SIGA Technologies Q4 2023 Earnings Call Transcript

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Provided by Quartr
March 12, 2024

There are 8 speakers on the call.

Operator

Welcome to the CIGA Business Update Call. Before we turn the call over to CIGA 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. Ceika 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 ks for the year ended December 31, 2023, and its subsequent reports on Form 10Q and Form 8 ks. I will now hand the call over to Zhan Nguyen, CEO of CIGA.

Operator

Please go ahead.

Speaker 1

Good afternoon, everyone, and thank you for joining today's call and review of our business results for the Q4 full year of 2023. I am joined by Dan Luxhire, our Chief Financial Officer, and we're pleased to have this opportunity to provide an update to our shareholders. After the update, we'll be happy to answer any of your questions. I'd like to begin by recognizing the work and contributions of Phil Gomes, who served as CIGA's CEO for the 7 years. Phil was instrumental in transforming our company into a more commercial organization with sales in over 25 countries and securing key regulatory approvals for our TPOXX franchise.

Speaker 1

On behalf of our team, I want to thank Phil for his many contributions to making CIGA the strong company it is today. On a personal note, I'm excited to join CIGA and take on the role of CEO. Having spent nearly 3 decades focused on addressing unmet needs in healthcare, I look forward to building on CIGA's success and driving greater growth for the benefit of our patients, customers and shareholders. I have a deep seated passion for scientific advancement and innovation as well as an extensive experience leading successful multi $1,000,000,000 commercial organization. I'm extremely excited to leverage this experience to help fulfill CIGA's potential and have our essential therapies available worldwide.

Speaker 1

Although this is only my 6th week with the company, I'm pleased to share my belief in CIGA's bright future. This belief has been grounded for the following. 1st, CIGA has strong business fundamentals. It is a highly profitable company with a management team that has deep expertise in commercial activities, anti viral R and D and government relations. And the company has built and maintains a fully integrated U.

Speaker 1

S.-based operational supply chain. This is a distinguishing asset for our customers. 2nd, TPx is a foundational product franchise that has a track record of securing multi year government contracts, which have totaled over $1,000,000,000 in the past 10 years. Again, this is a point of distinction and speaks to the significant value of TPOC. 3rd, CIGA has achieved best in class financial performance.

Speaker 1

Our average annual pretax operating income over the past 4 years has been $75,000,000 These results have been achieved while maintaining a strong balance sheet. 4th, CIGA has attractive growth opportunities. Let me just mention a few. In the near term, CIGA has the potential to expand the indications of TPOXX to include post exposure prophylaxis, which we like to call PEP and MPOX. I'll provide an update on these programs a little later in these remarks.

Speaker 1

Also in the near term, CIGA has the opportunity to expand geographically and work with governments across the world to fully embrace stockpiling and orthopoxvirus risks. We want to ensure governments have a modernized view of the risk and the tools for protection against orthopox viruses. And thinking more broadly, Zika has strong antiviral and government procurement capabilities. We believe these capabilities are best in class that we can leverage to move into complementary therapeutic areas with similar points of patient care. Importantly, all of this has reinforced PPOC's leadership among infectious disease countermeasures.

Speaker 1

Zika's expertise and experience in commercial execution, R and D Innovation and government contracting enables us to support the highest level of public and individual safety. As a result of these four critical factors, I believe CIGA is well positioned for further innovation, strong business performance and attractive value creation for our shareholders. Now turning to our financial results. I am very pleased to report that we finished the year strong. Full year 2023 product revenues of $131,000,000,000 are the highest amount achieved over the past 5 years.

Speaker 1

This reflects a 51% increase over 2022. Approximately $116,000,000 of the full year product revenues were achieved in the 4th quarter coming from a diversity of sources, including the U. S. Strategic National Stockpile or the SMS, the U. S.

Speaker 1

Department of Defense and 5 international governments. Pretax operating income was approximately $84,000,000 in 2023, a 96% increase over 2022. This is a testament to the strength of the CIGA team, the value of our franchise and the resilience of our company. Dan will provide more details on these results shortly. Additionally, in 2023, we spent $43,000,000 on capital management through a combination of special cash dividend and share buyback.

