SIGA Technologies Inc (SIGA) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the SIGA Technologies quarterly business update conference call. At this time, all participants are in a listen-only mode. Later, we'll have a question-and-answer session and instructions will follow at that time. (Operator instructions) As a reminder, today's conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Todd Fromer, Managing Partner of KCSA Strategic Communications. Sir, you may begin.

Thank you, Mary, and thank you all for joining us today. This is Todd Fromer, Managing Partner of KCSA Strategic Communications, Investor Relations Consultant to SIGA Technologies. Hosting the call today are Dr. Eric Rose, Chief Executive Officer and Chairman and Daniel Luckshire, the CFO. Today's call is being simultaneously webcasted and is available on SIGA's website. A replay of the call will also be available in reported format on the Company's website.

Before we begin today, I would like to remind everyone that this conference call contains statements that constitute forward-looking statements. A Safe Harbor statement covering this call will be read at the end of the call, and can be found in our press release for financial results for the year ended 2011.

With that said, I'd like to turn the call over to Dr. Eric Rose. Eric, the floor is yours.

Thanks, Todd. Good afternoon, and thank you all for joining us for our business update call. During this call, Daniel Luckshire and I will provide you with a business update and then we'll open the call for questions. Since our last call in November, we have continued to march forward on schedule in the performance of our BARDA procurement contract.

We recently completed the required security implementation at our lead manufacturing site and we're commencing compound synthesis of drug substance of ST-246 at this site, tomorrow, actually. In sum, we continue to be on schedule to start delivering product produced under BARDA approved security arrangements by the end of the first quarter of 2013.

Once we start delivering product, we expect to deliver the full 2 million courses of drug within 24 months of the initial delivery date. Depending on a series of factors, the size of each delivery and the exact timing of each delivery will be determined in the future. Once we deliver 500,000 courses, we'll be able to invoice for payment. Please note that when I talk about delivery date, discussion is focused on product that is produced under BARDA approved security arrangements, as opposed to product that is produced outside of these security arrangements, such as courses produced as part of the commercial validation process.

On the regulatory front, we participated in December in a two-day advisory committee meeting convened by the FDA to discuss development paths for drugs that treat smallpox, including the preferred animal model to determine the efficacy of these drugs. In aggregate, we found the responses and views of the committee panel members to be practical and constructive.

Importantly, the advisory committee's recommendations confirmed that monkeypox, rabbitpox and ectromelia models, especially in combination considerably provide appropriate evidence of efficacy for treatment of smallpox. This is important to us because animal testing to date, [as shown in] our drug ST-246, is highly effective in all three of these models. Subsequent to the December advisory committee meeting, we've been communicating with the FDA regarding the development path of our drug, and we expect to engage further with the FDA on this topic in the coming months.

In addition to our regulatory development work on the oral formulation of ST-246, we've also continued our IND-enabling work on intravenous or IV formulations of the drug. We continue to target an IND filing for the IV formulation as early as the fourth quarter of this year.

At this point, I'm going to hand the call over to Dan, who'll provide an update on our financial position and an update on the PharmAthene litigation.

Thank you, Eric. Regarding our financial position, we had $49.3 million of cash on our balance sheet as of December 31, 2011. This amount is meaningfully larger than cash balances historically maintained by SIGA and reflects our growing footprint as a commercial stage company.

The cash balance will be invested in the performance of the BARDA contract and the funding of SIGA's business operations. In addition to having cash on hand, we are also targeting a $12 million labeling plan milestone for the summer of 2013. Cash from this milestone, as well as cash received from continuing development contracts and grants should buttress our near-term resources.

With respect to the PharmAthene litigation, both SIGA and PharmAthene have submitted their own separate definitions of net profit to the court. As a reminder, definitions of net profit and of the components that lead up to a calculation of the net profit are needed in order for a final judgment to be entered in accordance with the post-trial ruling of the Chancery Court. The parties have also each made various submissions to the Chancery Court in support of their respective definitions. There are substantial differences between the parties' approaches to net profit and the appropriate implementation of the Chancery Court's post-trial ruling.

And clarity on the impact of these rulings on SIGA, we'll have to await the final ruling by Vice Chancellor, Parsons. Once the court enters a final judgment implementing a net profit definition, we will evaluate this judgment and determine the best course for SIGA going forward, including the possibility of an appeal of the decision and judgment to the Delaware Supreme Court.

