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.

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 ending December 31st, 2019 and its subsequent reports on Form 10-Q and Form 8-K.

It is now my pleasure to hand the call over to Phil Gomez, CEO of SIGA Technologies. Please go ahead..

Thank you for taking the time to join today's call. Today I am joined by Dan Luckshire, our CFO. We're pleased to have this opportunity to provide a business update.

On this call, we will primarily focus our prepared remarks on the following; review of 2019 financial results and a forecast of anticipated product deliveries under the 19C BARDA Contract; progress on international sales; our Post-Exposure Prophylaxis program for TPOXX; other TPOXX opportunities including Monkeypox and Oncology; the Board of Directors' authorization of a $50 million share repurchase program; and growing and diversifying SIGA's product mix through acquisition of assets or businesses.

Before I hand the call over to our CFO, Dan Luckshire, who will provide an update on our 2019 financial results and a forecast for product deliveries under the 19C BARDA Contract, I would like to provide some context on the 19C BARDA Contract.

The stated goal of the 19C BARDA Contract as outlined in the initial request for proposal or RFP is for the maintenance of a 1.7 million course stockpile of smallpox antiviral drug.

We have been preparing to deliver a substantial number of courses of TPOXX to the Strategic National Stockpile or SNS in 2020 since based on expiry of previously delivered product; the stockpile would otherwise drop below the 1.7 million course level.

In 2018, BARDA encouraged the start of manufacturing for the purpose of stockpile replenishment with a contract modification which allowed SIGA to invoice for an $11 million payment upon the purchase of raw materials for processing and manufacturing. We've been manufacturing product in anticipation of product deliveries in 2020.

For product deliveries to commence in 2020, we need procurement options to be exercised by BARDA under the 19C contract. As of today, the procurement options have yet to be exercised by BARDA. However, we do believe BARDA's funding of raw material purchases for product deliveries highlight BARDA's commitment to a robust smallpox antiviral stockpile.

We also believe the COVID-19 outbreak underlines the importance of preparedness and the critical role that ASPR, BARDA, CDC, and the NIH play in health security. As a starting point, we should keep in the mind that the recent news of cases expanding outside China is a sober reminder we do not know the ultimate impact of this virus.

Our partners at ASPR, BARDA, NIH, and CDC are leading the response to this outbreak and it will likely continue to strain their human resources. However, we do not expect an impact on anticipated replenishment of TPOXX stockpiles.

From a financial perspective, we would expect an outbreak like this to follow the same path as other prior outbreaks, for example, the Ebola outbreak, a few years ago in which Congress would appropriate supplemental funding to address COVID-19 and ensure existing high-priority programs such as ours are not interrupted.

Additionally, we believe the COVID-19 outbreak is a clear reminder of the human and economic impact an infectious disease outbreak can have globally. If this outbreak was smallpox which is much more lethal and from initial reports, much more contagious than COVID-19, the impact would be orders of magnitude higher on human lives and the economy.

And therefore, a critical reminder that preparedness with medical countermeasures like TPOXX is essential. With regard to SIGA, the bottom-line is that we continue to work with the Assistant Secretary for Preparedness and Response, BARDA, and the SNS to exercise contract options for product delivery.

Our expectation for the number of courses to be delivered to the SNS between 2020 and 2024 to replace expiring TPOXX has not changed. As a reminder, we expect to deliver approximately 1.66 million courses of oral and IV TPOXX to the SNS between 2020 and 2024 worth a value of approximately $532 million. At this point I'll turn the call over to Dan..

Thanks Phil. Financially, 2019 was a transition year and operationally, it was a groundwork year.

On the financial front, the 2019 financial results reflect the transition from the 1C BARDA contract also known as the 2011 BARDA contract to the 19C contract with substantial completion of the 1C contract occurring in 2018 and substantial product deliveries and revenues under the 19C contract expected to commence in 2020.

SIGA's revenue for the year ended December 31, 2019, was approximately $27 million, which is divided between approximately $11 million in connection with the delivery of approximately 36,000 courses of oral TPOXX and approximately $16 million in connection with research and development activities.

The R&D revenue amount includes approximately $3 million of revenue attributable to a negotiated update to government contract rates. In this transition year, SIGA had a pre-tax operating loss of approximately $2 million and a net loss per diluted share of $0.15.

The per-share calculation includes items such as adjustments to the fair value of warrants, interest expense on the term loan and benefit from income taxes. We ended the year in a solid financial position with cash and cash equivalents including amounts in restricted accounts of approximately $161 million as of December 31, 2019.

Amounts in restricted accounts approximately $96 million as of December 31, 2019 are available to pay interest, fees and principal related to the outstanding term loan. On the operational front, it has been a busy and productive year. Phil will address most of the operational, regulatory and scientific activities in his comments to come.

One operational item, I would like to briefly highlight relates to manufacturing. In 2019, we proactively worked with our supply chain to forward process API, active pharmaceutical ingredient in order to be in a position to start delivering meaningful numbers of TPOXX treatment courses in 2020.

This enabled us to be where we are well-positioned to meet SNS product delivery needs in 2020 and beyond.

With regard to this year and early next year, SIGA expects procurement options under the 19C BARDA contract; we exercised in the near-term and to deliver oral TPOXX courses with a value of approximately $101 million to the SNS by April 2021 with product deliveries in connection with option exercises to start in the second quarter of 2020.

