Welcome to the SIGA Business Update Call. Before we turn the call over to SIGA management, please note that any forward-looking statements made during this call are based on management's current expectations and observations and are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements. SIGA does not undertake any obligation to update publicly any forward-looking statement to reflect events or change circumstances after this call. For a discussion of factors that could cause results to differ, please see the company's filing with the Securities and Exchange Commission, including without limitation, the company's annual report on Form 10-K for the year ended December 31, 2021. Its subsequent reports on Form 10-Q and Form 8-K. I would now like to hand the conference over to Mr. Phillip Gomez.
Thank you for taking the time to join today's call. Today I'm joined by Daniel Luckshire, our CFO. We are pleased to have this opportunity to provide a business and financial update to our shareholders. We'll then be happy to take questions. With $61 million of international sales this quarter spread over 12 international customers, SIGA's third quarter financial results continue a trend of substantial financial diversification at SIGA. In combination with the first sales of the intravenous formulation of TPOXX, IV TPOXX, in the first quarter of 2022 and the first sale of oral TPOXX to the U.S. Department of Defense in the second quarter of 2022, the sale of oral TPOXX or Tecovirimat to 12 international customers in the third quarter of 2022 highlights the continuing and substantial diversification of SIGA's revenue base.
Importantly, I would like to note that the new procurement order in August for approximately $26 million of IV TPOXX by BARDA and the new DoD procurement contract award in September for up to approximately $11 million of oral TPOXX highlight how diversification can lay the groundwork for future revenues. In total, we have received approximately $115 million of firm commitment procurement orders for TPOXX this year, a portion of which will be recognized as revenue in 2023. Overall, we believe the expanded number of customers and recent repeat order activity by the DoD emphasizes the growing recognition by government of the overall importance of health security preparedness, and that by increasing both the scale and scope of TPOXX stockpiling, countries can be better prepared for the outbreak risks of smallpox, monkeypox, and other viruses in the orthopoxvirus family.
We believe that broadened procurement of TPOXX is being driven by a combination of trends that have been in place for a while, as well as by activity in connection with the current monkeypox outbreak. With respect to the monkeypox outbreak, in which there have been approximately 77,000 global cases and 28,000 U.S. cases since May, the outbreak is shining a light on the importance of TPOXX, given that TPOXX has been used to compassionately treat approximately 4,000 monkeypox cases in the U.S. and many cases internationally. Approximately 10 clinical trials have been launched or are planned to be launched in the near term, all of which will study the use of TPOXX for monkeypox, and half of which are randomized placebo-controlled trials.
With regard to the randomized placebo-controlled trials, two of the trials are sponsored by the National Institute of Allergy and Infectious Diseases, or NIAID, and the other one is funded by the National Institute for Health and Care Research in the U.K., the NIHR. Among the NIAID trials, one study is U.S.-based, and the other study, which is being done in collaboration with INRB, is based in the Democratic Republic of Congo. The U.S.-based study seeks to enroll more than 500 participants and will include an open label arm, and the DRC-based trial seeks to enroll more than 450 participants. The NIHR's U.K.-based study seeks to recruit at least 500 participants.
Randomized placebo-controlled trials, such as the three trials just mentioned, are important because they could provide required data that could be used in any submission with the U.S. FDA for an approved monkeypox label for TPOXX. The other trials mentioned at the beginning of this discussion will be observational in nature, also providing important information. All of the trials that have started are at the early stages of enrollment, with some of the active trials opening trial sites on a staggered basis. The timing and the ultimate number of participants of the trials will depend on the path of the monkeypox outbreak and the general speed of enrollment. Hence, the timing and the likely ultimate enrollment levels of the trials, especially the randomized placebo-controlled trials, is currently unknown.
In turn, this means the timing and likely composition of an FDA submission for monkeypox label for TPOXX is also currently unknown. Despite the variability of the specific path of the monkeypox outbreak, we do believe there are some things related to the outbreak that offer a degree of clarity when viewed with a long-term perspective. For instance, we believe that monkeypox will have a continuing global impact going forward. While the short-term path of the monkeypox outbreak is uncertain, what we have seen and learned to date indicates there's a meaningful high probability that the United States and other countries across the world will have to deal with monkeypox cases in future years. It is just unknown as to the ultimate magnitude of the cases, the scope of the cases across different communities, and whether case levels become consistent or whether case levels come and go periodically.