Speaker 1

And I'm pleased to announce that our Board of Directors has declared a special dividend of $0.60 per share to be paid in April. This represents a 33% increase over the special dividend we paid in June of 2023. This demonstrates the financial strength of our company and the confidence the Board and the management team have in our future. Our proven track record, coupled with the potential of a new long term contract with the SMS, provides both a compelling and attractive backdrop for our company in both the short and longer term. Looking forward, we plan on continuing to invest to grow our business, while maintaining a balanced and disciplined capital allocation approach with the goal of delivering strong long term revenues and earnings growth and creating value for our shareholders.

Speaker 1

And now I would like to talk about PEP and NMOS programs. With regard to PEP, I will start by recapping what was reported on the last investor call. Based on the studies and trials that have been conducted, we believe TPOGS benefits patients in a prophylactic situation. The FDA has not asked for any additional studies to prove the efficacy of tpox for pets, but has asked for extended safety data in humans for treatment for 28 days. We have completed this requirement and the data is consistent with prior safety studies.

Speaker 1

It is important to emphasize the clinical trial results do not show any drug related serious adverse events consistent with TPOXX existing strong safety profile. In addition to the safety trial, we have completed a JYNNEOS tPOXX immunogenicity trial solely to evaluate if tpox has an impact on vaccine immune response. Because in the event of an outbreak, PPox treatment would likely to be used in combination with a smallpox vaccine. In the preliminary analysis of the data from the immunogenicity trial, consistent with what we expected, the results did not show a meaningful difference between immunogenicity of those who received the JYNNEOS vaccine while on placebo compared to those that received the JYNNEOS vaccine while on TPOXX. However, as mentioned previously, results indicated that the number of volunteers who had measurable immune response to the JYNNEOS vaccine in both the placebo and tpox groups was lower than expected.

Speaker 1

Given this result, the data deemed difficult to assess for the non inferior statistical determination, which was necessary for the primary endpoint as originally planned in the study. On the last investor call, we also reported that a subset of the JYNNEOS and TPOXX samples from the immunogenicity trial were sent to our colleagues at the CDC who performed their validated PRINT analysis on them. These samples showed the expected immune responses. As such, we are now working on getting the entire set of the samples reanalyzed given the challenges associated with the prior analysis conducted by our CRO vendor. We believe these preliminary CDC analyses provide a potential path forward despite the unexpected nature of the prior results.

Speaker 1

As such, in parallel, we are working towards a supplemental NDA submission within the next 12 months. We are grateful to our colleagues at the CDC for this collaboration and efficient path forward. We believe this is the best course of action in terms of getting timely data from the immunodemicity trial and the FDA agrees as they have been briefed on our plan and have not voiced any objections. But as a final comment on the PET program, I want to emphasize that the immunogenicity analysis are not about the efficacy or safety of TPOXX nor are they about TPOXX impact on those individuals who are showing an immune response. Rather, the relevance of the immunogenicity study is that in the case of an orthopox virus epidemic, be it mpox or smallpox, use of TPOXX with the vaccine for pets will be important to reduce the morbidity and mortality of the population without sacrificing patient safety.

Speaker 1

Now I would like to shift gears and provide a quick update on the current mpox trials involving tpox, which includes 4 randomized controlled trials as well as multiple observational studies. These studies continue to enroll patients and collect data. To provide some specific data points, in Africa, as of February, the NIAID POM trial being conducted in the DRC has enrolled approximately 425 patients, a large increase from the 314 patients noted in our last call. In the NIAID STOP trial, as of February, there were 267 patients, which is also a substantial increase from the 157 patients noted in our last call. These increases in patient numbers demonstrate that case counts continue to accumulate, especially in Africa.

Speaker 1

Importantly, they also provide a glimpse. Some would say a warning into the overall global health risk posed by orthopoxviruses. As such, we are working closely with the NIH and other health agencies on randomized clinical trials to demonstrate whether TPOXX is safe and effective for treating mpox in Africa, the U. S. And other parts of the world to achieve the best possible outcome for mpox patients from a public health perspective.

