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

the operating front, the business development front and the regulatory front. On the operating front, we have been delivering TPOXX on a timely basis under the 19C BARDA contract. In September, we delivered approximately 134,000 courses of oral TPOXX to the Strategic National Stockpile or SNS.

This brings total oral TPOXX SNS deliveries for the first 9 months of 2020 to approximately 251,000 courses, which is reflected in the 10-Q financial results. Additionally, we delivered another approximate 112,000 courses of oral TPOXX to the SNS in October. This delivery will be reflected in the fourth quarter financial results.

On the business development front, the Public Health Agency of Canada or PHAC announced its intention to award a contract for the procurement of up to 33,300 courses of oral TPOXX over a 5-year time period. This announcement by PHAC represents another step in the overall process of building an international market for TPOXX.

A contract with PHAC, in combination with the separate and distinct contract issued by the Canadian military in April, would position SIGA to cumulatively deliver up to approximately 46,000 courses of oral TPOXX over the next 5 years to Canada.

If the PHAC contract is executed at pricing similar to the pricing of the Canadian military contract, then cumulative deliveries to PHAC and the Canadian military would generate revenues up to approximately $43 million if all options are exercised.

Going forward, we expect to build on the Canadian purchases with another international order within the next 3 months. We expect the next order likely will be an annual order as opposed to a multiyear contract.

Beyond anticipated orders and contracts over the next few months, we continue to advance conversations with a broad range of countries and continue to believe prospects are good for additional international orders and/or orders for oral TPOXX to be placed within the next 6 to 12 months.

The COVID-19 pandemic has slowed some conversations in the short term, but we believe it will increase focus on pandemic preparedness broadly, which is good for SIGA and TPOXX.

On the regulatory front, we continue to press forward at a fast pace, with a plan to make 3 regulatory submissions for TPOXX in 3 jurisdictions within a 12-month period, starting with the MAA submission for oral TPOXX in Europe earlier this year and including a regulatory submission in Canada for oral TPOXX as early as the end of this year and a planned NDA submission for IV TPOXX in the U.S.

in the first quarter of 2021. The MAA filing in Europe includes indications for treatment of smallpox, cowpox, monkeypox and vaccinia complications. We plan to file the same set of indications with Health Canada when that application is filed as soon as late this year.

Subsequent to these filings, we plan to pursue similar label expansion discussions with the FDA at an appropriate time. With respect to regulatory activity and support of domestic initiatives, I would like to briefly touch on the postexposure prophylaxis and IV programs.

With respect to the postexposure prophylaxis program or PEP, it continues to be an important development program in that it addresses the likely use of oral TPOXX for a majority of people in the event of a smallpox outbreak. As such, the PEP program is an important element in the overall discussion with the U.S.

government about the merits of increasing the size of the SNS. We will provide a status update for this program on the next quarterly update in the first quarter of 2021. With regard to the IV program, as noted earlier in this call, we expect to file the IV NDA with the U.S. FDA early in 2021.

From a public health perspective, this program is an important supplement to oral TPOXX as it seeks to ensure TPOXX would be available to those too sick or unable to swallow an oral capsule.

Finally, with BARDA’s support, SIGA continues to conduct development work on a liquid suspension pediatric formulation of TPOXX that would be important to serve the population not covered by the current label, those under 13 kilograms and those who are unable to swallow capsules.

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

3,700 courses to be delivered by March 31, 2021; a cumulative total of 18,500 courses are expected to be delivered by March 31, 2023; and an additional 14,800 courses can be delivered after March 31, 2023, subject to option exercise.

As Phil mentioned earlier, the PHAC contract and the contract issued by the Canadian military in April, in total, would positioned SIGA to cumulatively deliver up to approximately 46,000 courses of oral TPOXX to Canada over the next 5 years if all options are exercised.

If the PHAC contract is executed at pricing similar to the pricing of the Canadian military contract, then cumulative deliveries would generate revenues up to approximately $43 million if all options are exercised. This concludes the financial section of the call. At this point, I will turn the call over to Phil..