We believe that in most scenarios, there will be a need for TPOXX, and at least some of the scenarios could lead to significant sales of TPOXX. Over the coming years, the ultimate amount of TPOXX U.S. sales related to monkeypox will be impacted by case levels obviously. Additionally, labeling of TPOXX for monkeypox likely will also materially impact future U.S. sales in connection with monkeypox treatment. As a reminder, the FDA has indicated that it wants efficacy data in the treatment of monkeypox for full approval of TPOXX in the U.S. for the monkeypox indication. Moving to a tangential topic, I'd like to spend a few minutes discussing our initiative to get a PEP label for TPOXX.
We believe that a post-exposure prophylaxis or PEP label for TPOXX could be an important catalyst for U.S. sales growth in the coming years in the context of supporting an expansion of the U.S. strategic stockpile. With respect to PEP, as a reminder, we are working with our DoD colleagues on executing two clinical trials needed to support regulatory approval of TPOXX for post-exposure prophylaxis. For the expanded safety study, we have set up nine clinical sites around the U.S., and such sites began dosing in the middle of the second quarter of this year. Enrollment continues to be strong. A majority of the study has been enrolled, and enrollment is on track to be completed within the next 90 days at the current rate of compliance and activity. For the TPOXX plus JYNNEOS immunogenicity trial, we have two sites recruiting and screening volunteers.
As a reminder, this trial started in early 2022, and enrollment got off to a slow start. This was due in part to post-COVID vaccine hesitancy in the U.S., among other factors. In coordination with the DoD, we made protocol adjustments and other adjustments so as to normalize the speed of enrollment. In light of the adjustments, as well as the impact of the monkeypox outbreak, enrollment has been running at a substantial rate. If the current rate of activity continues, we expect that enrollment will be complete in the fourth quarter. Thus, in recap, the goal is to have all the volunteers in both studies complete the active phase within the next 90 days. If the studies show the expected results, we would commence assembly activities for a package re-requesting regulatory approval of TPOXX for PEP.
At this point, I'd like to hand the call over to Dan for the financial update.
Thanks, Phil. For the three and nine months ended September 30, 2022, SIGA's revenue was approximately $72 million and $99 million, respectively. For the third quarter, approximately $61 million of revenue relates to international sales of oral TPOXX to 12 customers, of which 10 are new customers. The quarter also includes approximately $4 million of oral TPOXX sales to the U.S. Department of Defense, and the remainder mostly relates to research and development activity. For the nine months ended September 30, approximately $66 million of revenue relates to international oral TPOXX sales. Approximately $7 million of revenue relates to sales of oral TPOXX to the U.S. Department of Defense. Approximately $7 million of revenue relates to sales of IV TPOXX to the U.S. government, and the remainder mostly relates to research and development activity.
Operating income, which excludes interest income, taxes, and adjustments to the fair value of the warrants, was approximately $43 million for the three months ended September 30, 2022. For the nine months ended September 30, operating income was approximately $45 million. Net income for the three months ended September 30, 2022 was approximately $43 million. For the nine months ended September 30, net income was approximately $45 million. Fully diluted income per share for the three months ended September 30 was $0.45 per share, and for the nine months ended September 30, fully diluted income per share was $0.47. At September 30, 2022, the cash balance for the company was approximately $110 million. This concludes the financial update. At this point, I will turn the call back to Phil.
Thanks, Dan. Before we turn to Q&A, I'd like to reiterate a few points which have been made in the past in support of our view that SIGA offers an attractive combination of existing revenue streams that generate strong financial results when product is ordered and delivered, complemented by organic growth initiatives that hold significant potential when viewed collectively. First, I'd like to reiterate that the monkeypox outbreak has heightened the importance of TPOXX in connection with the treatment of monkeypox. It is our understanding that TPOXX is the leading, and likely the only in many countries, therapeutic that is being used or expected to be used in the U.S., Europe, Canada, Asia Pacific region, Africa, and other areas. We will continue to work with various levels of the medical community and governments to provide TPOXX to monkeypox patients and to pursue appropriate stockpiles.
