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spk00: Greetings. Welcome to 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 risk and uncertainties that could cause actual results to differ from the forward-looking statements. CIGA does not undertake any obligations to update publicly any forward-looking statement to reflect events or change circumstances after this call. For a discussion of factors that could cause results to differ, please see the company's filings with the Securities and Exchange Commission, including, without limitation, the company's annual report on Form 10-K for the year end December 31, 2020, and its subsequent reports on Form 10-Q and Form 8-Q. I would now like to turn the conference over to your host today, Mr. Phil Gomez, Chief Executive Officer. Thank you. You may begin.
spk01: Thank you for taking the time to join today's call. Today, I'm joined by Dan Luxhire, our CFO, and Dr. Dennis Ruby, our CSO. We're pleased to have this opportunity to provide a business, R&D, and financial update to our shareholders. We'll then be happy to take questions. We had a significant third quarter with the exercise of 113 million procurement option under the 19th ABARDA contract. In connection with this option exercise, We are targeting multiple deliveries of oral teapots to the U.S. government in the fourth quarter, which would have a cumulative value of $113 million. In October, we delivered approximately $33 million of oral teapots toward this goal. To complete all targeted deliveries by year end, we will need to complete manufacturing, secure transportation, and have available delivery slots at the U.S. government locations where teapots are stockpiled. As we have all read in the news, supply chain disruptions continue to be a challenge and our SIGA team is working extremely hard to ensure we do not have delays or barriers to completing the delivery. On a related note, we are proactively coordinating manufacturer of active pharmaceutical ingredient or API to ensure we are well positioned in the future for domestic and international procurement orders given the ongoing supply chain risks. Looking beyond 2021, The 19C contract has approximately $300 million of procurement options available for future exercise by the U.S. government. This amount includes two remaining procurement options of approximately $113 million each for oral TPOCs and a series of intravenous or IV procurement options that have a total value of $77 million. If these options are exercised when product in the U.S. government stockpile expires, then we would expect these options to be exercised in the next three years. At some point during the next three years, the current 19C contract could be replaced with a longer-term 10-year contract, which could provide a more consistent and transparent product delivery timeline. Such a contract format is being used for other contracts that cover products delivered to the Strategic National Stockpile. In turn, if the TPOX contract is transitioned, it would be natural for the smallpox stockpile size, and by extension, the TPOX contract size, to reflect consideration of our post-exposure prophylaxis indication under development. Please note that with respect to COVID-19, even with the highly effective vaccines, the U.S. government is contracted to purchase nearly 5.7 million courses of COVID therapeutics for over $4 billion. We believe the stockpile of 1.7 million courses of TPOX in a smallpox outbreak would not be sufficient to treat all those who would need care, and that is an active part of our ongoing conversations with the U.S. government. Shifting gears slightly, I'd like to talk about another U.S. stockpile, the antibiotic stockpile. As described on previous calls, we have a collaboration with CIPLA. The goal of that collaboration is to respond to an anticipated BARDA RFP for antibiotics to be developed for bio-threats and stockpiles. The request for information or RFI was posted last fall, but the RFP has not yet issued. We now anticipate the RFP will issue early next year, and we will continue to track it closely with our colleagues at CIPLA. Given the COVID-19 related work that BARDA is doing, it's not entirely surprising that this initiative has been delayed. However, we believe the antimicrobial resistant initiative at BARDA, AMR, is a continuing focal point, and we look forward to responding when the RFP is issued. On the international sales front, it's been a quarter with progress in many areas, but continued delay on a target contract issuance. On the progress side of the ledger, we delivered $2.3 million of oral TPOCs to the Canadian military during the third quarter, which is ahead of schedule as we anticipated they would not exercise this option until after Health Canada approval. And beyond Canada, we have seen a pickup in opportunities for travel and meetings with customers. As such, SIGA presented at conferences in Germany and Italy this quarter with our colleagues at Meridian Medical Technologies. With respect to the aforementioned delay, we continue to work with Meridian in a new foreign jurisdiction toward finalizing an order that would be similar in size to the initial orders received from Canada in 2020 and early 2021. The timing of the completion of the order has been and may continue to be impacted by the COVID-19 pandemic. As background, it is becoming clear that as countries order TPOCs for the first time, there are extensive logistics questions that arise as to how the country will import the product, what waivers may be necessary given that the product will be stockpiled and not immediately used by patients, regulatory requirements, and detailed terms and conditions. We remain optimistic about future sales potential as we gain EMA approval and advance discussion with customers in Europe, the Middle East, and Asia. I'll now pass the call over to Dennis, who will provide an R&D update. Dennis?
