SIGA Technologies(SIGA) - 2023 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents SIGA Technologies, Inc.'s unaudited interim financial statements as of March 31, 2023, including balance sheets, statements of operations, and cash flows, with notes on accounting policies and contract details Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $115,680,683 | $98,790,622 | | Accounts receivable | $12,316,704 | $45,406,960 | | Inventory | $42,577,787 | $39,273,090 | | Total Assets | $183,924,259 | $195,035,923 | | Liabilities & Equity | | | | Total current liabilities | $18,476,491 | $21,517,721 | | Total Liabilities | $21,830,799 | $24,875,881 | | Total Stockholders' Equity | $162,093,460 | $170,160,042 | - Total assets decreased from $195.0 million at year-end 2022 to $183.9 million, primarily due to a decrease in accounts receivable[12] - Cash and cash equivalents increased to $115.7 million from $98.8 million[12] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Unaudited, Three Months Ended March 31) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenues | $8,323,025 | $10,539,299 | | Total Operating Expenses | $10,431,331 | $11,978,180 | | Operating Loss | ($2,108,306) | ($1,438,881) | | Net and Comprehensive Loss | ($918,255) | ($361,049) | | Basic Loss Per Share | ($0.01) | ($0.00) | | Diluted Loss Per Share | ($0.01) | ($0.01) | - Total revenues decreased to $8.3 million in Q1 2023 from $10.5 million in Q1 2022[14] - The company reported a net loss of $0.9 million, compared to a net loss of $0.4 million in the prior-year period[14] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Unaudited, Three Months Ended March 31) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $24,447,118 | $56,706,411 | | Cash used in investing activities | $0 | $0 | | Cash used in financing activities | ($7,557,057) | ($6,585,316) | | Net increase in cash and cash equivalents | $16,890,061 | $50,121,095 | - Cash from operating activities was $24.4 million, a decrease from $56.7 million in the prior year, primarily due to lower collections on accounts receivable[16][114] - Cash used in financing activities was $7.6 million, mainly for common stock repurchases[16][116] Notes to Condensed Consolidated Financial Statements - As of March 31, 2023, the aggregate transaction price allocated to remaining performance obligations was $64.9 million, expected to be recognized as revenue within the next three years[19] - The company's 19C BARDA contract contemplates up to approximately $602.5 million in payments, with about $281.9 million in unexercised options remaining as of March 31, 2023[25] - In March 2023, the company fulfilled a $5.1 million firm commitment to the DoD for oral TPOXX®, and the DoD exercised a subsequent $5.5 million option[34] - As of March 31, 2023, the company had approximately $29.3 million of purchase commitments associated with manufacturing obligations[56] - On May 4, 2023, the Board of Directors declared a special dividend of $0.45 per share, payable on June 1, 2023[74] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's Q1 2023 financial performance, business overview, and key government contracts, highlighting decreased revenues, TPOXX® product developments, and liquidity management including a special dividend Overview - SIGA's lead product, TPOXX®, is an antiviral drug for smallpox, approved by the FDA in both oral and intravenous formulations, and also approved in Europe, the UK, and Canada for treating smallpox, mpox, cowpox, and vaccinia complications[76][77][78] - The company is pursuing a potential FDA label expansion for oral TPOXX® to include post-exposure prophylaxis (PEP) for smallpox, targeting a supplemental New Drug Application (sNDA) submission in early 2024[80] - Several randomized, placebo-controlled clinical trials (STOMP, PLATINUM, and PALM 007) are underway to assess the safety and efficacy of TPOXX® for treating mpox, which could support a future FDA label expansion[81][82][83] Procurement Contracts - The 19C BARDA Contract has a total potential value of approximately $602.5 million, with $281.9 million in unexercised options remaining for oral and IV TPOXX®[87][90] - The company estimates that approximately 920,000 courses of TPOXX® need to be delivered to the U.S. Strategic Stockpile in 2023 and 2024 to maintain historical levels of unexpired treatment[92] - In March 2023, the company fulfilled a $5.1 million order from the DoD and the DoD exercised an additional $5.5 million option under DoD Contract 2[95] - As of March 31, 2023, the company had firm commitments with two European countries for approximately $8 