patient advocacy medical organizations professional society global and regional health agencies, and other public health and defense.

<unk> around the world.

As background, one of the key reasons that I was highly interested in joining the C the team was that I believe my experience in skills are a good fit for the C.

Background, what are the key reasons that I was highly interested enjoying the key the key was that I believe my experience and skills are a good fit.

As a quick introduction, let me provide a brief summary of my professional background.

As a quick introduction, let me provide a brief summary of my professional background.

I am a physician and epidemiologist who has led epidemic responses, developed global and national policies, and led large-scale programs that have saved hundreds of thousands of lives in China, Southeast Asia, Africa, and the United States.

I'm a physician epidemiologist, who is like epidemic responses developed global and National policy and the large scale programs that have saved hundreds of thousands of lives in China, Southeast Asia Africa, and the United States.

2001 to 2021, I worked for the U.S. Centers for Disease Control and Prevention with postings in Atlanta, Thailand, China, Ethiopia, and New York City.

From 2001 to 2021 I've worked for the U S centers for disease control and prevention with posting Atlanta, Thailand, China, Ethiopia, and New York City.

And from April 2020 to May 2021, I served as the principal scientific spokesperson and lead for New York City's COVID-19 response.

And from April 2020 to May 2021, I served as the principal scientific spokesperson and lead for New York City's COVID-19 response.

Before I turn the call over to Dan, I would like to make some brief remarks in connection with the small talks and in talks for Until.

Before I turn the call over to Dan I would like to make some brief remarks in connection with the smallpox and Tox threat.

The risk of these threats is growing, with many public health officials arguing that we have entered a new age of pandemic.

The risk of these threats is growing with many public health officials, arguing that we have entered a new age of Pandemics.

with development, urbanization, migration and climate change, humans are interacting with animals in the environment in new ways, accelerating the risk of new diseases spilling over into humans.

Development urbanization migration and climate change humans are interacting with animals and the environment in new ways accelerating the risk of new diseases spilling over into humans.

Humans are also increasingly conducting research on pathogens, using novel techniques and biologists.

Humans are also increasingly conducting research on packaging using novel techniques in biology.

This increases the risk of the accidental spillover of a dangerous pathogen in a lab, or, more worrisome, the deliberate release of a dangerous pathogen as an active bioterrorist.

This increases the risk of the accidental spill over other dangerous pathogen in the lat.

Or more worrisome deliberate release of dangerous pathogen.

Active bioterrorism.

Specifically with respect to smallpox.

Specifically would respect the small talk this tragedy.

It increased armed conflict around the world, particularly involved in countries that have the least you have developed a biological weapon increases the likelihood that a rogue actor our nation could deliberately released the buyers.

armed conflict around the world, particularly involving countries that are believed to have developed biological weapons, increases that likelihood that a rogue actor or nation could deliberately release the virus.

For MPOX, while cases have declined globally since the 2022 pandemic, outbreaks continue to occur in East and Southeast Asia and Latin America.

Or impacts while cases have declined globally.

22 pandemic outbreaks continue to occur in east and South East Asia, and Latin America.

Particularly concerning are the high and rising cases in the Democratic Republic of Congo involving a subtype of the virus known as clade one that causes more severe illness and death than the subtype that circulated around the world during the recent pandemic.

Particularly concerning or the high and rising cases in the Democratic Republic of Congo involving a subtype of the virus known as clean one that causes more severe illness and death in the subtype circulated around the world during the recent pandemic in.

In the May 2023 issue of the medical journal, the Lansing, several prominent public health experts flag their concern that this subtype is more similar to smallpox and that earlier to stop transmission in Central Africa could lead to a far worse end-pox pandemic than the 2022.

In the May 2023 issue of the medical journal the lancet several prominent public health experts flag. They are concerned that this subtype is more similar to smallpox.

Dale you just stop transmission in Central Africa could lead to a far worse impact pandemic than the 2022 one.

In response, as detailed by Dennis, we are working closely with NIH and other health agencies on randomized clinical trials to demonstrate whether TPOX is safe and effective for treating MPOX in Africa, the U.S., and other parts of the world.

In response as detailed by Dennis we are working closely with NIH and other health agencies arent randomized clinical trials to demonstrate whether <unk> is safe and effective for treating <unk> in Africa. The U S.

And other parts of the world.

And I am working with the team to get the best possible results from a public health and company perspective.

And I am working with the team to get the best possible result from a public health and company perspective.

At this point, I would like to turn the call over to Dan for our financial update.