Speaker 1

I would like to remind, however, tpox is approved for smallpox, mpox, cowpox and Vicinia complications in Europe

Operator

and in the U.

Speaker 1

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

Speaker 2

Thanks, Dan. As noted earlier in the call, CIGA's strong performance is represented in 2023. Product sales for the 12 months ended December 31, 2023 were $131,000,000 which is the highest amount achieved over the past 5 years and reflects 51% increase over 2022. Dollars 116,000,000 of the full year product sales were achieved in the 4th quarter coming from the diversity of sources, including the U. S.

Speaker 2

Strategic National Stockpile, the U. S. Department of Defense and 5 international governments. 4th quarter product sales include SMS product sales of $98,000,000 for the delivery of oral TPOCs, dollars 6,000,000 of oral TPOXX sales to the U. S.

Speaker 2

Department of Defense and $12,000,000 of international sales of oil tPOXX, those of which relate to orders under the HERA contract announced in October of 2023. I would like to add that the process of product deliveries under existing orders, which started in the Q4 of 2023, continued in the 1st 2 months of 2024, with approximately $50,000,000 of deliveries of oral TPOXX to the SNS and approximately $7,000,000 of international deliveries of Royal TEAPOCs. Pre tax operating income, which excludes interest income and taxes, was approximately $84,000,000 for 2023. This represents an increase of 96% over the corresponding 2022 amount. I would like to note that average pre tax operating income for the past 4 years, the time period of 2020 to 2023 is $75,000,000 We believe this average and the 2023 financial results highlight the robust earnings power of CIGA.

Speaker 2

Continuing the strong performance, net income for 2023 was $68,000,000 an increase of approximately 100 percent from the corresponding amount in 2022. In turn, fully diluted income per share for 2023 was $0.95 versus $0.46 in 2022. At December 31, 2023, the company maintained a strong balance sheet with a cash balance of approximately $150,000,000 and no debt. In 2023, Pika spent approximately $43,000,000 in capital management with a special cash dividend of approximately $32,000,000 and share repurchases of approximately $11,000,000 Earlier today, the company declared a special cash dividend of $0.60 per share payable on April 11 to shareholders of record at the close of business on March 26. This concludes the financial update.

Speaker 2

At this point, I'll turn the call back to Zen.

Speaker 1

Thank you, Dan. Before I conclude our prepared remarks, I'd like to offer one more insight to my role as CEO. I am committed to creating shareholder value for our shareholders by doing what I believe is best in the long term interest of our company, partners and patients. I am bringing a fresh perspective with a sense of urgency to our strategic planning, operational processes, development efforts and capital allocation, just to name a few. You'll be hearing more from me in the coming months as our plans evolve and we leverage the progress and momentum from 2023 into 2024.

Speaker 1

Now in summary, our company is in an exciting and important launch moment as we strategically invest in our research and development program, expand geographically by broadening our partnerships with governments around the world, leverage our antiviral experience and expertise to pursue attractive opportunities in other therapeutic areas with similar points of patient care and continue initiatives that directly benefit our shareholders. Now, I would like to open the call to Q and A.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer Your first question is from Sue Ramanov from Edison Group. Please ask your question.

Speaker 3

Great. Thank you for taking my questions and congratulations on the quarter. It's nice to see the healthy distribution. My first question was on oral TPOXX delivery. It looks like we'll mark the last deliveries under the 2018 contract with BARDA for the oral TPOXX.

Speaker 3

Have we had any other further discussions with the government, the U. S. Government on possible extensions to the contract or new long term rolling SNS contracts?

Speaker 4

Thank you, Sue, for the question. We want to share that we have maintained a continued as well as healthy dialogue with the U. S. Government. At this time, we're targeting an RFP for the SNS from the Administration of Strategic Preparedness and Response this year.

Speaker 4

Specifically, we're not in a position to point or pinpoint the exact timing, but we do know that we're prepared to engage in any conversation and address any needs that they may have. Thank you.

Speaker 3

My second question was really on HERA. I mean, that was a really big milestone for CIGA. And it was have we seen any incremental opportunities develop in the last few months? We saw that nice double digit million procurement deal that was already signed. What kind of other sales potentials can we assume looking ahead?

