Q1 2024 SIGA Technologies Inc Earnings Call
Participants
Diem Nguyen; Independent Director; SIGA Technologies Inc
Daniel Luckshire; Chief Financial Officer, Executive Vice President, Corporate Secretary; SIGA Technologies Inc
Pooya Hemami; Analyst; Edison Group
George Hill
Charlie Campbell; Analyst; Liberum Capital Limited
Presentation
Operator
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. SIGA does not undertake any obligation to update publicly any forward-looking statement to reflect events or changed circumstances after this call.
For a discussion of factors that could cause results to differ, please see the company's filings with the Securities and Exchange Commission, including without limitation, the company's annual report on Form 10-K for the year ended December 31, 2023, and its subsequent reports on Form 10-Q and Form 8-K.
I will now hand the call over to Diem Nguyen, CEO of SIGA. Please go ahead.
Diem Nguyen
Good afternoon, everyone, and thank you for joining today's call and review of our business results for the fourth quarter and full year of 2023. I am joined by Dan Luckshire, 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 Gomez. He served as SIGA's CEO for seven 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 ISP Fox franchise. On behalf of our team, I want to thank Phil for his many contributions to making SIGA the strong company it is today.
On a personal note, I'm excited to join SIGA and take on the role of CEO. Having spent nearly three decades focused on addressing unmet needs in healthcare, I look forward to building on your 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 multibillion-dollar commercial organization.
I'm extremely excited to leverage that experience to help fulfill SIGA's potential and have are essential therapies available worldwide. Although this is only my sixth week with the company. I'm pleased to share my belief and SIGA's bright future. This belief has been grounded for the following:
First, SIGA has strong business fundamentals. It is a highly profitable company with a management team that has deep expertise in commercial activities, antiviral R&D, and government relations. And the company has built and maintains a fully integrated US-based operational supply chain. This is a distinguishing asset for our customers.
Second, key parks is a foundational product franchise that has a track record of securing multi-year government contracts, which have totaled over $1 billion in the past 10 years. Again, this is a point of distinction. It speaks to the significant value of two parts.
Third, SIGA has achieved best-in-class financial performance. Our average annual pretax operating income over the past four years has been $75 million. These results have been achieved while maintaining a strong balance sheet for Seagen has attractive growth opportunities.
Let me just mention a few in the near term, SIGA has the potential to expand the indications of key products include post-exposure prophylaxis, which we like to call Pap and PoCs. I'll provide an update on these programs a little later in these remarks.
Also in the near term, SIGA has the opportunity to expand geographically and work with governments across the world. I've fully embraced stockpiling and preparedness for full range of OrthoPAT expire spread. We want to ensure governments have a modernized view of the risks and the tools for protection against or the pox viruses and thinking more broadly speaking, 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.
Then my points of patient care. Importantly, all of this has reinforced people leadership among infectious disease, countermeasures figures, expertise and experience in commercial execution, R&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 Sygate 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 year strong full year 2023 product revenues of $131 billion are the highest amount achieved over the past five years.
This reflects a 51% increase over 2022, approximately $116 million of the full-year product revenues were achieved in the fourth quarter coming from a diversity of sources, including the U.S. Strategic National Stockpile or the SNS, the U.S. Department of Defense and five international governments pretax operating income was approximately $84 million in 2023, a 96% increase over 2022.
This is a testament to the strength of the senior team, the value of our franchise and the real brilliance of our company. Dan will provide more details on these results shortly.
Additionally, in 2023, we spent $43 million on capital management through a combination of special cash dividends and share buybacks. And I'm pleased to announce that our Board of Directors has declared a special dividend of $0.6 per share to pay 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 SNS. provides both a compelling and attractive backdrop for our company in both the short and longer term.
Looking forward, we plan to continue 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.
And now I would like to talk about PEP and pass program. With regard to past, 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 T pass benefits patients are in a prophylactic situation. The FDA has not asked for any additional studies prove the efficacy of tapeouts for pets.
It 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. It is important to emphasize that clinical trial results do not show any drug-related serious adverse events consistent with the past existing strong safety profile.
In addition to the safety trial, we have completed a journey of key product immunogenicity trials solely to evaluate if TPAC. has an impact on it vaccine immune response because in the event of an outbreak, key past treatment would likely to be used in combination with smallpox?
Yes. 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 the immunogenicity of those who received the Genius vaccines while on placebo compared to those that receive the G NeoTract seen while on two parts. However, as mentioned previously, the results indicated that the number of volunteers who had measurable immune response to the Genius vaccine in both the placebo and tox group was lower than expected, given the results that data deemed difficult process 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 engineers and Deepak samples from the immunogenicity trial were said 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 seven samples reanalyzed, given the challenges associated with a 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. 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 an efficient path forward. We believe this is the best course of action in terms of getting timely data from the immunogenicity trials and the FDA agreed as they have been briefed on our plan and had 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 key parts, nor are they about peak tax impact of those individuals who are showing an immune response, rather the relevance of immunogenicity study is that in the case of an ortho pox virus epidemic, Fiat and half or smallpox, you have two parts with the vaccine forecast.
It will be important to reduce the morbidity and mortality of the population without sacrificing patient safety.
Now I would like to shift gears and provide a quick update on the current Am-Pac trials involving key products, which include four 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 NIOBE Pompe trial being conducted in the DRC has enrolled approximately 425 patients, a large increase from the 314 patients noted in our last call. And then I add that 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 the case counts continue to accumulate, especially in Africa.
