SIGA Technologies Inc (SIGA) 2021 Q4 法說會逐字稿

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 statements to reflect events or changed circumstances after this call.

For a discussion of factors that could cause results to differ, please see the company's filings 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, and its subsequent reports on Form 10-Q and Form 8-K.

Thank you for taking the time to join today's call. Today, I'm joined by Dan 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.

We had a strong fourth quarter in which we delivered approximately $113 million of oral TPOXX to the U.S. government under the 19C BARDA contract. Fourth quarter deliveries to the U.S. government build upon international sales growth we achieved in the first 9 months of the year. For 2021, international sales grew to approximately $13 million from approximately $2 million in 2020.

In total, revenues in 2021 were approximately $134 million, resulting in approximately $89 million of pretax operating income for the year. This performance is attributable to a lot of hard work from the entire SIGA team, especially our supply chain team as well as our supply chain partners at [PPI Pharma Services], timely delivery involves a team effort in which we collectively work through many challenges. I would also like to thank our partners at BARDA and the Strategic National Stockpile for working so closely with us to deliver product at the end of the year.

As we discussed in November, supply chain challenges are an issue for many industries, including the pharmaceutical industry. Our team has been working continuously with our supply chain partners to manage and mitigate issues when they arise as well as to identify risks and mitigate such risks. We have had success to date in managing issues, but it is important to note that challenges and risks persist. As such, we will continue to take proactive steps to identify and manage risk in order to put us in the best position to meet future procurement demand.

As a historical note, the U.S.-based supply chain that we built many years ago and continue to use today was purposely centered in the U.S. as a proactive risk management tool. I believe this strategy has served us well in navigating recent supply chain challenges.

Looking forward, with respect to procurement activity, I'd like to talk about the next steps with the BARDA 19C contract. As a reminder, we built the initial U.S. government stockpile of TPOXX with final drug product that was manufactured in 4 years, 2013, 2014, 2016 and 2017.

When BARDA issued the 19C contract in 2018, it contained former procurement options for oral TPOXX in which each option was valued at approximately $112.5 million. Oral TPOXX has a 7-year shelf-life. And as we saw in 2020 and 2021, BARDA exercised procurement options as stockpiled products that had been manufactured in 2013 and 2014 expired. In substance, we replenished the U.S. government stockpile with deliveries of oral TPOXX in those calendar years. We anticipate the remaining 2 procurement options for oral TPOXX as well as the intravenous, or IV, TPOXX procurement options will be exercised over the next 3 years, given that we expect significant product expirations over the next 3 years.

These option exercises would generate approximately $300 million of revenue. The exact timing of such option exercises remains to be determined.

I will note that since final drug product was not manufactured in 2015, the U.S. government stockpile does not have scheduled expirations this year. As such, there is no immediate need for the U.S. government to secure deliveries in 2022 to replenish expiration. Having said that, we have been working with BARDA and the ASPR to exercise options further in advance, and we'll continue to work on a longer-term 10-year contract with annual options to smooth out deliveries and better manage budgets in supply chain.

More importantly, we are focused on ensuring that the requirements for postexposure prophylaxis, or PEP. The PEP use of TPOXX are also considered by the U.S. government in any new contract. Given the expected 28-day course of treatment for PEP, the existing stockpile would only be able to protect half the number of Americans in the event of an outbreak. Consequently, as I will discuss more momentarily, we strongly believe that a reevaluation of the size of the stockpile is essential.

In sum, we expect significant procurement by the U.S. government over the next 3 years with the timing among the upcoming calendar years to be determined. In terms of the ultimate sizing of the stockpile, we believe that clinical results from the PEP program could play an important role.

And as noted in the prior investor call, we expect to receive immunogenicity data from a PEP clinical trial later this year. Substantial progress in the PEP program is timely in that we believe that the COVID-19 pandemic has highlighted the importance of having access to broad, active antiviral drug, especially those that could be used prophylactically.

I will note that the U.S. government has contracted to purchase approximately 7 million doses of COVID monoclonal antibodies and approximately 13 million courses of COVID antiviral drugs for over $17 billion, highlighting from our perspective that the current stockpile of TPOXX and the smallpox outbreak would not be nearly sufficient to treat all those who would need care.

Before I shift to the topic of international procurement, I would like to note that we have begun making deliveries of our intravenous product to the U.S. government. As a reminder, we have 20,000 courses ordered for IV final drug product and our base 19C contract, and we expect to deliver up to approximately 18,000 courses this year, which would equate to approximately $7 million of revenue.