This concludes our prepared remarks. Thank you for attending this business update, and we will now open the line for questions.

(Operator Instructions) Joaquin Horton, Sterne, Agee.

Hi, guys.

Good afternoon.

Eric, in past conferences calls, you've talked about filing INDs for both dengue and Lassa fever. Can you give us an update on how those two programs are going?

We're pleased with the progress of both of those programs. And we're still optimizing, particularly in a dengue program, we have a plethora, if anything, of potential drug candidates and families of drug candidates. So I think for that program and for that matter it's the Lassa program either, I think, to specify exactly when we'll do IND filings is not something we're prepared to do yet.

Okay. You've done that in the past phone calls. I mean you've kind of given us a clue, but sounds like things have changed a little bit or?

I don't think things have -- our view of these programs, I don't think, has changed. I think the specificity that we can give in this regard is something that we don't think we ought to provide at this point.

Okay. In the press, recently there has been some talk about some scientist creating a deadly man-made bird flu and I guess that's H1N1. In our broad-spectrum program, are we doing anything to look at this?

The broad-spectrum program is not particularly focused on influenza. We do have a high throughput screening program with regard to influenza virus. So that is underway, which could be applicable for this. But we certainly are not working with the virus with these characteristics and we shouldn't be. It's a safety issue, for sure.

Okay. What is the next thing there as far as getting together with the FDA, are you going to have a meeting, are they going to -- just continuing negotiations or --?

Yes. This is Dan, and I'll just answer that in that after the advisory committee, we've had an active dialog with the FDA. And we plan on continue to have this active dialog [with the idea that's] culminating into a specific development path in the future. In terms of the specific time frame, it'll probably be premature to comment on it other than we feel like the conversations are constructive and it's building to something substantial.

Okay. Last November, Secretary of State, Hillary Clinton, gave a speech on bioterrorism and brought up Syria as being a country that has developed something along the camelpox area. And recently, January 1, there was an announcement that the London emergency response team for the Olympics had somewhat -- like over 300 members had been vaccinated for smallpox.

Now, it seems to me that something has changed here. I've never even heard of a response team being vaccinated for smallpox. Have we had any conversations with any governments recently that would lead us to believe that there is something going on?

I mean we don't comment on specific conversations that we're having with governments. Regardless of this of the London Olympics, we sense that there is a considerable international interest in the risks of orthopoxviruses is weapons of mass destruction and making sure that they don't become such. And that has not changed.

And just a last question. And all these investigations that were thrown at you from Darrell Issa to Senator McCaskill to Energy and Commerce Committee, well, actually they weren't thrown at you, but thrown at BARDA, have you heard anything on the resolution of any of those investigations?

Well, to our knowledge, there have been no investigations. There have been requests or information to BARDA. And at least, our understanding is that they've received copious amounts of materials from BARDA and we've seen no further statements on the part of any of those committees or bodies. And as far as we know, we have not seen any further activity from them since they've gotten that information.

Okay. Thank you.

Sure.

And we'll be talking.

Good.

(Operator Instructions) Fred Greenberg, Greenberg Advisors.

Hi there.

Hi. Hey, Fred.

How are you doing?

Good.

From the beautiful [Fleur De Keys]. Couple of quick questions. On the dengue, can you tell us which governments or nonprofits or WHO, aren't those agencies working on a vaccine for dengue at this point? I know dengue, at least from my understanding, is a very complex target. I wonder if you agree with that. So there's two questions in there.

Well, first on the issue, we know there is industry activity with regard to dengue virus development that I believe it's sanofi-aventis that's developing a vaccine. So I can't say specifically if there are international government entities that are supporting.

How far along is their vaccine, do you know?

My understanding is they're building a plant for it. So I think it's something that is moving along.

So if they're building a plant, it seems like they're very far ahead of you.

Well, I don't think that a vaccine as compared to antiviral excludes the potential utility of an antiviral. And there are a lot of hurdles to be overcome to develop a successful vaccine, as [they're allowed] to develop a successful antiviral as well. But we certainly don't view that development of a vaccine is something that would keep us from our commercial interest in pursuing dengue.

What can you say about the price for the 246? You gave us the courses, but you didn't say anything about price.

The pricing for 246?

246, yes.