spk05: Thank you, Phil. The SIGA R&D team has had a very busy quarter advancing regulatory filings and directing earlier stage development activities. First, an update on regulatory filings in progress. The IV TPOX NDA application is under active review by the FDA. We are responding to questions and providing information as requested. Barring any unforeseen delays, we are targeting approval to be received during the first quarter of 2022. Our Health Canada application is also under active review, and approval could come as soon as late fourth quarter of 2021. Of note, Health Canada is following FDA guidance on approval of products under the animal rule guidance, and as such, will restrict the label to treatment of smallpox. Finally, our EMA MAA application is being actively advanced as well. We've responded to the 180-day questions and are awaiting the EMA response. The MAA approval is targeted for the first quarter 2022. Thus far, the EMA has not objected to our request for a broader indication that includes all human orthopoxvirus pathogens, vaccinia, cowpox, smallpox, and monkeypox. An approval for monkeypox would greatly facilitate the use of TPOX against this growing disease threat in Africa as well as exported cases elsewhere. In support of this effort, CIGA has provided TPOX for use in a clinical trial managed by Oxford University in collaboration with Institute Pasteur to study the use of TPOX in monkeypox patients in the Central African Republic. All the necessary paperwork is in place, drug is on site, and they are preparing to treat their first patients. CIGA is also in the process of setting up additional clinical trials with other international partners in additional African countries. We are hopeful that acquisition of safety and efficacy data for the use of TPOX in monkeypox patients will afford us the opportunity to revisit with the FDA, broadening the TPOX indication to include monkeypox and potentially other orthopox pathogens for which there's strong animal data. Dental development activities are underway for oral TPOX. First, we've completed a post-marketing commitment to conduct a PK study in volunteers weighing more than 120 kilograms, which is approximately 13% of the US population. Based on the results and after discussions with the FDA, the TPOX label will be modified to suggest 600 milligrams three times a day in these patients. Of note, in case of an outbreak, this adjustment will effectively reduce the size of the stockpile to treat the overall population. Second, we continue to advance our Powder for Reconstitution pediatric formulation, and as such, our two leading formulations have been transitioned to our CRO partner to begin adaptive PK clinical trials. Last and most importantly, in terms of TPoC's development activities, our collaboration with the Department of Defense to obtain approval for post-exposure prophylaxis use of TPOX continues to progress. After iterative discussions with the FDA, we have agreement on clinical trial design. The TPOX plus JYNNEOS immunogenicity clinical trial will start patient recruitment during the fourth quarter of 2021. The larger TPOX 28-day safety trial should commence patient recruitment in the first quarter of 2022. If the results are as expected upon completion of these studies, we will file for regulatory approval. The immunogenicity data from the TPOX plus JYNNEOS study will be the most important data to support the use of TPOX in PEP, and we anticipate that data will be available in the second half of 2022. With respect to earlier stage programs, we continue to advance our ST357 smallpox antiviral. Current efforts are aimed at developing co-crystals of ST357 and its protein target, and conducting computer modeling to predict analogs with improved drug characteristics. Additionally, we are actively developing the experimental plan for conducting animal experiments to support the development of plazomycin against plague and tularemia. This work is being done as part of a broader preparation for an antimicrobial resistance RFP that we expect to launch in the coming months, to which we will reply in coordination with CIPLA as part of our collaboration. With that update, I'll hand you over to Dan to provide a financial update.
spk04: Thanks, Dennis. For the three and nine months ended September 30th, 2021, SEGA's revenue was approximately $4.8 million and $18.3 million, respectively. For the third quarter, approximately $2.3 million of revenue relates to product sales of oral teapots to the Canadian military. For the nine months ended September 30th, 2021, Approximately $12.8 million of revenue relates to product sales of oral TPOC to the Public Health Agency of Canada and the Canadian military. In comparison to the nine months ended September 30, 2020, international product sales have increased approximately $10 million, or more than fourfold. Operating loss, which excludes interest income, taxes, and adjustments to the fair value of the warrant, was approximately $2.9 million for the three months ended September 30th, 2021. For the nine months ended September 30th, 2021, operating loss is approximately $4.9 million. Net loss for the three months ended September 30th, 2021 was approximately $3.1 million. For the nine months ended September 30th, 2021, net loss was approximately $3.8 million. In turn, Fully diluted loss per share for the three and nine months ended September 30th, 2021 was 4 cents a share and 5 cents a share, respectively. At September 30th, the cash bounce for the company was approximately $93 million. During the third quarter, Sega repurchased approximately 1.1 million shares of its common stock for approximately $7.1 million. As of September 30th, 2021, The company has cumulatively repurchased approximately 7.7 million shares of its common stock at a total of approximately $49 million since the inception of the share repurchase program in March of 2020. This concludes the financial section of the call. At this point, I will turn the call over to Phil.
