SIGA Technologies(SIGA) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) The unaudited statements show financial position, operations, and cash flows as of June 30, 2023 Condensed Consolidated Balance Sheets Total assets and stockholders' equity decreased to $146.5 million and $124.1 million respectively Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 76,213,484 | 98,790,622 | | Accounts receivable | 6,026,887 | 45,406,960 | | Inventory | 50,497,103 | 39,273,090 | | Total current assets | 134,298,100 | 185,786,344 | | Total assets | 146,510,759 | 195,035,923 | | Liabilities & Equity | | | | Total current liabilities | 18,988,145 | 21,517,721 | | Total liabilities | 22,436,703 | 24,875,881 | | Total stockholders' equity | 124,074,056 | 170,160,042 | Condensed Consolidated Statements of Operations The company shifted to a net loss of $3.8 million in H1 2023 from a net income in H1 2022 due to lower revenues Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2023 ($) | Three Months Ended June 30, 2022 ($) | Six Months Ended June 30, 2023 ($) | Six Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | 5,878,166 | 16,667,045 | 14,201,190 | 27,206,345 | | Operating (loss)/income | (4,638,367) | 3,070,711 | (6,746,675) | 1,631,830 | | Net and comprehensive (loss)/income | (2,875,476) | 2,037,062 | (3,793,733) | 1,676,012 | | Diluted (loss)/income per share | (0.04) | 0.03 | (0.05) | 0.02 | Condensed Consolidated Statements of Cash Flows Net cash decreased by $22.6 million in H1 2023, driven by significant financing outflows Six Months Ended June 30 - Cash Flow Summary (Unaudited) | Cash Flow Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net cash provided by operating activities | 20,866,971 | 54,498,658 | | Cash used in investing activities | (21,686) | — | | Cash used in financing activities | (43,422,423) | (43,106,551) | | Net (decrease)/increase in cash | (22,577,138) | 11,392,107 | | Cash and cash equivalents at end of period | 76,213,484 | 114,530,926 | Notes to Condensed Consolidated Financial Statements Notes detail revenue recognition policies, major government contracts, and significant equity transactions - As of June 30, 2023, the aggregate amount of transaction price allocated to remaining performance obligations was $59.0 million, with an additional $138.2 million added in July from new U.S. government orders[16] - The 19C BARDA Contract has a total potential value of approximately $602.5 million, with about $407.1 million in exercised options and $143.7 million in unexercised options as of July 31, 2023[22] - As of June 30, 2023, the company had approximately $24.6 million of purchase commitments associated with manufacturing obligations[54] Revenues by Geographic Region (Six Months Ended June 30) | Region | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | United States | 12,970,007 | 22,254,602 | | International | 1,231,183 | 4,951,743 | | Total revenues | 14,201,190 | 27,206,345 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses lower H1 2023 revenue due to order timing, TPOXX® developments, and capital allocation - SIGA is a commercial-stage pharmaceutical company whose lead product, TPOXX®, is approved for smallpox in the U.S. and for smallpox, mpox, and cowpox in Europe and the UK[78][79][80] - The company is pursuing a potential FDA label expansion for TPOXX® to include post-exposure prophylaxis (PEP) for smallpox and is also assessing its use for the treatment of mpox through various clinical trials[82][83][84] - The company estimates that approximately 920,000 courses of TPOXX® would need to be delivered to the U.S. Strategic Stockpile in 2023 and 2024 to maintain historical levels of unexpired treatment[91] Results of Operations H1 2023 revenues fell to $14.2 million, resulting in a pre-tax loss of $4.7 million Comparison of Results (Three Months Ended June 30) | Metric | 2023 ($M) | 2022 ($M) | Change ($M) | | :--- | :--- | :--- | :--- | | Product Sales Revenue | 1.3 | 8.6 | (7.3) | | R&D Revenue | 4.6 | 8.1 | (3.5) | | SG&A Expenses | 4.4 | 5.9 | (1.5) | | R&D Expenses | 5.1 | 6.8 | (1.7) | | Pre-tax (Loss)/Income | (3.4) | 3.2 | (6.6) | Comparison of Results (Six Months Ended June 30) | Metric | 2023 ($M) | 2022 ($M) | Change ($M) | | :--- | :--- | :--- | :--- | | Product Sales Revenue | 7.0 | 15.9 | (8.9) | | R&D Revenue | 7.2 | 11.3 | (4.1) | | Cost of Sales | 2.1 | 5.6 | (3.5) | | Pre-tax (Loss)/Income | (4.7) | 2.1 | (6.8) | Liquidity and Capital Resources Cash decreased to $76.2 million due to a $32.1 million dividend and $11.0 million in share repurchases - Cash and cash equivalents decreased to $76.2 million as of June 30, 2023, from $98.8 million at December 31, 2022[120] - For the six months ended June 30, 2023, cash used in financing activities was $43.4 million, primarily due to a $32.1 million special cash dividend and $11.0 million in common stock repurchases[124] - As of June 30, 2023, the company had outstanding purchase orders for manufacturing obligations totaling approximately $24.6 million[125] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate changes affecting its cash and equivalents - The company's main market risk exposure is from changes in U.S. interest rates affecting its cash and cash equivalents[129] - SIGA does not use derivative financial instruments to manage interest rate exposure[129] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2023[131] - No material changes were made to the internal control over financial reporting during the quarter ended June 30, 2023[132] PART II - OTHER INFORMATION Item 1. Legal Proceedings Current legal proceedings are not expected to have a material adverse effect on the business - The company is not involved in any legal proceedings that are expected to have a material adverse effect on its business[133] Item 1A. Risk Factors No material changes to risk factors were reported since the 2022 Annual Report on Form 10-K - No material changes to risk factors were reported since the 2022 Annual Report on Form 10-K[134] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 596,900 shares in Q2 2023, with $21.5 million remaining in its buyback program Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Dollar Value Remaining for Purchase ($) | | :--- | :--- | :--- | :--- | | April 2023 | 431,700 | 5.87 | 22,450,884 | | May 2023 | 165,200 | 5.77 | 21,498,370 | | June 2023 | - | - | 21,498,370 | | Total | 596,900 | 5.84 | 21,498,370 | - The company has a share repurchase program authorized for up to $50 million, running through December 31, 2023[137] Item 3. Defaults upon Senior Securities The company reports no defaults upon senior securities - None[138] Item 4. Mine Safety Disclosures This item is not applicable to the company - No disclosure is required pursuant to this item[139] Item 5. Other Information The company reports no other material information for this period - No disclosure is required pursuant to this item[140] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including key contract modifications - Exhibits filed include a modification to the BARDA contract (10.2), an amended transition agreement with the former CEO (10.3), and CEO/CFO certifications (31.1, 31.2, 32.1, 32.2)[141]