Second, I'd like to highlight that the ongoing international sales growth initiative is progressing in a value-creating manner. We now have more than 10 countries outside the U.S. that have ordered TPOXX, and we continue to work hard to expand that base. While as noted many times before, progress on this front is expected to be lumpy and uneven given a variety of factors, we believe that a meaningful international market is gradually taking shape. Third, I want to reiterate that the PEP-based development program represents a growth initiative in that it would provide scientific and regulatory support for any stockpile expansion. As stated on prior calls, we believe the current size of the stockpiled TPOXX in the U.S. would not be sufficient to treat all those who would need care in many outbreak scenarios.
A lesson from the COVID pandemic, which is being reinforced by the monkeypox outbreak, is that governments need to be more proactive in addressing the health and societal risks associated with virus families. Fourth, we continue to be focused on transitioning our U.S. contract to a long-term MFNS contract that focuses on appropriate size requirements for the TPOXX stockpile, as well as smoothing the annual deliveries, which will be critical to supply chain planning and financial predictability. Fifth, our portfolio of customers is becoming more diversified. This year we've added the U.S. Department of Defense to our customer list, as well as 11 international customers. Six, we continue to pursue and support oncology collaborations and other strategies that could open new markets for TPOXX. As mentioned earlier, we believe these initiatives, when viewed collectively, have potential for significant value creation.
This concludes our prepared remarks, and we will now begin the Q&A session.
Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble the roster. Your first question comes from Ben Rabizadeh with Story Trading. Please go ahead.
Hi. Thanks. Can you hear me? I'm in my car today. Am I coming through?
We can hear you fine. Good to talk to you, Dan.
All right. Perfect. Thank you. Thank you so much for your time. Last quarter, you guys had a $0.45 dividend and 500,000 shares I believe you bought back, and I didn't see any updates on that. I'm wondering if you can kinda walk me through the thought process why we had that then and nothing this quarter.
Yeah, absolutely. I appreciate the question, Dan. Over the past couple years, we've certainly taken a very disciplined approach to both share buybacks. Over the past couple years, we've done about $60 million in buybacks. As we talked on the first quarter call around the special dividend, when we looked at our balance sheet, we had an excess of cash in our needs, and we did that dividend. Going forward, we'll continue to take that disciplined approach in looking at all uses for cash, certainly dividends, certainly share buybacks. As we've said over time, we would also look at any potential M&A that could be accretive and diversify our income base. The board and the management team take a very disciplined approach to that.
Let me just hand it over to Dan if you wanna just give the numbers for the quarter and then we can take the next question. Thanks.
Hello?
Yeah. Oh, I'm sorry. Go ahead.
Oh, okay.
Did you have another question?
I'm sorry. Yeah, I did. I'm sorry. I didn't realize you were waiting for me. My name's Ben. Sorry, not Dan, but I thought I got confused.
I'm sorry, Ben.
The other question was, I heard a lot about monkeypox on the call today, but you know, last year, most of your revenue was attributed to smallpox. I mean, I think you had more revenue last year than this year, and that was all for smallpox stockpiling. I'm wondering what you can tell us about that and if there's any visibility into 2023, if you can kind of, I don't know if there's any kinda high-level guidance you can give in terms of revenue from smallpox stockpiling you expect.
Yeah, absolutely. Sorry, Ben. Our smallpox, predominantly our sales are with the U.S. government. They have a stockpile of 1.7 million courses, and that is resupplied on a seven-year shelf life basis. It is lumpy. It was not delivered evenly over a seven-year period. We essentially in our current contract have four options, each of about $112.5 million. As product expired in 2020 and 2021, we had orders from the government to resupply that product. You saw that in our revenue in 2020 and 2021. This year, at the beginning of the year, we highlighted there were not a lot of expirations in the stockpile, so we did not anticipate an order this year.
In both 2023 and 2024, we've projected out that we do anticipate product will expire, and those options are anticipated to be exercised next year and the year after that. We do anticipate those $112.5 million orders for oral TPOXX to come through over the next couple years. We have that. As we said on this call, we've been diversifying with the U.S. Department of Defense, so we'll continue to work with the U.S. Department of Defense, and we'll continue to work with international customers. Because as we highlighted on the last call, the orders that we received internationally, for the most part, are focused on getting immediate product available to treat monkeypox patients in the current outbreak.