spk01: Phil Ashmore Thanks, Dan. Before we turn to Q&A, I'd like to reiterate a few points that have been made in the past. In support of our view that Seeger offers an attractive combination of existing contracts that are currently generating strong financial results, complemented by organic growth initiatives that hold significant potential when viewed collectively. First, I'd like to highlight that the ongoing international sales growth initiative is progressing in a value-creating manner. In 2020, this initiative generated our first international sale and $2 million of revenue. Year to date this year, this initiative has generated approximately $13 million of revenue. While, as noted many times before, progress on this front is expected to be lumpy and uneven, given that the international market for biodefense is not well developed, we believe that a meaningful international market is gradually taking shape. Second, I want to reiterate that the PEP-based development program represents a growth initiative in that it would provide scientific and regulatory support for any stockpile expansions. As stated earlier, we believe a stockpile of 1.7 million courses of TPOX and a smallpox outbreak would not be sufficient to treat all those who would need care. Third, we believe collaborations such as the one with CIPLA could be an important avenue in the future to expand our government portfolio of products and contracts. In effect, the aforementioned RFP that we expect to respond to in coordination with CIPLA would be a first shot on goal for this growth initiative. And fourth, our portfolio of growth initiatives is diversified, including ongoing efforts to broaden the U.S. customer base to potentially include the U.S. Department of Defense and others. As mentioned earlier, we believe these growth initiatives, when viewed collectively, have potential for significant value creation. And one last point. As we generate cash over time through existing contracts and organic growth initiatives, we will continue to examine the best use of our cash, including continuing share buybacks, as well as potential investments or acquisitions that provide an opportunity to grow earnings, diversify our business, and leverage our successful platform. As we announced at our last call, the SIGA Board authorized a new repurchase program under which the company may repurchase up to $50 million of the company's common stock through December 31, 2023. This concludes our prepared remarks, and we will now begin the Q&A session.
spk00: Thank you. At this time, we will conduct a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment as we post our first question. Our first question comes from Max from Jacobsville Edison Group. Please proceed.
spk02: Hi, guys. Thanks for the very detailed update. It's much appreciated. My only question is just on the potential contract transition to a 10-year contract. I was wondering if you could provide any color on what the timing of that might be. I figure you probably can't get too detailed on that.
spk01: Yeah, hi, Max. It's Phil, and thank you very much for the question. So it is very difficult to predict the US government and their timeline on it, but I would say historically, once products get FDA approval, there is usually a multi-year transition over to a contract in a separate part of the government. So we are currently under contract with BARDA. BARDA develops and supports the advanced development, the R&D, as well as the first procurement. into the stockpile, which we did. We, in fact, got resupply under BARDA because of the ongoing work with IV and the pediatric formulation. But ultimately, it makes sense to transition over to a different part of the Assistant Secretary for Preparedness and Response. Historically, that's been the Strategic National Stockpile. There's a lot of ongoing discussions of the government as to where that's going to settle out and how that organization is going to be structured post the learnings of COVID-19. But as I said in my remarks, we have an opportunity over the next three years for the remainder of our BARDA contract, and certainly we'll be working hard over that time period to make sure we have a smooth transition. So thanks again for the question.
spk02: Wonderful. That was very helpful. Thank you so much.
spk00: Once again, ladies and gentlemen, to ask a question at this time, please press star 1 on your telephone keypad. Once again, that's star one to ask a question at this time. Our next question comes from Teddy Green, private investor. Please proceed.
spk03: Hello, guys. Hi, Phil, Dr. Ruby, and Dan. Good to see the progress on the Canadian military order. That was, I think, a little surprising. Wasn't expecting that until you actually received the approval. So that's good to see. First question I have for you, the existing label for TPOX, obviously only in the US, it's only to be sold and marketed as a product for stockpiling, is that correct?
spk01: That's correct. That is the way the label is structured.
spk03: For the future, or at least with the application in European Union and in Canada, Are you including the ability to sell outside of a stockpile for those labels?