At this point I would like to turn the call over to Dan for a financial update.

Thanks, drag. For the three and nine months and the September 30th, 2023.

Thanks Jay.

The three and nine months ended September 32023.

Figures revenue was approximately 9 million and 23 million respectively. For the third quarter, approximately 8 million of revenue relates to international sales world key pockets and approximately 1 million relates to research and development activities.

<unk> revenue was approximately $9 million and $23 million respectively.

For the third quarter, approximately $8 million of revenue relates to international royalty patch.

And approximately $1 million relates to research and development activity.

In connection with the International Sales Bureau of Teapots, it included a sale to a first-time customer.

In connection with the international sales growth key packs and included a sale to a first time customer.

for the nine months and a September 30th, approximately 15 million revenue relates to product sales and supportive activities.

For the nine months ended September 3rd yet.

Approximately $15 million of revenue relates to product sales and supportive activities.

and approximately $8 million of revenue relates to research and development activity.

And approximately $8 million of revenue relates to research and development activity.

In connection with product sales, $5 million of the sales were to the U.S. Department of Defense and approximately $9 million of sales were to the U.S. Department of Defense.

In connection with product sales.

$5 million of the sales were to the U S Department of defense and.

And approximately $9 million of sales are international.

free tax operating loss, which excludes interest income and tax.

Pre tax operating loss, which excludes interest income and taxes was approximately $1 million for the three months ended September 32023.

was approximately $1 million for the three months and a September 30th, 2023.

For the nine months ended Sept.

For the nine months into September 30th, pre-tax operating loss was approximately $8 million.

September 30th.

Tax operating loss was approximately $8 million.

Net loss should three months into September 30th, 2023 was less than $1 million.

Net loss for the three months ended September 32.

Slide 23 with less than $1 million.

for the nine months and a September 30th. That loss was approximately four million dollars.

For the nine months ended September 30.

Loss was approximately $4 million.

In turn fully diluted loss per share for the three months ended September 30th was one cents per share and for the nine months ended September 30th fully diluted loss per share was six cents.

And Carey fully diluted loss per share for the three months ended September 30 was one <unk> per share and for the nine months ended September 30th fully diluted loss per share was <unk>.

At September 30th, 2023, the cash balance for the company was approximately $71 million.

At September 32023.

Cash balance should the company was approximately $71 million.

For the first nine months of the year, she could spend approximately $43 million on capital management.

For the first nine months of the year.

<unk> spent approximately $43 million on capital management for the special cash.

with a special cash dividend of approximately $32 million, and shared purchases are.

Cash dividend of approximately $32 million.

And share repurchases of approximately $11 million.

As noted by Phil earlier in the call.

It's noted by Phil earlier in the call. We are targeting 2023 pre-tax operating income of between $90 million and $100 million.

Targeting 2023 pretax operating income a bit.

$390 million and $100 million.

based on the timing of deliveries that are currently being coordinated among the company, our supply chain, and our government customers.

Based on the timing of deliveries that are currently being coordinated.

Among the company, our supply chain and our government customers.

Target pre-tax operating comes for 2023 is based on the following target revenue.

Alright, good pre tax operating income for 2023 is based on the following target revenues.

approximately 113 million of revenues from fourth quarter deliveries of oil teapots to the US strategic national

Approximately 113 going to revenues from fourth quarter deliveries of oil <unk>.

The U S strategic national stockpile.

Approximately $5 million revenues for fourth quarter deliveries of oil cheapox to the us Department of defense.

Approximately $5 million revenues for fourth quarter deliveries are all key parts to the U S Department of defense.

$15 million to $18 million of revenues from fourth quarter International deliveries royalty Pak <unk>.

$15 to $18 million of revenues from fourth quarter international deliveries of oil teapots to European countries in connection with the recently announced ERA Joint Procurement Framework Contract and up to $15 million of revenues from fourth quarter deliveries of IV teapots to the U.S. Strategic National Stockpile.

<unk> European countries in connection with the recently announced.

Sarah joint procurement framework contract and up to $15 million of revenues from fourth quarter deliveries with IV <unk> to the U S strategic national stockpile.

to the degree that any target delivery and related target revenues and pre-tax operating income do not occur in the fourth quarter of this year due to any timing constraints in connection with our customers or our packaging vendors.

To the degree that any target delivery.

And related target revenues and pre tax operating income.

That occur in the fourth quarter of this year to do anytime the constraints.

In connection with their customers, where our packaging vendor.

We expect that such deliveries and revenues would occur in January of 2020.