As a reminder, the remaining procurement options for IV TPOXX under the 19C contract have a total value of approximately $77 million. Please note that on the regulatory front for IV TPOXX, our FDA PDUFA date for the NDA is May 28, 2022. We had one extension to provide additional data to the FDA, and we believe that review is going well as we reach the final stages.

Looking forward with respect to international sales, we believe that the Public Health Agency of Canada, or PHAC, proposed amendment to the TPOXX contract lays the groundwork for approximately $12 million of product deliveries to PHAC in 2022. We are also targeting a delivery to the Canadian Department of National Defense, CDND, for $3 million to $4 million of oral TPOXX in 2022. Beyond Canada, we continue to target an initial order from a new jurisdiction for approximately $3 million. This target country has been noted in prior investor calls. The customer remains focused on the purchase and the negotiations are frustratingly slow and at this juncture is centered on final terms, conditions and logistics.

In Europe, we believe the EMA regulatory approval announced in January, which includes a broader indication for treatment of not only smallpox, but monkeypox, cowpox and complications from immunization with vaccinia, will be an important milestone as some EU countries would not discuss or advance potential procurement opportunities until we had obtained EMA approval. We are working hard with our partner, Meridian, to build on the international sales growth of 2021, especially with regard to marketing in Europe, but also key jurisdictions in Asia and the Middle East.

I would like to note that meetings with potential customers have picked up recently as the COVID-19 pandemic has waned with recent meetings being held in Europe, the Middle East and Asia to discuss sales opportunities. We are monitoring the unfortunate events in Ukraine, which may have an impact on our potential customers in Europe. The war could be a distraction for them as they focus on the immediate implication, but it's also a reminder of the broad threat Europe faces. I would also note, there was a press report from Russia that they completed clinical testing of their candidate smallpox antiviral treatment in December of 2021.

In the context of international activity, I would also like to touch on our oncolytic virus collaboration initiative, which had an international bend given the collaboration activity we have announced. As we have described previously, several companies are developing cancer therapies that use the orthopox vaccinia, the virus that historically was used in the smallpox vaccine. While there have not been any products approved with vaccinia to date, the use of TPOXX and vaccinia potentially provides an opportunity for higher dosing or more systemic routes of administration.

The collaboration we announced with Bioarchitech in January focuses on preclinical studies where their product is TPOXX. Long term, if collaborations with companies like the Bioarchitech are ultimately successful, it could open up new commercial markets for TPOXX.

Finally, before I turn the call over to Dan for financial update, I would like to provide an update on our collaboration with Cipla. BARDA announced at the 2021 World Anti-Microbial Resistance Congress an intent to procure and stockpile 3 additional novel antibiotics by 2030 and as part of the new 4 by '30 Initiative. They have completed one contract with Paratek, which they are counting as the first award under this initiative, and they intend to issue 3 additional RFPs for the other 3 antibiotics. The second RFP was released on January 20 and was designated a small business set-aside. A small business set-aside is essentially required when 2 or more small businesses meet the criteria to complete the work contemplated in a federal contract.

BARDA has indicated, they did not anticipate the third RFP will be a small business set-aside, but there can be no guarantee that, that will be the case. Neither SIGA nor Cipla qualify as a small business under the criteria of the RFP, and we have indicated our opposition to the small business set-aside with BARDA.

We believe the small business set-aside is unfortunate given the past bankruptcies that have plagued the novel antibiotic development and advancements in the field. Limiting the competition for the second RFP does not encourage larger sustainable companies to support the mission of BARDA in antibiotics. We will continue to monitor development around this RFP and future ones with our partner, Cipla.

I'll now pass the call over to Dan, who will provide a financial update. Dan?

Thanks, Phil. For the 12 months ended December 31, 2021, SIGA's revenue was approximately $134 million, of which approximately $113 million relates to fourth quarter deliveries of oral TPOXX to the U.S. government under the 19C BARDA contract. Approximately $13 million of full year 2021 revenue relates to international sales. This amount represents an increase of approximately $10 million or more than fourfold over 2020 levels. The remainder of 2021 revenue mostly relates to research and development activity.