spk01: So that would be an ongoing conversation that comes near the end of the process as to what the final label has. Teddy, so certainly we're thinking broadly, but I will say there could be a lot of conversations that happen near the end that we'll have to wait and see how the regulators feel about the product and the requirements that be necessary to do stockpiling versus more wide sales. Clearly, with the monkeypox indication, there are patients that routinely have monkeypox, so we'd want to have an ability to get that to patients. But in Europe, as you know, there's a lot more government involvement in health care, and so the distinction between what is a private sale and what is a government sale is certainly much narrower. But it is something certainly we're looking at as we progress our development and regulatory filings going forward.
spk03: Okay. That's good to hear. And then uh carrying over into uh the uh monkeypox question this uh might be uh better answered by dr ruby um it's been my observation just with the ebola that the ebola clades say in central africa seem to appear to be more virulent than the clades in in west africa and um i know that you have this trial set up in the central african republic with oxford university And I'm curious if the monkeypox clades, if that holds true for the monkeypox clades also. Are the monkeypox clades in Central Africa more virulent than, say, the clades in Nigeria or West Africa?
spk05: This is Dennis. Thanks for the question. You're absolutely correct. The Central African clades are more virulent. Based on sequence analysis, we may expect TPOX to be equally effective against both West Africa and Central Africa clades.
spk03: Okay, great. Thank you. And then also, Dr. Ruby, in regards to ST357, I had read there were some solubility issues, and have those issues been identified, and has there been any kind of design come up to overcome those issues?
spk05: We've certainly identified issues and come up with analogs that we think will address them. we need to initiate a chemistry optimization campaign, and we hope to receive external funding soon to do that. Okay, great. Thank you for that.
spk03: Okay, and then, Phil, the final question I have is, obviously, it was in October, we had a notice of intent to sole source from the Department of Defense, U.S. Army, to purchase TPOCs. And then there was a sources sought notice that came out. Actually, excuse me, I think that was in the middle of September. And then a sources sought notice came out at the end of October, which is kind of just the evolution of the original notice of intent to sole source. And this is obviously the joint project manager medical is asking to see the capabilities, industry capabilities to produce courses of TPOCs. So I guess my question is, Are they asking to see what the company's capabilities are over and above and beyond the 19C contract to produce courses of TPOCs?
spk01: So we'll be responding to that. I think that's a pretty common ask to continue to get capability broadly from organizations to ensure they can respond to the needs of the DoD. And so we'll certainly be responding to that and feel like we have not only a very good product with a great safety profile and efficacy profile, but we certainly have the ability, as we've demonstrated, to deliver TPOCs as the government needs it. So, yeah, we'll be responding and continue to work with them in any questions they may have.
spk03: Okay. And then just a follow-up on that, too, is I'm curious, is this solely to purchase TPOCs just with an indication to treat symptomatic smallpox, or could this be kind of getting their ducks in a row in anticipation of a PEP label going forward? And, you know, because I understand how these You know, the contracting and procurement process works in the government. It does take a lot of time, and they have to submit this, one thing, and then another thing, and you have to respond to it, and there's 15 days after that before it goes inactive. I'm just curious what your thoughts are on that.
spk01: So certainly that's not in their intent to purchase kibbutz. There's no details that they have described, which is not surprising as to what it's going to be used for, I guess. I would highlight it at two levels. The DOD has been working very closely with Dennis and his team on the PEP program. We've received substantial funding, certainly been a focus for them, and I think something that certainly they have a point of pride that we've been collaborating, getting this clinical study ready to go and launching. And contract vehicles are important. When you talk to people that work in government contracting broadly, having a contract vehicle, meaning a contract and an ability to sell to an agency, is a first step in opening up business and being able to broaden it and have conversations. So we're very excited that they posted a notice for sole source for TPox, and we think that's a great first step. And we'll work with them on responding to this, on responding to PEP, and having the broad conversation about what the best strategy is for the use of TPOTs both in the DOD and with other clients within the U.S. government. So certainly I think it's a great first step, as you say, Teddy, but the data is still evolving and there hasn't been anything formally said by DOD.
spk03: Okay, great. Thank you very much, guys. Appreciate it. Thank you very much.
spk00: Thank you. Thank you. At this time, there are no further questions in queue. I would like to turn the call back over to Mr. Phil Gomez for closing comments.
spk01: So I'd like to thank everybody for joining the call today. I'd also like to thank the SIGA team for a whole lot of work in ensuring our supply chain continues to function and our R&D programs continue to advance in the pandemic. There's still a lot of challenges and work, so our team continues to execute flawlessly, and I'd like to thank them all, and we look forward to talking to you all soon as our shareholders. So thank you very much and have a good day.
spk00: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. And thank you for your participation and have a great day.
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