Good day, ladies and gentlemen, and welcome to the SIGA Technologies Quarterly Business Update Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Josh Dver. Please proceed, sir.

Thank you, and thank you all for joining us today. This is Josh Dver, KCSA Strategic Communications' Investor Relations Consultant to SIGA Technologies. With me on 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 on a 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 third quarter ended September 30, 2013. With that said, I'd like to turn the call over to Dr. Eric Rose. Eric, the floor is yours.

Thanks, Josh. Good afternoon, and thank you all for joining us for our business update call. During the call, we'll provide you with a business update, and then we will open the call for questions. Today, as part of our quarterly earnings release, we made 2 related announcements. First, we announced that in the third quarter, we received approximately $101 million from the Biomedical Advanced Research and Development Authority, BARDA. Of that amount, approximately $96 million was for the aggregate delivery of approximately 725,000 courses of Arestvyr, our smallpox antiviral drug, to the United States' Strategic National Stockpile, and approximately $5 million was for reimbursement of expenses related to research and development services and support of activities related to Arestvyr. I should note that substantially all the amounts received from BARDA have been accounted for as deferred revenue in accordance with generally accounted accounting principles. With the receipt of payments for delivery of product, SIGA had $105 million of cash, cash equivalents and investments as of September 30. And going forward, we plan to deliver more than 1 million additional courses within the next year, of which approximately 975,000 courses will be invoiced for the government, and the remaining courses will be free of charge. These milestones mark the culmination of many years of hard work, teamwork and perseverance on the part of our employees. I'd like to personally thank all of our employees and partners who've made this possible. With the successes just enumerated, there also comes responsibility constantly to evaluate the best path forward. This brings me to the second announcement made with our earnings release, that is the implementation of a series of initiatives to optimize our efficiency within our operations. At this point, I'll turn the call over to Dan Luckshire, who will discuss the optimization plan.

Thank you, Eric. Good afternoon to those on the call. As Eric mentioned, and as noted in today's earnings release, we have commenced the implementation of an optimization program. This program is based on a comprehensive review of our operations and of external opportunities. At the heart of the optimization program is a commitment to match the company's resources, staff and efforts with near- and long-term opportunities. One element of the optimization program will be a reduction in the workforce. Other elements of the program include the discontinuation of our early-stage drug discovery operations and our decision to seek a partner or partners for the further development of our dengue lead candidate and other preclinical antiviral candidates. We believe such decisions are warranted in order to support efficiently the Arestvyr business and to provide the necessary financial strength and strategic focus to pursue the best growth prospects. Going forward, we're targeting approximately $6 million in annual cost savings from the optimization program. We expect to implement most of the changes by the end of this year. We expect to layer on the remaining changes during 2014. As part of the optimization program, we expect to incur restructuring charges of between $500,000 and $800,000. This range includes noncash charges for assets that may be impaired. Approximately $275,000 to $350,000 of the anticipated expenses are expected to result in cash outlays. The remaining restructuring charges are expected to be noncash in nature. At this point, I will hand the call back to Eric for closing remarks.

Thank you, Dan. You can tell from our comments we believe this is, and continues to be, a period of value-creating transformation for our company. As evidenced by the cash received to date, the Arestvyr business is bearing fruit. And as a result of our Arestvyr business, our financial position has never been better. Lastly, and importantly, we are laying the groundwork for the next phase of innovation and growth at SIGA. Thank you for joining this investor call, and we'll now open the line for questions.

[Operator Instructions] Our first question will come from the line of Joaquin Horton from Sterne, Agee.

A question. Our headcount is currently what, 71 employees?

Correct.

And so, how many are in New York? And how many are in Oregon?

Prior to these reductions, we had 11 in New York and the rest in Corvallis.

So -- okay. And so, the reductions have already taken place. Is that what you're saying?

Well, I gave you the number you asked. We said we had 71. I gave you the breakdown of that 71. We're not disclosing the number going forward, the reductions, at this point in time.

Okay. So next question is regarding dengue fever. I assume I heard right that you were going to try to find a partner to continue developing the small molecule that you have for dengue fever, correct?

That's correct. The entire program, not just the lead drug candidate, yes.

So the entire program, meaning Lassa, West Nile virus?

[Indiscernible]. We have a lead candidate that we've identified. It has -- there's a class of drug candidates that, that represents in terms of the target, which we've not disclosed because that's proprietary. And we have several other series [ph] that target other genes in the dengue genome. So all those intellectual assets, I think, are the basis for what we think could be a very strong collaboration with a partner to attack dengue fever.