Pretax operating income, which excludes interest income, taxes and adjustments to the fair value of the warrant, was approximately $89 million for 2021. Net income for 2021 was approximately $69 million, and fully diluted income per share was $0.91. At December 31, 2021, the cash balance for the company was approximately $103 million.

Additionally, please note that with the company's delivery of approximately $80 million of oral TPOXX to the U.S. government in December, the company's balance sheet as of December 31, 2021, included an $80 million receivable for such delivery as well as a $19 million tax liability, primarily in connection with taxable income generated by deliveries of oral TPOXX to the U.S. government in the fourth quarter.

During the fourth quarter, SIGA repurchased approximately 760,000 shares of its common stock for approximately $5.8 million. For the full year 2021, the company repurchased approximately 3.8 million shares of its common stock for approximately $26 million, which amounts to approximately 5% of shares outstanding as of the start of the year.

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 would like to reiterate a few points that have been made in the past in support of our view that SIGA offers an attractive combination of existing revenue streams that are currently generating strong financial results complemented by organic growth initiatives that hold a significant potential when viewed collectively.

First, I'd like to highlight that the ongoing international sales growth initiative is progressing in a value-creating manner. In 2020, this initiative generated our first international sales and $2 million of revenue. In 2021, this initiative has generated approximately $13 million of revenue. While as noted many times before, progress on this front is expected to be lumpy and uneven given the national market for biodefense products is not well developed, we believe that a meaningful international market is gradually taking shape.

Second, 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 earlier, we believe the current size of the stockpile TPOXX and a smallpox outbreak would not be sufficient to treat all of those who would need care. If we've learned anything from COVID, that certainly appears to be the case.

Third, we will be focused on transitioning our U.S. contract to a long-term SNS contract that focuses on appropriate size requirements for the TPOXX stockpile as well as a smoothing of the annual delivery, which will be critical to supply chain planning and financial predictability.

Fourth, our portfolio of growth initiative is diversified, including ongoing efforts to broaden the U.S. customer base to potentially include the U.S. Department of Defense and others. And fifth, we continue to pursue and support oncology collaborations and other strategies that can open new markets for TPOXX.

As mentioned earlier, we believe these growth initiatives, when viewed collectively, have potential for significant value creation. And one last point, as we generate cash over time through existing contracts and organic growth initiatives, we will continue to examine the best use of our cash, including share buybacks as well as potential investments or acquisitions that provide an opportunity to grow earnings, diversify our business and leverage our successful platform. Since the beginning of our share buyback program in 2020, we have purchased approximately $55 million of stock as of December 31, 2021, or approximately 10% of our outstanding shares.

This concludes our prepared remarks, and we will now begin the Q&A session.

(Operator Instructions)

Our first question comes from the line of [Joaquin Horton], who is a private investor.

I've got a question about Meridian. How long have we been working with Meridian?

So we signed the agreement with Meridian in, I believe, 2019. So I believe we're coming up on the third year of that.

Third year, okay. Have you noticed any change since there was a change in management since Meridian was Pfizer sold it to a buyout group?

So we continue to work with Meridian, [Joaquin], and have been pleased with their focus on the sales of TPOXX as they have ramped up post-EMA approval. So I would say, we continue to have an excellent relationship with Meridian and see the exact team that we had at Pfizer coming across and focusing on the sales currently with TPOXX.

Okay. So let me ask, how many countries have you talked to -- don't need to name them, but how many countries have you talked to because of Meridian?

I don't have a number at the top of my head. I would say, certainly, more than 10. I'm trying to think about a rough estimate, but as we said when we announced it, I think they have sold to more than 30 countries worldwide. So there may be conversations that I'm forgetting, but it's certainly been quite a number of countries and potential customers that we wouldn't have access to without the historical relationships that Meridian has had.

Okay. On the PEP program that you're currently doing the testing, when can we expect some top-line data come in?

So I believe that data will come in late this year. Part of the challenges that we have right now, we're doing those studies, especially the one with Geneos, there's a lot of vaccine studies that have been done around COVID. And so doing a vaccine study right now to get access to clinical sites and get them up and running and recruit people, we're seeing early challenges with that. So we're doing a few things to continue to try and accelerate it, but I do think that data is going to come out late in the year, and it is subject to the challenges of getting volunteers explaining that it's a smallpox vaccine, not a COVID vaccine, getting them recruited and then getting the data out. So right now, we're focused on recruitment and making sure we get volunteers in as fast as we can.

