Good day, ladies and gentlemen, and welcome to the SIGA Technologies' Quarterly Business Update. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to your host, Todd Fromer, Managing Partner, KCSA Strategic Communications. Please 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; Daniel Luckshire, the Chief Financial Officer; and Dennis Hruby, Chief Scientific Officer. Today's call is being simultaneously webcast and is available on SIGA's website. A replay of the call will also be available in recorded format and on the company's website. Before we begin today, I would like to remind everyone that this conference call contains statements that can 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 first quarter ended March 31, 2012. With that said, I'd like to 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 this call, we will provide you with a business update, and then we will open the call for questions. With regard to the ST-246 program, we continue to perform the operational activities that were set in place in the fourth quarter of 2011 and were arranged in coordination with BARDA. And as discussed in prior calls, these activities are scheduled to lead to product deliveries by the end of the first quarter of 2013. We expect to deliver the full 2 million courses under the contract within 24 months of the date of initial delivery. 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 of delivery threshold, as noted in the contract, we'll be able to invoice BARDA for payment of all amounts then due. In addition to executing the operational plan for the delivery of ST-246 oral therapeutic, we've also been busy on the development front, which continues to be a key focus for us. Beyond our commercial and regulatory development work on the oral formulation of ST-246, we continue our IND-enabling work on the intravenous IV formulation of ST-246. We're targeting an IND filing for this formulation as early as the fourth quarter of this year. Additionally, our BARDA contract includes initial funding for a pediatric formulation. Work on the IV and pediatric formulation is important because it seeks to address the unmet needs of particularly vulnerable populations. We continue to make progress on the regulatory front as well. We were discussing with the FDA various matters regarding -- relating to our eventual marketing approval application, including final efficacy testing that would support our application. It would be premature to say anything else at this point. Beyond our development work on ST-246, we continue to focus on progressing, enhancing and whenever commercially appropriate, accelerating our cross-section of preclinical development programs. I've asked Dennis Hruby, our Chief Scientific Officer, to provide a quick update today on our preclinical development programs. Dennis?

Thank you, Eric. As mentioned, beyond ST-246, we have a diverse mix of preclinical programs that build off our expertise in virology and high-throughput screening with a focus on both biothreat agents and emerging pathogens. These programs are at varying stages of discovery or development. Our discovery program continues to seek lead molecules against agents that have been identified by our federal partners as high-priority targets. Our development programs include a broad-spectrum antiviral targeting Lassa virus and other category arenavirus pathogens and antivirals against dengue, Ebola and influenza. With respect to the Lassa virus program, we have conducted a very successful chemistry optimization program, and we're in the final stages of selecting a clinical lead. The availability and timing of future federal funding will continue to drive the pace of Lassa development going forward. Within the dengue program, we have multiple drug series that we view as attractive. One series, in particular, is viewed as the lead series. Right now, these series are formulated for parenteral administration. We believe oral administration could provide a much larger commercial opportunity. And as such, we're investing time into pursuing new candidates that would permit oral administration, in addition to the candidates currently under review that appear to require parenteral administration. We believe this time well spent and believe the process can improve the opportunity for commercial success down the road. In addition to laboratory work, our scientists continue to conduct due-diligence activity on potential in-licensing opportunities, and they continue to monitor federal grant and contract opportunities to identify opportunities to obtain non-dilutive funding to advance our research and development programs. Eric?

Thank you for the update, Dennis. At this point, I'd like to hand the call over to Dan, who will provide a quick update on our financial position and the PharmAthene litigation.

Thank you, Eric, and yes, my update will be brief so that we may proceed to questions. Regarding our financial position, we had $42.6 million of cash or cash equivalents on our balance sheet as of March 31. This compares to $49.3 million of cash or cash equivalents at December 31, 2011. As is evident, we continue to maintain a substantial cash position, which can be used to fund performance of the BARDA contract, research and development activities and business operations. With respect to the PharmAthene litigation, there has been no change since the last investor call. As a reminder, both SIGA and PharmAthene have submitted their own separate definitions of net profit to the court. There are substantial differences between the parties' approaches to net profit and the parties' views on the appropriate implementation of the Chancery Court's post-trial ruling. And clarity with respect to the impact of these rulings on SIGA will have to await a ruling by Vice Chancellor Parsons on this issue. 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 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] Our first question comes from Jason Kantor with RBC Capital Markets.

Could you give us some sense of -- sort of operationally, what progress you've made towards the contract, and I guess, are you continuing to be on track for delivering? And if there's a -- if you could give us any update that you might have on your thinking as to what you need to do to get the FDA -- to get a submission in for FDA approval for ST-246?

Let me take that in 2 parts. I'm going to let Dan sort of address the issue of where we stand in terms of contract execution because we're making good progress there, and let me speak just to the FDA approval issue. Animal rule approval, needless to say, is a complicated and difficult place to be in the regulatory universe. We feel that we've made very, very good progress with them in terms of being able to outline, at this point, a path for development of ST-246 that should allow us to make the submission, ultimately, for full FDA approval beyond the EUA mechanism that will be the initial mechanism used for our drugs' stockpiling by the Strategic National Stockpile. Dan, do you want to address where we are operationally?