So it's just for the dengue fever? It's not for any other program that you're working on now?

Well, we're amenable to potentially partnering any of the programs that we have, as we have been in the past, Joaquin. So I don't think...

Well, this seems like a turn to the left. I mean, you've always done it on the inside. I haven't seen anything really on the outside. Is that true?

Well, we develop these, obviously, internally. We do think that the quality of the asset at this point and where we stand at this point is optimally managed by having a partner for dengue and perhaps for other programs as well. I don't think it reflects any kind of turn in any directions. I'm not sure it means a turn to the left or to the right, but we do think, as with our smallpox antiviral drug as well where we're a partner with the government, that there is potentially worthwhile commercial opportunity in partnering our dengue antiviral program.

I think you're right. So, I mean, I agree with you 100%.

Good.

Haven't you been working on some other programs though? I mean, is it -- are you going to stop your research and development? Is it..

We are stopping our early-stage antiviral drug discovery activities, which have been predominantly directed towards bio-defense targets because we think that right now, in our portfolio already, we now have a reasonable-sized portfolio of these assets at this point. We think that we can pursue what we have more in the spirit of -- or the direction of advanced development as opposed to early drug discovery because we think that there's more value to be created in development at this point than there is in early-stage drug discovery, but our assets at this point also, well, our financial assets, we think, will allow us to pursue many things.

For instance?

I'm not going to speak about it, Fred [ph] -- or Joaquin.

Okay. I just thought it's really out there.

Yes.

Anyway...

Well, it's a very desirable new position for us, and we're pleased to be here.

I can understand that. Just doing a "back of the envelope" numbers, and I don't -- that $101 million that you received in cash from the -- from BARDA, and you had $73 million, was that $73 million for ST-246 that you received? What I'm trying to figure out is, if you add the $101 million in cash to the cash that you had at the end of the second quarter, which would be $134 million, and you subtract out -- I'm trying to figure out what -- come on, mate, you're not going to tell me about what it cost you to produce a product?

Yes, we're -- I mean, if you look at the financials, -- but -- we had the receipts coming in, the $101 million, and then we have operating expenses, which you can see on the financials, as well as payments for the manufacturer, which you can...

Okay. I just -- I haven't got to the 10-Q yet. So that's probably all in there.

You can see it. It's -- you'll see the buildup. It's not going to be dragged in a separate line item, but you can get a sense for it once you look at the financials.

So getting back to dengue, I know you have somebody from -- on the board from Pfizer. Has he been a lot of help in looking for a partner?

I think to outline the specific activities of our board members is not a direction that we want to take on our conference calls. All of our directors, I think, are helpful to us across the spectrum of our activities, and that includes certainly Jeff Kindler as well.

Our next question comes from the line of Fred Greenberg [ph] from Greenberg Advisors [ph].

Congratulations on the receipts and the cash.

Thanks, Fred [ph].

It looks like it's over a couple of dollars a share, isn't it?

It's right around $2 a share. Yes, Fred [ph].

Yes. So there's not much -- if you look at the market cap minus the cash, it's pretty modest. I think you should have your complete P&L, so people don't have to go back to the Q. That's what most companies do on these press releases, by the way. So I would ask in the future you have the complete P&Ls and balance sheet on the press release. The -- so this is an interesting development in the dengue. There aren't too many partners out there, as you know and as I know. But do you do this speculatively? Let's do this and look for a partner, of which there may be a handful? Or is your research and communications and -- whatever you want to call it, which we just talked about Jeff Kindler about all this, set you on a path to this decision? It seemed like you wouldn't make this decision without knowing what the outcome was going to be?

Let's say that this decision is within the context of a broader encompassing process. This process affects the whole company. It is done with the eye toward positioning the company for growth going forward and really looking at the opportunities that are most attractive and making sure that we're positioned for these opportunities and that -- and the assets we currently have, we're managing them efficiently. Within that context, the decision was made to look for a partner for dengue and other programs with the idea that, that would be the most -- or the best path going forward to getting...

Well, I think the question is, to put it in a simple question, you have -- you know there's a partner for you? I mean, this is a...

Fred [ph], we can't speak to specific partnerships. So...

No, I'm not talking about specific partnerships.

No.

You guys, you gentlemen made this move, this kind of move that's very calculated and very important. But it can't be just half thought out. You have to have it be full thought out. So that's why I'm asking is it...

I think this is a part of the strategy that we think will propel SIGA to deliver the value that its shareholders deserve. We have a...

So this is what the company is doing. And so...

