SIGA Technologies, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; compared with Q1 2020. SIGA is a commercial-stage pharmaceutical company whose lead product, oral TPOXX, is FDA-approved for smallpox treatment. The company also develops IV TPOXX. Financial statements are unaudited.
Financial performance and position
| Metric | Q1 2021 / March 31, 2021 | Q1 2020 / comparator |
|---|---|---|
| Total revenue | $4.81 million | $2.62 million |
| Operating loss | $1.99 million | $4.00 million |
| Net loss | $0.81 million; basic EPS $(0.01), diluted EPS $(0.02) | $8.90 million; EPS $(0.11) |
| Operating cash flow | $(4.81) million | $3.32 million |
| Cash and cash equivalents | $106.53 million | $117.89 million at Dec. 31, 2020 |
| Total assets / equity | $138.77 million / $122.68 million | $149.83 million / $129.79 million at Dec. 31, 2020 |
| Total liabilities | $16.08 million | $20.04 million at Dec. 31, 2020 |
Revenue comprised $3.52 million of product sales and supportive services, primarily from TPOXX deliveries to Canada’s Public Health Agency (PHAC), and $1.29 million of R&D revenue. Product cost was $0.25 million; total operating expenses were $6.80 million. The filing does not present a consolidated gross margin. Operating margin was approximately negative 41% of revenue.
Cash used in investing activities was $0.01 million. Financing used $6.54 million, chiefly for repurchases of approximately 958,000 shares for $6.53 million. SIGA had no Term Loan outstanding; it prepaid the loan in March 2020. Lease liabilities totaled $2.23 million, including current and long-term portions. Current assets were $132.89 million versus current liabilities of $7.51 million.
Changes versus Q1 2020
- Revenue increased approximately 84%, mainly because Q1 2021 included $3.4 million of TPOXX product deliveries to PHAC; there were no product deliveries in Q1 2020.
- R&D revenue fell 49% to $1.29 million, primarily reflecting lower IV TPOXX vendor costs and variability in oral TPOXX post-marketing work. R&D expense declined 27% to $2.30 million.
- SG&A rose 28% to $4.06 million, mainly due to PHAC sales commission expense and higher insurance costs.
- Operating loss narrowed by about $2.01 million. Net loss improved substantially, partly because Q1 2020 included a $4.98 million loan-extinguishment loss and $3.02 million of interest expense. Q1 2021 included a $0.92 million gain from a lower warrant liability.
- Operating cash flow shifted from $3.32 million provided to $4.81 million used. Q1 2020 cash flow benefited from BARDA receipts associated with procurement raw materials.
Outlook, risks, contingencies, and unusual items
- The 2019 BARDA contract contemplates up to approximately $602.5 million in payments: $51.7 million in the base period, $127.1 million for exercised options, and up to $423.7 million in unexercised options. BARDA has sole discretion over whether and when to exercise those options; they are not assured revenue.
- SIGA estimated that about one million courses may need delivery to the U.S. Strategic National Stockpile during 2021–2023 to maintain unexpired stockpile levels. This is an estimate, not a firm purchase commitment.
- The PHAC contract provides for up to approximately $33 million of purchases over five years, including firm cumulative commitments of about $17 million by March 31, 2023; later purchases are subject to options. SIGA recognized $3.4 million in Q1 and reported an additional $6.9 million delivery in April 2021.
- SIGA filed an IV TPOXX NDA with the FDA on April 30, 2021; the company cited a typical review timeline of ten months, with no assurance of approval. Oral TPOXX applications in Europe and Canada were expected to complete review by Q1 2022, subject to regulatory uncertainty.
- Management said COVID-19 had not materially disrupted the supply chain or liquidity as of filing, but warned it could slow R&D, contract activity, or international awards. No material change to the 2020 Form 10-K risk factors was reported.
- Remaining performance obligations were $73.3 million at March 31, 2021. Government contracts may be modified or terminated, and options may not be exercised. Manufacturing purchase commitments were approximately $13.2 million.
- The liability-classified warrant was valued at $5.72 million and generated a noncash Q1 gain of $0.92 million. Its fair value is sensitive to SIGA’s share price. The company repurchased shares under a $50 million program authorized through December 31, 2021; approximately $14.97 million remained available at quarter-end.
- Management reported effective disclosure controls and no material change in internal control over financial reporting. The filing reports no off-balance-sheet arrangements and no pending legal matters expected to materially affect the company.
Important facts for investors to verify
- Whether BARDA exercises additional procurement options, and the timing and economics of any TPOXX deliveries.
- Regulatory outcomes and timing for IV TPOXX and oral TPOXX in Canada and Europe.
- Conversion of contract revenue and receivables into cash, including working-capital needs and the $13.2 million manufacturing commitments.
- Cash use, share repurchases, and remaining authorization relative to liquidity and future operating needs.
- Potential effects of COVID-19, government contract changes, and warrant fair-value fluctuations on reported results.