SIGA Technologies Inc (SIGA) 2012 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the SIGA Technologies second quarter business update conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions)

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Todd Fromer, Managing Partner of KCSA. You may begin.

Thank you 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 Chief Financial Officer.

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 and 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 second quarter ended June 30, 2012.

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

Thank you, Todd. Good afternoon and thank you all for joining us for our business update call. During the call, we'll provide you with a brief business update and then we'll open the call for questions.

Let me start by saying that it's been a busy and productive three months. Commercially, we have continued to execute our operational plan for the BARDA contract, taking tangible steps toward our commercial goals for ST-246. And on the legal front, we've recently filed our brief and our appeal to the Delaware Supreme Court, which we believe makes a strong case for a change in the Chancery Court's ruling. In the event that notwithstanding our appeal, any net profits of ST-246 would have to be shared with PharmAthene following an appeal, we are pleased by the May 31 ruling by the Delaware Chancery Court in which the Court accepted many of the arguments that SIGA made concerning the net profit definition, including the Court's decision to include all product-related expenses, whenever incurred, in order to best reflect the concept of net profits. In sum, we are making progress on many fronts, and there is much to look forward to.

Regarding our business operations, in particular ST-246 and the BARDA contract, I want to highlight a few areas of progress. First, the labeling plan for ST-246 has been submitted and is being reviewed by the FDA. We are eligible for a $12 million milestone payment from BARDA once the labeling plan is approved by the government. With respect to the delivery schedule for ST-246, we continue to expect to begin delivering drug into the Strategic National Stockpile by the end of the first quarter 2013. We also continue to expect to deliver the full 2 million courses under the contract within 24 months of the date of initial delivery. As mentioned on previous calls, the size and exact timing of each delivery will be determined in the future based on a variety of factors. Once we meet the 500,000-course delivery threshold, as noted in the contract, we'll be able to invoice BARDA for timely payment of all amounts then due.

When we deliver courses of ST-246 due to the SNS under the current procurement contract, our plan is that the courses will have a daily dosage of 600 milligrams over a 14-day regimen. We have set daily dosage at 600 milligrams per day after discussions with BARDA, the FDA, and CDC. While our discussions have included the FDA, the 600-milligram dosage does not represent an FDA regulatory decision on dosage at this time. It is our understanding that the FDA will express its normal regulatory decision on dosage after an NDA has been filed for ST-246, consistent with the timing and process one sees with other drug candidates.

Shifting gears, let me spend a minute discussing the progress we've made on the intravenous formulation, the IV formulation of ST-246. As you will recall, in addition to an oral formulation, we are pursuing an IV formulation for the drug. This effort has been steadily progressing, and we continue to target an IND filing for the IV formulation by the fourth quarter of this year, and it may happen in the third quarter. Work on the IV formulation is important because it seeks to address an unmet need of a vulnerable segment of the population.

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

(Operator Instructions)

Adnan Butt, RBC Capital Markets.

Eric, Daniel, thanks for taking my question.

Hi.

The first question is on the dosing. You said for delivery, the assumption is 600 mg over a 14-day course. What could impact the FDA's decision on dosing? And when you file the NDA, first, when do you think you might file it? And secondly, what kind of dosing would you be looking for?

I think that our ultimate NDA filing will follow this line of reasoning for the 600-milligram dosage. With regard to the SNS deliveries, we've come to that dosage after consultation, vigorous consultation with FDA, BARDA. And that's the dose that we intend to defend with high likelihood in our NDA submission.

Okay. Can you provide an update on what you need to do before you file the NDA and the timing of when that filing might occur?

This is Dan Luckshire. We've had extensive conversations with the FDA but right now we have an outline of our development [task] it's still early innings and so it's probably premature to start putting time lines on the regulatory time line.

And remind us what the regulatory time line is, please?

We really haven't gotten into regulatory time lines because we've been working toward putting things in place. Once we make more progress as we go along, we'll report to you.

Okay. And then just a follow-up and I'll get back in queue. In terms of the appeals process, is there a formal time line that needs to be looked out for? And then what happens to any profit-sharing requirement while the appeals process is ongoing?

We just filed our appeal which is a probably available document and then beyond that, it's customary that we really don't comment on litigation.

Okay. I will get back in queue. Thanks.

Thank you. Joaquin Horton, Sterne, Agee

Hi, Eric.

Hi.

Is there any research update from what we've been working on with Lassa and dengue fever? What is the government's stance currently on Lassa fever because I saw where some Department of Defense programs were dropped for ebola.

Well, there is no procurement process or articulated requirement for a Lassa antiviral. I think the reason for that in part is because there has not been a perception that there is an available Lassa antiviral. We think we've made good progress in that direction and we think that's been noticed by people within the government who have been paying for the research that we've been doing. But there's nothing changed, I think, since the last quarter in terms of what we're seeing from the government. We continue to pursue the drug candidates that we think are in our sights, both for Lassa and for dengue.

When do you think that we'll be able to do the last pivotal trial with our 400- or 500-patient study for ST-246?

I think that depends on the final shape of the final regulatory plan. We feel very comfortable that FDA is working with us to define a process for each step. That will be the final step. But that's not in the way of our deliveries to the SNS. It's an important step ultimately for the milestone payments that's part of our contract for FDA approval. In the short-term, it's not something that's on the horizon in the next few quarters.

Thank you. I'll get back in the queue.

Sure.

(Operator Instructions)

[Scott Sibley, Lindquist]

Hi, good afternoon. How are you guys doing? I had a question. Did we receive any compensation or anything for extending the warrants from MacAndrews and Forbes? And what was the reason we did that?

The extension, obviously, we don't talk about individual deals involving investors. But the extension made sense for the Company for all investors, so we did it. But we're not going to get into details in terms of individual deals.

Okay. So we didn't receive anything, then? Wouldn't you file something if we received something in return for that or --

I said we just don't comment on individual deals with investors.

Okay.

(Operator Instructions)

I'm not showing any further questions at this time.

Once again, thanks for joining us. Let me turn the call over to Todd Fromer, who will give you the Safe Harbor disclosures. Thanks very much.

Thank you, Eric. 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 time line 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 free clinical or clinical trials. SIGA or its collaborators will not obtain appropriate or necessary governmental approvals to market these or other potential products.

SIGA may not be able to obtain anticipated funding for its development projects or other needed funds. 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 challenges to SIGA's patents and other proprietary rights, [and if] adversely determined, could effect 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 for initial [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, is 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, 2011, 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.

With that said, operator, we can conclude the call. Thank you all for joining us.

Ladies and gentlemen, this concludes today's program. You may now disconnect. Good day.