Thanks, Dan. In closing, I want to reiterate that we believe that the achievements in 2020, in combination with goals we are pursuing for the future, provide a bright future for SIGA. We will continue to pursue a full range of avenues to create value, including continued delivery of oral TPOXX courses under the 19C BARDA contract; pursuit of U.S.

stockpile expansion to cover PEP; pursuit of additional international sales through Meridian and international regulatory approvals to support those sales; seek approval for label expansions for TPOXX to include PEP and other orthopoxviruses; extending and supporting ongoing oncology collaborations for TPOXX; and leverage our capability for new formulations and products.

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

Thank you. [Operator Instructions] Thank you. Our first question is coming from the line of Joaquin Horton with Raymond James. Please proceed with your question..

Great quarter, guys..

Thanks, Joaquin. Appreciate it..

Thanks, Joaquin..

Okay. Just one quick comment and I got a couple of questions. It looks like we – in our share buyback, we bought about 900,000 shares just a little bit more than the short sellers bought back, which they bought back 650,000 shares.

Anyway, a couple of questions on the PEP program, how are we doing on our testing? We are supposed to setup some sort of tests – human tests to get that approved.

How is that going?.

one to evaluate if there is any interference with the Jynneos smallpox vaccine and then an expanded safety study. We are progressing very well with developing those protocols and planning for it. And as I mentioned on this call, we are planning to give an update on that in the first quarter next year.

So, on our next call, we will give a more detailed update of how that program is progressing and the plans that we have there. So, I appreciate the question..

So, one other question on the use of cash since we are not spending a whole bunch of money what are your plans for the use of cash? We seem to be accumulating – according to my back of the envelope figures that I am going to use, it will have maybe as much as $150 million by the end of the year in cash.

Any thoughts on what you might do with that?.

So as we have talked about before, we have authorized share repurchase program. Since March of this year, we have repurchased $22 million of stock, 3.7 million shares of stock. So we have certainly been active under that authorized share repurchase plan.

We also continue to look at are there assets, products that we could layer on our platform to also help us continue to grow the business. So, we look at those. And then we look broadly at capital management on an ongoing basis, to look at the best way we can return value to our shareholders.

So certainly, our Board and our management team continue to evaluate that and we think $22 million in progress is a good first step on an active share repurchase program and we will continue to look at that..

Well, I mean, on the – you seem to be price constrained on your purchases this last quarter.

Is there a price constraint on that?.

So, we look at a number of factors as we said when we authorize the share repurchase program. It’s our prospects for option exercises, our capital that we have, the price, all of the items are considered as part of share repurchase programs..

Because there were, say, 62 days of trading this last quarter. And if you only bought 900,000 shares, that wasn’t very many shares per day. Anyway, that’s all I had for this conference call. We look forward to the next one. Good luck, guys..

Thanks so much, Joaquin. I appreciate you dialing in and asking questions. Thanks..

Thank you. Our next question is from the line of [indiscernible], a Private Investor. Please proceed with your question..

Congrats on the quarter. So – and Dan, I’d like to see those numbers, and I’d like to see what we can anticipate in the fourth quarter also with the completion of the first option exercise if that’s basically what that was. My first question I have for you is with regards to the potential second option exercise and 19C contract.

Could we – so should we expect it to be – the delivery the same as in the first? Or is it divided up into 4 different parts? Or could it be done in an entirely different manner?.

Yes. So Teddy, good to talk to you and thanks for joining. So you’re correct, the number 9 was divided into 4. The government has not asked us to divide CLIN into 4 parts. And as you can see, we essentially exercised almost all the deliveries under 9 in pretty short order this year.

So I don’t have insights that the government might ask us to change that. But as of right now, it is still 1 CLIN for the entire 112.5 million..

Okay. And then – because I’m just looking at your deliveries back in 2014 into 2015. Obviously, I know 2014, it was 600 milligrams until it was adjusted up.

So how confident are you in receiving an announcement for the second option exercise in the next couple of months? Do you expect or anticipate something in the first quarter? That’s what I’m – I guess I’m curious about right now..

Yes. So I appreciate the precision of the question around when exactly it would be option exercised. Given the nature of these contracts with the government, given the way the government works, I tend to think a little longer term around that, that they have stated they want to maintain 1.7 million courses.