Okay. A question for Dan. How long ago, Dan, did we do the deal with Piper to bail the company out that $60 million loan or $80 million loan?

That loan was done in 2016, and we paid it back in 2020.

Okay. We worked with Piper at the time, right?

Yes, we did work with Piper on that deal.

So was Leerink involved in a fairness opinion on that deal? Or were they involved in some other deal that we worked with?

We worked with them on the sale of the PRV.

Okay. I guess the focus of my question is that you've been there, say, 10 years or more. And we're -- I'm struggling to figure out how come we don't have any Wall Street coverage yet. And I know we've worked with a couple of firms, and I know everybody says, okay, we're not going to do anything because you don't have any investment banking for us. But I mean there's going to be somebody out there. Any thoughts?

Yes, we do continue to look for coverage. And you know the reasons why it's sell-side coverage is, it's -- the model has changed over the years. And so we continue to look for it, and as you did mention, we don't have a lot of financing work and usually financing work is a big driver. You mentioned the debt deal, but that was a private deal as opposed to a public financing, there's a difference.

We have been looking, and we'll continue to look at research coverage and the focus is getting good research coverage.

And [Joaquin], I appreciate all your questions, thanks for the update today. And as you know, Joaquin , we also have the Edison Group, which publishes their research, which also provides a nice reference for investors, if they'd like to take a look at the analysis from the outside in. So I just wanted to thank you for those questions today.

(Operator Instructions)

Our next question comes from the line of Ken Mestemacher with Edison Group.

I have several questions. First, you mentioned Ukraine and developments there. Can you share with us kind of your thoughts on how investors should view or interpret the impact on SIGA of all that's going on with the situation and the development work on the smallpox antiviral issues?

Thanks, Ken. I appreciate the question. And as I said, I think we're waiting to see broadly how it shakes out. I think there'll certainly be a little disruption in the short term, but it's a reminder that nation-states certainly can have actions that aren't anticipated and do surprise folks in thinking about what threats are out there when they may happen.

One of the things I did mention as well is that in February, there was a translated press report of Russia updating the status of their smallpox antiviral drug. That's something that they had been developing over the years that had been reported in the WHO by a new variola working group meeting where scientists from around the world talk about research and development they're doing on products that might be able to mitigate the impact of the smallpox attack. It targets the same P37 protein as our drug did. It is a different drug, but they certainly focus on development and they announced in December of 2021 that they finished the clinical trial.

So it's a reminder that many countries worry about these threats and want to make sure that they have products to mitigate it. So I think that's an important reminder for our potential customers in Europe, Middle East and Asia that this is a threat that most large countries take seriously. So I appreciate the question.

Sure. Switching gears, Europe definitely seems like it's an area that is going to be good for future expansion. Can you give us some color on the next steps in terms of getting contract awards and things like that?

Yes, absolutely. So there's a number of conversations that go on with customers, especially in Europe. It involves talking to the public health and military folks around the need. They then go to what typically is some type of governance body that determines what products they're going to buy, and then it follows into a procurement process with funding, obviously, having to precede that. So there's a series of conversations that happened. Each country has its own process on how those steps are, but the helpful thing has been EMA's approval has helped us have broader discussions to be able to advance those.

And one last question. When do you expect that a new procurement contract with SNS would replace the current BARDA contract you have now?

Yes. So we are in discussions, and we've started talking to the U.S. government about that. From a pragmatic standpoint, we talked about 19C, and it's always helpful to have forcing functions with the government to make sure that we have clear deadlines, and the forcing function for us is the BARDA 19C contract in 3 years will have exercised all its options and resupply. So certainly, that's a forcing function that we need to get it done before then, but we're focused on getting it done certainly as soon as we can.

Post-COVID, there's been some reorganization within the ASPR within the U.S. government does that. They just named a permanent head of the Strategic National Stockpile. So that's something that needed to get put in place. So we'll have the organization to be able to talk to. And so we'll be focusing on those conversations.

The reality is, as I said, there were no expiries this year. So the probability of us being able to do a lot of deliveries this calendar year is not high, but we will continue to push to get options exercised in advance and deliver product on a more consistent basis. But it is going to be a process, Ken, that we'll go through to be able to do that.

And our next question comes from the line of [Teddy Green] with SIGA Technologies.

Phil and Dan, I am not with SIGA Technologies, but I'm a private investor.

That was a surprise.