We expect that such deliveries and revenues would occur in January of 2024.

This concludes the financial update. At this point, I'll turn the call back to Phil.

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

Thanks, Dan.

Before we open the call for Q&A, I'd like to make a few concluding remarks. First, MPOX continues to be a worrisome disease with significant impact and potential to grow. As Dennis and Jay have highlighted, we continue to see cases though the global outbreak has receded.

Before we open the call for Q&A I'd like to make a few concluding remarks first.

<unk> continues to be awards from disease with significant impact and potential to grow.

Dennis and Jay have highlighted we continue to see cases, though the global outbreak has proceeded.

Second, our ongoing International Sales Growth Initiative is progressing in a value-creating manner and evidenced by the recently announced Pan-European Joint Procurement.

Second our ongoing international sales growth initiative is progressing in a value creating manner as evidenced by the recently announced Pan European joint procurement contract, we have a solid base of international customers through which we continue to pursue additional customers as well as follow on orders.

We have a solid base of international customers through which we continue to pursue additional customers as well as follow on orders.

Third, the PEP-based development program continues to represent a growth initiative and that it may provide scientific and regulatory support for any stockpile expansion.

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

The team is working hard to complete the follow on immunogenicity testing and file for FDA approval of that.

<unk> is working hard to complete the follow on Immunogenicity testing and file for FDA approval.

Fourth, we continue to be focused on transitioning our US government contract to a long-term SNS contract that focuses on appropriate size requirements for the T-Box stockpile as well as smoothing the annual deliveries, which would be critical to supply chain planning and provide a higher degree of financial predictability. This concludes our process.

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

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

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your telephone keypad. You will hear a three-tone prompt acknowledging request. Questions will be taken in the order received. And should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please leave your handset before pressing any keys. Once again, that is star and one to ask a question.

Thank you ladies and gentlemen, we will now begin the question and answer session should you have any question. Please press the star followed by the one on your telephone keypad.

Acknowledging request.

<unk> will be taken in the order you received and should you wish to cancel your request. Please press star followed by the two.

You are seeing is speaker phone. Please keep your handset before pressing any keys. Once again that is star one to ask a question.

Thank you and your first question comes from the line of Puyahemami from Edison Group. Please go ahead.

Thank you and your first question comes from the line of Trulia, Hey, Moms from Edison Group. Please go ahead.

Yes, Hello. Thank you for taking my questions I have a question on the HERA aspect.

Yes, hello. Thank you for taking my questions. I have a question on the HERA aspect. You expect about $18 million worth of orders over the next two months. Given that there are several other EU nations under the guidance of HERA, do you expect or do we expect to receive incremental countries from other countries that are not part of those 13 right now?

We expect to about $18 million worth of orders over the next two months.

Given that there are several other EU nations.

Under the.

The guidance O'hara do you expect or do we expect to receive incremental countries. Other countries that are not part of those 13 right now.

Yes, thanks for the question. We certainly do. This essentially...

Yes. Thanks for the question, we certainly do this essentially provides a contract vehicle with price that's been negotiated.

provides a contract vehicle with price that's been negotiated for all EU countries.

For all EU countries.

In this represents the first order. There is pricing that is based on volume. So there's an incentive to pool orders.

This represents the first order there is pricing that is based on volume. So there is an incentive pool orders before they go forward, but the vehicle has the concept of quarterly review with customers and the ability to put in orders on a quarterly basis I think that'll be based on how many come in and the volume to make sure they feel they're getting the right volume discount.

before they go forward, but the vehicle has the concept of quarterly review with customers and the ability to put in orders.

quarterly basis. I think that'll be based on how many come in and the volume to make sure they feel they're getting the right volume discounts that they want to get. But in essence, this is broadly a hunting license as well. It's now we can go to countries that haven't purchased and said

But they want to get but in essence. This is broadly a hunting license as well because now we can go to countries that have been purchased and said there is I'd say there is a vehicle to do this the terms have been negotiated the price has been negotiated so we do feel like this is a nice step. It is I would say our understanding is it's the first vehicle that has been ever put in place in Europe.

to do this, the terms have been negotiated, the price has been negotiated, so we do feel like this is a nice step. I would say our understanding is it's the first vehicle that has been ever put in place in Europe for chemical biological products like this. So we're excited that we've opened up this vehicle and we look forward to talking now to customers directly about following orders. So thank you for the question.

For chemical biological products like this so we're excited that we've opened up this vehicle and we look forward to talking now to customers directly about follow on orders. So thank you for the question.

