SIGA Technologies, Inc. (SIGA) Q2 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the SIGA Technologies Second Quarter Business Update Conference Call [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 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 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 will open the call for questions. Let me start by saying that it's been a busy and productive 3 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 concepts of net profit. In some, we are making progress on many fronts and there's 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 $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 the drug into the Strategic National Stockpile by the end of the first quarter 2013, and 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 into 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 dosages at this time. It is our understanding that the FDA will express its formal regulatory decision on dosage after an NDA has been filed for ST-246, consistent with the timing and process once these -- with other drug candidate. 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] The first question is from Adnan Butt of RBC Capital Markets.

The first question is on the dosing. So you said for delivery, the assumption is 600 mg over a 14-day course. What could impact of 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. This has been -- 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. And in terms of -- well, I mean, 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, Ad. Yes, we've had extensive conversation with the FDA. But right now, we have an outline of our development. As it's still early innings and so it's probably premature to start putting timelines on the regulatory timeline.

Care to remind us what the regulatory timeline is, please?

We really haven't -- we've -- kind of haven't really gotten into regulatory timelines because we've been working toward putting things in place. But once we have -- 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 timeline that needs to be looked out for? And then, what happens to any profit-sharing requirement while the appeals process is ongoing?

Well, on the -- we just filed our appeal, which is probably available documents. So -- and then beyond that, it's customary that we really don't comment on litigation.

The next question is from Joaquin Horton of Sterne, Agee.

Is there any research updates from what we've been working on with Lassa and Dengue fever? I know that -- and what is the government's stance currently on Lassa fever because I saw where some department and 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. And we continue to pursue the drug candidates that we think are in our sights, both for Lassa and for Dengue.

Getting back to -- when do you think that we'll be able to do at the last pivotal trials, with our -- was it a 400- or 500-patient study for ST-246?

I think that, that depends on the final shape of the final regulatory plans. 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, so it's an important step ultimately for the milestone payments that's part of our contract for FDA approval. But in the short term, it's not something that's on the horizon in the next few quarters.

[Operator Instructions] The next question is from Scott Sibly [ph] of [indiscernible].

I had a question. Did we receive any compensation or anything for extending the warrants from MacAndrews & 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 and for our own investors, so we did it. But we're not going to get into details in terms of individual deals.

Okay. So, okay. So we didn't receive anything, we're going to -- I mean, wouldn't you file something? If we received something in return for that? Or...

No offense, we just don't comment on individual deals with investors.

[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. 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 risks of 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 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 of 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 market 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 in 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/or except for any obligation under the U.S. 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.