SIGA Technologies Q3 2024 Earnings Call Transcript

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Provided by Quartr
November 7, 2024

There are 4 speakers on the call.

Operator

Good afternoon, ladies and gentlemen, and welcome to the Sika Technologies Third Quarter 20 24 Earnings Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, November 7, 2024. I would now like to turn the conference over to Zem Wen, Chief Executive Officer.

Operator

Please go ahead.

Speaker 1

Good afternoon, everyone, and thank you for joining today's call and the review of our business results for the Q3 of 2024. I am joined by Dan Luxhire, our Chief Financial Officer, and we appreciate this opportunity to provide an update on our company. After the update, we'll be happy to answer your questions. I'm pleased to share that with $122,000,000 of procurement orders secured in the 3rd quarter, SIC continues to sustain its strong business momentum. These new orders position us well to extend our strong year to date revenue performance, which is outpacing revenues in the comparable period last year.

Speaker 1

Additionally, I would like to note that our product sales so far this year include a diverse mix of revenue sources led by oral and IV TPOXX deliveries to the U. S. Strategic National Stockpile. Internationally, year to date sales include deliveries to new customers, one of which represents our first sales of oral TPOXX in Africa in response to a request from the Ministry of Health in Morocco. At the end of the Q3, outstanding procurement orders were $146,000,000 This significant balance of outstanding orders positions us to recognize substantial revenues in the Q4 of 2024 and into 2025, demonstrating the continued strong demand for TPOXX.

Speaker 1

Please note that this outstanding order balance includes most of the $112,500,000 order from the U. S. Government under the 19C contract announced in July, which we began shipping towards the end of September and continued into October. We believe year to date sales as well as the outstanding orders built over the past several months underscore our company's financial strength and resilience. Our focus continues to be on CIGA's long term performance as we have multiple strategic opportunities to drive and expand our revenue base and earnings over time.

Speaker 1

Looking forward, we believe securing a new contract for the continuing supply of TPOXX to the Strategic National Stockpile or SNS represents a significant opportunity to enhance our company's momentum and long term earnings potential as well as do our part to advance our nation's public health preparedness. We believe our ongoing productive conversations with a wide range of government officials positions us well as we prepare for the administration of strategic preparedness and response known as ASPR, to take the first step in the process, which we expect to result in a new contract for TPOXX. As a reminder, ASPR is within the U. S. Department of Human Services or HHS and houses a center for the Biomedical Advanced Research and Development Authority or BARDA and the SNS.

Speaker 1

We believe our dedicated team is well prepared to support this crucial public health initiative. And based on these conversations, we are confident in the U. S. Government's enduring commitment to maintaining robust public health preparedness and a supply of antiviral therapies to treat smallpox. Importantly, at CIGA, we believe that effective pandemic preparedness requires both vaccines and antivirals as neither alone can fully address the complexity of an outbreak.

Speaker 1

While vaccines play an important role preventing disease and building immunity, they may not be immediately available or effective for everyone. Antivirals meanwhile offer a critical line of defense by treating infections in real time and reducing the severity and spread of illness. Together, these tools provide a comprehensive approach to managing a pandemic, ensuring both preventive measures and timely treatments are available. We anticipate working towards a new comprehensive long term agreement spanning 5 to 10 years. As a framer reference, our last contract executed in 2018 was valued at 546,000,000 dollars Given the many changes anticipated to take place over the coming weeks in the federal government, the exact timing of the necessary steps remain to be determined.

Speaker 1

Please keep in mind that health security is a bipartisan issue with strong alignment across both parties and transcends elections and political considerations. This has been reinforced by our experience with administrations from both parties. In fact, our last two contracts were awarded under different administrations, specifically President Obama and President Trump. In summary, we're targeting the issuance of a new SNS contract in 2025, which we expect would include initial order under such contract. Such a contract would further our shared goal of protecting public health through continued partnership with the U.

Speaker 1

S. Government. Shifting gears, I'm pleased to share that we've recently announced an exclusive license to the portfolio of our preclinical fully human monoclonal antibodies from the Vanderbilt University that has the potential to treat a broad range of orthopox viruses, including smallpox and mpox. This portfolio of monoclonals expands our pipelines, complements our TPOXX franchise and offers the potential for development of additional therapies in this space. Further, it opens the door to new long term growth opportunities in collaboration with government partners to offset development investments.