Yes. That was a good quarter. Let's get right to it. I have some questions. So let's talk about the Canadian orders for this year. I heard you say, if you could just repeat that for me. In regards to the Department of Defense, you're expecting, how much product delivered in '22?

Dan, I'll let you provide that, but I can go back to the comment that you have in front of you, Dan.

Yes, certainly. So the Department of Defense -- the Canadian Department of Defense, we're looking at 4,000 courses, which is a value of about $4 million. And then there's the public health component of that value we're looking -- we're targeting is $12 million.

Yes. Yes, I was looking at the -- actually, I'm on the Canadian website right now, looking at the Public Health Agency of Canada, and it looks like they're going to complete the firm year 3 for 7,400 courses. And then they obviously -- in January, they requested another $5.5 million worth of product. So it looks like they've increased the actual total contract value to 22.752. So do you confirm the way that I'm reading that? So the firm year 3 will be delivered of 7,400 and then another roughly 5,900 courses to make it a total of 22.7 total contract value now, and that will be delivered to spread out through '22?

Yes. So exactly. And I would say, it's -- we'll do it as soon as possible. So I would anticipate one delivery to Public Health Canada and other delivery to military and hopefully, we can efficiently do it around the same time period for both of them. But you're correct in that essentially, what you're seeing is, those are the 2 deliveries we're targeting is what you just specified. And then when you talked about the total contract value, that sort of take the amounts you talked about for this year as well as the amounts we've delivered in 2020 and 2021 that gets you to that total. There are still some amounts leftover that are options. So what they're putting on that paper -- or that posting is really the firm commitments. There's options also behind that, too.

Yes. Right. I mean that's why it was increased because there's a little -- they're moving into a little bit of the options, at least the PHAC, correct?

And I did want to provide a little color on the posting. I know you track those and you've asked about that previously. So they did post on the website which entered into a conversation for us about when we can deliver it. I wanted to provide a little more color around a new jurisdiction. So we got Health Canada approval late last year. One of the series of challenges we had with supply chain, and I won't bore everyone with all the challenges we had, was simply getting paper for labels that go on drug packaging. And that area is one of the reasons we very much thank PCI Pharma Services, our packager because they did a lot of work to be able to do that.

And our new Canadian packaging actually is different than U.S. packaging because it includes both English and French language. So the labels have to be bigger. We have to do a different packaging configuration. So when Canada ordered, we have to have a conversation with them about when we will have the material to package. They obviously have constraints about when deliveries can happen, given fiscal years, et cetera.

So it is a conversation. So I wouldn't want some of the things when it comes out on the Canadian website, that's a signed, sealed order that is already gone down the system. There's actually a conversation that happens about how we can deliver it. We've provided the update on what we expect this year, working very closely with them. They're great partners to work with, but I did want to add that because I know you've had that question about what those websites actually mean as they're updated.

Okay. Good. I appreciate that color. So Dan, I guess, back to you. So are you -- how should I model for deliveries that you said the delivery for Department of Defense and then the initial delivery? I mean it could be broken down for PHAC of maybe roughly $6.9 million, if they deliver the 7,400 from the firm year 3? Can we expect that in this first quarter? Should I look at it for the second quarter? Do you have like a decent feel for that?

Yes. Yes, we don't give specific guidance on that, but look, I think the way to look it is that the fact that it was posted indicates that we are actively working on that, and we have been building inventory now. Now the thing to keep in mind is, we are -- we just got -- we did get approval in Canada recently. And so with the approval, there are some extra steps when we're actually delivering approved product in Canada versus when it was not approved in Canada. So there's some extra steps that we're going to work through, but we are working on doing it as soon as possible. And the fact that it's been posted indicates that we're making good progress on that.

Right. And also just looking at the inventory that you carry on the balance sheet, also I'm assuming that, that product is, it's ready. I mean you want to deliver this as soon as you can.

Yes, we really try to be -- I mean we view it as both beneficial to the client in terms of being responsive and also beneficial to us financially. So I think everyone's on lock and determined to doing it as soon as possible.

Okay. And then Dan, another question for you. Operating expenses for 2022, how should we look at them? Should it be similar to what you reported for '21 on a quarterly basis? I mean it could be lumpy, obviously, depending on when product is delivered, but are you looking at kind of a similar amount of operating expenses for '22?