What we're turning to in those conversations is the importance of stockpiling and the broader preparedness for things like monkeypox, but also smallpox. Because as we talked about on the last call, monkeypox, the clade or the strain of virus that's circulating is fortunately one that historically had a very low fatality rate, less than 1% in Africa. There's a second clade that circulated predominantly in the Central African Republic, Democratic Republic of Congo, and Nigeria that has up to 10% fatality rate. We kinda dodged the bullet by having the one with the lower mortality, but certainly concerns that could come out. There's concerns the virus could evolve, et cetera.
We're talking with governments globally that they need to be ready for an immediate potential outbreak of monkeypox in their geography, but they have to consider could the virus evolve. Very importantly, they have to think about smallpox, which would be just much more devastating, much more fast-moving. We certainly talk about that opportunity broadly with our international customers as well.
Great. Thank you. Just final question, if I can just circle back to the question of stock buyback. The stock is much lower than it was, I believe, than what you purchased at last quarter, and with over $100 million in cash. Is there any reason why you wouldn't wanna pursue some buybacks now at these prices?
Yeah, we certainly have an active share buyback authorization that our board did. We have demonstrated over the past couple of years, as you highlight, we bought back about $60 million worth of shares. We certainly, with the large increase in uncertainty around the monkeypox outbreak, we're not in the market as we reported this quarter, but it's something the board is very focused on. We've certainly had many conversations with investors on the importance of share buyback. Stay tuned on that. Appreciate the question.
All right. Thank you. Thank you so much, guys.
Your next question comes from Ken Maslanka with Edison.
Good afternoon, guys, and congrats again on the solid results. I'm calling in for Soo Romanoff today. I guess my first question is, you know, you talked about countries kinda looking to build up their stockpiles of treatments like TPOXX. Now, what kind of levels of coverage are you seeing them consider, say, Europe or in the Asia Pacific, say, 10% of the population, 100% or even higher? What are you kinda seeing on first clients?
Ken, appreciate the question, and thanks for the comments. We're seeing governments historically have certainly thought about smallpox in terms of its ability to transmit. It typically transmits through respiration, speaking, et cetera. They recognize that the threat is quite large. They also recognize, and we've seen this in the monkeypox outbreak, that you can't order product when you have an outbreak. You have to have it on hand and ready to deploy. As I've also talked about a lot of times on this call, it is a multidimensional discussion with those customers.
We typically start with our partner, Meridian Medical Technologies, talking to policymakers, public health people on educating them on the availability of TPOXX and the role an antiviral would play in addition to a vaccine. Some countries do modeling internally. Sometimes they'll share that. Sometimes they do their internal modeling, and we don't see the results until we get an order. The main thing that they also have to do is gain the support and find essentially the dollars in their budgets for their governments. One of the things we learned in COVID was a lot of governments don't have the infrastructure for pandemic planning that is pre-set up.
The good news is we now have organizations like HERA in Europe that are working broadly with the EU to ensure that they think about preparedness. You saw them in the last quarter do an emergency procurement with us. They also announced in that press release they're working on broader requirements and having another procurement with us. It's certainly evolving, but you know, in Canada, we saw about $50 million in initial orders thinking about their requirements around smallpox. I think they're certainly, as we're seeing, reevaluating that with the monkeypox outbreak. We really have to see the final results before we project that out in what both the requirement and the budget is at the end of the day. The last quarter shows monkeypox has certainly elevated the urgency of those discussions and elevated the importance of being prepared.
Great. Thank you. You know, recently, you know, there are several deaths in the U.S. from monkeypox and, you know, how, especially domestically, has that kind of impacted, you know, the demand or interest for TPOXX, that being vaccines, you know, for the treatments?
Yeah. One of the unfortunate things in this outbreak was there wasn't a lot of investigation. There certainly was great work by researchers understanding monkeypox in Africa, where it unfortunately has had ongoing outbreaks for a number of years, but there wasn't a real understanding of what the morbidity and the mortality would be. There's really been an evolution of the perspective of the disease. I would say up front, there was an initial thought that, well, it seems self-limiting in a lot of patients. We haven't seen a lot of deaths, and so there certainly was some lack of urgency, and I think I talked about that on the last call with the initial outbreak. Subsequent to that, we've learned an incredible amount of things about monkeypox, and most of them have been very unfortunate and surprising.