million of oral TPOXX®[97] Results of Operations Q1 2023 vs Q1 2022 Performance | Metric | Q1 2023 | Q1 2022 | Change | | :--- | :--- | :--- | :--- | | Product Sales Revenue | $5.7M | $7.3M | ($1.6M) | | R&D Revenue | $2.6M | $3.2M | ($0.6M) | | Cost of Sales | $1.2M | $4.7M | ($3.5M) | | SG&A Expenses | $4.2M | $3.7M | $0.5M | | R&D Expenses | $5.0M | $3.5M | $1.5M | - Q1 2023 product sales of $5.7 million were primarily from oral TPOXX® sales to the DoD, whereas Q1 2022 sales of $7.3 million were mainly from IV TPOXX® sales to the U.S. Government under the BARDA contract[104] - R&D expenses increased by $1.5 million year-over-year, primarily due to a $0.6 million increase in EMA regulatory fees and higher vendor costs for the PEP Label Expansion and BARDA contracts[108] Liquidity and Capital Resources - Cash and cash equivalents increased to $115.7 million as of March 31, 2023, from $98.8 million at December 31, 2022[112] - Net cash provided by operating activities was $24.4 million for Q1 2023, primarily from the receipt of approximately $35 million for 2022 product deliveries[114] - The company used $7.6 million in financing activities during Q1 2023 to repurchase approximately 1.1 million shares of common stock[116] - Future cash requirements include approximately $29.3 million in manufacturing purchase commitments and a special dividend of $0.45 per share declared on May 4, 2023[117] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's investment portfolio consists of cash and cash equivalents, with a primary objective of capital preservation, and its main market risk is sensitivity to changes in U.S. interest rates - The company maintains a conservative investment policy focused on capital preservation for its cash and cash equivalents[121] - The company does not use derivative financial instruments and its primary market risk exposure is to changes in U.S. interest rates affecting interest income[121] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2023, with no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of March 31, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[123] - No changes occurred during the quarter ended March 31, 2023, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[124] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company may be involved in various claims and proceedings in the ordinary course of business but does not believe any current pending matters will have a material adverse effect on its financial position or results - The company states that while it may be involved in ordinary course legal claims, it does not expect the resolution of any current matters to have a material adverse effect on its business[125] Item 1A. Risk Factors There have been no material changes to the risk factors disclosed in the 2022 Annual Report on Form 10-K, with the exception of a newly added risk concerning the potential loss of or delayed access to uninsured funds held in deposit or investment accounts at financial institutions - A new risk factor was added regarding cash and cash equivalents held at four financial institutions, where balances regularly exceed FDIC insurance limits, indicating that a failure of one of these institutions could result in a loss of or delay in accessing uninsured funds[126] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's stock repurchase activity under its $50 million share repurchase program authorized through December 31, 2023, with 1,139,922 shares repurchased for approximately $7.5 million during Q1 2023 Issuer Purchases of Equity Securities (Q1 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Dollar Value Remaining in Program | | :--- | :--- | :--- | :--- | | Jan 2023 | 291,071 | $7.50 | $30,284,999 | | Feb 2023 | 319,519 | $7.00 | $28,049,642 | | Mar 2023 | 529,332 | $5.79 | $24,986,971 | | Total Q1 | 1,139,922 | $6.56 | $24,986,971 | - The company has a share repurchase program authorized for up to $50 million, valid through December 31, 2023[129] Item 3. Defaults upon Senior Securities None reported - The company reports no defaults upon senior securities[130] Item 4. Mine Safety Disclosures Not applicable - No mine safety disclosures are required[131] Item 5. Other Information No other information is required to be disclosed - No disclosure is required under this item[132] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, a transition agreement, and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act - The report includes exhibits such as the Certificate of Incorporation, By-laws, CEO/CFO certifications (Sections 302 and 906), and XBRL data files[133] Signatures