Yes, for the 2 million courses?

Well, the information we're going to disclose on the pricing is in the redacted contract that's been filed.

Well, what is it, we don't know. If it's redacted we can't see it, right? But you talked about the price per course, is it the same or is a change or what?

Fred, the information that we're disclosing is in the contract that was filed.

And it hasn't changed.

It hasn't changed.

Okay. Make it simple. And then this year, okay, not 2012 -- [not] 2013, are we expecting any contracts of any kind, any income?

Well, [tearfully] I'm glad that you brought that up. We are talking about that on the -- in our prepared remarks, we're talking about the labeling plan milestone, that is summer of 2012.

Because I think you said 2013?

Correct.

You are correct. We were just talking about that.

If I was talking to someone else who really knows this area and he said, 2012, so okay.

Yes, so --

2012 is correct.

It is correct. So to again stated is, a labeling plan milestone is targeted for the summer of 2012.

Okay. And was there anything else in that category or related to that?

No, beyond that most of 2012 will be used for producing drugs. There is a second milestone related to commercial validation. Our anticipation would be that --

That's a BARDA milestone.

That is a BARDA milestone, that's an $8 million milestone, but that would be likely a 2013 event.

(inaudible) 500,000 courses --

Fred, you went out.

Yes, sorry. We deliver 500,000 courses. And then bill, is that 30 days, net 10 or is that something different than a regular commercial billing?

Yes. So you're correct in that we will be able to invoice once we deliver 500,000 courses. And it's not directly in the -- most government contracts are net 30.

Yes, you're fast. Okay. Thank you.

Good.

Thank you. And before taking any further questions, Mr. Luckshire would like to make a comment.

I think the comment that we're planning to make was addressed in Fred's question about the labeling plan milestone, which we clarified to be a target for the summer of 2012. Thank you.

And as there are no further questions in the queue, I'd like to turn the conference back to Mr. Todd Fromer for closing remarks.

Thank you. As a reminder, everyone, this call included certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including statements regarding the efficacy or potential of products, the timeline for bringing such products to market and the continued development and possible eventual approval for such products.

Forward-looking statements are based on management's estimates, assumptions and projections and are subject to uncertainties, many of which are beyond SIGA's control. Actual results may differ materially from those anticipated in any forward-looking statements.

Factors that may cause such differences include the risk that potential products that appear promising to SIGA or its collaborators cannot be shown to be efficacious or safe in subsequent preclinical or clinical trials. SIGA or its collaborators will not obtain appropriate or necessary governmental approval to market these or other potential products.

SIGA may not be able to obtain anticipated funding for its development projects or other needed funding. SIGA may not be able to secure funding from anticipated government contracts and grants. SIGA may not be able to secure or enforce efficient legal rights in its products, including patent protection for its products. Any challenge to SIGA's patents and other proprietary rights, as is adversely determined, could affect its business and even if determined favorably could be costly.

Regulatory requirements applicable to SIGA's products may result in the need for further or additional testing or documentation that will delay or prevent seeking or obtaining needed approvals to market these products. The US Biomedical Advanced Research and Development Authority may not complete the procurement set forth in its solicitation to the acquisition of the smallpox antiviral for the Strategic National Stockpile or may complete it on different terms. Any contractual award we may receive to supply a smallpox antiviral may be subject to one or more protests, which may cause contract awards to be delayed or denied.

The volatile and competitive nature of the biotechnology industry may hamper SIGA's efforts. Changes in domestic and foreign economic marketing conditions may adversely affect SIGA's ability to advance its research or its products and the effect of federal, state and foreign regulation on SIGA's businesses.

More detailed information about SIGA and risk factors that may affect the realization of forward-looking statements, including the forward-looking statements in this conference call, are set forth in SIGA's filings with the Securities and Exchange Commission, including SIGA's Annual Report on Form 10-K for the fiscal year ended December 31, 201 and in other documents that SIGA has filed with the Commission.

SIGA urges investors and security holders to read these documents free of charge at the Commission's website at www.sec.gov. Interested parties may also obtain these documents free of charge from SIGA. Forward-looking statements speak only to the date they are made. And except for any obligation under the US federal securities laws, SIGA undertakes no obligation to publicly update any forward-looking statements as a result of new information, future events or otherwise.

This concludes our call. You can now disconnect your lines.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect at this time.