Speaker 4

At this point, as you have all been aware, we have sold to more than 25 countries. There are multiple countries in Europe and beyond who have ordered in the past who are indicating interest in ordering more teapots, often in larger quantities than the prior order. These conversations tend to be productive, but yet iterative. So we will share once we're able to. I will note that we've had $21,000,000 in international sales in 2023, and we are looking to strengthen these sales in the years ahead.

Speaker 3

Great. Thank you so much.

Operator

Investor. Please ask your question.

Speaker 5

Yes. I'm not sure if you covered this earlier in the call, but do you does Zika still have an option coming up for later this year, the final option exercise for TPOXX for the U. S. Government?

Speaker 6

Yes. This is Dan. And you're correct in that the existing contract does have a remaining option for $113,000,000 for oral TPOXX as well as an IV TPOXX option for $26,000,000 I would note Okay.

Speaker 1

And that

Speaker 2

I'm sorry, go ahead.

Speaker 5

That's for the 2024 fiscal year?

Speaker 6

That's what we're targeting is that those options we are targeting to get exercised this year.

Speaker 5

Okay. Thank you.

Operator

Thank you. Your next question is from Lance Kimbro from Ivy Creek Capital. Please ask your question.

Speaker 7

Congratulations on the great 2023 results. My question was related to in the last quarter call, you had highlighted that there was some manufacturing bottlenecks that were kind of holding up deliveries. It looks like or it sounds like you've worked through those. It was also mentioned that the reorder cycle for 2024 would be approximately 128,000,000 Do you feel like manufacturing capacity now is such that you can meet that target if it's fulfilled?

Speaker 6

Sure. This is Dan. I'll start off and Sam can jump in if she wants. Yes, we did navigate the slow pace of the supply chain towards the end of the year. We are still working on getting that to a more normalized way.

Speaker 6

I'm not going to say that it's back to where it was a couple of years ago, but we did manage to get deliveries within the Q4 for the most part. Going forward, it will be continuing focus. Your timing is important in terms of when the order comes in, in terms of when deliveries are made, But provided that we get a timely order from the U. S. Government, then we'll be working toward making at least a substantial portion of deliveries this year.

Speaker 4

And Lance, I would just add that given my experiences running large or commercialized organizations, I recognize the importance of a strong manufacturing capability. So within the weeks that I joined, I started to take a deep dive on the manufacturing partnerships, how we can be more effective the future.

Speaker 7

Great. All right. Well, congratulations again on the great results.

Speaker 4

Thank you, Lance.

Operator

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

Speaker 4

Thank you, Jenny. I just want to pause and thank you for everyone for their time today and their continued interest in CIGA. As I mentioned in my remarks earlier, CIGA is in an exciting and

Speaker 1

important launch moment. We look forward to providing

Speaker 4

you an update with our progress next quarter. And thank you to everyone. Have a great day.

Operator

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.

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Key Takeaways

  • New CEO Zhan Nguyen highlighted CIGA’s strong fundamentals, including a profitable TPOXX franchise with over $1 billion in multi-year government contracts and opportunities to expand indications to PEP and mpox.
  • Full-year 2023 product revenues reached $131 million, up 51% year-over-year, while pretax operating income rose 96% to $84 million, driven by U.S. Strategic National Stockpile, Defense, and international sales.
  • The board declared a special cash dividend of $0.60 per share—up 33% versus the prior special dividend—and returned $43 million in 2023 through dividends and share buybacks, underscoring disciplined capital allocation.
  • CIGA is advancing its PEP supplemental NDA by completing extended safety and immunogenicity trials, working with the CDC on data reanalysis, and targeting submission within 12 months to support TPOXX use alongside vaccines.
  • Ongoing global mpox trials have now enrolled over 690 patients, reinforcing TPOXX’s safety and efficacy data, as CIGA pursues new long-term SNS contract options and strengthens manufacturing capacity.
A.I. generated. May contain errors.
Earnings Conference Call
SIGA Technologies Q4 2023
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