Speaker 1

The U. S. Department of Defense is currently funding the development of these monoclonals through Phase 1 via a third party contract manufacturing organization with proven expertise in biologics, development and manufacturing. Assuming the data are positive on these future studies, we plan to explore collaborations with government stakeholders and with their input pursue the development of these monoclonals to meet the needs of patients and public health. Our efforts will strive to develop this portfolio over the next several years efficiently without requiring significant use of the company's cash resources to progress.

Speaker 1

The license marks an important step forward in our strategy to leverage our existing capabilities to create new opportunities for growth over the long term. Regarding the TPOXX post exposure prophylaxis program for smallpox or PEP, we continue to collaborate with the CDC in consultation with the FDA to complete the analysis of samples collected to support the study's immunogenicity objective. The CDC recently began gearing up to perform the reanalysis and is targeted to complete its work in the first half of twenty twenty five. As such, we are planning for an FDA submission of the FEP indication in the Q3 of 2025. As we announced on August 15, the National Institute of Allergy and Infectious Diseases or NIAID shared top line results from a preliminary analysis from the POM-seven trial.

Speaker 1

While the study did not meet its primary endpoint of a statistically significant improvement in time to lesion resolution within 28 days for mpox patients in the Democratic Republic of Congo, who were treated with tikavirimat versus placebo. The results from this trial was not surprising due to the humanitarian considerations of the study design. Nonetheless, we are encouraged by the data showing tikavirimat's potential benefit in 2 important patient groups. 1st, those patients treated early and second, those with severe disease. We believe additional trials are warranted to explore the potential benefits of tpox as an mpox treatment in these and possibly other patient populations.

Speaker 1

Several additional mpox studies are currently being conducted by trial sponsors around the world and are expected to help inform a deeper understanding of the potential of tikavirimat to benefit mpox patients. Four trials are currently enrolling patients including STOMP, UNITY, PLATINUM Canada and EPOXI. The largest of these is STOMP sponsored by NIAID and is enrolling patients primarily in the U. S. And South America.

Speaker 1

It's progressing well with about 670 patients enrolled as of the 1st week of October, up from 5 15 reported on our last call. I would highlight that TPOXX has demonstrated a strong safety profile and is well tolerated by patients. This is supported by preclinical safety and toxicology studies in numerous animal models, including mPOXX infected non human primates, Phase 3 clinical data with healthy volunteers and clinical observations in disease patients. Additionally, more than 2,000 MPOX patients have participated in clinical trials to access the efficacy of tpox for MPOX treatment and more than 8,000 patients have been administered TPOXX for compassionate use as the preferred antiviral to treat mpox disease. Furthermore, TPOXX has demonstrated effectiveness as an antiviral and pet treatment for survival and reduction of body lesions and viral load in non human primates infected with lethal amounts of mpox virus.

Speaker 1

Additionally, TPOXX has been shown to improve survival and reduce lesions in non human primates infected with smallpox. Based on the totality of the scientific evidence, we believe this diverse and expansive collection of data sources highlights why TPOXX has received regulatory approval for smallpox in the U. S. And Canada and regulatory approval in the EU and the U. K.

Speaker 1

For a broad orthopox label, including smallpox and mpox. In Japan, we are actively engaged in discussions with our partner, Japan Biotechnopharma and regulators regarding the pending new drug application for TPOXX to treat smallpox, mpox, cowpox and complications due to the Vicinia virus. Based on the standard review timeline, we expect a final regulatory decision by early next year. In summary, this is an exciting and dynamic time for CIGO. We are strong, resilient and profitable.

Speaker 1

Our strategy and prudent capital management is delivering solid results and we believe make us well positioned for the future. Additionally, our TPOXX franchise meets a critical need for smallpox preparedness and our team has the expertise to drive long term results, which we believe will produce sustainable growth and shareholder value over time. With that, I'll turn it over to Dan to review the financial results in more detail.

Speaker 2

Thanks, Sam. As noted earlier in the call, Vega's product sales for the 9 months ended September 30, 2024 continue to outpace product sales for the comparable period in 2023. Product revenue for the 9 months ended September 30, 2024 was $53,000,000 Other this amount, dollars 9,000,000 is related to the Q3. In the Q3, there was an $8,000,000 oil TPOCs delivery to the U. S.

Speaker 2

Strategic National Stock Power or SNS and a $1,000,000 of international sales. The $8,000,000 Royal TEAPOCS delivery represents the first delivery to the SNS in connection with the $112,500,000 order under the 19C contract, which was announced in July. The international sales amount includes the 1st sale to Africa. With respect to product revenues for the 9 months ended September 30, 2024, the $53,000,000 amount comes from a diverse mix, including $23,000,000 of oil teapot sales and $17,000,000 of IV teapot sales to the U. S.

