SIGA Technologies, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparative period is Q1 2022. SIGA is a commercial-stage pharmaceutical company whose primary product is TPOXX, sold principally to U.S. and foreign governments. The statements are unaudited.
Financial performance and condition
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Total revenue | $8.32 million | $10.54 million; down 21% |
| Product sales and supportive services | $5.70 million | $7.32 million; down 22% |
| Research and development revenue | $2.62 million | $3.22 million; down 19% |
| Operating expenses | $10.43 million | $11.98 million; down 13% |
| Operating loss | $2.11 million | $1.44 million |
| Net loss | $0.92 million; $0.01 per diluted share | $0.36 million; reported diluted loss per share of $0.01 |
| Cash from operating activities | $24.45 million | $56.71 million |
| Cash and cash equivalents | $115.68 million at March 31 | $98.79 million at December 31, 2022 |
| Current assets / current liabilities | $172.53 million / $18.48 million | Current ratio approximately 9.3x |
Revenue was entirely U.S.-based in both quarters; no international revenue was recognized. No borrowing debt is reported. Total liabilities were $21.83 million, including approximately $1.93 million in present-value operating lease liabilities. Operating cash flow included a $33.09 million reduction in accounts receivable; cash generation therefore reflects collections and working-capital timing, not operating profit. The company repurchased about 1.14 million shares for $7.56 million. No investing cash flow or capital expenditures were reported.
Changes and management commentary
- Q1 2023 product revenue primarily reflected oral TPOXX deliveries to the Department of Defense (DoD); Q1 2022 product revenue primarily reflected IV TPOXX deliveries to the Strategic National Stockpile. No BARDA product-delivery revenue was recognized in Q1 2023.
- Cost of sales fell to $1.15 million from $4.72 million, principally reflecting the different product and delivery mix. SG&A rose about $0.5 million, mainly from professional fees related to the CEO transition. R&D expense rose about $1.5 million, reflecting higher regulatory fees and vendor costs.
- R&D contract revenue declined partly because estimated direct vendor costs for the smallpox post-exposure prophylaxis program increased, changing the contract’s estimated profitability.
- Operating cash flow decreased from Q1 2022, when large collections for prior-year stockpile deliveries contributed approximately $80 million. Q1 2023 cash flow benefited from approximately $35 million received for 2022 deliveries and was partly offset by inventory investment and operating costs.
Outlook, risks and notable items
- The company reports $64.9 million of remaining performance obligations at March 31, 2023, which it expects to recognize as revenue within three years. Timing is uncertain and depends partly on performance of contracts.
- The BARDA contract contemplates up to approximately $602.5 million in total payments: about $268.9 million relates to exercised options and up to $281.9 million to unexercised options. BARDA decides in its sole discretion whether to exercise the remaining options; these amounts are not assured revenue.
- Management estimated that approximately 920,000 courses would need delivery to the Strategic Stockpile in 2023 and 2024 to maintain historical levels of unexpired treatment. This is an estimate, not a firm order or formal revenue guidance.
- Two European customers had approximately $8 million of firm oral TPOXX commitments at quarter-end; approximately $1 million was delivered in April 2023, with the remaining $7 million targeted for delivery by July 31, 2023. DoD exercised a $5.5 million option in March 2023 under its second procurement contract.
- SIGA met target enrollment in two trials supporting a potential smallpox post-exposure prophylaxis label expansion. Subject to supportive unblinded results, it expects to begin preparing a supplemental NDA in 2023 and targets submission in early 2024. Mpox trials were enrolling; timing and viability of any potential label expansion remain uncertain.
- On May 4, 2023, the board declared a $0.45-per-share special dividend, payable June 1 to shareholders of record May 16. This is a subsequent event, not a Q1 expense.
- Key risks include discretionary or canceled government orders, contract performance and supply-chain disruption, uncertain international demand and clinical or regulatory outcomes. The company also disclosed that deposits and investments held at four financial institutions exceed standard insurance limits or are uninsured, exposing it to potential loss or delayed access. Management expects no material effect from pending ordinary-course legal matters. Disclosure controls were assessed as effective.
Important facts for investors to verify
- How much of the $64.9 million remaining performance obligations converts to revenue and cash, and on what schedule.
- Whether BARDA exercises additional options and whether expected stockpile replenishment produces firm orders and deliveries.
- Delivery, acceptance, and collection timing for the remaining European commitments and the exercised DoD option.
- Whether trial results support the planned smallpox prophylaxis submission and whether mpox trials provide evidence supporting a potential label expansion.
- The amount and liquidity of uninsured or otherwise uninsured cash and investments, and the cash impact of the special dividend, share repurchases, and $29.3 million of manufacturing purchase commitments.