One is it can have debilitating pain, it can have complications. As we know with orthopoxviruses, it could lead to blindness if you have an infection in the eye. What you're highlighting with the deaths is unfortunately that, especially in severely immunocompromised patients, it can be deadly. That's not a big surprise. Any antiviral drug does not kill a virus. What it does is it stops the replication. Unfortunately for people, and the CDC reported on this, if you have a severely compromised immune system and aren't able to eventually generate an immune response, those people have succumbed to infection. I think it has raised the awareness in the public health community.
It's certainly raised awareness with patient groups who realize with their communities, the impact it's had, not only with the morbidity and the mortality, but having to quarantine for six weeks, which has huge economic implications. I think we are in a better place where people understand the implications of the disease much better than they did early on, and we're certainly hopeful that will result in better understanding of the requirements for stockpiling and access for patients, which we're working very hard on.
Great. I guess my last question, you know, you kinda talked about the treatments in the U.S., you know, with the CDC's expanded access protocol for TPOXX. What sort of feedback, you know, have you seen so far, you know, from patients, practitioners, you know, anyone involved?
Yeah. As certainly as an FDA-regulated company, we want to be very transparent about the fact that all of those would be anecdotal and reported. Certainly we've read with great pride some of the reports from CDC and the MMWR from the results from patients that have been interviewed in the media and from, you know, physicians who we've worked with over this time period to deliver TPOXX. We're certainly encouraged when people have reported within a day or two they've seen symptoms dramatically improve. That's consistent with animal data that was used to gain approval. As I said, at the end of the day, regulators are very focused on placebo-controlled studies. That's where you get the most important data to show the benefit that the drug provided.
We're very focused on collecting that while also looking at the details of the EA-IND process that CDC is collecting as supportive data to help us understand the benefit of the drug. One of the most encouraging things that has been very consistent with the validated pivotal studies that were done with monkeypox in non-human primates. That's certainly been encouraging and obviously the reason the EMA approved TPOXX for monkeypox earlier this year.
Great. Thank you. That's all the questions I have. Go back and queue.
Again, if you have a question, please press star, then one on your phone and wait for your name to be announced. Once again, if you have any questions, please press star, then one on your telephone and wait for your name to be announced. Your next question comes from Brian Adams with Carter, Terry & Company.
Yes. Hi. Thank you very much for taking my call. I just had a couple quick questions. In regards to the pricing, especially with the foreign buyers, you had alluded to in the last call that the numbers were in kind of the roughly $800-$1,000 per dose. Can you give us confirmation that that still is the case?
Our pricing is based on volume. The publicly disclosed numbers based on the contracts that have been published. A lot of times governments will publish, as in Canada, it was a little north of $900 for the orders we had there. We're seeing certainly consistent with that and for smaller volume, higher than that. I think that's a pretty good surrogate for what we're seeing with government sales in bulk. Certainly, I would reiterate for those that are new to the call, all of these are bulk sales directly to governments that are done. We're certainly evaluating and planning, as we get these randomized controlled trials to think about the private market, the value, that we believe after we get placebo-controlled data would provide to patients, that would be a separate sales channel. Just wanted to make that point. Appreciate your question. Let me get another one.
In regards to the trials, and I know this came up in the last question, and it was alluded to as you described in some of the press releases and some of the anecdotal evidence. Do you have an idea of what the actual endpoint is that either the FDA or the CDC or, you know, is actually looking for? Is it a, you know, specific number of days, you know, as far as alleviation of symptoms? You know, is it the, you know, the pain scale, you know, dropping in half? You know, do you have any kind of anecdotal or firm, you know, clues as to what exactly that they're looking for?
Yeah, we do. Certainly the primary one that's being evaluated is time to resolution of symptoms. When lesions heal over, scab falls off, and you see the resolution of symptoms, and we're looking for the impact of the drug on that. There are a variety of secondary endpoints around viral load and other things that will be looked at. The primary one is the resolution of symptoms and the speed at which that happens in placebo versus those that are on drug.