Speaker 2

Government under the 19C contract, dollars 12,000,000 of International TEAPOC sales to 12 countries and $1,000,000 of World TEAPOC sales to the U. S. Department of Defense. In addition to product related revenues, the company also has had research and development revenue. For the 3 9 months ended September 30, 2024, research and development revenues were $1,000,000 $4,000,000 respectively.

Speaker 2

Pretax operating income, which excludes interest income and taxes, was $500,000 for the 3 months ended September 30, 2024. For the 9 months ended September 30, pretax operating income was $13,000,000 In comparison, there's a pre tax operating loss for the 3 9 months ended September 30, 2023 of $1,000,000 $8,000,000 respectively. Net income for the 3 months ended September 30, 2024 was $1,000,000 For the 9 months ended September 30, net income was $13,000,000 In turn, fully diluted income per share for the 3 months ended September 30, 2024 was $0.02 And for the 9 months ended September 30, fully diluted income per share was $0.19 At September 30, 2024, the company continued to maintain a strong balance sheet with a cash balance of $99,000,000 and no debt. I would like to note that the company has maintained a strong balance sheet while also returning substantial cash to shareholders. As a quick reminder, on April 11, DIGA paid a cash dividend of $0.60 per share, which amounted to a $43,000,000 payment to shareholders.

Speaker 2

Looking forward, as Zem mentioned earlier in the call, we are well positioned for substantial revenues in the Q4 and into 2025 in light of our outstanding order balance of $146,000,000 as of September 30. As such, we believe 2024 is lining up to be another year of strong product revenue performance. This concludes the financial update. At this point, I will turn the call back to Zim.

Speaker 1

Thank you, Dan. With that, we would like to open the call for questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer Your first question comes from Jyoti Prakash at Edison Group. Please go ahead.

Speaker 3

Hello. Thank you for taking my questions. I have around 3 to 4 questions. So let me ask them 1 after the other. It's great to see that the deliveries under the BARDA order for oral TPOXX have started happening in Q4.

Speaker 3

My question is related to the deliveries of IV TPOXX, which seem to be more protracted in comparison to oral TPOXX. What are the reasons for this? Are there any particular supply chain related constraints? When can we see orders being delivered for IV TPOXX? Secondly, when can we expect the latest order from the Department of Defense to be delivered?

Speaker 1

So, Gioce, thank you so much for your first question. I will start by first giving you a little context between oral TPOXX as well as the IV. Oral TPOXX is the predominant formulation of the U. S. Government stockpile and in connection with its delivery activity, the timing and the cadence of the order activity is very, very different between the two formulations whether it's orals or IV.

Speaker 1

The manufacturing process for IV is much more complex than the oral process for TPOXX with the use of different vendors as well as some different raw materials. Given these differences, IV and oral TPOXX are on different schedules with IV requiring longer manufacturing lead times than oral. Lastly, product deliveries, whether it's IV or oral are partially dependent on whether customers would like to take when the customers would like to take delivery. As Dan mentioned, the timing of the orals from the last contract tranche has started in 2024 and will continue into 2025.

Speaker 3

Okay. That's helpful. And just on the question on the deliveries under the Department of Defense contract?

Speaker 1

Hi. I think I

Speaker 2

This time, Nishu.

Speaker 1

Yes. And I said that the deliveries have started in already this year and will continue into 2025.

Speaker 3

Okay. Thank you. And the second question is related to your internationalization efforts. It's great to see you make your commercial foray into Africa. Just want to understand since your amendment agreement with Meridian, what kind of traction opportunities or challenges are you seeing in the international markets?

Speaker 1

So thank you. As a gentle reminder for the broad audience, we amended the Meridian agreement effective in June 1, so that we could bring all the international marketing sales in house except for a few administrative and supportive activities provided by Meridian. This change has given us greater control to meet the needs of our global customers. Since amending the agreement, we have been spending considerable time strengthening and building our relationships with current and as well as potential customers around the globe. And we're all centered around the expanding of our international business.

Speaker 1

With the recent sale of Africa to the request of the Ministry of Health in Morocco, we believe our effort is off to a great start. Bringing the effort in house has definitely enhanced our depth and dialogue with international customers and we expect it will help our ongoing efforts to pursue sales opportunities over the immediate and long term horizon. We have not experienced any challenges at this point in this transition.

