SIGA Technologies, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; comparisons are with Q1 2021 unless otherwise noted. SIGA is a commercial-stage pharmaceutical company whose lead product is TPOXX (tecovirimat), including oral and intravenous formulations.
Financial performance and position
| Metric | Q1 2022 / March 31, 2022 | Prior comparable period / December 31, 2021 |
|---|---|---|
| Total revenue | $10.54 million | $4.81 million |
| Operating loss | $1.44 million | $1.99 million |
| Net loss | $0.36 million | $0.81 million |
| Cash and cash equivalents | $153.26 million | $103.14 million |
| Accounts receivable | $5.34 million | $83.65 million |
| Total current assets | $177.11 million | $208.75 million |
| Total current liabilities | $7.24 million | $30.49 million |
| Total liabilities | $16.81 million | $40.41 million |
| Stockholders’ equity | $167.74 million | $174.31 million |
- Revenue increased 119% to $10.54 million. Product sales and supportive services were $7.32 million, primarily from IV TPOXX deliveries to the U.S. Government; research and development revenue was $3.22 million.
- Cost of sales and supportive services rose to $4.72 million from $0.25 million, primarily reflecting IV TPOXX manufacturing and delivery. Product revenue less reported cost of sales was approximately $2.60 million, or 35.5% of product revenue; this is not a company-wide gross margin because R&D revenue and costs are reported separately.
- SG&A declined 13% to $3.52 million, while R&D expense rose 54% to $3.55 million, primarily due to vendor costs supporting the PEP label-expansion program. Patent expense was approximately $0.19 million.
- The company recorded a $0.35 million gain from the lower fair value of its warrant liability, versus a $0.92 million gain in Q1 2021. The income-tax benefit was $0.70 million; the reported effective tax rate was 66.1%, compared with 22.3%.
- Operating cash flow was positive $56.71 million, versus negative $4.81 million in Q1 2021. The main driver was approximately $80 million collected for oral TPOXX delivered to the Strategic National Stockpile in December 2021; this was partly offset by approximately $19 million of federal tax payments. The cash-flow increase should therefore be viewed in light of collection timing.
- Investing cash flow was zero. Financing cash outflow was $6.59 million, mainly for repurchasing approximately 980,000 shares. No outstanding borrowing is identified in the reported balance sheet; the company did report a $6.17 million warrant liability and $2.48 million of lease liabilities.
- Remaining performance obligations were $59.9 million at quarter end, expected to be recognized within three years; timing depends on performance and circumstances outside the company’s control.
Material changes, outlook and risks
- Q1 revenue growth reflected U.S. IV TPOXX delivery and higher R&D contract revenue, rather than the international oral TPOXX sales that principally drove Q1 2021 product revenue. International-contract revenue was zero in Q1 2022, compared with $3.4 million in Q1 2021.
- Under the BARDA contract, approximately $311.1 million of potential payments remained in unexercised options at March 31, 2022. Exercise is solely at BARDA’s discretion. SIGA estimated that approximately 940,000 courses would need to be delivered to the U.S. Government during 2022–2024 to maintain unexpired stockpile levels, based on then-current shelf life and prior delivery activity.
- PHAC increased its potential oral TPOXX procurement ceiling to $38 million and placed an approximately $13 million order targeted for delivery in 2022. A separate international order of approximately $2.8 million was awarded to Meridian in March 2022, with delivery expected in 2022. These are delivery expectations, not assurance of completed revenue. Remaining Canadian military purchases and some PHAC purchases are options.
- The company estimated IV TPOXX sales under the BARDA contract would have a gross margin below 40% if the relevant IV final-product options were exercised. Estimated international oral TPOXX contribution margin was 65%–80%, before expenses not directly related to manufacturing or Meridian activities.
- SIGA had submitted an FDA application for IV TPOXX and was targeting completion of FDA review in Q2 2022; approval and timing were not assured. Oral tecovirimat received EU marketing authorization in January 2022, and Health Canada approval had been announced in December 2021.
- Management cited possible COVID-19-related delays to supply chains, manufacturing, clinical research and government contracting. Other significant risks include government discretion to exercise, modify or terminate contract options; uncertain international market development; regulatory and clinical outcomes; and intellectual-property challenges. Management reported no material change to the risk factors in its 2021 Form 10-K.
- Purchase commitments for manufacturing obligations were approximately $22.7 million. The filing reported no off-balance-sheet arrangements and stated that disclosure controls were effective, with no material change in internal control over financial reporting.
- Subsequent event: On May 5, 2022, the board declared a $0.45-per-share special dividend, payable June 2, 2022, to holders of record May 17, 2022.
Important facts for investors to verify
- Whether BARDA exercises any of its approximately $311.1 million of remaining options, and the timing, volume, pricing and margins of resulting deliveries.
- Whether expected 2022 deliveries under the PHAC and other international orders occur as planned and produce revenue and cash collection.
- The FDA’s decision and timing for IV TPOXX, and the progress and funding of the PEP label-expansion program.
- How much of Q1 operating cash flow reflects one-time collection timing, and the cash effects of the $22.7 million manufacturing commitments, share repurchases and special dividend.
- The potential earnings and cash impact of the warrant liability, which is measured using Level 3 valuation inputs, and of changes in SIGA’s share price.