Importantly, they also provided some, let's say, a warning into the overall global health risks posed by all the pox viruses. As such, we are working closely with the NIH and other health agencies and randomized clinical trials to demonstrate where their key pockets of safe and effective for treating Enpath in Africa, the US, and other parts of the world achieve the best possible outcome for Impax patients from a public health perspective, I would like to remind, however, TPOXX is approved for smallpox and Pak Caba, Pak and fixed India complications in Europe and in the UK. At this point, I would like to turn the call over to Dan for the financial update.
Daniel Luckshire
Thank, Diem for their earlier in the call, biggest strong performance is represented in 2023. Product sales for the 12 months ended December 31st, 2023 for $131 million, which is the highest demand achieved over the past five years and reflects a 51% increase over 2020 to $116 million of the full year. Product sales were achieved in the fourth quarter coming from the diversity of sources, including the U.S. strategic national stockpile for U.S. Department of Defense and five international governments. Fourth quarter product sales include net product sales of $98 million for the delivery of quality box, $6 million warranty box sales to the US Department of Defense and $12 million of international sales and royalty costs, most of which relates to orders under the Hera contract announced in October 2023.
I would like to add that the process of product deliveries under existing orders, which started in the fourth quarter 2023, continued in the first two months of 2024 with approximately $15 million of deleverage of quality products to the SNS and approximately $7 million of international deliveries won't keep up pretax operating income, which excludes interest income and taxes was approximately $84 million for 2023. This represents an increase of 96% over the corresponding 2022 amounts are right to note that average pretax operating income for the past four years, a time period of 2020 to 2023 is $75 million.
We believe this average and the 2023 financial results highlight the robust and in power and Shiga continuing this strong performance. Net income for 2023 was $68 million, an increase of approximately 100% from the corresponding amount in 2020 to in turn fully diluted income per share for 2023 or $0.95 versus $0.46 in 2022 at December 31st, 2023, the company maintained a strong balance sheet with a cash balance of approximately $150 million and no debt in 2023 biggest spend approximately $43 million in capital management with a special cash dividend of approximately $32 million and share repurchases of approximately $11 million.
Earlier today, the company declared a special cash dividend of $0.60 per share payable on April 11th for shareholders of record at the close of business on March 26. This concludes the financial update at this point, I'll turn the call back to Diem.
Diem Nguyen
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 through 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.
So in summary, our company is in an exciting and important launch moments, as we strategically invest in our research and development programs, expand geographically by broadening our partnerships with governments around the world, leverage our anti-viral experience, and expertise to pursue attractive opportunities in other therapeutic areas with similar points of patient care and continued initiatives that directly benefit our shareholders.
Now, I would like to open the call to Q&A.
Question and Answer Session
Operator
(Operator Instructions) Sue Romano, Edison Group.
Pooya Hemami
Great. Thank you for taking my questions and congratulations on the quarter. It's nice to see the healthy distribution out. My first question was on on oral P. POX delivery. It looks like it will mark the last deliveries under the 2018 contract with Barda with oral P. parks. 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 S. and S. contract?
Diem Nguyen
Thank you, Sue, for the question. We want to share that we have maintained a continued as well as healthy dialogue with the US government. At this time, we're targeting an RFP for the SNS from the administration of strategic preparedness and response this year. 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.
Pooya Hemami
Thank you. And my second question was really on here. I mean, that was a really big milestone for Sika, and it was on have we seen any incremental opportunities develop in the last few months. We saw that nice in a double digit million of procurement deal those already signed up. What kind of other sales potentials Can we assume looking ahead at this point as you have all been aware, we have sold to more than 25 countries.
Diem Nguyen
There are multiple countries in Europe and beyond who have ordered a pass for indicating interest in ordering more T box often a larger quantity than the prior order. The 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 million in international sales in 2023, and we are looking to strengthen the sales in the years ahead.
Operator
(Operator Instrcitons) George Hill, a private investor.
George Hill
I'm not sure if you covered this earlier in the call, but do you still have an option coming up for later this year? The final option exercise for T. box for the US government?
Daniel Luckshire
Yes, this is Dan, and you're correct in that existing contract as a remaining option for 113 million for OTOX. as well as an IVTPOX. option for 26 million, I would now.
Okay. And that is -- sorry, go ahead in that for the 24 fiscal year, that's what we're targeting is that those options we are targeting to get exercised this year.
George Hill
Okay, thank you.
Daniel Luckshire
Yes. Thank you.
Operator
Charlie Campbell, Liberum Capital.
Charlie Campbell
Congratulations on the great 2023 results. My question was related to on 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 sounds like you worked through does it was also mentioned that the reorder cycle for 2024 would be approximately $128 million. Do you feel like manufacturing capacity now is such that you can meet that target? Phil?
Daniel Luckshire
Sure. This is Dan. I'll start off and Diem can jump in if she wants. And yes, we did the navigate the I guess, the slow pace of the supply chain toward the end of the year, and we are still working on getting that to a more normalized way which I'm happy to say that it's back to where it was a couple of years ago, but we did it. We did manage to get deliveries within the fourth quarter for the most part.
And going forward, it will be contained a continuing focus on 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 US government, and then we will be working toward making at least a substantial portion of deliveries this year.
Diem Nguyen
And last, I would just add that given my experience is 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 in communication.
And you will see that we will be working towards successful delivery of products in the future or will.
Charlie Campbell
Congratulations again on the great results. Thank you.
Daniel Luckshire
Thank you.
Operator
There are no further questions at this time. Please proceed.
Diem Nguyen
Thank you, Jenny. I just want to pause and say thank you for everyone for their time today and their continued interest in data. As I mentioned in my remarks earlier, SIGA is in an exciting and important launch moment. We look forward to providing an update with our progress next quarter. And thank you to everyone.
Have a great day. Thank you.
Operator
Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect.