Speaker 3

Perfect. And moving on, it's great to see that you've been licensed to new preclinical program. Can you provide us some more details on the deal economics? And when can we expect this program to enter clinical studies? And how do you plan to develop this as a monotherapy or a combination therapy with TPOXX?

Speaker 1

Sure. Thank you for asking. We're extremely excited about the recent in license of the monoclonal antibody portfolio from Vanderbilt. And we're excited about this opportunity to expand our pipeline and strengthen our ability to be in the orthopox space. These antibodies, we believe, have a potential to treat a broad spectrum of orthopox viruses, which is inclusive of smallpox and mpox, and we would look to develop them from a therapeutic as well as a prophylactic consideration.

Speaker 1

We've demonstrated promise in preclinical models and could potentially use as a standalone treatment or in the combination with tpox. Given our capabilities in clinical development as well as partnerships in the U. S. Government agencies, we believe we're best suited to maximize the potential of these therapies in a cost effective manner. In fact, the DoD has recently funded the development through a 3rd party with monoclonal antibody manufacturer expertise through Phase 1.

Speaker 1

As we work through the clinical development process, we will keep you posted. It's premature to talk about timing.

Speaker 3

Excellent. And I have one final question. There have been recent media reports on some MPOX patients being resistant to TPOXX. Can you provide your perspective on these reports and if that's a concern for CIGA?

Speaker 1

Thank you for giving us an opportunity to weigh in on some of these reports as it relates to resistance. I always think it's important to think about considerations based on totality of data. I will first start with by saying that the preclinical evidence collected to date has shown no resistance to an animal treated with TPOXX for an extended timeframe. Additionally, CDC reports document only a small number of drug resistance developing in patients receiving TPOXX. Overall, it remains low at less than 1% in the patient population.

Speaker 1

This resistance has been primarily observed in a limited number of immunocompromised patients or those with advanced HIV who have received extended courses of treatment beyond the recommended duration. I think the recent report you're referring to is the October CDC morbidity and mortality weekly report. This is noted a small sample of patients with mild mpox, resistance to tpox was reported in a few patients. This finding is potentially important and does warrant further investigation to guide future treatment protocols. However, I think it's important to note that the treatment history documentation was not collected to better understand these reports.

Speaker 1

And additionally, these reports omit important data related to the total number of specimens tested, patient profiles as well as treatment timing, making it difficult to reach a conclusion about ticovirimat's efficacy in mpox treatment or overall detection of drug resistance. It's really important to note that the resistance of smallpox or mpox is less likely to occur compared to COVID-nineteen or influenza. For example, smallpox and mpox are DNA viruses which mutate less easily than RNA viruses like the viruses that I just mentioned, COVID and influenza. This may attribute it to the low levels of resistance observed to date with tucovirimat. I would like to remind everyone that there is no demonstrated tikaviramat resistance to smallpox and we have not identified that to date.

Speaker 3

Thank you. That's very helpful. That's all the questions I have. Congratulations on the quarter. Thank you.

Speaker 3

Thank you.

Operator

Thank

Speaker 1

you.

Operator

It appears we have no further questions. I will turn the call back over for closing comments.

Speaker 1

Thank you so much for dialing in to CIGA's call and for your ongoing interest in our company. We look forward to speaking to you again on our Q4 call. Have a good rest of the evening.

Operator

Ladies and gentlemen, this concludes your conference for today. We thank you for participating and we ask that you please disconnect your lines.

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Key Takeaways

  • Secured $122 million in Q3 procurement orders and ended the quarter with $146 million of outstanding orders, positioning the company for strong revenue recognition in Q4 2024 and into 2025.
  • Year-to-date product sales of $53 million outpace last year’s comparable period and include oral and IV TPOXX deliveries to the U.S. Strategic National Stockpile as well as the first oral TPOXX sale in Africa (Morocco).
  • Management is targeting the issuance of a new 5–10 year contract for TPOXX supply to the U.S. SNS in 2025, highlighting bipartisan support and continuity across administrations to bolster public health preparedness.
  • Signed an exclusive license for a portfolio of preclinical fully human monoclonal antibodies from Vanderbilt to treat orthopox viruses, with U.S. DoD funding through Phase 1 development and potential for standalone or combination use with TPOXX.
  • Advancing the TPOXX pipeline with a planned FDA submission for post-exposure prophylaxis in Q3 2025 and participation in multiple mpox treatment trials (e.g., STOMP enrolling ~670 patients), backed by a robust safety profile and pending regulatory decisions in Japan.
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Earnings Conference Call
SIGA Technologies Q3 2024
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