We shall say, product in -- that we've developed in smallpox. We have some earlier stage assets with regard to antiviral drug discovery that we think are partnerable. And we believe that a company with our existing assets now is in a very strong position to pursue multiple opportunities.

Okay, this is not different than other, let's call, higher -- high-tech or biotech, or whatever you want to call it, research companies do, end up with partners. You would -- if you were successful in dengue, you'd have to find a partner to market it, we know that, or you will never market it yourself. So it just was a little surprising to us, at least to me, that it was just done now. Maybe it's because you're coming to year end or maybe someone was knocking on your door with a deal.

We're -- we can't comment on that.

So that leaves us thinking that you're smart guys and you know what to do, and there's not a -- this is a room, this is not a big dance hall, as they say. We're all wondering what the other opportunities are. You're not saying...

We can't be more specific about that at this point, Fred [ph].

Well, Fred [ph]...

Why is that? Why is that? And I don't know if I'm being unfair in asking a question, but it would seem that if you're doing all these things, you've already thought all these things out. So I was wondering why you couldn't be generally specific. Is there such a word?

Sure.

I'm just trying to understand what you have in mind.

Well, yes, to, in your words, to be generally specific, it's -- we're interested in growth opportunities that are going to create near-term value creation, whether that's through cash inflows or just a -- the point of which the value is transparent to all. So those are the types of things that we are interested in.

Shareholder interest. And just last question. So is there any signal, understanding we're all -- we're all worried about the government, but the stock market doesn't seem to care, by the way. Things maybe were better with a dysfunctional market because we're getting new highs. Do you expect life after 2 million doses?

We think that this is an important bio-defense asset for the country. As you know, there is a very complicated budgetary situation in Washington now. And in particular, bio-defense acquisitions were funded through a budget mechanism that was put in place in 2003. That expired on September 30, 2013. We're optimistic that especially because this is a bipartisan issue in terms of support for a strong bio-defense, we believe that BARDA and the CDC and all the related agencies within HHS will maintain a strong bio-defense posture for us, and we think our drug is meaningfully part of that. Specifically what that looks like, there's really nothing more I can say at this point.

Well, it was their idea to ask for 10 million doses, when you think about it, in your calculation as far as protecting the U.S. population. It wasn't SIGA's idea or my idea. So just sort of an...

The requirements that the government sets are something that are set by the government. And that -- the processes for that are, I'd say, dynamic. They change over time. And we've got to be diligent in our navigation of those processes and knowing those processes. But we also, at this point, have to be patient around our legislative process, ultimately, to fund this type of purchase.

Okay. Yes, EBS seems to be doing pretty well, by the way, your friends up a block, so to speak, or down a block.

We think that all the bio-defense suppliers that have products that are in the Strategic National Stockpile have generally continued to add to those stockpiles and to replenish those stockpiles. We don't think we're in any different position in that regard.

Right. The -- just a technical question on dengue. The -- I see the use of the drug, if it ever gets to the market as a therapeutic not just for travelers who are going to Indonesia, India, or Brazil or here in the Florida Keys, where we have dengue, I think if one of us got dengue, we would want to be treated.

We view our drug as both therapeutic and a prophylactic drug essentially [ph].

Okay, I just want to...

Get that.

And let's see. Did I take up all your time?

No.

No? We -- Sunset's coming down. We can look at the sunset together. Let's see. Yes, are you still involved in the lawsuit?

Yes, it is still ongoing.

Yes.

And the next activity is planned for next year, if I recall, from the Delaware courts?

So this active litigation, as you know, we...

I'm not going to comment on active litigation on these calls, Fred [ph].

[Indiscernible] in 2014 [indiscernible]?

I think we have a technical problem hearing you now, Fred [ph].

Okay, you hear me now?

Now we got you.

It's better, Fred [ph].

Okay. Well, we're -- I'm at the end of the world here. Didn't the courts set a -- or you said or say you were...

Fred [ph], we're not going to comment on the schedule of what's going on, on the Delaware court on the call. But the hearings, as I understand it, are in the public domain.

Yes, okay. That's -- I was just trying to remember what they said in the public -- all right, I'm finished. And good luck with Louie [ph] or anyone else you find, okay?

Yes. Thank you.

Thank you. And at this time, I'm not showing any further questions. I would like to turn the call back over to Josh Dver.

Thank you. 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 time line for bringing such products to market and the continued development and possible eventual approval of -- 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 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 a 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 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 smallpox antiviral may…

Thank you, ladies and gentlemen, for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.