And thank you and as a follow up to that and driving your last remarks do you envision that this arrangement with HERA will develop into something similar to what you have with BARDA, which covers a certain percentage of the U S population.

And thank you. As a follow up to that and dry on your last remarks, do you envision that this arrangement with Hera will develop into something similar into what you have with Barda, which covers a certain percentage of the U.S. population in theory, what kind of upside-downs will you foresee here?

What kind of upside potential do you foresee here.

Yeah, so the mechanism that here is using is not the same as Barta. In the US, the US government determines what a stock pile size should be. They then procure product to meet that stock pile size on behalf of the entire US population.

Yes. So the mechanism that here is using is not the same as BARDA.

In the U S. The U S government determines what a stockpile size should be they then procure product to meet that stockpile size on behalf of the entire U S population.

It's evolving in Europe , but right now, here it does not set a target for all of Europe . They do emergency small procurement. So people may remember last year, they did do a direct procurement.

Evolving in Europe, but right now here does not set a target for all of Europe. They do emergency small procurements. So people may remember last year. They did do a direct procurement for $10 million roughly $10 million to get some initial courses, but really what they are doing in this vehicle is allowing countries to procure.

for roughly $10 million to get some initial courses, but really what they're doing in this vehicle is allowing.

to procure under it, but each country ultimately is determining what their budget is, what they're doing to start stockpiling in their behalf. There have been broader discussions at the European Commission level to set up.

You're under it but each country ultimately is determining what their budget is what theyre doing to start stockpiling on their behalf.

Have been broader discussions with the European Commission level to set up targets central funding that just hasnt gotten to the point, yet where theyre, making targets, but we're encouraged that there is a lot more conversation in Europe than there was historically and certainly as evidenced by this initial order under this contract. There is some opportunity here that we look forward to pursue.

targets central funding that just hasn't gotten to the point yet where they're making targets, but we're encouraged that there's a lot more conversation in Europe than there was historically, and certainly is evidenced by this initial order under this contract. There is some opportunity here that we look forward to pursuing.

Okay.

Okay. Thank you very much.

Thank you and your next question comes from the line of Paul Saunders from Hutch Capital. Please go ahead.

Thank you and your next question, concern the line of falseunders. From Hatch Capital, please go ahead.

Yeah.

Yes. Hi, guys. Thanks for taking my question. First question is just on the buyback. I noticed that you didn't buy any shares back this quarter, so I was just curious if you had any.

Yes, hi, guys. Thanks for taking my question.

First question is just on the.

The buyback I noticed that.

So you didn't buy shares back this quarter. So just curious if you had any.

Tell us your commentary on not buying any shares back.

Thoughts or commentary on.

Buying any shares back.

Yes.

A. Paul, thanks for the question. Good to hear your voice. So as we've said in our conference calls.

Hey, Paul Thanks for the question good to hear your voice.

So as we've said in our conference calls any buyback decision is a multi year and certainly multifaceted set of circumstances around the cash flow orders other opportunities.

Any buyback decision is a multi-year and certainly multifaceted set of.

circumstances around cash flow, orders, other opportunities, and the board and management review that. So we don't comment on specific quarters or buybacks, but as Dan highlighted, we did have the special dividend and the 11 million purchase, so we've certainly been active this year in capital management, but we don't comment on quarter-by-quarter buying decisions.

And the board and management review that so we don't comment on specific quarters or buybacks, but as Dan highlighted we did have the special dividend and the $11 million purchase. So we've certainly been active this year in capital management.

But we don't comment on quarter by quarter buying decisions, but I appreciate the question.

Yep. And one more for me, if you don't mind, just a question on the inventory. I know it sounds like.

Yes.

One more for me if you don't mind, just a question on the inventory.

I know it sounds like.

The delivery got pushed back because of it sounds like packaging issues. So I know it's sort of inflated due to that, but you know, just kind of running the rough mass. If that were fully finished, it looks like it's like 1.5 million courses of inventory.

Just delivery got pushed back because of it sounds like packaging issues, and I know thats sort of greater due to that but.

Just kind of running the rough math is that we're fully finished it looks like it's like $1 5 million courses of inventory.

I'm just kind of curious thats, obviously, a lot more than what youre going to deliver in the next quarter or two so.

I'm just kind of curious, but obviously a lot more than what you're going to deliver in the next quarter or two. So just kind of can you provide any color on that inventory build in excess of what you're going to deliver this upcoming quarter?

Just kind of can you provide any color on that that inventory build.