As we’ve shown in our management presentation, over a 5-year period, they plan to do 4 options to maintain that. We’re now down to 4 years and 3 options. And as you point out, we provided deliveries in 2014. So it would – we would expect there would be expiries next year. Part of it is driven by the U.S. government budgeting process. So the U.S.

government has to approve a federal budget. And so last year, what we saw was there was a continuing resolution for a number of months. That wasn’t actually cleared until March of this year. Once the federal budget is approved, it takes sometimes a month, even 2 months for the federal budget to work its way into the operating divisions.

And then that allows places like the SNS and BARDA to actually issue contracts with the new money they have. So part of the answer to your question has to be when will there be a federal budget approved. Part of the answer to your question is around how fast can BARDA exercise that. They are working on COVID.

But we are certainly optimistic that we will see another option exercise so that we can continue to redeliver to the SNS. Just as we did this year, we are planning and manufacturing product in anticipation of that to make sure we can deliver on future international contracts, on domestic contracts, etcetera. So we want to be ready for that resupply.

Sorry for the long answer, Teddy..

No, that’s okay. That actually was a great answer because it gave a lot of detail. And actually, what I was able to read from that is that perhaps because the first option exercise, when they made the announcement to purchase or provide for the active pharmaceutical ingredient, it then took – there was a big lead time.

And it sounds like you might not need that lead time this time around, that you have product ready, and it could be delivered much quicker if the option is exercised.

Is that an accurate read on what you said?.

Yes. So we’re certainly manufacturing product in anticipation of future deliveries. So yes, that’s certain..

Okay, perfect. That’s excellent.

And then one other question, I did hear you say that you are expecting one international order within the next 3 months?.

Yes. And those are always hard to predict, but we do think we will have another one that will come up. And I also mentioned what we’re seeing with Canada, I do want to point out, is pretty consistent with other countries that for those of you that have followed SIGA for a very long time, you know the U.S.

government had a very large fund called BioShield where they could purchase their entire stockpile at once. Most countries don’t have that. They have annual budgets that they have to follow.

So if you see the Canadian order that has materials that will be delivered every year, we anticipate other countries may make their first order with that being announced then and then having options or additional orders they may place in subsequent years.

So we’ll see a mix of that as it rolls out, and I added that color to that potential order that’s coming up..

Okay. That’s great. Thank you very much..

Thanks so much, Teddy. .

Thank you. [Operator Instructions] Our next question comes from the line of Chris Thompson with Hutch Capital. Please proceed with your question..

Hey, guys. It’s actually Paul on for Chris. Great quarter and I really appreciate the prepared remarks as well. It’s great news on the – an additional international order. My quick question for you is on PEP. And I know that – I know, Phil, you don’t like these timing questions but I’m going to ask it anyway.

And I don’t know if you’ve ever cuffed the timing on when you expect that label expansion to be approved.

And then related to that, is this something that you think the SNS and BARDA will need that approval before they start thinking about an expansion contract or do you think it might be something that they would consider before that approval is in place?.

So thanks, Paul. Thanks for joining and thanks for the question. I’ll answer the second question first, which is we do not believe that we would need a full PEP approval by FDA before they bought in advance for a couple of reasons. One, the theoretical or the scientific rationale for no interference with the Jynneos vaccine is very high.

There’s no real scientific reason that it would interfere. So we don’t anticipate that. And second, I go back to our FDA Advisory Committee meeting where most public health experts said, look, that’s the way it’s going to be used.

And if that’s the way it’s going to be used, product would be used a lot faster than the way the government had contemplated it. And even if you go back to our original 2011 contract, there was discussion of PEP and it’s a need to increase the stockpile should that become part of the use case.

So for a variety of reasons, we think they can operate on that sooner. Now it is hard to predict what that time line is because that requires them to change a requirement and buy additional materials. So we’re working closely to push that to educate and to discuss. But ultimately, we have to wait for the government.

On the time line for actual development, as you can appreciate, part of that is planning these studies. Part of that is getting FDA’s approval on not only the size but the sequence and the outcomes, and all of that drives what the time line will be.

So that’s why we’re targeting, in our next call, to have Dennis give an update on PEP and what that looks like. So stay tuned on that..

That’s great, really helpful and congrats again guys. Thanks..

Thanks..