Yes, the quick answer on operations is: yes. To confirm, we are still on target in terms of -- we're focusing on starting to deliver by the end of the first quarter 2013. And in terms of what needs to be done, we got to keep doing the detailed execution activities. We have 3 contract manufacturing organizations, and we have a product that's starting to go through different parts of the supply chain and manufacturing chain. And we just got to keep executing. I know it's not overly exciting, but it's very important to us. And that's why it's going to be our focus for the remainder of 2012.

And when you think about the 500,000 doses and if you start making deliveries sometime in Q1, is it your anticipation that you would essentially make that amount delivered in full at that time? Or would that be spread out over a longer period of time? When do you think you would book first revenue, I guess?

Yes, well, we always address these calls in terms of cash flows. But in terms of hitting that threshold, our expectation is that we'll be delivering -- once we start delivering, we'll be delivering on a pretty consistent basis, probably at least once a quarter, if not more. I would not expect, at this point in time, that the very first delivery to be 500,000. We will have to do a series of deliveries to reach that threshold.

Our next question comes from Nathan Cali with Noble Financial.

As far as the on pace to deliver Q1 2013, do you know if -- and I don't know if you already answered this question, will you be able to deliver all of that in the first quarter? I know you said it's going to be done in tranches, but will it all be completed in the first quarter or...

What do you mean by it? Do you mean 500,000 courses, Nathan?

Yes. Because that's what's needed before you guys receive payment, is that correct?

Correct. And referring back to the prior question is that it's not our expectation that, that first delivery will be 500,000. We expect it would be less than 500,000 courses. So to hit the threshold, it will be a series of deliveries.

Okay. And so, do you think that will be done over the first quarter, or you don't have guidance on that yet?

We're not giving specific guidance on the pace inside the deliveries. What we're telling you is that we will -- we plan to start delivering by the end of first quarter 2013. And then after that point, we expect that deliveries will we made on a relatively consistent basis, and we would expect that delivery would -- at least one delivery will happen each quarter, if not more per quarter.

We'll complete the contract over 24 months after that initial delivery.

Okay, that's great.

Yes, to be clear, within 24 months is delivering the full 2 million courses.

And then with respect to the litigation where SIGA is expected to receive $40 million in revenues prior to any profit split between SIGA and PharmAthene, is that $40 million part of that what you already received or is that $40 million in revenue?

Yes, on that, that sort of goes to the litigation. And some of the -- the issue is being litigated right now, so we're not going to directly comment on that.

Okay. Any expectations on the final opinion by the judge on the profit split?

We're not going to comment.

We're not going to comment on that.

Okay. And then it's to my knowledge, I think, if I have this correctly, there's 30 days to submit for an appeal, and you're allowed an extension up to an additional 15 days, is that the timing?

It sounds right but...

Yes, we're not going to get into the mechanics. So first things first is we're still awaiting word from Judge Parsons on the net profit definition.

Our next question comes from P.J. Solit with Potomac Capital.

Most of my questions have been answered, but I was wondering if you could quantify at all regarding the definition of net profits. You said that the 2 sides have substantially different methodologies or numbers. Could you quantify that at all in terms of is it more or less than a 20% difference, or just put any numbers on that?

I'm sorry, I can understand your interest in it, but we're just -- we're not going to comment on it. If you want to go through the differences, those papers have been filed with the court, but we're not going to get into those types of details.

[Operator Instructions] Our next question comes from Joaquin Horton with Sterne, Agee.

A question: We do expect some milestone payments, could you give me a timeline on the next milestone payments here this year?

Sure.

Yes. So we are targeting the milestone payment for the labeling planned for this summer, and then that's a $12 million milestone. And then there's an $8 million milestone for approval of our commercial validation report, and we're targeting early 2013 for that.

Okay. Is there no milestone for filing an IND for the IV formulation?

Right. So for that, that ties into the timing for the development plan. That's a $20 million milestone. And once we have a little more specificity on the development plan, we'll be able to come back to you with better timing -- more detailed timing.

Okay. Back in March -- or maybe just before March, the BARDA announced that they would issue a BAA, broad agency announcement, on 3 areas of biodefense, et cetera, where they were going to give some grants. Have we heard anything from BARDA lately?

Dennis, do you want to comment on that?

Yes, Joaquin, this is Dennis. That -- we've asked. They're still delayed in putting that solicitation out. It's still expected to come out shortly. We check on a daily basis and as soon as it comes out and we can see what the topics are, we will certainly formulate contract submissions if and when they're appropriate.

Okay. Now regarding the FDA, at one time you said, "We were expecting a letter from the FDA kind of giving us a clear path to approval." Have we -- I know there's been a lot of negotiations back and forth, but have we finally reached that milestone?

Joaquin, this is Eric. We've had, I think, very good ongoing communication with the FDA, both verbally now and expected written communications from them. So we're very happy with our level of communication with the FDA.

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

Great. Thank you all. As a reminder, 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 risks 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 approvals to market these or other potential products. SIGA may not be able to obtain anticipated funding towards development projects or other needed funding. 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 sufficient 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 U.S. Biomedical Advanced Research and Development Authority may not complete the procurements set forth in its solicitation to the acquisition of the smallpox antiviral for the Strategic National Stockpile or may complete…

Thank you, ladies and gentlemen. Thank you for your participation in today's conference. This does conclude the conference. You may now disconnect. Good day.