Yes. On expenses, in general, we don't give guidance on it. Historically, we've been very good at maintaining a pretty efficient level. I would hold back on commenting on it in terms of -- we are in an inflationary environment, and it's early in the year. So in terms of actual numbers, I would hold off on. I will say, though, that the way we're built is that we're very focused in terms of what types of investments we make in terms of infrastructure. We don't expect material changes to the infrastructure, but we will have to navigate what we see as -- what a lot of company sees that it is in an environment where costs are increasing at a faster rate than is normal in that space.

I appreciate it. I understand where you're coming from and fair enough. Okay. Phil, little clarity on the 19C contract. The way that I understand it and looking at delivery schedules with the original 11C contract. We have $300 million worth of product remaining on the 19C contract. Is that correct?

Yes.

Okay. And so can you just clarify again to me -- my understanding is that you did deliver product in 2015, 373,000 courses at 1,200 milligrams, which would expire this year. Am I off on that?

So I described it as when the product was manufactured, so you are correct. We did make deliveries in 2015, but they were manufactured the year previously. So what I updated on the call was the expiration schedule, and there were no expirations 7 years after 2015.

Okay. So then they need to replenish still because to me, the action that BARDA has shown is that they want to exactly maintain a proper stockpile of TPOXX. So they do need to replenish over the next 2 years, and that's also in the 10-K of the company that you do have expiring product that has to be replenished. So I should be looking for a delivery this year and a delivery next year of oral. I'm not talking about IV. Is that correct?

There is expiries over the next 3 years. What I was saying was we were not anticipating expiries this year, but there are substantial ones next year. And so we will work to get those deliveries as soon as possible, so we don't have to do a huge amount in a very short amount of time. It would be much easier to be able to spread those out, but the reality is, it's not this year. So I can't say, there's a forcing function for the government to absolutely have to be that.

Okay. So then it would just be a -- double the amount the following years what you're saying?

It's over 2 years -- I'm sorry, over 3 years from today. So the expiries are in '23 and '24 that happened. So I do want to say that the -- that's over a 2-year period after this year.

Okay. Would it make sense -- yes, go ahead.

Yes. [Teddy], maybe to help out is that what we have said is that -- in the 10-K is that over the next 3 years, we expect expirations of 940,000 courses. And on the call, we just said that there's no expirations in 2022. So in essence, in 2023 and 2024, that's where those expirations will be concentrated.

Okay. Now does it make sense to lobby the SNS harder to kind of smooth out the expiration or the shelf-life expiration of the product so to have some delivered this year?

Absolutely. That's a key focus for us. It's something that we always push on, which is that we want to be able to smooth out. We want to be able to provide product in a more consistent way, and we also want to have a longer lead time so that we're able to actually do that in partnership with them. So yes, that's absolutely a focus for us.

Okay. And then you said you will be delivering IV product this year, and this will be final drug product, correct?

That's correct.

Okay. And you said around 18,000 courses of that?

That's correct.

Okay. And that -- the course for IV runs roughly is what $400 a course?

Yes, if you do the math on the order, that's about what it runs, and it's broken up as you -- I think we're alluding to into all-drug substance, which we had already delivered on previously and then the final drug products. I do want to point out on the order that we have this year, the base contract 19C, which is what we're delivering under -- has an initial order of 20,000 courses. We'll be delivering 18,000 courses. In our initial campaign with Patheon, they had a batch failure that was unrelated to TPOXX. It was a facility issue that popped up. So we will top up that remainder of the 20,000 courses as we go back into manufacturing on the next production schedule for the intravenous product, which we've obviously worked with BARDA on to make sure that they're okay with that. It's much more efficient to do it in a longer campaign than to try and go in and get one more batch done.

Right. Right. And the bulk drug substance that you had already provided under the base contract, that's, to us, was like, what, $3.2 million, I think, but it was deferred revenue, correct?

Correct. Yes.

Okay. Okay. And so once the final drug product is delivered, that will be deferred revenue until you actually get FDA approvals? Is that how I should look at it?

No. For this, it would be revenue weighted to the -- in the prior contract, the old contract, we had that deferral until approval because of conditions within the contract. We don't have the same conditions in the current contract so the revenue will be recognized upon delivery.

Okay. Great. Okay. And then one final question. I see a lot of cash on the balance sheet and a lot more that's going to be coming on. And so I heard you say that obviously, we have a second buyback going on. You've talked about potential acquisitions. Have you discussed with the Board of Directors a dividend policy to return cash to the shareholders?