These estimates are based on among other things, the expiration schedule of courses currently in the Strategic National Stockpile, as well as other considerations such as customer input and manufacturing schedules.

The aforementioned estimates do not include any product sales related to IV TPOXX or any domestic or international procurement contracts that may be awarded after this date.

It's important to note that after the anticipated exercise of procurement options under CLIN 0009 of the 19C BARDA contract, SIGA's 19C BARDA contract will have up to $414 million of procurement related options remaining for future exercise. This concludes the financial section of the call. Back to you Phil. .

one, the just announced Board authorization of a $50 million share repurchase program; and two, corporate strategy going forward. As noted in today's press release, our Board of Directors have authorized a share repurchase program, under which the company may repurchase up to $50 million worth of stock.

The program is authorized through December 31, 2021. The timing and actual number of shares repurchased will depend on a variety of factors including exercise of procurement options under government contracts, alternative opportunities for strategic uses of cash, the stock price of the company's common stock and market and industry conditions.

We believe that this share repurchase program announced today highlights our commitment to seeking value creation through a full range of approaches. Now I'd like to say a few words about our corporate strategy going forward.

We continue to find new ways to expand our business with and beyond TPOXX, which is keeping our team fully engaged as we execute our plans. We also have a second mechanism of action antiviral drug for smallpox treatment that we are collaborating with NIH to advance its development. We'll provide updates on our second compound as we hit key milestones.

We are also continuing to scan for assets that would be accretive and add value to our efficient corporate platform. We have and continue to look at adjacencies in infectious disease, government contracting and other complementary businesses.

To date, we've examined over 100 potential opportunities, which include potential partnerships, product licenses, acquisitions and strategic investments.

We continue to be selective and do not know if we will ultimately find assets with the right fit, but do believe that using cash to invest in assets and our businesses to grow and diversify our product mix is an important potential avenue for value creation.

In summary, we will continue to drive value for our shareholders on the operating front through deliver oral TPOXX courses with a value of approximately $101 million to the SNS by April 2021, with deliveries starting in the second quarter of 2020; pursuing international sales with Meridian; pursuing approval for label expansion for PEP and other orthopoxviruses; expanding and supporting oncology collaborations for TPOXX; and leveraging our capabilities for new products.

Additionally, beyond current operations, we are exploring deployment of cash as another way that we may create value. On this front, we've just announced a $50 million share repurchase program and we are actively looking for assets and businesses that could add to SIGA's product mix.

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

Thank you. [Operator Instructions] Our first questions come from the line of Matthew Mark of Jet Capital. Please proceed with your question..

Hi, guys. Phil, I very much appreciate the enhanced disclosure in the release and then also in your presentation. So thank you for that. I had two questions.

First, the section in the press release that discussed the 19C contract and product delivery expectations, was that language shown to the customer before it was published?.

So, this is a projection that comes from us. We're, obviously, sensitive with our customer that we stay in close contact with them, but I wouldn't comment on exactly what we get approval for from BARDA when we do those..

Okay. Second the $50 million repurchase, can you speak to, as a Director and as a Board, how that number was arrived at? In light of the disclosure it's -- I mean, it's not a lot. It's a small percent of the cash on the balance sheet looking out over the period of time, during which you project to complete the program.

How did you come up with the $50 million? And also how do you think about that allocation of cash to shareholders, finally a return for shareholders over time past this two-year window?.

So, thanks, Mark. It's a great question. I think I'd first like to start by saying; we are reaching in 2020 a new era. As Dan said, we were in a transition period last year between one contract to the next. And so, we recognize that we're now in a new position starting to deliver product in 2020. We haven't however started to deliver that.

And so, we wanted to do what many companies do, as they signal share repurchase, that we think our share price has been undervalued. And so, we wanted to be able to have the ability to repurchase our shares, if we believe the circumstances make sense for that.

And we thought $50 million was a very meaningful number given where we are with our future contract and we believe it provides a substantial signal to the market that we see great value in our shares for doing that. So, that's where we really came out with the number.

And going forward, we'll continue to look at opportunities both in share repurchase and assets on the outside and be very disciplined about how we make investment decisions and which ones to use..

I appreciate the answer but there's $80 million cash on the balance sheet and there's another north of $80 million that will be generated by the company between now and December of 2021. So, it's a small fraction of that and most of us have been waiting for a long time to see returns.

So, I would encourage you and the other members of the Board most of whom have been on the Board for well over a decade when the company's performance over their tenure has been for to think harder about a capital return program and one that would be ongoing as a payback for shareholders who waited for a very long time.

But I appreciate your answer and I appreciate the enhanced disclosure. Thanks Phil..

Thanks Mark. Appreciate it..

[Operator Instructions] There are no further questions at this time. I'd like to turn the call back over to Phil Gomez for any closing remarks..

So, I'd like to thank everybody for joining the call today. As Matthew Mark said we appreciate that we're entering a new era and part of that is us being able to communicate the activities as they go forward and providing frequent updates and engagement with our shareholders.

So, we really appreciate you joining today and we look forward to continuing those conversations as we go forward and providing additional updates. So, thank you all very much..

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great evening..