Okay. Thank you very much. I appreciate it.
Your next question is a follow-up from Ken Maslanka with Edison.
Thank you guys for taking my another question. You know, one thing that's really interesting was, you know, you were talking about expanding to 10 other countries, outside the U.S. and, you know, especially with a lot of the new customers. You had mentioned, you know, a couple of calls ago about getting kind of your first, you know, APAC customer and growing out there. You know, can you share any progress on, you know, what sort of countries or areas are you seeing a lot of attention from, say, you know, Indonesia, Japan, China, some of those areas?
Yeah. I appreciate the follow-up, Ken. As we've said, a lot of countries require us not to disclose. Some have publicly announced the arrival of product. There was a press release out of South Korea, for example, that they had their first delivery that they talked about. Broadly, we have multiple customers in the Pacific Asia region, continue to have conversations with additional countries there. We've had our first customers in this quarter in the Middle East region. Certainly, continuing discussions broadly in that region. As you highlighted, we have both HERA procurement, which was an emergency procurement on behalf of the European Union, and we've had specific sales inside the European Union. It's been geographically very broadly diverse.
We also talked to pooled procurement organizations that help regional areas purchase products like this to deliver. Some of our contracts ultimately would be with people like HERA on behalf of pools of countries. It is very broad geographically, and we certainly expect that as countries in specific regions start to announce and talk about the arrival of the product, we've seen that pick up conversations in that region with other players that don't wanna be caught without having drug on hand. We continue to press those sales with our partner, Meridian.
Great. Thank you. That's all I have. Again, congrat-
Your next question comes from Scott Sibley with Equis.
Hey, guys. How you doing?
Good, Scott. How are you?
I'm good. My main question was about the stock buybacks, one of the things we've been excited about over the last couple years. I know during the Q2, we stopped buying at the end of May when it got around $7.58 a share. I suspected that this quarter we didn't buy anything back, but now moving past that and where our price is, I just wanna reiterate that I hope that we're getting aggressive in the buyback, especially since I hope it's tied to a P/E ratio and not just a price, 'cause I feel like it's a better value, you know, 'cause the company's growing. Hopefully we're still active against that and with the higher volume too, that hopefully we're getting a big share of it back. That's just the statement I wanna make.
The only other question I had is I was kind of a little bit involved in the government CR, the continuing resolution bill with some of my representatives and got stripped out at the last minute due to some politics and we're I mean, expecting it hopefully to be put back in the bill in December with COVID money and stuff and debated on its own merits. Do you guys have any light to shed on that of what's going on with any more funding for monkeypox?
Yeah, Scott, appreciate the question. You know, it's always hard to predict what the U.S. government's gonna do, but we certainly are very active in those conversations both with the administration and Capitol Hill, emphasizing the importance of monkeypox. We're also, you know, importantly, different congressional representatives have different perspectives on preparedness. I would say some are very concerned about the biological threat of smallpox and the way the world has a lot of conflicts around it, that we should be very concerned about that. We certainly think that's a stakeholder community that's important to talk about. There are others that are very worried about emerging infectious disease and the fact these viruses can show up over and over again, and they worry about other strains of monkeypox that could show up.
We're certainly focused on whatever the best supplemental funding strategy could be. The White House updated their biodefense strategy recently. They do it every couple years. There's nothing dramatically new in it, but they reiterate that in a virus family, one of the things you want is an antiviral that has efficacy and pre-developed. This was a perfect example for both Congress and administration that having at least in the U.S. 1.7 million courses put us in a good position. Now, we kind of fell down on how we distributed that efficiently and effectively, and there's a lot of discussions around that, but I would broaden your question to broader preparedness for both the threat of national security smallpox, but also monkeypox. Appreciate the question.
All right. Great. Thanks.
This concludes our question and answer session. I would like to turn the conference over to Mr. Phillip Gomez for any closing remarks.
I'd just like to thank everybody for joining the update call. It's been a very busy quarter for us, with working on international sales and getting a lot of clinical studies up and running. As always, I'd like to extend a great thanks to all the members of the SIGA team and our partners for doing a incredible volume of work this past quarter, to launch these studies, get product delivered throughout the world. We look forward to talking to you on the next quarterly call and I'm sure in between. Take care, and thank you again.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.