Excess of what Youre going to deliver in this upcoming quarter.

Yeah, so for those that may not know, the cycle time for making our product is.

Yes, so for those that may not know.

The cycle time for making our product is certainly given normal scheduling and proactive scheduling of batches in manufacturing we have four different manufacturers. It takes well over a year to go through the cycle time of our product with BARDA, we have pretty good visibility into how that replenishment.

certainly given normal scheduling and proactive scheduling of batches and manufacturing. We have four different manufacturers. It takes well over a year to go through the cycle time of our product. With BARTO, we have pretty good visibility into how that replenishment is going to go. And historically, we had a long lead time.

There is going to go and historically, we had a long lead time.

But we are now at a more mature place in our business where we wanna make sure that we're able to have a responsive supply chain that doesn't start from zero but may have targeted active pharmaceutical ingredients in inventory and so if we have an opportunity for a sale, we're able to translate that into product in months that's supposed to over year. So you will see in general an increase on our balance sheet of inventory that we manage to make sure if we have an opportunity to accelerate orders with a customer we can do that. If we ever had a disruption in our supply chain, we'd be ready to do that and we have a lot of flexibility given the stability of our API. And as you point out, we do have a volus that's getting ready for a large delivery to Barta. We also anticipate next year, as we've said many times an expiry schedule that'll have another $113 million option that would be exercised and another IV option. There were also building inventory to make sure we're ready to do that. We're ready for those orders, not just the next quarter.

But we are now at a more mature place in our business, where we want to make sure that we're able to have a responsive supply chain that doesn't start from zero, but may have.

Targeted active pharmaceutical ingredient in inventory and so if we have an opportunity for sale, we're able to translate that into product in months as opposed to over a year. So you will see in general an increase on our balance sheet of inventory that we manage to make sure. If we have an opportunity to accelerate orders with us.

Customer we can do that if we ever had a disruption in our supply chain will be ready to do that and we have a lot of flexibility given the stability of our ACI and as you point out we do have a bolus thats getting ready for a large delivery to BARDA. We also anticipate next year as we've said many times an expiry schedule that will have another $113 million.

Or option that would be exercised in another IV option. So we're also building inventory to make sure we're ready for those orders not just the next quarter.

Sure.

Yes.

Yes, that makes a lot of sense. I appreciate that. And if you don't mind, just with the, I assume it was the packaging why that option exercise didn't get to live this quarter, was that?

Yes that makes a lot of sense I appreciate that.

If you don't mind just slipped.

I assume it was packaging why that that option exercise didn't get the lift this quarter or was that.

Can you also provide any more color on what happened there with the packaging and I guess maybe how to sort of avoid that in the future?

Can you also provide any more color on what happened there with packaging and I guess.

Adam.

Sort of avoid that in the future.

Yes.

Yeah, it's a great, it's a great question, Paul. We work with a lot of service providers.

Yes, it's a great. It's a great question, Paul we work with a lot of service providers and as we said we haven't run into any problems per se, but it's just taken longer to get into those facilities get it packaged and get it out.

And as we said, we haven't run into any problems per se, but it's just taken longer.

get into those facilities, get it packaged and get it out. We certainly planted an advance for that, but then we have a sprint.

Certainly plan in advance for that but then we have a sprint once we get the order and have to do the packaging historically.

once we get the order and have to do the packaging historically

That's actually been an area that's gone very smoothly and rapidly. It just turns out this year we run into delays there, not any technical challenges, simply delays.

It's actually been an area that has gone very smoothly and rapidly. It just turns out this year.

Run into delays there not any technical challenges simply delays and I can assure everyone. Our team has been working really hard to find ways to make sure. We hit the target, but we wanted to highlight that is the challenge that we're focused on right now.

And I can assure everyone our team has been working really hard to find ways to make sure we have the target But we wanted to highlight that as the challenge that we're focused on right now

Sounds good thanks, Phil.

Thanks, Paul.

Thank you there are no further questions at this time. Please proceed.

Thank you. There are no further questions at this time. Please proceed.

Yeah.

Like to thank everybody for their time today. We really appreciate the update and look forward to talking to you again soon. Thank you. Operator. Have a good day.

I'd like to thank everybody for their time today, we really appreciate the update and look forward to talking to you again soon thank you operator have a good day everybody.

Thank you, ladies and gentlemen. That does conclude our conference for today. Thank you all for participating. You may all disconnect.

Thank you, ladies and gentlemen that does conclude your conference for today. Thank you all for participating you may all disconnect.

Okay.