Thank you. [Operator Instructions] The next question is from the line of Matthew Mark with Jet Capital. Please proceed with your questions..

Hi, guys.

Phil, when you say the next international order will be annual as opposed to multiyear, does that imply that there will be sort of a onetime purchase or that there would be – can you elaborate a bit on just kind of what you mean by that?.

Yes. So what I mean is that some countries we anticipate will say, we need X courses this year. And they’ll say, hey, we are on a trajectory where we think we’re going to order that every year, but I can’t say it in advance, and they’re not going to do a multiyear contract with option.

So our understanding in discussions with some countries are they will say, look, we’ll place an order every year, but I can only tell you once I actually place the order if it’s a definitive order the following year. But it would be the first of what we’d anticipate would be annual orders..

Got it.

And do those kind of considerations tie back to budget and funding or is there anything from a negotiating standpoint or anything else that would kind of explain that?.

As our colleagues at Meridian, who have been doing this for a very long time say, every country just has its own style and bureaucracy and how they like to do things. It is astounding how in the U.S., we have BARDA, which has kind of a unified approach to these things. In other countries, there are not standardized places.

Sometimes, it’s the military buying. Sometimes, it’s a public health group that may buy normally commercial items and this is unusual for them to do. So it’s really just a function of the business processes that are inside each country that result in these types of approaches.

There was an announcement a few months ago that, for example, Europe is thinking about putting together a BARDA to kind of do this type of work, having learned some things from the COVID-19 pandemic.

It’s early days on that, but it would be nice if countries start to realize, especially with the COVID-19 pandemic, that having a centralized place that thinks about these things, builds stockpiles, manages stockpiles, that could certainly be good for us as we go forward. So we’re encouraging that and educating countries on how that can be done..

Got it. So can you talk a little bit more expansively on the cash balance and the use of cash? I understand the share buyback plan, and everyone sees that it was barely executed on in this quarter. Just a little bit more about why. And especially in light of the fact that as someone else already asked, the cash balance is going to grow.

It’s going to become a meaningfully larger number.

So shareholders have a right to understand management’s point of view on that, I think, in more detail than it is for us to date?.

So I appreciate the question, Matthew. I know you have asked that before. We certainly appreciate that we have a number of uses for cash. There’s certainly the active share buyback program. We do look for assets that would be accretive, that we could layer on to our business. We do need to manage cash for operations.

As I mentioned, we do manufacture product as we go forward. And I will say, certainly at a high level at the Board, we look at all potential uses for cash. There’s been discussions about share buybacks and other distribution of cash to shareholders, which we look at and we will continue to do so.

I still think this quarter, it is early to give a broad set of expectations around exactly what’s going to be purchased and when. We want to continue to look at that and have the flexibility if an asset shows up that is something that could layer on in this time of a pandemic, we’d like to be able to look at that.

So we’ll continue to provide those updates. We don’t think it’s the right thing to do right now to give exactly what a target would be because we’re still being opportunistic in thinking about how we can effectively grow the business right now. Dan, I know the question also Matthew had was on cash balance.

I don’t know if you want to reiterate that at quarter end, just so we can talk about where we actually are now..

Yes. So we ended the quarter at $79 million. And as we mentioned, we did have a meaningful product delivery in October, which will – has a beneficial impact on the cash balance.

I think it is instructive that as Phil mentioned, in addition to the overall potential uses of cash, one thing to – like outside of the company such as share repurchases or finding other assets is we do have to do things such as manufacturing proactively in order to be prepared for the next option exercise. And so there is some front-loading.

You got some cash usage that you had to take into account when you think about rolling things forward. So when we have – we have deliveries and that increases the cash. But you also have to look at we are building inventory and things like that, that do have – take a bite out some of the cash usage.

And also, I think as a broad measure, as we think about these things, you also think about the concept of our cash flows in a given year tend to be lumpy. So we had to take that into account as we think about timing of cash usage..

Just one more question.

Was the company blacked out from share repurchase during the quarter for anything other than the typical blackout periods?.

No..

Okay. Thanks guys..

Thank you. At this time, we have reached the end of our question-and-answer session, and this will also conclude today’s conference. Thank you for your participation. Have a wonderful day..