So we absolutely look at all potential uses of cash. We think about share buybacks. We think about dividends. We think about acquisitions. So there's always a broad discussion of all the options that are out there. So absolutely.

Okay. And I mean I've never really heard you talk about it. I always see you say about a buyback and then a potential possible acquisition and stuff like that. So is that something that you're actively or are you more focused on an accretive acquisition, which I still think is -- obviously, with the decline in the biotech sector, maybe things are more attractive, but it's still an extremely competitive environment to find an accretive acquisition.

So how -- I'm just curious to understand, how the company is looking at a potential dividend policy? Is that something on the back burner? Or should it or is it not? Is it as important as looking at an accretive acquisition? Because the cash is ours. I mean we are the shareholders that own this company, correct?

Yes, [Teddy]. The shareholders certainly own the company, and I would say, we look at all of those options and have continuing discussions about it. I would also agree with your comment on accretive acquisitions. They certainly are difficult to identify. And as I've said several times on these calls, we don't want to set some artificial target that we're going to absolutely do an acquisition because we're going to have to be opportunistic about it.

I do think we've had a very robust share buyback program. As we've said, we've repurchased quite a number of shares over the past couple of years, including 10% of the shares. And certainly, we will continue to look at ways to return cash to shareholders and create shareholder value. So your point is very well taken. We certainly think about all of those types of strategies, and we'll continue to do so.

I do think we want to have the optionality to be able to do all of those things. So we're not rushing into one strategy to the next. We've had a share buyback program. We've been very active in it as we updated today, and we'll continue to look at all those options. So absolutely.

Okay. And then actually, it just kind of triggered me when you said about the buyback. Do you -- does a company look to get more aggressive? Because I mean, look, I definitely feel a lot of frustration watching the stock price of this company come down as we generate more cash from the 19C contract, which means the enterprise value has dropped while the fundamentals improve on the business model.

That's very frustrating for me. And the hope [I tell my controls], you shared my frustration with that. And because of that, with the stock price so depressed here, how does the company -- and I know this. I might not get an answer, but is the company proactive -- so if the price comes down a lot, can you be more aggressive? Can you search out? I know that just on basic open market stuff, you can only be a percentage of it. Has the company actively gone out to find out if there are people who want to sell and bid them for their stock?

So as you allude to, [Teddy], there's a lot of rules around share buybacks and how those programs progress. We certainly, as I said, have had a robust share buyback program over the past couple of years, and we're open to all options and ways to ensure that we maximize our opportunities around that share buyback program.

And then lastly, I'd go back to our objectives for how we continue to build this business. We certainly have put cash on the balance sheet, but I think it's also important to talk about getting that predictability of our earnings as I talked to potential new shareholders and shareholders are here, that's really a theme of how do we think about the cash flows. We have very lumpy cash flows now. It's in an opaque process when a government makes a decision on that as we start to get more predictability. I think that will certainly help people understand the tremendous power of this platform to be able to provide value both to our customers who get a very important product as well as our shareholders.

And then I think the ultimate -- other one that people are looking for clarity on ultimately is international sales, and that's an area where, as we've said, there isn't a road map. You can't go out and say, what are the 5 other products like TPOXX that have been sold to governments? What was the time line? What's the market penetration? What are those sales? And I think we're on a path where we're looking to get data points and clarity on how we can size and give some predictability to what the international market size will be.

So I do think that will help people understand again the power and the growth in our company, and how we're able to work and deliver value to our customers and our shareholders. So it's -- I appreciate the question, I really do, and I think it's something that our team works on a daily basis to make sure we continue to build the value of both what the company is delivering on financially and how that message can be continually evolved to ensure people understand the power that this platform has. So appreciate the questions.

And we have reached the end of the question-and-answer session. And I'll turn the call back over to Phil Gomez for closing remarks.

So I'd like to thank everybody for joining today, it really was a tremendous year last year for SIGA. It was also during a pandemic, we had a lot of people working remotely. I'd like to specifically thank Dennis Hruby and his team in the regulatory group that got us the approvals in Health Canada. And Europe, Tove Bolken, who's our Chief Supply Chain Officer; and Dan and the rest of the team spent a lot of time, ensuring we found ways to get product delivered and continue to execute on the plans that we had last year to meet our objectives. So I appreciate everybody joining today. Please, have a great day. Thanks.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.